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Commodity Futures Trading Commission.
Final rule.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is issuing a final rule to amend the position limit rules applicable to security futures products (“SFP”) by increasing the default maximum level of equity SFP position limits that designated contract markets (“DCMs”) may set; modifying the criteria for setting a higher position limit and position accountability level by relying primarily on estimated deliverable supply; and adjusting the time during which position limits or position accountability must be in effect. In addition, the final rule will provide DCMs discretion to apply limits to either a person's net position or a person's position on the same side of the market. The rule also includes position limit requirements and related guidance and acceptable practices for DCMs to apply in adopting position limits for SFPs based on products other than an equity security.
Effective November 26, 2019.
Thomas Leahy, Associate Director, Division of Market Oversight (“DMO”) at 202-418-5278 or
On December 21, 2000, the Commodity Futures Modernization Act (“CFMA”) became law and amended the Commodity Exchange Act (“CEA”) and the Securities Exchange Act of 1934 (“Exchange Act”).
As the Commission noted when it proposed to adopt criteria for trading of SFPs:
It is important that the listing standards and conditions in the CEA and the Exchange Act be easily understood and applied by [DCMs]. The rules proposed today address issues related to these standards and establish uniform requirements related to position limits, as well as provisions to minimize the potential for manipulation and disruption to the futures markets and underlying securities markets.
Among those provisions is current Commission regulation 41.25(a)(3), which requires a DCM that lists SFPs to establish position limits or position accountability standards.
Under existing § 41.25(a)(3), a DCM is required to establish for each SFP a position limit, applicable to positions held during the last five trading days of an expiring contract month, of no greater than 13,500 (100-share) contracts, except under specific conditions.
As an alternative to an applicable position limit requirement, existing
Since adoption of the 2001 Final SFP Rules, the Commission's SFP position limit regulations have not been substantively amended to account for SFPs on securities other than common stock, although CEA section 2(a)(1)(D)(i) authorizes DCMs to list for trading SFPs based upon common stock and such other equity securities as the Commission and the Securities and Exchange Commission jointly determine appropriate.
On July 31, 2018, the Commission published a Notice of Proposed Rulemaking to amend Commission regulation 41.25 to update the position limit rules for SFPs to provide regulatory comparability with equity options, foster innovation by providing a framework for position limits on SFPs that are not covered under the existing rules, and provide flexibility to DCMs in setting position limits for such products (“Proposal”).
Notably, the Commission proposed changes to the default position limit level and the criteria for DCMs adopting position limits and accountability levels for SFPs, relying primarily on estimated deliverable supply, as defined in the rule. For equity SFPs, the Proposal would increase the default position limit level from 13,500 (100-share) contracts to 25,000 (100-share) contracts and would permit a DCM to establish a position limit level higher than 25,000 (100-share) contracts based on the estimated deliverable supply of the underlying security.
Also for equity SFPs, the Proposal would change the criteria that permit a DCM to adopt an exchange rule for position accountability in lieu of position limits. Under the Proposal, for a DCM to adopt an exchange rule for position accountability in lieu of position limits, the underlying security must have an estimated deliverable supply of more than 40 million shares and a total trading volume of more than 2.5 billion shares over a six-month period.
The Proposal also provided that the DCM could have the discretion to adopt limits and accountability levels on either a net basis or gross basis (“on the same side of the market”) and included specific position limit requirements and guidance for a physically-delivered basket of equities SFP, a cash-settled equity index SFP, and an SFP on one or more debt securities.
When adopted, the Commission's existing SFP position limits were set at levels that were generally comparable, but not identical, to the limits that applied to options on individual securities at that time.
Noting the differences in the position limit rules applicable to SFPs and security options,
The differences mainly reflect certain provisions adopted for commodity futures contracts that reflect the special characteristics of those markets. In this regard, the proposed position limit requirements for security futures differ from individual security option position limit rules in that the limits would apply only to net positions in an expiring security futures contract during its five last trading days. The Commission believes that this provision is appropriate since, consistent with its experience in conducting surveillance of other futures markets, it is during the time period near contract expiration that the potential for manipulation based on an extraordinarily large net futures position would most likely occur.
In addition to requesting comments on the Proposal, the Commission solicited comments on, among other things, the impact of the Proposal on small entities, the Commission's cost-benefit considerations, and any anti-competitive effects of the Proposal. The comment period for the Proposal closed on October 1, 2018. The Commission received one substantive comment letter on the Proposal, from OneChicago, LLC (“OneChicago” or the “Exchange”).
The Commission has considered the comments received in response to the Proposal and is adopting it as proposed but with a few modifications.
OneChicago challenged what it viewed as the Commission's assumption that SFPs and security options are economically equivalent.
OneChicago commented that SSF contracts do not contain any optionality and, accordingly, have a delta of one, where delta means the rate of change in the price of a derivative relative to the rate of change in price of the underlying instrument.
According to OneChicago, because only a Delta One derivative can avoid a tax event (from the transfer of a security), no other derivative is equivalent to a Delta One derivative.
The Exchange recommended regulating Delta One derivatives, whether traded OTC or on an exchange, comparably.
OneChicago noted that, in its experience, its market participants hedge a short SFP position with a long stock position and hedge a long SFP position with a short sale of stock (with a stock borrow).
The Commission's regulations distinguish between cash market transactions, such as securities lending agreements, and derivative market transactions. Delta One derivatives, as defined by the Exchange, include certain cash market forward transactions. The Commission notes that it does not directly regulate cash market transactions but has certain anti-fraud and anti-manipulation authority over cash markets.
The CFMA lifted the ban on security futures and sought to ensure comparable regulation of SFPs and security options on NSEs. The Commission appreciates that SFPs may not be identical to equity options. The Commission also notes that use of SFPs as lending transactions is not the only way in which SFPs may be used. As such, the Commission's approach reflects the concept of economic equivalence of SFPs and security options contained in the CFMA.
To facilitate implementation of its proposed changes to its SFP rules, the Commission proposed definitions for two new terms: “estimated deliverable supply” and “same side of the market.” The Commission also proposed guidance on estimating deliverable supply.
The Commission proposed to define “estimated deliverable supply” as the quantity of the security underlying a SFP that reasonably can be expected to be readily available to short traders and salable by long traders at its market value in normal cash marketing channels during the specified delivery period.
The Proposal also included guidance for estimating deliverable supply in proposed appendix A to Commission regulation 41.25.
OneChicago opined that the Commission's proposed guidance for estimating deliverable supply is inadequate. In this respect, OneChicago noted that cash market participants going through settlement are more likely to borrow shares rather than purchase shares.
The Commission is adopting the definition of “estimated deliverable supply,” and the associated guidance for calculating it, as proposed. The Commission notes that the deliverable supply of equity securities in the cash market may be estimated in many ways. A maximum estimate of deliverable supply could be the total number of shares that could be authorized by a corporation. However, there may be a significant time lag before a corporation actually issues additional shares. Accordingly, a more conservative estimate of deliverable supply is based on the number of shares issued and outstanding. The Commission proposed to estimate deliverable supply based on free float, that is, shares issued and outstanding, excluding shares that either: (i) Are restricted from transfer (
The Commission notes that a short position holder in an SFP may obtain shares for delivery either through purchase of shares or through a securities lending or securities repurchase agreement. The Commission further notes that, at a particular point in time, there can be no more shares available for lending than there are shares outstanding. The Commission acknowledges that, when certain shares are on loan, the borrower of such shares may enter a subsequent transaction to lend such security. However, subsequent lending transactions (resulting in repetitive re-lending of the same shares) should not be used as a basis to increase an estimate of deliverable supply. Once shares are obtained by a market participant, either to deliver on a short SFP position, or in an attempt to corner the readily available supply of such security, then such shares presumably would not be made available for lending during the SFP delivery period. Further, at the termination of a securities lending agreement, the borrower must return securities to the lender. A borrower who has re-sold securities would need to purchase shares (or borrow such shares again) to close out the securities lending agreement.
By way of example, when estimating the deliverable supply of wheat, the Commission does not count both the wheat in a warehouse and a warehouse receipt representing ownership of that same wheat; a warehouse receipt is simply the ownership of the commodity, and is not an increase in the amount of the commodity. Likewise, a forward purchase of wheat would not increase the estimated deliverable supply. Similarly, a single share of stock and a securities lending agreement that transfers ownership of that single share
The Proposal defined “same side of the market” to mean long positions in physically-delivered security futures contracts and cash-settled security futures contracts, in the same security, and, separately, short positions in physically-delivered security futures contracts and cash-settled security futures contracts, in the same security.
The Commission proposed to continue to require DCMs to establish position limits or position accountability rules in each SFP for the expiring futures contract month. OneChicago argued that position limits for SSFs are not significant to the market in light of margin requirements.
The Commission proposed in § 41.25(b)(3)(i) to increase the default level of a DCM's position limits in an equity SFP from no greater than 13,500 100-share contracts on a net basis to no greater than 25,000 100-share contracts (or the equivalent if the contract size is different than 100 shares per contract), either on a net basis or on the same side of the market.
OneChicago believes that increasing the default position limit level to 25,000 contracts is an improvement over the status quo but commented that the proposal did not level the playing field between SFPs and OTC Delta One products.
The Commission is adopting Commission regulation 41.25(b)(3)(i) as proposed. The default level of 25,000 100-share contracts is equal to 2,500,000 shares. The Commission notes that 12.5 percent of 20 million shares equals 2,500,000 shares.
The Commission notes that the lowest position limits adopted for equity option positions on NSEs are 25,000 100-share option contracts on the same side of the market.
As noted above, SFPs and security options may serve economically equivalent or similar functions. However, under current Commission regulation 41.25(a)(3), as previously detailed, the default level for position limits for SFPs must be set no greater than 13,500 (100-share) contracts, while security options on the same security may be, and currently are, set at a much higher default level of 25,000 contracts, which may place SFPs at a competitive disadvantage. Comparability of limit levels is intended to provide a more level regulatory playing field.
Because limit levels would not apply to a market participant's combined position between SFPs and security options, the Commission did not propose a default limit level for an SFP higher than 12.5 percent of estimated deliverable supply. That is, under the final rule, a market participant with positions at the limits in each of an SFP and a security option on the same underlying security might be equivalent to about 25 percent of estimated deliverable supply, which is at the outer bound of where the Commission has historically permitted spot month limit levels.
The Proposal would change the criteria that DCMs use to set equity SFP speculative position limit levels above the default level. Under the existing rules, a DCM may establish a position limit for an equity SFP of no more than 22,500 contracts (rather than the default level of no greater than 13,500 (100-share) contracts) if the security underlying the SFP has either (i) an average daily trading volume of at least 20 million shares; or (ii) an average daily trading volume of at least 15 million shares and at least 40 million shares outstanding.
OneChicago recommended using 25 percent of estimated deliverable supply, as opposed to the 12.5 percent proposed by the Commission, to set the level of the position limit, because, in the Exchange's view, there is no justification for a lower level, other than the misconception that SFPs and security options compete.
OneChicago supported the proposal to give DCMs the discretion to determine if the liquidity in an SFP justifies setting the position limit lower than the default level. OneChicago stated that DCMs are flexible and can adjust to changing market conditions quickly.
For underlying securities with more than 20 million shares of estimated deliverable supply, the Commission is adopting as proposed the rule that permits DCMs to set the position limit equivalent to no more than 12.5 percent of estimated deliverable supply. By way of example, if the estimated deliverable supply were 40 million shares, then the rule would permit a DCM to set a limit level of no greater than 50,000 100-share contracts; computed as 40 million shares times 12.5 percent divided by 100 shares per contract. This level of 50,000 100-share contracts is the same as permitted under current rules of NSEs for an underlying security with 40 million shares outstanding, although an NSE would also require the most recent six-month trading volume of the underlying security to have totaled at least 15 million shares.
While this provision for SFP position limits more closely resembles existing limits on security options, the final rule permits a DCM to use its discretion in assessing the liquidity of trading in the underlying security, rather than imposing a prescriptive trading volume requirement.
The Commission expects a DCM to conduct a reasoned analysis as to whether setting a level for a limit based on such criterion is appropriate. In this regard, for example, assume security QRS and security XYZ have equal free float of shares. Assume, however, that trading in QRS is not as liquid as trading in XYZ. Under these assumptions, it may be appropriate for a DCM to adopt a position limit for XYZ equivalent to 12.5 percent of deliverable supply, but to adopt a lower limit for QRS because a lesser number of shares would be readily available for shorts to acquire to make delivery.
Under the current SFP-listing practices of DCMs (with OneChicago being the only domestic DCM that lists SFPs), SFPs require delivery of the underlying shares. Relatedly, NSEs also may list equity options that require delivery of the underlying shares. Given this situation, the Commission believes that in adopting the SFP position limit rule the Commission should take into consideration the impact on deliverable supply of both an option on a particular security being listed for trading on an NSE and an SFP on that same security being listed for trading on a DCM.
The Commission notes that the criterion of 12.5 percent of estimated deliverable supply is half the level for DCM-set spot month speculative position limits for physical delivery contracts in current Commission regulation 150.5(c).
Moreover, as noted above, SFPs and equity options in the same underlying security are not subject to a combined position limit across DCMs and NSEs. Accordingly, the SFP limit level is half the level for DCM-set spot month futures contract limits applicable to physical delivery contracts of 25 percent of estimated deliverable supply.
Further, the Commission notes that limits for equity options at NSEs do not increase in a linear manner for all increases in shares outstanding.
The Commission will continue to monitor trading activity and positions in the SFP market to assess whether the levels of position limits unduly restrict trading.
As an alternative to the proposed criteria for setting position limit levels based on estimated deliverable supply, the Commission invited comments on whether the Commission should permit a DCM to mirror the position limit level set by an NSE in a security option with the same underlying security or securities as that of the DCM's SFP.
The Commission is not adopting this proposed alternative. NSEs may set an equity option's position limit by the use of trading volume as a sole criterion.
The Commission proposed to change the criteria for when a DCM would be permitted to substitute position accountability for a position limit in an equity SFP.
OneChicago recommended that the Commission authorize position accountability for all SFPs based on ETFs at a level of 25,000 contracts, or perhaps at a lower level for ETFs with low liquidity.
The Commission is adopting, as proposed, the amended position accountability provisions in Commission regulation 41.25(b)(3)(i)(B).
Rather than the existing requirement that the underlying security have more than 40 million shares outstanding, the rule requires the underlying security to have more than 40 million shares of estimated deliverable supply, which generally would be smaller than shares outstanding. This change conforms to the use of estimated deliverable supply of underlying shares in setting a position limit as discussed above. The Commission believes an appropriate refinement to its criterion for position accountability is to quantify those equity shares that are readily available in the market, rather than all shares outstanding. Generally, a short position holder may expect to obtain at or close to fair value shares that are readily available in the market and a long position holder may expect to be able to sell such shares at or close to fair value. However, in contrast, shares that are issued and outstanding by a corporation may not be readily available in a timely manner, such as shares held by the corporation as treasury stock. Therefore, to ensure that short position holders generally will be able to obtain equity shares at or close to fair value, the DCM should consider whether the shares are readily available in the market when estimating deliverable supply.
In addition, the Commission is increasing the maximum position accountability level to 25,000 contracts from the current level of 22,500 contracts. The Commission notes a DCM would be able to set a lower accountability level, should it desire. The Commission believes it is appropriate to set a position accountability level no higher than 25,000 contracts because the Commission believes a DCM should have the authority, but not the obligation, to inquire with very large position holders as to the nature of the position and to order such position holders not to increase positions.
The Commission is not adopting a position accountability rule as the default for all SFPs based on ETFs. The Commission notes that ETFs are structured such that pre-approved groups of institutional firms, known as authorized participants, are the only set of persons permitted to create or redeem shares in an ETF. Moreover, to create ETF shares, the authorized participant must have the requisite shares in the securities underlying the ETF. It is not clear that the process to create new shares in an ETF could be accomplished quickly enough during the period leading to delivery to ensure that the ETF's price remains in line with the prices in the underlying shares. Therefore, the Commission will require in Commission regulation 41.25(b)(3)(i)(A) position limits on ETFs as appropriate.
In addition, the Commission is adopting its proposed guidance, including paragraph (d) to appendix A, which provides that a DCM may adopt a position accountability rule for any SFP,
The Proposal also included specific position limits requirements and guidance directed at SFPs based on products other than a single equity security: A physically-delivered basket equity SFP, a cash-settled equity index SFP, and an SFP on one or more debt securities.
The existing SFP rule provides that, for an SFP comprised of more than one equity security, the DCM must apply the position limit or position accountability level applicable to the security in the index with the lowest average daily trading volume.
OneChicago believes the current general framework is sufficient and recommended that the Commission not finalize regulations for types of SFPs that currently are not listed for trading, unless there is interest in listing such SFPs.
The Commission is adopting the changes to the general framework for types of SFPs not currently listed for trading, as proposed. The Commission is concerned that the existing general framework applicable to SFPs, as noted in the Proposal, does not take into account the characteristics of other types of SFPs, such as an SFP on one or more debt securities, SFPs based on physically-delivered baskets of equities, and cash-settled SFPs based on equity indexes. Absent revisions, the Commission is concerned that the existing general framework could impede innovation because a DCM may not be able to tailor a product's terms to comply with the framework.
With respect to a physically-delivered SFP on more than one equity security, the Proposal provided that the DCM must adopt the position limit for the SFP based on the underlying security with the lowest estimated deliverable supply and that the position accountability level would only be allowable if each of the underlying equity securities in the basket of deliverable securities is eligible for a position accountability level.
The Commission is adopting Commission regulation 41.25(b)(3)(ii) as proposed. The rule is based on the premise that the limit on a physically-delivered equity basket SFP should be consistent with the most restrictive limit applicable to SFPs based on each component of such basket of deliverable securities. This restricts a person from obtaining a larger exposure to a particular component security through a physically-delivered basket equity SFP than could be obtained directly in a single equity SFP. However, the rule does not aggregate positions in single equity SFPs with positions in basket deliverable SFPs.
With respect to a cash-settled SFP based on a narrow-based security index of equity securities, the Proposal simply provided that the DCM must adopt a position limit level and offered relevant guidance and acceptable practices.
As an example of an acceptable practice in paragraph (b)(2) of appendix A, for a cash-settled equity index SFP on an equity security index weighted by the number of shares outstanding, a DCM could set a position limit as follows: First, compute the limit on an SFP on each underlying security under proposed regulation (b)(3)(i)(A) (currently designated as (a)(3)(i)(A)); second, multiply each such limit by the ratio of the 100-share contract size and the shares of the security in the index; and third, determine the minimum level from step two and set the limit to that level, given a contract size of one dollar times the index, or for a larger contract size, reduce the level proportionately.
The Commission is adopting Commission regulation 41.25(b)(3)(iii) and its associated guidance and acceptable practices as proposed. For setting levels of limits on an SFP comprised of more than one security, existing Commission regulation 41.25(a)(3)(ii) specifies certain criteria for trading volume and shares outstanding that must be applied to the security in the index with the lowest average daily trading volume. However, the Commission did not propose to retain those criteria for setting levels of limits for cash-settled equity index SFPs. For an equity index that is price weighted, it appears that use of shares outstanding or trading volume may result in an inappropriately restrictive level for a position limit. For an equity index that is value weighted, it also appears that such use may result in an inappropriately restrictive level for a position limit. For example, suppose a price weighted index has a component with a high price and a large number of shares outstanding, but a low trading volume. Specifically, this stock has the lowest trading volume in this index. If trading volume is used to establish the position limit for an SFP based on this index, then the position limit would be excessively restrictive because this specific component with a high index weight and low trading volume would force such a tight position limit to ensure that a trader could not attain a notional position in this stock that is in excess of a position limit that would apply to an SFP on that stock. The Commission observes that while trading volume, as an indicator of liquidity, may be an appropriate factor for a DCM to consider in setting position limits, trading volume is not generally used in construction of equity indexes.
Although no DCM currently lists for trading SFPs based on one or more debt securities, the Proposal provided that if a DCM listed such SFPs, the DCM must adopt a position limit level and offered relevant guidance.
The Commission is adopting Commission regulation 41.25(b)(3)(iv) and the associated guidance as proposed. Although no DCM currently lists an SFP based on a debt security, the Commission believes a framework for position limits may reduce uncertainty regarding acceptable practices for listing such contracts on non-exempted securities and, thereby, may facilitate listing of such contracts. The Commission notes that futures contracts in exempted securities, such as U.S. Treasury notes, have been listed for many years.
The Commission is adopting this approach as guidance because there may be other reasonable bases for setting position limits for debt SFPs, and the Commission does not want to foreclose those bases. For example, a coupon stripped from an interest-bearing corporate bond does not have a par value in terms of such corporate bond, but instead such coupon is the amount of interest due at the time the corporate issuer is scheduled to pay such coupon under the corporate bond indenture. The Commission elected not to apply the criteria of trading volume and shares outstanding for setting levels of limits for debt SFPs because debt securities generally are neither issued in terms of shares nor trading volume measured in terms of shares.
The Commission proposed to maintain the requirement that position limits and position accountability levels be applied during a period of time no shorter than the last five trading days in an expiring contract month.
OneChicago believes positions limits should only be in effect on the expiration day, because its experience has been that the short side is always pre-hedged and prepared to go through delivery, and the long side simply needs money to pay for delivery at its brokerage firm. The Exchange stated, “All FCM customers roll their positions forward or extinguish the positions prior to expiration as taking delivery of securities, while theoretically possible, is not practical and the FCM [sic] make the process uneconomical for the customers.”
The Commission is amending the existing provision in Commission regulation 41.25(a)(3) that requires position limits to be applied in an expiring contract month for at least the last five trading days of the contract month. Specifically, the Commission is decreasing the time during which position limits must be in effect to at least the last three trading days of the contract month. However, Commission regulation 41.25(b)(3) of the final rule nevertheless requires position limits be in effect for a period longer than three trading days in the event that the terms of an SFP provide for delivery prior to
The Commission notes that other DCMs have experience in applying spot month position limits to the last few days of trading, where delivery occurs after the close of trading on the last trading day.
The time period during which position limits are in effect for SFPs need not be consistent with that of position limits on security options, which are in effect at all times, because security options typically have American-style exercise provisions and can be exercised at any time prior to expiration. The unanticipated need to acquire securities to make delivery on an exercised security option, therefore, does not exist with SFPs. For the reasons noted above, the Commission is decreasing to three days from five days the period during which SFP position limits will be in effect.
The Proposal generally allowed DCMs the discretion to apply position limits and position accountability levels on either a net, as under existing regulations, or a gross (“same side of the market”) basis.
OneChicago did not support the use of gross position limits for SSFs. The Exchange noted that it does not permit a customer to hold both a long and short SSF with the same symbol and expiration, making the application of this proposed rule meaningless under the Exchange's rules.
The Exchange believes cash-settled and physically-delivered SFPs on the same underlying security should be combined for the same expiration date for purposes of position limits.
The Commission is adopting its proposal to give a DCM discretion to apply position limits or position accountability levels either on a net basis, as under current regulations, or on the same side of the market.
For example, if there were a physically-delivered SFP on equity XYZ, a dividend-adjusted SFP on equity XYZ, and a cash-settled SFP on equity XYZ, then a DCM's rules could provide that long positions held by the same person across each of these classes of SFP based on equity XYZ would be aggregated for the purpose of determining compliance with the position limit. A gross position in a futures contract is larger than a net position in the event a person holds positions on opposite sides of the market. That is, a net basis is computed by subtracting a person's short futures position from that person's long futures position, and, under current regulations, a single position limit applies on a net basis to that net long or net short position. Under the final rule, at the discretion of a DCM, a person's long futures position is subject to the position limit and, separately, a person's short futures position also is subject to the position limit.
Adding this gross basis approach (in addition to net basis) to SFP limits more closely resembles existing limits on security options that apply on the same side of the market per the rules of the NSEs.
The Commission notes that a DCM need not use this alternative approach. The Commission continues to permit DCMs to apply SFP limits on a net basis at the DCM's discretion. In this regard, the Commission believes it is possible for a DCM's application of limits to further the goals of the CEA whether applied on a net or a gross basis.
The Commission proposed to require a DCM to consider, on at least a semi-annual basis, whether SFP position limits were set at appropriate levels, through consideration of estimated deliverable supply.
OneChicago supported the proposal to allow DCMs to recalculate levels of position limits on a semiannual basis, instead of a monthly basis. In this regard, OneChicago noted that in its experience resetting levels monthly provides very little value.
The Commission is adopting Commission regulation 41.25(b)(3)(vi) as proposed. The Commission believes that review of position limit levels and position accountability rules on at least a semi-annual basis rather than a monthly basis generally should be adequate to ensure appropriate levels because deliverable supply generally does not change to a great degree from month to month. For example, the number of shares outstanding may increase through periodic issuance of additional shares, and may decrease through stock repurchase programs, but, as a general observation, such issuance or repurchases are not a large percentage of free float. Of course, there could be situations where deliverable supply changes to a great degree before the semi-annual period and the rule does not prevent a DCM from considering those changes before such period.
Under the existing SFP rule in Commission regulation 41.25(a)(3)(iii), DCMs are authorized to approve exemptions from SFP position limits, provided the exemptions are consistent with Commission regulation 150.3, which addresses exemptions from Commission-set position limits set forth in Commission regulation 150.2.
OneChicago did not comment on the Commission's proposed guidance regarding exemptions from SFP position limits, but requested that the Commission give DCMs the authority to exempt spread transactions designed to facilitate the transfer and return of securities as a pure financing trade. On OneChicago, such transactions are called Securities Transfer and Return Spreads (“STARS”).
The Exchange stated that it sees no value in requiring market participants to seek a hedge exemption for the expiring nearby contract in the OneChicago STARS transaction. The Exchange noted its rules allow customers to request an exemption for a position that was established the day before, which, for a OneChicago STARS transaction, would be for a nearby leg that no longer exists. Since the market participant can seek an exemption the day after the OneChicago STARS transaction when the nearby leg would no longer exist, the Exchange views such an exemption request as unnecessary paperwork. OneChicago, therefore, requests that the Commission give DCMs the authority to exempt transactions such as OneChicago STARS transactions from SFP position limits.
The Commission is deleting existing Commission regulation 41.25(a)(3)(iii) and adopting the guidance in paragraph (e) to appendix A as proposed. The Commission also believes that OneChicago's recommendation regarding the OneChicago STARS
The Regulatory Flexibility Act (“RFA”)
For all these reasons, the Commission believes that the amendments to the SFP position limits regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the final rule will not have a significant economic impact on a substantial number of small entities.
The Paperwork Reduction Act of 1995 (“PRA”)
Section 15(a) of the CEA requires the CFTC to consider the costs and benefits of its actions before promulgating a regulation under the CEA.
Where reasonably feasible, the CFTC has endeavored to estimate quantifiable costs and benefits. Where quantification is not feasible, the CFTC identifies and describes costs and benefits qualitatively.
The CFTC requested comments on the costs and benefits associated with the proposed rule amendments. In particular, the CFTC requested that commenters provide data and any other information or statistics that the commenters relied on to reach any conclusions regarding the CFTC's proposed considerations of costs and benefits. The Commission received comments that indirectly address the costs and benefits of the Proposal. These comments are discussed as relevant below.
The CFTC's economic baseline for this analysis of the final rule is the SFP position limits rule requirement that was adopted in 2001 and exists today in Commission regulation 41.25(a)(3). In the 2001 Final SFP Rules, the Commission adopted an SFP position limits rule that is consistent with the statutory requirements of CEA section 2(a)(1)(D). In particular, CEA section 2(a)(1)(D)(i)(VII) requires generally that trading in an SFP not be readily susceptible to manipulation of the price of that SFP or its underlying security. In this connection, Commission regulation 41.25(a)(3) currently states that the DCM shall have rules in place establishing position limits or position accountability procedures for the expiring futures contract month.
The CFTC analyzed the costs and benefits of the final rule against the current default net position limit level of 13,500 (100-share) contracts; or a higher net position limit level of 22,500 (100-share) contracts for equity SFPs meeting either: (i) A criterion of at least 20 million shares of average daily trading volume, or (ii) criteria of at least 15 million shares of average daily trading volume and more than 40
For equity SFPs, the final rule increases the default position limit level from 13,500 (100-share) contracts to 25,000 (100-share) contracts and permits a DCM to establish a position limit level higher than 25,000 (100-share) contracts based on the estimated deliverable supply of the underlying security. The final rule provides guidance on estimating delivery supply, and in connection with this change, requires a DCM to estimate deliverable supply at least semi-annually, rather than calculating the six-month average daily trading volume at least monthly.
Also for equity SFPs, the final rule changes the criteria that permit a DCM to adopt an exchange rule for position accountability in lieu of position limits. Under the final rule, for a DCM to adopt an exchange rule for position accountability in lieu of position limits, the underlying security must have an estimated deliverable supply of more than 40 million shares and a total trading volume of more than 2.5 billion shares over a six-month period.
For physically-delivered basket equity SFPs, the final rule, in addition to requiring a position limit, specifies that the position limit be based on the underlying security in the index with the lowest estimated deliverable supply. The final rule also clarifies that an appropriate adjustment must be made to the level of the limit for a contract size different than 100 shares per underlying security.
For SFPs that are cash settled to a narrow-based security index of equity securities, the final rule requires a position limit and provides guidance that a DCM may set the limit level to that of a similar narrow-based security index equity option. The final rule also provides guidance and an acceptable practice, which sets forth a safe harbor whereby a DCM itself may establish such a limit level.
For SFPs in debt securities, the final rule establishes a requirement that a DCM must adopt a position limit either net or on the same side of the market, and provides guidance that the level of such limit generally should be set no greater than the equivalent of 12.5 percent of the par value of the estimated deliverable supply of the underlying debt security.
The final rule shortens the time period during which position limits must be in effect from the last five trading days to the last three trading days. The final rule also establishes a required minimum position limit time period beginning no later than the first day that a holder of a long position may be assigned a delivery notice, if such period is longer than the last three trading days, where the SFP permits delivery notices to be sent to long traders before the termination of trading.
The final rule provides DCMs with the discretion to alter the basis for applying a position limit from a net position to a gross position on the same side of the market.
The final rule establishes guidance that a DCM may adopt an exchange rule for position accountability in addition to an exchange rule for a position limit.
The final rule amends the guidance for exemptions from SFP position limits by changing the reference to CFTC regulation 150.3, regarding exemptions to federal position limits, to CFTC regulation 150.5, regarding exchange-set limits. The final rule also adds guidance for exemptions from SFP position limits to permit a DCM to provide exemptions consistent with those of an NSE regarding securities options position limits or exercise limits.
The final rule amends the requirements for resetting levels of SFP position limits by changing the required review period from monthly to semi-annually; and imposing a requirement that a DCM must lower the position limit for an SFP if the data no longer justify a higher limit level. The final rule also makes clear that a DCM must adopt a position limit for an SFP if data no longer justify an exchange rule for position accountability in lieu of a position limit. The final rule continues to permit a DCM to use discretion as to whether to increase the level of a position limit for an SFP if the data justify a higher level.
The final rule establishes a general definition of estimated deliverable supply, consistent with the guidance on estimating deliverable supply in appendix C to part 38 of the Commission's regulations, and provides guidance on estimating deliverable supply that is specific to an SFP.
Lastly, the final rule establishes a definition of “estimated deliverable supply,” which reflects the general definition of deliverable supply in the Commission's appendix C to part 38, paragraph (b)(1)(i),
As a general matter, the Commission believes that the final rule will reduce costs relative to existing Commission regulation 41.25(a)(3),
However, the Commission notes that these costs will now be incurred only on a semi-annual basis rather than monthly
The Commission notes that under the final rule, DCMs have the discretion to implement the default position limit of 25,000 contracts, and that this may result in position limit levels in some contracts greater than 12.5 percent of deliverable supply. However, this discretion is limited by Core Principle 5 (which requires DCMs to set position limits at necessary and appropriate levels to deter manipulation) and by Core Principle 3 (which requires that DCMs only list contracts that are not readily susceptible to manipulation). To the extent that DCMs comply with these core principles, any such discretion regarding the setting of position limits should not impair the protection of market participants and the public or otherwise impose significant costs on the markets for SFPs or related securities.
To the extent that a DCM lists equity SFPs on deliverable baskets, the costs of implementing the amended position limit provisions for such SFPs would be similar to the costs of the analogous provisions for single stock SFPs. As compared to the existing rule, there is likely to be a small incremental cost to DCMs because a DCM would be required to apply a position limit or position accountability rule based on the security in the basket with the lowest estimated deliverable supply rather than the existing lowest average daily trading volume. The determination of estimated deliverable supply is expected to take more time and effort since it is not merely a formulaic number like “average daily trading volume” but instead may require additional subjective analysis. However, since DCMs do not currently list and trade any equity SFPs on deliverable baskets there will be no additional costs associated with the final rule at this time.
For a DCM that may list SFPs on debt securities, the final rule is expected to provide an incremental increase in costs as compared to the existing regulation. Under the current regulation, a DCM is permitted to list an SFP based on a debt security, however, the existing regulation does not specify the position limit or position accountability requirements for SFPs on debt securities largely due to the focus in the existing requirements on equity securities. As a result, a DCM could under the final rule set position limits or position accountability rules for SFPs on a single debt security based on the guideline of 12.5 percent of the par value of the estimated deliverable supply or for a basket of debt securities based on 12.5 percent of the par value of the debt security with the lowest estimated deliverable supply. However, a DCM could, if it has a reasonable basis, adopt a different approach for SFPs based on debt securities. The cost for DCMs applying this position limit framework will be mitigated by the systems currently in place for equity securities and the fact that DCMs do not currently list any SFPs on a single debt security or basket of debt securities.
To the extent that there is less publicly-available information related to the deliverable supply of debt securities, estimating deliverable supply may be more costly for debt securities than for equity securities. However, these costs will only be incurred in the event that a DCM begins listing SFPs on non-exempted debt securities. Moreover, these deliverable supply provisions are set out as guidance so that DCMs are free to implement less costly methods to comply with the rule, which provides only that SFPs on debt securities must have position limits. Although DCMs have not listed debt security SFPs to date, absent the changes to the regulation, it is theoretically possible that the costs associated with estimating deliverable supply or otherwise determining position limit levels may affect future decisions regarding whether or not to list such SFPs. The costs of the final rule for SFPs on debt securities would be otherwise similar to the costs of the final rule for equity SFPs.
The rule permitting DCMs to implement position limits on a net basis or on positions on the same side of the market (
The reduction in the time period during which position limits must be in effect from five to three days imposes no additional costs on DCMs, and the Commission believes the implementation costs for DCMs will be low. This change merely delays by two days the need for a hedger to apply for a hedge exemption and the DCM to process that hedge exemption request, if necessary. The establishment in the final rule of a required minimum position limit time period beginning no later than the first day that a holder of a long position may be assigned a delivery notice, if such period is longer than the last three trading days, in instances where the SFP permits delivery before the close of trading, currently imposes no costs since contracts of this nature are not currently listed for trading. If a DCM listed such contracts, the final rule would require market participants to incur the costs of complying with position limits or applying for hedge exemptions (and would require DCMs to incur the costs of reviewing such applications) earlier in the life of the contract than absent this rule.
The Commission does not believe that the final rule will impose any significant additional costs or burdens to the market or to market participants. The final rule is likely to impose incremental additional costs on market participants related to compliance, monitoring, and implementation. As noted above for DCMs, these costs may include the monitoring of positions in the SFP and related underlying security; related filing, reporting, and recordkeeping requirements; and the costs of changes to information technology systems. It is likely that these additional costs of the rule will be significantly mitigated because market participants that currently engage in the SFP market are required to comply with existing comparable requirements.
DCMs that list SFPs may adopt position limits that are either equivalent to the default level for security options (
The Commission from time-to-time reviews its regulations to help ensure they keep pace with technological developments and industry trends, and to reduce regulatory burden where needed. The final rule will provide to DCMs greater flexibility to adopt SFP position limits that they deem to be appropriate while not having an adverse effect on market integrity. In this respect, the Commission believes that DCMs will adopt position limits that are large enough not to significantly inhibit liquidity, but also appropriate to mitigate potential manipulations and other concerns that may be associated with overly large positions in SFPs in line with the Core Principles. Moreover, to the extent that the final rule would lead to position limits that are higher than current position limits, the final rule could alleviate the costs to hedgers of filing hedge exemption requests for positions that are larger than a current position limit, but lower than a new position limit under the final rule. The Commission notes, however, that, based on an analysis by Commission staff, there do not appear to have been any positions in SFPs during calendar year 2018 that exceeded current position limits, although there were some SFP positions in 2017 that did exceed current position limits.
The Commission believes that the provision requiring DCMs to set position limits and accountability based on deliverable supply estimates calculated no less frequently than semi-annually should help ensure on an ongoing basis that position limits and accountability are set at levels that are necessary and appropriate to deter manipulation consistent with DCM Core Principles 3 and 5. OneChicago supported this aspect of the proposal, noting that resetting position limits on a monthly basis as required by current rules provides very little value.
The final rule permits DCMs to implement position limits on a net basis or on positions on the same side of the market (such as physically-delivered or cash-settled contracts on the same security, should a DCM ever list both types of contracts) and gives DCMs the discretion to choose the alternative they deem appropriate as constrained by DCM core principles, meaning DCMs are unlikely to alter their position limit rules in this regard unless they determine doing so would be beneficial.
The final rule establishes a required minimum position limit time period beginning no later than the first day that a holder of a long position may be assigned a delivery notice, if such period is longer than the last three trading days, where the SFP permits delivery before the close of trading. This provision will ensure that such contracts are subject to appropriate position limits or position accountability during the entire delivery period. Although DCMs do not currently list for trading SFPs of this nature, any future listings would benefit from this change. Reducing the minimum position time limit period from the last five trading days to the last three trading days, while also likely raising limits levels for SFPs, may also reduce monitoring and compliance costs for traders.
The Commission believes that the final rule maintains the protection of market participants and the public provided by the current regulation. The final rule will continue to protect market participants and the public by maintaining the requirement that DCMs that list SFPs adopt and enforce appropriate position limits or position accountability consistent with DCM Core Principle 5 and implementing for SFPs the longstanding Commission policy that spot-month position limits should be set based on estimates of deliverable supply. Linking the levels of position limits and position accountability to deliverable supply for equity securities that have an estimated deliverable supply of more than 20 million shares protects market participants and the public by helping prevent congestion, manipulation, or other problems that can be associated with speculative positions in expiring contracts that are overly large relative to deliverable supply. While DCMs will have the discretion to implement the default position limit of 25,000 contracts regardless of deliverable supply, and this may result in position limit levels in some contracts greater than 12.5 percent of deliverable supply, DCMs continue to be required to comply with core principle 3, which states that DCMs shall only list contracts for trading that are not readily susceptible to manipulation, and core principle 5, which requires that positon limits and accountability be set at levels that reduce the threat of manipulation or congestion.
As noted above, DCMs that list other commodity futures contracts providing for delivery after the termination of trading have adopted position limits during the last few days of trading. These DCMs have demonstrated that the underlying cash market and market participants can be protected from congestion and squeezes entering the delivery period for these contracts. Likewise, the Commission believes that the underlying equities market and market participants also can continue to be protected from market manipulation and other distortions after decreasing to three days the time period during which position limits are in effect prior to the termination of trading.
As discussed above, it is reasonable to anticipate that many or most SFPs will be subject to higher position limits under the final rule compared to the current position limits. Therefore, hedgers may be able to take larger positions without the need to apply for hedge exemptions. This also could alleviate a DCM's need to review hedge exemptions, improving resource allocation efficiency for exchanges and certain market participants. Moreover, with less restrictive position limits, it is theoretically possible that more traders could be enticed into the market and
The current position limit regulation for SFPs (a default of 13,500 contracts) often leads to position limits that are tighter than analogous position limits for security options (a default of 25,000 contracts). The final rule raises the default limit level in equity SFPs to match that for security options. More closely aligning the position limits in SFPs to those in securities options may help to enhance the competitiveness of the SFP market relative to the security options market.
The Commission believes that price discovery occurs in the liquid and transparent security markets underlying existing SFPs rather than the relatively low-volume SFPs themselves. Nevertheless, as noted above, to the extent that trading activity in SFP markets increases due to less restrictive position limits, the price discovery function of SFPs could be enhanced by reducing liquidity risk and thereby facilitating arbitrage between the underlying security and SFP markets.
The current position limit regulation often leads to position limits that are tighter than analogous position limits for security options. It is conceivable that this could encourage potential hedgers or other risk managers to use security options rather than SFPs because of burdens associated with the SFP's hedge exemption process. Risk managers might also find that the liquidity risk in the current SFP market is too high, due to a lack of speculators in the SFP market (among other causes). In this regard, it is possible that the current position limits might be too tight for speculators to perform adequately their role of providing liquidity in a futures market. Because the final rule raises the default limit to 25,000 contracts to match the default in security options, and thus would likely lead to higher position limits for many SFPs, it is possible that both risk managers and speculators enter or increase trading in the SFP market.
The Commission has not identified any additional public interest considerations associated with the final rule.
The Commission considered the various alternatives put forth in comments. These considerations are discussed in this section. The Commission notes as a general matter that while SFPs are commonly used for securities lending transactions that are eligible for hedge exemptions, SFPs could be used for speculation in the future and that Core Principle 5 requires speculative position limits or accountability as appropriate.
OneChicago stated that position limits should only be in effect on expiration day rather than the last five trading days as under current rules and under the proposed rules.
OneChicago also stated that the Commission should authorize position accountability for all SFPs on ETFs and stated that estimated deliverable supply and trading volume are unsuitable metrics for ETFs because authorized participants can increase or decrease the number of shares.
OneChicago also recommended that position limits be set based on 25 percent of estimated deliverable supply, as opposed to the 12.5 percent proposed by the Commission because, in the Exchange's view, there is no justification for a lower level, other than the misconception that SFPs and security options compete.
The Commission invited comment on whether to adopt a rule that would permit DCMs to adopt position limits equivalent to the level of corresponding security option position limits on the same security.
OneChicago opined that the current position limit framework is “sufficient to give innovators a clear view of regulation in the SSF marketplace,” and that issuing regulations for SFPs that currently are not listed for trading “would risk stifling innovation.”
CEA section 15(b) requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the objectives, polices, and
The Commission has determined that the final rule is not anticompetitive and has no anticompetitive effects. In the Proposal, the Commission requested comment on whether there are less anticompetitive means of achieving the relevant purposes of the CEA that would further the objective of the Proposal, such as leveling the regulatory playing field between SFPs and security options listed on NSEs. As noted above, OneChicago argued that it is not appropriate to regulate derivatives containing optionality similarly to derivatives not containing optionality. The Exchange noted different regulation of Delta One derivatives traded on a DCM and Delta One derivatives traded overseas or OTC creates an uneven playing field. The Commission notes, however, that given the statutory constraints that require similar regulation of SFPs and security options, discussed above, the Commission has not identified any less anticompetitive means of achieving the purposes of the CEA.
Brokers, Position accountability, Position limits, Reporting and recordkeeping requirements, Securities, Security futures products.
For the reasons discussed in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 41 as follows:
Sections 206, 251 and 252, Pub. L. 106-554, 114 Stat. 2763, 7 U.S.C. 1a, 2, 6f, 6j, 7a-2, 12a; 15 U.S.C. 78g(c)(2).
The addition and revisions read as follows:
(a)
(b) * * *
(3)
(i)
(A) For a security futures product on a single equity security where the estimated deliverable supply of the underlying security exceeds 20 million shares, a designated contract market may adopt, if appropriate in light of the liquidity of trading in the underlying security, a position limit no greater than the equivalent of 12.5 percent of the estimated deliverable supply of the underlying security, either net or on the same side of the market, applicable to positions held during the last three trading days of an expiring contract month; or
(B) For a security futures product on a single equity security where the six-month total trading volume in the underlying security exceeds 2.5 billion shares and there are more than 40 million shares of estimated deliverable supply, a designated contract market may adopt a position accountability rule in lieu of a position limit, either net or on the same side of the market, applicable to positions held during the last three trading days of an expiring contract month. Upon request by a designated contract market, traders who hold positions greater than 25,000 100-share contracts (or the equivalent if the contract size is different than 100 shares), or such lower level specified pursuant to the rules of the designated contract market, must provide information to the designated contract market and consent to halt increasing their positions when so ordered by the designated contract market.
(ii)
(iii)
(iv)
(v)
(vi)
(A) If the estimated deliverable supply data supports a lower speculative limit for a security futures product, then the designated contract market shall lower the position limit for that security futures product pursuant to the submission requirements of § 41.24. If the data require imposition of a reduced position limit for a security futures product, the designated contract market may permit any trader holding a position in compliance with the previous position limit, but in excess of the reduced limit, to maintain such position through the expiration of the security futures contract; provided, that the designated contract market does not find that the position poses a threat to the orderly expiration of such contract.
(B) If the estimated deliverable supply or six-month total trading volume data no longer supports a position accountability rule in lieu of a position limit for a security futures product, then the designated contract market shall establish a position limit for that security futures product pursuant to the submission requirements of § 41.24.
(C) If the estimated deliverable supply data supports a higher speculative limit for a security futures product, as provided under paragraph (b)(3)(i)(A) of this section, then the designated contract market may raise the position limit for that security futures product pursuant to the submission requirements of § 41.24.
(vii)
(c) * * *
(2) Notwithstanding paragraph (c)(1) of this section, if an opening price for one or more securities underlying a security futures product is not readily available, the final settlement price of the security futures product shall fairly reflect:
(i) The price of the underlying security or securities during the most recent regular trading session for such security or securities; or
(ii) The next available opening price of the underlying security or securities.
(3) Notwithstanding paragraph (c)(1) or (2) of this section, if a derivatives clearing organization registered under section 5b of the Act or a clearing agency exempt from registration pursuant to section 5b(a)(2) of the Act, to which the final settlement price of a security futures product is or would be reported determines, pursuant to its rules, that such final settlement price is not consistent with the protection of customers and the public interest, taking into account such factors as fairness to buyers and sellers of the affected security futures product, the maintenance of a fair and orderly market in such security futures product, and consistency of interpretation and practice, the clearing organization shall have the authority to determine, under its rules, a final settlement price for such security futures product.
(e)
(a)
(2) For a debt security, deliverable supply should not include securities that are committed for long-term agreements (
(3) Further guidance on estimating deliverable supply, including consideration of whether the underlying security is readily available, is found in appendix C to part 38 of this chapter.
(b)
(i) May set the level of a position limit to that of a similar narrow-based equity index option listed on a national security exchange or association; or
(ii) Should consider the deliverable supply of equity securities underlying the index, and should consider the index weighting and contract multiplier.
(2)
(c)
(2)
(d)
(e)
The following appendix will not appear in the Code of Federal Regulations.
On this matter, Chairman Tarbert and Commissioners Quintenz, Behnam, Stump, and Berkovitz voted in the affirmative. No Commissioner voted in the negative.
Federal Highway Administration (FHWA), U.S. Department of Transportation (DOT).
Final rule.
The FHWA is revising its regulations to provide greater flexibility for States to use proprietary or patented materials in Federal-aid highway projects. This final rule rescinds the requirements limiting the use of Federal funds in paying for patented or proprietary materials, specifications, or processes specified in project plans and specifications, thus encouraging innovation in transportation technology and methods.
This final rule is effective October 28, 2019.
Mr. John Huyer, Office of Preconstruction, Construction, and Pavements, (720) 437-0515, or Mr. William Winne, Office of the Chief Counsel, (202) 366-1397, Federal Highway Administration, 1200 New Jersey Avenue SE, Washington, DC 20590. Office hours are from 8 a.m. to 4:30 p.m., e.t., Monday through Friday, except Federal holidays.
This document, the notice of proposed rulemaking (NPRM), supporting materials, and all comments received may be viewed online through the Federal eRulemaking portal at
The FHWA is revising its regulations at 23 CFR 635.411 to provide greater flexibility for States to use patented or proprietary materials in Federal-aid highway projects. Based on a century-old Federal requirement, the outdated requirements in 23 CFR 635.411(a)-(e) are being rescinded to encourage innovation in the development of highway transportation technology and methods. As a result, State Departments of Transportation (State DOTs) will no longer be required to provide certifications, make public interest findings, or develop research or experimental work plans to use patented or proprietary products in Federal-aid projects. Federal funds participation will no longer be restricted when State DOTs specify a trade name for approval in Federal-aid contracts. In addition, Federal-aid participation will no longer be restricted when a State DOT specifies patented or proprietary materials in design-build Request-for-Proposal documents.
The FHWA published an NPRM titled “Construction and Maintenance—Promoting Innovation in Use of Patented and Proprietary Products” at 83 FR 56758 on November 14, 2018. The NPRM offered two alternative deregulatory options relating to the use of patented and proprietary products. The use of these products has been limited by regulation for over a century (since 1916), and FHWA undertook this rulemaking in an effort to increase innovation and reduce regulatory burdens. The first option (Option 1) proposed removing the requirements of 23 CFR 635.411(a)-(e) and replacing them with a general certification requirement ensuring competition in the selection of materials and products. Alternatively, the second option (Option 2) proposed to rescind the patented and proprietary materials requirements of 23 CFR 635.411(a)-(e) and change the title of section 635.411 to “Culvert and Storm Sewer Materials Types.” Under its new title, the former paragraph (f) of section 635.411 would be retained to fulfill the mandate of section 1525 of the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Pub. L. 112-141, 126 Stat. 405, July 6, 2012) for States to retain autonomy for the selection of storm sewer material types.
The NPRM solicited comments regarding this deregulatory initiative. The FHWA received 107 comments to the docket, including comments from 16 State DOTs, 14 associations, 22 manufacturers or suppliers, 4 construction companies, and numerous individuals. The FHWA considered all comments received before the close of business on the comment closing date, and the comments are available for examination in the docket (FHWA-2018-0036) at
After consideration of the comments, FHWA selected Option 2 for the reasons summarized below. Option 2 reduces the regulatory burden on the States, fosters innovation in highway transportation technology, and provides greater flexibility for State DOTs in making materials and product selections in planning Federal-aid highway projects.
Commenters argued Option 2 (rescinding the patented and proprietary materials requirements) better serves the purpose of decreasing unnecessary regulatory burdens on the States. These commenters argue Option 2 eliminates unnecessary regulatory and administrative burdens imposed by the existing regulations. Commenters who support Option 2 further argued that if an objective of the NPRM is to reduce regulatory and administrative burdens imposed on the States by the existing regulation, those burdens should not be replaced by new ones as proposed under Option 1 (replacing existing regulations with a general certification requirement). For example, the American Association of State Highway and Transportation Officials (AASHTO) commented that about half of its member State DOTs consider the paperwork required under the current regulation to be difficult and lengthy. Several State DOTs reported difficulty in: (1) Proving to FHWA Division Offices the availability or non-availability of competitive products; (2) providing the benefit of using one
Commenters also reported that at least some State DOTs are reluctant to request Public Interest Findings (PIF) or develop experimental product work plans (hereinafter: Proprietary product approval process) to use patented and proprietary materials in Federal-aid projects because they see it as time consuming, cumbersome, and believe it increases overhead costs. One State DOT commented that the proprietary product approval process causes delays by adding layers of approval between the State DOTs and FHWA. The same State DOT further commented it is difficult to determine the availability of equally suitable products under the existing regulation.
Commenters expressed concerns that the existing regulation imposes undue administrative burdens on the States relating to documenting and justifying the use of patented and proprietary products under the current proprietary product approval process. Rescinding the current regulation, FHWA believes, is consistent with reducing the time—consuming and cumbersome process that commenters believe increases overhead costs.
The FHWA agrees Option 2 best reduces unnecessary regulatory and administrative burdens on the States. State DOTs are responsible for the effective and efficient use of Federal-aid funds, subject to the requirements of Federal law. The FHWA believes, absent the existing regulation governing patented and proprietary products, State DOTs may implement material selection procedures that ensure fair and open competition while allowing for, and encouraging, innovation. The statutory requirements of 23 U.S.C. 112 for competition and competitive bidding continue to apply to federally assisted projects.
In addition, this proposal could generate cost savings resulting from reduced administrative burden associated with the efforts by the States and FHWA related to the existing methods for approving patented and proprietary materials. These cost savings, measured in 2018 dollars, are expected to be $313,848 per year.
After reviewing the comments received, FHWA is persuaded that rescinding the existing regulation would achieve the goal of reducing an unnecessary regulatory or administrative burden on the States, where such regulations or burdens are outdated or no longer serve an important public purpose. The FHWA is further persuaded that rescinding the existing regulation's requirement to identify equally suitable alternatives may reduce project planning delays.
Commenters who supported Option 2 also cited four primary reasons related to promoting innovation: (1) Option 2 would eliminate the existing regulation, which is a barrier to innovation; (2) Option 2 would best foster and accelerate innovation in the future; (3) Option 2 encourages innovation that may improve transportation systems relating to: (a) Safety; (b) quality, resilience, performance, durability, and service life of transportation facilities; (c) efficiency and cost-effectiveness of repairs, treatment, maintenance, preservation, rehabilitation, reconstruction, or replacement of highway facilities; (d) minimizing congestion; and (e) implementing autonomous vehicle (AV) technology; and (4) Option 2 would best fulfill the Federal Government's important role in supporting research and development leading to improvements in highway transportation technology.
Some commenters argued that the existing regulation is a barrier to innovation in highway technology. For example, one State DOT commented that the current regulation has created an industry perception that certain innovative products are excluded from federally funded highway projects. Commenters supporting Option 2 generally argued that FHWA should promote, encourage, and accelerate innovation and the improvements that may follow.
One commenter argued that fostering a competitive market for these products may lead to lower prices on old products as new ones become available. Another commenter argued that innovative products can lower the overall project cost or future maintenance costs. For example, by increasing the useful life of transportation facilities, the commenter argues, innovative products may both reduce the cost of maintenance and increase safety.
The AASHTO commented that a regulatory change would provide greater flexibility in approving connected and AV components that are certain to incorporate more proprietary and patented components than traditional highway products. One commenter suggested Option 2 may encourage development of AV technology, and suggested the proprietary product approval process under the existing regulation is not suitable for accelerated development of AV technology.
The FHWA agrees Option 2 best provides State DOTs greater flexibility to use innovative technologies in highway transportation. The Agency is persuaded by comments that rescinding the regulation may accelerate innovation in planning Federal-aid projects by removing a requirement that may have been a “barrier” to innovation in highway transportation technology. Moreover, FHWA believes that the specification of innovative, higher-performing products will encourage others in the industry to develop and market products with comparable performance. This will ultimately result in a lower cost for the higher performing product due to the greater availability in the market.
Commenters who supported Option 2 also cited two primary reasons related to its ability to provide flexibility for States. First, commenters argued that the existing regulation limits their flexibility on materials selection. Next, commenters also argued that, considering the uncertainty regarding how Option 1 would be administered by FHWA, it could also limit the flexibility of State DOTs.
Multiple commenters argued the existing regulation lacks flexibility. Multiple commenters observed that the existing regulation is too restrictive, complicated, unclear, time-consuming, and not consistently implemented by State DOTs and FHWA. For example, certain State members of AASHTO that support Option 2 commented about difficulties they encountered under the current regulation. Some of these State DOTs cited difficulties in completing the paperwork for use of patented or proprietary products to the satisfaction of the relevant FHWA Division Office. Those States also cited related difficulties in successfully obtaining Federal participation after the paperwork was submitted.
The AASHTO commented that some of its member State DOTs have experienced variability in dealing with FHWA Division Offices. Certain State DOTs believe that division offices interpret the existing regulation inconsistently among States. The AASHTO maintains that, while some division offices provide more leeway, others do not recognize the State's prerogative to certify patented and proprietary products and, in some instances, have discouraged them from doing so. Some commenters also argued that some State DOTs are reluctant to use the proprietary product approval process because they perceive it as too cumbersome and time consuming.
Commenters also argued that Option 2 would provide the most flexibility to the States. Multiple State DOTs commented that Option 1 may not adequately unburden States from current regulatory restrictions in this area—and thus may not increase flexibility, or at least not in a way comparable to Option 2. Several State DOTs, including Oregon, Washington, Idaho, Montana, North Dakota, South Dakota, and Wyoming, expressed support for Option 2 as providing the most flexibility. One commenter argued that Option 2 would provide State DOTs with the most flexibility to determine which products are the best fit for their own unique transportation needs.
The FHWA agrees Option 2 best provides flexibility to State DOTs in selecting materials for use in Federal-aid highway projects. A common theme among the comments indicated that the level of effort necessary to comply with the existing regulation is time consuming, cumbersome, and imposes undue administrative “paperwork” burdens on the States.
The added flexibility provided to States by this rescission may also provide State DOTs an advantage by potentially obtaining highway materials or products at a lower price. Specifying a patented article in the solicitation materials would not, by itself, limit competition.
The FHWA believes State DOTs utilize new product evaluation processes and approved product lists that provide fair and transparent procedures for the evaluation, selection, and use of materials, including patented and proprietary products.
The FHWA is persuaded that rescinding the existing regulation provides needed flexibility to the States to manage Federal financial assistance under 23 U.S.C. 145.
Under Option 1 of the NPRM, the existing regulatory requirements of 23 CFR 635.411(a)-(e) were proposed for removal. The FHWA proposed replacing them with general certification requirements in new paragraphs 23 CFR 635.411(a) and 23 CFR 630.112(c)(6) to ensure competition in the selection of materials and products. This change would have required a State DOT to: (1) Implement procedures and specifications that provide for fair, open, and transparent competition awarded only by contract to the lowest responsive bid submitted by a responsible bidder pursuant to 23 U.S.C. 112; and (2) certify adherence to those procedures and specifications.
Commenters who supported Option 1, including some State DOT members of AASHTO, argued that one of its benefits is that FHWA would create regulations establishing a general framework for the State processes and would provide for greater consistency across the country as compared to Option 2. Those commenters expressed a preference for consistency that would promote competition and provide more transparency regarding Federal-aid decisionmaking compared to Option 2. The commenters expressed the belief that manufacturers might better understand the protocols for the use of patented and proprietary materials under a national framework. One State DOT compared the patented and proprietary rules to the design exception process. It argued that process is well defined and it could be used as a model if FHWA adopts Option 1.
Another commenter argued the existing regulation is misunderstood with respect to competition requirements. The commenter believes that arguments that the existing regulation stifles innovation and patented and proprietary products cannot be used in Federal-aid projects are incorrect. The commenter further stated that patented and proprietary materials can be used in Federal-aid projects based on a proper justification, those justifications provide a critical oversight function, and they guard against the imposition of sole-source specifications that restrict competition. The same commenter further argued the existing regulation provides a safeguard that when data is obtained through independent experimentation of new transportation technology, better and more objective evidence about its effectiveness is available as compared to a vendor's sales or promotional material.
Commenters opposing Option 1 suggested, among other things: (1) Existing requirements discourage State DOTs from using patented and proprietary products to improve highway transportation technology, and this may continue under new requirements established by Option 1; (2) State DOTs are confused by the current requirements for certifications to obtain approval for the use of patented and proprietary products and similar confusion may continue under the as-yet-undefined certification process for Option 1; (3) the existing process for certification is unduly complicated and time consuming, and there is no indication Option 1 would resolve this; and (4) the term “fair, open, and transparent competition” lacks clarity and would require new regulation to define the term. Commenters also expressed the belief that the existing regulations are outdated, unclear, and not applied uniformly.
Comments about Option 1 lacking clarity with respect to the definition of the term “fair, open, and transparent competition” were not considered by FHWA as they were speculative in nature. However, after considering comments submitted to the docket, FHWA agrees Option 1 is not the appropriate regulatory alternative to finalize as part of this rulemaking. The FHWA notes that rescinding the existing regulations without replacing them with a new certification process better reduces regulatory burdens on the States, fosters greater innovation in highway transportation technology, affords greater flexibility to the States for materials selection in Federal-aid highway projects, and is consistent with the statutory authority provided under 23 U.S.C. 106(c). In addition, rescinding the existing regulation affords deference to the States to determine which projects are subject to Federal financial assistance pursuant to 23 U.S.C. 145.
Commenters who supported either Option 1 or the existing regulation cited two primary reasons why they believed that Option 2 constitutes a harm to competition. First, commenters argued that under Option 2 suppliers of patented products may control prices. Next, commenters also argued that the bidding process may be manipulated under Option 2 by limiting access to certain proprietary products or offering inconsistent pricing.
Similarly, some commenters who supported either Option 1 or the existing regulation also argued that Option 2 would eliminate nationwide consistency on requirements for competition. Some commenters argued that Option 1 would provide adequate nationwide consistency while others preferred the existing regulation and argued that it should be maintained. Some commenters argued that a uniform standard under Option 1 would also benefit product manufacturers that operate in multiple States.
In contrast to commenters raising concerns about competition, many commenters supporting Option 2 argued that it is improper to speculate about competition problems in advance of the regulatory change. There is no basis, they argued, for FHWA to simply presume that Option 2 would create a problem. These commenters either argued that no problem was likely to arise or suggested that FHWA should first remove the existing regulation and
Commenters supporting Option 2 also pointed to the standards found in the Office of Management and Budget's (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. These commenters argued that reliance on OMB's regulations would adequately ensure that a State's specification of a patented or proprietary product complies with the competition mandate in 23 U.S.C. 112.
The FHWA acknowledges the commenters who argued that, under Option 2, suppliers of patented products may control prices, but these concerns are speculative. Some commenters attempted to compare the Federal-aid highway program to the prescription drug industry in this regard, but these markets are inherently different. The FHWA believes that States, as responsible stewards of the limited amount of Federal funding apportioned to them, have an incentive not to waste limited resources on proprietary products that would have costs exceeding demonstrated benefits. It is important to note that this final rule does not require States to use proprietary products, and FHWA believes that States would not choose to do so unless there are benefits that exceed the costs associated with the use of such products. States, as rational market actors, are best situated to make this determination on a case-by-case basis as they consider whether a proprietary product would fit a specific programmatic need.
In response to comments regarding competition, many States already have procedures established under State law or regulation relating to competition for federally assisted contracts, and the use of patented and proprietary materials in Federal-aid projects. Nevertheless, ensuring competition and requiring awards to the lowest responsive bidder in the Federal-aid highway program remain statutory duties of the Secretary and the statutory requirements of 23 U.S.C. 112 continue to apply to Federal-aid assisted State contracts. As long as the contract specifications are clear in terms of what materials the State DOT requires, it remains the responsibility of any prospective bidder to find materials that are responsive to the applicable contract specification. Concerns relating to potential prosecution of anticompetitive legal actions is speculative and outside the scope of FHWA's authority.
Some commenters supported retaining the existing regulation and expressed support for the current process for using patented and proprietary materials in Federal-aid projects. Those commenters included five State DOTs, one industry association, and three manufacturers. The commenters expressed the belief that the regulation should not be changed and existing procedures allow State DOTs to justify the use of innovative, patented, or proprietary products. They went on to express the belief the existing regulation works well and strikes an appropriate balance between ensuring competition while allowing the use of patented and proprietary products based on a documented proprietary product approval.
As noted above, FHWA believes that cost savings would result if the requirements at 23 CFR 635.411(a) through (e) are rescinded by this rulemaking. In addition, State DOTs remain responsible for the effective and efficient use of Federal-aid funds, and continue to be subject to the statutory requirements of 23 U.S.C. 112 for competition and competitive bidding.
The FHWA has determined that this action is not a significant regulatory action within the meaning of Executive Order (E.O.) 12866, and within the meaning of the U.S. Department of Transportation's regulatory policies and procedures. This action complies with E.O.s 12866, 13563, and 13771 to improve regulation. The FHWA anticipates that the economic impact of this rulemaking would be minimal. The FHWA anticipates that the rule would not adversely affect, in a material way, any sector of the economy. In addition, these changes would not interfere with any action taken or planned by another agency and would not materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs.
Although FHWA has determined that this action would not be a significant regulatory action, this action is considered an E.O. 13771 deregulatory action. This action could generate cost savings that are applicable to offsetting the costs associated with other regulatory actions as required by E.O. 13771. These cost savings, measured in 2018 dollars, are expected to be $313,848 per year.
The cost savings resulting from this action result from reduced administrative burden associated with the efforts by the States and FHWA related to the existing methods for approving patented and proprietary materials.
Currently, there are three methods available to approve specific patented and proprietary products for use on Federal-aid highway construction projects:
1. Certification: A certification is the written and signed statement of an appropriate contracting agency official certifying that a particular patented or proprietary product is either:
a. Necessary for synchronization with existing facilities; or
b. A unique product for which there is no equally suitable alternative.
2. Experimental Products: If a contracting agency requests to use a proprietary product for research or for a distinctive type of construction on a relatively short section of road for experimental purposes, it must submit an experimental product work plan for review and approval. The work plan should provide for the evaluation of the proprietary product, and where appropriate, a comparison with current technology.
3. Public Interest Finding: A PIF is an approval by the FHWA Division Administrator, based on a request from a contracting agency that it is in the public interest to allow the contracting agency to require the use of a specific material or product even though other equally acceptable materials or products are available.
To estimate the cost savings from removing the need for the above categories of approvals, FHWA estimated the number of new approvals that would be generated in the future in the above categories if the rule does not change as a baseline scenario and compared it to the scenario in the final rule. The estimated number of new approvals per year is multiplied by the estimated number of hours required to process the documentation for that specific type of approval (including conducting analysis and documenting methods and results) by the appropriate labor cost (wage rate multiplied by a factor to account for employer provided benefits). Currently, the work related to
Under the final rule, the costs associated with approvals for patented and proprietary materials may not be completely removed. This is because twelve States are believed (according to information from FHWA Division offices) to have their own laws or policies that are similar to existing FHWA requirements. Absent other information, this analysis assumes those State laws or policies would remain in place even after an FHWA rule change. For those States, this analysis assumes that the total number of hours associated with processing and managing approvals would remain unchanged but that the work would be conducted solely by State agency staff (rather than a mix of State and FHWA staff as is assumed in the baseline calculations) and that time spent on FHWA review would no longer be needed.
In addition to the cost savings that have been quantified here, there may be additional positive impacts from the rulemaking related to supporting the adoption of patented and proprietary products. Although FHWA has undertaken various efforts to grant States the flexibility to use such products, to the extent that the current rules and guidance discourage their use, the final rule removes those barriers. Since patented and proprietary products are/may be more expensive than non-proprietary alternatives, this could lead to States paying more for proprietary and patented products if certain products are specified in Federal-aid contracts. However, ARTBA, in its petition for repeal, states that such products could “save lives, minimize congestion, and otherwise improve the quality of our Nation's highways.”
In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601- 612), FHWA has evaluated the effects of this action on small entities and has determined that the action is not anticipated to have a significant economic impact on a substantial number of small entities. The amendment addresses obligation of Federal funds to States for Federal-aid highway projects. As such, it affects only States and States are not included in the definition of small entity set forth in 5 U.S.C. 601. Therefore, the Regulatory Flexibility Act does not apply, and FHWA certifies that the action will not have a significant economic impact on a substantial number of small entities.
This rule would not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48, March 22, 1995) as it will not result in the expenditure by State, local, Tribal governments, in the aggregate, or by the private sector, of $155 million or more in any 1 year (2 U.S.C. 1532
This action has been analyzed in accordance with the principles and criteria contained in E.O. 13132 dated August 4, 1999, and FHWA has determined that this action would not have a substantial direct effect or sufficient federalism implications on the States. The FHWA has also determined that this action would not preempt any State law or regulation or affect the States' ability to discharge traditional State governmental functions.
Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing E.O. 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501,
The FHWA has analyzed this action for the purpose of the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321
The FHWA has analyzed this rule under E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. The FHWA does not anticipate that this action would affect a taking of private property or otherwise have taking implications under E.O. 12630.
This action meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. The FHWA certifies that this action would not cause an environmental risk to health or safety that might disproportionately affect children.
The FHWA has analyzed this action under E.O. 13175, dated November 6, 2000, and believes that the action would not have substantial direct effects on one or more Indian Tribes; would not impose substantial direct compliance costs on Indian Tribal governments; and would not preempt Tribal laws. The rulemaking addresses obligations of Federal funds to States for Federal-aid highway projects and would not impose
We have analyzed this action under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The FHWA has determined that this is not a significant energy action under that order since it is not a significant regulatory action under E.O. 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required.
A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in the spring and fall of each year. The RIN number contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.
Grant programs, transportation, highways and roads.
Construction materials, Design-build, Grant programs, transportation, highways and roads.
In consideration of the foregoing, FHWA amends 23 CFR part 635 as follows:
Sections 1525 and 1303 of Pub. L. 112-141, Sec. 1503 of Pub. L. 109-59, 119 Stat. 1144; 23 U.S.C. 101 (note), 109, 112, 113, 114, 116, 119, 128, and 315; 31 U.S.C. 6505; 42 U.S.C. 3334, 4601
State Departments of Transportation (State DOTs) shall have the autonomy to determine culvert and storm sewer material types to be included in the construction of a project on a Federal-aid highway.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary special local regulation for certain waters of the Intracoastal Waterway. This action is necessary to provide for the safety of life on these navigable waters in Venice, FL, during the Battle of the Bridges event. This rulemaking would prohibit persons and vessels from being in the race area unless authorized by the Captain of the Port St. Petersburg (COTP) or a designated representative.
This rule is effective from 7:30 a.m. until 4 p.m. on September 28, 2019.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Marine Science Technician First Class Michael Shackleford, U.S. Coast Guard; telephone 813-228-2191, email
On February 2, 2019, the Sarasota Scullers Youth Rowing Program notified the Coast Guard that it would be conducting the Battle of the Bridges sculler race from 6 a.m. to 6 p.m. on September 28, 2019. The race will take place on portions of the Intracoastal Waterway (ICW) in Venice, FL. In response, on August 2, 2019, the Coast Guard published a notice of proposed rulemaking (NPRM) titled, “Special Local Regulation; Battle of the Bridges, Intracoastal Waterway; Venice, FL” (84 FR 37808). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this fireworks display. During the comment period that ended September 3, 2019, we received eighty-five comments.
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port St. Petersburg (COTP) has determined that potential hazards associated with the rowing event on September 28, 2019 will be a safety concern for anyone within the special local regulation area. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the scheduled event.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard received eighty-five submissions from private citizens in response to the proposed rule. Forty-two commenters endorsed the Coast Guard's proposal. Forty-three commenters were opposed to the proposed rule for various reasons, discussed below.
Twenty-two comments expressed concerns about the monetary loss of several businesses and their employees that fall within the boundaries of this temporary special local regulation. The commenters stated businesses would lose customers due to the 12 hours the ICW would be closed as proposed in the regulatory text.
Twenty comments expressed concerns about not having access to the ICW during this event. The commenters stated that the ICW, and the public boat ramps along the ICW, would be closed for the duration of the event and the proposed regulatory text would not
Seven comments expressed concerns about not being able to access the Marine Max Marina located along the ICW during this event. The commenters stated that the marina would be inaccessible while the ICW was closed for the event.
Nine comments expressed concern regarding the event being too long. The commenters stated that the proposed twelve hour closure of the ICW for the event was too long and that event should be shortened.
Five comments expressed concern regarding there being no alternative routes around the closed section of the ICW. The commenters stated that the regulatory text did not provide another route for vessel traffic to take around the event.
Twelve comments expressed concern regarding the safety of boaters who may choose to transit into the Gulf of Mexico in order to get around the closed section of the ICW. These commenters expressed concerns about general boating and boating safety knowledge as well as the potential for adverse weather affecting the gulf waters. The Coast Guard has taken these concerns into consideration and has determined to only close the ICW when the event is actively taking place. The closure times of the ICW are being modified to accommodate the opening of the ICW to allow for morning, midday, and afternoon vessel transits. This modification, while not providing an alternate route, does allow for times when vessels can transit the ICW. This modification will reduce the effective closure time of the ICW by approximately 4 and a half hours, which will allow businesses an opportunity to remain open the day of the event. These openings will allow for vessels to transit to and from the marina while the ICW remains open. This modification allows for times when vessels can transit the ICW instead of navigating into the Gulf of Mexico. The Venice Police Department confirmed that there are 4 other boats ramps in the area of the event that can be used as alternate boat ramps during this event. In the event of inclement weather, a Coast Guard designated representative reserves the right to cancel the event, which would open the ICW up to normal vessel traffic.
Twenty-two comments expressed concern regarding the ICW not being a suitable location to hold this event. The commenters stated that there was a nearby rowing venue that was constructed for such rowing events. These comments are outside of the scope of this rulemaking as the Coast Guard is not involved in the process of selecting a venue for a sponsor's proposed event.
Seven comments expressed concern regarding the event taking place on a bad day of the week. The commenters stated that a Saturday is not a suitable day to host an event in the ICW and that it should have been on a weekday instead. These comments are outside of the scope of this rulemaking as the Coast Guard is not involved in the process of selecting a day to hold a sponsor's proposed event.
One comment was expressed regarding the event being hazardous to the marine environment. The commenter expressed concerns that a proper environmental review was not performed and that the use of mooring balls and lane markers for the event would endanger manatees and sea turtles. The National Environmental Policy Act requires federal agencies to consider the impacts to the human environment for events such as these. A Record of Environmental Consideration was completed for this event after the Coast Guard consulted with numerous environmental agencies, including U.S. Fish and Wildlife Service, Florida Department of Environmental Protection, Army Corps of Engineers, and the Florida Fish and Wildlife Conservation Commission. This is addressed in section V. F. “Environment” below.
We received seventeen comments that were generally negative towards the event, and while noted, they are beyond the scope of the rulemaking process.
This rule contains one minor change in the regulatory text from the NPRM. In response to public comments, we have revised the regulatory text to mitigate the commenters concerns and to provide for a shorter closing of the ICW and also allow for a scheduled opening of the ICW in the midday. This change will allow boaters to transit the ICW at designated times, under the direction of a designated representative, instead of transiting into the gulf. The change will also allow for impacted businesses to conduct operations as well. Details of this change can be found in the regulatory text at the end of this document.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the size, location, duration, and time-of-day of the special local regulation. This regulation would impact approximately 3.5 miles of the Intracoastal Waterway in Venice, FL for approximately 4 and a half hours, on one day. The Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the regulation, and the rule would allow vessels to seek permission to enter the race area. Advance notice of the regulation will be provide the local community with ample time to plan around the race event accordingly.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the special local regulation area may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please call or email the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969(42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a special local regulation, which temporarily limits access to the portions of the Intracoastal Waterway in Venice, FL to race participants for approximately 4 and a half hours on one day. It is categorically excluded from further review under paragraph L(61) in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:
46 U.S.C. 70041; 33 CFR 1.05-1.
(a)
(b)
“Participant” means all persons and vessels registered with the event sponsor as a participant in the event.
(c)
(2) Persons and vessels desiring to enter, transit through, anchor in, or remain within the race area may contact the COTP St. Petersburg by telephone at (727) 824-7506 or via VHF-FM radio Channel 16 to request authorization.
(3) If authorization to enter, transit through, anchor in, or remain within the race area is granted, all persons and vessels receiving such authorization shall comply with the instructions of the COTP or a designated representative.
(4) The Coast Guard will provide notice of the regulated areas by Local Notice to Mariners, Broadcast Notice to Mariners, or by on-scene designated representatives.
(d)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone on the navigable waters of the Neches River extending 500-feet on either side of the Kansas City Southern Railroad Bridge that crosses the Neches River in Beaumont, TX. The safety zone is necessary to protect the bridge as well as persons and property on or near the bridge from potential damage from passing vessels until missing and/or damaged fendering systems are repaired or replaced. Entry of certain vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port Marine Safety Unit Port Arthur or a designated representative.
This rule is effective from October 1, 2019, through January 31, 2020.
If you have questions about this rulemaking, call or email Mr. Scott Whalen, Marine Safety Unit Port Arthur, U.S. Coast Guard; telephone 409-719-5086, email
On April 19, 2018, the Coast Guard was notified that the wood fendering systems designed to protect bridge support columns of the Kansas City Southern Railroad Company's bridge (KSC) from strikes by vessels transiting under the bridge had been damaged or destroyed by Hurricane Harvey. The south bank column protection fenders are missing and the north bank column protection fenders are severely damaged. KCS indicated that strikes to the support columns could compromise the bridge structure. In response, on May 7, 2018, the Coast Guard published a temporary final rule; request for comment titled
The Captain of the Port Marine Safety Unit Port Arthur (COTP) has determined that potential hazards posed by the unprotected bridge columns are a safety concern to the KCS Bridge and to persons and property on or near the bridge. The purpose of this rule is to provide for the safety of the KCS Bridge and persons and property on or near the bridge.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 previously 33 U.S.C. 1231. The Captain of the Port Marine Safety Unit Port Arthur (COTP) has determined that potential hazards posed by the unprotected bridge columns are a safety concern to the KCS Bridge and to persons and property on or near the bridge. The purpose of this rule is to provide for the safety of the KCS Bridge and persons and property on or near the bridge.
As noted above, we received no comments on our NPRM published August 27, 2019. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.
This rule establishes a temporary safety zone from October 1, 2019, through January 31, 2020, or until missing or damaged fendering systems are repaired or replaced, whichever occurs first. The safety zone extends 500-feet on either side of the KCS Bridge that crosses the Neches River in Beaumont, TX in approximate location 30°04′54.8″ N 094°05′29.4″ W. The duration of the zone is intended to protect the bridge support columns as well as persons and property on or near the bridge until the bridge fendering is repaired or replaced. Only vessels less than 65 feet in length and not engaged in towing are authorized to enter the zone, unless otherwise permitted by the COTP or a designated representative to enter the safety zone.
Persons and vessels desiring to enter the safety zone must request permission from the COTP or a designated representative. They may be contacted through Vessel Traffic Service (VTS) on channels 65A or 13 VHF-FM, or by telephone at (409) 719-5070.
Permission to transit through the bridge will be based on weather, tide and current conditions, vessel size, horsepower, and availability of assist vessels. All persons and vessels permitted to enter this temporary safety zone shall comply with the lawful orders or directions given to them by COTP or a designated representative.
Intentional or unintentional contact with any part of the bridge or associated structure, including fendering systems, support columns, spans or any other portion of the bridge, is strictly prohibited. Report any contact with the bridge or associated structures immediately to VTS Port Arthur on channels 65A, 13 or 16 VHF-FM or by telephone at (409) 719-5070.
The Coast Guard will inform the public through public of the effective period of this safety zone through VTS Advisories, Broadcast Notices to Mariners (BNMs), Local Notice to Mariners (LNMs), and/or Marine Safety Information Bulletins (MSIBs) as appropriate.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the nature of vessel traffic in the area and the location, and duration of the safety zone. This rule will only affect certain vessels transiting the upper reaches of the Neches River in Beaumont, TX, and will terminate once the necessary repairs are completed for the bridge. The Coast Guard will issue a VTS Advisory concerning the zone, and the rule allows vessels to seek permission to enter the zone.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone might be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone that will prohibit entry within 500-feet of either side of the KCS Bridge that crosses the Neches River in Beaumont, TX. It is categorically excluded from further review under paragraph L60(d) in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures. A Record of Environmental Consideration supporting this determination is included in the docket with this rule where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(i) A vessel less than 65 feet in length and not engaged in towing; or
(ii) A vessel authorized by the Captain of the Port Marine Safety Unit Port Arthur (COTP) or a designated representative.
(2) Persons and vessels desiring to enter the safety zone must request permission from the COTP or a designated representative. They may be contacted through Vessel Traffic Service (VTS) on channels 65A or 13 VHF-FM, or by telephone at (409) 719-5070.
(3) Permission to transit through the bridge will be based on weather, tide and current conditions, vessel size, horsepower, and availability of assist vessels. All persons and vessels permitted to enter this temporary safety zone shall comply with the lawful orders or directions given to them by COTP or a designated representative.
(4) Intentional or unintentional contact with any part of the bridge or associated structure, including fendering systems, support columns, spans or any other portion of the bridge, is strictly prohibited. Report any contact with the bridge or associated structures immediately to VTS Port Arthur on channels 65A, 13 or 16 VHF-FM or by telephone at (409) 719-5070.
(d)
Environmental Protection Agency (EPA).
Final rule.
Pursuant to the Federal Clean Air Act (CAA or the Act), the Environmental Protection Agency (EPA) is finalizing an approval of a portion of a revision to the Arkansas State Implementation Plan (SIP) submitted by the State of Arkansas through the Arkansas Department of Environmental Quality (ADEQ) that addresses certain requirements of the CAA and the EPA's regional haze rules for the protection of visibility in mandatory Class I Federal areas (Class I areas) for the first implementation period. The EPA is taking final action to approve, among other things, the state's sulfur dioxide (SO
This rule is effective on October 28, 2019.
The EPA has established a docket for this action under Docket No. EPA-R06-OAR-2015-0189. All documents in the dockets are listed on the
Dayana Medina, 214-665-7241,
Throughout this document “we,” “us,” and “our” means the EPA.
Regional haze is visibility impairment that is produced by a multitude of sources and activities that are located across a broad geographic area and emit fine particulates (PM
Data from the existing visibility monitoring network, the “Interagency Monitoring of Protected Visual Environments” (IMPROVE), shows that visibility impairment caused by air pollution occurs virtually all of the time at most national parks and wilderness areas. In 1999, the average visual range
In Section 169A of the 1977 Amendments to the CAA, Congress created a program for protecting visibility in the nation's national parks and wilderness areas. This section of the CAA establishes as a national goal the prevention of any future, and the remedying of any existing, man-made impairment of visibility in 156 national parks and wilderness areas designated as mandatory Class I Federal areas.
Section 169A of the CAA directs states to evaluate the use of retrofit controls at certain larger, often under-controlled, older stationary sources in order to address visibility impacts from these sources. Specifically, section 169A(b)(2)(A) of the CAA requires states to revise their SIPs to contain such measures as may be necessary to make reasonable progress toward the natural visibility goal, including a requirement that certain categories of existing major stationary sources
Arkansas submitted a SIP revision on September 9, 2008, to address the requirements of the first regional haze implementation period. On August 3, 2010, Arkansas submitted a SIP revision with mostly non-substantive revisions to Arkansas Pollution Control and Ecology Commission (APCEC) Regulation 19, Chapter 15.
Following the issuance of the Arkansas Regional Haze FIP, the State of Arkansas and several industry parties filed petitions for reconsideration and an administrative stay of the final rule.
EPA also published a document in the
On August 8, 2018, Arkansas submitted a SIP revision (Arkansas Regional Haze SO
This action finalizes our proposed approval of a portion of the Arkansas Regional Haze SO
We are finalizing our withdrawal of our prior approval of Arkansas' reliance on participation in the Cross-State Air Pollution Rule (CSAPR) for ozone season NO
We are also finalizing our approval of Arkansas' reasonable progress determinations for Independence Units 1 and 2 and determination that no additional controls are necessary for SO
We are finalizing our approval of the components of the long-term strategy addressed by the Arkansas Regional
We are also finalizing our determination that Arkansas has satisfied the requirement under 40 CFR 51.308(i) to consult and coordinate with the federal land managers (FLMs).
As we discussed in our proposal, the SIP revision also includes a discussion on interstate visibility transport. We are aware that Arkansas is working on a SIP revision to address the interstate visibility transport requirements for several national ambient air quality standards (NAAQS), and we therefore deferred evaluating and proposing action on the interstate visibility transport portion of the Arkansas Regional Haze Phase II SIP revision until a future proposed rulemaking.
We are finalizing our approval of a portion of the Arkansas Regional Haze Phase II SIP revision as we have found it to meet the applicable provisions of the Act and EPA regulations and is consistent with EPA guidance. We received comments from several commenters on our proposed approval. Our responses to the substantive comments we received are summarized in Section III. We have fully considered all significant comments on our proposed action on the SIP revision submittal and have concluded that no changes to our final determinations are warranted.
We are approving a portion of the Arkansas Regional Haze Phase II SIP revision submitted by ADEQ on August 8, 2018, as we have determined that it meets the regional haze SIP requirements, including the BART requirements in § 51.308(e); the reasonable progress requirements in § 51.308(d); and the long-term strategy requirements in § 51.308(d)(3). In conjunction with this final approval, we are finalizing in a separate rulemaking, published elsewhere in this issue of the
The public comments received on our proposed rule are included in the publicly posted docket associated with this action at
While it is true that some SO
As we explained in our proposal, ADEQ's cost analysis was based on a dry scrubber system assuming an inlet coal sulfur content of 1.2 lb/MMBtu, which is based on Entergy's current coal contract sulfur limit.
In this instance, we believe Arkansas is within its discretion to evaluate the BART factors as it has done, and we find that the state has presented a reasoned basis for its BART determination and has met all CAA and Regional Haze Rule requirements in making the BART determination for White Bluff. Considering all the above, we are finalizing our approval of ADEQ's determination that SO
We note that the cost-effectiveness figures for dry scrubbers for White Bluff are in fact higher than that for a Novel Integrated Deacidification (NID) system, a type of dry scrubbing technology, for Flint Creek. In our proposed rule, we estimated the cost effectiveness of dry scrubbers for White Bluff Units 1 and 2 to be $4,376/ton for Unit 1 and $4,129/ton for Unit 2. The visibility benefit of dry scrubbers at White Bluff is anticipated to be 0.603 dv at Caney Creek and 0.642 dv at Upper Buffalo for Unit 1 and 0.574 dv at Caney Creek and 0.632 dv at Upper Buffalo for Unit 2; Caney Creek and Upper Buffalo are the two Class I areas where White Bluff Units 1 and 2 have the greatest modeled baseline visibility impacts.
Instead of relying on the SIP's cost estimates, which are based on Entergy's estimates for a dry scrubber designed to treat coal with a sulfur content of 1.2 lb/MMBtu, we presented revised cost estimates for dry scrubbers for White Bluff in our proposal. After considering our lower revised cost numbers, we still agree with ADEQ's SO
The baseline emissions rate should represent a realistic depiction of anticipated annual emissions for the source. In general, for the existing sources subject to BART, you will estimate the anticipated annual emissions based upon actual emissions from a baseline period. When you project that future operating parameters (
Based on the BART Guidelines, the presumption is that the baseline emissions should be based on historical emissions. If future operations are expected to differ from past practices, and this impacts the BART analysis, an enforceable mechanism must be in place. The example in the above reference to the BART Guidelines anticipates that future operations will cause the baseline to be lower, resulting in a correspondingly lower denominator in the $/ton cost effectiveness calculation, thus resulting in the cost effectiveness seeming less attractive (higher) and triggering the need for an enforceable mechanism to ensure the integrity of the cost-effectiveness calculation into the future. The same principle applies to Entergy's situation, in that using a higher scrubber cost for scrubbing a higher sulfur coal, in conjunction with using an unrepresentative (lower) baseline, both act to make the $/ton cost effectiveness of the scrubber seem less attractive (higher). In this instance, we would not require an enforceable mechanism to ensure Entergy burns a higher sulfur coal, but the need to ensure the future integrity of the cost-effectiveness calculation nevertheless remains.
There are two obvious ways to ensure the cost effectiveness calculation accurately reflects the costs and emission reductions of scrubbers for White Bluff: Either (1) the higher cost of a scrubber designed to handle a higher sulfur coal must be balanced against its greater SO
We also note that the commenter does not appear to argue that basing the cost analysis on a scrubber system designed to burn coal having a sulfur content of 0.68 lb/MMBtu is inconsistent with its historical maximum monthly emission rate, but only suggests that in the future the White Bluff units may be burning coal containing a higher sulfur content. The commenter also points to the units' maximum 3-hour average emission rate of 1.1 lb/MMBtu from 2014-2016 in arguing that the cost analysis must reflect a dry scrubber that is designed to handle the highest sulfur content that may be combusted at the unit. However, we note that this is a maximum 3-hour average, while our cost estimates were based on a scrubber system designed to burn coal having a sulfur content of 0.68 lb/MMBtu, which is the units' maximum monthly emission rate from 2009-2013. This is significant because variations in emissions due to changes in coal quality, reagent quality, or scrubber performance are normally accommodated in permitting by specifying a sufficiently long averaging time, such as a 30-day averaging period, which is specifically designed to average out short term fluctuations. In general, averaging smooths out fluctuations in data.
Considering the above, we disagree with the commenter that we underestimated the cost of dry scrubbers for White Bluff by basing our cost assessment on the assumption that White Bluff will combust coal with a sulfur content of 0.68 lb/MMBtu. Nevertheless, our disagreement with the commenter on the above issues does not ultimately impact our final action given that even after considering our lower cost estimates, we find that ADEQ reasonably exercised its discretion in concluding that the costs of dry scrubbers are not warranted after also taking into account the level of anticipated visibility benefit at the affected Class I areas due to these controls and the other BART factors, including consideration that an Administrative Order that is part of the SIP revision requires the White Bluff units to cease coal combustion by December 31, 2028. We are finalizing our proposed approval of ADEQ's determination that SO
As we have noted in a number of other regional haze actions, certain line items such as AFUDC, owner's costs, and escalation during construction are not valid costs under our Control Cost Manual methodology. We incorporate our responses to similar comments we have received in those actions here.
Despite our disagreement with the commenter on the above issues, we note that our position on these issues does not ultimately impact our final action given that even after considering the set of cost-effectiveness figures that exclude the disallowed line items, we find that ADEQ reasonably determined that the costs of DSI, enhanced DSI, and dry scrubbers are not warranted after also taking into account the level of anticipated visibility benefit at the affected Class I areas due to these controls and the other BART factors, including consideration that an Administrative Order that is part of the SIP revision requires the White Bluff units to cease coal combustion by December 31, 2028. We are therefore finalizing our proposed approval of ADEQ's determination that SO
To the extent the commenter is contending that the Administrative Order itself requires Entergy to obtain APSC approval in order to be able to make the changes in operations necessary to comply with the requirements of that Administrative Order (AO), we note that Provision No. 12 provides that “Nothing contained in this AO shall relieve Entergy Arkansas of any obligations imposed by any other applicable local, state, or federal laws, nor, except as specifically provided herein, shall this AO be deemed in any way to relieve Entergy Arkansas of responsibilities contained in the permit.”
To the extent that the commenter is suggesting that EPA should acknowledge that approval will be required from the APSC because the lack of such approval would prevent Entergy from complying with the voluntary cessation of coal combustion, we note that Entergy has entered into an enforceable Administrative Order, which requires the cessation of coal combustion at White Bluff Units 1 and 2 by December 31, 2028. In this final action, we are approving the Administrative Order as part of the SIP, and it is now therefore federally enforceable as a source-specific requirement. If Entergy does not comply with the terms of the Administrative Order, such as not ceasing coal combustion by December 31, 2028, Entergy will be in violation of the SIP, which is a federal requirement. Under Section 113 of the CAA (42 U.S.C. 7413), which addresses, among other things, federal enforcement of SIPs, EPA has the authority to enforce the terms of the Entergy Administrative Order, such as ceasing coal combustion by December 31, 2028, that are being incorporated into Arkansas' SIP here. In addition, under Section 304 of the CAA (42 U.S.C. 7604), citizens and/or citizens groups have the authority to enforce emission limitations in orders, such as the provisions within the Entergy Administrative Order, or require EPA to do so, through the notice of the CAA citizens' suit process.
We noted in our proposal that Arkansas considered the capital costs of dry scrubbers and wet scrubbers to be high even though the costs in terms of $/ton of SO
We do note that based on comments we received and having given the matter further consideration, we realize that Arkansas' consideration of capital costs in the four-factor analysis for the Independence facility is not appropriate because the state's decision to consider capital costs was rooted in Entergy's anticipated early cessation of coal combustion at the Independence facility, which is not state- or federally-enforceable. Considering the capital costs of controls in this context would be equivalent to inappropriately assuming a shorter remaining useful life for Independence in the cost-effectiveness calculation based on an unenforceable measure to change future operations. Therefore, we are clarifying that our evaluation and conclusion in this final action that Arkansas' reasonable progress determination is reasonable does not rely on Arkansas' consideration of capital costs. EPA's long-standing position in other regional haze actions is that consideration of certain cost metrics such as capital costs and $/dv are not appropriate bases for rejecting controls that would have otherwise been determined to be reasonable. However, given the totality of the circumstances in this case, including the SIP's requirement for Independence Units 1 and 2 to switch to low sulfur coal within 3-years under the long-term strategy, the anticipated emissions reductions due to the implementation of BART controls required by the SIP revision,
The approach taken by Arkansas in its reasonable progress analysis involved an assessment of both region-wide Particulate Source Apportionment Technology (PSAT) data and PSAT data for Arkansas sources.
CAA section 169A(g)(1) provides that reasonable progress is determined by consideration of (1) the costs of compliance, (2) the time necessary for compliance, (3) the energy and nonair quality environmental impacts of compliance, and (4) the remaining useful life of any existing source subject to such requirements. The Regional Haze regulations under § 51.308(d)(1)(i)(A) also require consideration of these four statutory factors when establishing the RPGs for a Class I area, along with a demonstration showing how these factors were taken into consideration in selecting the goal.
The statute and regulations are both clear that the states have the authority and obligation to evaluate the four reasonable progress factors and that the decision regarding the controls required to make reasonable progress and the subsequent establishment of the RPGs must be based on these factors identified in CAA section 169A(g)(1) and the Regional Haze regulations under § 51.308(d)(1)(i)(A). The URP framework is not based on the four statutory factors, but is instead an analytical tool created by extrapolating emission reductions from the mid-1990s through approximately 2005 into the future.
We note that our conclusion here is consistent with our final action on the 2008 Arkansas Regional Haze SIP, where we disapproved Arkansas' RPGs and found that Arkansas had not met its reasonable progress obligations precisely because the state established its RPGs without conducting an evaluation of the four statutory factors and did so based on the fact that its Class I areas were below the URP glidepath. In the preamble to our final action on the 2008 Arkansas Regional Haze SIP, we were clear that an evaluation of the four statutory factors is required regardless of the Class I area's position relative to the URP glidepath:
[B]eing on the “glidepath” does not mean a state is allowed to forego an evaluation of the four statutory factors when establishing its RPGs. Based on an evaluation of the four statutory factors, states may determine that RPGs that provide for a greater rate of visibility improvement than would be achieved with the URP for the first implementation period are reasonable.
Our final action on the Arkansas Regional Haze SIP was published in the
With regard to the commenter's argument that it was not necessary for Arkansas to conduct a four-factor analysis given that Arkansas Class I areas are already meeting the RPGs established in the SIP revision, we note first that this is a circular argument. The numeric RPGs are calculated by taking into account the visibility improvement anticipated from enforceable emission limitations and other control measures (including BART, reasonable progress, and other “on the books” controls). Thus, the RPGs for the first planning period represent the best estimate of the degree of visibility improvement that will result in 2018 from changes in emissions inventories, changes driven by the particular set of control measures the state has adopted in its regional haze SIP to address visibility, as well as all other enforceable measures expected to reduce emissions over the period of the SIP from 2002 to 2018.
Moreover, ADEQ itself deemed the application of the four factors to the Independence facility necessary, stating in the SIP revision that “due to the circumstances of the 2016 AR RH FIP, which applied the factors to a single facility, Independence, ADEQ has determined that application of the four factors to the specific source analyzed by EPA is also “relevant.”
Although we disagree with the commenter that the broad analysis included in ADEQ's SIP revision satisfies Arkansas' reasonable progress obligations, we are finalizing our proposed approval of ADEQ's reasonable progress determination based on the following: (1) The state's discussion of the key pollutants and source categories that contribute to visibility impairment in Arkansas' Class I areas per the CENRAP's source apportionment modeling; (2) the state's identification of a group of large SO
Second, the SIP revision will not interfere with any applicable requirement concerning attainment and reasonable further progress. EPA interprets CAA section 110(l) as applying to all NAAQS that are in effect, including those that have been promulgated but for which EPA has not yet made designations. EPA has concluded that 110(l) can be satisfied by demonstrating that substitute measures ensure that status quo air quality is preserved. However, 110(l) can also be satisfied by an air quality analysis demonstrating that any change in emissions will not interfere with any applicable requirement concerning attainment and reasonable further progress, or any other applicable CAA requirement. Noninterference with attainment of the NAAQS may be demonstrated by an air quality analysis showing that any emission changes associated with the revision will not interfere with attainment of the NAAQS. This option requires a showing that the area (as well as interstate and intrastate areas downwind) can attain the NAAQS even with the plan in its revised form.
Though the commenter is correct in noting that the higher SO
While it is true that the FIP included more stringent SO
Since sulfate is a precursor to particulate matter, there is also a need to address whether withdrawal of the FIP and approval of the SIP revision will interfere with attainment of the PM NAAQS. There is no evidence that withdrawal of the SO
While the FIP provisions might have produced better air quality than the provisions we are approving into the SIP, CAA section 110(l) does not require that each SIP revision include greater emissions reductions than the plan being revised or replaced. Instead, section 110(l) requires a showing that approval of the SIP revision will not interfere with attainment and reasonable further progress or any other applicable CAA provision. In this case, the relevant areas are attaining the SO
Additionally, since there are no areas in Arkansas designated nonattainment under the 2010 1-hour SO
While the comment appears to focus on SO
The commenter contends that CALPUFF may have had some limited utility in the BART screening process (
With regard to the comment that CAMx modeling would show that visibility improvements from each of the SO
As part of the state's notice and comment period for the SIP, ADEQ received a comment that ADEQ lacked the authority to implement the SIP revision under state law since the SIP (including the Administrative Orders) did not undergo legislative review. The comment further alleged that EPA cannot approve the SIP until the Arkansas legislature has reviewed the SIP revision. ADEQ responded that the SIP did not need to undergo legislative review per Arkansas state law because, among other things, it does not fit within the state's statutory definition of a “rule”, rather state law defines SIPs as a plan, the statutory construction of provisions pertaining to plans, and in particular SIPs, exhibits an intent on the part of the Arkansas legislature to create a separate and distinct set of requirements for SIPs, and the SIP is issued by the Director and such action is subject to an appeals process differently from that of a rule. Furthermore, ADEQ has the authority under state law to enter into Administrative Orders to include as part of its SIP revision. These all establish that legislative review is not required for this SIP revision, thereby the state's SIP process met the state's statutory requirements and when the Director issued the SIP, it became an enforceable document under state law. See Response 33 of Arkansas' “Responsive Summary for State Implementation Plan Revision: Revisions to Arkansas SIP: Regional Haze SIP Revision for 2008-2018 Planning Period.”
Based on ADEQ's response to comments explaining the state authority to issue an enforceable SIP revision without the need to undergo state legislative review, we find it reasonable
In addition, the commenter states that ADEQ's position is that the SIP revision as a package is not enforceable, only the individual, component Administrative Orders. According to the commenter, since the SIP package as a whole is not enforceable, it does not meet the requirements of CAA section 110(a)(2). We reject that the ADEQ's position is that the SIP package as a whole is not enforceable, as discussed previously. As explained above, an Administrative Law Judge and the Commission have determined that the issuance of the SIP revision by the Director did not need legislative review in order for the SIP to be adopted and implemented as a matter of state law, thereby making it enforceable.
We are approving a portion of the Arkansas SIP revision submitted on August 8, 2018, as meeting the regional haze requirements for the first implementation period. This action includes the finding that the submittal meets the applicable regional haze requirements as set forth in sections 169A and 169B of the CAA and 40 CFR 51.300-308. The EPA is approving the SIP revision submittal as meeting the following regional haze requirements for the first implementation period: The core requirements for regional haze SIPs found in 40 CFR 51.308(d), including the reasonable progress requirements as well as the long-term strategy requirements with respect to all sources other than the Domtar Ashdown Mill; the SO
Specifically, the EPA is finalizing approval of the following revisions to the Arkansas Regional Haze SIP submitted to EPA on August 8, 2018: The SO
We are also finalizing our determination that the reasonable progress requirements under § 51.308(d)(1) have been fully addressed for the first implementation period. The Arkansas Regional Haze Phase I SIP revision, which we approved on February 12, 2018,
The Arkansas Regional Haze Phase II SIP revision does not address BART and associated long-term strategy requirements for the Domtar Ashdown Mill Power Boilers No. 1 and 2, and the FIP's BART emission limits for the facility continue to remain in place at this time. However, ADEQ recently submitted a SIP revision to address the regional haze requirements for Domtar Power Boilers No. 1 and No. 2, and we will evaluate any conclusions ADEQ has drawn in that submission with respect to the need to conduct a reasonable progress analysis for Domtar. As long as the BART requirements for Domtar continue to be addressed by the measures in the FIP, however, we propose to agree with ADEQ's conclusion that nothing further is needed to satisfy the reasonable progress requirements for the first implementation period. With respect to the RPGs for Arkansas' Class I areas, we will assess the SIP revision ADEQ recently submitted addressing Domtar to determine if changes are needed based on any differences between the SIP-based measures and the measures currently contained in the FIP. We intend to take action on the SIP revision addressing Domtar in a future rulemaking.
We are finalizing our approval of the components of the long-term strategy under § 51.308(d)(3) addressed by the Arkansas Regional Haze Phase II SIP revision, including the BART measures contained in the SIP revision and the SO
The BART emission limits we are approving as source-specific requirements that are part of the SIP are presented in Table 1; the SO
Concurrent with our final approval of the Arkansas Regional Haze Phase II SIP revision, we are finalizing in a separate rulemaking our final action to withdraw those portions of the Arkansas Regional Haze FIP at 40 CFR 52.173 that impose SO
We find that an approval of the SIP revision meets the Clean Air Act's 110(1) provisions. Approval of the Arkansas Regional Haze SO
In this final action, we are including regulatory text that includes incorporation by reference. In accordance with the requirements of 1 CFR 51.5, we are incorporating by reference revisions to the Arkansas source-specific requirements as described in the Final Action section above. We have made, and will continue to make, these documents generally available electronically through
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k)(3); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. 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
• 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
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, 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).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2019. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Best available retrofit technology, Incorporation by reference, Intergovernmental relations, Ozone, Particulate Matter, Regional haze, Reporting and recordkeeping requirements, Sulfur Dioxide, Visibility.
Title 40, chapter I, of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
The revision and addition read as follows:
(d) * * *
(e) * * *
(g)
(1) Identification of the 6A Boiler at the Georgia-Pacific Crossett Mill as BART-eligible and the determination based on the additional information and technical analysis presented in the SIP revision that the Georgia-Pacific Crossett Mill 6A and 9A Boilers are not subject to BART. (2) SO
(3) The focused reasonable progress analysis and the reasonable progress determination that no additional SO
(4) The long-term strategy is approved with respect to sources other than the Domtar Ashdown Mill. This includes the BART emission limits contained in the SIP revision and the SO
(5) Consultation and coordination in the development of the SIP revision with the FLMs and with other states with Class I areas affected by emissions from Arkansas sources.
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is finalizing a clean data determination (CDD) for the 2006 24-hour fine particulate matter (PM
This rule is effective on October 28, 2019.
The EPA has established a docket for this action under Docket ID No. EPA-R08-OAR-2019-0081. All documents in the docket are listed on the
Crystal Ostigaard, Air and Radiation Division, EPA, Region 8, Mailcode 8ARD-QP, 1595 Wynkoop Street, Denver, Colorado, 80202-1129, (303) 312-6602,
Throughout this document “we,” “us,” and “our” means the EPA.
On June 5, 2019 (84 FR 26053), we published a notice proposing a CDD for the 2006 24-hour PM
We received a request from the Center for Biological Diversity to extend the comment period and, in response, we extended the comment period to July 22, 2019 (84 FR 29455).
The EPA received a total of six comments on the proposed action prior to the close of the public comment period. The first comment was from the Center for Biological Diversity (requesting an extended comment period), the second and third comments were from named individuals, the fourth comment was anonymous, the fifth comment was from the Utah Petroleum Association (UPA), and the sixth comment was from the Center for Biological Diversity, HEAL Utah, and Western Resource Advocates. Our Response to Comments document in the docket for this action contains a summary of the comments and the EPA's responses. The full text of the public comments, as well as all other documents relevant to this action, are available in the docket (EPA-R08-OAR-2019-0081).
No comments were submitted that changed our assessment of the adequacy of the proposed CDD for the Salt Lake City PM
The CDD does not suspend Utah's obligation to submit CAA requirements not related to demonstrating attainment, which includes the base-year emission inventory, nonattainment new source review revisions, and best available control measures/best available control technology. This action does not constitute a redesignation to attainment under CAA section 107(d)(3).
This action finalizes a determination of attainment based on air quality and suspends certain federal requirements, and thus would not impose additional requirements beyond those imposed by state law. For this reason, this final 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 expected to be an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because this action is not significant under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• 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
• 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 the 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 the 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).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2019. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review, nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Reporting and recordkeeping requirements.
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is amending a Federal Implementation Plan (FIP) that addresses regional haze for the first planning period for Arkansas as it applies to the best available retrofit technology (BART) requirements for sulfur dioxide (SO
This final rule is effective October 28, 2019.
The EPA has established a docket for this action under Docket No. EPA-R06-OAR-2015-0189. All documents in the dockets are listed on the
Dayana Medina, (214) 665-7241;
Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.
Arkansas submitted a SIP revision on September 9, 2008, to address the requirements of the first regional haze implementation period. On August 3, 2010, Arkansas submitted a SIP revision with mostly non-substantive revisions to Arkansas Pollution Control and Ecology Commission (APCEC) Regulation 19, Chapter 15.
Following the issuance of the Arkansas Regional Haze FIP, the State of Arkansas and several industry parties filed petitions for reconsideration and a motion for an administrative stay of the final rule.
EPA also published a notice in the
On August 8, 2018, Arkansas submitted another SIP revision (Arkansas Regional Haze SO
The background for this final rule and the separate final action also being published today that approves the Arkansas Regional Haze SO
We are withdrawing the majority of the Arkansas Regional Haze FIP that we promulgated on September 27, 2016. Specifically, we are withdrawing the following components of the FIP at 40 CFR 52.173: The SO
As explained in our November 30, 2018 proposal,
We received several comment letters concerning our proposed action, which included both our proposed approval of the portions of the Phase II SIP revision listed in the previous section and proposed withdrawal of the FIP provisions addressing the requirements for which we were proposing SIP approval. EPA did not receive any comments specifically on withdrawal of the FIP provisions; rather, the comments addressed EPA's proposed approval of the SIP provisions that would replace the FIP. Therefore, we have responded to all relevant comments in response to our proposed action in a separate, final notice published elsewhere in this issue of the
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review. This final rule revises a FIP to withdraw source-specific SO
This action is not 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 provisions of the PRA. Burden is defined at 5 CFR 1320.3(b). This final rule revises a FIP to withdraw source-specific SO
I certify that this final action will not have a significant economic impact on a substantial number of small entities under the RFA. This final action will not impose any requirements on small entities. This final action revises a FIP to withdraw source-specific SO
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, will result from this action.
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, because this partial FIP withdrawal does not apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. This final action revises a FIP to withdraw source-specific SO
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the 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.
The EPA believes the human health or environmental risk addressed by this action will not have potentially disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations.
Pursuant to CAA section 307(d)(1)(B), this action is subject to the requirements of CAA section 307(d), as it revises a FIP under CAA section 110(c).
This rule is exempt from the CRA because it is a rule of particular applicably. EPA is not required to submit a rule report regarding this action under section 801 because this is a rule of particular applicability that only affects six individually identified facilities in Arkansas.
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2019. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).
Environmental protection, Air pollution control, Best available retrofit technology, Incorporation by reference, Intergovernmental relations, Ozone, Particulate Matter, Regional haze, Reporting and recordkeeping requirements, Sulfur Dioxide, Visibility.
Title 40, chapter I, of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
The revisions read as follows:
(c)
(1)
(2) * * *
(4)
(5)
(B) The owner or operator must confirm the site-specific curve equation through stack testing. By October 27, 2017, the owner or operator must provide a report to EPA showing confirmation of the site specific-curve equation accuracy. Records of the quantity of fuel input to the boiler for each fuel type for each day must be compiled no later than 15 days after the end of the month and must be maintained by the owner or operator and made available upon request to EPA and ADEQ representatives. Each boiler-operating-day of the 30-day rolling average for the boiler must be determined by adding together the pounds of SO
(ii) If the air permit is revised such that Power Boiler No. 1 is permitted to burn only pipeline quality natural gas, this is sufficient to demonstrate that the boiler is complying with the SO
(iii) To demonstrate compliance with the NO
(iv) If the air permit is revised such that Power Boiler No. 1 is permitted to burn only pipeline quality natural gas, the owner or operator may demonstrate compliance with the NO
(7)
(8)
(ii) The owner or operator shall continue to maintain and operate a CEMS for SO
(iii) Continuous emissions monitoring shall apply during all periods of operation of the boiler listed in paragraph (c)(6) of this section, including periods of startup, shutdown, and malfunction, except for CEMS breakdowns, repairs, calibration checks, and zero and span adjustments. Continuous monitoring systems for measuring SO
(iv) If the air permit is revised such that Power Boiler No. 2 is permitted to burn only pipeline quality natural gas, this is sufficient to demonstrate that the boiler is complying with the SO
(v) If the air permit is revised such that Power Boiler No. 2 is permitted to burn only pipeline quality natural gas and the operation of the CEMS is not required under other applicable requirements, the owner or operator may demonstrate compliance with the NO
(10)
(11) Alternative
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of 2-
This regulation is effective September 27, 2019. Objections and requests for hearings must be received on or before November 26, 2019, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2017-0651, is available at
Michael Goodis, Director, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2017-0651 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before November 26, 2019. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2017-0651, by one of the following methods:
•
•
•
In the
Based upon review of the data supporting the petition, EPA has limited the maximum end-use concentration of 2-phenoxyethanol as not to exceed 0.2% by weight in pesticide formulations, when ready for use. The reason for this change is explained in Unit V.B.
Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption
Consistent with FFDCA section 408(c)(2)(A), and the factors specified in FFDCA section 408(c)(2)(B), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for 2-phenoxyethanol including exposure resulting from the exemption established by this action. EPA's assessment of exposures and risks associated with 2-phenoxyethanol follows.
EPA has evaluated the available toxicity data and considered their validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.
Single and repeat-dose studies in rats indicated that 2-phenoxyethanol is rapidly and nearly completely absorbed after oral administration and more than 90% of the administered dose is excreted in urine within 24 hours of exposure. Following oral and dermal exposure the terminal hydroxyl group of 2-phenoxyethanol is metabolized, mainly in the liver, by alcohol dehydrogenase (ADH) to 2-phenoxyacetaldehyde and then by aldehyde dehydrogenase (ALDH) to 2-phenoxyacetic acid (PhAA).
2-Phenoxyethanol exhibits low levels of acute toxicity. Acute studies in rats showed oral LD
Studies on 2-phenoxyethanol show that the target organ in rats and mice is the kidney, most likely due to an extensive first-pass metabolism and formation of high amounts/concentrations of 2-phenoxyacetic acid in systemic circulation. Following oral and dermal exposure the terminal hydroxyl group of 2-phenoxyethanol is metabolized, mainly in the liver, to 2-phenoxyacetic acid (PhAA). Data suggest that mice are somewhat more resistant to the toxic effects of 2-phenoxyethanol and its main metabolite 2-phenoxyacetic acid than rats.
In addition to the effects on the kidney, hematotoxicity was also observed. This appears to be the result of exposure to the parent compound. Although hemotoxic effects of 2-phenoxyethanol were observed in repeat dose studies, the available repeat dose dataset indicates that the rabbit is the most sensitive species. The hemolysis was less pronounced in rats and mice. Based on differences in metabolism, humans are expected to be the least susceptible to RBC hemolysis.
In developmental toxicity studies in rats and rabbits, no evidence of developmental toxicity was observed. In a two-generation reproductive toxicity study in mice, an effect on fertility was observed but only at a dose level above limit dose values. Offspring toxicity was observed, but only in the presence of maternal toxicity (
There is no evidence that exposure to 2-phenoxyethanol suppresses or otherwise harms immune function in humans. No signs of neurotoxicity were reported in acute or repeat-dose oral studies. There were also no signs of carcinogenicity in the database including the 2-year feeding studies. Similarly, all tests were negative for genotoxicity and mutagenicity. The available data suggests that 2-phenoxyethanol is not carcinogenic.
Specific information on the studies received and the nature of the adverse effects caused by 2-phenoxyethanol as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) identified from the toxicity studies can be found at
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see
A summary of the toxicological endpoints for 2-phenoxyethanol used
1.
Because no acute endpoint of concern was identified, a quantitative acute dietary exposure assessment is unnecessary. In conducting the chronic dietary exposure assessment using the Dietary Exposure Evaluation Model DEEM- FCID
A complete description of the general approach taken to assess inert ingredient risks in the absence of residue data is contained in the memorandum entitled “Alkyl Amines Polyalkoxylates (Cluster 4): Acute and Chronic Aggregate (Food and Drinking Water) Dietary Exposure and Risk
2.
3.
In addition to the proposed and current pesticidal uses of 2-phenoxyethanol, 2-phenoxyethanol is also used in various non-pesticidal products such as paints and coatings, personal care/cosmetic products, and cleaning products. The Agency incorporated known non-pesticidal background exposure to 2-phenoxyethanol used in latex paint, cosmetic products, and cleaning products into this risk assessment.
For each residential scenario, short-term exposure for both the handler (adult) and post-application exposure (adult and child) is expected. Based on the proposed use pattern, intermediate-term and long-term pesticidal exposures from residential uses are not expected. Non-pesticidal use in cosmetics can result in short-term, intermediate-term, and long-term exposure.
4.
EPA has not found 2-phenoxyethanol to share a common mechanism of toxicity with any other substances, and 2-phenoxyethanol does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that 2-phenoxyethanol does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at
1.
2.
3.
i. The toxicity database for 2-phenoxyethanol is complete.
ii. There is no indication that 2-phenoxyethanol is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.
iii. There is no evidence that 2-phenoxyethanol results in increased susceptibility in
iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100% CT and incorporated a limitation of 0.2% by weight in pesticide formulation. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to 2-phenoxyethanol in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by 2-phenoxyethanol.
EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
1.
2.
3.
Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs above the Agency's level of concern. Aggregate dermal exposures resulted in a MOE of 114 for adults and a MOE of 165 in children. Because EPA's level of concern for 2-phenoxyethanol is a MOE of 100 or below, these MOEs are not of concern.
4.
5.
6.
An analytical method is not required for enforcement purposes since the Agency is not establishing a numerical tolerance for residues of 2-phenoxyethanol in or on any food commodities. EPA is establishing limitations on the amount of 2-phenoxyethanol that may be used in pesticide formulations applied pre- and post-harvest. These limitations will be enforced through the pesticide registration process under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), 7 U.S.C. 136
Although the petition did not specify a limitation on concentration of this inert ingredient in end-use pesticide formulations, the Agency is establishing this exemption with the limitation of 0.2% by weight in pesticide formulations. Based upon an evaluation of the data included in the petition, as well as publicly available literature, it was determined that 2-phenoxyethanol has biocidal properties; therefore, EPA is establishing a limitation in formulation, when ready for use, (
One comment was submitted generally opposing the establishment of tolerance exemptions. Although the Agency recognizes that some individuals believe that pesticides should be banned on agricultural crops, the existing legal framework provided by section 408 of the Federal Food, Drug and Cosmetic Act (FFDCA) authorizes EPA to establish tolerances when it determines that the tolerance is safe. Upon consideration of the validity, completeness, and reliability of the available data as well as other factors the FFDCA requires EPA to consider, EPA has determined that this exemption from the requirement of a tolerance is safe. The commenter provided no information to support a conclusion that the exemption was not safe.
Therefore, an exemption from the requirement of a tolerance is established under 40 CFR 180.910 for 2-phenoxyethanol (CAS Reg. No. 122-99-6) when used as an inert ingredient (solvent or co-solvent) limited to 0.2% by weight in pesticide formulations applied to growing crops and raw agricultural commodities after harvest.
This action establishes an exemption from the requirement of a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it considered a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
Federal Communications Commission.
Final rule.
At the request of SSR Communications Inc., the Audio Division amends the FM Table of Allotments, by allotting Channel 264A at Caliente, Nevada, as the first local service. A staff engineering analysis indicates that Channel 264A can be allotted to Caliente consistent with the minimum distance separation requirements of the Commission's rules without a site restriction. The reference coordinates are 37-36-02 NL and 114-30-32 WL.
Effective September 27, 2019.
Rolanda F. Smith, Media Bureau, (202) 418-2700.
This is a synopsis of the Commission's Report and Order, MB Docket No. 19-57, adopted May 30, 2019, and released May 31, 2019. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street SW, Washington, DC 20554. The full text is also available online at
Radio, Radio broadcasting.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:
47 U.S.C. 154, 155, 301, 303, 307, 309, 310, 334, 336 and 339.
(b)
Agricultural Marketing Service, USDA.
Referendum order.
This document directs that a referendum be conducted among eligible producers of Vidalia onions to determine whether they favor continuance of the marketing order regulating the handling of Vidalia onions produced in Georgia.
The referendum will be conducted from October 7 through October 28, 2019. Only current producers of Vidalia onions within the production area that produced onions during the period January 1, 2018, through December 31, 2018, are eligible to vote in this referendum.
Copies of the marketing order may be obtained from the Southeast Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1124 First Street South, Winter Haven, FL 33880; Telephone: (863) 324-3375; from the Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, Stop 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491; or on the internet:
Steven W. Kauffman, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1124 First Street South, Winter Haven, FL 33880; Telephone: (863) 324-3375, Fax: (863) 291-8614, or Email:
Pursuant to Marketing Agreement and Order No. 955, as amended (7 CFR part 955), hereinafter referred to as the “Order,” and the applicable provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” it is hereby directed that a referendum be conducted to ascertain whether continuance of the Order is favored by producers. The referendum will be conducted from October 7 through October 28, 2019, among Vidalia onion producers in the production area. Only current Vidalia onion producers who were also engaged in the production of Vidalia onions during the period of January 1, 2018, through December 31, 2018, may participate in the continuance referendum.
USDA has determined that continuance referenda are an effective means for determining whether producers favor the continuation of marketing order programs. USDA would consider termination of the Order if less than two-thirds of the producers in the referendum, and producers of less than two-thirds of the volume of Vidalia onions voting in the referendum favor continuance of the program. In evaluating the merits of continuance versus termination, USDA will not exclusively consider the results of the continuance referendum. USDA will also consider all other relevant information regarding operation of the Order and relative benefits and disadvantages to producers, handlers, and consumers to determine whether continuing the Order would tend to effectuate the declared policy of the Act.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the ballots used in the referendum have been approved by the Office of Management and Budget (OMB) and have been assigned OMB No. 0581-0178, Vegetable and Specialty Crops. It has been estimated it will take an average of 20 minutes for each of the approximately 65 Vidalia onion producers to cast a ballot. Participation is voluntary. Ballots postmarked after October 28, 2019, will not be included in the vote tabulation.
Steven W. Kauffman and Christian D. Nissen of the Southeast Marketing Field Office, Specialty Crops Program, AMS, USDA, are hereby designated as the referendum agents of the Secretary of Agriculture to conduct this referendum. The procedure applicable to the referendum shall be the “Procedure for the Conduct of Referenda in Connection With Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the Agricultural Marketing Agreement Act of 1937, as Amended” (7 CFR 900.400 through 900.407).
Ballots will be mailed to all producers of record and may also be obtained from the referendum agents or from their appointees.
Marketing agreements, Onions, Reporting and recordkeeping requirements.
7 U.S.C. 601-674.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend 12 high altitude area navigation (RNAV) routes (Q-routes) in support of the Florida Metroplex Project. The proposed amendments would provide more efficient, streamlined options for users, and improve the efficiency of the National Airspace System (NAS).
Comments must be received on or before November 12, 2019.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Paul Gallant, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would expand the availability of area navigation routes in the NAS, increase airspace capacity, and reduce complexity in high air traffic volume areas.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA-2019-0687; Airspace Docket No. 19-ASO-17) and be submitted in triplicate to the Docket Management Facility (see
Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2019-0687; Airspace Docket No. 19-ASO-17.” The postcard will be date/time stamped and returned to the commenter.
All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see
This document proposes to amend FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
The Florida Metroplex Project developed Performance Based Navigation (PBN) routes involving Jacksonville Air Route Traffic Control Center (ARTCC), Miami ARTCC, and San Juan Center Radar Approach Control (CERAP). The FAA issued a final rule for Docket No. FAA-2018-0437 in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 to amend 12 existing Q-routes, in the southeastern United States in support of the Florida Metroplex Project. The amendments would include adding additional waypoints (WP) to various Q-routes. These added WPs would give air traffic controllers more predictability, and provide users with more options when filing flight plans. Amendments would be made to the descriptions of the following routes: Q-65, Q-77, Q-79, Q-81, Q-85, Q-87, Q-93, Q-99, Q-109, Q-110, Q-116, and Q-118.
The proposed Q-route amendments are as follows (full route descriptions are detailed in the proposed amendments to 14 CFR part 71 set forth below):
The coordinates for the OCTAL, FL, WP would be updated as described above. In addition, an editorial change would be made to the order of the WPs listed in the Q-110 description and published in FAA Order 7400.11D. Currently, the route description lists the points from “BLANS, IL, to OCTAL, FL.” This change would simply reverse the order of the points listed in the Q-110 description in Order 7400.11 to “OCTAL, FL, to BLANS, IL.” This change would match airspace database documentation. Except for the change to the OCTAL, FL, WP coordinates, the amendment the order of points would not affect the alignment of Q-110.
In the regulatory text, below, some route descriptions include waypoints located over international waters. In those route descriptions, in place of a two-letter state abbreviation, either “OA,” meaning “Offshore Atlantic,” or “OG,” meaning “Offshore Gulf of Mexico,” is used.
RNAV routes are published in paragraph 2006 of FAA Order 7400.11D dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The RNAV routes listed in this document would be subsequently published in the Order.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Office of Workers' Compensation Programs, Labor.
Request for information.
The Black Lung Benefits Act provides benefits to miners who are totally disabled due to pneumoconiosis arising out of coal mine employment and to certain miners' survivors. Determining benefits entitlement necessarily entails evaluating the miner's physical condition, particularly his or her respiratory system. These evaluations usually involve medical tests that assess the miner's respiratory capacity. To promote accuracy when tests are conducted in connection with a claim, the program regulations set out quality standards for administering and interpreting two commonly used tests: pulmonary function tests and arterial blood gas studies. The Office of Workers' Compensation Programs (OWCP) is considering updating the quality standards, which were last amended in 2000, to better reflect current medical technology and practice. This request for information seeks the public's input on current standards for administering pulmonary function tests and arterial blood gas studies; criteria used to evaluate the results of these tests; whether OWCP should adopt quality standards for additional testing methods; and the economic impact of any changes to the quality standards.
The Department invites written comments on the request for information from interested parties. Written comments must be received by January 27, 2020.
You may submit written comments by any of the following methods. To facilitate receipt and processing of comments, OWCP encourages interested parties to submit their comments electronically.
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Michael Chance, Director, Division of Coal Mine Workers' Compensation, Office of Workers' Compensation Programs, U.S. Department of Labor, 200 Constitution Avenue NW, Suite N-3520, Washington, DC 20210. Telephone: 1-800-347-2502. This is a toll-free number. TTY/TDD callers may dial toll-free 1-800-877-8339 for further information.
The Black Lung Benefits Act (BLBA), 30 U.S.C. 901-944, provides for the payment of benefits to coal miners and certain of their dependent survivors for total disability or death due to coal workers' pneumoconiosis arising from coal mine employment.
The Department of Labor first published “Criteria for the Development of Medical Evidence,” commonly referred to as the “quality standards,” on February 29, 1980. 45 FR 13679-85; 13694-712. Originally published at 20 CFR 718.102-718.103, 718.105 and appendices A-C (1981), these standards set out detailed requirements for administering chest radiographs, pulmonary function tests (PFTs), and arterial blood gas studies (ABGs). The Department based the requirements on then-current medical industry practices, standards, and equipment.
Simultaneously, the Department adopted criteria to establish total disability based on these tests. 45 FR 13687-90, 13699-13711, 20 CFR 718.204 and appendices B-C (1981). PFT and ABG results that met the criteria in part 718, appendices B or C (commonly referred to as “qualifying” results) were sufficient, absent “contrary probative evidence,” to establish total respiratory disability. 45 FR 13688, 20 CFR 718.204(c) (1981). For PFTs, the criteria addressed the forced expiratory volume in 1 second (FEV
The quality standards and the disability criteria remained the same until 2000 when, in addition to a few revisions to the existing PFT standards, the Department required that a “flow-volume loop” be included in each PFT. The Department adopted this requirement to increase the reliability of the testing results.
In the 2000 rulemaking, the Department also added two additional points related to all of the quality standards. First, the Department clarified that the standards for test administration applied only to tests conducted “in connection with a claim” for benefits after the date the regulations went into effect (
In 2014, OWCP, in consultation with NIOSH, comprehensively revised the standards applicable to chest radiographs and added new standards addressing digital imaging methods. 79 FR 21606-15 (April 17, 2014), 20 CFR 718.101 and appendix A (2015). OWCP also updated the criteria for establishing pneumoconiosis by chest radiograph. 79 FR 21612, 20 CFR 718.102 (2015).
OWCP is now considering, again in consultation with NIOSH, updating the standards for administering PFTs and ABGs and the criteria for establishing total disability based on these tests. OWCP's goal is to adopt regulations that reflect current medical technology and practice.
OWCP requests input from medical professionals, medical associations, black lung clinics, miners, employers, insurance carriers, trade associations, and other interested parties on current techniques, equipment, and best practices for administering PFTs and ABGs to ensure accurate and reliable results. OWCP also seeks input on PFT- and ABG-related criteria for establishing total respiratory disability under the BLBA. Finally, OWCP requests information regarding whether test administration standards or qualifying disability criteria should be developed for other tests (for example, pulse oximetry) and, if so, what those standards or criteria should be.
When responding, please:
• Address your comments to the topic and question number whenever possible. For example, you would identify your response to questions regarding administration of PFTs, Question 1, as “A.1.”
• Provide your rationale for your views.
• Provide sufficient detail in your responses to enable proper agency review and consideration. OWCP wants to fully understand your answers and any recommendations you make.
• Identify the information on which you rely. Please provide specific examples. Include applicable data, studies, or articles regarding standard professional practices, availability of technology, and costs.
OWCP invites comment in response to the specific questions posed below and encourages commenters to include any related cost and benefit data. OWCP is especially interested in issues related to the economic impact on small entities as defined by the Regulatory Flexibility Act, 5 U.S.C. 601(6).
Please note that as used in the questions below: (1) “Administration” refers to the methods, equipment, and techniques used to conduct the test and interpret the results; and (2) “criteria” refers to the values set to define total respiratory disability (
OWCP is considering aligning the black lung program's PFT administration standards, currently codified at 20 CFR 718.103 and part 718, appendix B, with NIOSH's requirements for NIOSH-approved spirometry facilities and the Social Security Administration's (SSA's) medical testing standards for evaluating respiratory disorders, both of which were updated in 2016.
1. Should OWCP require PFTs to be administered according to the procedures in pages 323-326 of M.R. Miller, et al., ATS/ERS Task Force: Standardisation of Lung Function Testing,
2. Should OWCP require spirometers to undergo calibration checks according to the procedures on pages 322-323 in 2005 ATS/ERS Standardisation of Spirometry?
3. Should OWCP require spirometers to meet the specifications for spirometer accuracy, precision, and real-time display size and content listed on pages 322 (Table 2), 325, and 331-333 in 2005 ATS/ERS Standardisation of Spirometry? 42 CFR 37.93(b)(2), 37.95(b). Are there alternative standards OWCP should consider?
4. Should OWCP require each person administering a spirometry test to complete NIOSH-approved training and maintain a valid NIOSH certificate by periodically completing NIOSH-approved refresher courses?
5. Currently, appendix B to part 718 provides that PFTs “shall not be performed during or soon after an acute respiratory illness.” Should OWCP further define this requirement? If so, how should it be defined?
6. Are there any other standards OWCP should consider regarding the validity of PFTs?
7. Should OWCP consider removing MVV test administration standards (and criteria) from the regulations given its limited usefulness?
8. What are the costs, benefits, and the technological and economic feasibility of these potential changes to PFT administration standards?
The current FEV
9. Is either (or both) of these sets of reference values superior to the Knudson 1976 values? Why?
10. Which of these two sets of reference values is better suited to evaluating respiratory disability in coal miners? Why?
11. Are there other sets of reference values OWCP should consider?
12. Should OWCP require facilities administering ABG studies and analyzing samples to either have a Clinical Laboratory Improvement Amendments of 1988 (CLIA) certificate or be CLIA-exempt?
13. Should OWCP require the use of plastic syringes instead of glass syringes? If plastic syringes are used, should OWCP prohibit icing blood samples prior to analysis?
14. Should OWCP require that a blood sample be analyzed within a certain time period of the sample being drawn for the result to be considered valid, and if so, what should that time period be?
15. Currently, § 718.105(b) provides that if an exercise ABG study is conducted, “blood shall be drawn during exercise.” Should OWCP allow pulse oximetry measurements (S
16. Currently, appendix C to part 718 provides that ABG tests “must not be performed during or soon after an acute respiratory or cardiac illness.” Should OWCP further define this requirement? If so, how should it be defined?
17. What are the costs, benefits, and the technological and economic feasibility of these suggested changes to ABG administration standards?
18. Do the Tables in Appendix C need to be revised? If so, what criteria should OWCP consider and why?
19. Should OWCP adopt test administration standards for pulse oximetry? If so, what standards should OWCP consider adopting and why?
20. Are there S
21. Should OWCP require a threshold measurement of a miner's oxygen saturation level through pulse oximetry before determining whether more invasive testing such as an ABG is necessary? If so, what should the threshold be? What are the advantages and disadvantages (including potential costs or benefits) of adopting such a threshold measurement?
22. Should OWCP adopt test administration standards for DLCO testing? If so, what standards should OWCP consider adopting and why?
23. Are there DLCO values that would establish total respiratory disability in a coal miner under the BLBA absent contrary probative evidence? If so, what values should OWCP consider and why?
24. Please provide any other data or information that may be useful to OWCP in evaluating its quality standards and related disability criteria, including whether there are other tests of respiratory disability for which quality standards or qualifying disability criteria should be developed.
Mine Safety and Health Administration, Labor.
Announcement of public meeting and correction.
The Mine Safety and Health Administration (MSHA) is announcing the date and location of a public meeting on the Agency's Request for Information on Respirable Silica (Quartz). In addition, this document corrects a typographical error included in the Request for Information that published on August 29, 2019.
The meeting date and location is listed in the
Submit comments and informational materials, identified by Docket No. MSHA-2016-0013, by one of the following methods:
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Sheila A. McConnell, Director, Office of Standards, Regulations, and Variances, MSHA, at
MSHA will hold a public meeting on the Agency's Request for Information on Respirable Silica (Quartz) to receive input from industry, labor, and other interested parties. The public meeting will be held on October 17, 2019, at MSHA Headquarters, 201 12th Street South, Arlington, Virginia 22202-5452. The public meeting will begin at 9 a.m. local time and conclude at 5 p.m., or until the last speaker speaks. The meeting will be conducted in an informal manner. Presenters and attendees may provide written information to the court reporter for inclusion in the record. MSHA will make the transcript of the meeting available at
MSHA's Request for Information, which published in the issue of August 29, 2019, at 84 FR 45452, included a typographical error.
On page 45453, in the first paragraph, in the third column, the last sentence is revised to read: “In 2016, the Occupational Safety and Health Administration (OSHA) amended MSHA's existing respirable crystalline silica standards to establish a permissible exposure limit (PEL) of 50 µg/m
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Advance notice of proposed rulemaking (ANPRM).
The Moving Ahead for Progress in the 21st Century Act of 2012 directs NHTSA to initiate a rulemaking proceeding to amend Federal Motor Vehicle Safety Standard No. 208, “Occupant crash protection,” to require a seat belt use warning system for rear seats. NHTSA initiated a rulemaking proceeding in 2013, and as it continues with this proceeding NHTSA is seeking public comment on a variety of issues related to a requirement for a rear seat belt warning system. NHTSA seeks comment on, among other things, potential requirements for such systems, the vehicles to which they should apply, their effectiveness, the likely consumer acceptance, and the associated costs and benefits.
You should submit your comments early enough to be received not later than November 26, 2019.
You may submit comments to the docket number identified in the heading of this document by any of the following methods:
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You may contact Ms. Carla Rush, Office of Crashworthiness Standards, Telephone: 202-366-4583, Facsimile: 202-493-2739 or Mr. John Piazza, Office of Chief Counsel, Telephone: 202-366-2992, Facsimile: 202-366-3820. You may
The Moving Ahead for Progress in the 21st Century Act of 2012 (MAP-21) directs the National Highway Traffic Safety Administration (NHTSA) to initiate a rulemaking proceeding to amend Federal Motor Vehicle Safety Standard (FMVSS) No. 208, “Occupant crash protection,” to require a seat belt use warning system for rear seats. As it continues with this proceeding, NHTSA is seeking comment on a variety of issues related to a potential requirement for a rear seat belt warning system.
Using a seat belt is one of the most effective actions a motor vehicle occupant can take to prevent death and injury in a crash. Seat belts are effective in most types of crashes. Research has found that seat belts greatly reduce the risk of fatal and non-fatal injuries, compared to the risk faced by unrestrained occupants. Unbelted occupants are overrepresented in fatal crashes. For rear seat occupants, seat belts reduce the risk of fatality by 55 percent (for passenger cars) and 74 percent (for light trucks and vans).
Although seat belt use has steadily increased over the past few decades, usage rates for rear belts have consistently been below those for the front seats. According to data from NHTSA's National Occupant Protection Use Survey, from 2006 to 2017, seat belt use was consistently lower in rear seats than in front seats, with the lowest difference of 6.2 percent in 2007 and the highest difference of 15.6 percent in 2006. Most recently, in 2017, front seat belt use was 89.7 percent, while rear seat belt use was only 75.4 percent, a difference of 14.3 percent.
Seat belt warning systems encourage seat belt use by reminding unbuckled occupants to fasten their belts and/or by informing the driver that an occupant is unbelted, so that the driver can request the unbelted occupant to fasten their seat belt. FMVSS No. 208 requires a seat belt warning system for the driver's seat, but not other seating positions. Most currently-produced vehicles also have a seat belt warning for the front outboard passenger seat, although FMVSS No. 208 does not require this. About 13 percent of model year (MY) 2019 vehicles sold in the United States came equipped with a rear seat belt warning system. Volvo, Toyota, Mazda, Ford and Jaguar Land Rover offer vehicles for sale in the U.S. with rear seat belt warning systems. All of those manufacturers' rear seat belt warning systems use a display that is visible to the driver and indicates which rear seat belts are in use, as well as employing a change-of-status reminder that has visual and audible components.
Euro New Car Assessment Program (NCAP)
Starting in September 2019, the Economic Commission for Europe (ECE) Regulation No. 16 will require a rear seat belt warning. This includes, among other things, a visual warning indicating any rear seating position in which a seat belt is unfastened. It also includes an audiovisual change-in-status warning.
In 2007, Public Citizen and Advocates for Highway and Auto Safety petitioned NHTSA to amend FMVSS No. 208 to require a seat belt warning system for rear seats on passenger cars and multipurpose passenger vehicles (MPVs) with a gross vehicle weight rating (GVWR) of 4,536 kilograms (10,000 pounds) or less. The petitioners stated that rear seat belt warnings would save hundreds of lives each year and that a large percentage of the lives saved would be children. In 2010, the agency published a Request for Comments (RFC) on the petition. The RFC discussed the agency's research and findings regarding rear seat belt warnings and solicited comments.
In 2012, Congress passed MAP-21. That law requires DOT to initiate a rulemaking proceeding to amend FMVSS No. 208 to provide a safety belt use warning system for designated seating positions in the rear seat. It directs the Secretary to either issue a final rule, or, if the Secretary determines that such an amendment does not meet the requirements and considerations of 49 U.S.C. 30111,
NHTSA has granted Public Citizen and Advocates for Highway and Auto Safety's petition. In accordance with that grant and continuing with the proceeding that MAP-21 required to be initiated, the agency is publishing this Advance Notice of Proposed Rulemaking. In it, we seek comment on a variety of issues related to a requirement for a rear seat belt warning system, including potential requirements for such systems, the vehicles to which they should apply, their effectiveness, the likely consumer acceptance, and the associated costs and benefits. This document also provides relevant background information, such as up-to-date information on rear seat belt warning systems that are currently available on some new motor vehicles. The document also seeks comment on removing the 8-second maximum duration for the driver's seat belt warning specified in FMVSS No. 208, S7.3; this amendment would reflect MAP-21's repeal of the statutory limitation that was the basis for this provision.
Section 31503 of the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Pub. L. 112-141) directs the Secretary
Using a seat belt is one of the most effective actions a motor vehicle occupant can take to prevent death and injury in a crash.
Although seat belt use has steadily increased over the past few decades, usage rates for rear belts have consistently fallen below those for the front seats. According to data from NHTSA's National Occupant Protection Use Survey (NOPUS), from 2006 to 2017, seat belt use was lower in the rear seat than in the front seat, ranging from a difference of 6.2 percent in 2007 (76.3% vs. 82.5%) to 15.6 percent in 2006 (64.8% vs. 80.4%).
NHTSA has, over time, used a variety of strategies to increase seat belt use, including sponsoring national media campaigns, providing assistance to states enacting seat belt use laws and high-visibility enforcement campaigns, and facilitating or requiring vehicle-based strategies. Some of these strategies are non-regulatory; some are regulatory. NHTSA has implemented a variety of non-regulatory approaches to increase seat belt use, such as the annual Click It or Ticket mobilization, which includes a national advertising campaign backed up by high-visibility local enforcement of state seat belt laws. Some states with mandatory rear seat belt laws include rear-seat specific messaging in their media campaigns.
One type of vehicle-based strategy is seat belt warning systems. Seat belt warning systems encourage seat belt use by reminding unbuckled occupants to fasten their belts and/or by informing the driver that an occupant is unbelted, so that the driver can request the unbelted occupant to fasten their seat belt.
Based on the agency's New Car Assessment Program (NCAP) Buying a Safer Car data, about 13 percent of model year (MY) 2019 vehicles sold in the United States came equipped with a rear seat belt warning system. Volvo, Toyota, Mazda, Ford and Jaguar Land Rover offer vehicles for sale in the U.S. with rear seat belt warning systems. Volvo started offering rear seat belt warnings in its vehicles in 2009 and currently all its vehicle models are equipped with rear seat belt warnings. Mazda and Ford introduced rear seat belt reminders in MY 2018 and 2019, respectively. Mazda MY 2019 CX-9, CX-5, 3, and 6 vehicles are equipped with rear seat belt reminder systems (SBRS), and Ford offers such systems on the Ranger. GM also offered rear seat belt warning systems as standard equipment in the United States (starting in MY 2010 for the Cadillac SRX and MY 2011 for the Volt) and such systems were offered on the Cadillac MY 2016 XTS and MY 2015 ELR, as well as the MY 2016 Chevy SS. Jaguar Land Rover first introduced rear seat belt warning systems in the MY 2010 Jaguar XJ, and since then has equipped four additional vehicles models with such systems (Range Rover Evoque, Range Rover, Range Rover Sport, and Discovery Sport). Toyota introduced rear seat belt warning systems in several MY 2017 vehicles and increased the number of equipped vehicles in MY 2018. All of these manufacturers' rear seat belt warning systems use a display that is visible to the driver and indicates which rear seat belts are in use, as well as employing a change-of-status reminder that has visual and audible components.
Euro NCAP introduced SBRS bonus points in 2002. The Euro NCAP protocol for Safety Assist systems describes which features a seat belt reminder must have to qualify for extra points.
The European Union is set to adopt an updated version of Regulation No. 16
FMVSS No. 208 is intended to reduce the likelihood of occupant deaths and the likelihood and severity of occupant injuries in crashes. The standard took effect in 1968 and from its inception required seat belts in passenger cars.
The standard currently requires a seat belt warning for the driver's seat belt on passenger cars;
Manufacturers have two compliance options for the driver's warning.
Prior to 1974, NHTSA had promulgated a series of occupant protection regulations that, at various times, specified as compliance options various combinations of active and passive occupant crash protection, seat belt interlocks, and seat belt warnings.
As a result of the strong negative consumer reaction, Congress adopted a provision, as part of the Motor Vehicle and School Bus Safety Amendments of 1974, prohibiting the agency from prescribing a motor vehicle safety
In 2001, the House Committee on Appropriations directed NHTSA to contract with the Transportation Research Board (TRB) of the National Academy of Sciences to conduct a study on the benefits and acceptability of minimally intrusive vehicle technologies to increase seat belt use.
In 2002 and 2003, NHTSA sent letters to several vehicle manufacturers encouraging them to enhance seat belt warning systems beyond the FMVSS No. 208 minimum requirements.
In 2005, Congress passed legislation—the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)
On November 21, 2007, Public Citizen and Advocates for Highway and Auto Safety (petitioners) petitioned NHTSA to amend FMVSS No. 208 to require a seat belt warning system for rear seats on passenger cars and MPVs with a GVWR of 4,536 kg (10,000 lb) or less.
On June 29, 2010, the agency published a Request for Comments (RFC) on the petition.
In 2012, Congress passed MAP-21.
In light of the Congressional directives concerning seat belt warnings, NHTSA has taken a variety of actions to research the effectiveness and acceptance of seat belt warnings.
In 2002, the agency chartered an integrated project team to recomm8end
In response to the 2005 SAFETEA-LU mandate, NHTSA undertook a multi-phase research study of seat belt warnings. NHTSA published several reports. Three are particularly relevant to today's ANPRM. The first is a large-sample national observational study on the effectiveness of front seat belt warnings.
NHTSA continued and expanded on this work several years later. In 2015 the agency completed an additional report on the effectiveness and consumer acceptance of rear seat belt warnings, based on a consumer survey.
The results of NHTSA's research are discussed in more detail in Section VI.A and VI.C-D. The relevant research reports have also been placed in the docket for this rulemaking.
Under 49 U.S.C. Chapter 301, Motor Vehicle Safety (49 U.S.C. 30101
MAP-21 requires the Secretary to initiate a rulemaking proceeding to amend FMVSS No. 208 to provide a safety belt use warning system for designated seating positions in the rear seat.
As it continues with the proceeding required to be initiated by MAP-21, NHTSA seeks comment on a variety of issues related to amending FMVSS No. 208 to require a rear seat belt warning system. These include: The types of seat belt warning system requirements the agency should propose; the effectiveness of such systems at increasing rear seat belt use; the degree to which consumers would accept such systems; the associated benefits and costs; and the vehicles to which any proposed requirements should apply.
NHTSA is considering proposing any of a variety of minimum requirements for a rear seat belt warning system. There are a variety of aspects of the possible proposed requirements that we seek comment on. NHTSA especially seeks any data related to these issues.
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➢ Below we ask specific questions about potential specifications for visual and audible warnings, and, more generally, which of these NHTSA should propose for the rear seat belt warning system minimum requirements. Should whether the warning is visual or audible depend on when the warning is given and what it is for (
NHTSA also seeks comment on whether an audible warning alone, without a visual warning, would be an effective way to alert the driver to the status of the rear seat belts and increase rear seat belt use. For example, would an audible notification (
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In addition to a warning at the beginning of a trip, should there be a warning if a seat belt becomes unbuckled in the course of a trip (a change-of-status warning)? Such a warning may reduce the risk of injury to children by alerting the driver that a child has unbuckled his or her seat belt, providing the driver an opportunity to direct the child to re-buckle the belt. The signal may also potentially prevent children from unbuckling their seat belts. The agency's 2015 Survey of Principal Drivers of Vehicles with a Rear Seat Belt Reminder System found that a change of status warning is effective in getting passengers to refasten their seat belt.
If NHTSA should propose a change-of-status warning, what should the triggering condition(s) be? Should it be linked to the vehicle's speed and/or transmission position (
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Rear seat warning systems that employ occupant detection have potential advantages over systems that do not utilize it. With occupant detection, a warning system can provide more informative warnings. The system can determine whether any seats are occupied by an unbelted occupant, as opposed to simply notifying the driver which or how many belts, if any, are fastened. Such systems are also better able to appropriately target audible warnings or longer-duration visual warnings (enhanced warnings). Having an audible or longer-duration visual warning activate for an unoccupied seat (such as might be the case if the system did not have occupant detection) could be a nuisance for the driver and might either desensitize the occupants to the
However, occupant detection for the rear seats may present both technical and cost challenges.
We seek comment on whether NHTSA should propose warning system requirements that would necessitate occupant detection for the rear seats, and the technical and cost feasibility of doing so.
NHTSA also seeks comment on proposing multiple compliance options for the warning system requirements. Should all the compliance options require occupant detection, or should there be some compliance options that do not require occupant detection? To what extent should we expect increased effectiveness and benefits for a system utilizing occupant detection compared to a system without such technology? What would be the increased cost associated with such a system (on a per seat and per vehicle basis), and how would it compare to the increased benefits (if any)?
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In addition to this, while enhanced warnings are potentially more effective due to their persistence and annoyance,
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Accordingly, NHTSA might need to propose seat occupancy criteria. If so, what should the criteria be? First, what type of occupants should the criteria be based on;
Next, for the type(s) of occupants upon which the criteria are based, what should the criteria be? Should NHTSA consider the same seat occupancy criteria specified in FMVSS No. 208 for compliance testing of low-risk deployment and suppression air bag systems? To test whether an air bag system either suppresses or properly deploys the front outboard passenger air bag in the presence of a child or small-stature individual, NHTSA tests the air bag system with a variety of different dummies. For example, for the static suppression and low-risk deployment compliance options, FMVSS No. 208 specifies multiple performance tests using 1-, 3-, and 6-year-old Anthropomorphic Test Devices (test dummies) both in and out of a Child Restraint System (CRS). In addition, in order to ensure that the suppression feature does not inappropriately suppress the air bag for small-statured adults, FMVSS No. 208 requires the air bag system to be active during several static tests using a 5th percentile adult female dummy in the right front passenger seat.
In order to perform compliance testing on a rear seat belt warning system that uses occupant detection, should NHTSA use one or more of these dummies, or specify occupancy conditions based on one of these dummies? For example, NHTSA could specify use of the 6-year-old test dummy. Alternatively (or in addition), NHTSA could specify that a rear seat would be considered “occupied” when an occupant who weighs at least 21 kg (46.5 lb), and is at least 114 cm (45 in) tall is seated there. These measurements come from FMVSS No. 208, S29.1(e), and correspond to the height and weight requirements for a child who is used as an alternative for the 6-year-old child test dummy for compliance testing of advanced air bag systems utilizing static suppression. Is this an appropriate threshold? NHTSA also seeks comment on the potential for false warnings, and how this might be addressed.
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• The belt was buckled before the occupant sat in the seat. This could be addressed by requiring a sequential logic system. A sequential logic system would require that the belt be buckled after the seat has been occupied in order for the system to recognize the seat belt as being buckled;
• An occupant buckles the seat belt behind themselves. This could be addressed by utilizing seat belt buckle and spool-out sensors and deactivating the warning only if the webbing were spooled out more than a predetermined length. However, even these sensors could be defeated by pulling out additional webbing and clipping it off to prevent retraction; or
• The seat belt and/or occupant detection sensors utilized by the rear warning system in vehicles with removable rear seats are intentionally disconnected.
There are also scenarios involving inadvertent circumvention that could impact the effectiveness and accuracy of a rear belt warning system. One scenario is when the driver uses a remote engine starter so that the initial warning activates before the driver (and perhaps the rear seat occupants) are in the vehicle. This might be addressed by programming the system to require input from door or occupant sensors to verify that the driver is in the vehicle. There are, of course, a variety of other ways the warning system might be intentionally or inadvertently circumvented.
We seek comment on whether NHTSA should propose requirements to address circumvention. We also seek comment on whether we should propose requiring a single-trip manual deactivation of the seat belt warning system once the minimal signal performance requirements are met, which might diminish the likelihood of circumvention.
9.
A variety of potential system requirements could be proposed to address this potential issue. The warning system in such vehicles might be required to automatically connect the electrical connections when the seat is put in place or, if a manual electrical connection is required, the connectors might be required to be readily accessible. The system could also provide a warning signal to inform the driver if a proper electrical connection has not been made with respect to an easily removable seat. Euro NCAP and
NHTSA seeks comment on this issue, particularly on whether such electrical connection requirements should be proposed, and if so what they should be, and what types of seats they should be required for. Are there new and innovative wireless technologies that could reduce or eliminate wiring complexities, such as those used in tire pressure monitoring systems? The agency also seeks comment on the safety need for such warnings and the costs and feasibility of addressing these issues.
10.
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With respect to potential requirements for a
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Each of these systems could have strengths and limitations. A positive-only system would be the least technically complex of the three. Since it would only need to detect whether a seat belt is in use, it would require seat belt latch or webbing spool-out sensors (assuming no defeat sensing was required). With a positive-only system, the driver would need to determine how many rear seat occupants there are and then determine if that number equals the number of seat belts that are reported by the warning system as buckled. This compliance option would not necessitate occupant detection.
Negative-only and full-status systems would provide more direct information to the driver, but might be more technically complex. These systems might be more effective than a positive-only system because they would directly inform the driver whether any rear seat occupants were unbuckled, without the driver having to compare the number or location of occupants and fastened belts. In addition, as discussed above, warning systems equipped with occupant detection are more amenable to audible warnings and enhanced warning features. However, such systems might require occupant detection sensors in order to minimize or eliminate false warnings. (Because the negative-only and full-status systems would indicate the presence of an unbuckled belt, they would probably want to avoid giving this warning unless the seat were occupied; if not, such “false positives” could lead the driver the disregard the warning or circumvent the system.)
NHTSA seeks comment on the relative merits of such systems. Should NHTSA propose one or more of these systems as requirements or compliance options? How much more effective would the more informative negative-only and full-status systems be? How much more complex or expensive would they be? Would occupant detection be necessary for these systems? NHTSA also seeks comment on whether there are alternative warning systems that would convey alternative or additional information to the driver (or rear passengers). For example, would a less sophisticated warning, such as a specialized system of mirrors, be sufficient to inform the driver about the status of the rear seat belts?
15.
16.
With respect to
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19. NHTSA seeks comment on the vehicles to which any proposed rear seat belt warning requirements should apply. We also seek comment on whether any vehicles within the broad applicability criteria should be exempt. Rear seat belts are generally required except in certain buses (such as school buses) between 10,000 lb and 26,000 lb, and for school, perimeter, and transit buses over 26,000 lb. (Other exceptions also apply.) We especially seek comment on whether a rear seat belt warning should be required for high-occupancy vehicles such as 15-passenger vans, large sport utility vehicles, school buses, and large trucks and vans with a GVWR less than or equal to 4,536 kg (10,000 lb).
Vehicles with a larger number of rear seats may present visual signal complexities and other challenges. At the same time, such vehicles could be at least as likely, if not more likely, to have rear occupants. With respect to school buses, we acknowledge that a rear seat belt warning requirement might place additional cost burdens on school systems, given that such cost can lead to reductions in school bus service, resulting in greater risk to students.
We seek comment on what vehicle types should be included and excluded, including the costs and benefits of inclusion. We also seek comment on ways to propose performance requirements that provide manufacturers with the flexibility to design a warning system that is appropriate for each vehicle type.
20. NHTSA seeks comment on the effectiveness of rear seat belt warning systems. NHTSA's research suggests that at least some unbelted rear seat occupants might be amenable to wearing a seat belt. Seat belt non-users are typically categorized as either “part-time” non-users or so-called “hard-core” non-users.
A rear seat belt warning system can increase rear seat belt use in two ways: It can remind a rear seat occupant to fasten his or her belt, and it can inform the driver that a passenger is unbuckled, so that the driver can request the occupant to fasten their belt. Without a rear seat belt warning, the driver must turn around to ascertain whether a rear seat occupant is using a seat belt (or ask the occupant); in some vehicles, belt use may not be evident to the driver, even if he or she turned around, due to line-of-sight limitations. In NHTSA's 2015 Survey of Principal Drivers of Vehicles with a Rear Seat Belt Reminder System, 65 percent of drivers of vehicles equipped with rear seat belt reminders reported that the rear seat belt reminder made it easier to encourage the rear seat passengers to buckle up.
NHTSA has conducted a variety of research relating to the effectiveness of in-vehicle seat belt warnings. First, it conducted the multi-phase seat belt
Second, NHTSA's 2015 Survey of Principal Drivers of Vehicles with a Rear Seat Belt Reminder System studied the effectiveness and acceptability of rear seat belt warnings based on a consumer telephone survey of the drivers of vehicles with and without rear seat belt warning systems.
NHTSA seeks comment on whether, and to what degree, a rear seat belt warning would be effective. We seek comment on specific warning signal attributes that NHTSA could propose (
We also seek comment on how to quantify the effectiveness of a rear seat belt warning system, including data related to this. Because of the low prevalence and limited history with rear seat belt warnings, NHTSA has limited direct data on the effectiveness of rear seat belt warnings. Can we expect more or less of an increase than the 3-4% increase for enhanced front warnings? NHTSA requests any data or studies concerning the effectiveness of rear seat belt warnings. We also seek comment on balancing effectiveness with costs, technological feasibility, and acceptability.
With respect to comments that identify an innovative seat belt warning system differing from the current driver's seat belt warning and current production front and rear passenger seat belt warnings, NHTSA seeks comment on such possibilities, and the effectiveness of any such alternative.
21. NHTSA seeks comment on potential consumer acceptance concerns with a proposed seat belt warning system.
In order for a rear seat belt warning to have an impact on seat belt use, it must balance effectiveness with acceptability. The warning must be noticeable enough to prompt occupants to buckle their seat belts, but not so intrusive that the public does not accept the warning system, that an occupant will circumvent or disable it, or that the warning system could lead to driver distraction that could increase the risk of a crash.
Consumer acceptance of any eventual seat belt warning requirements is an important consideration, given the potential safety benefits of rear seat belt warnings, the history of seat belt warning technologies, and the fact that consumers have not yet had widespread exposure to rear seat belt warnings.
The 2004 Transportation Research Board Report on technologies to increase seat belt use observed that, while limited, “the data available to date provide strongly converging evidence in support of both the potential effectiveness and consumer acceptance of many new seat belt use technologies[.]”
NHTSA's 2015 Survey of Principal Drivers of Vehicles with a Rear Seat Belt Reminder System also investigated the acceptability of rear seat belt warning systems. NHTSA surveyed (by telephone) drivers of vehicles with and without a rear seat belt warning system.
NHTSA seeks comment on what types of rear seat belt warnings consumers would accept. NHTSA seeks comment on specifications that would maximize effectiveness while still being acceptable to the public, as well as the potential for intrusive warnings to lead to driver distraction. NHTSA also seeks comment on how the potential for false positives can be minimized (because false positives can lead occupants to ignore or circumvent the warnings, or lead to driver distraction). NHTSA also seeks comment on the results of the 2015 survey, including whether and to what extent, selection bias might influence the results.
22. NHTSA also seeks comment on the technological and economic feasibility of alternative rear seat belt warning systems.
We seek comment on the technological and economic challenges that might be posed by different types of warning systems, including the type of equipment and re-design they might necessitate. Seat belt latch and webbing spool-out sensors are already used by many manufacturers to comply with the existing driver seat belt requirements. We are aware that implementing a visual warning may require physical redesign of the instrument panel. Such redesign would have to take into account visibility, interaction with existing signals and displays, available space on the instrument panel, and effectiveness, as well as other factors. In some instances, a visual signal might be displayed as a telltale on the instrument panel or on the vehicle's information display screen. Manufacturers would
We also seek comment about whether a rear seat belt warning would reliably detect a child restraint system attached by a child restraint anchorage system, or LATCH.
23. The agency has presented a wide variety of different potential alert systems, all with different cost and effectiveness profiles, and is not at this time conducting a cost-benefit analysis on any particular approach. However, many of the technologies discussed in this ANPRM are currently in use, either for front seat passengers or, in more limited models, rear seat passengers. NHTSA, therefore, seeks comment on the potential benefits and costs of the different types of rear seat belt warning system discussed in this notice, including those that provide a warning similar to the kinds of seat belt warnings that are provided in current-production vehicles in the United States or elsewhere in the world, as well as other potentially novel approaches.
24. MAP-21 instructs NHTSA to initiate a rulemaking proceeding for a rear seat belt warning system and to issue a final rule if it would meet the requirements in section 30111 of the Safety Act. NHTSA seeks comment on whether a proposed rear seat belt warning system would meet the requirements and considerations of 49 U.S.C. 30111.
25. If commenters believe that a proposed seat belt warning system would not meet the requirements and considerations of 49 U.S.C. 30111, NHTSA seeks comment on whether it should consider any non-regulatory approaches to address this issue.
For example, NHTSA might provide recognition through NCAP for vehicles equipped with a rear seat belt warning system. Other international NCAP programs, including Euro NCAP, Japan's New Car Assessment Program (J-NCAP), China NCAP (C-NCAP), Latin NCAP, New Car Assessment Program for Southeast Asia (ASEAN NCAP), Korean NCAP (KNCAP), and Australasian New Car Assessment Program (ANCAP), award bonus points to vehicles that are equipped with seat belt warning systems for passenger seating positions. NHTSA could potentially establish criteria in NCAP for rear seat belt warning systems as it does for other vehicle safety features. For example, NCAP evaluates the ability of an automatic emergency braking system to detect the presence of a vehicle and initiate braking without driver interaction in several different scenarios (
NHTSA could also issue voluntary guidelines for manufacturers. The guidelines could identify best practices for manufacturers who wish to equip vehicles with a rear seat belt warning system. The best practices could include the type of information the warning system should convey and the minimum durations of the warnings. NHTSA also seeks comment on whether there would be any other non-regulatory approaches that would be appropriate.
26. NHTSA also seeks comment on removing the driver's seat belt warning audible signal duration upper limit.
FMVSS No. 208 currently requires a driver's seat belt warning with an audible warning lasting between four and eight seconds. Prior to the enactment of MAP-21, the agency could not require the audible warning to operate for more than 8 seconds. As discussed above, Congress enacted this restriction in 1974. The sole basis for the 8-second maximum duration in FMVSS No. 208 is this statutory limitation. In light of Congress's repeal of this restriction, NHTSA seeks comment on removing the corresponding provision in FMVSS No. 208.
Although NHTSA did not previously have the authority to require, or specify as a compliance option, a seat belt warning with an audible signal lasting more than 8 seconds, the agency facilitated the voluntary adoption of enhanced warnings through a series of legal interpretations that determined that the Safety Act did not prohibit manufacturers from using enhanced warning systems (
Amending FMVSS No. 208 by removing the 8-second limitation would eliminate the need to differentiate between signals and give vehicle manufacturers greater flexibility in designing their seat belt warning systems. It would not affect the minimum required duration for the audible signal (4 seconds) and would not require manufacturers to make any changes to their existing seat belt warnings that comply with the existing requirements of FMVSS No. 208.
We seek comment on this.
This action has been determined to be significant under Executive Order 12866, as amended by Executive Order 13563, and the Department of Transportation (DOT) Order 2100.6, “Policies and Procedures for Rulemakings.” It has been reviewed by the Office of Management and Budget under Executive Order 12866. Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) require agencies to regulate in the “most cost-effective manner,” to make a “reasoned determination that the benefits of the intended regulation justify its costs,” and to develop regulations that “impose the least burden on society.” Additionally, Executive Orders 12866 and 13563 require agencies to provide a meaningful opportunity for public participation. We have asked commenters to answer a variety of questions to elicit practical information about alternative approaches and relevant technical data. Further, in accordance with DOT Order 2100.6, NHTSA has determined that this rulemaking, should it lead to a mandate of rear seat belt systems, would qualify as an “economically significant rule,” as it would likely impose a total annual cost greater than $100 million; accordingly, NHTSA is using this ANPRM to solicit public feedback before proceeding with a proposed rule. This action is not subject to the requirements of E.O. 13771 (82 FR 9339 (Feb. 3, 2017)) because it is an advance notice of proposed rulemaking.
• To ensure that your comments are correctly filed in the Docket, please include the Docket Number found in the heading of this document in your comments.
• Your comments must not be more than 15 pages long.
• Please organize your comments so they appear in the same order as the topics to which they respond appear in this document. Please identify comments by the number with which the relevant topic is associated in this document.
• If you are submitting comments electronically as a PDF (Adobe) file, NHTSA asks that the documents be submitted using the Optical Character Recognition (OCR) process, thus allowing NHTSA to search and copy certain portions of your submissions.
• Please note that pursuant to the Data Quality Act, in order for substantive data to be relied on and used by NHTSA, it must meet the information quality standards set forth in the OMB and DOT Data Quality Act guidelines. Accordingly, NHTSA encourages you to consult the guidelines in preparing your comments. DOT's guidelines may be accessed at
When submitting comments, please remember to:
• Identify the rulemaking by docket number and other identifying information (subject heading,
• Explain why you agree or disagree, suggest alternatives, and substitute language for your requested changes.
• Describe any assumptions you make and provide any technical information and/or data that you used.
• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
• Provide specific examples to illustrate your concerns, and suggest alternatives.
• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
• To ensure that your comments are considered by the agency, make sure to submit them by the comment period deadline identified in the
For additional guidance on submitting effective comments, visit:
If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail.
If you wish to submit any information under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, NHTSA, at the address given above under
We will consider all comments received before the close of business on the comment closing date indicated above under
You may read the comments received by the docket at the address given above under
Please note that even after the comment closing date, we will continue to file relevant information in the docket as it becomes available. Further, some people may submit late comments. Accordingly, we recommend that you periodically check the Docket for new material. You can arrange with the docket to be notified when others file comments in the docket. See
Issued in Washington, DC, under authority delegated in 49 CFR 1.95 and 501.5.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Request for comments.
In a separate
You should submit comments early enough to ensure that Docket Management receives them not later than October 28, 2019.
You may submit comments to the docket number identified in the heading of this document by any of the following methods:
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Regardless of how you submit your comments, you should mention the docket number of this document. You may call the Docket at (202) 366-9324.
For policy and technical issues: Mr. David Sparks, Director, Office of Odometer Fraud, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590. Telephone: (202) 366-5953. Email:
NHTSA has issued a final rule amending Part 580 to allow for the establishment of electronic odometer disclosure systems allowing odometer disclosures required by the Motor Vehicle Information and Cost Savings Act (Cost Savings Act) to be made electronically (81 FR 16107). The odometer disclosure laws and regulations protect purchasers of motor vehicles from odometer fraud.
The scope of this rulemaking's cost-benefit analysis was limited to the direct effects of odometer disclosures, and thus the NPRM did not explore broader issues associated with adopting purely paperless transactions for automotive sales, particularly the wider benefits to States, consumers, and other stakeholders that could arise should States adopt such systems. To assist States and other stakeholders in assessing whether to adopt purely paperless procedures, NHTSA now seeks additional comments on these potential benefits and the plans and interest among the States in adopting these systems.
There were 17.3 million new vehicles
Now that NHTSA has lifted this general prohibition, the Department anticipates that States may be interested in moving towards completely electronic transactions for motor vehicles. As experience in other sectors of the economy has demonstrated, electronic transactions would be expected to lead to many efficiency gains to the significant number of entities involved in motor vehicle transactions, including motor vehicle dealers; motor vehicle auction companies; insurance and casualty companies; banks, credit unions, and finance companies; salvage companies and junk yards; state departments of motor vehicles; and consumers; and all other persons or entities required to make odometer disclosures. For example, stakeholders will no longer be required to scan hard copy documents with wet signatures to retain or manage records electronically. Moreover, reductions in postage and delivery costs, including overnight delivery, will accrue from removing the need to mail hard copy documents with wet signatures. NHTSA also anticipates that paperless transactions will reduce the time needed to complete vehicle transactions, which could lead to substantial additional cost savings. States adopting electronic transaction systems may also see cost savings through reduction in records retention and retrieval costs and by eliminating the need to print titles on secure paper. NHTSA estimates that there are at least 48.5 million transactions involving odometer disclosures completed annually by motor vehicle dealers and private parties through private party
Therefore, NHTSA believes that there is strong incentive for States to adopt electronic transaction systems. To assist States in making prudent decisions based on the best available evidence, in this document, NHTSA requests comment on the ways that adopting purely paperless transaction systems may reduce vehicle transaction costs for States, consumers, and other stakeholders. Specifically, can these systems reduce State transaction costs for receiving, processing, and storing odometer disclosures and creating titles? Also, will adopting purely paperless procedures reduce transaction costs for (i) wholesale transactions; (ii) auction transactions; (iii) salvage or junk transactions; or (iv) retail transactions? Moreover, what benefits will purely paperless transactions have for stakeholders, including from the following industries: (i) Insurance; (ii) salvage and whole automobile auctions; (iii) new, used, and wholesale vehicle dealers; (iv) vehicle registration companies; and/or (v) technology companies providing systems for any of the above industries?
NHTSA also requests comment on any plans that States currently have to adopt electronic transaction systems now that the Federal requirement for paper odometer disclosures has been eliminated, as well as the general interest that States may have in adopting these systems even if no specific plans exist yet. In addition, NHTSA requests comment on the steps the agency can take to assist in assisting States in determining whether and how best to implement such procedures. For instance, (i) what questions do States have in determining whether and how to implement these systems and what can NHTSA do to help?; (ii) What can be done to support development of secure odometer disclosure programs and electronic titling systems more generally?; (iii) How can NHTSA support the interoperability of multiple state electronic titling systems?
Instructions for submitting comments are described above.
Issued in Washington, DC, pursuant to authority delegated in 49 CFR 1.81, 1.95, and 501.8(d).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS proposes regulations to implement Amendment 120 to the Fishery Management Plan (FMP) for Groundfish of the Bering Sea and Aleutian Islands (BSAI) Management Area (BSAI FMP) and Amendment 108 to the FMP for Groundfish of the Gulf of Alaska (GOA) (GOA FMP), collectively referred to as Amendments 120/108. If approved, Amendment 120 would limit the number of catcher/processors (C/Ps) eligible to operate as motherships receiving and processing Pacific cod from catcher vessels (CVs) directed fishing in the BSAI non-Community Development Quota Program (CDQ) Pacific cod trawl fishery. This proposed rule is intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), Amendments 120/108, the BSAI and GOA FMPs, and other applicable laws.
Submit comments on or before October 28, 2019.
You may submit comments on this document, identified by FDMS Docket Number NOAA-NMFS-2019-0060, by any of the following methods:
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Electronic copies of Amendment 120 to the BSAI FMP, Amendment 108 to the GOA FMP, the Regulatory Impact Review (RIR; also referred to as the Analysis) and the draft National Environmental Policy Act (NEPA) Categorical Exclusion evaluation document may be obtained from
Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this rule may be submitted by mail to NMFS at the above address; and by email to
Bridget Mansfield, 907-586-7228.
NMFS manages the groundfish fisheries in the exclusive economic zone of the BSAI and GOA under the BSAI and GOA FMPs, respectively. The North Pacific Fishery Management Council (Council) prepared the BSAI and GOA FMPs under the authority of the Magnuson-Stevens Act, 16 U.S.C. 1801
This proposed rule would implement Amendments 120/108 to the BSAI and GOA FMPs, respectively. The Council submitted Amendments 120/108 for review by the Secretary of Commerce (Secretary), and a Notice of Availability (NOA) of Amendments 120/108 was published in the
In April 2019, the Council voted to recommend Amendments 120/108 to require that a C/P acting as a mothership receiving deliveries of BSAI non-CDQ Pacific cod from CVs directed fishing with trawl gear must be designated on a groundfish LLP license with a “BSAI Pacific cod trawl mothership endorsement.” Directed fishing is defined as any fishing activity that results in retention of an amount of a species on board a vessel that is greater than the maximum retainable amount for that species (see definition at 50 CFR 679.2). The term “mothership”, as defined at § 679.2, means a vessel that receives and processes groundfish from other vessels. As included in the regulatory text and discussed in the preamble of this proposed rule, the term “BSAI Pacific cod trawl mothership endorsement” refers to an endorsement on a groundfish LLP license that would allow the C/P vessel designated on that groundfish LLP license to operate as a mothership and receive and process catch of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery. This proposed rule would establish the eligibility criteria and issuance process for this new endorsement. C/Ps not designated on groundfish LLP licenses will be prohibited from participating in the BSAI non-CDQ Pacific cod trawl directed fishery as a mothership. “BSAI non-CDQ Pacific cod trawl CV directed fishery” is defined at § 679.2 as the fishery in which CVs are directed fishing for BSAI non-CDQ Pacific cod allocated to the CV trawl sector, as specified at § 679.20(a)(7)(ii)(A).
To implement Amendments 120/108, NMFS would issue a BSAI Pacific cod trawl mothership endorsement to a groundfish LLP license with Bering Sea or Aleutian Islands area and C/P operation endorsements if the groundfish LLP license had an Amendment 80 or non-Amendment 80 C/P designated on it, and the groundfish LLP license is credited with receiving and processing a mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV fishery in each of the qualifying years 2015 through 2017 (qualifying period). The Council noted its intent, and Section 2.6.10 of the Analysis specifies, that qualification for a C/P to operate as a mothership should be based on the history of that vessel receiving deliveries of targeted non-CDQ BSAI Pacific cod harvested by CVs using trawl gear during each year in the qualifying period. This proposed rule defines the term “mothership trip target” as, in the aggregate, the groundfish species that is delivered by a CV to a given C/P operating as a mothership in an amount greater than the retained amount of any other groundfish species delivered by the same CV to the same C/P for a given week. For those C/Ps that received and processed at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV fishery in each year of the qualifying period, only one groundfish LLP license on which the vessel was designated during the qualifying period would be eligible to receive the BSAI Pacific cod trawl mothership endorsement. Further, Amendments 120/108, if approved by the Secretary, would prohibit all Amendment 80 C/Ps not designated on an Amendment 80 QS permit and an Amendment 80 LLP license, or not designated on an Amendment 80 LLP/QS license, from receiving and processing Pacific cod harvested in directed fishing for Pacific cod in the BSAI and GOA.
The following sections of this preamble provide a brief description of (1) the LLP, the BSAI Pacific cod trawl CV fishery, and related management programs; (2) the need for this proposed rule; (3) the proposed eligibility criteria and process for obtaining the new endorsement authorizing receipt and processing of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery; and (4) the prohibition on replaced Amendment 80 C/Ps from receiving and processing Pacific cod harvested by directed fishing in the BSAI and GOA Pacific cod fisheries.
The Council and NMFS have long sought to control the amount of fishing effort in the BSAI groundfish fisheries to ensure that the fisheries are sustainably managed and do not exceed established biological thresholds. One of the measures used by the Council and NMFS to control fishing effort is the LLP, which limits access to the groundfish fisheries in the BSAI. The LLP is intended to prevent unlimited entry into groundfish fisheries managed under the BSAI FMP. With some limited exceptions, the LLP requires that persons hold a groundfish LLP license and have designated on a groundfish LLP license each vessel that is used to fish in federally managed groundfish fisheries.
NMFS published the final rule to implement the LLP for BSAI groundfish fisheries on October 1, 1998 (63 FR 52642), and fishing under the requirements of the LLP began on January 1, 2000. The preamble to the final rule implementing the BSAI groundfish LLP and the EA/RIR prepared for that action describe the
The key components of the LLP are briefly summarized as follows. The BSAI groundfish LLP established specific criteria to allow a vessel to receive a groundfish LLP license and continue to be eligible to fish in groundfish directed fisheries managed under the BSAI FMP. Vessels under 32 feet length overall (LOA) in the BSAI, and vessels using jig gear in the BSAI that are less than 60 feet LOA and that deploy no more than five jigging machines are exempt from the requirements to have a groundfish LLP license.
Under the LLP, NMFS issued licenses that (1) endorse fishing activities in specific regulatory areas in the BSAI; (2) restrict the length of the vessel on which the LLP license may be used; (3) designate the fishing gear that may be used on the vessel (
In order to receive a BSAI groundfish LLP license, a vessel owner had to meet minimum landing requirements with the vessel during a specific time frame. Specifically relevant to this proposed rule, a vessel owner received a BSAI groundfish LLP license endorsed for a specific regulatory area in the BSAI, if that vessel met specific harvesting and landing requirements for that specific regulatory area during the qualifying periods established in the final rule implementing the LLP (63 FR 52642, October 1, 1998). A groundfish LLP license with a CV operation endorsement allows a vessel to catch but not process its catch at-sea; a groundfish LLP license with a C/P endorsement allows a vessel to harvest and process its own catch at-sea or to act as a mothership to process catch harvested and delivered by a CV. As an example, in order to receive a groundfish LLP endorsed for trawl gear in the Aleutian Islands with a C/P designation, a vessel must have met the minimum groundfish harvesting and landing requirements for the Aleutian Islands using trawl gear during the qualifying period, and must have processed the qualifying catch on board the vessel. Section 2.6.9 of the Analysis provides additional details on the LLP.
This proposed rule would modify regulations governing the deliveries of Pacific cod in the BSAI to vessels operating as motherships. The vessels primarily affected by this proposed rule are managed under three management regimes, the American Fisheries Act (AFA) Program, the Amendment 80 Program, and the allocation of Pacific cod to the BSAI trawl catcher vessel sector that was implemented under Amendment 85 to the BSAI FMP. Each of these three management regimes is described in additional detail below.
NMFS published the final rule to implement the American Fisheries Act (AFA) (BSAI FMP Amendment 61), on December 30, 2002 (67 FR 79691). The preamble to the final rule implementing the AFA and the EA/RIR prepared for that action describe the rationale and specific provisions of the AFA in greater detail (see
The Amendment 80 Program was implemented in 2008 (72 FR 52668, September 14, 2007). The preamble to the final rule implementing the Amendment 80 Program and the EA/RIR prepared for that action describe the rationale and specific provisions of Amendment 80 in greater detail (see
Each year, NMFS allocates the initial total allowable catch (ITAC) of the six Amendment 80 species, as well as crab and halibut prohibited species catch (PSC) limits, between the Amendment 80 sector and the BSAI TLAS. Allocations made to the Amendment 80 sector are exclusive to the Amendment 80 sector and not subject to harvest in other fishery sectors. The Amendment 80 sector is precluded from harvesting Amendment 80 species allocated to the BSAI TLAS. The Council's intent in establishing the BSAI TLAS was to provide harvesting opportunities for AFA C/Ps, AFA CVs, and non-AFA CVs. The ITAC represents the amount of total allowable catch (TAC) for each Amendment 80 species that is available for harvest after allocations to the CDQ Program and the incidental catch allowance (ICA) have been subtracted.
The ICA is an amount set aside for the incidental harvest of each Amendment 80 species by non-Amendment 80 vessels targeting other groundfish species in non-trawl fisheries and in the BSAI TLAS fisheries. BSAI Pacific cod ITAC (non-CDQ) for trawl gear is
Although the Council was clear in its intent to prohibit Amendment 80 vessels from harvesting Amendment 80 species allocated to the BSAI TLAS, the Council did not specifically address during its development of Amendment 80 whether Amendment 80 vessels should be eligible to serve as processing platforms for other fishery sectors. As noted earlier in this preamble, a vessel that receives and processes groundfish from other vessels is referred to as a “mothership.” Although Amendment 80 vessels operate as C/Ps (
The final rule implementing Amendment 80 clarified that Amendment 80 vessels could be used as motherships for CVs fishing in other BSAI trawl fisheries, based on public comments received on the proposed rule (72 FR 30052, May 30, 2007), further analysis by NMFS, and the lack of clearly stated Council intent to the contrary. The final rule implementing Amendment 80 modified the proposed regulations to permit this activity, noted that this revision accommodated one Amendment 80 C/P that had historically been used as a mothership, and acknowledged that the revision provided for potential future growth in the use of Amendment 80 vessels as motherships in the BSAI TLAS fisheries. A detailed description of the Council's intent and NMFS' actions regarding limitations of Amendment 80 vessels catching, receiving, and processing fish assigned to the BSAI TLAS fisheries is provided in the proposed and final rules implementing Amendment 80.
Under Pacific cod allocations prior to the final rule implementing BSAI FMP Amendment 85 (72 FR 50787, September 4, 2007), one or more harvest sectors were often unable to harvest their annual allocation of the BSAI non-CDQ Pacific cod TAC. To provide opportunities for full harvest, NMFS annually reallocated Pacific cod projected to be unharvested by some sectors to other sectors. To reduce or eliminate the need for such reallocations, Amendment 85 established direct allocations and seasonal apportionments of BSAI Pacific cod TAC for each specified sector in the BSAI Pacific cod fishery. This change reduced annual uncertainty about harvest availability within sectors and increased stability among sectors in the fishery. Because the allocation to each sector is fixed, and NMFS does not reallocate unused catch to trawl CPs in most cases, trawl C/Ps may have an incentive to engage in mothership operations to increase Pacific cod processing.
In 2017 the Council noted an increase in mothership activity since 2016 in the BSAI non-CDQ Pacific cod trawl CV directed fishery. This increased mothership activity was linked to trawl CVs delivering to C/Ps operating as motherships thereby decreasing Pacific cod landings at BSAI shoreside processing facilities. Table 2-29 in the Analysis for this action shows the rapid increase of the amount of Pacific cod harvested in the BSAI non-CDQ Pacific cod trawl CV directed fishery and delivered to C/Ps acting as motherships in recent years. Section 2.7.1 of the Analysis noted that, from 2003 through 2015, four unique C/Ps operated as motherships in the fishery, with one to three such vessels participating in any one year. One of the four C/Ps participating from 2003 through 2015 acted as a mothership in the fishery during one of those 13 years, and one acted as mothership in the fishery during three of the 13 years. Of the remaining two C/Ps, one participated as a mothership in the fishery 10 of 13 years, and the other participated as a mothership in the fishery 12 of 13 years. In 2016 and 2017, the number of C/Ps acting as motherships in the fishery jumped substantially to eight vessels, and increased again to nine vessels in 2018.
Section 2.7.1 of the Analysis noted that in 2018, 174 groundfish LLP licenses had a trawl endorsement for either the Bering Sea area or the Aleutian Islands area. A C/P endorsement is assigned to 59 of those licenses, and a CV endorsement is assigned to the remaining 115 licenses. The groundfish LLP licenses also identify whether the groundfish LLP license is associated with either the Amendment 80 or AFA programs. Twenty-six of the C/P groundfish LLP licenses are associated with Amendment 80, while 27 groundfish LLP licenses are associated with AFA C/Ps. Under current regulations, any of the 50 C/Ps not currently active in the fishery with a trawl endorsement for either the Bering Sea area or the Aleutian Islands area could enter the fishery as a mothership, if they have the proper Federal Fisheries Permit and endorsement and meet any other regulatory requirement to act as a mothership. The nine Amendment 80 C/Ps and AFA C/Ps that are active as motherships in the fishery could maintain or increase the percentage of the trawl CV sector allocation they process.
The Council noted that, as a result of increased mothership availability, the number of trawl CVs in the offshore fishery has increased. This is true particularly in the fishery's A season, when the majority of BSAI non-CDQ Pacific cod trawl CV allocation is harvested. Table 2-29 in Section 2.7.1 of the Analysis indicates that an average of 4.7 CVs in this fishery delivered Pacific cod to C/Ps acting as motherships from 2006 through 2014, compared to an average of 9 CVs from 2015 through 2017. The number of CVs in the fishery delivering to C/Ps acting as motherships continued to increase in the A season in 2018 and 2019, with 11 and 13 CVs, respectively.
A corresponding decline in deliveries to shoreside processors occurred during the same period. Eighteen different shoreside or floating processing entities took deliveries of Pacific cod from either the Bering Sea or Aleutian Islands during 2009 through 2018 (Section 2.6.14.4 of the Analysis). In any one year the number of shoreside processors that operated ranged from 10 to 13. Just under 93 percent of non-CDQ Pacific cod targeted in the Bering Sea was delivered to shoreside and other non-C/P processors from 2008 through 2018 by trawl CVs. Deliveries to that sector decreased to approximately 87 percent in 2017 and 79 percent in 2018, which the Council noted represented a substantial departure from historical delivery patterns. In comparison, in the Bering Sea from 2008 through 2018 deliveries to C/Ps acting as motherships
The potential exists for additional motherships and CVs delivering to motherships to participate in the BSAI non-CDQ Pacific cod trawl CV directed fishery. There are no current constraints on C/Ps operating as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery as long as they hold the required permits or licenses. Section 2.7.1 of the Analysis provides information indicating that up to 46 additional Amendment 80 or AFA C/Ps could enter the BSAI non-CDQ Pacific cod trawl CV directed fishery as motherships based on a range of factors. These motherships could provide processing capacity for a substantial number of additional CVs. CVs are not limited in the amount of Pacific cod from the available allocation to the BSAI non-CDQ Pacific cod trawl CV directed fishery that they can delivery to C/Ps. These estimates likely represent the maximum potential expansion of mothership processing capacity in the BSAI non-CDQ Pacific cod trawl CV directed fishery, although that maximum would likely not be realized for a number of reasons. Section 2.7.1 of the Analysis provides additional details on the potential for new C/Ps operating as motherships and for CVs to enter the BSAI non-CDQ Pacific cod trawl CV directed fishery.
Given the recent sharp increases in offshore deliveries in the BSAI non-CDQ Pacific cod trawl CV directed fishery to C/Ps operating as motherships and the potential for future growth in offshore deliveries, the Council identified two primary management concerns that it wanted to address with Amendments 120/108: (1) The likelihood of decreasing benefits from the fishery for long-time participants, including some C/Ps, shoreside processors, and communities dependent on those shoreside processors; and (2) negative impacts of a faster paced fishery, such as the increased risk of a “race for fish.” The Council noted the increase in mothership deliveries in the fishery was disrupting historical distribution patterns resulting in, and increasing the potential to have further, negative impacts on long-time participants with sustained activity in the fishery, including C/Ps operating as motherships, shoreside processors, and communities with local economies dependent on revenue and jobs created by the shoreside processors. The Council was concerned that the increase in offshore deliveries may have resulted in slightly shorter fishing seasons due to the faster pace of the fishery, negatively affecting PSC rates and vessel safety.
The Analysis (Section 2.8.2) noted that safety issues associated with compressed seasons and crowding of premium fishing areas could be made worse as more vessels enter the fishery. Public testimony has indicated that crowding may already be occurring on Bering Sea fishing grounds, where vessels are required to queue up to begin fishing for Pacific cod. Additional effort in the fishery could increase queue times and increase the risks that vessel operators are willing to take. Shorter fishing seasons may affect vessel safety as the race for fish intensifies; fish quality may suffer as Pacific cod is rushed through factory processing; global markets may respond with lower prices if large volumes of lower quality Pacific cod oversaturate markets; and local economies may receive less revenue as landings to shoreside processors, upon which associated communities have historically been dependent, continue to erode. The Council also expressed concern that recent declines in available trawl CV sector allocations of BSAI Pacific cod, noted in Section 2.6.2 of the Analysis and potential future declines could exacerbate these other problems in the fishery.
In order to address these concerns, the Council determined, and NMFS agrees, that management measures are needed to limit the offshore processing capacity in the BSAI non-CDQ Pacific cod trawl CV directed fishery. The Council also determined that any Amendment 80 C/P that was replaced under BSAI Amendment 97 (77 FR 59852; October 1, 2012) should be prohibited from operating as a mothership in the fishery. The Council recommended, and NMFS proposes two preferred alternatives for Amendment 120 and one for Amendment 108 to implement those management measures. The first preferred alternative under Amendment 120 would implement eligibility criteria for a groundfish LLP license to receive a mothership endorsement authorizing a C/P designated on that groundfish LLP license to operate in the BSAI non-CDQ Pacific cod trawl CV directed fishery as a mothership and receive and process deliveries of Pacific cod from CVs using trawl gear in the fishery. The Council considered two separate eligibility options: One for groundfish LLP licenses on which Amendment 80 C/Ps are designated and one for groundfish LLP licenses on which non-Amendment 80 C/Ps are designated. For groundfish LLP licenses on which Amendment 80 C/Ps are designated, the Council recommended the most restrictive sub-option of the three evaluated in the Analysis. This sub-option stipulates that groundfish LLP licenses on which Amendment 80 C/Ps are designated would be eligible for a mothership endorsement only if the groundfish LLP license has been credited with receiving at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year from 2015 through 2017.
The second option, addressing eligibility for groundfish LLP licenses on which non-Amendment 80 C/Ps are designated, was evaluated in Section 2.4.2 of the Analysis. Because only one groundfish LLP license on which a non-Amendment 80 C/P is designated would qualify under any of the eligibility sub-options considered for groundfish LLP licenses on which Amendment 80 C/Ps are designated, the Council initially noted that sub-options need not be considered for groundfish LLP licenses on which non-Amendment 80 C/Ps are designated in the Analysis. As a result, the Council recommended adopting the only option for eligibility for groundfish LLP licenses on which non-Amendment 80 C/P are designated. That option specified that “a catcher/processor may take directed fishery deliveries of Pacific cod from catcher vessels participating in the Bering Sea (BSAI) non-CDQ Pacific cod trawl CV fishery if the catcher/processor acted as a mothership and received targeted Pacific cod deliveries as follows: Non-Amendment 80 vessels acting as a mothership during 2015-2017.” However, in discussion during final action, the Council clarified its intent that a groundfish LLP license on which a non-Amendment 80 C/P is designated would be eligible for a mothership endorsement only if the C/P was designated on a groundfish LLP license that has been credited with receiving and processing at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year from 2015 through 2017. The Council made this clarification to ensure that eligibility criteria for groundfish LLP licenses on which Amendment 80 and non-Amendment 80 C/Ps are designated are
The second preferred alternative that would be implemented under Amendment 120 would also be implemented under Amendment 108. This preferred alternative would eliminate the ability of any Amendment 80 C/P replaced under BSAI Amendment 97 from operating as a mothership in the fishery. Thus, any Amendment 80 sector C/P not designated on an Amendment 80 QS permit and an Amendment 80 LLP license, or not designated on an Amendment 80 LLP/QS license, would be prohibited from receiving and processing Pacific cod harvested in directed fishing for Pacific cod in the BSAI or GOA.
The Council determined, and NMFS agrees, that limiting the number of C/Ps operating as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery is necessary to restore historical patterns of harvest delivery distribution between processing sectors. Reducing recent levels of deliveries to offshore processors and increasing deliveries to shoreside processors will ease the likelihood of harvesting pressure further shortening the fishing season, and mitigate the risk that a “race for fish” could continue to develop and accelerate. The Council also determined, and NMFS agrees, that this proposed rule would reasonably balance the need to limit the number of C/Ps operating as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery with the need to provide continued access and benefits to long time participants with sustained activity in the fishery, including C/Ps operating in the fishery as motherships, shoreside processors, and fishery-dependent communities.
The Council determined, and NMFS agrees, that the proposed action would likely prevent the fishing season from shortening further, because it removes the ability for additional offshore processing capacity to enter the fishery and accelerate TAC harvest or reach PSC limits more quickly. Reaching the halibut PSC limit or harvesting Pacific cod allocations increasingly quickly results in increasingly earlier fishery closures. The Council noted, and NMFS agrees, that this proposed rule could ease NMFS's inseason management challenges in gathering effort information to project when the seasonal allocations will be harvested. As described in Section 2.6.3 and 2.7.1 of the Analysis, the lengths of the A seasons in 2017 through 2019, when the bulk of the fishery's annual allocation is harvested, were the shortest on record for this fishery, and this trend was coincident with the highest numbers of C/Ps operating as motherships and highest levels of offshore deliveries compared to shoreside deliveries. The pace of fishing during those fishing seasons may have increased in part due to additional speculative entry and concerns by current participants about the increasing competition.
This proposed rule could help lengthen the fishing season and mitigate a “race for fish” by limiting the eligible groundfish LLP licenses for C/Ps operating as motherships, such that participation is generally representative of the levels seen from 2008 through 2015, when the A season lasted five weeks or longer. This proposed rule also would allow more flexibility in fishing operations by ensuring predictable levels of competition. That flexibility may help reduce PSC in the fishery and improve vessel safety, by allowing vessels to implement fishing practices known to reduce PSC and improve vessel safety. At a minimum, the proposed action is expected to minimize further negative impacts on C/Ps with long-term, sustained participation operating as motherships, as well as shoreside processors and associated fishery-dependent communities.
Under the LLP, a license can be transferred to a different vessel that is eligible to be designated on that LLP license. Although a vessel may be designated on more than one LLP license at one time, only one vessel can be designated on each LLP license at any given time. Therefore, the number of eligible groundfish LLP licenses presented in this proposed rule and the Analysis represents the maximum number of C/Ps that NMFS has determined would be eligible to receive and process Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery. If Amendments 120/108 are approved and this rule is implemented, fewer and/or different C/Ps designated on groundfish LLP licenses with a BSAI Pacific cod trawl fishery mothership endorsement may be used to receive and process Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery. The Analysis uses the current groundfish LLP license vessel designations to describe the likely impacts of the proposed action, because it is not possible to know how the vessel designations on groundfish LLP licenses may change in the future or how those groundfish LLP licenses will be used in the fishery.
The Council considered a range of factors and options in determining what criteria would qualify a groundfish LLP license for a BSAI Pacific cod trawl CV fishery mothership endorsement, including: (1) How eligible mothership trip targets would be determined; (2) the range of years during which eligible mothership trip targets would need to be made (
At its June 2018 meeting, the Council clarified that eligibility criteria should be based on mothership trip targets rather than directed fishing landings. Directed fishing is defined as any fishing activity that results in retention of an amount of a species on board a vessel that is greater than the maximum retainable amount for that species (see definition at 50 CFR 679.2). Under this definition of directed fishing, a vessel may be targeting and retaining yellowfin sole but also retaining incidentally caught Pacific cod at an amount that exceeds the maximum retainable amount for Pacific cod. NMFS would consider the vessel to be directed fishing for yellowfin sole and directed fishing for Pacific cod in such a situation. Thus, limiting access of C/Ps acting as motherships to the BSAI directed non-CDQ Pacific cod trawl CV fishery based on a history of receiving and processing directed fishing landings of Pacific cod could result in C/Ps meeting eligibility criteria based on receiving and processing incidental catch of Pacific cod from trawl CVs.
Under this proposed rule, “mothership trip target” is defined as,
The Analysis presented to the Council explained that different numbers of groundfish LLP licenses would qualify for a BSAI Pacific cod trawl mothership endorsement depending on whether weekly production reports or fish tickets are used to determine which C/Ps received deliveries of targeted Pacific cod during the qualifying period. If weekly production reports from the qualifying period are used to determine receipt of targeted Pacific cod deliveries, then two groundfish LLP licenses would qualify for a BSAI Pacific cod trawl mothership endorsement. If fish ticket data are used, then three groundfish LLP licenses would be eligible to receive a BSAI Pacific cod trawl mothership endorsement. The record demonstrates that the Council understood that two groundfish LLP licenses would qualify for the endorsement under the preferred alternative. This suggests to NMFS that only weekly production reports should be used in determining qualification. Further, relying on weekly production report data would qualify the two C/Ps that have long-term, sustained participation as motherships in the fishery, which is also consistent with the Council's intent.
The Council considered one range of years, 2015 through 2017, to define the qualifying period in which mothership trip targets of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery delivered to C/Ps operating as motherships would qualify a groundfish LLP license on which the C/P was designated for a mothership endorsement. This range includes the years directly before and after 2016, which was the year that five additional Amendment 80 C/Ps entered the BSAI non-CDQ Pacific cod trawl CV directed fishery as motherships, more than doubling the number of participating C/Ps operating as motherships in the fishery. There has not been the same increase in non-Amendment 80 C/P participation as motherships in the BSAI Pacific cod fishery during this same period. The increase in Amendment 80 C/Ps operating as motherships resulted in the Council expressing concern about the increased amount of BSAI non-CDQ Pacific cod delivered offshore in the fishery, and the corresponding decrease in the amount delivered onshore. The Council considered including participation in the fishery prior to 2015, but determined that participation prior to 2015 was stable and represented sustained effort. The Council chose to end the qualifying period with 2017, because the Council initiated the Analysis for Amendments 120/108 in 2017 and announced its intent to limit the number of C/Ps operating as motherships based on activity occurring prior to December 31, 2017. Thus, the Council considered participation after 2017 to represent speculative entry into the fishery. Finally, these were the most recent three years of data available at the time the Council signaled its intent to limit the number of C/Ps operating as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery, and a three-year qualifying period is consistent with the length of qualifying periods set in similar Council actions (
The Council was aware of the potential for additional effort to enter the BSAI non-CDQ Pacific cod trawl CV directed fishery while the Council developed and considered Amendments 120/108. The Council was also aware that additional or speculative effort could enter the fishery to establish some history in it, potentially impacting existing participants in the fishery by further shortening the fishing season and increasing the “race for fish” (see Section 2.6.3 of the Analysis for a description of fishing patterns and seasons), and further shifting the historical delivery patterns in this fishery from shoreside processors to offshore processors. To dampen the effect of additional or speculative entry into the BSAI non-CDQ Pacific cod trawl CV directed fishery, on December 9, 2017, the Council signaled its intent to establish eligibility criteria based on activity occurring prior to December 31, 2017. Although this date was not binding on future Council actions, the Council clearly indicated at its December 2017 meeting that December 31, 2017 could be used as a reference date for a future management action to limit C/Ps from acting as motherships in the BSAI trawl catcher vessel Pacific cod fishery. In taking such action, the Council intended to promote awareness that the Council may develop a future management action; to provide notice to the public that any current or future mothership operations in the offshore sector of the BSAI non-CDQ Pacific cod trawl CV directed fishery may be affected or restricted; and to discourage speculative participation and behavior in the fishery while the Council considered whether to initiate a management action to further limit mothership participation in the fishery.
After the Council noted the recent increase of C/Ps operating as motherships in the fishery from three C/Ps in 2015 to eight C/Ps in 2016 and 2017, and signaled its intent to limit this activity in December 2017, the number of participating C/Ps acting as motherships increased to nine in 2018. The 2018 level was triple the maximum level of participation by C/Ps acting as motherships during any year from 2003 through 2015, and over four times the average level from 2003 through 2015. Because the Council identified in 2017 the recent increase in C/Ps acting as motherships in the fishery as a contributing factor to the increased pace of the fishery and shortened fishing seasons, the Council was concerned that the even greater increase in participation by C/Ps acting as motherships after 2017 would further shorten the fishing season. The Council believed that this would decrease the Council's ability to maximize the value of the fishery, and would negatively impact fishery participants and threaten the viability of the fishery. The selection of the 2015 through 2017 qualifying period is consistent with the Council's clearly stated policy objectives for this action.
In selecting the years 2015 through 2017 as the qualifying period, the
Section 2.7.2 of the Analysis details the number of groundfish LLP licenses that would and would not qualify for a BSAI Pacific cod trawl mothership endorsement for each of the options described above. Under the first sub-option described above, seven groundfish LLP licenses on which an Amendment 80 C/P was designated would be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year of the qualifying period and therefore would be eligible to receive a BSAI Pacific cod trawl mothership endorsement. Twelve groundfish LLP licenses on which an Amendment 80 C/P was designated would not qualify for the endorsement under this sub-option. Under the second sub-option, six groundfish LLP licenses on which an Amendment 80 C/P was designated would be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year of the qualifying period, and therefore would be eligible to receive the endorsement. Thirteen groundfish LLP licenses on which an Amendment 80 C/P was designated would not qualify for the endorsement under the second sub-option. Under the third sub-option, selected by the Council as its preferred sub-option, one groundfish LLP license on which an Amendment 80 C/P was designated would be eligible to receive the endorsement. Eighteen groundfish LLP licenses on which an Amendment 80 C/P was designated would not qualify for the endorsement under the third sub-option.
Since only one non-Amendment 80 C/P received deliveries of BSAI directed, non-CDQ Pacific cod from trawl CVs in each year from 2015 through 2017, the groundfish LLP license on which that vessel was designated during the qualifying period is the only one that would be eligible for the BSAI Pacific cod trawl mothership endorsement under the terms of all of the sub-options established for the Amendment 80 C/Ps. The Council selected the one non-Amendment 80 option, Alternative 2, Option 2, as its preferred option to provide eligibility for the groundfish LLP license on which the one non-Amendment 80 C/P that operated in the fishery as a mothership was designated. The Council decided to exclude non-Amendment 80 true motherships from this action based on information showing minimal participation taking deliveries from the BSAI cod target fishery from 2008 through 2018, as noted in Section 2.6.14.5 of the Analysis.
The Council determined, and NMFS agrees, that the selected sub-option 3 for Amendment 80 C/Ps, and the selected option, as clarified by the Council, for non-Amendment 80 C/Ps would allow the fishery to be fully prosecuted without the risk of a continued increase in harvest pressure that could continue to shorten the fishing season or decrease deliveries to the shoreside processors. The Council did not choose the sub-options for one- or two-year participation requirements for groundfish LLP licenses on which Amendment 80 C/Ps were designated, because either option would have allowed participation in a manner that is not reflective of the historical harvest patterns in the fishery prior to the recent increase in Amendment 80 C/Ps acting as motherships. The selected eligibility criteria for groundfish LLP licenses are consistent with the Council's intent to provide continued access and benefits to C/Ps that had sustained participation operating as a mothership, as well as shoreside processors that historically accepted higher levels of Pacific cod deliveries in the fishery.
Restricting Amendment 80 C/Ps operating as motherships in directed Pacific cod fisheries in the BSAI and GOA to only those designated on an Amendment 80 QS permit and an Amendment 80 LLP license or on an Amendment 80 LLP/QS license is intended to ensure that Amendment 80 C/Ps that are replaced under regulations promulgated under BSAI Amendment 97 (77 FR 59852; October 1, 2012) cannot be used to circumvent the intent of the proposed action. This ensures that both current and replaced Amendment 80 C/Ps are subject to the limitations placed on the fleet under this proposed rule. If an Amendment 80 C/P designated on a groundfish LLP license that qualifies for the BSAI Pacific cod trawl mothership endorsement is replaced, the endorsement transfers with the Amendment 80 QS permit and LLP license or the combined QS permit/LLP license to the replacement vessel designated on the license and permit. This proposed provision thus eliminates the opportunity for both the replacement vessel and the replaced vessel to be used as a mothership in the BSAI non-CDQ Pacific cod trawl CV fishery. This provision expands the limitations of this proposed rule, which is otherwise focused on the BSAI non-CDQ Pacific cod trawl CV directed fishery, to include all mothership activity in the BSAI and GOA Pacific cod fisheries. This expansion reflects the Council's intent to prohibit the expanded use of those C/Ps once they exit the Amendment 80 program. If this proposed provision were not included in this proposed rule, a replaced Amendment 80 C/P would continue to be allowed to operate as a mothership and receive and process Pacific cod harvested by vessels directed fishing for Pacific cod, in addition to the C/P that replaced it. This proposed provision closes that potential loophole in the regulations and therefore meets the Council's intent of allowing only one Amendment 80 C/P and one non-Amendment 80 C/P to operate as a mothership in the BSAI non-CDQ Pacific cod trawl directed fishery in the future. Further, this approach is consistent with the Council's practice of limiting the ability of catch share program participants to increase
As noted in the Analysis in Section 2.7.3.2, the Council determined that establishing a limit on the amount of Pacific cod the two eligible C/Ps operating as motherships could receive, commonly known as a “sideboard,” would: Increase management costs, increase management complexity for the Council and NMFS, and potentially increase the incidental catch of Pacific cod delivered to C/Ps that qualify for the BSAI Pacific cod trawl mothership endorsement. The Council and NMFS determined that these potential costs outweigh the benefits of implementing a sideboard. Further, public testimony indicated that there are operational constraints on a C/P's ability to accept increases in Pacific cod deliveries, making sideboards unnecessary for limiting offshore deliveries. These constraints include space limitations, limits on freezing and processing capacity, and regulatory prohibitions on mixing tows in single tanks.
Section 2.7.3.2. of the Analysis states that without a sideboard, it would be possible for the C/Ps designated on a groundfish LLP license that qualifies under this proposed rule for an endorsement to operate as a mothership in this fishery to increase the amount of Pacific cod they accept from CVs in this fishery, but the potential amount of increase cannot be known with any certainty. This concern was expressed by the Council and some members of the public. However, because the C/Ps designated on a groundfish LLP license that would be eligible for a BSAI Pacific cod trawl mothership endorsement have been operating in a fishery where participants compete for a portion of the sector allocation, incentives exist to operate at capacity and as efficiently as possible. These incentives will remain in place under the proposed rule, since the C/Ps designated on an eligible groundfish LLP license will still compete with the shoreside and floating processors for a share of the fishery. Further, the Analysis (Section 2.10) and public testimony received on this issue clearly stated that imposing a sideboard would increase the complexity of the action and could result in a sideboard limit that would be confidential or too small to allow NMFS to open the fishery at the start of the A season. NMFS could deem a sideboard to be too small to open the fishery if the sideboard amount could be harvested before NMFS received data in time to close the fishery before the sideboard was exceeded.
There is also the potential for negative impacts of a Bering Sea sideboard on both the Bering Sea and Aleutian Islands directed Pacific cod trawl fisheries. Under certain conditions a relatively small sideboard in the Bering Sea could result in increased effort in the Aleutian Islands, resulting in negative impacts on the shoreside processors in the Aleutian Islands. The Council determined, and NMFS agrees, that it was neither necessary nor appropriate to establish a sideboard in the Bering Sea for the two C/Ps designated on a groundfish LLP license that qualify for the BSAI Pacific cod trawl mothership endorsement. The impact in the Bering Sea of implementing a Bering Sea sideboard would primarily be a change in the distribution of harvest effort, but would be tempered because only two groundfish LLP licenses will qualify for the BSAI Pacific cod trawl mothership endorsement. Tightly limiting the number of C/Ps that qualify to operate as a mothership in the BSAI non-CDQ Pacific cod trawl CV directed fishery and not implementing a sideboard was the preferred management approach.
The increase in deliveries of BSAI non-CDQ Pacific cod from the trawl CV directed fishery to C/Ps operating as motherships has resulted in a corresponding decline in the amount of Pacific cod delivered to onshore processing facilities. The Council determined, and NMFS agrees, that these Pacific cod deliveries are an important financial component to Bering Sea inshore processing operations and fishery dependent communities in the BSAI: Dutch Harbor/Unalaska, King Cove, Akutan, Sand Point, St. Paul, Adak, Atka, and the Aleutians East Borough. For shoreside processing operations, Pacific cod is second only to pollock in terms of volume, and these high-volume fisheries help ensure a more stable workforce in these remote communities and increase economic activity, as described in Sections 2.8.3 through 2.8.5 of the Analysis. Limiting the C/Ps that can operate as a mothership to only the historical participants is consistent with the objectives of this action to address the recent and rapid increase in deliveries of Pacific cod offshore and the resulting negative impacts to the shoreside processors and fishery-dependent communities, consistent with National Standard 8. The Council has utilized the best available economic and social data to evaluate the sustained participation of fishing communities.
In fisheries where circumstances motivate fishermen to race against each other to harvest as much fish as they can before the annual catch limit or the PSC limit is reached and the fishery closes for the season, participants can have a substantial disincentive to take actions to reduce bycatch use and waste, particularly if those actions could reduce groundfish catch rates. In a “race for fish,” participants who choose not to take actions to reduce bycatch and waste stand to gain additional groundfish catch by continuing to harvest at a higher bycatch rate, at the expense of any vessels engaged in bycatch avoidance. By limiting processing capacity in the offshore sector of the BSAI non-CDQ pacific cod trawl CV directed fishery and reducing pressure to harvest the BSAI Pacific cod trawl CV allocation quickly, this proposed action would help to reduce incentives for a “race for fish” and provide participating CVs more flexibility in fishing operations, because participation in the fishery would be more stable and predictable over the long term, thereby allowing them to choose fishing operations that better avoid PSC (Section 2.7.1 and 2.8.2 of the Analysis).
This proposed rule would not affect annual halibut PSC limits, but it could help maintain or reduce halibut PSC rates in the fishery. While such savings are not guaranteed or predictable, due to the suite of variables that can affect PSC rates, the proposed action addresses concerns that increases in the number of C/Ps operating as motherships could increase PSC rates during shorter fishing seasons at a time when Pacific cod Allowable Biological Catch (ABC) is declining in the Bering Sea, thus creating incentives to abandon fishing practices that have reduced halibut PSC (Section 2.8.2 of the Analysis). Additionally, PSC limits for this fishery would continue to be established each year under the process analyzed in the EA/RIR/IRFA for Amendment 111 (80 FR 71649, November 16, 2015) to the BSAI FMP (see
As explained earlier in this preamble, the Council and NMFS recognized at the time Amendment 80 was implemented that participation by Amendment 80 vessels as motherships in the offshore BSAI TLAS fisheries could continue or even increase. However, the proportion of the BSAI non-CDQ Pacific cod trawl CV directed fishery catch now being harvested and delivered to Amendment 80 C/Ps operating as motherships is substantially greater than it was at the time the Amendment 80 Program was implemented.
The final rule for the Amendment 80 Program (72 FR 52668, September 14, 2007) that allowed Amendment 80 C/Ps to operate as motherships noted that only one Amendment 80 C/P was receiving and processing catch delivered from one non-Amendment 80 CV using trawl gear in the BSAI TLAS fishery prior to the implementation of the Amendment 80 Program. The 2008 final rule noted the practice of delivering unsorted catch from non-Amendment 80 CVs to Amendment 80 C/Ps was not widespread at that time. The final rule also noted that permitting this practice was unlikely to create a significant shift in processing patterns away from shoreside processors based on data available at that time, particularly if then-current rates of delivery of unsorted BSAI TLAS catch from CVs to C/Ps operating as motherships for processing continued. Importantly, the final rule noted that NMFS could not predict the extent to which that practice might increase in the future or whether the practice would have adverse effects on existing processing operations (
From 2003 through 2015, no more than two Amendment 80 C/Ps participated as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery in any one year (Section 2.7.1 of the Analysis), and this participation rate was more or less in line with NMFS's previous expectations. However, in each year from 2016 through 2018, the practice of trawl CVs delivering non-Amendment 80 catch to Amendment 80 C/Ps operating as motherships expanded significantly, with six to seven Amendment 80 C/Ps and two AFA C/Ps operating as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery.
The Council determined, and NMFS agrees, that it is appropriate to review the policies adopted for the BSAI TLAS fisheries under the Amendment 80 Program and the fishing operations in those fisheries, and take action, if necessary, as fishing patterns change from those observed at the time the Amendment 80 Program was implemented. As a result, the Council concluded, and NMFS agrees, at this time it is necessary to limit activity of C/Ps operating as motherships receiving and processing BSAI non-CDQ Pacific cod from CVs using trawl gear in the directed fishery.
This proposed rule would implement Amendment 120 to the BSAI FMP and Amendment 108 to the GOA FMP. This proposed rule would establish eligibility criteria for, and a process to issue, a new endorsement to groundfish LLP licenses that would authorize C/Ps designated on those licenses to operate as a mothership and receive and process deliveries of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery. Regulations at 50 CFR 679.2 define a mothership as a vessel that receives and processes groundfish from other vessels. Any C/P that meets the mothership definition at § 679.2 or has a mothership designation on its Federal Fisheries Permit will be considered a mothership under this action. However, true motherships, other at-sea processors, and shoreside processors would not be restricted by this action.
Under this proposed action, NMFS would issue a BSAI Pacific cod trawl mothership endorsement to an Amendment 80 or non-Amendment 80 groundfish LLP license with Bering Sea or Aleutian Islands area and C/P operation endorsements if the groundfish LLP license is credited with receiving and processing at least one legal mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year of the qualifying period from 2015 through 2017. Further, under this proposed rule, any Amendment 80 vessel not designated on an Amendment 80 QS permit and Amendment 80 LLP license or on an Amendment 80 LLP/QS license would be prohibited from receiving and processing Pacific cod harvested in the Pacific cod directed fishery in the BSAI and the GOA.
Based on the information provided in the Analysis and the official record, NMFS has determined that two groundfish LLP licenses would be eligible to be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year of the qualifying period and receive a BSAI Pacific cod trawl mothership endorsement. One is an Amendment 80 groundfish LLP license and one is an AFA groundfish LLP license. Therefore, under this proposed rule, those two groundfish LLP licenses would be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year of the qualifying period and receive a BSAI Pacific cod trawl mothership endorsement. Based on NMFS's catch records, both were the sole groundfish LLP license on which a C/P that received and processed at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery in each year of the qualifying period was designated during the qualifying period. As a result, NMFS anticipates that a total of two groundfish LLP licenses would receive a BSAI Pacific cod trawl mothership endorsement, resulting in up to two C/Ps that could operate as a mothership authorized to receive and process Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery.
This proposed rule would not preclude a vessel without a BSAI Pacific cod trawl mothership endorsement from receiving and processing incidental catch of Pacific cod that is caught while participating in other directed fisheries. For example, a C/P without a BSAI Pacific cod trawl mothership endorsement could participate in the BSAI TLAS yellowfin sole directed fishery and receive and process directed catch of BSAI TLAS yellowfin sole with incidental catch of BSAI Pacific cod, provided that the vessel has met all applicable requirements to participate in the BSAI TLAS yellowfin sole directed fishery and the incidental catch of BSAI Pacific cod is at or under the maximum retainable amount (MRA) for Pacific cod. This proposed action would not preclude an Amendment 80 or a non-Amendment 80 vessel from participating as a C/P and processing its own catch in the BSAI non-CDQ Pacific cod trawl CV directed fishery. As noted above, it would not preclude a true mothership, other at-sea processor, or shoreside processor from receiving and processing Pacific cod harvested by a CV using trawl gear in the BSAI non-
NMFS can determine which and how many landings were received by a vessel designated on a specific groundfish LLP license during a particular timeframe. “Landing” means offloading fish (see 50 CFR 679.2), and is used interchangeably with “deliveries” in the preamble of this proposed rule. Regulations at 50 CFR 679.4(k) require an LLP license holder to designate a specific vessel on which the license will be used. This requirement allows NMFS to credit vessel deliveries to a specific LLP license. NMFS also collects vessel delivery data in the form of weekly production reports from C/Ps operating as motherships, which include information on the species and amounts received. From these data, NMFS has created an official record with all relevant information necessary to determine legal mothership trip targets that can be credited to groundfish LLP licenses with a C/P designation.
The official record created by NMFS contains vessel delivery data and the groundfish LLP licenses to which those deliveries are credited. The official record includes the documentation of specific groundfish LLP licenses, including vessels designated on them, and other relevant information necessary to credit vessel deliveries to specific groundfish LLP licenses. NMFS presumes the official record is correct, and a person wishing to challenge the presumptions in the official record would bear the burden of proof through an evidentiary and appeals process. Evidence of the number of mothership trip targets of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery is based on legally required production reports submitted to NMFS by C/Ps, as required by 50 CFR 679.5(c)(6).
In order for a groundfish LLP license to receive a BSAI Pacific cod trawl mothership endorsement and thus be authorized to receive and process deliveries of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery, NMFS must first determine that the groundfish LLP license is an eligible license, and then must determine that the eligible license can be credited with one or more mothership trip targets of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery for each year during the qualifying period. Under this proposed rule, NMFS would identify as eligible those groundfish LLP licenses with Bering Sea or Aleutian Islands area and C/P operation endorsements on which an Amendment 80 or non-Amendment 80 C/P was designated when the groundfish LLP license was used to receive and process at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery during each year from 2015 through 2017.
Based on the official record, NMFS has identified two groundfish LLP licenses that would be eligible to be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery for each year during the qualifying period. Neither of these groundfish LLP licenses had more than one C/P designated on it during the qualifying period. Therefore, NMFS would credit these two groundfish LLP licenses with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery for each year during the qualifying period under this proposed rule. NMFS proposes to list these two groundfish LLP licenses in Table 57 to part 679 to facilitate the public's ability to review their catch records and determine if additional groundfish LLP licenses may be eligible to receive the endorsement. Additional groundfish LLP licenses may qualify for an endorsement through the proposed administrative adjudicative process described below. If a holder of a groundfish LLP license believes the groundfish LLP license would meet the eligibility criteria described above, but the license is not listed in proposed Table 57 to part 679, or if a license holder disagrees with a groundfish LLP license to which NMFS would assign the BSAI Pacific cod trawl mothership endorsement, the holder would have the opportunity to challenge NMFS's determination as described in the following section of this preamble.
NMFS has determined the groundfish LLP licenses identified in proposed Table 57 can be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery for each year during the qualifying period, based on the official record, and those groundfish LLP licenses would receive a BSAI Pacific cod trawl mothership endorsement. If BSAI Amendment 120 is approved and this action is implemented in a final rule, then, in accordance with the regulatory text of the final rule, NMFS would issue a notification of eligibility and a revised groundfish LLP license with a BSAI Pacific cod trawl mothership endorsement to the holders of the groundfish LLP licenses identified in proposed Table 57, using the address on record at the time the notification is sent.
For all those groundfish LLP licenses with an Amendment 80 or AFA, Bering Sea or Aleutian Islands area, and C/P operation endorsements, but not listed in proposed Table 57, NMFS would notify the holders that the groundfish LLP license is not eligible for a BSAI Pacific cod trawl mothership endorsement based on the official record, using the address on record at the time the notification is sent. NMFS would provide the holder with an opportunity to submit information to NMFS to rebut the official record. NMFS would provide a single, 30-day evidentiary period, beginning on the date that notification is sent, for a groundfish LLP license holder to submit any information or evidence to demonstrate that the information contained in the official record is inconsistent with the holder's records.
A groundfish LLP license holder who submits claims that are inconsistent with information in the official record would have the burden of proving that the submitted claims are correct. NMFS would not accept claims that are inconsistent with the official record, unless they are supported by clear, written documentation. NMFS would evaluate all additional information or evidence submitted within the 30-day evidentiary period. If NMFS determines that the additional information or evidence proves that the groundfish LLP license holder's claims are correct, NMFS would amend the official record in accordance with that information or evidence. However, if, after the 30-day evidentiary period, NMFS determines that the additional information or evidence does not prove that the groundfish LLP license holder's claims were correct, NMFS would deny the claim. NMFS would notify the applicant that the additional information or evidence did not meet the burden of proof to overcome the official record through an initial administrative determination (IAD).
NMFS's IAD would indicate the deficiencies and discrepancies in the information or evidence that is submitted in support of the claim. NMFS's IAD would indicate which claims could not be approved based on the available information or evidence, and provide information on how an applicant could appeal an IAD. The procedure for appealing an IAD through NMFS's National Appeals Office is described at 15 CFR part 906 (79 FR 7056, February 6, 2014). During the pendency of an administrative adjudication leading to a final agency action, NMFS would issue an interim (temporary, non-transferable) license to an applicant who was authorized to participate in the fishery as a mothership in the year before the IAD is issued and who makes a credible claim to eligibility for a BSAI Pacific cod trawl mothership endorsement. Such an applicant would be eligible for a non-transferable interim license pending the resolution of his or her claim pursuant to the license renewal provisions of 5 U.S.C. 558. The non-transferable, interim license would authorize the applicant to operate as a mothership and receive and process Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery, and would be effective until final agency action on the appeal. At that time, the person who appealed would receive either a transferable license with the endorsement or a transferrable license without the endorsement, depending on the final agency action.
The following provides a brief summary of the regulatory changes that would be made by this proposed rule. In order to implement Amendments 120/108, this proposed rule would:
(1) Add § 679.4(k)(15) to include the provisions that are necessary to qualify for and receive a BSAI Pacific cod trawl mothership endorsement;
(2) Add § 679.7(i)(12) to prohibit the receipt and processing by a C/P operating as a mothership of Pacific cod harvested by CVs directed fishing for Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery without a copy of a valid groundfish LLP license with a BSAI Pacific cod trawl mothership endorsement;
(3) Add § 679.7(o)(3)(v) to prohibit the use of an Amendment 80 C/P to receive and process Pacific cod harvested from directed fishing in Pacific cod fisheries in the BSAI or GOA, if that C/P is not designated on an Amendment 80 QS permit and an Amendment 80 LLP license or on an Amendment 80 LLP/QS license; and
(4) Add Table 57 to part 679 to list those groundfish LLP licenses NMFS has determined would be eligible, would be credited with at least one mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery for each year of the qualifying period, and would receive a BSAI Pacific cod trawl mothership endorsement.
Pursuant to sections 304(b)(1)(A) and 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with Amendments 120/108 to the BSAI and GOA FMPs, respectively, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration of comments received during the public comment period.
This proposed rule has been determined to be not significant for the purposes of Executive Order 12866.
An RIR was prepared to assess all costs and benefits of available regulatory alternatives. A copy of this analysis is available from NMFS (see
This IRFA was prepared for this proposed rule, as required by section 603 of the Regulatory Flexibility Act (RFA) (5 U.S.C. 603), to describe the economic impact this proposed rule, if adopted, would have on small entities. An IRFA describes why this action is being proposed; the objectives and legal basis for the proposed rule; the number of small entities to which the proposed rule would apply; any projected reporting, recordkeeping, or other compliance requirements of the proposed rule; any overlapping, duplicative, or conflicting Federal rules; and any significant alternatives to the proposed rule that would accomplish the stated objectives, consistent with applicable statutes, and that would minimize any significant adverse economic impacts of the proposed rule on small entities. Descriptions of this proposed rule, its purpose, and the legal basis are contained earlier in this preamble and are not repeated here.
This proposed rule would directly regulate the owners and operators of certain Amendment 80 and AFA C/Ps operating as motherships when receiving Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery. The proposed action would also directly regulate the owners of Amendment 80 C/Ps that have been replaced under BSAI Amendment 97 (77 FR 59852, October 1, 2012) by prohibiting such vessels from operating as a mothership in the BSAI or GOA Pacific cod fisheries.
The thresholds applied to determine if an entity or group of entities are “small” under the RFA depend on the industry classification for the entity or entities. Businesses classified as primarily engaged in commercial fishing are considered small entities if they have combined annual gross receipts not in excess of $11.0 million for all affiliated operations worldwide (50 CFR 200.2). The nine C/Ps that operated as motherships in 2018 (the most recent year of complete data) during some part of the BSAI non-CDQ Pacific cod trawl CV directed fishery operate primarily as C/Ps throughout the year in either AFA pollock fisheries or Amendment 80 fisheries; they are considered C/Ps for purposes of classification under this IRFA. Though C/Ps engage in both fish harvesting and fish processing activities, since at least 1993 NMFS Alaska Region has considered C/Ps to be predominantly engaged in fish harvesting rather than fish processing. Under this classification, the threshold of $11.0 million in annual gross receipts is the appropriate threshold to apply to identify any C/Ps that are small entities.
This proposed rule would directly regulate the activities of 19 Amendment 80 vessels owned by five companies. One of the 19 Amendment 80 C/Ps qualified for both the Amendment 80 and AFA programs. Additionally this proposed rule directly regulates the 21 AFA C/Ps that are eligible to fish for pollock under the provisions of the AFA. Not all of the 21 eligible AFA vessels participate in the harvesting of the Bering Sea pollock allocation. The 2018 Pollock Conservation Cooperative report indicates that 14 vessel owned by seven firms harvested the cooperative's pollock allocation in 2018. The owners of the remaining vessels leased their allocation within the cooperative. This action does not directly regulate three true AFA motherships that are defined under the AFA.
Analysis of directly regulated entity revenue to determine entity size as measured against the commercial fishing threshold of $11.0 million must also consider ownership affiliations and other contractual affiliations of the entities, worldwide. This proposed rule directly regulates C/Ps in the Amendment 80 fleet and the AFA fleet. At present five firms are operating a total of 19 vessels in the Amendment 80 fleet. All five firms have revenue in excess of the small entity threshold based on ownership affiliations between vessels, and therefore are considered large entities for RFA purposes. All Amendment 80 firms owning permitted vessels are members in an Amendment 80 fishing cooperative, which is a cooperative affiliation via contractual arrangements. Similarly, 14 active AFA C/P vessels are owned by 7 firms and all are large entities. Additionally, the remaining AFA eligible entities are affiliated with participating AFA firms via contractual leasing agreements. The RFA requires consideration of affiliations between entities for the purpose of assessing whether an entity is classified as small. The AFA pollock and Amendment 80 cooperatives are types of affiliation between entities. All of the AFA and Amendment 80 cooperatives have gross annual revenues that are substantially greater than $11 million. Therefore, NMFS considers members in these cooperatives to be “affiliated” large (non-small) entities for RFA purposes. The eligible Amendment 80 and AFA entities are large entities based on those affiliations.
Under this proposed rule, C/Ps acting as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery would be limited to two vessels, and all remaining AFA and Amendment 80 C/Ps would not be permitted to operate as a mothership in this fishery even if retired from and/or replaced in either the AFA or Amendment 80 Programs. However, all of the directly regulated entities have been determined to be large entities via ownership, cooperative, or contractual affiliations. Thus there are no adverse impacts on directly regulated small entities.
Trawl CVs operating in the BSAI non-CDQ Pacific cod trawl CV directed fishery are not directly regulated by this action. However, limiting the mothership markets available to CVs could negatively impact the ex-vessel price some CVs receive and impact the profitability of the vessel and firm. Due to data limitations, definitive statements on overall net revenue of the CVs in the various sectors are not available, because they would be speculative given the available information. Furthermore, indirect adverse effects on participating CVs will be somewhat offset by improved vessel safety associated with reduced crowding in highly fished areas.
Shoreside processors are not directly regulated by this action but could be indirectly affected, as they would likely benefit from limits imposed on C/Ps. The intent of this action is to implement regulations that would limit the number of C/Ps acting as a mothership in the BSAI non-CDQ Pacific cod trawl CV directed fishery and limit the amount of directed fishing deliveries of Pacific cod that can be processed by those C/Ps. These limitations on mothership activities will likely result in greater directed fishing deliveries to shoreside processing facilities. The communities that are home to these shoreside processors derive multiple benefits from economic activity related to vessel and processor activities, such as employment and income provided by the various sectors, business activity generated at fishery support services providers in the communities, and public revenues that derive from taxes on fishery related activities in the communities. Thus, indirect effects of this proposed rule on shoreside processing facilities and the communities they operate within are expected to be beneficial. However, we note that communities in which C/Ps have a strong presence could experience indirect negative effects, due to the proposed rule's limitations on motherships.
NMFS has determined that all directly regulated entities are large because of their ownership affiliations or contractual affiliations. Nonetheless, NMFS has prepared this IRFA, which provides potentially affected small entities, including those that are indirectly affected, with an opportunity to provide comments on this IRFA. NMFS will evaluate any comments received on the IRFA and may consider certifying under section 605 of the RFA (5 U.S.C. 605) that this action will not have a significant economic impact on a substantial number of small entities prior to publication of the final rule.
The RFA requires identification of any significant alternatives to the proposed rule that accomplish the stated objectives of the proposed action, consistent with applicable statutes, and that would minimize any significant economic impact of the proposed rule on small entities. The Council considered a status quo alternative and three action alternatives with several options and sub-options. The combination of options and sub-options under the action alternatives provided a reasonable range of potential alternative approaches to status quo management.
No significant alternatives were identified that would accomplish the stated objectives for limiting mothership activity in the BSAI non-CDQ Pacific cod trawl CV directed fishery consistent with applicable statutes, and that would minimize costs to potentially affected small entities more than the approaches of the preferred alternatives adopted in this proposed rule. NMFS and the Council considered four alternatives for action in this proposed rule. Alternative 1 is the no action alternative. This alternative would continue to allow non-Amendment 80 and Amendment 80 C/Ps to operate as motherships in the BSAI non-CDQ Pacific cod trawl CV directed fishery, and is inconsistent with the Council's purpose and need statement.
Alternative 2, along with Options 1, Sub-option 1.3, and Option 2, would provide the greatest limit on mothership activity, while recognizing historical participation. This alternative (and its options and sub-options), selected as the Council's preferred alternative, would allow one Amendment 80 C/P and one AFA C/P to act as a mothership to receive and process Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery.
Alternative 3 would require a sideboard on the amount of Pacific cod delivered to C/Ps operating as motherships and only applies to the Bering Sea. The Council determined that the increased management costs, increased management complexity for the Council and NMFS, limited constraints a sideboard would have on the Bering Sea directed fishery, and the potential for increases in the incidental catch of Pacific cod delivered to C/Ps that do not qualify for a mothership endorsement outweighed the benefits of implementing a sideboard. As a result the Council determined that the preferred management approach would be to tightly limit the number of C/Ps that qualify to operate as a mothership rather than implementing a sideboard.
Alternative 4, also selected as the preferred alternative, is consistent with the intent of the Council to ensure that no loophole exists to allow Amendment 80 C/Ps replaced under BSAI Amendment 97 to operate as a mothership in the BSAI non-CDQ Pacific cod trawl CV directed fishery. Alternative 4 would also clarify the intent of the Council to prevent
No duplication, overlap, or conflict between this proposed action and existing Federal rules has been identified.
This proposed rule does not add additional reporting or recordkeeping requirements for the vessels that choose to submit an appeal. An appeal process exists for groundfish LLP license endorsement issuance. No small entity is subject to reporting requirements that are in addition to or different from the requirements that apply to all directly regulated entities. No unique professional skills are needed for the groundfish LLP license or vessel owners or operators to comply with the reporting and recordkeeping requirements associated with this proposed rule. This proposed rule would not implement or increase any fees that NMFS collects from directly regulated entities. The Analysis prepared for this action identifies no operational costs of the endorsement (see
This proposed rule contains collection-of-information requirements subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). These requirements have been submitted to OMB for approval under a temporary new information collection, to be merged, after OMB approval, with existing OMB Control Number 0648-0334. The public reporting burden for the collection-of-information requirements in this proposed rule is estimated to average 4 hours per response to submit an appeal, which includes the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
Public comment is sought regarding (1) whether this proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (2) the accuracy of the burden estimate; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information to NMFS Alaska Region at the
Notwithstanding any other provision of law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number. All currently approved NOAA collections of information may be viewed at
Alaska, Fisheries, Reporting and recordkeeping requirements.
For reasons set out in the preamble, 50 CFR part 679 is proposed to be amended as follows:
16 U.S.C. 773
(k) * * *
(15)
(ii)
(A) Has Bering Sea or Aleutian Islands area and catcher/processor operation endorsements;
(B) Had a vessel designated on it that received and processed at least one legal mothership trip target of Pacific cod delivered by catcher vessels directed fishing using trawl gear in the BSAI non-CDQ Pacific cod trawl catcher vessel fishery as specified in § 679.20(a)(7)(ii)(A) in each of the three years of the qualifying period of 2015 through 2017, inclusive, where a mothership trip target is, in the aggregate, the groundfish species that is delivered by a catcher vessel to a given catcher/processor acting as a mothership in an amount greater than the retained amount of any other groundfish species delivered by the same catcher vessel to the same catcher/processor for a given week; and
(C) Is credited by NMFS with receiving a legal mothership trip target specified in paragraph (k)(15)(ii)(B) of this section.
(iii)
(B) NMFS will credit a groundfish LLP license with a legal mothership trip target specified in paragraph (k)(15)(ii)(B) of this section if that groundfish LLP license was the only groundfish LLP license on which the vessel that received and processed legal mothership trip targets was designated from 2015 through 2017.
(C) Mothership trip targets will be determined based on round weight equivalents.
(iv)
(A) The official record will contain all information used by the Regional Administrator that is necessary to administer the requirements described in paragraph (k)(15) of this section.
(B) The official record is presumed to be correct. A groundfish LLP license holder has the burden to prove otherwise.
(C) Only legal landings as defined in § 679.2 and documented on NMFS production reports will be used to determine legal mothership trip targets under paragraph (k)(15)(ii)(B) of this section.
(v)
(B) NMFS will issue to the holder of a groundfish LLP license with Bering Sea or Aleutian Islands area and catcher/processor operation endorsements, and that is not listed in Table 57 of this part, a notice informing that holder that the groundfish LLP license is not eligible to be credited with at least one legal mothership trip target of Pacific cod in the BSAI non-CDQ Pacific cod trawl CV directed fishery for each year during the qualifying period or receive a BSAI Pacific cod trawl mothership endorsement based on the official record, using the address on record at the time the notice is sent. The notice specified in this paragraph will inform the holder of the groundfish LLP license of the timing and process through which the holder can provide additional information or evidence to amend or challenge the information in the official record of this section, as specified in paragraphs (k)(15)(v)(C) and (D) of this section.
(C) The Regional Administrator will specify by notice a 30-day evidentiary period during which an applicant may provide additional information or evidence to amend or challenge the information in the official record. A person will be limited to one 30-day evidentiary period. Additional information or evidence received after the 30-day evidentiary period specified in the letter has expired will not be considered for purposes of the initial administrative determination (IAD).
(D) The Regional Administrator will prepare and send an IAD to the applicant following the expiration of the 30-day evidentiary period, if the Regional Administrator determines that the information or evidence provided by the person fails to support the person's claims and is insufficient to rebut the presumption that the official record is correct, or if the additional information, evidence, or revised application is not provided within the time period specified in the letter that notifies the applicant of his or her 30-day evidentiary period. The IAD will indicate the deficiencies with the information or evidence submitted. The IAD will also indicate which claims cannot be approved based on the available information or evidence. A person who receives an IAD may appeal pursuant to 15 CFR part 906. NMFS will issue a non-transferable interim license that is effective until final agency action on the IAD to an applicant who avails himself or herself of the opportunity to appeal an IAD and who has a credible claim to eligibility for a BSAI Pacific cod trawl mothership endorsement.
(i) * * *
(12)
(o) * * *
(3) * * *
(v) Use an Amendment 80 catcher/processor, as defined at § 679.2 of this part, to receive and process Pacific cod harvested by vessels directed fishing for Pacific cod in the BSAI or GOA, if that catcher/processor is not designated on:
(A) An Amendment 80 QS permit and an Amendment 80 LLP license; or
(B) An Amendment 80 LLP/QS license.
Agricultural Marketing Service, USDA.
Notice.
The results of the Agricultural Marketing Service's (AMS) Request for Referendum indicate that too few soybean producers wanted a referendum on the Soybean Promotion and Research Order (Order) for one to be conducted. The Request for Referendum was conducted from May 6, 2019, through May 31, 2019, at the U.S. Department of Agriculture's (USDA) Farm Service Agency county offices. To trigger a referendum, 51,501 soybean producers, 10 percent of the total nationwide soybean producers, needed to complete a valid Request for Referendum. The total number of soybean producers participating in the referendum was 794. The number of valid petitions received was 708.
Sarah Aswegan, Research and Promotion Division, Livestock and Poultry Program, AMS, USDA, Room 2610-S, STOP 0251, 1400 Independence Avenue SW, Washington, DC 20250-0251; Telephone (515) 201-5190; Fax (202) 720-1125; or email to
Pursuant to the Soybean Promotion, Research, and Consumer Information Act (Act) (7 U.S.C. 6301
A notice of opportunity to Request a Soybean Referendum was published in the
A total of 794 producers participated in the Request for Referendum. Only 708 valid requests for a referendum were completed by eligible soybean producers. This number does not meet the requisite number of 51,501. Therefore, based on the results, a referendum will not be conducted. In accordance with the provisions of the Act, soybean producers will be provided another opportunity to request a referendum in 5 years.
The following are the State-by-State results of the Request for Referendum:
7 U.S.C. 6301-6311.
Forest Service, USDA.
Notice; request for comment.
In accordance with the Paperwork Reduction Act of 1995, the Forest Service is seeking comment from all interested individuals and organizations on the extension with no revisions of a currently approved information collection, OMB 0596-0016), Application for Permit for Use of Roads, Trails, or Areas Restricted by Regulation or Order (form FS-7700-40). The Forest Service is also seeking renewal of an associated existing, form FS-7700-48, Permit for Use of Roads, Trails, or Areas Restricted by Regulation or Order, and renewal of an associated existing information collection, form FS-7700-41, Non-Federal Commercial Road Use Permit.
Comments must be received in writing by November 26, 2019 to be considered.
Comments concerning this notice should be addressed to USDA Forest Service, Director, Engineering Staff, RPC5, 201 14th Street SW, Mail Stop 1101, Washington, DC 20024-1101. Comments also may be submitted via facsimile to 703-605-1542 or by email to
The public may inspect comments received at the Office of the Director of Engineering, USDA Forest Service, 201 14th Street SW, Mail Stop 1101, Washington, DC 20024-1101 during normal business hours. Visitors are encouraged to call ahead at 202-205-0963 to facilitate entry into the building.
David Payne, Engineering Staff, 202-205-0963. Individuals who use telecommunication devices for the deaf may call the Federal Relay Service at 1-800-877-8339 twenty four hours a day, every day of the year, including holidays.
In particular, 36 CFR 212.5 and 212.9 authorize the Chief of the Forest Service to establish procedures for investment sharing and to require commercial users to perform maintenance commensurate with their road use. Section 261.10 contains a national prohibition against constructing or maintaining an NFS road or NFS trail without a written authorization. Section 212.12 contains a national prohibition against violating the load, weight, height, length, or width limitations of State law when using NFS roads without a written authorization. Section 212.13 contains a national prohibition against possessing or operating a motor vehicle on NFS roads, NFS trails, or areas on NFS lands that are not designated for motor vehicle use on a motor vehicle use map, unless the use is authorized by a written authorization. Section 261.54 authorizes issuance of an order prohibiting use of an NFS road in a manner prohibited by the order without a written authorization, including commercial hauling without a permit or written authorization when required by order. Section 261.55 authorizes issuance of an order prohibiting use of an NFS trail in a manner prohibited by the order without a written authorization.
Forest Service directives implementing the regulations are found in Forest Service Manual 2350, 7710, and 7730 and Forest Service Handbook 7709.59, chapter 20. These directives provide for the size and weight limits under State traffic law to apply on NFS roads and require the responsible official to designate NFS roads, NFS trails, and areas on NFS lands for motor vehicle use; enter into appropriate investment sharing arrangements, require commercial users of NFS roads to perform maintenance commensurate with their road use; and issue orders that implement the authority in 36 CFR261.54. The permits road users obtain contain appropriate requirements for implementation of applicable regulations and directives.
The following information is collected: (1) The applicant's name, address, and telephone number; (2) identification of the NFS roads, NFS trails, and areas on NFS lands proposed for use (NFS roads and NFS trails are identified by Forest Service route number, and areas on NFS lands are identified using a map); (3) purpose of use; and (4) the proposed use schedule. The applicant is asked to provide explanatory information specific to the proposed use, including information on the types and size of vehicles, through attachments and remarks. There are standard attachments available for use when the application requests oversize vehicle use or commercial use of roads. The application is submitted to the Forest Supervisor or District Ranger responsible for the NFS roads, NFS trails, or areas on NFS lands for which a permit is requested.
When applications for commercial use of roads restricted by order are received, the information is used to identify maintenance commensurate with the applicant's road use. The information is also used to calculate the proportion of acquisition, construction, and maintenance costs associated with the NFS roads proposed for use that is assignable to the applicant for purposes of investment sharing. When requests are for oversize vehicle use, the information is used to evaluate the structural capacity of bridges and potential adverse effects on the safety of other traffic on the roads proposed for use. When the application requests use of NFS roads, NFS trails, or areas on NFS lands that are not designated for motor vehicle use or are restricted by order, the information is used to decide whether and, if appropriate, when the use should be permitted.
The identifying information collected on form FS-7700-40, Application for Permit for Use of Roads, Trails, or Areas Restricted by Regulation or Order, is used on form FS-7700-41, Non-Federal Commercial Road Use Permit, and form FS-7700-48, Permit for Use of Roads, Trails, or Areas Restricted by Regulation or Order, to identify the permit holder and the routes or areas requested for use. When form FS-7700-41 is issued, road maintenance requirements, road use schedules, and any necessary payments to be made in lieu of performance of maintenance developed from the data submitted on or with form FS-7700-40 are included in form FS-7700-41. When form FS-7700-48 is issued, requirements resulting from data submitted with form FS-7700-40, such as requirements for signs and pilot cars when moving oversize vehicles, are included. A copy of form FS-7700-41 or form FS-7700-48 must be carried in the holder's motor vehicle during use of the NFS roads, NFS trails, or areas on NFS lands covered by the permit.
All comments received in response to this notice, including names and addresses when provided, will be a matter of public record. Comments will be summarized and included in the request for OMB approval of the information collection.
An application has been submitted to the Foreign-Trade Zones (FTZ) Board by the Greater Mississippi Foreign-Trade Zone, Inc., grantee of FTZ 158, requesting subzone status for the facilities of United Furniture Industries, Inc., located in Nettleton and Amory, Mississippi. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the FTZ Board (15 CFR part 400). It was formally docketed on September 23, 2019.
The proposed subzone would consist of the following sites in Monroe County:
In accordance with the FTZ Board's regulations, Camille Evans of the FTZ Staff is designated examiner to review the application and make recommendations to the Executive Secretary.
Public comment is invited from interested parties. Submissions shall be addressed to the FTZ Board's Executive Secretary and sent to:
A copy of the application will be available for public inspection in the “Reading Room” section of the FTZ Board's website, which is accessible via
For further information, contact Camille Evans at
On May 24, 2019, the Piedmont Triad Partnership, grantee of FTZ 230 submitted a notification of proposed production activity to the FTZ Board on behalf of MVP International Group, Inc., within FTZ 230, in Elkin and Boonville, North Carolina.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) preliminarily determines that countervailable subsidies are being provided to producers and exporters of dried tart cherries (cherries) from the Republic of Turkey (Turkey). The period of investigation is January 1, 2018 through December 31, 2018. Interested parties are invited to comment on this preliminary determination.
Applicable September 27, 2019.
Ajay Menon or Maria Tatarska, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1993 or (202) 482-1562, respectively.
This preliminary determination is made in accordance with section 703(b) of the Tariff Act of 1930, as amended (the Act). Commerce published the notice of initiation of this investigation on May 20, 2019.
The product covered by this investigation is cherries from Turkey. For a complete description of the scope of this investigation,
In accordance with the preamble to Commerce's regulations,
Commerce is conducting this investigation in accordance with section 701 of the Act. For each of the subsidy programs found countervailable, Commerce preliminarily determines that there is a subsidy,
Commerce notes that, in making these findings, we relied in total on facts available and, because we find that neither the Government of Turkey nor the mandatory respondents acted to the best of their ability to respond to Commerce's requests for information, we drew an adverse inference in selecting from among the facts otherwise available.
Sections 703(d) and 705(c)(5)(A) of the Act provide that in the preliminary determination, Commerce shall determine an estimated all-others rate for companies not individually examined. This rate shall be an amount equal to the weighted average of the estimated subsidy rates established for those companies individually examined, excluding any zero and
Pursuant to section 705(c)(5)(A)(ii) of the Act, if the individual estimated countervailable subsidy rates established for all exporters and producers individually examined are zero,
Commerce preliminarily determines that the following estimated countervailable subsidy rates exist:
In accordance with section 703(d)(1)(B) and (d)(2) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of entries of subject merchandise as described in the scope of the investigation section entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the
Commerce intends to disclose its calculations and analysis performed to interested parties in this preliminary determination within five days of its public announcement, or if there is no public announcement, within five days of the date of this notice in accordance with 19 CFR 351.224(b).
Because the examined respondents in this investigation did not provide information requested by Commerce and Commerce preliminarily determines each of the examined respondents to have been uncooperative, it will not conduct verification.
Case briefs or other written comments may be submitted to the Assistant Secretary for Enforcement and Compliance no later than 30 days after the date of publication of the preliminary determination. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, whether any participant is a foreign national, and a list of the issues to be discussed. If a request for a hearing is made, Commerce intends to hold the hearing at the U.S. Department of Commerce, 1401
In accordance with section 703(f) of the Act, we will notify the International Trade Commission (ITC) of our determination. If the final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination.
This determination is issued and published pursuant to sections 703(f) and 777(i) of the Act and 19 CFR 351.205(c).
The scope of this investigation covers dried tart cherries, which may also be referred to as,
Included in the scope of this investigation are dried tart cherries that otherwise meet the definition above that are packaged with non-subject products, including, but not limited to, mixtures of dried fruits and mixtures of dried fruits and nuts, where the smallest individual packaging unit of any such product contains a majority (
Included in the scope of this investigation are dried tart cherries that have been further processed in a third country, including but not limited to processing by stabilizing, preserving, sweetening, adding oil or syrup, coating, chopping, mincing, crumbling, packaging with non-subject products, or other packaging, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the dried tart cherries.
Excluded from the scope of this investigation are dried tart cherries that have been incorporated as an ingredient in finished bakery and confectionary items (cakes, cookies, candy, granola bars,
The subject merchandise is currently classifiable under 0813.40.3000 of the Harmonized Tariff Schedule of the United States (HTSUS). The subject merchandise may also enter under subheadings 0813.40.9000, 0813.50.0020, 0813.50.0060, 2006.00.2000, 2006.00.5000, and 2008.60.0060. The HTSUS subheadings set forth above are provided for convenience and U.S. customs purposes only. The written description of the scope is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce is rescinding the new shipper review of the antidumping duty order on hardwood plywood products from the People's Republic of China for the period January 1, 2019, through June 30, 2019, based on the timely withdrawal of the request for review.
Applicable September 27, 2019.
Jasun Moy, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-8194.
On January 4, 2018, the Department of Commerce (Commerce) published the antidumping duty order on hardwood plywood products (plywood) from the People's Republic of China (China).
Pursuant to 19 CFR 351.214(f)(1), Commerce will rescind a NSR, in whole or in part, if the party that requested the review withdraws its request within 60 days of the publication date of the notice of initiation of the requested review. Constant Forest withdrew its request for review within the 60-day deadline. Because Commerce received no other requests for review of Constant Forest, we are rescinding the NSR covering the period January 1, 2019 through June 30, 2019, in full, in accordance with 19 CFR 351.214(f)(1). Consequently, we will continue to treat Constant Forest as part of the China-wide entity.
Because we are rescinding the NSR of Constant Forest, we are not making a determination as to whether Constant Forest qualifies for a separate rate. Therefore, we will continue to treat Constant Forest a part of the China-wide entity and any entries covered by this NSR will be assessed at the China-wide rate. The China-wide entity is not under
This notice serves as the only reminder to importers whose entries will be liquidated as a result of this rescission notice, of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the presumption that reimbursement of the antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a sanctionable violation.
This notice is issued and published in accordance with sections 751 and 777(i)(l) of the Act and 19 CFR 351.214(f)(3).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) preliminarily determines that dried tart cherries (cherries) from the Republic of Turkey (Turkey) are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is April 1, 2018 through March 31, 2019. Interested parties are invited to comment on this preliminary determination.
Applicable September 27, 2019.
Alex Wood or Alice Maldonado, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-1959 or (202) 482-4682, respectively.
This preliminary determination is made in accordance with section 733(b) of the Tariff Act of 1930, as amended (the Act). Commerce published the notice of initiation of this investigation on May 20, 2019.
The products covered by this investigation are dried tart cherries from Turkey. For a complete description of the scope of this investigation,
In accordance with the preamble to Commerce's regulations,
Commerce is conducting this investigation in accordance with section 731 of the Act. Pursuant to section 776(a) and (b) of the Act, Commerce has preliminarily relied upon facts otherwise available with adverse inferences for Isik Tarim Urunleri Sanayi ve Ticaret A.S. (Isik Tarim) and Yamanlar Tarim Urunleri (Yamanlar). For a full description of the methodology underlying the preliminary determination,
Sections 733(d)(1)(A)(ii) and 735(c)(5)(A) of the Act provide that in the preliminary determination Commerce shall determine an estimated all-others rate for all exporters and producers not individually examined. This rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and
Pursuant to section 735(c)(5)(B) of the Act, if the estimated weighted-average dumping margins established for all exporters and producers individually examined are zero,
Commerce preliminarily determines that the following estimated dumping margins exist during the period April 1, 2018 through March 31, 2019:
In accordance with section 733(d)(2) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of entries of subject merchandise, as described in Appendix I, entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the
Further, pursuant to section 733(d)(1)(B) of the Act and 19 CFR 351.205(d), Commerce will instruct CBP to require a cash deposit equal to the estimated dumping margin or the estimated all-others rate, as follows: (1) The cash deposit rate for the respondents listed above will be equal to the company-specific estimated dumping margins determined in this preliminary determination; (2) if the exporter is not a respondent identified above, but the producer is, then the cash deposit rate will be equal to the company-specific estimated dumping margin established for that producer of the subject merchandise; and (3) the cash deposit rate for all other producers and exporters will be equal to the all-others estimated simple-average dumping margin. These suspension of liquidation instructions will remain in effect until further notice.
Commerce normally adjusts cash deposits for estimated antidumping duties by the amount of export subsidies countervailed in a companion countervailing duty (CVD) proceeding, when CVD provisional measures are in effect. However, in this investigation, we made no adjustments to the all-others antidumping cash deposit rates because Commerce made no findings in the companion CVD investigation that any of the subsidies in question are export subsidies.
Normally, Commerce discloses to interested parties the calculations performed in connection with a preliminary determination within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of the notice of preliminary determination in the
Because the examined respondents in this investigation did not respond to the antidumping questionnaire, we will not conduct verification.
Case briefs or other written comments may be submitted to the Assistant Secretary for Enforcement and Compliance no later than 30 days after the date of publication of the preliminary determination. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce, within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, whether any participant is a foreign national, and a list of the issues to be discussed. If a request for a hearing is made, Commerce intends to hold the hearing at the U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, at a time and date to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.
Section 735(a)(1) of the Act and 19 CFR 351.210(b)(1) provide that Commerce will issue the final determination within 75 days after the date of its preliminary determination. Accordingly, Commerce will make its final determination no later than 75 days after the signature date of this preliminary determination.
In accordance with section 733(f) of the Act, Commerce will notify the International Trade Commission (ITC) of its preliminary determination. If the final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether these imports are materially injuring, or threaten material injury to, the U.S. industry.
This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).
The scope of this investigation covers dried tart cherries, which may also be referred to as,
Included in the scope of this investigation are dried tart cherries that otherwise meet the definition above that are packaged with non-subject products, including, but not limited to, mixtures of dried fruits and mixtures of dried fruits and nuts, where the smallest individual packaging unit of any such product contains a majority (
Included in the scope of this investigation are dried tart cherries that have been further processed in a third country, including but not limited to processing by stabilizing, preserving, sweetening, adding oil or syrup, coating, chopping, mincing, crumbling, packaging with non-subject products, or other packaging, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the dried tart cherries.
Excluded from the scope of this investigation are dried tart cherries that have been incorporated as an ingredient in finished bakery and confectionary items (cakes, cookies, candy, granola bars,
The subject merchandise is currently classifiable under 0813.40.3000 of the Harmonized Tariff Schedule of the United States (HTSUS). The subject merchandise may also enter under subheadings 0813.40.9000, 0813.50.0020, 0813.50.0060, 2006.00.2000, 2006.00.5000, and 2008.60.0060. The HTSUS subheadings set forth above are provided for convenience and U.S. customs purposes only. The written description of the scope is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On August 12, 2019, the Department of Commerce (Commerce) published the preliminary results of the changed circumstances review of the antidumping duty order on certain frozen warmwater shrimp (shrimp) from India. For these final results, Commerce continues to find that Sunrise Seafoods India Private Limited (SSIPL) is the successor-in-interest to Sunrise Aqua Food Exports (SAFE).
Applicable September 27, 2019.
Brittany Bauer, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3860.
On October 31, 2018, SSIPL requested that Commerce conduct an expedited changed circumstances review, pursuant to section 751(b)(1) of the Tariff Act of 1930, as amended (the Act), 19 CFR 351.216(b), and 19 CFR 351.221(c)(3), to confirm that SSIPL is the successor-in-interest to SAFE for purposes of determining antidumping duty cash deposits and liabilities. In its submission, SSIPL explained that SAFE undertook a business reorganization and transferred its shrimp business to SSIPL.
On December 26, 2018, Commerce initiated this changed circumstances review, and on August 12, 2019, Commerce published the notice of preliminary results, determining that SSIPL is the successor-in-interest to SAFE.
The merchandise subject to the order is certain frozen warmwater shrimp.
For the reasons stated in the
We are issuing this determination and publishing these final results and notice in accordance with sections 751(b)(1) and 777(i)(1) and (2) of the Act and 19 CFR 351.216(e), 351.221(b), and 351.221(c)(3).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; request for comments.
The Assistant Regional Administrator for Sustainable Fisheries, West Coast Region, NMFS, has made a preliminary determination that an exempted fishing permit application titled, “Annual Vessel Limit Pooling for Groundfish IFQ Vessels Operating Under a Collective Enforcement Agreement in 2019-2020,” contains all of the required information and warrants further consideration. The application, submitted by the Fort Bragg Association and the Half Moon Bay Groundfish Marketing Association, requests approval to test the use of a voluntary collective agreement to manage a pool of annual vessel limits of cowcod quota pounds using a risk pooling model. This exempted fishing permit project would allow individual vessels participating in the California Groundfish Collective to exceed their annual vessel limit for cowcod, however the collective pooled annual vessel limit would not be exceeded. The primary goal of this exempted fishing permit project is to reduce the operational risk of catching cowcod for participating vessels, while allowing participating vessels to increase landings of more abundant groundfish stocks. Regulations under the Magnuson-Stevens Fishery Conservation and Management Act require publication of this notification to provide interested parties the opportunity to comment on applications for proposed exempted fishing permit projects.
Comments must be received no later than 5 p.m., local time on October 15, 2019.
You may submit comments on this document, identified by NOAA-NMFS-2019-0101, by any of the following methods:
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Lynn Massey, West Coast Region, NMFS, at (562) 436-2462,
This action is authorized under Magnuson-Stevens Conservation and Management (Magnuson-Stevens Act) regulations at 50 CFR 600.745, which allow NMFS Regional Administrators to issue exempted fishing permits (EFP) to test fishing activities that would otherwise be prohibited.
The California Groundfish Collective (CGC) is comprised of fishing associations from Fort Bragg and Half Moon Bay, and includes fishermen from three ports along the California Coast. CGC fishermen collect and share information about where, when, and what type of fish they catch, and use this information to adaptively manage fishing strategies to reduce bycatch of overfished groundfish stocks (
CGC vessels participate in the Trawl Rationalization Program's Shorebased Individual Fishing Quota (IFQ) Program. Annual vessel limits are used in the Shorebased IFQ Program to restrict the consolidation of quota pounds among vessels in the fishery, particularly for constraining stocks and stock complexes (
The region where the CGC operates off the coast of California (south of the 40°10′ North latitude (N lat.) management line) is the only area where cowcod are encountered and managed as an individual IFQ species, and few trawl vessels operate in the area. The annual catch limit for cowcod is small due to its overfished stock status. Vessels have historically caught cowcod
At the June 2018, April 2019, and June 2019 Council meetings, the CGC made public comments that annual vessel limits for cowcod have been constraining fishing operations in CGC ports. The CGC reported that in 2017-2019, its participating vessels experienced significant catch increases for cowcod early in the fishing season, and that, if this continues through the 2019 and 2020 fishing years, vessels may attain their cowcod annual vessel limit and be forced to depart fishing grounds early despite not having attained quotas for healthy target stocks. This would reduce economic opportunity for CGC vessels and likely adversely impact other components of the fishing industry (
On June 18, 2019, the CGC submitted an application for an EFP project to exempt CGC vessels from the Federal regulations at 50 CFR 660.140(b)(1)(iii) through (v), which include requirements applicable to individual vessels with any species deficit in their IFQ account. If NMFS approves this EFP project, CGC vessels fishing on an EFP trip would be permitted to exceed the current annual vessel limit for cowcod (
• Test and evaluate the merits of permitting a regional collective of vessels operating under a Collective Enforcement Agreement, similar to a regional fishery association, to pool constraining species quota pounds, allocate those pounds among members as needed (potentially exceeding annual vessel limits), and stay within a pool limit;
• identify if managing annual vessel limits using a risk pool model can allow additional attainment of target species while mitigating the impact of catching constraining species to the point of ending fishing seasons early;
• establish and share best practices for collectively managing and allocating constraining species quota pounds using a Collective Enforcement Agreement;
• gather and share information that may inform an impact analysis should the Council scope potential changes to the groundfish IFQ vessel limit regulations; and
• gather and share information that may inform an exploration into the types of provisions to include in regional fishery associations as defined in the Magnuson-Stevens Fishery Conservation and Management Act as well as community fishing groups that are already allowed within the current fishery management system.
Currently, there are five CGC vessels. If this EFP project is approved, NMFS would provide EFPs to these five vessels in 2019, and any additional vessels that join the CGC in 2019 or 2020.
NMFS is proposing to approve the 2019-2020 EFP project covering the exemptions stated above, following the conclusion of the public comment period and review of public comment. Pending approval, NMFS would issue the permits for the EFP project to the vessel owner or designated representative as the “EFP holder.” NMFS intends to use an adaptive management approach in which NMFS may revise requirements and protocols to improve the program without issuing another
All CGC vessels participate in NMFS' electronic monitoring (EM) EFP project, which exempts certain vessels from the requirement to carry a human observer on all IFQ fishing trips. While NMFS has primary jurisdiction over EM EFP management, the Nature Conservancy is an EFP holder that manages CGC vessels operating under the EM EFP pursuant to a Collective Enforcement Agreement, which outlines rules that CGC vessels must follow, including catch requirements and EM system specifications. If NMFS approves this EFP application, the specific terms and conditions of the EFP would be partially managed by the Nature Conservancy via an extended version of the EM EFP Collective Enforcement Agreement. NMFS may adjust these specifics in cooperation with the EFP applicant and following the public comment period.
After publication of this document in the
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; availability of a Draft Environmental Assessment and receipt of revised application; request for comments.
NMFS announces the availability of the revised application and Draft Environmental Assessment (EA) on the effects of issuing an Incidental Take Permit (ITP) (No. 21316) to Barney M. Davis L.P., pursuant to the Endangered Species Act (ESA) of 1973, as amended, for the incidental take of green (
Written comments must be received at the appropriate address or fax number (see
The revised application and EA are available for download and review at
You may submit comments, identified by NOAA-NMFS-2017-0104, by any of the following methods:
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Sara Wissmann, (301) 427-8402 or
Publication of this notice begins the official public comment period for this draft EA. Per the National Environmental Policy Act (NEPA), the purpose of the draft EA is to evaluate the potential direct, indirect, and cumulative impacts caused by the issuance of Permit No. 21316 to Barney M. Davis L.P. for the incidental take of green (
Section 9 of the ESA and Federal regulations prohibit the `taking' of a species listed as endangered or threatened. The ESA defines “take” to mean harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct. NMFS may issue permits, under limited circumstances to take listed species incidental to, and not the purpose of, otherwise lawful activities. Section 10(a)(1)(B) of the ESA provides a mechanism for authorizing incidental take of listed species. NMFS regulations governing permits for threatened and endangered species are promulgated at 50 CFR 222.307.
Barney M. Davis, L.P. owns Barney M. Davis Power Station (the facility), a natural gas-fired electric power generating facility. The facility is located at 4301 Waldron Road, Corpus Christi, Nueces County, Texas. The facility has approximately 1,992 acres of land between the Laguna Madre and Oso Creek and is comprised of two natural gas-fired combustion turbines.
The facility utilizes a 0.75-mile cooling water intake canal leading to the Cooling Water Intake Structure (CWIS) from the Laguna Madre. Although the facility has been in operation since 1974, the presence of sea turtles in the intake canal has only been documented during the past 10 years and is typically associated with cold-stunning events. During cooler months, sea turtles in the Laguna Madre become “cold-stunned” and, therefore, become unable to swim normally. Once the sea turtles are cold-stunned, they float into the facility's intake canal, toward the facility. The facility has experienced an increased occurrence in the number of sea turtles in the intake canal during the winter months (December—March), which coincides with documented cold stunning events in this region of Texas.
The facility currently coordinates with the Texas Sea Turtle Stranding and Salvage Network (STSSN) and the Texas Parks and Wildlife Department in the Coastal Conservation Association Marine Development Center to collect and relocate sea turtles that have migrated into the intake canal. Under the proposed action and conservation plan, facility staff will implement consistent monitoring of the intake canal, and will continue to work with the Texas STSSN on proper animal identification and handling. Although every effort will be made to intercept sea turtles prior to the cooling water intake structure, it is possible that a cold stunned sea turtle may become impinged on the automatic rake prior to entering the structure. Due to the physical characteristics and operations of the structure, any impingement of turtles could be lethal.
The facility is applying for an ITP in accordance with rules established under Section 10(a)(1)(B) of the ESA. The permit application requests authorization for the incidental take of the North Atlantic Distinct Population Segment (DPS) of the ESA-listed threatened green turtle (
On September 14, 2017 (82 FR 43224) NMFS announced the availably of the Barney M. Davis Power Station ITP application. At that time, the application was determined to be complete and therefore was provided to the public for review. Based on public comments received and additional discussions between NMFS and Barney M. Davis, L.P., it was decided that Barney M. Davis, L.P. would further revise their application and re-submit to NMFS. The updated and final application was received by NMFS on October 19, 2018. This revised application provides additional necessary details on the protocols and procedures for locating and handling sea turtles during the facility operation, and provides additional information on the historic takes that have been observed at the facility as justification for the requested take necessary for the development of the draft EA and the issuance of the ITP.
Section 10 of the ESA specifies that no permit may be issued unless an applicant submits an adequate habitat conservation plan. The conservation plan prepared by Barney M. Davis L.P.
The facility has experienced increased numbers of cold-stunned sea turtles in the intake canal during the winter months over the past several years. The facility currently coordinates with Texas Parks and Wildlife Department's Coastal Conservation Association Marine Development Center to collect and relocate sea turtles that have migrated into the intake canal.
To avoid and minimize take of sea turtles, facility personnel will visually monitor the area immediately surrounding the cribhouse, which includes the bulkhead, trash racks, and intake canal on a seasonal schedule. From December 1st through March 31st, monitoring will be conducted a minimum of four times per twelve hour shift, spaced at approximately three-hour intervals. From April 1st through November 30th, monitoring will be conducted one time per shift, or once approximately every twelve hours. Visual monitoring will last for approximately fifteen minutes during each monitoring event. Facility staff responsible for monitoring the intake canal will be trained upon hiring, and again annually, on the proper procedures required for the collection of turtles. Photos of potentially affected species are available to staff to assist them with species identification. Staff will be required to measure the length of the turtles collected.
Barney M. Davis Power Station is an existing facility. Continued monitoring related to the take of sea turtles will be ongoing and funding provided through the facility's annual operating budget.
This notice is provided pursuant to section 10(c) of the ESA and the National Environmental Policy Act (NEPA) regulations (40 CFR 1506.6). The draft EA was prepared in accordance with NEPA (42 U.S.C. 4321,
In preparing the Draft EA, NMFS considered the following 2 alternatives for the action.
The Draft EA presents a comparison of the direct, indirect, and cumulative effects of the alternatives. Regulations for implementing NEPA (42 U.S.C. 4331
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments.
NMFS has received a request from Skipjack Offshore Energy, LLC (Skipjack) for authorization to take marine mammals incidental to marine site characterization surveys offshore of Delaware in the area of the Commercial Lease of Submerged Lands for Renewable Energy Development on the Outer Continental Shelf (OCS-A 0519) and along potential submarine cable routes to a landfall location in Delaware or Maryland. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to incidentally take marine mammals during the specified activities. NMFS is also requesting comments on a possible one-year renewal that could be issued under certain circumstances and if all requirements are met, as described in
Comments and information must be received no later than October 28, 2019.
Comments should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service. Physical comments should be sent to 1315 East-West Highway, Silver Spring, MD 20910 and electronic comments should be sent to
Jordan Carduner, Office of Protected Resources, NMFS, (301) 427-8401. Electronic copies of the applications and supporting documents, as well as a list of the references cited in this document, may be obtained by visiting the internet at:
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth.
The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
This action is consistent with categories of activities identified in Categorical Exclusion B4 of the Companion Manual for NAO 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has preliminarily determined that the proposed action qualifies to be categorically excluded from further NEPA review.
Information in Skipjack's application and this notice collectively provide the environmental information related to proposed issuance of these regulations and subsequent incidental take authorization for public review and comment. We will review all comments submitted in response to this notice prior to concluding our NEPA process or making a final decision on the request for incidental take authorization.
On July 1, 2019, NMFS received a request from Skipjack for an IHA to take marine mammals incidental to marine site characterization surveys offshore of Delaware in the area of the Commercial Lease of Submerged Lands for Renewable Energy Development on the Outer Continental Shelf (OCS-A 0519) and along potential submarine cable routes to a landfall location in Delaware or Maryland. A revised application was received on August 15, 2019. NMFS deemed that request to be adequate and complete. Skipjack's request is for the take of 17 marine mammal species by Level B harassment that would occur over the course of 200 survey days. Neither Skipjack nor NMFS expects serious injury or mortality to result from this activity and the activity is expected to last no more than one year, therefore, an IHA is appropriate.
Skipjack proposes to conduct marine site characterization surveys, including high-resolution geophysical (HRG) and geotechnical surveys, in the area of Commercial Lease of Submerged Lands for Renewable Energy Development on the Outer Continental Shelf #OCS-A 0519 (Lease Area) and along potential submarine cable routes to landfall locations in either Delaware or Maryland.
The purpose of the marine site characterization surveys are to obtain a baseline assessment of seabed/sub-surface soil conditions in the Lease Area and cable route corridors to support the siting of potential future offshore wind projects. Underwater sound resulting from Skipjack's proposed site characterization surveys has the potential to result in incidental take of marine mammals in the form of behavioral harassment.
The estimated duration of the activity is expected to be up to 200 survey days between October 2019 through September 2020. This schedule is based on 24-hour operations and includes potential down time due to inclement weather.
Skipjack's survey activities would occur in the Northwest Atlantic Ocean within Federal waters. Surveys would occur in the Lease Area and along potential submarine cable routes to landfall locations in either Delaware or Maryland (see Figure 1 in the IHA application).
Skipjack's proposed marine site characterization surveys include high-resolution geophysical (HRG) and geotechnical survey activities. The Lease Area is approximately 106.6 square kilometers (km) (26,341 acres) and is within the Delaware Wind Energy Area of the Bureau of Ocean Energy Management's Mid-Atlantic planning area. Water depths in the Lease Area range from 16 to 28 meters (m) (52 to 92 feet (ft)). Water depths along the submarine cable corridor in Federal waters range from 12 to 28 m (39 to 92 ft). The closest point to shore is approximately 18 km (11 miles (mi)) due east from Rehoboth Beach, Delaware (see Figure 1 in the IHA application). For the purpose of this IHA the Lease Area and submarine cable
Geophysical and shallow geotechnical survey activities are anticipated to be supported by as many as five total vessels, with as many as three vessels operating concurrently. Survey vessels would maintain a speed of approximately 4 knots (kn) while transiting survey lines. The proposed HRG and geotechnical survey activities are described below. A maximum of 200 total survey days are expected to be required to complete the site characterization surveys.
Geophysical and shallow geotechnical survey activities are anticipated to be supported by vessels which will maintain a speed of up to 4 knots (kn) while transiting survey lines. The proposed HRG and geotechnical survey activities are described below.
Skipjack's proposed geotechnical survey activities would include the following:
• Sample boreholes to determine geological and geotechnical characteristics of sediments;
• Deep cone penetration tests (CPTs) to determine stratigraphy and in situ conditions of the deep surface sediments; and
• Shallow CPTs to determine stratigraphy and in situ conditions of the near surface sediments.
Geotechnical investigation activities are anticipated to be conducted from a drill ship equipped with dynamic positioning (DP) thrusters. Impact to the seafloor from this equipment will be limited to the minimal contact of the sampling equipment, and inserted boring and probes.
In considering whether marine mammal harassment is an expected outcome of exposure to a particular activity or sound source, NMFS considers the nature of the exposure itself (
Geotechnical survey activities would be conducted from a drill ship equipped with DP thrusters. DP thrusters would be used to position the sampling vessel on station and maintain position at each sampling location during the sampling activity. Sound produced through use of DP thrusters is similar to that produced by transiting vessels and DP thrusters are typically operated either in a similarly predictable manner or used for short durations around stationary activities. NMFS does not believe acoustic impacts from DP thrusters are likely to result in take of marine mammals in the absence of activity- or location-specific circumstances that may otherwise represent specific concerns for marine mammals (
Field studies conducted off the coast of Virginia to determine the underwater noise produced by CPTs and borehole drilling found that these activities did not result in underwater noise levels that exceeded current thresholds for Level B harassment of marine mammals (Kalapinski, 2015). Given the small size and energy footprint of CPTs and boring cores, NMFS believes the likelihood that noise from these activities would exceed the Level B harassment threshold at any appreciable distance is so low as to be discountable. Therefore, geotechnical survey activities, including CPTs and borehole drilling, are not expected to result in harassment of marine mammals and are not analyzed further in this document.
Skipjack has proposed that HRG survey operations would be conducted continuously 24 hours per day. Based on 24-hour operations, the estimated duration of the geophysical survey activities would be approximately 200 days (including estimated weather down time). As many as three survey vessels may be used concurrently during Skipjack's proposed surveys. The geophysical survey activities proposed by Skipjack would include the following:
• Shallow Penetration Sub-bottom Profilers (SBP; Chirps) to map the near-surface stratigraphy (top 0 to 5 m (0 to 16 ft) of sediment below seabed). A chirp system emits sonar pulses that increase in frequency over time. The pulse length frequency range can be adjusted to meet project variables. Typically mounted on the hull of the vessel or from a side pole.
• Medium Penetration SBPs (Boomers) to map deeper subsurface stratigraphy as needed. A boomer is a broad-band sound source operating in the 3.5 Hz to 10 kHz frequency range. This system is typically mounted on a sled and towed behind the vessel.
• Medium Penetration SBPs (Sparkers) to map deeper subsurface stratigraphy as needed. Sparkers create acoustic pulses from 50 Hz to 4 kHz omni-directionally from the source that can penetrate several hundred meters into the seafloor. Typically towed behind the vessel with adjacent hydrophone arrays to receive the return signals.
• Parametric SBPs, also called sediment echosounders, for providing high data density in sub-bottom profiles that are typically required for cable routes, very shallow water, and archaeological surveys. Typically mounted on the hull of the vessel or from a side pole.
• Acoustic Cores to provide multi-aspect acoustic intensity imaging to delineate sub-seabed stratigraphy and buried geohazards. Although acoustic cores are used for geotechnical investigations, they operate acoustic sources (chirps and a parametric sonar) to achieve the data collection. They are stationary sourced mounted on the seafloor approximately 3.5 m (11.5 ft) above the seabed.
• Ultra-Short Baseline (USBL) Positioning and Global Acoustic Positioning System (GAPS) to provide high accuracy ranges by measuring the time between the acoustic pulses transmitted by the vessel transceiver and the equipment transponder necessary to produce the acoustic profile. It is a two-component system with a hull or pole mounted transceiver and one to several transponders either on the seabed or on the equipment.
• Multibeam Echosounders (MBES) to determine water depths and general bottom topography. Multibeam echosounder sonar systems project sonar pulses in several angled beams from a transducer mounted to a ship's hull. The beams radiate out from the transducer in a fan-shaped pattern orthogonally to the ship's direction.
• Side-scan Sonar (SSS) for seabed sediment classification purposes and to
Table 1 identifies the representative survey equipment that may be used in support of planned geophysical survey activities. HRG surveys are expected to use several equipment types concurrently in order to collect multiple aspects of geophysical data along one transect. Selection of equipment combinations is based on specific survey objectives.
The deployment of HRG survey equipment, including the equipment planned for use during Skipjack's planned activity, produces sound in the marine environment that has the potential to result in harassment of marine mammals. However, sound propagation is dependent on several factors including operating mode, frequency and beam direction of the HRG equipment; thus, potential impacts to marine mammals from HRG equipment are driven by the specification of individual HRG sources. The specifications of the potential equipment planned for use during HRG survey activities (Table 1) were analyzed to determine which types of
Of the potential HRG survey equipment planned for use, NMFS determined the following equipment does not have the potential to result in harassment of marine mammals:
• Multibeam echosounders and side-scan sonars: All of the multibeam echosounders and side-scan sonars proposed for use by Skipjack have operating frequencies above 180 kHz. Because these sources operate at frequencies that are outside the functional hearing ranges of all marine mammals, NMFS considers the potential for this equipment to result in the take of marine mammals is to be so unlikely as to be discountable; and
• Unlike the other HRG sources which are mobile sources, acoustic corers are stationary and made up of three distinct sound sources comprised of high frequency parametric sonar, a high frequency chirp sonar, and a low frequency chirp sonar; with each source having its own transducer. The corer is seabed-mounted while the parametric sonar is operated roughly 3.5 m (11.5 ft) above the seabed with the transducer pointed directly downwards toward the seafloor. The beam width of the parametric sonar is very narrow (3.5°-8°), resulting in nominal horizontal propagation. Due to the fact that these sources are stationary, are operated very close to the seafloor, and have very narrow beam widths, NMFS considers the potential for this equipment to result in the take of marine mammals is to be so unlikely as to be discountable.
As the HRG survey equipment listed above was determined to not have the potential to result in the harassment of marine mammals, these equipment types are therefore not analyzed further in this document. All other HRG equipment types planned for use by Skipjack as shown in Table 1 are expected to have the potential to result in the harassment of marine mammals and are therefore carried forward in the analysis.
Proposed mitigation, monitoring, and reporting measures are described in detail later in this document (please see “Proposed Mitigation” and “Proposed Monitoring and Reporting”).
Sections 3 and 4 of the IHA application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history, of the potentially affected species. Additional information regarding population trends and threats may be found in NMFS' Stock Assessment Reports (SARs;
Table 2 summarizes information related to the population or stock, including regulatory status under the MMPA and ESA and potential biological removal (PBR), where known. For taxonomy, we follow Committee on Taxonomy (2018). PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS' SARs). While no mortality is anticipated or authorized here, PBR is included here as a gross indicator of the status of the species and other threats.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS' stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS' U.S. Atlantic SARs. All values presented in Table 2 are the most recent available at the time of publication and are available in the 2018 Atlantic SARs (Hayes
Four marine mammal species that are listed under the Endangered Species Act (ESA) may be present in the survey area and are included in the take request: The North Atlantic right whale, fin whale, sei whale, and sperm whale.
Below is a description of the species that are both common in the survey area offshore of Delaware and Maryland that have the highest likelihood of occurring, at least seasonally, in the survey area and are thus are expected to potentially be taken by the proposed activities. For the majority of species potentially present in the specific geographic region, NMFS has designated only a single generic stock (
The North Atlantic right whale ranges from calving grounds in the southeastern United States to feeding grounds in New England waters and into Canadian waters (Hayes
The western North Atlantic population demonstrated overall growth of 2.8 percent per year between 1990 to 2010, despite a decline in 1993 and no growth between 1997 and 2000 (Pace
Elevated North Atlantic right whale mortalities have occurred since June 7, 2017 along the U.S. and Canadian coast. A total of 29 confirmed dead stranded whales (20 in Canada; 9 in the United States) have been documented. This event has been declared an Unusual Mortality Event (UME), with human interactions, including entanglement in fixed fishing gear and vessel strikes, implicated in at least 13 of the mortalities thus far. More information is available online at:
The proposed survey area is part of an important migratory area for North Atlantic right whales; this important migratory area is comprised of the waters of the continental shelf offshore the East Coast of the United States and extends from Florida through Massachusetts. NMFS' regulations at 50 CFR part 224.105 designated nearshore waters of the Mid-Atlantic Bight as Mid-Atlantic U.S. Seasonal Management Areas (SMA) for right whales in 2008. SMAs were developed to reduce the threat of collisions between ships and right whales around their migratory route and calving grounds. A portion of one SMA, which occurs off the mouth of Delaware Bay, overlaps spatially with a section of the proposed survey area. The SMA which occurs off the mouth of Delaware Bay is active from November 1 through April 30 of each year.
Humpback whales are found worldwide in all oceans. Humpback whales were listed as endangered under the Endangered Species Conservation Act (ESCA) in June 1970. In 1973, the ESA replaced the ESCA, and humpbacks continued to be listed as endangered. NMFS recently evaluated the status of the species, and on September 8, 2016, NMFS divided the species into 14 distinct population segments (DPS), removed the current species-level listing, and in its place listed four DPSs as endangered and one DPS as threatened (81 FR 62259; September 8, 2016). The remaining nine DPSs were not listed. The West Indies DPS, which is not listed under the ESA, is the only DPS of humpback whale that is expected to occur in the project area.
A key question with regard to humpback whales off the mid-Atlantic states is their stock identity. Using fluke photographs of living and dead whales observed in the region, Barco
Since January 2016, elevated humpback whale mortalities have occurred along the Atlantic coast from Maine to Florida. Partial or full necropsy examinations have been conducted on approximately half of the 103 known cases. Of the whales examined, about 50 percent had evidence of human interaction, either ship strike or entanglement. While a portion of the whales have shown evidence of pre-mortem vessel strike, this finding is not consistent across all whales examined and more research is needed. NOAA is consulting with researchers that are conducting studies on the humpback whale populations, and these efforts may provide information on changes in whale distribution and habitat use that could
Fin whales are common in waters of the U.S. Atlantic Exclusive Economic Zone (EEZ), principally from Cape Hatteras northward (Waring
The Nova Scotia stock of sei whales can be found in deeper waters of the continental shelf edge waters of the northeastern United States and northeastward to south of Newfoundland. The southern portion of the stock's range during spring and summer includes the Gulf of Maine and Georges Bank. Spring is the period of greatest abundance in U.S. waters, with sightings concentrated along the eastern margin of Georges Bank and into the Northeast Channel area, and along the southwestern edge of Georges Bank in the area of Hydrographer Canyon (Waring
Minke whales can be found in temperate, tropical, and high-latitude waters. The Canadian East Coast stock can be found in the area from the western half of the Davis Strait (45° W) to the Gulf of Mexico (Waring
Since January 2017, elevated minke whale mortalities have occurred along the Atlantic coast from Maine through South Carolina, with a total of 66 strandings recorded through August 30, 2019. This event has been declared a UME. Full or partial necropsy examinations were conducted on more than 60 percent of the whales. Preliminary findings in several of the whales have shown evidence of human interactions or infectious disease, but these findings are not consistent across all of the whales examined, so more research is needed. More information is available at:
The distribution of the sperm whale in the U.S. EEZ occurs on the continental shelf edge, over the continental slope, and into mid-ocean regions (Waring
Long-finned pilot whales are found from North Carolina and north to Iceland, Greenland and the Barents Sea (Waring
As described above, long-finned and short-finned pilot whales overlap spatially along the mid-Atlantic shelf break between New Jersey and the southern flank of Georges Bank (Payne and Heinemann 1993; Rone and Pace 2012). Short-finned pilot whales have occasionally been observed stranded as far north as Massachusetts but north of ~42° N short-finned pilot whale sightings would be considered unusual while south of Cape Hatteras most pilot whales would be expected to be short-finned pilot whales (Hayes
Killer whale distribution in the Atlantic extends from the Arctic ice edge to the West Indies. They are normally found in small groups, although 40 animals were reported from the southern Gulf of Maine in September 1979, and 29 animals in Massachusetts Bay in August 1986 (Katona
White-sided dolphins are found in temperate and sub-polar waters of the North Atlantic, primarily in continental shelf waters to the 100-m depth contour from central West Greenland to North Carolina (Waring
Atlantic spotted dolphins are found in tropical and warm temperate waters ranging from southern New England, south to Gulf of Mexico and the Caribbean to Venezuela (Waring
The common dolphin is found world-wide in temperate to subtropical seas. In the North Atlantic, common dolphins are commonly found over the continental shelf between the 100-m and 2,000-m isobaths and over prominent underwater topography and east to the mid-Atlantic Ridge (Waring
There are two distinct bottlenose dolphin morphotypes in the western North Atlantic: The coastal and offshore forms (Waring
In the Lease Area, only the Gulf of Maine/Bay of Fundy stock may be present. This stock is found in U.S. and Canadian Atlantic waters and is concentrated in the northern Gulf of Maine and southern Bay of Fundy region, generally in waters less than 150 m deep (Waring
The harbor seal is found in all nearshore waters of the North Atlantic and North Pacific Oceans and adjoining seas above about 30° N (Burns, 2009). In the western North Atlantic, harbor seals are distributed from the eastern Canadian Arctic and Greenland south to southern New England and New York, and occasionally to the Carolinas (Hayes
There are three major populations of gray seals found in the world; eastern Canada (western North Atlantic stock), northwestern Europe and the Baltic Sea. Gray seals in the survey area belong to the western North Atlantic stock. The range for this stock is thought to be from New Jersey to Labrador. Though gray seals are not regularly sighted offshore of Delaware their range has been expanding southward in recent years, and they have been observed recently as far south as the barrier islands of Virginia. Current population trends show that gray seal abundance is likely increasing in the U.S. Atlantic EEZ (Waring
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Current data indicate that not all marine mammal species have equal hearing capabilities (
The pinniped functional hearing group was modified from Southall
For more detail concerning these groups and associated frequency ranges, please see NMFS (2018) for a review of available information. Seventeen marine mammal species (15 cetacean and 2 pinniped (both phocid species)) have the reasonable potential to co-occur with the proposed activities. Please refer to Table 2. Of the cetacean species that may be present, five are classified as low-frequency cetaceans (
This section includes a summary and discussion of the ways that components of the specified activity may impact marine mammals and their habitat. The
This section contains a brief technical background on sound, on the characteristics of certain sound types, and on metrics used in this proposal inasmuch as the information is relevant to the specified activity and to a discussion of the potential effects of the specified activity on marine mammals found later in this document. For general information on sound and its interaction with the marine environment, please see,
Sound travels in waves, the basic components of which are frequency, wavelength, velocity, and amplitude. Frequency is the number of pressure waves that pass by a reference point per unit of time and is measured in hertz (Hz) or cycles per second. Wavelength is the distance between two peaks or corresponding points of a sound wave (length of one cycle). Higher frequency sounds have shorter wavelengths than lower frequency sounds, and typically attenuate (decrease) more rapidly, except in certain cases in shallower water. Amplitude is the height of the sound pressure wave or the “loudness” of a sound and is typically described using the relative unit of the decibel (dB). A sound pressure level (SPL) in dB is described as the ratio between a measured pressure and a reference pressure (for underwater sound, this is 1 microPascal (μPa)), and is a logarithmic unit that accounts for large variations in amplitude; therefore, a relatively small change in dB corresponds to large changes in sound pressure. The source level (SL) represents the SPL referenced at a distance of 1 m from the source (referenced to 1 μPa), while the received level is the SPL at the listener's position (referenced to 1 μPa).
Root mean square (rms) is the quadratic mean sound pressure over the duration of an impulse. Root mean square is calculated by squaring all of the sound amplitudes, averaging the squares, and then taking the square root of the average (Urick, 1983). Root mean square accounts for both positive and negative values; squaring the pressures makes all values positive so that they
Sound exposure level (SEL; represented as dB re 1 μPa
When underwater objects vibrate or activity occurs, sound-pressure waves are created. These waves alternately compress and decompress the water as the sound wave travels. Underwater sound waves radiate in a manner similar to ripples on the surface of a pond and may be either directed in a beam or beams or may radiate in all directions (omnidirectional sources). The compressions and decompressions associated with sound waves are detected as changes in pressure by aquatic life and man-made sound receptors such as hydrophones.
Even in the absence of sound from the specified activity, the underwater environment is typically loud due to ambient sound, which is defined as environmental background sound levels lacking a single source or point (Richardson
The sum of the various natural and anthropogenic sound sources that comprise ambient sound at any given location and time depends not only on the source levels (as determined by current weather conditions and levels of biological and human activity) but also on the ability of sound to propagate through the environment. In turn, sound propagation is dependent on the spatially and temporally varying properties of the water column and sea floor, and is frequency-dependent. As a result of the dependence on a large number of varying factors, ambient sound levels can be expected to vary widely over both coarse and fine spatial and temporal scales. Sound levels at a given frequency and location can vary by 10-20 decibels (dB) from day to day (Richardson
Sounds are often considered to fall into one of two general types: pulsed and non-pulsed. The distinction between these two sound types is important because they have differing potential to cause physical effects, particularly with regard to hearing (
Pulsed sound sources (
Non-pulsed sounds can be tonal, narrowband, or broadband, brief or prolonged, and may be either continuous or intermittent (ANSI, 1995; NIOSH, 1998). Some of these non-pulsed sounds can be transient signals of short duration but without the essential properties of pulses (
Richardson
We describe the more severe effects (
When PTS occurs, there is physical damage to the sound receptors in the ear (
Relationships between TTS and PTS thresholds have not been studied in marine mammals, and there is no PTS data for cetaceans, but such relationships are assumed to be similar to those in humans and other terrestrial mammals. PTS typically occurs at exposure levels at least several decibels above (a 40-dB threshold shift approximates PTS onset;
TTS is the mildest form of hearing impairment that can occur during exposure to sound (Kryter, 1985). While experiencing TTS, the hearing threshold rises, and a sound must be at a higher level in order to be heard. In terrestrial and marine mammals, TTS can last from minutes or hours to days (in cases of strong TTS). In many cases, hearing sensitivity recovers rapidly after exposure to the sound ends. Few data on sound levels and durations necessary to elicit mild TTS have been obtained for marine mammals.
Marine mammal hearing plays a critical role in communication with conspecifics, and interpretation of environmental cues for purposes such as predator avoidance and prey capture. Depending on the degree (elevation of threshold in dB), duration (
Currently, TTS data only exist for four species of cetaceans (bottlenose dolphin, beluga whale (
Animals in the survey area during the proposed survey are unlikely to incur TTS due to the characteristics of the sound sources, which include relatively low source levels and generally very short pulses and duration of the sound. Even for high-frequency cetacean species (
Habituation can occur when an animal's response to a stimulus wanes with repeated exposure, usually in the absence of unpleasant associated events (Wartzok
Available studies show wide variation in response to underwater sound; therefore, it is difficult to predict specifically how any given sound in a particular instance might affect marine mammals perceiving the signal. If a marine mammal does react briefly to an underwater sound by changing its behavior or moving a small distance, the impacts of the change are unlikely to be significant to the individual, l
Changes in dive behavior can vary widely and may consist of increased or decreased dive times and surface intervals as well as changes in the rates of ascent and descent during a dive (
Disruption of feeding behavior can be difficult to correlate with anthropogenic sound exposure, so it is usually inferred by observed displacement from known foraging areas, the appearance of secondary indicators (
Variations in respiration naturally vary with different behaviors and alterations to breathing rate as a function of acoustic exposure can be expected to co-occur with other behavioral reactions, such as a flight response or an alteration in diving. However, respiration rates in and of themselves may be representative of annoyance or an acute stress response. Various studies have shown that respiration rates may either be unaffected or could increase, depending on the species and signal characteristics, again highlighting the importance in understanding species differences in the tolerance of underwater noise when determining the potential for impacts resulting from anthropogenic sound exposure (
Marine mammals vocalize for different purposes and across multiple modes, such as whistling, echolocation click production, calling, and singing. Changes in vocalization behavior in response to anthropogenic noise can
Avoidance is the displacement of an individual from an area or migration path as a result of the presence of a sound or other stressors, and is one of the most obvious manifestations of disturbance in marine mammals (Richardson
A flight response is a dramatic change in normal movement to a directed and rapid movement away from the perceived location of a sound source. The flight response differs from other avoidance responses in the intensity of the response (
Behavioral disturbance can also impact marine mammals in more subtle ways. Increased vigilance may result in costs related to diversion of focus and attention (
Many animals perform vital functions, such as feeding, resting, traveling, and socializing, on a diel cycle (24-hour cycle). Disruption of such functions resulting from reactions to stressors such as sound exposure are more likely to be significant if they last more than one diel cycle or recur on subsequent days (Southall
We expect that some marine mammals may exhibit behavioral responses to the HRG survey activities in the form of avoidance of the area during the activity, especially the naturally shy harbor porpoise, while others such as delphinids might be attracted to the survey activities out of curiosity. However, because the HRG survey equipment operates from a moving vessel, and the maximum radius to the Level B harassment threshold is relatively small, the area and time that this equipment would be affecting a given location is very small. Further, once an area has been surveyed, it is not likely that it will be surveyed again, thereby reducing the likelihood of repeated impacts within the survey area.
We have also considered the potential for severe behavioral responses such as stranding and associated indirect injury or mortality from Skipjack's use of HRG survey equipment. Previous commenters have referenced a 2008 mass stranding of approximately 100 melon-headed whales in a Madagascar lagoon system. An investigation of the event indicated that use of a high-frequency mapping system (12-kHz multibeam echosounder) was the most plausible and likely initial behavioral trigger of the event, while providing the caveat that there is no unequivocal and easily identifiable single cause (Southall
Neuroendocrine stress responses often involve the hypothalamus-pituitary-adrenal system. Virtually all neuroendocrine functions that are affected by stress—including immune competence, reproduction, metabolism, and behavior—are regulated by pituitary hormones. Stress-induced changes in the secretion of pituitary hormones have been implicated in failed reproduction, altered metabolism, reduced immune competence, and behavioral disturbance (
The primary distinction between stress (which is adaptive and does not normally place an animal at risk) and “distress” is the cost of the response. During a stress response, an animal uses glycogen stores that can be quickly replenished once the stress is alleviated. In such circumstances, the cost of the stress response would not pose serious fitness consequences. However, when an animal does not have sufficient energy reserves to satisfy the energetic costs of a stress response, energy resources must be diverted from other functions. This state of distress will last until the animal replenishes its energetic reserves sufficient to restore normal function.
Relationships between these physiological mechanisms, animal behavior, and the costs of stress responses are well studied through controlled experiments and for both laboratory and free-ranging animals (
NMFS does not expect that the generally short-term, intermittent, and transitory HRG and geotechnical activities would create conditions of long-term, continuous noise and chronic acoustic exposure leading to long-term physiological stress responses in marine mammals.
Under certain circumstances, marine mammals experiencing significant masking could also be impaired from maximizing their performance fitness in survival and reproduction. Therefore, when the coincident (masking) sound is man-made, it may be considered harassment if disrupting behavioral patterns. It is important to distinguish TTS and PTS, which persist after the sound exposure, from masking, which occurs during the sound exposure. Because masking (without resulting in TS) is not associated with abnormal physiological function, it is not considered a physiological effect, but rather a potential behavioral effect.
The frequency range of the potentially masking sound is important in determining any potential behavioral impacts. For example, low-frequency signals may have less effect on high-frequency echolocation sounds produced by odontocetes but are more likely to affect detection of mysticete communication calls and other potentially important natural sounds such as those produced by surf and some prey species. The masking of communication signals by anthropogenic noise may be considered as a reduction in the communication space of animals (
Masking affects both senders and receivers of acoustic signals and can potentially have long-term chronic effects on marine mammals at the population level as well as at the individual level. Low-frequency
Marine mammal communications would not likely be masked appreciably by the HRG equipment given the directionality of the signals (for most geophysical survey equipment types planned for use (Table 1)) and the brief period when an individual mammal is likely to be within its beam.
Vessel strikes of marine mammals can cause significant wounds, which may lead to the death of the animal. An animal at the surface could be struck directly by a vessel, a surfacing animal could hit the bottom of a vessel, or a vessel's propeller could injure an animal just below the surface. The severity of injuries typically depends on the size and speed of the vessel (Knowlton and Kraus 2001; Laist
The most vulnerable marine mammals are those that spend extended periods of time at the surface in order to restore oxygen levels within their tissues after deep dives (
An examination of all known ship strikes from all shipping sources (civilian and military) indicates vessel speed is a principal factor in whether a vessel strike results in death (Knowlton and Kraus 2001; Laist
The proposed activities would not result in permanent impacts to habitats used directly by marine mammals, but may have potential minor and short-term impacts to food sources such as forage fish. The proposed activities could affect acoustic habitat (see masking discussion above), but meaningful impacts are unlikely. There are no known foraging hotspots, or other ocean bottom structures of significant biological importance to marine mammals present in the project area. Therefore, the main impact issue associated with the proposed activity would be temporarily elevated sound levels and the associated direct effects on marine mammals, as discussed previously. The HRG survey equipment will not contact the substrate and does not represent a source of pollution. Impacts to substrate or from pollution are therefore not discussed further.
Fish utilize the soundscape and components of sound in their environment to perform important functions such as foraging, predator avoidance, mating, and spawning (
Fish react to sounds which are especially strong and/or intermittent low-frequency sounds, and behavioral responses such as flight or avoidance are the most likely effects. Short duration, sharp sounds can cause overt or subtle changes in fish behavior and local distribution. The reaction of fish to noise depends on the physiological state of the fish, past exposures, motivation (
We are not aware of any available literature on impacts to marine mammal prey from sound produced by HRG survey equipment. However, as the HRG survey equipment introduces noise to the marine environment, there is the potential for it to result in avoidance of the area around the HRG survey activities on the part of marine mammal prey. The duration of fish avoidance of an area after HRG surveys depart the area is unknown, but a rapid return to normal recruitment, distribution and behavior is anticipated. In general, impacts to marine mammal prey species are expected to be minor and temporary due to the expected short daily duration of the proposed HRG survey, the fact that the proposed survey is mobile rather than stationary, and the relatively small areas potentially affected. The areas likely impacted by the proposed activities are relatively small compared to the available habitat in the Atlantic Ocean. Any behavioral avoidance by fish of the disturbed area would still leave significantly large areas of fish and marine mammal foraging habitat in the nearby vicinity. Based on the information discussed herein, we conclude that impacts of the specified activity are not likely to have more than short-term adverse effects on any prey habitat or populations of prey species. Because of the temporary nature of the disturbance, and the availability of similar habitat and resources (
This section provides an estimate of the number of incidental takes proposed for authorization through this IHA, which will inform both NMFS' consideration of “small numbers” and the negligible impact determination.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes would be by Level B harassment only, in the form of disruption of behavioral patterns for individual marine mammals resulting from exposure to HRG sources. Based on the nature of the activity and the anticipated effectiveness of the mitigation measures (
As described previously, no mortality is anticipated or proposed to be authorized for this activity. Below we describe how the take is estimated.
Generally speaking, we estimate take by considering: (1) Acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and, (4) and the number of days of activities. We note that while these basic factors can contribute to a basic calculation to provide an initial prediction of takes, additional information that can qualitatively inform take estimates is also sometimes available (
Using the best available science, NMFS has developed acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur PTS of some degree (equated to Level A harassment).
Level B Harassment—Though significantly driven by received level, the onset of behavioral disturbance from anthropogenic noise exposure is also informed to varying degrees by other factors related to the source (
Level A harassment—NMFS' Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing (Version 2.0) (Technical Guidance, 2018) identifies dual criteria to assess auditory injury (Level A harassment) to five different marine mammal groups (based on hearing sensitivity) as a result of exposure to noise from two different types of sources (impulsive or non-impulsive). The components of Skipjack's proposed activity that may result in the take of marine mammals include the use of impulsive sources.
These thresholds are provided in Table 4 below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS 2018 Technical Guidance, which may be accessed at:
Here, we describe operational and environmental parameters of the activity that will feed into identifying the area ensonified above the acoustic thresholds, which include source levels and transmission loss coefficient.
The proposed survey would entail the use of HRG equipment. The distance to the isopleth corresponding to the threshold for Level B harassment was calculated for all HRG equipment with the potential to result in harassment of marine mammals. NMFS has developed an interim methodology for determining the rms sound pressure level (SPL
If only peak source sound pressure level (
In order to account for the greater absorption of higher frequency sources, we recommend applying 20 log(r) with an absorption term α·r/1000 to calculate transmission loss (
While the calculation of absorption coefficient varies with frequency, temperature, salinity, and pH, the largest factor driving the absorption coefficient is frequency. A simple formula to approximate the absorption coefficient (neglecting temperature, salinity, and pH) is provided by Richardson
Further, if the beamwidth is less than 180° and the angle of beam axis in respect to sea surface is known, the horizontal impact distance
Finally, if the beam is pointed at a normal downward direction, Eq. (4) can be simplified as
The interim methodology described above was used to estimate isopleth distances to the Level B harassment threshold for the proposed HRG survey. NMFS considers the data provided by Crocker and Fratantonio (2016) to represent the best available information on source levels associated with HRG equipment and therefore recommends that source levels provided by Crocker and Fratantonio (2016) be incorporated in the method described above to estimate isopleth distances to the Level B harassment threshold. In cases when the source level for a specific type of HRG equipment is not provided in Crocker and Fratantonio (2016), NMFS recommends that either the source levels provided by the manufacturer be used, or, in instances where source levels provided by the manufacturer are unavailable or unreliable, a proxy from Crocker and Fratantonio (2016) be used instead. Table 1 shows the HRG equipment types that may be used during the proposed surveys and the sound levels associated with those HRG equipment types. Table 4 in the IHA application shows the literature sources for the sound source levels that are shown in Table 1 and that were incorporated into the modeling of Level B isopleth distances to the Level B harassment threshold.
Results of modeling using the methodology described above indicated that, of the HRG survey equipment planned for use by Skipjack that has the potential to result in harassment of marine mammals, sound produced by the AA Dura-Spark 400 sparker and the GeoSource 800 J sparker would propagate furthest to the Level B harassment threshold (Table 5); therefore, for the purposes of the exposure analysis, it was assumed the AA Dura-Spark or the GeoSource 800 J would be active during the entirety of the survey. Thus the distance to the isopleth corresponding to the threshold for Level B harassment for the AA Dura-Spark 400 and the GeoSource 800 J (estimated at 141 m; Table 5) was used as the basis of the take calculation for all marine mammals. Note that this is conservative as Skipjack has stated that for approximately 120 of the 200 total survey days, neither the AA Dura-Spark nor the GeoSource 800 J would be operated, and the source with the greatest potential isopleth distance to the Level B harassment threshold that would be operated during those 120 days would likely be a USBL, which has a smaller associated isopleth distance to the Level B harassment threshold (Table 5).
Predicted distances to Level A harassment isopleths, which vary based on marine mammal functional hearing groups (Table 3), were also calculated. The updated acoustic thresholds for impulsive sounds (such as HRG survey equipment) contained in the Technical Guidance (NMFS, 2018) were presented as dual metric acoustic thresholds using both cumulative sound exposure level (SEL
When the NMFS Technical Guidance (2016) was published, in recognition of the fact that ensonified area/volume could be more technically challenging to predict because of the duration component in the new thresholds, we developed a User Spreadsheet that includes tools to help predict a simple isopleth that can be used in conjunction with marine mammal density or occurrence to help predict takes. We note that because of some of the assumptions included in the methods used for these tools, we anticipate that isopleths produced are typically going to be overestimates of some degree, which may result in some degree of overestimate of Level A harassment take. However, these tools offer the best way to predict appropriate isopleths when more sophisticated 3D modeling methods are not available, and NMFS continues to develop ways to quantitatively refine these tools, and will qualitatively address the output where appropriate. For mobile sources (such as HRG surveys), the User Spreadsheet predicts the closest distance at which a stationary animal would incur PTS if the sound source traveled by the animal in a straight line at a constant speed.
Skipjack used the NMFS optional User Spreadsheet to calculate distances to Level A harassment isopleths based on SEL and used the spherical spreading loss model to calculate distances to Level A harassment isopleths based on peak SPL. Modeling of distances to isopleths corresponding to Level A harassment was performed for all types of HRG equipment proposed for use with the potential to result in harassment of marine mammals. Isopleth distances to Level A harassment thresholds for all types of HRG equipment and all marine mammal functional hearing groups are shown in Table 5. To be conservative, the largest isopleth distances for each functional hearing group were used to model potential exposures above the Level A harassment threshold for all species within that functional hearing group. Inputs to the NMFS optional User Spreadsheet for the GeoSource 800 J Sparker, which resulted in the greatest potential isopleth distance to the Level A harassment threshold for any of the functional hearing groups, are shown in Table 6.
Due to the small estimated distances to Level A harassment thresholds for all marine mammal functional hearing groups, based on both SEL
In this section we provide the information about the presence, density, or group dynamics of marine mammals that will inform the take calculations.
The habitat-based density models produced by the Duke University Marine Geospatial Ecology Laboratory (Roberts
For purposes of the exposure analysis, density data from Roberts
Here we describe how the information provided above is brought together to produce a quantitative take estimate.
In order to estimate the number of marine mammals predicted to be exposed to sound levels that would result in harassment, radial distances to predicted isopleths corresponding to harassment thresholds are calculated, as described above. Those distances are then used to calculate the area(s) around the HRG survey equipment predicted to be ensonified to sound levels that exceed harassment thresholds. The area estimated to be ensonified to relevant thresholds in a single day is then calculated, based on areas predicted to be ensonified around the HRG survey equipment and the estimated trackline distance traveled per day by the survey vessel. Skipjack estimates that proposed surveys will achieve a maximum daily track line distance of 110 km per day during proposed HRG surveys. This distance accounts for the vessel traveling at roughly 4 knots and accounts for non-active survey periods. Based on the maximum estimated distance to the Level B harassment threshold of 141 m (Table 5) and the maximum estimated daily track line distance of 110 km, an area of 31.1 km
The number of marine mammals expected to be incidentally taken per day is then calculated by estimating the number of each species predicted to occur within the daily ensonified area (animals/km
Using this method to calculate take, Skipjack estimated a total of 2 takes by Level A harassment of 1 species (harbor porpoise) would occur, in the absence of mitigation (see Table 9 in the IHA application for the estimated number of Level A takes for all potential HRG equipment types). However, as described above, due to the very small estimated distances to Level A harassment thresholds (Table 5), and in consideration of the proposed mitigation measures, the likelihood of the proposed survey resulting in take in the form of Level A harassment is considered so low as to be discountable; therefore, we do not propose to authorize take of any marine mammals by Level A harassment. Proposed take numbers are shown in Table 7.
Skipjack requested take authorization for three marine mammal species for which no takes were calculated based on the modeling approach described above: Killer whale, sei whale and Risso's dolphin. Though the modeling resulted in estimates of less than 1 take for these species, Skipjack determined that take of these species is possible due to low densities in some density blocks and general variability in the movements of these species. NMFS believes this is reasonable and we therefore propose to authorize take of these species.
As described above, Roberts
Using the take methodology approach described above, the take estimates for the sei whale, sperm whale, killer whale, Risso's dolphin, Atlantic white-sided dolphin, spotted dolphin, long-finned and short-finned pilot whale were less than the average group sizes estimated for these species (Table 7). However, information on the social structures of these species indicates these species are likely to be encountered in groups. Therefore it is reasonable to conservatively assume that one group of each of these species will be taken during the proposed survey. We therefore propose to authorize the take of the average group size for these species to account for the possibility that the proposed survey encounters a group of any of these species or stocks (Table 7).
In order to issue an IHA under Section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to such activity, and other means of effecting the least practicable impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting such activity or other means of effecting the least practicable adverse impact upon the affected species or stocks and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, we carefully consider two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation
(2) the practicability of the measures for applicant implementation, which may consider such things as cost, impact on operations, and, in the case of a military readiness activity, personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity.
NMFS proposes the following mitigation measures be implemented during Skipjack's proposed marine site characterization surveys.
Marine mammal exclusion zones (EZ) would be established around the HRG survey equipment and monitored by protected species observers (PSO) during HRG surveys as follows:
• A 500-m EZ would be required for North Atlantic right whales;
• A 200 m EZ would be required for all other ESA-listed marine mammals (
• A 100-m EZ would be required for all other marine mammals.
If a marine mammal is detected approaching or entering the EZs during the proposed survey, the vessel operator would adhere to the shutdown procedures described below. In addition to the EZs described above, PSOs would visually monitor a 200 m Buffer Zone. During use of acoustic sources with the potential to result in marine mammal harassment (
A minimum of one NMFS-approved PSO must be on duty and conducting visual observations at all times during daylight hours (
Prior to initiating HRG survey activities, Skipjack would implement a 30-minute pre-clearance period. During pre-clearance monitoring (
If a marine mammal were observed within the relevant EZs or Buffer Zone during the pre-clearance period, initiation of HRG survey equipment would not begin until the animal(s) has been observed exiting the respective EZ or Buffer Zone, or, until an additional time period has elapsed with no further sighting (
When technically feasible, a ramp-up procedure would be used for geophysical survey equipment capable of adjusting energy levels at the start or re-start of survey activities. The ramp-up procedure would be used at the beginning of HRG survey activities in order to provide additional protection to marine mammals near the survey area by allowing them to detect the presence of the survey and vacate the area prior to the commencement of survey equipment operation at full power. Ramp-up of the survey equipment would not begin until the relevant EZs and Buffer Zone has been cleared by the PSOs, as described above. HEG equipment would be initiated at their lowest power output and would be incrementally increased to full power. If any marine mammals are detected within the EZs or Buffer Zone prior to or during ramp-up, the HRG equipment would be shut down (as described below).
If an HRG source is active and a marine mammal is observed within or entering a relevant EZ (as described above) an immediate shutdown of the HRG survey equipment would be required. When shutdown is called for by a PSO, the acoustic source would be immediately deactivated and any dispute resolved only following deactivation. Any PSO on duty would have the authority to delay the start of survey operations or to call for shutdown of the acoustic source if a marine mammal is detected within the applicable EZ. The vessel operator would establish and maintain clear lines of communication directly between PSOs on duty and crew controlling the HRG source(s) to ensure that shutdown commands are conveyed swiftly while allowing PSOs to maintain watch. Subsequent restart of the HRG equipment would only occur after the marine mammal has either been observed exiting the relevant EZ, or, until an additional time period has
Upon implementation of shutdown, the HRG source may be reactivated after the marine mammal that triggered the shutdown has been observed exiting the applicable EZ (
The shutdown requirement would be waived for certain genera of small delphinids (
If a species for which authorization has not been granted, or, a species for which authorization has been granted but the authorized number of takes have been met, approaches or is observed within the area encompassing the Level B harassment isopleth (141 m), shutdown would occur.
Vessel strike avoidance measures would include, but would not be limited to, the following, except under circumstances when complying with these requirements would put the safety of the vessel or crew at risk:
• All vessel operators and crew will maintain vigilant watch for cetaceans and pinnipeds, and slow down or stop their vessel to avoid striking these protected species;
• All vessel operators will comply with 10 knot (18.5 km/hr) or less speed restrictions in any SMA and DMA per NOAA guidance;
• All vessel operators will reduce vessel speed to 10 knots (18.5 km/hr) or less when any large whale, any mother/calf pairs, large assemblages of non-delphinoid cetaceans are observed near (within 100 m (330 ft)) an underway vessel;
• All survey vessels will maintain a separation distance of 500 m (1640 ft) or greater from any sighted North Atlantic right whale;
• If underway, vessels must steer a course away from any sighted North Atlantic right whale at 10 knots (18.5 km/hr) or less until the 500 m (1640 ft) minimum separation distance has been established. If a North Atlantic right whale is sighted in a vessel's path, or within 100 m (330 ft) to an underway vessel, the underway vessel must reduce speed and shift the engine to neutral. Engines will not be engaged until the North Atlantic right whale has moved outside of the vessel's path and beyond 100 m. If stationary, the vessel must not engage engines until the North Atlantic right whale has moved beyond 100 m;
• All vessels will maintain a separation distance of 100 m (330 ft) or greater from any sighted non-delphinoid cetacean. If sighted, the vessel underway must reduce speed and shift the engine to neutral, and must not engage the engines until the non-delphinoid cetacean has moved outside of the vessel's path and beyond 100 m. If a survey vessel is stationary, the vessel will not engage engines until the non-delphinoid cetacean has moved out of the vessel's path and beyond 100 m;
• All vessels will maintain a separation distance of 50 m (164 ft) or greater from any sighted delphinoid cetacean. Any vessel underway remain parallel to a sighted delphinoid cetacean's course whenever possible, and avoid excessive speed or abrupt changes in direction. Any vessel underway reduces vessel speed to 10 knots (18.5 km/hr) or less when pods (including mother/calf pairs) or large assemblages of delphinoid cetaceans are observed. Vessels may not adjust course and speed until the delphinoid cetaceans have moved beyond 50 m and/or the abeam of the underway vessel;
• All vessels will maintain a separation distance of 50 m (164 ft) or greater from any sighted pinniped; and
• All vessels underway will not divert or alter course in order to approach any whale, delphinoid cetacean, or pinniped. Any vessel underway will avoid excessive speed or abrupt changes in direction to avoid injury to the sighted cetacean or pinniped.
Skipjack will ensure that vessel operators and crew maintain a vigilant watch for marine mammals by slowing down or stopping the vessel to avoid striking marine mammals. Project-specific training will be conducted for all vessel crew prior to the start of survey activities. Confirmation of the training and understanding of the requirements will be documented on a training course log sheet. Signing the log sheet will certify that the crew members understand and will comply with the necessary requirements throughout the survey activities.
As described above, the section of the proposed survey area partially overlaps with a portion of a North Atlantic right whale SMA off the mouth of Delaware Bay. This SMA is active from November 1 through April 30 of each year. Any survey vessels that are >65 ft in length would be required to adhere to the mandatory vessel speed restrictions (<10 kn) when operating within the SMA during times when the SMA is active. In addition, between watch shifts, members of the monitoring team would consult NMFS' North Atlantic right whale reporting systems for the presence of North Atlantic right whales throughout survey operations. Members of the monitoring team would also monitor the NMFS North Atlantic right whale reporting systems for the establishment of Dynamic Management Areas (DMA). If NMFS should establish a DMA in the survey area while surveys are underway, Skipjack would contact NMFS within 24 hours of the establishment of the DMA to determine whether alteration of survey activities was warranted to avoid right whales to the extent possible.
The proposed mitigation measures are designed to avoid the already low potential for injury in addition to some instances of Level B harassment, and to minimize the potential for vessel strikes. Further, we believe the proposed mitigation measures are practicable for the applicant to implement. Skipjack has proposed additional mitigation measures in addition to the measures described above; for information on the measures proposed by Skipjack, see Section 11 of the IHA application.
There are no known marine mammal rookeries or mating or calving grounds in the survey area that would otherwise potentially warrant increased mitigation measures for marine mammals or their
Based on our evaluation of the applicant's proposed measures, as well as other measures considered by NMFS, NMFS has preliminarily determined that the proposed mitigation measures provide the means effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, Section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104 (a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the proposed action area. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
As described above, visual monitoring would be performed by qualified and NMFS-approved PSOs. Skipjack would use independent, dedicated, trained PSOs, meaning that the PSOs must be employed by a third-party observer provider, must have no tasks other than to conduct observational effort, collect data, and communicate with and instruct relevant vessel crew with regard to the presence of marine mammals and mitigation requirements (including brief alerts regarding maritime hazards), and must have successfully completed an approved PSO training course appropriate for their designated task. Skipjack would provide resumes of all proposed PSOs (including alternates) to NMFS for review and approval at least 45 days prior to the start of survey operations.
During survey operations (
PSOs would be equipped with binoculars and have the ability to estimate distances to marine mammals located in proximity to the vessel and/or exclusion zone using range finders. Reticulated binoculars will also be available to PSOs for use as appropriate based on conditions and visibility to support the monitoring of marine mammals. Position data would be recorded using hand-held or vessel GPS units for each sighting. Observations would take place from the highest available vantage point on the survey vessel. General 360-degree scanning would occur during the monitoring periods, and target scanning by the PSO would occur when alerted of a marine mammal presence.
During good conditions (
Data on all PSO observations would be recorded based on standard PSO collection requirements. This would include dates, times, and locations of survey operations; dates and times of observations, location and weather; details of marine mammal sightings (
Within 90 days after completion of survey activities, a final technical report will be provided to NMFS that fully documents the methods and monitoring protocols, summarizes the data recorded during monitoring, summarizes the number of marine mammals estimated to have been taken during survey activities (by species, when known), summarizes the mitigation actions taken during surveys (including what type of mitigation and the species and number of animals that prompted the mitigation action, when known), and provides an interpretation of the results and effectiveness of all mitigation and monitoring. Any recommendations made by NMFS must be addressed in
In addition to the final technical report, Skipjack will provide the reports described below as necessary during survey activities. In the unanticipated event that Skipjack's survey activities lead to an injury (Level A harassment) or mortality (
• Time, date, and location (latitude/longitude) of the incident;
• Name and type of vessel involved;
• Vessel's speed during and leading up to the incident;
• Description of the incident;
• Status of all sound source use in the 24 hours preceding the incident;
• Water depth;
• Environmental conditions (
• Description of all marine mammal observations in the 24 hours preceding the incident;
• Species identification or description of the animal(s) involved;
• Fate of the animal(s); and
• Photographs or video footage of the animal(s) (if equipment is available).
Activities would not resume until NMFS is able to review the circumstances of the event. NMFS would work with Skipjack to minimize reoccurrence of such an event in the future. Skipjack would not resume activities until notified by NMFS.
In the event that Skipjack discovers an injured or dead marine mammal and determines that the cause of the injury or death is unknown and the death is relatively recent (
In the event that Skipjack discovers an injured or dead marine mammal and determines that the injury or death is not associated with or related to the activities authorized in the IHA (
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
To avoid repetition, our analysis applies to all the species listed in Table 2, given that NMFS expects the anticipated effects of the proposed survey to be similar in nature.
NMFS does not anticipate that serious injury or mortality would occur as a result of Skipjack's proposed survey, even in the absence of proposed mitigation. Thus the proposed authorization does not authorize any serious injury or mortality. As discussed in the
Effects on individuals that are taken by Level B harassment, on the basis of reports in the literature as well as monitoring from other similar activities, will likely be limited to reactions such as increased swimming speeds, increased surfacing time, or decreased foraging (if such activity were occurring) (
In addition to being temporary and short in overall duration, the acoustic footprint of the proposed survey is small relative to the overall distribution of the animals in the area and their use of the area. Feeding behavior is not likely to be significantly impacted. Prey species are mobile and are broadly distributed throughout the project area; therefore, marine mammals that may be temporarily displaced during survey activities are expected to be able to resume foraging once they have moved away from areas with disturbing levels of underwater noise. Because of the temporary nature of the disturbance and the availability of similar habitat and resources in the surrounding area, the impacts to marine mammals and the food sources that they utilize are not expected to cause significant or long-
There are no rookeries, mating or calving grounds known to be biologically important to marine mammals within the proposed survey area and there are no feeding areas known to be biologically important to marine mammals within the proposed survey area. There is no designated critical habitat for any ESA-listed marine mammals in the proposed survey area. The proposed survey area overlaps a portion of a biologically important migratory area for North Atlantic right whales (effective March-April and November-December) that extends from Massachusetts to Florida (LaBrecque,
Potential impacts to marine mammal habitat were discussed previously in this document (see
As described above, North Atlantic right, humpback, and minke whales, and gray and harbor seals are experiencing ongoing UMEs. For North Atlantic right whales, as described above, no injury as a result of the proposed project is expected or proposed for authorization, and Level B harassment takes of right whales are expected to be in the form of avoidance of the immediate area of the proposed survey. In addition, the number of takes proposed for authorization above the Level B harassment threshold are minimal (
Similarly, no injury or mortality is expected or proposed for authorization for any of the other species with UMEs, Level B harassment will be reduced to the level of least practicable adverse impact through use of proposed mitigation measures, and the proposed authorized takes would not exacerbate or compound the ongoing UMEs. For minke whales, although the ongoing UME is under investigation (as occurs for all UMEs), this event does not provide cause for concern regarding population level impacts, as the likely population abundance is greater than 20,000 whales. Even though the PBR value is based on an abundance for U.S. waters that is negatively biased and a small fraction of the true population abundance, annual M/SI does not exceed the calculated PBR value for minke whales. With regard to humpback whales, the UME does not yet provide cause for concern regarding population-level impacts. Despite the UME, the relevant population of humpback whales (the West Indies breeding population, or distinct population segment (DPS)) remains healthy. The West Indies DPS, which consists of the whales whose breeding range includes the Atlantic margin of the Antilles from Cuba to northern Venezuela, and whose feeding range primarily includes the Gulf of Maine, eastern Canada, and western Greenland, was delisted. The status review identified harmful algal blooms, vessel collisions, and fishing gear entanglements as relevant threats for this DPS, but noted that all other threats are considered likely to have no or minor impact on population size or the growth rate of this DPS (Bettridge
The proposed mitigation measures are expected to reduce the number and/or severity of takes by (1) giving animals the opportunity to move away from the sound source before HRG survey equipment reaches full energy; (2) preventing animals from being exposed to sound levels that may otherwise result in injury or more severe behavioral responses. Additional vessel strike avoidance requirements will further mitigate potential impacts to marine mammals during vessel transit to and within the survey area.
NMFS concludes that exposures to marine mammal species and stocks due to Skipjack's proposed survey would result in only short-term (temporary and short in duration) effects to individuals exposed. Marine mammals may temporarily avoid the immediate area, but are not expected to permanently abandon the area. Major shifts in habitat use, distribution, or foraging success are not expected. NMFS does not anticipate the proposed take estimates to impact annual rates of recruitment or survival.
In summary and as described above, the following factors primarily support our preliminary determination that the impacts resulting from this activity are not expected to adversely affect the species or stock through effects on annual rates of recruitment or survival:
• No mortality, serious injury, or Level A harassment is anticipated or authorized;
• The anticipated impacts of the proposed activity on marine mammals would primarily be in the form of temporary behavioral changes due to avoidance of the area around the survey vessel;
• The availability of alternate areas of similar habitat value (for foraging, etc.) for marine mammals that may temporarily vacate the survey area during the proposed survey to avoid exposure to sounds from the activity;
• The proposed project area does not contain known areas of significance for mating or calving;
• Effects on species that serve as prey species for marine mammals from the proposed survey would be minor and temporary and would not be expected to reduce the availability of prey or to affect marine mammal feeding;
• The proposed mitigation measures, including visual and acoustic monitoring, exclusion zones, and shutdown measures, are expected to minimize potential impacts to marine mammals.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the proposed monitoring and mitigation measures, NMFS preliminarily finds
As noted above, only small numbers of incidental take may be authorized under Sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
The numbers of marine mammals that we propose for authorization to be taken, for all species and stocks, would be considered small relative to the relevant stocks or populations (less than 28 percent for two of seventeen species and stocks, and less than 1 percent for all remaining species and stocks). See Table 7. Based on the analysis contained herein of the proposed activity (including the proposed mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS preliminarily finds that small numbers of marine mammals will be taken relative to the population size of the affected species or stocks.
There are no relevant subsistence uses of the affected marine mammal stocks or species implicated by this action. Therefore, NMFS has determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
Section 7(a)(2) of the Endangered Species Act of 1973 (16 U.S.C. 1531
The NMFS Office of Protected Resources Permits and Conservation Division is proposing to authorize the incidental take of four species of marine mammals which are listed under the ESA: The North Atlantic right, fin, sei, and sperm whale. The Permits and Conservation Division has requested initiation of Section 7 consultation with NMFS GARFO for the issuance of this IHA. NMFS will conclude the ESA section 7 consultation prior to reaching a determination regarding the proposed issuance of the authorization.
As a result of these preliminary determinations, NMFS proposes to issue an IHA to Skipjack for conducting marine site characterization surveys offshore of Delaware and along potential submarine cable routes to a landfall location in Delaware or Maryland, from the date of issuance for a period of one year, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. A draft of the proposed IHA can be found at
We request comment on our analyses, the proposed authorization, and any other aspect of this Notice of Proposed IHA for the proposed [action]. We also request at this time comment on the potential renewal of this proposed IHA as described in the paragraph below. Please include with your comments any supporting data or literature citations to help inform decisions on the request for this IHA or a subsequent Renewal.
On a case-by-case basis, NMFS may issue a one-year IHA renewal with an additional 15 days for public comments when (1) another year of identical or nearly identical activities as described in the Specified Activities section of this notice is planned or (2) the activities as described in the Specified Activities section of this notice would not be completed by the time the IHA expires and a Renewal would allow for completion of the activities beyond that described in the Dates and Duration section of this notice, provided all of the following conditions are met:
• A request for renewal is received no later than 60 days prior to expiration of the current IHA;
• The request for renewal must include the following:
(1) An explanation that the activities to be conducted under the requested Renewal are identical to the activities analyzed under the initial IHA, are a subset of the activities, or include changes so minor (
(2) A preliminary monitoring report showing the results of the required monitoring to date and an explanation showing that the monitoring results do not indicate impacts of a scale or nature not previously analyzed or authorized;
• Upon review of the request for Renewal, the status of the affected species or stocks, and any other pertinent information, NMFS determines that there are no more than minor changes in the activities, the mitigation and monitoring measures will remain the same and appropriate, and the findings in the initial IHA remain valid.
The next meeting of the U.S. Commission of Fine Arts is scheduled for 17 October 2019, at 9 a.m. in the Commission offices at the National Building Museum, Suite 312, Judiciary Square, 401 F Street NW, Washington, DC 20001-2728. Items of discussion may include buildings, parks and memorials.
Draft agendas and additional information regarding the Commission are available on our website:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed deletions from the procurement list.
The Committee is proposing to delete products and services from the Procurement List that were furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia, 22202-4149.
For further information or to submit comments contact: Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
This notice is published pursuant to 41 U.S.C. 8503 (a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
The following products and services are proposed for deletion from the Procurement List:
Commodity Futures Trading Commission.
Notice.
In compliance with the Paperwork Reduction Act of 1995 (PRA), this notice announces that the Information Collection Request (ICR) abstracted below has been forwarded to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collection and its expected costs and burden.
Comments must be submitted on or before October 28, 2019.
Comments regarding the burden estimate or any other aspect of the information collection, including suggestions for reducing the burden, may be submitted directly to the Office of Information and Regulatory Affairs (OIRA) in OMB within 30 days of this notice's publication by either of the following methods. Please identify the comments by “OMB Control No. 3038-0107.”
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A copy of all comments submitted to OIRA should be sent to the Commodity Futures Trading Commission (the “Commission”) by either of the following methods. The copies should refer to “OMB Control No. 3038-0107.”
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• Through the Commission's website at
A copy of the supporting statement for the collection of information discussed herein may be obtained by visiting
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Dan Rutherford, Associate Director, Office of Public Affairs, Office of Customer Education and Outreach, Commodity Futures Trading Commission, (202) 418-6552; email:
This collection of information is necessary to enable the OCEO to garner customer and stakeholder feedback in an efficient and timely manner in accordance with our commitment to improving service delivery. The information collected from our customers and stakeholders will help ensure that users have an effective, efficient, and satisfying experience with OCEO programs. This feedback will provide insights into customer or stakeholder perceptions, experiences and expectations, provide an early warning of issues with service, or focus attention on areas where communication, training or changes in operations might improve delivery of products or services. These collections will allow for ongoing, collaborative and actionable communications between the OCEO and its customers and stakeholders. It will also allow feedback to contribute directly to the improvement of program management.
On July 24, 2019, the Commission published in the
There are no capital costs or operating and maintenance costs associated with this collection.
44 U.S.C. 3501
Commodity Futures Trading Commission.
Notice.
In compliance with the Paperwork Reduction Act of 1995 (PRA), this notice announces that the Information Collection Request (ICR) abstracted below has been forwarded to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collection and its expected costs and burden.
Comments must be submitted on or before October 28, 2019.
Comments regarding the burden estimated or any other aspect of the information collection, including suggestions for reducing the burden, may be submitted directly to the Office of Information and Regulatory Affairs (OIRA) in OMB, within 30 days of the notice's publication, by by either of the following methods. Please identify the comments by “OMB Control No. 3038-0017.”
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A copy of all comments submitted to OIRA should be sent to the Commodity Futures Trading Commission (the “Commission”) by either of the following methods. The copies should refer to “OMB Control No. 3038-0017.”
• By mail addressed to: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581;
• By Hand Delivery/Courier to the same address; or
• Through the Commission's website at
A copy of the supporting statement for the collection of information discussed herein may be obtained by visiting
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Adam Charnisky, Market Analyst, Division of Market Oversight, Commodity Futures Trading Commission, (312) 596-0630; email:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. On July 23, 2019, the Commission published in the
There are no capital costs or operating and maintenance costs associated with this collection.
44 U.S.C. 3501
Federal Student Aid (FSA), Department of Education (ED)
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing an extension of an existing information collection.
Interested persons are invited to submit comments on or before October 28, 2019.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Beth Grebeldinger, 202-377-4018.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Office of Environmental Management, U.S. Department of Energy.
Record of decision.
The U.S. Department of Energy (DOE) announces its decision to demolish the 18 buildings it owns in Area IV of the Santa Susana Field Laboratory (SSFL) and dispose of or recycle the materials off site. This action will be taken in accordance with applicable federal, state, and local requirements. (The demolition of five of the eighteen buildings and the disposal of the resulting debris will be accomplished pursuant to closure plans approved by the California Department of Toxic Substances Control.) This action will also be taken consistent with agreements and decisions resulting from interagency consultations conducted in accordance with applicable federal, state, and local requirements, including the Programmatic Agreement executed with the California State Historic Preservation Officer pursuant to the National Historic Preservation Act and the Biological Opinion issued by the U.S. Fish and Wildlife Service pursuant to the Endangered Species Act.
This Record of Decision (ROD), the SSFL Area IV Final Environmental Impact Statement (EIS), and related NEPA documents are available at the DOE SSFL Area IV website (
For further information on the SSFL FEIS, the ROD, and DOE cleanup actions within Area IV of SSFL and the Northern Buffer Zone, please contact Ms. Stephanie Jennings, ETEC National Environmental Policy Act (NEPA) Compliance Officer, U.S. Department of Energy at
DOE prepared the SSFL Area IV Final EIS (DOE/EIS-0402) in accordance with NEPA (42 U.S.C 4321
SSFL, located on approximately 2,850 acres in the hills between Chatsworth and Simi Valley, California, was developed as a remote site to test rocket engines and conduct nuclear research. Rocket engine testing by North American Aviation (later Rockwell International (Rocketdyne)) began in 1947. In the mid-1950s, the Atomic Energy Commission (AEC), a predecessor agency to DOE, funded nuclear research on a 90-acre parcel within Area IV of SSFL. The Energy Technology Engineering Center (ETEC) was established on this parcel as a “center of excellence” for liquid metals research. A total of 10 small reactors were built and operated as part of nuclear research that ended in 1982. DOE-directed liquid metals research continued until 1998.
During the years of research activities within Area IV, there were more than 270 numbered structures supporting the research (structures included occupied buildings, storage sheds, tanks, transformers, loading docks, etc.). As the mission associated with each structure was completed, the structure was decontaminated, demolished, and the debris transported offsite for disposal. There was no DOE-sponsored development within the Northern Buffer Zone (NBZ).
By 2006, only 18 DOE-owned numbered structures (buildings and sheds) remained in Area IV. Operations within five of the structures were conducted under two Resource Conservation and Recovery Act (RCRA) permits issued by the State of California Department of Toxic Substances Control (DTSC). The remaining 13 buildings were operated pursuant to DOE requirements and other applicable laws and regulations.
The RCRA permitted structures at the Radioactive Materials Handling Facility (RMHF) include:
The RCRA permitted structures at the Hazardous Waste Management Facility (HWMF) include:
The non-RCRA-permitted structures include:
DOE's purpose and need for action remains as stated in the SSFL Area IV Final EIS. DOE needs to complete remediation of Area IV and the NBZ to comply with applicable requirements for cleanup of radiological and non-radiological hazardous substances. Pursuant to this ROD, DOE has decided to remove the remaining 18 DOE-owned structures in Area IV of SSFL in a manner that is protective of the environment and the health and safety of the public and its workers. (The demolition of five of these buildings requires closure plans approved by DTSC.)
DOE's proposed action that is the subject of this ROD is to demolish the 18 DOE-owned buildings in Area IV and transport the resulting waste off site for disposal. Demolition of 13 facilities and disposition of the resulting debris will be in accordance with DOE requirements and applicable laws and regulations. Three facilities at the RMHF and the two facilities comprising the HWMF will be closed in accordance with California DTSC-approved RCRA facility closure plans. By doing so, DOE will no longer have a long-term safety and environmental liability at SSFL related to buildings, and removal is consistent with the future land use as open space/recreational. This action
In the SSFL Area IV Draft and Final EIS, DOE evaluated the No Action, Alternative Use of Area IV Buildings, and Building Removal alternatives. The Alternative Use of Area IV Buildings was dismissed in the SSFL Area IV Draft EIS as a viable alternative because DOE does not own the land, and Boeing, the land owner, has established conservation easements and agreements designating the future use of its land as open space/recreational. There is no viable purpose for reuse of the buildings and their removal is consistent with Boeing's land-use plans. Under the No Action Alternative, none of the 18 structures would be removed, but as required by the Atomic Energy Act of 1954, as amended, DOE would still be responsible for long-term surveillance, maintenance, and security. The Building Removal Alternative would involve complete removal of the buildings and foundations (except for the concrete slabs of Buildings 4462 and 4463 which are owned by Boeing) with offsite disposal of debris at permitted or authorized facilities in accordance with its waste classification.
In the SSFL Area IV Final EIS DOE analyzed environmental issues and the potential impacts, including land resources, geology and soils, surface water, groundwater, biology, air quality and climate change, noise, transportation and traffic, human health, waste management, cultural resources, socioeconomics, environmental justice, and sensitive-aged populations. DOE also evaluated the potential impacts of the irreversible and irretrievable commitment of resources, the short-term uses of the environment, and the maintenance and enhancement of long-term productivity. These analyses and results are described in the SSFL Area IV Final EIS, including the Summary and in Section 2.8 of the SSFL Area IV Final EIS.
In identifying the preferred alternative for building demolition and disposal, and in making the decision announced in this ROD, DOE considered the potential impacts that would result from the building removal. Table S-8 of the SSFL Area IV Final EIS Summary also provides a summary and comparison of potential environmental consequences associated with each alternative. The impacts to the physical, social, and natural environments will be minimal and manageable.
The environmentally preferable alternative is the complete removal of all 18 buildings and structures. The deteriorating buildings have the potential to release contamination (
DOE will demolish and dispose of the RMHF and HWMF buildings in accordance with the closure plans approved by California DTSC. DOE has coordinated the processes associated with NEPA and Section 106 of the National Historic Preservation Act, codified at 54 U.S.C. 306108, and complied with Section 106 requirement through completion of the Programmatic Agreement with the California State Historic Preservation Officer (September 13, 2019). DOE also consulted with the U.S. Fish and Wildlife Service (USFWS) for compliance with Section 7 of the Endangered Species Act, codified at 16 U.S.C. 1536. Area IV of SSFL includes federally-designated critical habitat for the endangered Braunton's milk-vetch. USFWS issued its Biological Opinion related to DOE's proposed actions on August 28, 2018 (
Following the 2007 Federal court decision resulting from a legal challenge to the 2003 Environmental Assessment (EA) Finding of No Significant Impact (FONSI), DOE published in the
Preparation of the Draft EIS was delayed due to the need to collect soil and groundwater characterization data for Area IV and the NBZ. The lack of characterization data was one of EPA's and the State of California's comments on the 2003 EA. EPA collected characterization data for radionuclides from October 2010 to December 2012. DOE (under DTSC oversight) collected characterization data for chemicals from October 2010 to June 2014. While the characterization data were being collected, DOE ETEC continued public involvement through release of newsletters and conducting Community Alternatives Development Workshops in 2012. Due to the length of time between the 2008 NOI and completion of characterization, DOE published in the
The Notice of Availability of the SSFL Area IV Final EIS was published in the
DOE received 885 letters or emails regarding the SSFL Area IV Final EIS. DOE considered all comments contained in the letters and emails received subsequent to publication of the FEIS. Some of the comments
• Comments that DOE needs to take responsibility and perform a full cleanup; that less would not be protective of human health and safety.
• Comments that DOE's proposed cleanup alternatives would leave contamination that could migrate from the site.
• Comments that the health of the local population would be threatened by the continued onsite presence of contaminants.
• Comments that DOE must comply with all laws and commitments, including the 2010 Administrative Order on Consent (AOC).
• Comments that DOE needs to comply with RCRA standards, enforced by DTSC, and that DOE does not intend to comply; the alternatives presented are attempts by DOE to usurp DTSC authority.
• Comments regarding DOE's failure to address only alternatives that comply with the AOC.
• Comments incorporated by reference by the City of Los Angeles.
This section of the ROD addresses comments that are generally applicable to the SSFL Area IV Final EIS, including any that are relevant to the building demolition and disposal decision. Comments generally applicable to the SSFL Area IV Final EIS address compliance with laws and regulations (
DOE received comment letters from the EPA, Region IX; DTSC; The Boeing Company; City of Los Angeles; Natural Resources Defense Council/Committee to Bridge the Gap; Physicians for Social Responsibility—Los Angeles; Rocketdyne Cleanup Coalition; Southern California Federation of Scientists; and the SSFL Community Advisory Group. DOE also received 876 comment emails from individuals. The primary topics of the comments are NEPA compliance, soil remediation, groundwater remediation, the Biological Opinion, and the Woolsey Fire. No new comments specific to the building demolition alternative, its impacts, or status of the building removal preferred alternative were received on the SSFL Area IV Final EIS. The topics below summarize the comments received related to building demolition, the SSFL Area IV Final EIS, and the proposed action in general. DOE has responded to each topic. Comments and comment topics related to soil or groundwater remediation are not addressed below because they are not relevant to the decision being made in this ROD. Comments related to soil and groundwater remediation will be addressed in the future ROD(s). DOE reviewed and responded to all comments received through March 28, 2019. There were no comments received after that date.
Various requests were made regarding review of the SSFL Area IV Final EIS. Some commenters requested that the review period for the SSFL Area IV Final EIS be extended. Some commenters requested recirculating the SSFL Area IV Final EIS for public comment and others requested withdrawing the current document and issuing a new SSFL Area IV Final EIS that the commenters asserted would be compliant with NEPA.
By submitting comments on the SSFL Area IV Final EIS, organizations and individuals demonstrated that they did have an opportunity to review and comment on the Area IV Final EIS. Having reviewed and considered comments received, DOE has determined that there is no need to reissue the SSFL Area IV Final EIS (or issue a new or supplemental EIS). DOE has met its obligations under NEPA for public input and review. Public involvement and review opportunities included two scoping periods, alternatives development workshops, and a comment period on the Draft EIS. Additionally, DOE considered comments received on the SSFL Area IV Final EIS.
Regarding comments that the fire resulted in the release of contamination, DOE, Boeing, and the National Aeronautics and Space Administration performed air sampling during and following the fire and DTSC, EPA, and others conducted sampling immediately post-fire. As reported in the
Risk assessments of onsite impacts were not new in the SSFL Area IV Final EIS (Section 4.9.1 Draft EIS). Comments related to risk assessments as they concern onsite risks associated with soil remediation, including the comment regarding EPA guidance, are not addressed in this ROD; DOE will
DOE has considered these comments and concludes that they do not present substantial changes to a proposal or significant new circumstances or information relevant to environmental concerns and bearing on the proposed action or its impacts within the meaning of 40 CFR 1502.9(c) and 10 CFR 1021.314(a) and therefore do not require preparation of a supplement analysis or a supplemental EIS.
DOE-EM has decided to implement the Building Removal Alternative, its Preferred Alternative for building demolition, as described in the SSFL Area IV Final EIS. Under this alternative, DOE-EM will prepare demolition/disposal plans for each building describing: (1) Processes for characterizing building materials for the presence of hazardous materials and radionuclides; (2) processes for collecting, handling, transporting, and disposing of debris containing hazardous materials and radionuclides; and (3) the identification of the facilities receiving the materials. The demolition/disposal plans will also describe the handling, transporting, and disposing of building debris in accordance with disposal facility waste acceptance criteria. Building demolition will be performed using standard mechanized equipment and transported using standard highway trucks. Demolition materials will be sampled for comparison with the waste acceptance criteria of the receiving facilities prior to or during building demolition. Some material will be containerized for transport. Following building removal DOE will prepare and implement plans for soil sampling beneath the building footprints. This will allow DOE to complete soil characterization and decision plans for soil and groundwater remediation.
DOE has prepared RCRA Closure Plans for the RMHF (3 buildings) and HWMF (2 buildings). DOE submitted the plans to DTSC for approval in October 2016. On August 13, 2018, DTSC announced the plans to be complete and initiated a public comment period. The public comment period ran from August 13, 2018, to October 12, 2018. The RCRA closure plans are also subject to review under the California Environmental Quality Act. In October 2017, DTSC released a draft Programmatic Environmental Impact Report describing cleanup actions for the entirety of SSFL. DOE will demolish and remove the RCRA-permitted buildings/structures at the RMHF and HWMF and clean up the sites to meet the requirements in the DTSC-approved closure plans.
In reaching this decision, DOE balanced the environmental information in the Final EIS, potential environmental impacts of building demolition and debris transportation, current and future mission needs, technical and security considerations, availability of resources, and public comments on the SSFL Area IV Draft and Final EIS. DOE no longer has a need for any of the buildings and by removing them DOE will facilitate accomplishment of its environmental management program initiatives. Some buildings still contain radionuclides imbedded in building material, and removal of the buildings with disposal of the radiological materials at a regulated facility provides long-term protection from the materials. The future land use of the Area IV property is open space/recreational, and removal of the buildings is consistent with that future land use. Removal of the buildings also allows for access to soil for final soil sampling. Building demolition and debris transportation can be conducted in a manner that is protective of the local Area IV environment and populations along the transport route. Implementing the Preferred Alternative will allow DOE to continue its progress of cleaning up legacy nuclear research properties.
Building demolition and debris transportation could result in airborne emissions of various pollutants in diesel exhaust, and potential pollutants including radionuclides, metals, and organic constituents during demolition activities. This decision adopts the mitigation and monitoring measures relevant to building demolition that are identified in Chapter 6 of the Final EIS, the Programmatic Agreement, and the Biological Opinion. Practicable means to avoid or minimize environmental harm from the selected alternative for building demolition have been, or will be, adopted. Prior to building demolition, DOE will prepare a mitigation and monitoring plan that will address how air emissions be will minimized. Diesel emissions will be controlled through using demolition equipment and highway trucks fitted with pollution control equipment maintained to manufacturer specifications. Particulate emissions during building demolition will be controlled using best available control measures including water sprays. Toxic chemicals and radionuclides found in debris will be packaged to prevent releases during transportation. Occupational safety risks to workers will be minimized by adherence to Federal and state occupational safety laws, and DOE requirements, regulations, and orders. Workers will also be protected by use of engineering and administrative controls. Emergency preparedness will also include an
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act of 1995 (PRA), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments shall be submitted on or before November 26, 2019. If you anticipate that you will be submitting comments but find it difficult to do so within the period of time allowed by this notice, you should advise the contacts below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email:
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Pursuant to the Small Business Paperwork Relief Act of 2002, the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
The Commission may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments should be submitted on or before October 28, 2019. If you anticipate that you will be submitting comments but find it difficult to do so with the period of time allowed by this notice, you should advise the contacts listed below as soon as possible.
Direct all PRA comments to Nicholas A. Fraser, OMB, via email
For additional information or copies of the information collection, contact Cathy Williams at (202) 418-2918. To view a copy of this information collection request (ICR) submitted to OMB: (1) Go to the web page
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the FCC invited the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
The information collection requirements for this collection, some of which were revised (Sections 76.970(h) and 76.975(e)) by FCC 19-52, are contained in the following rule sections:
47 CFR 76.970(h) requires cable operators to provide prospective leased access programmers with the following information within 30 calendar days of the date on which a bona fide request for leased access information is made, provided that the programmer has remitted any application fee that the cable system operator requires up to a maximum of $100 per system-specific bona fide request (for systems subject to small system relief, cable operators are required to provide the following information within 45 calendar days of a bona fide request):
(a) How much of the cable operator's leased access set-aside capacity is available;
(b) a complete schedule of the operator's full-time leased access rates;
(c) rates associated with technical and studio costs; and
(d) if specifically requested, a sample leased access contract.
Bona fide requests, as used in this section, are defined as requests from potential leased access programmers that have provided the following information:
(a) The desired length of a contract term;
(b) the anticipated commencement date for carriage; and
(c) the nature of the programming.
All requests for leased access must be made in writing and must specify the date on which the request was sent to the operator. Operators must maintain supporting documentation to justify scheduled rates, including supporting contracts, calculations of the implicit fees, and justifications for all adjustments.
Cable system operators must disclose on their own websites, or through alternate means if they do not have their own websites, a contact name or title, telephone number, and email address for the person responsible for responding to requests for information about leased access channels.
47 CFR 76.971 requires cable operators to provide billing and collection services to leased access programmers unless they can demonstrate the existence of third party billing and collection services which, in terms of cost and accessibility, offer leased access programmers an alternative substantially equivalent to that offered to comparable non-leased access programmers.
47 CFR 76.975(b) allows any person aggrieved by the failure or refusal of a cable operator to make commercial channel capacity available or to charge rates for such capacity in accordance with the relevant provisions of the statute or the implementing regulations to file a petition for relief with the Commission. Persons alleging that a cable operator's leased access rate is unreasonable must receive a determination of the cable operator's maximum permitted rate from an independent accountant prior to filing a petition. If parties cannot agree on a mutually acceptable accountant within five business days of the programmer's request for a review, they must each select an independent accountant on the sixth business day. These two accountants will then have five business days to select a third independent accountant to perform the review. To account for their more limited resources, operators of systems entitled to small system relief have 14 business days to select an independent accountant when no agreement can be reached.
47 CFR 76.975(c) requires that petitioners attach a copy of the final accountant's report to their petition where the petition is based on allegations that a cable operator's leased access rates are unreasonable.
47 CFR 76.975(e) provides that the cable operator or other respondent will have 30 days from service of the petition to file an answer. If a leased access rate is disputed, the answer must show that the rate charged is not higher than the maximum permitted rate for such leased access, and must be supported by the affidavit of a responsible company official. If, after an answer is submitted, the staff finds a prima facie violation of our rules, the staff may require a respondent to produce additional information, or specify other procedures necessary for resolution of the proceeding. Replies to answers must be filed within fifteen (15) days after submission of the answer.
The Commission has determined that there is some duplication in collections 3060-0568 and 3060-0569. Therefore, we are also consolidating collection 3060-0569 into 3060-0568. The Commission intends to discontinue collection 3060-0569 once the consolidation has been approved by OMB.
ATSC PSIP standard A/65C requires broadcasters to provide detailed programming information when transmitting their broadcast signal. This standard enhances consumers' viewing experience by providing detailed information about digital channels and programs, such as how to find a program's closed captions, multiple streams and V-chip information. This standard requires broadcasters to populate the Event Information Tables (“EITs”) (or program guide) with accurate information about each event (or program) and to update the EIT if more accurate information becomes available. The previous ATSC PSIP standard A/65-B did not require broadcasters to provide such detailed programming information but only general information.
The Federal Communications Commission will hold an Open Meeting on the subjects listed below on Thursday, September 26, 2019, which is scheduled to commence at 10:30 a.m. in Room TW-C305, at 445 12th Street SW, Washington, DC
The meeting site is fully accessible to people using wheelchairs or other mobility aids. Sign language interpreters, open captioning, and assistive listening devices will be provided on site. Other reasonable accommodations for people with disabilities are available upon request. In your request, include a description of the accommodation you will need and a way we can contact you if we need more information. Last minute requests will be accepted but may be impossible to fill. Send an email to:
Additional information concerning this meeting may be obtained from the Office of Media Relations, (202) 418-0500; TTY 1-888-835-5322. Audio/Video coverage of the meeting will be broadcast live with open captioning over the internet from the FCC Live web page at
The liquidation of the assets for each receivership has been completed. To the extent permitted by available funds and in accordance with law, the Receiver will be making a final dividend payment to proven creditors.
Based upon the foregoing, the Receiver has determined that the continued existence of the receiverships will serve no useful purpose. Consequently, notice is given that the receiverships shall be terminated, to be effective no sooner than thirty days after the date of this notice. If any person wishes to comment concerning the termination of any of the receiverships, such comment must be made in writing, identify the receivership to which the comment pertains, and be sent within thirty days of the date of this notice to:
No comments concerning the termination of the above-mentioned receiverships will be considered which are not sent within this time frame.
12 U.S.C. 1819.
Federal Trade Commission (FTC or Commission).
Notice.
The FTC plans to ask the Office of Management and Budget (OMB) to extend for an additional three years the current Paperwork Reduction Act (PRA) clearance for information collection requirements contained in the FTC's portion of the information collection requirements contained in the Consumer Financial Protection Bureau's Regulation N (the Mortgage Acts and Practices—Advertising Rule). The FTC generally shares enforcement of Regulation N with the Consumer Financial Protection Bureau (“CFPB”). The current clearance expires on January 31, 2020.
Comments must be received on or before November 26, 2019.
Interested parties may file a comment online or on paper by following the instructions in the Request for Comments part of the
Carole L. Reynolds, Attorney, Division of Financial Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580, (202) 326-3230.
Under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3520, federal agencies must get OMB approval for each collection of information they conduct, sponsor, or require. “Collection of information” means agency requests or requirements to submit reports, keep records, or provide information to a third party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for public comment before requesting that OMB extend the FTC's existing PRA clearance for the information collection requirements associated with the CFPB's Regulation N (Mortgage Acts and Practices—Advertising), 12 CFR 1014.
Regulation N requires covered persons to retain: (1) Copies of materially different commercial communications and related materials, regarding any term of any mortgage credit product, that the person made or disseminated during the relevant time period; (2) documents describing or evidencing all mortgage credit products available to consumers during the relevant time period; and (3) documents describing or evidencing all additional products or services (such as credit insurance or credit disability insurance) that are or may be offered or provided with the mortgage credit products available to consumers during the relevant time period.
Commission staff believes the recordkeeping requirements pertain to records that are usual and customary and kept in the ordinary course of business for many covered persons, such as mortgage brokers, lenders, and servicers; real estate brokers and agents; home builders, and advertising agencies.
The information retained under the Rule's recordkeeping requirements is used by the Commission to substantiate compliance with the Rule and may also provide a basis for the Commission to bring an enforcement action. Without
Commission staff estimates that the Rule's recordkeeping requirements will affect approximately 1,000 persons
Commission staff derived labor costs by applying appropriate hourly cost figures to the burden hours described above. Staff further assumes that office support file clerks will handle the Rule's record retention requirements at an hourly rate of $16.25.
Absent information to the contrary, staff anticipates that existing storage media and equipment that covered persons use in the ordinary course of business will satisfactorily accommodate incremental recordkeeping under the Rule. Accordingly, staff does not anticipate that the Rule will require any new capital or other non-labor expenditures.
Pursuant to Section 3506(c)(2)(A) of the PRA, the FTC invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond. All comments must be received on or before November 26, 2019.
You can file a comment online or on paper. For the FTC to consider your comment, we must receive it on or before November 26, 2019. Write “Regulation N; PRA Comment: FTC File No. P072108” on your comment. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online, or to send them to the Commission by courier or overnight service. To make sure that the Commission considers your online comment, you must file it through the
If you file your comment on paper, write “Regulation N; PRA Comment: FTC File No. P072108” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex J), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible FTC website at
Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled “Confidential,” and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record.
The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before November 26, 2019. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at
Federal Trade Commission (FTC).
Notice and request for comment.
The FTC requests that the Office of Management and Budget (OMB) extend for three years the current PRA clearance for information collection requirements contained in the Contact Lens Rule (Rule). That clearance expires on October 31, 2019.
Comments must be received by October 28, 2019.
Comments in response to this notice should be submitted to the OMB Desk Officer for the Federal Trade Commission within 30 days of this notice. You may submit comments using any of the following methods:
Paul Spelman, Attorney, Division of Advertising Practices, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Mail Drop CC-10528, Washington, DC 20580, at (202) 326-2487.
Specifically, the Rule requires that prescribers provide a copy of the prescription to the consumer upon the completion of a contact lens fitting, even if the patient does not request it, and verify or provide prescriptions to authorized third parties. The Rule also mandates that a contact lens seller may sell contact lenses only in accordance with a prescription that the seller either: (a) Has received from the patient or prescriber; or (b) has verified through direct communication with the prescriber. In addition, the Rule imposes recordkeeping requirements on contact lens prescribers and sellers. For example, the Rule requires prescribers to document in their patients' records the medical reasons for setting a contact lens prescription expiration date of less than one year. The Rule requires contact lens sellers to maintain records for three years of all direct communications involved in obtaining verification of a contact lens prescription, as well as prescriptions, or copies thereof, which they receive directly from customers or prescribers.
The information retained under the Rule's recordkeeping requirements is used by the Commission to substantiate compliance with the Rule and may also provide a basis for the Commission to bring an enforcement action. Without the required records, it would be difficult either to ensure that entities are complying with the Rule's requirements or to bring enforcement actions based on violations of the Rule.
On July 5, 2019, the FTC sought comment on the information collection requirements associated with the Rule. 84 FR 32170. The FTC received no comments that were germane to the issues that the agency sought comment on pursuant to the Paperwork Reduction Act (PRA) renewal request. Pursuant to OMB regulations, 5 CFR part 1320, that implement the PRA, 44 U.S.C. 3501
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Your comment—including your name and your state—will be placed on the public record of this proceeding at the
Federal Trade Commission.
Notice and request for comment.
In accordance with the Paperwork Reduction Act of 1995 (“PRA”), the Federal Trade Commission (“FTC” or “Commission”) is seeking public comment on its proposal to extend for an additional three years the Office of Management and Budget clearance for information collection requirements of its Affiliate Marketing Rule, which applies to certain motor vehicle dealers, and its shared enforcement with the Consumer Financial Protection Bureau (“CFPB”) of the provisions (subpart C) of the CFPB's Regulation V regarding other entities (“CFPB Rule”). The current clearance expires on January 31, 2020.
Comments must be filed by November 26, 2019.
Interested parties may file a comment online or on paper by following the instructions in the Request for Comment part of the
Katherine McCarron, Attorney, Division of Privacy and Identity Protection, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Room CC-8232, Washington, DC 20580, (202) 326-2333.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was enacted on July 21, 2010.
As mandated by section 214 of the Fair and Accurate Credit Transactions Act (“FACT Act”), Public Law 108-159 (Dec. 6, 2003), the Affiliate Marketing Rule (“Rule”) requires covered entities to provide consumers with notice and an opportunity to opt out of the use of certain information before sending marketing solicitations. The Rule generally provides that, if a company communicates certain information about a consumer (eligibility information) to an affiliate, the affiliate may not use it to make or send solicitations to the consumer unless the consumer is given notice and a reasonable opportunity to opt out of such use of the information and does not opt out.
To minimize compliance costs and burdens for entities, particularly any small businesses that may be affected, the Rule contains model disclosures and opt-out notices that may be used to satisfy the statutory requirements. The Rule also gives covered entities flexibility to satisfy the notice and opt-out requirement. Covered entities may send the consumer a free-standing opt-out notice to satisfy the Rule's requirements or add the opt-out notice to privacy notices already provided to consumers, such as those provided in accordance with the provisions of Title V, subtitle A of the Gramm Leach Bliley Act (“GLBA”).
Under the PRA, 44 U.S.C. 3501-3521, the FTC is requesting that OMB renew the clearance (OMB Control Number 3084-0131) for the information collection burden associated with the Rule.
Staff assumes that all or nearly all motor vehicles subject to the Rule's provisions are also subject to the Commission's Privacy of Consumer Financial Information Rule under the Gramm-Leach-Bliley Act (16 CFR 313) (“Privacy Rule”). Entities that are subject to the Commission's GLBA
Staff estimates that the 1,834 covered motor vehicle business families will spend on average about 5 hours per year to comply with the Affiliate Sharing Rule beyond their separate obligations under the Privacy Rule, yielding a total annual hours burden of 9,170 hours. Staff's estimates take into account the time necessary to determine compliance obligations; create the notice and opt-out, in either paper or electronic form; and disseminate the notice and opt-out. Staff's estimates presume that the availability of model disclosures and opt-out notices will simplify the compliance review and implementation processes, thereby significantly reducing the compliance burden.
Staff estimates the associated labor cost by adding the hourly mean private sector wages for managerial, technical, and clerical work and multiplying that sum by the estimated number of hours. The private sector hourly wages for these classifications are $50.11, $41.51, and $17.19, respectively.
Because the FACT Act and the Rule contemplate that the affiliate marketing notice can be included in the GLBA notices, the capital and non-labor cost burden on regulated entities would be greatly reduced. Covered entities typically already provide notices to their customers so there are no new capital or non-labor costs, as the Affiliate Marketing notice may be consolidated into their annual privacy notice. Thus, Staff estimates that any capital or non-labor costs associated with compliance for these entities are
Pursuant to Section 3506(c)(2)(A) of the PRA, the FTC invites comments on: (1) Whether the disclosure, recordkeeping, and reporting requirements are necessary, including whether the resulting information will be practically useful; (2) the accuracy of our burden estimates, including whether the methodology and assumptions used are valid; (3) how to improve the quality, utility, and clarity of the disclosure requirements; and (4) how to minimize the burden of providing the required information to consumers. In addition, staff seeks comment on how the FAST Act exception that exempts certain institutions that are required to provide an affiliate marketing notice from sending annual privacy notices will impact the burden estimates for these entities.
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before November 26, 2019. Write “Affiliate Marketing Disclosure Rule, PRA Comment: FTC File No. P0105411” on your comment. Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it through the
If you file your comment on paper, write “Affiliate Marketing Disclosure Rule, PRA Comment: FTC File No. P0105411” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610, Washington, DC 20024. If possible, please submit your paper comment to the Commission by courier or overnight service.
Because your comment will be placed on the public record, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else's Social Security number; date of birth; driver's license number or other
Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled “Confidential,” and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record.
The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before November 26, 2019. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see
Administration for Native Americans (ANA), Administration for Children and Families (ACF), Department of Health and Human Services (HHS).
Notice of intent to issue an emergency single-source award to 500 Sails, Inc. in Saipan, Commonweath of the Northern Mariana Islands.
The ACF, ANA, Division of Program Operations (DPO) intends to award a grant of $106,638 to 500 Sails, Inc. in Saipan, Commonwealth of the Northern Mariana Islands. The purpose of the award is to support restoration of culturally significant sites and a digital storytelling project after the devastating effects of Typhoon Yutu in October, 2018.
The intended period of performance for this award is 09/30/2019 through 09/29/2020.
Carmelia Strickland, Director, Division of Program Operations, Administration for Native Americans, 330 C Street SW, Switzer Bldg. 4115, Washington, DC 20201. Telephone: 202-401-6741; Email:
An emergency declaration by President Donald Trump was issued for the Commonwealth of the Northern Mariana Islands (CNMI) on October 27, 2018. In the spring of 2019, ANA's Pacific Basin Training and Technical Assistance Center performed an assessment of community needs that were not addressed by other federal agencies in response to the catastrophic storm. A report was prepared for ANA with a series of projects aiming to reduce the post-traumatic stress of 200 Chamorro and Carolinian community members through storytelling, and to repair and/or restore six culturally significant sites and two ANA project sites. Currently, the CNMI government is burdened with the reconstruction of homes and governmental infrastructure that were damaged by Typhoon Yutu. The award will be carried out by 500 Sails, Inc., a non-profit organization located in Saipan, CNMI, to serve as the grants administrator and project coordinator for the proposed projects. 500 Sails, Inc. is a current ANA grantee with an ending 3-year project period and has successfully administered an ANA award. They have the organizational capacity, including accounting and data management, as well as qualified staff in place. In addition, the organization has the community connections, partnerships, and experience to successfully implement the award. The Board of Directors for 500 Sails, Inc has included a board resolution in support of the application and the 9 proposed projects. The activities within the project are designed to incorporate cultural ways of supporting the recovery after Typhoon Yutu. The proposed projects include the cultural component that no other federal agency could provide, and it allows for a holistic approach to the recovery. Most of the projects include volunteer opportunities for community members to help in the rebuilding of their community. The application will be awarded in compliance with HHS policy for emergency awards, including after an objective review has been conducted.
Section 803(a) of the Native American Programs Act of 1974 (NAPA), 42 U.S.C. 2991b.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a final guidance entitled “Changes to Existing Medical Software Policies Resulting From Section 3060 of the 21st Century Cures Act.” This guidance provides clarity on FDA's current thinking regarding changes made by the 21st Century Cures Act (Cures Act) to the definition of a medical device and the resulting effect on guidances related to medical device software.
The announcement of the guidance is published in the
You may submit either electronic or written comments on Agency guidances at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
An electronic copy of the guidance document is available for download from the internet. See the
Bakul Patel, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5458, Silver Spring, MD 20993-0002, 301-796-5528; or Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993, 240-402-7911.
FDA has long regulated software that meets the definition of a device. Section 3060(a) of the Cures Act, enacted on December 13, 2016 (Pub. L. 114-255), amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) to exclude certain software functions from the definition of device under section 201(h) of the FD&C Act (21 U.S.C. 321(h)). The software functions that are removed from the definition of device are described in section 520(o)(1) of the FD&C Act (21 U.S.C. 360j(o)(1)), and the intended uses of such software functions can be summarized as follows: (1) For administrative support of a healthcare facility, (2) for maintaining or encouraging a healthy lifestyle, (3) to serve as electronic patient records, (4) for transferring, storing, converting formats, or displaying data, or (5) providing certain types of clinical decision support to a healthcare provider unless interpreting or analyzing a clinical test or other device data.
This guidance provides FDA's current thinking regarding the amended device definition and the resulting effect the amended definition has on published FDA guidance, including the policies expressed in guidance about mobile medical applications; medical device data systems used for the electronic transfer, storage, display, or conversion of medical device data; medical image storage devices, used to store or retrieve medical images electronically; and general wellness products. This guidance focuses on the first four categories of software functions that are excluded from the device definition. FDA will address the fifth category in a separate guidance. Elsewhere in this
FDA considered comments received on the draft guidance that appeared in the
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on “Changes to Existing Medical Software Policies Resulting from Section 3060 of the 21st Century Cures Act.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.
Persons interested in obtaining a copy of the guidance may do so by downloading an electronic copy from the internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
This guidance refers to previously approved collections of information. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in the following FDA regulations have been approved by OMB as listed in the following table:
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of the draft guidance entitled “Clinical Decision Support Software.” This guidance clarifies the types of clinical decision support (CDS) functions that do not meet the definition of a device as amended by the 21st Century Cures Act (Cures Act). This guidance describes a risk-based approach for regulatory oversight of CDS software functions that remain devices using the categories defined by the International Medical Device Regulators Forum (IMDRF) final document entitled “Software as a Medical Device: Possible Framework for Risk Categorization and Corresponding Considerations.” The guidance also provides clarity on the types of CDS software functions on which FDA intends to focus its regulatory oversight for health care providers, patients, and caregivers. This draft guidance is not final nor is it in effect at this time.
Submit either electronic or written comments on the draft guidance by December 26, 2019 to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance.
You may submit comments on any guidance at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
An electronic copy of the guidance document is available for download from the internet. See the
Bakul Patel, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5458, Silver Spring, MD 20993-0002, 301-796-5528; or Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993, 240-402-7911; or Kristina Lauritsen, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6162, Silver Spring, MD 20993-0002, 301-796-8936.
FDA has long regulated software that meets the definition of a device in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 321(h)), including software that is intended to provide decision support to health care professionals, patients, or caregivers for the diagnosis, treatment, prevention, cure, or mitigation of diseases or other conditions (often referred to as CDS software). Section 3060(a) of the Cures Act, enacted on December 13, 2016 (Pub. L. 114-255), amended section 520 of the FD&C Act (21 U.S.C. 360j) to exclude certain medical software functions, including certain decision support software, from the definition of device under section 201(h) of the FD&C Act.
This draft guidance provides clarity on the types of CDS software functions that do not meet the device definition (Non Device CDS). This draft guidance also describes a risk-based approach for regulatory oversight of CDS software functions that meet the device definition (Device CDS) using categories established by the IMDRF final document entitled “Software as a Medical Device: Possible Framework for Risk Categorization and Corresponding Considerations.” The purpose of this draft guidance is to identify the types of CDS software functions that: (1) Do not meet the definition of a device as amended by the Cures Act; (2) may meet the definition of a device but for which, at this time and based on our current understanding of the risk of these devices, FDA does not intend to enforce compliance with the applicable device requirements of the FD&C Act, including, but not limited to, premarket clearance and premarket approval requirements; and (3) meet the definition of a device and on which FDA intends to focus its regulatory oversight. This guidance also provides examples of device software functions that are not CDS and on which FDA intends to focus its regulatory oversight. Elsewhere in this issue of the
On December 8, 2017, FDA announced in the
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on “Clinical Decision Support Software.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
This draft guidance refers to previously approved collections of information. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in the following FDA regulations, guidance, and form have been approved by OMB as listed in the following table:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
National Institutes of Health, HHS.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Chris Kornak at 240-627-3705 or
Technology description follows:
Scientists at NIAID have developed broadly neutralizing antibodies (bNAbs) with enhanced neutralizing activity against HIV-1. Specifically, previously unknown gp120 interactions with a newly elucidated quaternary receptor (CD4)-binding site in the HIV-1 envelope have been discovered by engrafting the extended heavy-chain framework region 3 (FR3) loop of VRC03 onto several potent bNAbs (including VRC01, VRC07 and N6). The new antibodies show improved binding with CD4 by interacting with both binding sites and as a result show improved neutralization of various HIV-1 strains. Furthermore, they show reduced autoreactivity and, as a result, have prolonged
One of several antibodies that were developed using this technology is VRC01.23. It combines the VRC03 framework 3 alteration, with a G54W mutation in the heavy chain, and a 3 amino acid deletion in the light chain. The modifications improved the potency while reducing the autoreactivity. In particular, VRC01.23 is capable of neutralizing 96% of HIV-1 viruses tested at geometric mean IC50 =0.042 ug/ml, which is ~10-fold more potent than VRC01.
This technology is available for licensing for commercial development in accordance with 35 U.S.C. 209 and 37 CFR part 404, as well as for further development and evaluation under a research collaboration.
National Institutes of Health, HHS.
Notice
The inventions listed below are owned by an agency of the U.S. Government and are available for licensing in the U.S. in accordance with 35 U.S.C. 209 and 37 CFR part 404 to achieve expeditious commercialization of results of federally-funded research and development.
Licensing information may be obtained by emailing the indicated licensing contact at the National Heart, Lung, and Blood, Office of Technology Transfer and Development Office of Technology Transfer, 31 Center Drive, Room 4A29, MSC2479, Bethesda, MD 20892-2479; telephone: 301-402-5579. A signed Confidential Disclosure Agreement may be required to receive any unpublished information.
Technology description follows. Antagonists of Hyaluronan Signaling for Treatment of Airway Diseases, such as Asthma and Chronic Obstructive Pulmonary Disease (COPD), constitute a major health burden in the development word. It is estimated that nearly15.0% of the adult population in the US are affected with such diseases, and the economic cost burden is over $23 billion annually. Unfortunately, the current options for treatment of such diseases are quite limited, consisting only of bronchodilators and inhaled steroids. The need for a novel and more effective class of therapeutics agents is imperative. The subject invention provides for a potentially more specific and effective treatment of airway diseases as compared with existing treatments. It is based on the inhibition of Hyaluronan (HA), a structural polysaccharide that plays a role in the signaling pathway that leads to the
National Institutes of Health, HHS.
Notice.
The National Heart, Lung and Blood Institute (NHLBI), National Institutes of Health, Department of Health and Human Services, is contemplating the grant of an exclusive patent license to Generation Bio Co. (“Generation Bio”), a company based in Cambridge, Massachusetts (in the exclusive field specified below), and a co-exclusive license to Generation Bio and Spark Therapeutics, a company based in Philadelphia, Pennsylvania (in the co-exclusive field specified below), to practice the inventions embodied in the patent application listed in the Supplementary Information section of this notice.
Only written comments and/or applications for a license which are received by the NHLBI Office of Technology Transfer and Development within 15 days from the date of publication of this notice in the
Requests for copies of the patent applications, inquiries, and comments relating to the contemplated exclusive patent license should be directed to: Uri Reichman, Ph.D., MBA, Senior Licensing and Patenting Manager, 31 Center Drive, Room 4A29, MSC2479, Bethesda, MD 20892-2479, phone number 301-435-4616, or
The following and all continuing U.S. and foreign patents/patent applications thereof are included in the intellectual property to be licensed under the prospective agreements to Generation Bio and Spark Therapeutics: NIH reference #E-241-2010.
U.S. patent 9,598,703 issued March 03, 2017; Israeli patent 228328 issued December 01, 2018; Australian patent 2012228376 issued October 05, 2017, and pending applications in Brazil (BR 11 2013 023185 8 A2), Canada (application 2829518), China (application 201280022523.5), Europe (application 12 708035.6), India (application 8000/DELNP/2013), Japan (application 2013-557138), and S. Korea (application10-2013-7026982).
The invention is jointly owned by the Government of the United States and by the following French institutions: Association Institut De Myologie, Sorbonne University, INSERM, and CNRS. The patent rights in these inventions have been assigned to the Government of the United States of America, and to the French institutions by their respective employees who are the inventors of the subject matter claimed in the patent rights. The prospective patent license will be granted worldwide and in fields of use not broader than the following:
All Fields of Use with the exception of the aforementioned fields are available for licensing by other parties on nonexclusive terms.
The subject technology provides DNA-based constructs for human therapeutics or preventative therapies. Such DNA-based constructs may be useful in gene therapy for treating genetic disorders, or other diseases by expressing therapeutic molecules. These constructs are AAV genome-based, where the gene of interest (therapeutic payload) is inserted between two ITRs (Inverted Terminal Repeats). The resulting constructs are devoid of the AAV capsid, and thus nonviral. They are advantageous over conventionally used AAV vectors, as they are non-immunogenic. They are also advantageous over plasmid-based expression constructs since they are of eukaryotic origin and thus devoid of the bacterial-type DNA methylation as typically present in plasmids.
This notice is made in accordance with 35 U.S.C. 209 and 37 CFR part 404. The prospective exclusive patent license will be royalty bearing and may be granted unless within fifteen (15) days from the date of this published notice, the NHLBI receives written evidence and argument that establishes that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR part 404. Complete applications for a license in the prospective field of use that are timely filed in response to this notice will be treated as objections to the grant of the contemplated exclusive patent license. Comments and objections submitted to this notice will not be made available for public inspection and, to the extent permitted by law, will not be released under the
Fish and Wildlife Service, Interior.
Notice of availability.
We, the U.S. Fish and Wildlife Service (Service), and the Washington State Department of Natural Resources (WDNR) have jointly developed a final environmental impact statement (FEIS), which analyzes the WDNR's proposal to amend the 1997 State Trust Lands Habitat Conservation Plan (HCP) to include a long-term conservation strategy (LTCS) for the federally listed marbled murrelet. This FEIS is intended to satisfy both the National Environmental Policy Act and the State Environmental Policy Act. The WDNR has requested an amendment to its existing incidental take permit (ITP) under section 10 of the Endangered Species Act. The proposed ITP amendment would allow the WDNR to implement a LTCS, and would replace the interim conservation strategy for the marbled murrelet, which is currently being implemented under the HCP. If approved, the LTCS is expected to be in place for the remainder of the ITP term, which is approximately 50 years.
The Service's ITP decision will occur no sooner than 30 days after publication of the U.S. Environmental Protection Agency's (EPA) notice of availability of the FEIS in the
You may obtain copies of the documents by any of the following methods:
•
•
Tim Romanski, U.S. Fish and Wildlife Service, Washington Fish and Wildlife Office (see
We, the U.S. Fish and Wildlife Service (Service), announce the availability of a final environmental impact statement (FEIS) addressing the Washington Department of Natural Resources' (the applicant's) proposed amendments to their Habitat Conservation Plan (HCP). The applicant is seeking an amendment to their incidental take permit (ITP) authorizing take of marbled murrelet (
The proposed HCP amendment describes the anticipated amount of take of the marbled murrelet, and the steps the applicant will implement to minimize and mitigate the impacts of that taking. The HCP amendment also describes the life history and ecology of the marbled murrelet, the impact of the anticipated taking on affected murrelet populations, adaptive management procedures, and take monitoring procedures.
The Service prepared the FEIS in response to an ITP application from WDNR. The Service considered comments received on the draft environmental impact statement (DEIS), and a revised draft environmental impact statement (RDEIS), in accordance with the requirements of the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
The marbled murrelet, a seabird, was listed as threatened in 1992 under the ESA. In 1996, the WDNR released its draft HCP addressing the conservation of multiple fish and wildlife species, including the marbled murrelet, and forest management activities on 1.6 million acres of forested State Trust lands within the range of the northern spotted owl in Washington.
A DEIS, dated March 1996, was jointly developed by the Service, the National Marine Fisheries Service (NMFS), and the WDNR to address the issuance of two proposed ITPs (one by the Service and one by NMFS) for the HCP, and was announced in the
The WDNR HCP commits the WDNR to developing a long-term conservation strategy (LTCS). At the time the HCP was being developed, the Service and WDNR determined that producing an LTCS was not yet possible because of the lack of scientific information about the marbled murrelet and its relationship to State Trust lands. For this reason, the WDNR developed an interim conservation strategy for the marbled murrelet, which is currently being implemented. Briefly, pursuant to the interim marbled murrelet conservation strategy: (1) Suitable murrelet habitat blocks were identified and deferred from harvest; (2) a habitat relationship study was conducted using marbled murrelet occupancy surveys to determine the relative importance and quality of occupied habitats; (3) the lowest quality habitat blocks were made available for timber harvest (these were expected to contain about 5 percent of the marbled murrelet occupied sites on covered lands); (4) the higher quality habitat blocks were surveyed for marbled murrelet occupancy, and occupied (along with some unoccupied) habitats were protected; and (5) the WDNR developed an LTCS for WDNR lands. The HCP and ITP amendment process is the final step in considering and potentially approving implementation of a LTCS.
If approved, the LTCS is expected to be in place for the remainder of the permit term, until January 2067. Additionally, the term of the ITP may be extended up to three times. Each extension would be for an additional 10-year term.
Section 9 of the ESA and its implementing regulations prohibit “take” of fish and wildlife species listed as endangered. The ESA implementing regulations extend, under certain circumstances, the prohibition of take to threatened species (50 CFR 17.31). Under section 3 of the ESA, the term “take” means to “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or attempt to engage in any such conduct” (16 U.S.C. 1538). Under section 10(a) of the ESA, the Service may issue permits to authorize incidental take of listed fish and wildlife species. “Incidental take” is defined by the ESA as take that is incidental to, and not the purpose of, carrying out an otherwise lawful activity. Section 10(a)(1)(B) of the ESA contains provisions for issuing ITPs to non-Federal entities for the take of endangered and threatened species, provided the following criteria are met:
1. The taking will be incidental;
2. The applicant will, to the maximum extent practicable, minimize and mitigate the impact of such taking;
3. The applicant will ensure that adequate funding for the plan will be provided;
4. The taking will not appreciably reduce the likelihood of the survival and recovery of the species in the wild; and
5. The applicant will carry out any other measures that the Service may require as being necessary or appropriate for the purposes of the HCP.
The proposed amendment of the WDNR ITP and the 1997 WDNR HCP to cover a marbled murrelet LTCS is a Federal action that triggers the need for compliance with NEPA (42 U.S.C. 4321
WDNR manages approximately 1.38 million acres within 55 miles of marine waters, which is the known inland limit of the nesting range for the marbled murrelet. The alternatives in the FEIS would all occur within this area. The alternatives represent a reasonable range of approaches to long-term marbled murrelet habitat conservation on WDNR lands. The alternatives differ in the amount and location of WDNR-managed forest land designated for long-term conservation of the murrelet, and also include a variety of conservation measures proposed to protect marbled murrelet habitat. The alternatives also differ in the amount and quality of marbled murrelet habitat that will be removed through timber harvest. The alternatives are discussed in detail in the FEIS.
A
A
In 2017, the WDNR selected a preferred alternative based on direction from the Washington Board of Natural Resources and public comments received on the DEIS. This action necessitated the development of a revised DEIS (RDEIS). A
The EPA is charged with reviewing all Federal agencies' EISs and commenting on the adequacy and acceptability of the environmental impacts of proposed actions in EISs. Therefore, EPA is publishing a notice in the
The Service will evaluate the permit amendment application, associated documents, and public comments in reaching a final decision on whether the application meets the requirements of section 10(a) of the ESA (16 U.S.C. 1531
We are not requesting public comments on the FEIS and HCP amendment, but any written comments received will become part of the public record associated with this action. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can request in your comment that we withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. All submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, will be made available for public disclosure in their entirety.
We provide this notice in accordance with the requirements of section 10(c) of the ESA and its implementing regulations (50 CFR 17.22 and 17.32) and NEPA and its implementing regulations (40 CFR 1506.6).
Bureau of Land Management, Interior.
Notice of official filing.
The plats of survey of lands described in this notice are scheduled to be officially filed in the Bureau of Land Management (BLM), Alaska State Office, Anchorage, Alaska. These surveys were executed at the request of the BLM, and are necessary for the management of these lands.
The BLM must receive protests by October 28, 2019.
You may buy a copy of the plats from the BLM Alaska Public Information Center, 222 W 7th Avenue, Mailstop 13, Anchorage, AK 99513. Please use this address when filing written protests. You may also view the plats at the BLM Alaska Public Information Center, Fitzgerald Federal Building, 222 W 8th Avenue, Anchorage, Alaska, at no cost.
Douglas N. Haywood, Chief, Branch of Cadastral Survey, Alaska State Office, Bureau of Land Management, 222 W 7th Avenue, Anchorage, AK 99513; 907-271-5481;
The lands surveyed are:
A person or party who wishes to protest one or more plats of survey identified above must file a written notice of protest with the State Director for the BLM in Alaska. The notice of protest must identify the plat(s) of survey that the person or party wishes to protest. You must file the notice of protest before the scheduled date of official filing for the plat(s) of survey being protested. The BLM will not consider any notice of protest filed after the scheduled date of official filing. A notice of protest is considered filed on the date it is received by the State Director for the BLM in Alaska during regular business hours; if received after regular business hours, a notice of protest will be considered filed the next business day. A written statement of reasons in support of a protest, if not filed with the notice of protest, must be filed with the State Director for the BLM in Alaska within 30 calendar days after the notice of protest is filed.
If a notice of protest against a plat of survey is received prior to the scheduled date of official filing, the official filing of the plat of survey identified in the notice of protest will be stayed pending consideration of the protest. A plat of survey will not be officially filed until the dismissal or resolution of all protests of the plat.
Before including your address, phone number, email address, or other personally identifiable information in a notice of protest or statement of reasons, you should be aware that the documents you submit, including your personally identifiable information, may be made publicly available in their entirety at any time. While you can ask the BLM to withhold your personally identifiable information from public review, we cannot guarantee that we will be able to do so.
43 U.S.C. Chap. 3.
Bureau of Land Management, Interior.
Notice of availability.
In accordance with the National Environmental Policy Act of 1969, as amended, and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) has prepared Final Environmental Impact Statement (EIS) and Proposed Land Use Plan Amendment to the California Desert Conservation Area (CDCA) Plan for the Desert Quartzite Solar Project, and by this notice is announcing its availability. This document is also an Environmental Impact Report (EIR) prepared by Riverside County under the California Environmental Quality Act.
BLM planning regulations state that any person who meets the conditions as described in the regulations may protest the BLM's Proposed Land Use Plan Amendment and Final EIS. A person who meets the conditions and files a protest must file the protest within 30 days of the date that the Environmental Protection Agency publishes its Notice of Availability in the
You may review the Final EIS and Proposed Land Use Plan Amendment at
Brandon G. Anderson, BLM Project Manager, telephone (951) 697-5215; address Bureau of Land Management, California Desert District Office, 22835
Desert Quartzite, LLC, a wholly owned subsidiary of First Solar Inc., applied for a Right-of-Way (ROW) from the BLM to construct, operate, maintain, and decommission a 450 megawatt (MW) solar photovoltaic (PV) facility near the City of Blythe, Riverside County, California. The proposed project includes construction of a 2.8 mile, 230 kilovolt generation interconnection (gen-tie) transmission line connecting the project to the Southern California Edison Colorado River Substation. The BLM is also considering an amendment to the CDCA Plan that would be necessary to authorize the project.
On August 8, 2018, the BLM issued the Draft EIS/EIR and Draft Land Use Plan Amendment, which analyzed the impacts of the Proposed Action and two action alternatives, in addition to a No Action Alternative. Alternative 2, Resource Avoidance Alternative, would be a 450 MW solar PV array on about 2,800 acres. It reduces effects to portions of the sand corridor and cultural resources. Alternative 3, Reduced Project Alternative, would be a 285 MW solar PV project on about 2,100 acres. Like the Proposed Action, under each of these alternatives, the BLM would amend the CDCA Plan to allow the project. Under the No-Action Alternative, the BLM would deny the ROW application, and would not amend the CDCA Plan to allow the project.
The Draft EIS/EIR and Draft Land Use Plan Amendment included analysis of the ROW application as it related to the following issues: (1) Impacts to cultural resources and tribal concerns; (2) Impacts to the sand transport corridor and Mojave fringe-toed lizard habitat and washes; (3) Impacts to BLM sensitive plants; (4) Impacts to avian species; (5) Impacts to visual resources; (6) Impacts to air and water quality; and (7) The relationship between the proposed project and the CDCA Plan, as amended.
The Draft EIS/EIR and Draft Land Use Plan Amendment was available for a 90-day public comment period. The BLM held public meetings on September 26, 2018, and September 27, 2018, in Palm Desert and Blythe, California, respectively. Fourteen individuals attended the meeting on September 26, 2018, and 19 individuals attended the meeting on September 27, 2018. The BLM received 22 comment letters during the comment period.
The BLM considered and incorporated, as appropriate, public comments on the Draft EIS/EIR and Draft Land Use Plan Amendment and internal agency review into the proposed plan amendment. Public comments resulted in the addition of clarifying text, but did not significantly change proposed land use plan decisions. Responses to the substantive comments are included in the Final EIS/EIR and Proposed Land Use Plan Amendment. The gen-tie alignment for Alternative 2 and Alternative 3 was adjusted to avoid a potential conflict with another proposed transmission line project. The adjustment does not substantially change the environmental effects analysis. The BLM has selected Alternative 2, the Resource Avoidance Alternative, as the Agency Proposed Alternative in the Final EIS/EIR and Proposed Land Use Plan Amendment.
All protests must be in writing and submitted, as set forth in the
Upon resolution of all protests, the BLM will issue a Record of Decision, which will include information on any further opportunities for public involvement. Before including your phone number, email address, or other personal identifying information in your protest, you should be aware that your entire protest—including your personal identifying information—may be made publicly available at any time. While you can ask us to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
40 CFR 1506.6, 40 CFR 1506.10, 43 CFR 1610.2, 43 CFR 1610.5.
United States International Trade Commission.
Notice of remand proceedings.
The U.S. International Trade Commission (“Commission”) hereby gives notice of the remand of its final determinations in the antidumping duty and countervailing duty investigations of softwood lumber from Canada. For further information concerning the conduct of these remand proceedings and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A through E (19 CFR part 201), and part 207, subpart A (19 CFR part 207).
This remand is effective as of September 23, 2019.
Nannette Christ (202-205-3263), Office of Investigations, or Jane Dempsey (202-205-3142), Office of General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
The comments must be based solely on the information in the Commission's record. The Commission will reject submissions containing additional factual information or arguments pertaining to issues other than those on which the Panel has remanded this matter. The deadline for filing comments is October 15, 2019. Comments shall be limited to no more than thirty (30) double-spaced and single-sided pages of textual material, inclusive of attachments and exhibits.
Parties are advised to consult with the Commission's Rules of Practice and Procedure, part 201, subparts A through E (19 CFR part 201), and part 207, subpart A (19 CFR part 207) for provisions of general applicability concerning written submissions to the Commission. All written submissions must conform to the provisions of section 201.8 of the Commission's rules; any submissions that contain BPI must also conform with the requirements of sections 201.6, 207.3, and 207.7 of the Commission's rules. The Commission's
Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission's rules, will not be accepted unless good cause is shown for accepting such submissions or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigation must be served on all other parties to the investigation (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
By order of the Commission.
United States International Trade Commission.
Institution of investigation and scheduling of public hearing.
Following receipt of a request from the U.S. Trade Representative (USTR) on August 30, 2019, under the Tariff Act of 1930, the U.S. International Trade Commission has instituted Investigation No. 332-573,
All Commission offices, including the Commission's hearing rooms, are located in the United States International Trade Commission Building, 500 E Street SW, Washington, DC. All written submissions should be addressed to the Secretary, United States International Trade Commission, 500 E Street SW, Washington, DC 20436. The public record for this investigation may be viewed on the Commission's electronic docket (EDIS) at
Project Leader Sabina Neumann (volumes 1 and 2) (202-205-3000 or
More specifically, the USTR asked that the report include the following:
(1) An overview of the role of plant protection products and their MRLs in relation to global production, international trade, and food safety for consumers. Describe the current and expected challenges to global agricultural production, including the impact of evolving pest and diseases pressures in differing regions and climates.
(2) A broad description of the approaches taken in setting national and international MRLs for crops. Describe the risk-based approach to setting MRLs in the context of agricultural trade, including the guidelines and principles of the Codex Alimentarius. Describe the procedures in the Codex Alimentarius for setting pesticide MRLs, including the role of the FAO/WHO Joint Meeting on Pesticide Residues (JMPR) in conducting risk assessments. Compare this risk-based approach to a hazard-based approach. Describe U.S. efforts to advance the use of lower-risk pesticides globally.
(3) A description of how MRLs for plant protection products are developed and administered in major markets for U.S. agricultural exports. Describe the specific regulations, processes, practices, and timelines in these major markets for establishing, modifying, and administering MRLs. Describe specific MRL enforcement practices and processes, including practices and procedures for addressing non-compliant imported plant products. Provide examples of how Codex MRLs are adopted into national legislation or regulation. Identify trade-facilitative practices and processes.
(4) A description of challenges and concerns faced by exporting countries in meeting importing country pesticide MRLs, such as when MRLs are missing or low. Explain the reasons for missing and low MRLs.
(5) Through case studies, describe the costs and effects of MRL compliance and non-compliance for producers in countries representing a range of income classifications, such as uncertainty in planting decisions, segregation of products, crop protection costs, yield implications, storage issues, product losses, and consequences of MRL violations. Include information on costs of adopting new plant protection products or those related to establishing, modifying, or testing for new or existing MRLs in export markets. To the extent possible, include effects on producers in countries with tropical climates where products are subject to high levels of pest and disease pressure.
(6) A review of the economic literature that assesses both qualitatively and quantitatively how missing and low MRLs affect countries representing a range of income classifications, particularly low income countries, with regard to production, exports, farmer income, and prices.
(7) Through case studies, describe the costs and effects or MRL compliance and non-compliance for U.S. producers, such as uncertainty in planting decisions, segregation of products, crop protection costs, yield implications, storage issues, product losses, and consequences of MRL violations. Include information on costs of adopting new plant protection products or those related to establishing, modifying, or testing for new or existing MRLs in export markets. To the extent possible, include effects on U.S. producers of specialty crops.
(8) To the extent possible, quantitatively and qualitatively assess how missing and low MRLs affect production, exports, farmer income, and prices, both on the national level and, to the extent possible, for small and medium size farms.
The USTR asked that the Commission prepare its report in two volumes, with volume 1 covering bullets (1)-(6) above transmitted by April 30, 2020, and volume 2 covering bullets (7)-(8) transmitted by October 31, 2020 (delivered on Monday, November 2, 2020).
In his request letter, the USTR stated that his office intends to make the Commission's report available to the public in its entirety, and asked that the Commission not include any CBI in the report that it delivers to the USTR.
The Commission will not include any of the CBI submitted in the course of this investigation in the report it sends to the USTR. However, all information, including CBI, submitted in this investigation may be disclosed to and used (i) by the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission, including under 5 U.S.C. Appendix 3; or (ii) by U.S. government employees and contract personnel for cybersecurity purposes. The Commission will not otherwise disclose any CBI in a manner that would reveal the operations of the firm supplying the information.
By order of the Commission.
On September 19, 2019, the United States of America (“United States”), through attorneys for the Department of Justice, and the Commonwealth of Pennsylvania, Department of Environmental Protection (“PADEP”), lodged a proposed Consent Decree with the United States District Court for the Middle District of Pennsylvania in the lawsuit entitled
In their Complaint, also filed on September 19, 2019, pursuant to Sections 106, 107(a), and 113(g) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”), 42 U.S.C. 9606, 9607(a), and 9613(g), and pursuant to Sections 507 and 1103 of the Hazardous Sites Cleanup Act, Act of October 18, 1988, Public Law 756, 35 P.S. §§ 6020.507 and 6020.1103 (“HSCA”), the United States and PADEP (“Plaintiffs”) allege that Defendant Foster Wheeler Energy Corporation (“FWEC”) is liable for cleanup costs incurred and to be incurred by the United States and PADEP in connection with the cleanup of the Foster Wheeler Energy Corporation/Church Road TCE Superfund Alternative Site (“Site”) in Mountain Top, Luzerne County, Pennsylvania. The Site includes a former industrial site used to manufacture and fabricate large pressure vessels that was formerly owned and operated by FWEC (the “Former FWEC Facility”). The Site also includes any areas at which hazardous substances released at or from this facility have come to be located, including an area of groundwater contamination located south and southwest of the Former FWEC Facility and encompassing approximately 295 acres of mixed land use (mainly residential), which extends from east to west along Church Road and Watering Run, and eight surrounding industrial properties located immediately south and west of the Former FWEC Facility.
The proposed Consent Decree resolves all allegations asserted in the Plaintiffs' Complaint and provides for FWEC to pay to the United States Environmental Protection Agency (“EPA”) $950,000.00 in past response costs incurred with respect to the Site, and to pay to PADEP $56,051.21 in past state response costs incurred with respect to the Site. These payments are due within thirty (30) days after the Consent Decree becomes effective as a judgment, if it is entered by the Court. The proposed Consent Decree also requires FWEC to pay the United States' and PADEP's future response costs and to perform the Interim Remedy selected in EPA's Interim Record of Decision for the Site. In exchange, FWEC receives from both Plaintiffs covenants not to sue for the interim remedial work performed and payment of past and future federal and state response costs, subject to certain reservations and limitations.
The publication of this notice opens a federal period for public comment on the Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the Consent Decree may be examined and downloaded at this Justice Department website:
Please enclose a check or money order for $39.50 (0.25 cents per page reproduction cost) payable to the United States Treasury for a copy of the full Consent Decree with appendices. For a paper copy without the appendices, the cost is $12.00.
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting the Wage and Hour Division (WHD) sponsored information collection request (ICR) titled, “Records to be Kept by Employers—Fair Labor Standards Act,” to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995. Public comments on the ICR are invited.
The OMB will consider all written comments that agency receives on or before October 28, 2019.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the
Submit comments about this request by mail to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-WHD, Office of Management and Budget, Room 10235, 725 17th Street NW, Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Frederick Licari by telephone at 202-693-8073, TTY 202-693-8064, (these are not toll-free numbers) or sending an email to
The Department of Labor is updating and revising the regulations issued under the Fair Labor Standards Act implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The Department is submitting to OMB for approval a revision to this ICR, “Records to be Kept by Employers—Fair Labor Standards Act,” incorporating certain recordkeeping provisions in the associated final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” RIN 1235-AA20. OMB asked the Department to resubmit the information collection request upon promulgation of the final rule and after considering public comments on the proposed rule.
OMB authorization for an ICR cannot be for more than three (3) years without renewal and the current approval for this collection is scheduled to expire on December 31, 2019. The DOL seeks to extend PRA authorization for the current information collection for three (3) more years and incorporate a revision to the burden requirements stemming from the Final Rule.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless the OMB, under the PRA, approves it and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility.
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
44 U.S.C. 3507(a)(1)(D).
Notice of availability; request for comments.
The Department of Labor (DOL) is submitting the Wage and Hour Division (WHD) sponsored information collection request (ICR) titled, “Employment Information Form,” to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995. Public comments on the ICR are invited.
The OMB will consider all written comments that agency receives on or before October 28, 2019.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the
Submit comments about this request by mail to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-WHD, Office of Management and Budget, Room 10235, 725 17th Street NW, Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Frederick Licari by telephone at 202-693-8073, TTY 202-693-8064, (these are not toll-free numbers) or sending an email to
The Department of Labor is updating and revising the regulations issued under the Fair Labor Standards Act (FLSA) implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The Department uses the Employment Information Form to obtain information from complainants regarding FLSA violations; the ICR covers complaints alleging violations of various labor standards that the agency administers and enforces, and will incorporate the provisions in the final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” RIN 1235-AA20, applicable to complaints. OMB asked the Department to resubmit the information collection request upon promulgation of the associated final rule and after considering public comments on the proposed rule. Additionally, this ICR seeks approval for a revision related to the Payroll Audit Independent Determination (PAID) program.
OMB authorization cannot be for more than three (3) years and the current approval for this collection is scheduled to expire on December 31, 2019. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, with change to the existing requirements stemming from the PAID program and a revision to the burden requirements stemming from the Final Rule and PAID program.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless the OMB, under the PRA, approves it and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility.
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
44 U.S.C. 3507(a)(1)(D).
Millennium Challenge Corporation.
Notice.
Section 608(a) of the Millennium Challenge Act of 2003 requires the Millennium Challenge Corporation to publish a report that identifies countries that are “candidate countries” for Millennium Challenge Account assistance during FY 2020. The report is set forth in full below.
This report to Congress is provided in accordance with section 608(a) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 7701, 7707(a) (the Act).
The Act authorizes the provision of assistance for global development through the Millennium Challenge Corporation (MCC) for countries that enter into a Millennium Challenge Compact with the United States to support policies and programs that advance the progress of such countries
This report is the first of three required reports listed above.
The Act requires the identification of all countries that are candidate countries for FY 2020 and the identification of all countries that would be candidate countries but for specified legal prohibitions on assistance. Under sections 606(a) and (b) of the Act, candidate countries must qualify as low income or lower middle income countries as defined in the Act.
Specifically, a country will be a candidate country in the low income category for FY 2020 if it
A country will be a candidate country in the lower middle income category for FY 2020 if it
Under section 606(c) of the Act as applied for FY 2020, a country with per capita income changes from FY 2019 to FY 2020 such that the country would be reclassified from the low income category to the lower middle income category or vice versa will retain its income status in its former category for FY 2020 and two subsequent fiscal years (FY 2021 and FY 2022). A country that has transitioned to the upper middle income category does not qualify as a candidate country.
Pursuant to section 606(d) of the Act, the Board identified the following countries as candidate countries under the Act for FY 2020. In so doing, the Board referred to the prohibitions on assistance to countries for FY 2019 under the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2019 (FY 2019 SFOAA).
* Bhutan, The Gambia, and Papua New Guinea were included on the list of Tier 3 countries in the 2019 Trafficking in Persons Report. If the President determines to withhold non-humanitarian nontrade-related assistance to such countries under section 110 of the Trafficking Victims Protection Act of 2000, each would no longer be a candidate country for FY 2020.
Countries that would be considered candidate countries for FY 2020 but are
Countries identified above as candidate countries, as well as countries that would be considered candidate countries but for the applicability of legal provisions that prohibit U.S. economic assistance, may be the subject of future statutory restrictions or determinations, or changed country circumstances, that affect their legal eligibility for assistance under part I of the Foreign Assistance Act by reason of application of the Foreign Assistance Act or any other provision of law for FY 2020.
Millennium Challenge Corporation.
Notice.
This report to Congress is provided in accordance with the Millennium Challenge Act of 2003, as amended (Act). The Millennium Challenge Act of 2003 requires the Millennium Challenge Corporation to publish a report that identifies the criteria and methodology that MCC intends to use to determine which candidate countries may be eligible to be considered for assistance under the Act for fiscal year 2020. The report is set forth in full below.
In accordance with section 608(b)(2) of the Act (22 U.S.C. 7707(b)(2)), the Millennium Challenge Corporation (MCC) is submitting the enclosed report. This report identifies the criteria and methodology that MCC intends to use to determine which candidate countries may be eligible to be considered for assistance under the Act for fiscal year 2020.
Under section 608(c)(1) of the Act (22 U.S.C. 7707(c)(1)), MCC will, for a thirty-day period following publication, accept and consider public comment for purposes of determining eligible countries under section 607 of the Act (22 U.S.C. 7706).
This document explains how the Board of Directors (the Board) of the Millennium Challenge Corporation (MCC) will identify, evaluate, and select eligible countries for fiscal year (FY) 2020. Specifically, this document discusses the following:
This report is provided in accordance with section 608(b) of the Millennium Challenge Act of 2003, as amended (the Act), as more fully described in Appendix A.
MCC evaluates the policy performance of all candidate countries and statutorily-prohibited countries by dividing them into two income categories for the purposes of creating “scorecards.” These categories are used to account for the income bias that occurs when countries with more per capita resources perform better than countries with fewer. In FY 2020, those scorecard evaluation income categories
• Countries whose gross national income (GNI) per capita is $1,925 or less; and
• Countries whose GNI per capita is between $1,926 and $3,995.
Appendix B lists all candidate countries and statutorily-prohibited countries for scorecard evaluation purposes.
The Board looks at three legislatively-mandated factors when it evaluates any candidate country for compact eligibility: (1) Policy performance; (2) the opportunity to reduce poverty and generate economic growth; and (3) the availability of MCC funds.
Appendix C describes all 20 indicators, their definitions, what is required to “pass,” their source, and their relationship to the legislative criteria. Because of the importance of evaluating a country's policy performance in a comparable, cross-country way, the Board relies to the maximum extent possible upon the best-available objective and quantifiable policy performance indicators. These indicators act as proxies for a country's commitment to just and democratic governance, economic freedom, and investing in its people, per MCC's founding legislation. Comprised of 20 third-party indicators in the categories of ruling justly, encouraging economic freedom, and investing in people, MCC scorecards are created for all candidate countries and statutorily-prohibited countries. To “pass” most indicators on its scorecard, a country's score on each indicator must be above the median score
• passed at least 10 of the 20 indicators, with at least one pass in each of the three categories,
• passed either the Political Rights or Civil Liberties indicator; and
• passed the Control of Corruption indicator.
While satisfaction of all three aspects means a country is termed to have “passed” the scorecard, the Board also considers whether the country performs “substantially worse” in any one policy category than it does on the scorecard overall.
The mandatory passing of either the Political Rights or Civil Liberties indicators is called the Democratic Rights “hard hurdle” on the scorecard, while the mandatory passing of the Control of Corruption indicator is called the Control of Corruption “hard hurdle.” Not passing either “hard hurdle” results in not passing the scorecard overall, regardless of whether at least 10 of the 20 other indicators are passed.
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Together, the 20 policy performance indicators are the predominant basis for determining which eligible countries will be selected for MCC assistance, and the Board expects a country to be passing its scorecard at the point the Board decides to select the country for either a first or second/subsequent compact. The Board, however, also recognizes that even the best-available data has inherent challenges. Data gaps, real-time events versus data lags, the absence of narratives and nuanced detail, and other similar weaknesses affect each of these indicators. As such, the Board uses its judgment to interpret policy performance as measured by the scorecards. The Board may also consult other sources of information to enhance its understanding of a country's policy performance beyond scorecard issues (
While the Board considers a range of other information sources depending on the country, specific areas of attention typically include better understanding issues and trends in, and trajectory of:
• The state of democratic and human rights (especially vulnerable groups
• civil society's perspective on salient governance issues;
• the control of corruption and rule of law;
• the potential for the private sector (both local and foreign) to lead investment and growth;
• poverty levels within a country; and
• the country's institutional capacity.
Where applicable, the Board also considers MCC's own experience and ability to reduce poverty and generate economic growth in a given country—such as considering MCC's core skills versus a country's needs, and MCC's capacity to work with a country.
This information provides greater clarity on the likelihood that MCC programs will have an appreciable impact on reducing poverty by generating economic growth in a given country. The Board has used such information to better understand when a country's performance on a particular indicator may not be up to date or is about to change. It has also used it to decline to select countries that are otherwise passing their scorecards. More details on this subject (sometimes referred to as “supplemental information”) can be found on MCC's website:
The final factor that the Board must consider when evaluating countries is the available funds. The agency's budget allocation is constrained, and often specifically limited, by provisions in our authorizing legislation and appropriations acts. MCC has a continuous pipeline of countries in compact development, compact implementation, threshold programs, and compact closure. Consequently, the Board factors in MCC's overall portfolio when making its selection decisions given the funding available for each planned or existing program.
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The following subsections describe how each of these three legislatively-mandated factors are applied by the Board at the December Board meeting: Selection of countries for a compact, selection of countries for a second or subsequent compact, selection of countries for the threshold program, and selection of countries for a concurrent compact. A note follows on considerations for countries that might transition to upper middle income country status after initial selection.
When selecting eligible countries for a compact, the Board looks at all three legislatively-mandated aspects described in the previous section: (1) Policy performance, first and foremost as measured by the scorecards and bolstered through additional information (as described in the previous section); (2) the opportunity to reduce poverty and generate economic growth, examined through the use of other supporting information (as described in the previous section); and (3) available funding.
At a minimum, the Board considers whether a country passes its scorecard. It also examines supporting evidence that a country's commitment to just and democratic governance, economic freedom, and investing in its people is on a sound footing and performance is on a positive trajectory (especially on the “hard hurdles” of Democratic Rights and Control of Corruption), and that MCC has the funds to support a meaningful compact with that country. Where applicable, previous threshold program information is also considered. The Board then weighs the information described above across each of the three dimensions.
During the compact development period following initial selection, the Board reevaluates a selected country based on this same approach.
Section 609(l) of the Act specifically authorizes MCC to enter into “one or more subsequent Compacts.” MCC does not consider the eligibility of a country for a subsequent compact, however, before the country has completed its compact or is within 18 months of compact completion, (
To evaluate the previous compact's success, the Board examines whether the compact succeeded within its budget and time limits, in particular by looking at three aspects:
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Details on the specific information types examined and sources used in each of the three areas are provided in Appendix D. Overall, the Board is looking for evidence that the previous compact will be or has been completed on time and on budget, and that there is a commitment to continued, robust reform going forward.
The Board also expects the country to have improved its overall scorecard policy performance during the partnership, and to pass the scorecard in the year of selection for the subsequent compact. The Board focuses on the following:
• The overall scorecard pass/fail rate over time, and what this suggests about underlying policy performance, as well as an examination of the underlying reasons;
• The progress over time on policy areas measured by both hard-hurdle indicators—Democratic Rights and Control of Corruption—including an examination of the underlying reasons; and
• Other indicator trajectories deemed relevant by the Board.
In all cases, while the Board expects the country to be passing its scorecard, other sources of information are examined to understand the nuance and reasons behind scorecard or indicator performance over time, including any real-time updates, methodological changes within the indicators themselves, shifts in the relevant candidate pool, or alternative policy performance perspectives (such as gleaned through consultations with civil society and related stakeholders). Other information sources are also consulted to look at policy performance over time in areas not covered by the scorecard, but that are deemed important by the Board (such as trade, foreign policy concerns, etc.).
The Board expects that subsequent compacts will endeavor to tackle deeper policy reforms necessary to unlock an identified constraint to growth. Consequently, the Board considers its own experience during the previous compact in considering how committed the country is to reducing poverty and increasing economic growth, and tries to gauge the country's commitment to further sector reform should it be selected for a subsequent compact. This includes:
• Assessing the country's delivery of policy reform during the previous compact (as described above);
• Assessing expectations of the country's ability and willingness to continue embarking on sector policy reform in a subsequent compact;
• Examining both other information sources describing the opportunity to reduce poverty by generating growth (as outlined in A.2 above), and the first compact's relative success overall, as already discussed; and
• Finally, considering how well funding can be leveraged for impact, given the country's experience in the previous compact.
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Through this overall approach to selection for a subsequent compact, the Board applies the three legislatively mandated evaluation criteria (policy performance, the opportunity to reduce poverty and generate economic growth, and available funds) in a way that assesses the previous partnership from a compact success standpoint, a commitment to improved scorecard policy performance standpoint, and a commitment to continued sector policy reform standpoint. The Board then weighs all of the information described above in making a decision.
During the compact development period following initial selection, the Board reevaluates a selected country based on this same approach.
Section 609(k) of the Act authorizes MCC to enter into one additional concurrent compact with a country if one or both of the compacts with the country is for the purpose of regional economic integration, increased regional trade, or cross-border collaborations.
The fundamental criteria and process for the selection of countries for such compacts remains the same as those for the selection of countries for non-concurrent compacts: Countries continue to be evaluated and selected individually, as described in sections II.A, II.B, II.C, and II.F.
Section 609(k) also requires as a precondition for a concurrent compact that the Board determine that the country is making “considerable and demonstrable progress in implementing the terms of the existing Compact and supplementary agreements thereto.” This statutory requirement is fully consistent with prior Board practice regarding the selection of a country for a non-concurrent compact. For a country where a concurrent compact is contemplated, the Board will take into account whether there is clear evidence of success, as relevant to the phase of the current compact. Among other information, the Board will examine the evaluation criteria described in Section II.C.1 above, notably:
• The degree to which there is evidence of strong political will and management capacity;
• The degree to which the country has exhibited commitment and capacity to achieve program results; and
• The degree to which the country has implemented the compact in accordance with MCC's core policies and standards.
In addition to providing information to the Board so it can make its determination regarding the country's progress in implementing its current compact, MCC will provide the Board with additional information relating to the potential for regional economic integration, increased regional trade, or cross-border collaborations for any country being considered for a concurrent compact. This information may include items such as:
• The current state of a country's regional integration, such as common financial and political dialogue frameworks, integration of productive value chains, and cross-border flows of people, goods, and services.
• The current and potential level of trade between a country and its neighbors, including analysis of trade flows and unexploited potential for trade, and an assessment of the extent and significance of tariff and non-tariff barriers, including information regarding the patterns of trade.
• The potential gains from cross-border cooperation between a country and its neighbors to alleviate bilateral and regional bottlenecks to economic growth and poverty reduction, such as through physical infrastructure or coordinated policy and institutional reforms.
The Board can then weigh all information as a whole—the fundamental selection factors described in sections II.A, II.B, II.C, and II.F, the information regarding implementation of the current compact, and any additional relevant information regarding potential regional integration—to determine whether or not to direct MCC to seek to enter into a concurrent compact with a country.
The Board may also evaluate countries for participation in the threshold program. Threshold programs provide assistance to candidate countries exhibiting a significant commitment to meeting the criteria described in the previous subsections, but failing to meet such requirements. Specifically, in examining a candidate country's policy performance, the opportunity to reduce poverty and generate economic growth, and available funds, the Board will consider whether a country appears to be on a trajectory to becoming viable for compact eligibility in the medium or short term.
Some candidate countries may have a high per capita income or a high growth rate that implies there is a chance they could transition to UMIC status during the life of an MCC partnership. In such cases, it is not possible to accurately predict if or when such country may transition to UMIC status.
Nonetheless, such countries may have more resources at their disposal for funding their own growth and poverty reduction strategies. As a result, in addition to using the regular selection criteria described in the previous sections, the Board will also use its discretion to assess both the need and the opportunity presented by partnering with such a country, in order to ensure that there is a higher bar for possible selection.
Specifically, if a candidate country with a high probability of transitioning to UMIC status is under consideration for selection, the Board will examine additional data and information related to the following:
• Whether the country faces significant challenges accessing other sources of development financing (such as international capital, domestic resources, and other donor assistance) and, if so, whether MCC grant financing would be an appropriate tool;
• Whether the nature of poverty in the country (for example, high inequality or poverty headcount ratios relative to peer countries) presents a clear and strategic opportunity for MCC to assist the country in reducing such
• Whether the country demonstrates particularly strong policy performance, including policies and actions that demonstrate a clear priority on poverty reduction; and
• Whether MCC can reasonably expect that the country would contribute a significant amount of funding to the compact.
These additional criteria would then be applied in any additional years of selection as the country continues to develop its compact. Should a country eventually transition to UMIC status during compact development, a country would no longer be a candidate for selection for that fiscal year. Continuing compact development beyond that point would then be at the Board's discretion.
This report to Congress is provided in accordance with section 608(b) of the Millennium Challenge Act of 2003, as amended (the Act), 22 U.S.C. 7707(b).
Section 605 of the Act authorizes the provision of assistance to countries that enter into a Millennium Challenge Compact with the United States to support policies and programs that advance the progress of such countries in achieving lasting economic growth and poverty reduction. The Act requires MCC to take a number of steps in selecting countries for compact assistance for FY 2020 based on the countries' demonstrated commitment to just and democratic governance, economic freedom, and investing in their people, MCC's opportunity to reduce poverty and generate economic growth in the country, and the availability of funds. These steps include the submission of reports to the congressional committees specified in the Act and publication of information in the
(1) The countries that are “candidate countries” for assistance for FY 2020 based on per capita income levels and eligibility to receive assistance under U.S. law (section 608(a) of the Act; 22 U.S.C. 7707(a));
(2) The criteria and methodology that MCC's Board of Directors (Board) will use to measure and evaluate policy performance of the candidate countries consistent with the requirements of section 607 of the Act (22 U.S.C. 7706) in order to determine “eligible countries” from among the “candidate countries” (section 608(b) of the Act; 22 U.S.C. 7707(b)); and
(3) The list of countries determined by the Board to be “eligible countries” for FY 2020, with justification for eligibility determination and selection for compact negotiation, including those eligible countries with which MCC will seek to enter into compacts (section 608(d) of the Act; 22 U.S.C. 7707(d)).
This report satisfies item 2 above.
Since MCC was created, it has relied on the
MCC will continue to use the historical IDA classifications for eligibility to categorize countries in two groups for purposes of FY 2020 scorecard comparisons:
• Countries with GNI per capita equal to or less than IDA's historical ceiling for eligibility (
• Countries with GNI per capita above IDA's historical ceiling for eligibility but below the World Bank's upper middle income country threshold (
The list of countries for FY 2020 scorecard assessments is set forth below:
The following indicators will be used to measure candidate countries' demonstrated commitment to the criteria found in section 607(b) of the Act. The indicators are intended to assess the degree to which the political and economic conditions in a country serve to promote broad-based sustainable economic growth and reduction of poverty and thus provide a sound environment for the use of MCC funds. The indicators are not goals in themselves; rather, they are proxy measures of policies that are linked to broad-based sustainable economic growth. The indicators were selected based on (i) their relationship to economic growth and poverty reduction; (ii) the number of countries they cover; (iii) transparency and availability; and (iv) relative soundness and objectivity. Where possible, the indicators are developed by independent sources. Listed below is a brief summary of the indicators (a detailed rationale for the adoption of these indicators can be found in the Public Guide to the Indicators on MCC's public website at
Within each policy category, the Act sets out a number of specific selection criteria. A set of objective and quantifiable policy indicators is used to inform eligibility decisions for assistance and to measure the relative performance by candidate countries against these criteria. The Board's approach to determining eligibility ensures that performance against each of these criteria is assessed by at least one of the objective indicators. Most are addressed by multiple indicators. The specific indicators appear in parentheses next to the corresponding criterion set out in the Act.
MCC reporting and data in the following chart are used to assess compact performance of MCC compact countries nearing the end of compact implementation (
For completed compacts, additional information is used to assess compact performance and is found in a country's Star Report. The Star Report and its associated quarterly business process capture key information to provide a framework for results and improve the ability to disseminate learning and evidence throughout the lifecycle of an MCC investment from selection to final evaluation. For each compact and threshold program, evidence is collected on performance indicators, evaluation results, partnerships, sustainability efforts, and learning, among other elements.
Nuclear Regulatory Commission.
Public meetings and webinar; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is undertaking activities to develop a report identifying best practices for establishment and operation of local community advisory boards (CABs) associated with decommissioning activities, including lessons learned from existing boards, as required by the Nuclear Energy Innovation and Modernization Act (NEIMA). As part of developing the report, the NRC is hosting 11 public meetings and a public webinar to consult with host States, communities within the emergency planning zone of an applicable nuclear power reactor, and existing local CABs. In addition to these public meetings and public webinar, the NRC has developed a questionnaire to collect information regarding the areas identified in NEIMA with respect to the creation and operation of CABs. The results of the meetings, along with any other data received as a result of the NRC's information collection activities associated with the NEIMA Section 108, will be captured in a best practices report that will be submitted to Congress.
Comments must be filed by November 15, 2019. Public meetings and a public webinar to discuss best practices and lessons learned associated with CABs at decommissioning nuclear power reactors have been taking and will take place from August through October of 2019. Specific details regarding the dates, times, locations, and other logistical information for the public meetings and public webinar can be found on the NRC's public website at
You may submit comments by any of the following methods:
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Marlayna Vaaler Doell, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-3178; email:
Please refer to Docket ID NRC-2019-0073 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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Please include Docket ID NRC-2019-0073 in your comment submission. The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
The NRC is coordinating activities in accordance with Section 108 of NEIMA to develop a report identifying best practices for establishment and operation of CABs. The contents of this report, scheduled to be issued to Congress no later than July 14, 2020, will include (1) a description of the type of topics that might be brought before a CAB; (2) how the board's input could inform the decision-making process of stakeholders for various decommissioning activities; how the board could interact with the NRC and other Federal regulatory bodies to promote dialogue between the licensee and affected stakeholders; and (3) how the board could offer opportunities for public engagement throughout all phases of the decommissioning process. The report will also include a discussion of the composition of existing CABs and best practices identified during the establishment and operation of such boards, including logistical considerations, frequency of meetings, the selection of board members, etc.
In developing a best practices report, and as required by NEIMA, the NRC is consulting with host States, communities within the emergency planning zone of an applicable nuclear power reactor, and existing CABs. This consultation includes hosting 11 Category 3 public meetings and at least 1 nationwide webinar. These public meetings are being held in locations that ensure geographic diversity across the United States, with priority given to States that (1) have a nuclear power reactor currently undergoing the decommissioning process; and (2) requested a public meeting under the provisions of NEIMA in accordance with the
In addition to these public meetings, the NRC has developed a questionnaire to collect information regarding the areas identified in NEIMA with respect to the creation and operation of CABs. The NRC is requesting responses from existing CABs in the vicinity of power reactors undergoing decommissioning, similar established stakeholder groups, or local government organizations. The questionnaire is available at
Consistent with the consultation requirements in NEIMA Section 108, the NRC received requests for and identified the areas surrounding 11 nuclear power reactors as locations to host public meetings to discuss best practices and lessons learned for establishment and operation of CABs.
Public meetings have been held near the following eight reactors:
(1) Palisades Nuclear Generating Station in Covert, Michigan, on August 21, 2019;
(2) Humboldt Bay Nuclear Power Plant in Eureka, California, on August 26, 2019;
(3) Diablo Canyon Power Plant in San Luis Obispo, California, on August 27, 2019;
(4) San Onofre Nuclear Generating Station in San Clemente, California, on August 29, 2019;
(5) Vermont Yankee Nuclear Power Plant in Vernon, Vermont, on September 10, 2019;
(6) Pilgrim Nuclear Power Station in Plymouth, Massachusetts, on September 11, 2019;
(7) Kewaunee Power Station in Kewaunee, Wisconsin, on September 24, 2019; and
(8) Zion Nuclear Power Station in Zion, Illinois, on September 26, 2019.
The three remaining public meetings will be held near the following reactors:
(1) Indian Point Energy Center in Buchanan, New York, on October 2, 2019 (ADAMS Accession No. ML19232A505);
(2) Oyster Creek Nuclear Generating Station in Forked River, New Jersey, on October 3, 2019 (ADAMS Accession No. ML19232A504); and
(3) Crystal River 3 Nuclear Power Plant in Crystal River, Florida, on October 10, 2019 (ADAMS Accession No. ML19232A502).
Additionally, the NRC hosted a public webinar held on August 8, 2019, to obtain comments from individuals in other areas of the country.
Specific details regarding the dates, times, locations, and other logistical information for each of the meetings can be found on the NRC's NEIMA Section 108 public website at
The NRC is seeking input from existing CABs in the vicinity of power reactors undergoing decommissioning, similar established stakeholder groups, or local government organizations regarding best practices and lessons learned associated with CABs at decommissioning nuclear power reactors. Comments may be submitted by November 15, 2019. Comments submitted after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received by this date.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Regulatory guide; withdrawal.
The U.S. Nuclear Regulatory Commission (NRC) is withdrawing Regulatory Guide (RG) 3.53, “Applicability of Existing Regulatory Guides to the Design, Construction, and Operation of an Independent Spent Fuel Storage Installation.” This document is being withdrawn because the information included in the RG has been superseded by newer guidance and is therefore no longer needed.
The withdrawal of RG 3.53 takes effect on September 27, 2019.
Please refer to Docket ID NRC-2019-0157 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document, using the following methods:
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Regulatory guides are not copyrighted, and NRC approval is not required to reproduce them.
Haile Lindsay, Office of Nuclear Material Safety and Safeguards; telephone: 301-415-0616; email:
The NRC is withdrawing RG 3.53 because it has been superseded and is no longer needed. RG 3.53 was published in July 1982 to describe the applicability of existing regulatory guides that would aid in the design, construction, and operation of an independent spent fuel storage installation (ISFSI). At that time, there were no precedents for applications for ISFSIs, there was not a consolidated set of guidance, and information technology did not exist to provide guidance electronically for ISFSIs. The staff issued RG 3.53 to expedite the staff's reviews of ISFSI applications, which were anticipated under the new requirements in title 10 of the
Since 1982, many of the guidance documents and regulatory positions listed in the RG have been withdrawn or superseded by more current guidance. Examples of new or revised staff guidance for ISFSIs include RG 3.48, “Standard Format and Content for the Safety Analysis Report for an Independent Spent Fuel Storage Installation or Monitored Retrievable Storage Installation (Dry Storage),” RG 3.50, “Standard Format and Content for a Specific License Application for An Independent Spent Fuel Storage Installation or Monitored Retrievable Storage Facility,” RG 3.60, “Design of an Independent Spent Fuel Storage Installation (Dry Storage),” and RG 3.62, “Standard Format and Content for the Safety Analysis Report for Onsite Storage of Spent Fuel Storage Casks.” These guidance documents incorporate the lessons learned during the licensing process and from operational experiences with ISFSIs. The current information technology available today makes the numerous RGs in the areas of design, construction, and operation of an ISFSI readily available electronically on the NRC's public website and it is easy for applicants to navigate and identify these guides.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Notice of submission to the Office of Management and Budget; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) has recently submitted a request for renewal of an existing collection of information to the Office of Management and Budget (OMB) for review. The information collection is entitled, “Criteria and Procedures for Determining Eligibility for Access to or Control Over Special Nuclear Material.”
Submit comments by October 28, 2019. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
Submit comments directly to the OMB reviewer at: OMB Office of Information and Regulatory Affairs (3150-0062), Attn: Desk Officer for the Nuclear Regulatory Commission, 725 17th Street NW, Washington, DC 20503; email:
David Cullison, NRC Clearance Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-2084; email:
Please refer to Docket ID NRC-2019-0103 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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The NRC cautions you not to include identifying or contact information in comment submissions that you do not want to be publicly disclosed in your comment submission. All comment submissions are posted at
If you are requesting or aggregating comments from other persons for submission to the OMB, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that comment submissions are not routinely edited to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
Under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the NRC recently submitted a request for renewal of an existing collection of information to OMB for review entitled, part 11 of title 10 of the
The NRC published a
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For the Nuclear Regulatory Commission.
On June 6, 2019, Cboe BZX Exchange, Inc. (“Exchange” or “BZX”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
This Amendment No. 2 to SR-CboeBZX-2019-047 amends and replaces in its entirety the proposal as amended by Amendment No. 1, which was submitted on September 20, 2019, which amended and replaced in its entirety the proposal as originally submitted on June 5, 2019. The Exchange submits this Amendment No. 2 in order to clarify certain points and add additional details to the proposal. The Exchange submits this Amendment No. 2 in order to clarify certain points and add additional details to the proposal.
The Exchange proposes to add new Rule 14.11(k) for the purpose of permitting the listing and trading, or trading pursuant to unlisted trading privileges, of Managed Portfolio Shares, which are securities issued by an actively managed open-end management investment company.
The proposed change to Rule 14.11(a) would amend the rule to include any statements or representations regarding the Verified Intraday Indicative Values included in any filing to list a series of Managed Portfolio Shares as constituting continued listing requirements for such securities listed on the Exchange.
Proposed Rule 14.11(k)(1) provides that the Exchange will consider for trading, whether by listing or pursuant to unlisted trading privileges, Managed Portfolio Shares that meet the criteria of Rule 14.11(k).
Proposed Rule 14.11(k)(2) provides that Rule 14.11(k) is applicable only to Managed Portfolio Shares and that, except to the extent inconsistent with Rule 14.11(k), or unless the context otherwise requires, the rules and procedures of the Exchange's Board of Directors shall be applicable to the trading on the Exchange of such securities. Proposed Rule 14.11(k)(2) provides further that Managed Portfolio Shares are included within the definition of “security” or “securities” as such terms are used in the Rules of the Exchange.
Proposed Rule 14.11(k)(2)(A) provides that the Exchange will file separate proposals under Section 19(b) of the Act before the listing and trading of a series of Managed Portfolio Shares.
Proposed Rule 14.11(k)(2)(B) provides that transactions in Managed Portfolio Shares will occur only during Regular Trading Hours.
Proposed Rule 14.11(k)(2)(C) provides that the Exchange will implement and maintain written surveillance procedures for Managed Portfolio Shares. As part of these surveillance procedures, the Investment Company's investment adviser will upon request make available to the Exchange and/or FINRA, on behalf of the Exchange, the daily portfolio holdings of each series of Managed Portfolio Shares.
Proposed Rule 14.11(k)(2)(D) provides that, if the investment adviser to the Investment Company issuing Managed Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information
Proposed Rule 14.11(k)(2)(E) provides that person or entity, including an AP Representative, custodian, pricing verification agent, reporting authority, distributor, or administrator, who has access to information regarding the Investment Company's portfolio composition, the Creation Basket, or changes thereto, must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the applicable Investment Company portfolio or Creation Basket. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity will erect and maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company portfolio or Creation Basket.
Proposed Rule 14.11(k)(3)(A) defines the term “Managed Portfolio Share” as a security that (a) represents an interest in an investment company registered under the Investment Company Act of 1940 (“Investment Company”) organized as an open-end management investment company, that invests in a portfolio of securities selected by the Investment Company's investment adviser consistent with the Investment Company's investment objectives and policies; (b) is issued in a Creation Unit, or multiples thereof, in return for a designated portfolio of instruments (and/or an amount of cash) with a value equal to the next determined net asset value and delivered to the Authorized Participant (as defined in the Investment Company's Form N-1A filed with the SEC) through a Confidential Account; (c) when aggregated into a Redemption Unit, or multiples thereof, may be redeemed for a designated portfolio of instruments (and/or an amount of cash) with a value equal to the next determined net asset value delivered to the Confidential Account for the benefit of the Authorized Participant; and (d) the portfolio holdings for which are disclosed within at least 60 days following the end of every calendar quarter.
Proposed Rule 14.11(k)(3)(B) defines the term “Verified Intraday Indicative Value” (“VIIV”) as the indicative value of a Managed Portfolio Share based on all of the holdings of a series of Managed Portfolio Shares as of the close of business on the prior business day and, for corporate actions, based on the applicable holdings as of the opening of business on the current business day, priced and disseminated in one second intervals during Regular Trading Hours by the Reporting Authority.
Proposed Rule 14.11(k)(3)(C) defines the term “AP Representative” as an unaffiliated broker-dealer with which an Authorized Participant has signed an agreement to establish a Confidential Account for the benefit of such Authorized Participant that will deliver or receive all consideration to or from the Investment Company in a creation or redemption. An AP Representative will be restricted from disclosing the Creation Basket.
Proposed Rule 14.11(k)(3)(D) defines the term “Confidential Account” as an account owned by an Authorized Participant and held with an AP Representative on behalf of the Authorized Participant. The account will be established and governed by contractual agreement between the AP Representative and the Authorized Participant solely for the purposes of creation and redemption, while keeping confidential the Creation Basket constituents of each series of Managed Portfolio Shares, including from the Authorized Participant. The books and records of the Confidential Account will be maintained by the AP Representative on behalf of the Authorized Participant.
Proposed Rule 14.11(k)(3)(E) defines the term “Creation Basket” as on any given business day the names and quantities of the specified instruments that are required for an AP Representative to deposit in-kind on behalf of an Authorized Participant in exchange for a Creation Unit and the names and quantities of the specified instruments that will be transferred in-kind to an AP Representative on behalf of an Authorized Participant in exchange for a Redemption Unit, which will be identical and will be transmitted to each AP Representative before the commencement of trading.
Proposed Rule 14.11(k)(3)(F) defines the term “Creation Unit” as a specified minimum number of Managed Portfolio Shares issued by an Investment Company at the request of an Authorized Participant in return for a designated portfolio of instruments and/or cash.
Proposed Rule 14.11(k)(3)(G) defines the term “Redemption Unit” as a specified minimum number of Managed Portfolio Shares that may be redeemed to an Investment Company at the request of an AP in return for a portfolio of instruments and/or cash.
Proposed Rule 14.11(k)(3)(H) defines the term “Reporting Authority” in respect of a particular series of Managed Portfolio Shares as the Exchange, the exchange that lists a particular series of Managed Portfolio Shares (if the Exchange is trading such series pursuant to unlisted trading privileges), an institution, or a reporting service designated by the Investment Company as the official source for calculating and reporting information relating to such series, including, the NAV, the VIIV, or other information relating to the issuance, redemption or trading of Managed Portfolio Shares. A series of Managed Portfolio Shares may have more than one Reporting Authority, each having different functions.
Proposed Rule 14.11(k)(3)(I) provides that the term “Normal Market Conditions” includes, but is not limited to, the absence of trading halts in the applicable financial markets generally; operational issues (
Proposed Rule 14.11(k)(4)(A) sets forth initial listing criteria applicable to Managed Portfolio Shares. Proposed Rule 14.11(k)(4)(A)(i) provides that, for each series of Managed Portfolio Shares, the Exchange will establish a minimum number of Managed Portfolio Shares required to be outstanding at the time of commencement of trading on the Exchange. In addition, proposed Rule 14.11(k)(4)(A)(ii) provides that the Exchange will obtain a representation from the Investment Company that issues each series of Managed Portfolio Shares that the NAV per share for the series will be calculated daily and that the NAV will be made available to all market participants at the same time. Proposed Rule 14.11(k)(4)(A)(iii) provides that all Managed Portfolio Shares shall have a stated investment objective, which shall be adhered to under Normal Market Conditions.
Proposed Rule 14.11(k)(4)(B) provides that each series of Managed Portfolio Shares will be listed and traded subject to application of the following continued listing criteria. Proposed Rule 14.11(k)(4)(B)(i) provides that the VIIV for Managed Portfolio Shares will be widely disseminated by the Reporting Authority and/or by one or more major market data vendors in one second intervals during Regular Trading Hours and will be disseminated to all market participants at the same time. Proposed Rule 14.11(k)(4)(B)(ii) provides that the Exchange will consider the suspension of trading in, and will commence delisting proceedings under Rule 14.12 for, a series of Managed Portfolio Shares under any of the following circumstances: (a) If, following the initial twelve-month period after commencement of trading on the Exchange of a series of Managed Portfolio Shares, there are fewer than 50 beneficial holders of the series of Managed Portfolio Shares for 30 or more consecutive trading days; (b) if the Exchange has halted trading in a series of Managed Portfolio Shares because the VIIV is interrupted pursuant to Rule 14.11(k)(4)(B)(iii) and such interruption persists past the trading day in which it occurred or is no longer available; (c) if the Exchange has halted trading in a series of Managed Portfolio Shares because the NAV with respect to such series of Managed Portfolio Shares is not disseminated to all market participants at the same time, the holdings of such series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the Investment Company Act of 1940 (the “1940 Act”), or such holdings are not made available to all market participants at the same time pursuant to Rule 14.11(k)(4)(B)(iii) and such issue persists past the trading day in which it occurred; (d) if the Investment Company issuing the Managed Portfolio Shares has failed to file any filings required by the Commission or if the Exchange is aware that the Investment Company is not in compliance with the conditions of any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff to the Investment Company with respect to the series of Managed Portfolio Shares; (e) if any of the continued listing requirements set forth in Rule 14.11(k) are not continuously maintained; (f) if any of the applicable Continued Listing Representations, as defined in Rule 14.11(a), for the issue of Managed Portfolio Shares are not continuously met; or (g) if such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable.
Proposed Rule 14.11(k)(4)(B)(iii)(a) provides that, upon notification to the Exchange by the Investment Company or its agent of the existence of any condition or set of conditions specified in any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff that would require the Investment Company's investment adviser to request that the Exchange halt trading in the Managed Portfolio Shares, the Exchange shall halt trading in the Managed Portfolio Shares as soon as practicable. Such halt in trading shall continue until the Investment Company or its agent notifies the Exchange that the condition or conditions necessary for the resumption of trading have been met.
Proposed Rule 14.11(k)(4)(B)(iii)(b) provides that, if the Exchange becomes aware that: (i) The Verified Intraday Indicative Value of a series of Managed Portfolio Shares is not being calculated or disseminated in one second intervals, as required; (ii) the net asset value with respect to a series of Managed Portfolio Shares is not disseminated to all market participants at the same time; (iii) the holdings of a series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act; or (iv) such holdings are not made available to all market participants at the same time, it will halt trading in such series until such time as the Verified Intraday Indicative Value, the net asset value, or the holdings are available to all market participants as required.
Proposed Rule 14.11(k)(4)(B)(iv) provides that, upon termination of an Investment Company, the Exchange requires that Managed Portfolio Shares issued in connection with such entity be removed from Exchange listing.
Proposed Rule 14.11(k)(4)(B)(v) provides that voting rights shall be as set forth in the applicable Investment Company prospectus and/or statement of additional information.
Proposed Rule 14.11(k)(5), which relates to limitation of Exchange liability, provides that neither the Exchange, the Reporting Authority, when the Exchange is acting in the capacity of a Reporting Authority, nor any agent of the Exchange shall have any liability for damages, claims, losses or expenses caused by any errors, omissions, or delays in calculating or disseminating any current portfolio value; the current value of the portfolio of securities required to be deposited to the open-end management investment company in connection with issuance of Managed Portfolio Shares; the VIIV; the amount of any dividend equivalent payment or cash distribution to holders of Managed Portfolio Shares; NAV; or other information relating to the purchase, redemption, or trading of Managed Portfolio Shares, resulting from any negligent act or omission by the Exchange, the Reporting Authority when the Exchange is acting in the capacity of a Reporting Authority, or any agent of the Exchange, or any act, condition, or cause beyond the reasonable control of the Exchange, its agent, or the Reporting Authority, including, but not limited to, an act of God; fire; flood; extraordinary weather conditions; war; insurrection; riot; strike; accident; action of government; communications or power failure; equipment or software malfunction; or any error, omission, or delay in the reports of transactions in one or more underlying securities.
Proposed Rule 14.11(k)(6), which relates to disclosures, provides that the provisions of subparagraph (k)(6) apply only to series of Managed Portfolio Shares that are the subject of an order by the Commission exempting such series from certain prospectus delivery requirements under Section 24(d) of the Investment Company Act of 1940 and are not otherwise subject to prospectus delivery requirements under the Securities Act of 1933. The Exchange will inform its Members regarding application of this subparagraph to a particular series of Managed Portfolio Shares by means of an information circular prior to commencement of trading in such series.
The Exchange requires that members provide to all purchasers of a series of Managed Portfolio Shares a written description of the terms and characteristics of those securities, in a form prepared by the open-end management investment company issuing such securities, not later than the time a confirmation of the first transaction in such series is delivered to such purchaser. In addition, members shall include such a written description
A member carrying an omnibus account for a non-member broker-dealer is required to inform such non-member that execution of an order to purchase a series of Managed Portfolio Shares for such omnibus account will be deemed to constitute agreement by the non-member to make such written description available to its customers on the same terms as are directly applicable to members under this rule.
Upon request of a customer, a member shall also provide a prospectus for the particular series of Managed Portfolio Shares.
While each series of Managed Portfolio Shares will be actively managed and, to that extent, similar to Managed Fund Shares (as defined in Rule 14.11(i)),
For each series of Managed Portfolio Shares, an estimated value—the VIIV—that reflects an estimated intraday value of a fund's portfolio will be disseminated. Specifically, the VIIV will be based upon all of a series' holdings as of the close of the prior business day and, for corporate actions, based on the applicable holdings as of the opening of business on the current business day, and will be widely disseminated by the Reporting Authority and/or one or more major market data vendors in one second intervals during Regular Trading Hours. The dissemination of the VIIV will allow investors to determine the estimated intra-day value of the underlying portfolio of a series of Managed Portfolio Shares and will provide a close estimate of that value throughout the trading day.
The Exchange, after consulting with various Lead Market Makers (“LMMs”)
To protect the identity and weightings of the portfolio holdings, a series of Managed Portfolio Shares would sell and redeem their shares in Creation Units and Redemption Units to APs only through an AP Representative. As such, on each business day, before commencement of trading in Shares on the Exchange, each series of Managed Portfolio Shares will provide to an AP Representative of each AP the names and quantities of the instruments comprising a Creation Basket,
In connection with the creation and redemption of Creation Units and Redemption Units, the delivery or receipt of any portfolio securities in-kind will be required to be effected through a Confidential Account
Each AP Representative will be given, before the commencement of trading each business day, the Creation Basket for that day. The published Creation Basket will apply until a new Creation Basket is announced on the following business day, and there will be no intra-day changes to the Creation Basket except to correct errors in the published Creation Basket. In order to keep costs low and permit Funds to be as fully invested as possible, Shares will be purchased and redeemed in Creation Units and Redemption Units and generally on an in-kind basis. Accordingly, except where the purchase or redemption will include cash under the circumstances required or determined permissible by the Fund, APs will be required to purchase Creation Units by making an in-kind deposit of specified instruments (“Deposit Instruments”), and APs redeeming their Shares will receive an in-kind transfer of Redemption Instruments through the AP Representative in their Confidential Account.
In the case of a creation, the AP
Other market participants that are not APs will not have the ability to create or redeem shares directly with a Fund. Rather, if other market participants wish to create or redeem Shares in a Fund, they will have to do so through an AP.
Each Fund will issue Shares through the Distributor on a continuous basis at
The Distributor will furnish acknowledgements to those placing orders that the orders have been accepted, but the Distributor may reject any order which is not submitted in proper form, as described in a Fund's prospectus or Statement of Additional Information (“SAI”). The NAV of each Fund is expected to be determined once each business day at a time determined by the board of the Investment Company (“Board”), currently anticipated to be as of the close of the regular trading session on the NYSE (ordinarily 4:00 p.m. E.T.) (the “Valuation Time”). Each Fund will establish a cut-off time (“Order Cut-Off Time”) for purchase orders in proper form. To initiate a purchase of Shares, an AP must submit to the Distributor an irrevocable order to purchase such Shares after the most recent prior Valuation Time.
Purchases of Shares will be settled in-kind and/or cash for an amount equal to the applicable NAV per Share purchased plus applicable “Transaction Fees,” as discussed below.
Generally, all orders to purchase Creation Units must be received by the Distributor no later than the end of Regular Trading Hours on the date such order is placed (“Transmittal Date”) in order for the purchaser to receive the NAV per Share determined on the Transmittal Date. In the case of custom orders made in connection with creations or redemptions in whole or in part in cash, the order must be received by the Distributor, no later than the Order Cut-Off Time.
The Shares may be redeemed to a Fund in Redemption Unit size or multiples thereof as described below. Redemption orders of Redemption Units must be placed by or through an AP (“AP Redemption Order”). Each Fund will establish an Order Cut-Off Time for redemption orders of Redemption Units in proper form. Redemption Units of a Fund will be redeemable at their NAV per Share next determined after receipt of a request for redemption by the Investment Company in the manner specified below before the Order Cut-Off Time. To initiate an AP Redemption Order, an AP must submit to the Distributor an irrevocable order to redeem such Redemption Unit after the most recent prior Valuation Time but not later than the Order Cut-Off Time.
In the case of a redemption, the AP would enter into an irrevocable redemption order, and then instruct the AP Representative to sell the underlying basket of securities that it will receive in the redemption. As with the purchase of securities, the AP Representative would be required to obfuscate the sale of the portfolio securities it will receive as redemption proceeds using similar tactics.
Consistent with the provisions of Section 22(e) of the 1940 Act and Rule 22e-2 thereunder, the right to redeem will not be suspended, nor payment upon redemption delayed, except for: (1) Any period during which the Exchange is closed other than customary weekend and holiday closings, (2) any period during which trading on the Exchange is restricted, (3) any period during which an emergency exists as a result of which disposal by a Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for a Fund to determine its NAV, and (4) for such other periods as the Commission may by order permit for the protection of shareholders.
It is expected that redemptions will occur primarily in-kind, although redemption payments may also be made partly or wholly in cash. The Participant Agreement signed by each AP will require establishment of a Confidential Account to receive distributions of securities in-kind upon redemption.
After receipt of a Redemption Order, a Fund's custodian (“Custodian”) will typically deliver securities to the Confidential Account with a value approximately equal to the value of the Shares
If the AP would receive a security that it is restricted from receiving, for example if the AP is engaged in a distribution of the security, a Fund will deliver cash equal to the value of that security. APs and non-AP market participants will provide the AP Representative with a list of restricted securities applicable to the AP or non-AP market participants on a daily basis, and a Fund will substitute cash for those securities in the applicable Confidential Account.
The Investment Company will accept a Redemption Order in proper form. A Redemption Order is subject to acceptance by the Investment Company and must be preceded or accompanied by an irrevocable commitment to deliver the requisite number of Shares. At the time of settlement, an AP will initiate a delivery of the Shares plus or minus any cash Balancing Amounts, and less the expenses of liquidation.
The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of Managed Portfolio Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. Trading of Managed Portfolio Shares through the Exchange will be subject to the Exchange's surveillance procedures for derivative products. The Exchange will require the issuer of each series of Managed Portfolio Shares listed on the Exchange to represent to the Exchange that it will advise the Exchange of any failure by a Fund to comply with the continued listing requirements, and,
Specifically, the Exchange will implement real-time surveillances that monitor for the continued dissemination of the VIIV. The Exchange will also have surveillances designed to alert Exchange personnel where shares of a series of Managed Portfolio Shares are trading away from the VIIV. As noted in proposed Rule 14.11(k)(2)(C), the Investment Company's investment adviser will upon request make available to the Exchange and/or FINRA, on behalf of the Exchange, the daily portfolio holdings of each series of Managed Portfolio Shares. The Exchange believes that this is appropriate because, while the Exchange can envision circumstances under which such information would be useful to the Exchange, specifically in testing for a Fund's compliance with any continued listing representations in the rule filing under Section 19(b) of the Act pursuant to which the Fund is listed on the Exchange, among others, the Exchange does not believe that there is value in the Exchange receiving such information every day, given its sensitivity. The Exchange does not believe that any of its real-time surveillances or reasons for halting a security, as further described below, would be enhanced by receiving such information and in addition does not believe that it makes sense to default to sharing the portfolio holdings unnecessarily on a daily basis.
The Exchange notes that the Exemptive Order restricts the investable universe for a series of Managed Portfolio Shares to include only certain instruments that trade on a U.S. exchange, contemporaneously with the Shares, and in cash and cash equivalents.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
As proposed above, the Exchange would halt trading as soon as practicable under the following circumstances: (a) Upon notification to the Exchange by the Investment Company or its agent of the existence of any condition or set of conditions specified in any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff that would require the Investment Company's investment adviser to request that the Exchange halt trading in the Managed Portfolio Shares; and (b) where the Exchange becomes aware that: (i) The VIIV of a series of Managed Portfolio Shares is not being calculated or disseminated in one second intervals, as required; (ii) the NAV with respect to a series of Managed Portfolio Shares is not disseminated to all market participants at the same time; (iii) the holdings of a series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act; or (iv) such holdings are not made available to all market participants at the same time, and will not resume trading in such series until such time as the VIIV, the net asset value, or the holdings are available to all market participants, as required (collectively, “Publicly Available Information Halts”).
As noted above, Form N-PORT requires reporting of a fund's complete portfolio holdings on a position-by-position basis on a quarterly basis within 60 days after fiscal quarter end. Investors can obtain a fund's Statement of Additional Information, its Shareholder Reports, its Form N-CSR, filed twice a year, and its Form N-CEN, filed annually. A fund's SAI and Shareholder Reports are available free upon request from the Investment Company, and those documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed on-screen or downloaded from the Commission's website at
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. Information regarding the previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares will be available via the Consolidated Tape Association (“CTA”) high-speed line. In addition, the VIIV, as defined in proposed Rule 14.11(k)(3)(B), will be widely disseminated by the Reporting Authority and/or one or more major market data vendors in one second intervals during Regular Trading Hours.
The Exchange deems Managed Portfolio Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Managed Portfolio Shares will trade on the Exchange only during Regular Trading Hours as provided in proposed Rule 14.11(k)(2)(B). As provided in BZX Rule 11.11(a), the minimum price variation for quoting and entry of orders in securities traded on the Exchange is $0.01, with the exception of securities that are priced less than $1.00, for which the minimum price variation for order entry is $0.0001.
Prior to the commencement of trading of a series of Managed Portfolio Shares, the Exchange will inform its members in an Information Circular (“Circular”) of the special characteristics and risks associated with trading the Shares. Specifically, the Circular will discuss the following: (1) The procedures for purchases and redemptions of Shares; (2) BZX Rule 3.7, which imposes
In addition, the Circular will reference that Funds are subject to various fees and expenses described in the Registration Statement. The Circular will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. The Circular will also disclose that the NAV for the Shares will be calculated after 4:00 p.m., E.T. each trading day.
The Exchange believes that the proposal is consistent with Section 6(b) of the Act
The Exchange believes that proposed Rule 14.11(k) is designed to prevent fraudulent and manipulative acts and practices in that the proposed rules relating to listing and trading of Managed Portfolio Shares provide specific initial and continued listing criteria required to be met by such securities. Proposed Rule 14.11(k)(4) sets forth initial and continued listing criteria applicable to Managed Portfolio Shares. Proposed Rule 14.11(k)(4)(A)(i) provides that, for each series of Managed Portfolio Shares, the Exchange will establish a minimum number of Managed Portfolio Shares required to be outstanding at the time of commencement of trading on the Exchange. In addition, proposed Rule 14.11(k)(4)(A)(ii) provides that the Exchange will obtain a representation from the Investment Company that issues each series of Managed Portfolio Shares that the NAV per share for the series will be calculated daily and that the NAV will be made available to all market participants at the same time.
Proposed Rule 14.11(k)(4)(B) provides that each series of Managed Portfolio Shares will be listed and traded subject to application of the specified continued listing criteria, as described above. Proposed Rule 14.11(k)(4)(B)(i) provides that the VIIV for Managed Portfolio Shares will be widely disseminated by the Reporting Authority and/or one or more major market data vendors in one second intervals during Regular Trading Hours and will be disseminated to all market participants at the same time. Proposed Rule 14.11(k)(4)(B)(ii) provides that the Exchange will consider the suspension of trading in, and will commence delisting proceedings under Rule 14.12 for, a series of Managed Portfolio Shares under any of the following circumstances: (a) If, following the initial twelve-month period after commencement of trading on the Exchange of a series of Managed Portfolio Shares, there are fewer than 50 beneficial holders of the series of Managed Portfolio Shares for 30 or more consecutive trading days; (b) if the Exchange has halted trading in a series of Managed Portfolio Shares because the Verified Intraday Indicative Value is interrupted pursuant to Rule 14.11(k)(4)(B)(iii) and such interruption persists past the trading day in which it occurred or is no longer available; (c) if the Exchange has halted trading in a series of Managed Portfolio Shares because the net asset value with respect to such series of Managed Portfolio Shares is not disseminated to all market participants at the same time, the holdings of such series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act, or such holdings are not made available to all market participants at the same time pursuant to Rule 14.11(k)(4)(B)(iii) and such issue persists past the trading day in which it occurred; (d) if the Investment Company issuing the Managed Portfolio Shares has failed to file any filings required by the Commission or if the Exchange is aware that the Investment Company is not in compliance with the conditions of any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff to the Investment Company with respect to the series of Managed Portfolio Shares; (e) if any of the continued listing requirements set forth in Rule 14.11(k) are not continuously maintained; (f) if any of the applicable Continued Listing Representations, as defined in Rule 14.11(a), for the issue of Managed Portfolio Shares are not continuously met; or (g) if such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable.
Proposed Rule 14.11(k)(4)(B)(iii)(b) provides that, if the Exchange becomes aware that: (i) The Verified Intraday Indicative Value of a series of Managed Portfolio Shares is not being calculated or disseminated in one second intervals, as required; (ii) the net asset value with respect to a series of Managed Portfolio Shares is not disseminated to all market participants at the same time; (iii) the holdings of a series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act; or (iv) such holdings are not made available to all market participants at the same time, it will halt trading in such series until such time as the Verified Intraday Indicative Value, the net asset value, or the holdings are available to all market participants as required. Proposed Rule 14.11(k)(4)(B)(iv) provides that, upon
Proposed Rule 14.11(k)(2)(D) provides that, if the investment adviser to the Investment Company issuing Managed Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such Investment Company portfolio and/or Creation Basket. Any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company's portfolio composition or has access to information regarding the Investment Company's portfolio composition, the Creation Basket, or changes thereto, must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the applicable Investment Company portfolio or Creation Basket. Proposed Rule 14.11(k)(2)(E) provides that, any person or entity, including an AP Representative, custodian, pricing verification agent, reporting authority, distributor, or administrator, who has access to information regarding the Investment Company's portfolio composition, the Creation Basket, or changes thereto, must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the applicable Investment Company portfolio or Creation Basket. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity will erect and maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company portfolio or Creation Basket.
The Exchange believes that these proposed rules are designed to prevent fraudulent and manipulative acts and practices related to the listing and trading of Managed Portfolio Shares because they provide meaningful requirements about both the data that will be made publicly available about the Shares as well as the information that will only be available to certain parties and the controls on such information. Specifically, the Exchange believes that the requirements related to information protection enumerated under proposed Rule 14.11(k)(2)(E)
The Exchange, after consulting with various LMMs that trade ETFs on the Exchange, believes that market makers will be able to make efficient and liquid markets priced near the VIIV, as long as market makers have knowledge of a Fund's means of achieving its investment objective, even without daily disclosure of a fund's underlying portfolio.
The Exchange understands that traders use statistical analysis to derive correlations between different sets of instruments to identify opportunities to buy or sell one set of instruments when it is mispriced relative to the others. For Managed Portfolio Shares, market makers utilizing statistical arbitrage use the knowledge of a fund's means of achieving its investment objective, as described in the applicable fund registration statement, to construct a hedging proxy for a fund to manage a market maker's quoting risk in connection with trading fund shares. Market makers will then conduct statistical arbitrage between their
Market makers have indicated to the Exchange that there will be sufficient data to run a statistical analysis which will lead to spreads being tightened substantially around the VIIV. This is similar to certain other existing exchange traded products (for example, ETFs that invest in foreign securities that do not trade during U.S. trading hours), in which spreads may be generally wider in the early days of trading and then narrow as market makers gain more confidence in their real-time hedges.
The LMMs also indicated that, as with some other new exchange-traded products, spreads would tend to narrow as market makers gain more confidence in the accuracy of their hedges and their ability to adjust these hedges in real-time relative to the published VIIV and gain an understanding of the applicable market risk metrics such as volatility and turnover, and as natural buyers and sellers enter the market. Other relevant factors cited by LMMs were that a fund's investment objectives are clearly disclosed in the applicable prospectus, the existence of quarterly portfolio disclosure and the ability to create shares in creation unit size or redeem in redemption unit size through an AP.
The real-time dissemination of a Fund's VIIV together with the right of APs to create and redeem each day at the NAV will be sufficient for market participants to value and trade Shares in a manner that will not lead to significant deviations between the shares' Bid/Ask Price and NAV.
The pricing efficiency with respect to trading a series of Managed Portfolio Shares will generally rest on the ability of market participants to arbitrage between the Shares and a fund's portfolio, in addition to the ability of market participants to assess a fund's underlying value accurately enough throughout the trading day in order to hedge positions in shares effectively. Professional traders can buy Shares that they perceive to be trading at a price less than that which will be available at a subsequent time, and sell Shares they perceive to be trading at a price higher than that which will be available at a subsequent time. It is expected that, as part of their normal day-to-day trading activity, market makers assigned to Shares by the Exchange, off-exchange market makers, firms that specialize in electronic trading, hedge funds and other professionals specializing in short-term, non-fundamental trading strategies will assume the risk of being “long” or “short” shares through such trading and will hedge such risk wholly or partly by simultaneously taking positions in correlated assets
With respect to trading of the Shares, the ability of market participants to buy and sell Shares at prices near the VIIV is dependent upon their assessment that the VIIV is a reliable, indicative real-time value for a Fund's underlying holdings. Market participants are expected to accept the VIIV as a reliable, indicative real-time value because (1) the VIIV will be calculated and disseminated based on a Fund's actual portfolio holdings, (2) the securities in which a Fund plans to invest are generally highly liquid and actively traded and therefore generally have accurate real time pricing available, and (3) market participants will have a daily opportunity to evaluate whether the VIIV at or near the close of trading is indeed predictive of the actual NAV.
In a typical index-based ETF, it is standard for APs to know what securities must be delivered in a creation or will be received in a redemption. For Managed Portfolio Shares, however, APs do not need to know the securities comprising the portfolio of a Fund since creations and redemptions are handled through the Confidential Account mechanism. In-kind creations and redemptions through a Confidential Account are expected to preserve the integrity of the active investment strategy and reduce the potential for “free riding” or “front-running,” while still providing investors with the advantages of the ETF structure.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the Investment Company that issues each series of Managed Portfolio Shares that the NAV per share of a fund will be calculated daily and that the NAV will be made available to all market participants at the same time. Investors can also obtain a fund's Statement of Additional Information, its Shareholder Reports, its Form N-CSR, filed twice a year, and its Form N-CEN, filed annually. A fund's SAI and Shareholder Reports are available free upon request from the Investment Company, and those documents and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed on-screen or downloaded from the Commission's website at
The Exchange further believes that the proposal is designed to prevent fraudulent and manipulative acts and practices related to the listing and trading of Managed Portfolio Shares and to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange would halt trading under certain circumstances under which trading in the shares of a Fund may be inadvisable. Specifically, the Exchange would halt trading as soon as practicable under the following circumstances: (a) Upon notification to the Exchange by the Investment Company or its agent of the existence of any condition or set of conditions specified in any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff that would require the Investment Company's investment adviser to request that the Exchange halt trading in the Managed Portfolio Shares; and (b) where the Exchange becomes aware that: (i) The VIIV of a series of Managed Portfolio Shares is not being calculated or disseminated in one second intervals, as required; (ii) the NAV with respect to a series of Managed Portfolio Shares is not disseminated to all market participants at the same time; (iii) the holdings of a series of Managed Portfolio Shares are not made available on at least a quarterly basis as required under the 1940 Act; or (iv) such holdings are not made available to all market participants at the same time, and will not resume trading in such series until such time as the VIIV, the net asset value, or the holdings are available to all market participants, as required.
The Exchange is proposing to rely on notice from the Investment Company or its agent of certain circumstances provided under the Investment Company's exemptive order or no-action relief to halt trading in a series of Managed Portfolio Shares (an “Exemptive Halt”) and four scenarios under which the Exchange would halt trading upon becoming aware of certain circumstances. Specifically, the Exchange is proposing to rely on notice from the Investment Company or its agent to halt for an Exemptive Halt because the Exchange is not in a position to know or become aware of such circumstances without the Investment Company or its agent. As it relates to the Exemptive Halts provided in the Application and described above, the Exchange does not expect to act as a pricing verification agent and, as such, would not have access to such information without notice from the Investment Company or its agent and similarly will not have direct access to whether the pricing verification agent has readily available market quotations necessary to calculate the VIIV. Even if the Investment Company was providing the Exchange with the portfolio holdings on a daily basis,
For each of the Publicly Available Information Halts, the scenario that triggers a halt is based on information that is available to the Exchange, either because the information is publicly available, the information will flow through the Exchange prior to being publicly disseminated, or both, and, thus, the Exchange is proposing that these halts should be subject to the Exchange becoming aware of such circumstances. The Exchange notes, however, that this is in addition to an Investment Company's obligation of disclosure of noncompliance under Rule 14.11(a), which requires that a “Company with securities listed on the Exchange must provide the Exchange with prompt notification after the Company becomes aware of any noncompliance by the Company with the requirements of Rule 14.11.” With this in mind, the Exchange becoming aware of any issue that would require a Publicly Available Information Halt could come through its own surveillances or through disclosure by an Investment Company. The Exchange further believes that these proposed reasons to halt trading in shares of a series of Managed Portfolio Shares are consistent with the Act because: (i) The Commission has already determined that the requirement that the VIIV be disseminated every second is appropriate;
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. The Exemptive Order also restricts the investable universe for a series of Managed Portfolio Shares to include only certain instruments that trade on a U.S. exchange, contemporaneously with the Shares, and in cash and cash equivalents.
For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change, rather will facilitate the listing and trading of a new type of actively-managed exchange-traded products that will enhance competition among both market participants and listing venues, to the benefit of investors and the marketplace.
The Exchange has neither solicited nor received written comments on the proposed rule change.
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Exchange Act
Pursuant to Section 19(b)(2)(B) of the Exchange Act,
The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposed rule change, as modified by Amendment No. 2, is consistent with Section 6(b)(5) or any other provision of the Exchange Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any request for an opportunity to make an oral presentation.
Interested persons are invited to submit written data, views, and arguments regarding whether the proposed rule change, as modified by Amendment No. 2, should be approved or disapproved by October 18, 2019. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by November 1, 2019.
The Commission asks that commenters address the sufficiency of the Exchange's statements in support of the proposal, which are set forth in Amendment No. 2,
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On June 7, 2019, New York Stock Exchange LLC (“Exchange” or “NYSE”) filed with the Securities and Exchange Commission (“Commission”) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On July 24, 2019, the Commission extended to September 23, 2019, the time period in which to approve the proposal, disapprove the proposal, or institute proceedings to determine whether to approve or disapprove the proposal.
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Rule 104 (Dealings and Responsibilities of DMMs) to specify DMM requirements for ETPs listed on the Exchange pursuant to Rules 5P and 8P.
Currently, the Exchange trades securities, including ETPs, on its Pillar trading platform on an unlisted trading privileges (“UTP”) basis, subject to Pillar Platform Rules 1P-13P.
Rules 5P (Securities Traded) and 8P (Trading of Certain Exchange Traded Products) provide for the listing of certain ETPs
The Exchange does not currently list any ETPs and anticipates that it would not do so until Exchange-listed securities transition to Pillar. Once an ETP is listed, it will be assigned to a DMM pursuant to Rule 103B. The DMMs' role with respect to ETPs assigned to them will be subject to the same DMM rules governing all other listed securities, including Rules 36, 98, and 104. For example, DMMs will be responsible for facilitating the opening, reopening, and close of trading for assigned ETPs as required by Rule 104(a)(2) and (3). To facilitate DMM trading of Exchange-listed ETPs pursuant to Rules 5P and 8P, with this proposed change, the Exchange proposes to amend Rule 104 relating specified DMM requirements.
Rule 104 sets forth the obligations of Exchange DMMs. Under Rule 104(a), DMMs registered in one or more securities traded on the Exchange are required to engage in a course of dealings for their own account to assist in the maintenance of a fair and orderly market insofar as reasonably practicable. Rule 104(a) also enumerates the specific responsibilities and duties of a DMM, including: (1) Maintenance of a continuous two-sided quote, which mandates that each DMM maintain a bid or an offer at the National Best Bid (“NBB”) and National Best Offer (“NBO”) (together, the “NBBO” or “inside”) at least 15% of the trading day for securities with a consolidated average daily volume of less than one million shares, and at least 10% for securities with a consolidated average daily volume equal to or greater than one million shares,
Rule 104(f) imposes an affirmative obligation on DMMs to maintain, insofar as reasonably practicable, a fair and orderly market on the Exchange in assigned securities, including maintaining price continuity with reasonable depth and trading for the DMM's own account when lack of price continuity, lack of depth, or disparity between supply and demand exists or is reasonably to be anticipated. The Exchange supplies DMMs with suggested Depth Guidelines for each security in which a DMM is registered, and DMMs are expected to quote and trade with reference to the Depth Guidelines.
Rule 104(g) provides that transactions on the Exchange by a DMM for the DMM's account must be effected in a reasonable and orderly manner in relation to the condition of the general market and the market in the particular stock. Rule 104(g)(1) also describes certain transactions on the Exchange by a DMM for the DMM's account must be effected in a reasonable and orderly manner in relation to the condition of the general market and the market in the particular stock. In addition, if a DMM unit engages in an “Aggressing Transaction,”
Rules 104(g)(2)(A) and (B) specify the re-entry obligations for Aggressing Transactions. Following an Aggressing Transaction, Rule 104(g)(2)(A) requires the DMM unit to re-enter the opposite side of the market at or before the applicable PPP for that security commensurate with the size of the Aggressing Transaction. Under Rule 104(g)(2)(B), immediate re-entry on the opposite side of the market at or before the applicable PPP for the security commensurate with the size of the Aggressing Transaction is required if the Aggressing Transaction (i) is 10,000 shares or more or has a market value of $200,000 or more, and (ii) exceeds 50% of the published offer (bid) size.
To reflect the differences in how ETPs trade and the unique role of exchange market makers in the trading of ETPs, in order to facilitate DMM trading of Exchange-listed ETPs pursuant to Rules 5P and 8P, the Exchange proposes certain amendments to Rule 104.
Unlike operating company securities listed on the Exchange, the value of ETPs are derived from the underlying assets owned. The end-of-day net asset value (“NAV”) of an ETP is a daily calculation based off the most recent closing prices of the underlying assets and an accounting of the ETP's total cash position at the time of calculation. The NAV generally is calculated by taking the sum of fund assets, including any securities and cash, subtracting liabilities, and dividing by the number of outstanding shares. Additionally, ETPs are generally subject to a creation and redemption mechanism to ensure that the ETP's price does not fluctuate too far away from NAV, which mechanisms mitigate the potential for exchange trading to impact the price of an ETP.
Moreover, each business day, ETPs make publicly available a creation and redemption “basket” which may, for example, be in the form of a portfolio composition file (
The principal, and perhaps most important, feature of ETPs is their
To reflect the role of market makers—including DMMs—in the trading of ETPs, the Exchange proposes to amend Rule 104 in several respects. First, the Exchange proposes to exclude ETPs from the re-entry obligations for Aggressing Transactions in Rule 104(g)(2) (Re-Entry Obligations). The Exchange believes that because of the unique characteristics of ETPs—in particular, that ETPs trade at intra-day market prices rather than at NAV and the existence of arbitrage pricing mechanisms that are designed to help ensure that secondary market prices of ETP shares do not vary substantially from the NAV—the re-entry obligations set forth in Rule 104(g)(2) not only are not necessary, but also could impede the ability of a DMM to effectively make markets in ETPs. For example, a market maker engaging in the arbitrage function may need to update the quote for an ETP to bring the price of the security in line with the underlying assets. If updating the quote consistent with that arbitrage function were to require the DMM to first to engage in an Aggressing Transaction (
To maintain the balance between DMM benefits and obligations under Rule 104, the Exchange proposes to amend Rule 104 to require heightened DMM quoting obligations for Exchange-listed ETPs. As proposed, for listed ETPs, DMMs would be required to maintain a bid or offer at the NBB and NBO at least 25% of the trading day. Time at the inside for ETPs would be calculated in the same way as other securities in which DMM units are registered as the average of the percentage of time the DMM unit has a bid or offer at the inside. In other words, this would be a portfolio-based quoting requirement. Orders entered by the DMM in ETPs that are not displayed would not be included in the inside quote calculation as is also currently the case for other securities in which DMM units are registered. Reserve or other non-displayed orders entered by the DMM in their assigned ETP would not be included in the inside quote calculations.
To effectuate this change, Rule 104(a)(1)(A) would be amended as follows:
• The phrase “for securities in which the DMM unit is registered” would be added following the first sentence in Rule 104(a)(1)(A) and the comma following that initial sentence would be removed;
• New subsections (i), (ii) and (iii) would be created;
• The phrase “that are not ETPs” would be added following “at least 15% of the trading day for securities” in new subsection (i) and “in which the DMM unit is registered” would be deleted;
• The phrase “of the trading day”
• New subdivision (iii) providing that DMM units must maintain a bid or an offer at the inside “at least 25% of the trading day for ETPs” would be added;
• The phrase “respective percentage” would replace “15% and 10%” in the next to last sentence of Rule 104(a)(1)(A) and “non-displayed” would replace “hidden” in the last sentence of the rule; and
• The phrase “other than Aggressing Transactions involving an ETP” would be added to Rule 104(g)(2)(A) and (B) following “Following an Aggressing Transaction.”
The Exchange also proposes non-substantive amendments to replace the terms “stock” and “stocks” in Rule 104(f)(2) (Function of DMMs) with the terms “security” and “securities,” respectively, and to replace the term “stock” in Rule 104(g)(1) with “security.” The Exchange would also add a new subsection (5) to Rule 104(f) providing that, for those ETPs in which they are registered, DMM units will be responsible for the affirmative obligation of maintaining a fair and orderly market, including maintaining price continuity with reasonable depth for their registered ETPs in accordance with Depth Guidelines published by the Exchange. To provide the Exchange time to collect trading data adequate to calculate appropriate Depth Guidelines for listed ETPs, the Exchange proposes that these provisions would not be operative until 18 weeks after the approval of the proposed rule change by the Commission.
The Exchange believes that the proposal is consistent with Section 6(b) of the Act,
In particular, the Exchange believes that proposed requirements for DMM trading of ETPs would remove impediments to and perfect the mechanism of a free and open market and a national market system by facilitating market making by DMMs in listed ETPs and maintaining the Exchange's current structure to trade listed securities. The Exchange believes that the proposed exclusion of listed ETPs from the requirements of Rule 104(g)(2) would not be inconsistent with the public interest and the protection of investors because the unique characteristics of ETPs, including that ETPs trade at intra-day market prices rather than end-of-day NAV and are constrained by arbitrage pricing mechanisms that are designed to ensure that secondary market prices of ETP shares do not vary substantially from the NAV, render those obligations unnecessary or potentially even harmful. As discussed above, the Exchange also believes the DMM obligations set forth in Rule 104(g)(2) could impede the ability of a DMM to effectively make markets in ETPs.
The Exchange believes that the proposed heightened quoting obligations for DMMs in listed ETPs requiring maintenance of a bid or offer at the inside of at least 25% of the trading day would maintain the balance of benefits and obligations under Rule 104 because exclusion of listed ETPs from the re-entry requirements for Aggressing Transactions under Rule 104(g)(2) would be offset by the heightened DMM quoting obligations for listed ETPs. DMMs would also be required to facilitate the opening, reopening, and closing of listed ETPs assigned to them, as required by Rule 104(a)(2) and (3), which is an obligation unique to the Exchange. As noted, listed ETPs would also be subject to the requirement that DMM transactions be effected in a reasonable and orderly manner in relation to the condition of the general market and the market in the particular stock. These safeguards are designed to ensure that DMM transactions in listed ETPs bear a reasonable relationship to overall market conditions and that DMMs cannot destabilize, inappropriately influence or manipulate a security. For the same reasons, the proposal would not alter or disrupt the balance between DMM benefits and obligations of being an Exchange DMM.
The proposed heightened quoting obligation for listed ETPs assigned to a DMM would also encourage additional stable displayed liquidity on the Exchange in listed securities, thereby promoting price discovery and transparency. The Exchange further believes that by establishing distinct requirements for DMMs, the proposal is also designed to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade.
The Exchange believes that the proposal would not be inconsistent with the public interest and the protection of investors. As noted, the proposal would subject DMMs to the Exchange's current structure for trading listed securities and the responsibilities and duties of DMMs set forth in Rule 104, including facilitating openings, reopenings, and closings and adding a heightened quoting obligation at the inside. In addition, the proposed rule would subject listed ETPs to the requirement that all DMM transactions be effected in a reasonable and orderly manner in relation to the condition of the general market and the market in the particular stock. Although the implementation of Depth Guidelines will be delayed, DMM units will still have the obligation once ETPs are listed and begin trading to maintain a fair and orderly market. The Exchange believes that the delayed implementation of Depth Guidelines will allow it to develop guidelines that are appropriately tailored for how ETPs will trade on the Exchange, which should improve the DMM units' ability to maintain a fair and orderly market and also the broader market for those securities here on the Exchange and on other markets.
For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
No written comments were solicited or received with respect to the proposed rule change.
After careful review of the proposal, as modified by Amendment No. 1, and the comments received, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Exchange has proposed to alter certain requirements of NYSE Rule 104 (Dealings and Responsibilities of DMMs) with respect to ETPs. Currently, under NYSE Rule 104(g)(1), DMMs are prohibited from engaging in Aggressing Transactions in the last ten minutes prior to the scheduled close of trading that would result in a new high (low) price for a security on the Exchange for the day at the time of the DMM's transaction (“Prohibited Transactions”). Furthermore, DMMs are subject to certain quote re-entry obligations, following an Aggressing Transaction, under NYSE Rule 104(g)(2).
In its original proposal, the Exchange proposed to exclude DMM transactions in ETPs from the definition of “Aggressing Transactions” in NYSE Rule 104(g)(1) and, by extension, to exempt DMM transactions in ETPs from the rule on Prohibited Transactions. The Exchange also proposed to exclude Aggressing Transactions in ETPs from the DMM re-entry obligations in NYSE Rule 104(g)(2). The Exchange also proposed to require DMMs in ETPs to meet heightened quoting obligations for listed ETPs, requiring DMMs to maintain a quote at the national best bid or offer at least 25% of the trading day for ETPs (rather than the current requirement of 15% of the trading day for non-ETPs).
In Amendment No. 1, the Exchange amended its original proposal significantly to no longer seek to exclude DMM transactions in ETPs from definition of Aggressing Transactions and thereby no longer seek to exempt DMM transactions in ETPs from the rule on Prohibited Transactions.
While the Exchange proposes to relieve DMMs in ETPs from the quote re-entry obligations in NYSE Rule 104(g)(2), the Exchange has argued that such an exclusion is necessary because DMMs engaging in an arbitrage function to keep an ETP's share price in line with the value of the ETP's underlying assets may need to update their quotes to align the price of the ETP and the value of the underlying assets, and may need to engage in Aggressing Transactions in the process. Therefore, the Exchange argues that requiring a DMM to re-enter a quote on the opposite side of the Aggressing Transaction would defeat the purpose of entering into the Aggressing Transaction to update its quote as part of the arbitrage function.
The Commission believes that the Exchange's amended proposal with respect to DMMs in ETPs is consistent with the Act. In 2015, when the Commission approved the NYSE's proposal to make the New Market Model permanent,
For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with Sections 6(b)(5) and 6(b)(8) of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the thirtieth day after the date of publication of notice of the filing of Amendment No. 1 in the
Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On March 13, 2019, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Section 19(b)(2) of the Act
The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change.
Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
84 FR 49778, September 23, 2019.
Wednesday, September 25, 2019 at 10:00 a.m.
The Open Meeting scheduled for Wednesday, September 25, 2019 at 10:00 a.m., has been cancelled.
For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551-5400.
On July 31, 2019, Cboe EDGX Exchange, Inc. (the “Exchange” or “EDGX”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
As described more fully in the Notice,
The Initiating Member may initiate a SAM in any class traded on the Exchange.
The Solicited Order must stop the entire buy (sell) Agency Order at a price that is at or better than the then-current NBO (NBB).
A “SAM sweep order” or “SAM ISO” is the submission of two orders for crossing in a SAM without regard for better-priced Protected Quotes (as defined in Exchange Rule 27.1) because the submitting Options Member routed an ISO(s) simultaneously with the routing of the SAM ISO to execute against the full displayed size of any Protected Quote that is better than the stop price and has swept all interest in the EDGX Book with a price better than the stop price. If the Initiating Member submits a SAM sweep order to a SAM, the stop price, SAM responses, and executions will be permitted at a price inferior to the Initial NBBO. Any execution(s) resulting from these sweeps will accrue to the SAM Agency Order.
The Exchange system will initiate the SAM process by sending a SAM auction notification message detailing the side, size, price, origin code, Auction ID, and options series of the Agency Order to all Options Members that elect to receive SAM auction notification messages.
Any User other than the Initiating Member (determined by EFID) may submit responses to a SAM auction that are properly marked specifying size, side of the market, and the Auction ID for the SAM auction to which the User is submitting the response.
One or more SAM auctions in the same series may occur at the same time. To the extent there is more than one SAM in a series underway at a time, the SAM auctions will conclude sequentially based on the exact time each SAM commenced, unless terminated early pursuant to proposed Rule 21.21(d). At the time each SAM concludes, the system will allocate the Agency Order pursuant to proposed Rule 21.21(e) and will take into account all SAM responses and unrelated orders in place at the exact time of conclusion. In the event there are multiple SAM auctions underway that are each terminated early pursuant to proposed Rule 21.21(d), the system will process the SAM auctions sequentially based on the exact time each SAM commenced.
The SAM will conclude at the sooner of the following: (i) The end of the SAM auction period; (ii) upon receipt by the system of a Priority Customer order on the same side of the market with a price the same as or better than the stop price that would post to the EDGX Book; (iii) upon receipt by the system of an unrelated order or quote that is not a Priority Customer order on the same side of the market as the Agency Order that would cause the stop price to be outside of the EDGX BBO; (iv) the market close; and (v) any time the Exchange halts trading in the affected series, provided, however, that in such instance the SAM auction will conclude without execution.
An unrelated market or marketable limit order (against the EDGX BBO), including a Post Only Order,
At the conclusion of the SAM auction, the system will execute the Agency Order against the Solicited Order or contra-side interest (which includes orders and quotes resting in the EDGX Book and SAM responses) at the best price(s) as follows (provided that any execution price(s) must be at or between the EDGX BBO existing at the conclusion of the SAM auction and at or between the Initial NBBO):
• The system will execute the Agency Order against the Solicited Order at the stop price if there are no Priority Customer orders (including Priority Customer AON orders) on the opposite side of the Agency Order resting in the EDGX Book at the stop price and the aggregate size of contra-side interest at an improved price(s) is insufficient to satisfy the Agency Order.
• The system will execute the Agency Order against contra-side interest (and cancel the Solicited Order) if (A) there is a Priority Customer order (including a Priority Customer AON order) on the opposite side of the Agency Order resting on the EDGX Book at the stop price and the aggregate size of the Priority Customer order and other contra-side interest at the stop price or an improved price(s) is sufficient to satisfy the Agency Order; or (B) the aggregate size of contra-side interest at an improved price(s) is sufficient to satisfy the Agency Order. The Agency Order execution against such contra-side interest will occur at each price level, to the price at which the balance of the Agency Order can be fully executed, in the following order:
○ Priority Customer orders (including Priority Customer AON orders) on the EDGX Book (non-AON orders before AON orders, each in time priority);
○ remaining contra-side trading interest (including non-Priority Customer orders and quotes on the EDGX Book and SAM responses) pursuant to Exchange Rule 21.8(c);
○ any nondisplayed Reserve Quantity (Priority Customer before non-Priority Customer, each in time priority); and
○ any non-Priority Customer AON orders, if there is sufficient size to satisfy the AON order.
• The system will cancel the Agency Order and Solicited Order with no execution if (i) execution of the Agency Order against the Solicited Order at the stop price would not be at or between the EDGX BBO at the conclusion of the SAM auction or at or between the Initial NBBO; or (ii) there is a Priority
Proposed Rule 21.21, Interpretation and Policy .01 provides that prior to entering Agency Orders into a SAM auction on behalf of customers, Initiating Members must deliver to the customer a written notification informing the customer that his order may be executed using the SAM auction. The written notification must disclose the terms and conditions contained in proposed Rule 21.21 and be in a form approved by the Exchange.
Exchange Rule 22.12 prevents an Options Member from executing agency orders to increase its economic gain from trading against the order without first giving other trading interests on the Exchange an opportunity to either trade with the agency order or to trade at the execution price when the Options Member was already bidding or offering on the book. However, the Exchange notes that it may be possible for an Options Member to establish a relationship with a Priority Customer or other person to deny agency orders the opportunity to interact on the Exchange and to realize similar economic benefits as it would achieve by executing agency order as principal.
After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange and, in particular, with Section 6(b) of the Act.
The Commission believes that allowing Options Members to enter orders into the SAM could provide additional opportunities for such large-sized orders to receive price improvement over the NBBO. The Commission further believes that the proposal to establish the SAM may allow for greater flexibility in executing large-sized orders, is not novel, and does not otherwise raise any issues of first impression.
Section 11(a)(1) of the Act
The Rule's first condition is that orders for covered accounts be transmitted from off the exchange floor. In the context of automated trading systems, the Commission has found that the off-floor transmission requirement is met if a covered account order is transmitted from a remote location directly to an exchange's floor by electronic means.
Second, the Rule requires that the member and any associated person not participate in the execution of its order after the order has been transmitted. The Exchange represents that at no time following the submission to the SAM of an order or SAM response is an Options Member able to acquire control or influence over the result or timing of the order's or response's execution.
Third, Rule 11a2-2(T) requires that the order be executed by an exchange member who is unaffiliated with the member initiating the order. The Commission has stated that this requirement is satisfied when automated exchange facilities, such as the SAM, are used, as long as the design of these systems ensures that members do not possess any special or unique trading advantages in handling their orders after transmitting them to the exchange.
Fourth, in the case of a transaction effected for an account with respect to which the initiating member or an associated person thereof exercises investment discretion, neither the initiating member nor any associated person thereof may retain any compensation in connection with effecting the transaction, unless the person authorized to transact business for the account has expressly provided otherwise by written contract referring to Section 11(a) of the Act and Rule 11a2-2(T) thereunder.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On June 6, 2019, Cboe BZX Exchange, Inc. (“Exchange” or “BZX”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The Exchange proposes to list and trade shares of the Funds under proposed BZX Rule 14.11(k).
The Exchange states that the American Century Focused Dynamic Growth ETF seeks long-term capital growth. Under Normal Market Conditions,
The Exchange states that the American Century Focused Large Cap Value ETF will seek long-term capital growth. Under Normal Market Conditions, the Fund intends to invest primarily in U.S. exchange-listed equity securities. In addition, the Fund may invest in ETFs, exchange-listed ADRs, U.S. exchange-listed equity futures contracts, and U.S. exchange-listed equity index futures contracts. The Fund may also hold cash and Cash Equivalents without limitation.
All exchange-listed equity securities in which the Funds will invest will be listed and traded on U.S. national securities exchanges. The Funds will not invest in forwards or swaps.
Each Fund's investments will be consistent with its investment objective and will not be used to enhance leverage.
Each Fund may hold up to an aggregate amount of 15% of its total assets in illiquid assets,
The shares of each Fund will conform to the initial and continued listing criteria under proposed BZX Rule 14.11(k). The Exchange states that each Fund's holdings will also meet the generic listing standards applicable to series of Managed Fund Shares under BZX Rule 14.11(i)(4)(C). While such standards do not apply directly to series of Managed Portfolio Shares, the Exchange believes that the overarching policy issues related to liquidity, market capitalization, diversity, and concentration of portfolio holdings that BZX Rule 14.11(i)(4)(C) is intended to address are equally applicable to series of Managed Portfolio Shares.
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Exchange Act
Pursuant to Section 19(b)(2)(B) of the Exchange Act,
The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Exchange Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any request for an opportunity to make an oral presentation.
Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by October 18, 2019. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by November 1, 2019.
The Commission asks that commenters address the sufficiency of the Exchange's statements in support of the proposal, which are set forth in the Notice,
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act. The requested order would permit (a) actively-managed series of certain open-end management investment companies (“Funds”) to issue shares redeemable in large aggregations only (“Creation Units”); (b) secondary market transactions in Fund shares to occur at negotiated market prices rather than at net asset value (“NAV”); (c) certain Funds to pay redemption proceeds, under certain circumstances, more than seven days after the tender of shares for redemption; (d) certain affiliated persons of a Fund to deposit securities into, and receive securities from, the Fund in connection with the purchase and redemption of Creation Units; (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the Funds (“Funds of Funds”) to acquire shares of the Funds; (f) certain Funds (“Feeder Funds”) to create and redeem Creation Units in-kind in a master-feeder structure; and (g) the Funds to issue shares in less than Creation Unit size to investors participating in a distribution reinvestment program.
Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090; Applicants, c/o Laura Flores, Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Avenue NW, Washington, DC 20004; or Kent P. Barnes, U.S. Bank Global Fund Services, 615 E Michigan Street, Milwaukee, WI 53202.
Zeena Abdul-Rahman, Senior Counsel, at (202) 551-4099, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
1. Applicants request an order that would allow Funds to operate as actively-managed exchange traded funds (“ETFs”).
2. Each Fund will consist of a portfolio of securities and other assets and investment positions (“Portfolio Instruments”). Each Fund will disclose on its website the identities and quantities of the Portfolio Instruments that will form the basis for the Fund's calculation of NAV at the end of the day.
3. Shares will be purchased and redeemed in Creation Units only and generally on an in-kind basis, or issued in less than Creation Unit size to investors participating in a distribution reinvestment program. Except where the purchase or redemption will include cash under the limited circumstances specified in the application, purchasers will be required to purchase Creation Units by depositing specified instruments (“Deposit Instruments”), and shareholders redeeming their shares will receive specified instruments (“Redemption Instruments”). The Deposit Instruments and the Redemption Instruments will each correspond pro rata to the positions in the Fund's portfolio (including cash positions) except as specified in the application.
4. Because shares will not be individually redeemable, applicants request an exemption from section 5(a)(1) and section 2(a)(32) of the Act that would permit the Funds to register as open-end management investment
5. Applicants also request an exemption from section 22(d) of the Act and rule 22c-1 under the Act as secondary market trading in shares will take place at negotiated prices, not at a current offering price described in a Fund's prospectus, and not at a price based on NAV. Applicants state that (a) secondary market trading in shares does not involve a Fund as a party and will not result in dilution of an investment in shares, and (b) to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants represent that share market prices will be disciplined by arbitrage opportunities, which should prevent shares from trading at a material discount or premium from NAV.
6. With respect to Funds that hold non-U.S. Portfolio Instruments and that effect creations and redemptions of Creation Units in kind, applicants request relief from the requirement imposed by section 22(e) in order to allow such Funds to pay redemption proceeds within fifteen calendar days following the tender of Creation Units for redemption. Applicants assert that the requested relief would not be inconsistent with the spirit and intent of section 22(e) to prevent unreasonable, undisclosed or unforeseen delays in the actual payment of redemption proceeds.
7. Applicants request an exemption to permit Funds of Funds to acquire Fund shares beyond the limits of section 12(d)(1)(A) of the Act; and the Funds, and any principal underwriter for the Funds, and/or any broker or dealer registered under the Exchange Act, to sell shares to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. The application's terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over a Fund through control or voting power, or in connection with certain services, transactions, and underwritings, (ii) excessive layering of fees, and (iii) overly complex fund structures, which are the concerns underlying the limits in sections 12(d)(1)(A) and (B) of the Act.
8. Applicants request an exemption from sections 17(a)(1) and (a)(2) of the Act to permit persons that are affiliated persons, or second-tier affiliates, of the Funds, solely by virtue of certain ownership interests, to effectuate purchases and redemptions in-kind. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions of Creation Units will be the same for all purchases and redemptions and Deposit Instruments and Redemption Instruments will be valued in the same manner as those Portfolio Instruments currently held by the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind transactions with the Fund of Funds.
9. Applicants also request relief to permit a Feeder Fund to acquire shares of another registered investment company managed by the Adviser having substantially the same investment objectives as the Feeder Fund (“Master Fund”) beyond the limitations in section 12(d)(1)(A) and permit the Master Fund, and any principal underwriter for the Master Fund, to sell shares of the Master Fund to the Feeder Fund beyond the limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act.
For the Commission, by the Division of Investment Management, under delegated authority.
Social Security Administration (SSA).
Notice of a New Matching Program.
In accordance with the provisions of the Privacy Act, as amended, this notice announces a new matching program with the Railroad Retirement Board (RRB).
This matching agreement sets forth the terms, conditions, and safeguards under which RRB will disclose to SSA information necessary to verify an individual's self-certification of eligibility for the Extra Help with Medicare Prescription Drug Plan Costs program (Extra Help). It will also enable SSA to identify individuals who may qualify for Extra Help as part of the agency's Medicare outreach efforts.
The deadline to submit comments on the proposed matching program is 30 days from the date of publication of this notice in the
Interested parties may comment on this notice by either telefaxing to (410) 966-0869, writing to Matthew D. Ramsey, Executive Director, Office of Privacy and Disclosure, Office of the General Counsel, Social Security Administration, G-401 WHR, 6401 Security Boulevard, Baltimore, MD 21235-6401, or emailing
Norma Followell, Supervisory Team Lead, Office of Privacy and Disclosure, Office of the General Counsel, Social
None.
SSA and RRB.
The legal authority for SSA to conduct this matching activity is sections 1144 and 1860D-14 of the Social Security Act (Act) (42 U.S.C. 1320b-14 and 1395w-114).
This matching program establishes the conditions under which RRB will disclose to SSA information necessary to verify an individual's self-certification of eligibility for the Extra Help with Medicare Prescription Drug Plan Costs program (Extra Help). It will also enable SSA to identify individuals who may qualify for Extra Help as part of the agency's Medicare outreach efforts.
The individuals whose information is involved in this matching program are individuals who self-certify for Extra Help or may qualify for Extra Help. SSA matches RRB's information with its Medicare Database File (MDB), which includes claimants, applicants, beneficiaries, ineligible spouses and potential claimants for Medicare Part A, Medicare Part B, Medicare Advantage Part C, Medicare Part D, and Medicare Part D prescription drug coverage subsidies.
RRB will transmit its annuity payment data monthly from its RRB-22 system of records (SOR). The file will consist of approximately 600,000 electronic records. RRB will transmit its Post Entitlement System file daily. The number of records will differ each day, but consist of approximately 3,000 to 4,000 records each month. RRB will transmit files on all Medicare eligible Qualified Railroad Retirement Beneficiaries from its RRB-20 and RRB-22 SORs to report address changes and subsidy changing event information monthly. The file will consist of approximately 520,000 electronic records. The number of people who apply for Extra Help determines in part the number of records matched.
SSA's comparison file will consist of approximately 90 million records obtained from its MDB. SSA will conduct the match using each individual's Social Security number, name, date of birth, RRB claim number, and RRB annuity payment amount in both RRB and MDB files.
RRB will provide SSA with data from its RRB-20 SOR, last published on September 30, 2014 (79 FR 58886), and RRB-22 SOR, last published on May 15, 2015 (80 FR 28018).
SSA will match RRB's data with its MDB File, 60-0321, published on July 25, 2006 (71 FR 42159), as amended on December 10, 2007 (72 FR 69723) and November 1, 2018 (83 FR 54969).
First State Infrastructure Managers (International) Limited (FSIM), Global Diversified Infrastructure Fund (North America) LP (GDIF-US), and Mitsubishi UFJ Financial Group, Inc. (MUFG),
The earliest the transaction may be consummated is October 13, 2019, the effective date of the exemption (30 days after the verified notice was filed).
The verified notice states that: (i) The 14 SRTV/Patriot railroads do not connect with a railroad controlled by First State; (ii) the subject acquisition of control is not intended to connect the SRTV/Patriot railroads with any other railroad; and (iii) the transaction does not involve a Class I carrier. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. However, 49 U.S.C. 11326(c) does not provide for labor protection for transactions under 49 U.S.C. 11324 and 11325 that involve only Class III rail carriers. Because this transaction involves Class III rail carriers only, the Board, under the statute, may not impose labor protective conditions for this transaction.
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions to stay must be filed no later than October 4, 2019 (at least seven days before the exemption becomes effective).
A copy of any petition filed with the Board should be sent to First State's representative: Thomas J. Litwiler, Fletcher & Sippel LLC, 29 North Wacker Drive, Suite 800, Chicago, IL 60606.
Board decisions and notices are available at
By the Board, Allison C. Davis, Director, Office of Proceedings.
Motive Rail, Inc. d/b/a Illinois Terminal Belt (ITB), a Class III railroad, has filed a verified notice of exemption under 49 CFR 1150.41 to lease from Illinois Central Railroad Company (IC) and operate approximately 10.7 miles of rail line from milepost 784.2 in Heyworth, Ill. to milepost 773.5 in Clinton, Ill. (the Line).
ITB states that it has entered into a track lease with IC to provide common carrier service on the Line. According to ITB, the track lease between ITB and IC does not contain an interchange commitment.
ITB certifies that its projected annual revenues as a result of the proposed transaction will not exceed $5 million and that the transaction will not result in the creation of a Class II or Class I rail carrier.
This transaction may be consummated on or after October 11, 2019 (30 days after the verified notice was filed).
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than October 4, 2019 (at least seven days before the exemption becomes effective).
All pleadings, referring to Docket No. FD 36348, must be filed with the Surface Transportation Board either via e-filing or in writing addressed to 395 E Street SW, Washington, DC 20423-0001. In addition, a copy of each pleading must be served on ITB's representative: Eric M. Hocky, Clark Hill PLC, Two Commerce Square, 2001 Market Street, Suite 2620, Philadelphia, PA 19103.
According to ITB, this action is excluded from environmental review under 49 CFR 1105.6(c) and from historic preservation reporting requirements under 49 CFR 1105.8(b).
Board decisions and notices are available at
By the Board, Allison C. Davis, Director, Office of Proceedings.
CSX Transportation, Inc. (CSXT), has filed a verified notice of exemption under 49 CFR pt. 1152 subpart F—
CSXT has certified that: (1) No freight traffic has moved over the Line for two years; (2) no overhead traffic has been operated and therefore none needs to be rerouted; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line either is pending with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication), and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance of service shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA)
A copy of any petition filed with the Board should be sent to CSXT's representative, Louis E. Gitomer, Law Offices of Louis E. Gitomer, LLC, 600 Baltimore Avenue, Suite 301, Towson, MD 21204.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available at
Decided: September 23, 2019.
By the Board, Allison C. Davis, Director, Office of Proceedings.
Surface Transportation Board.
Notice Tentatively Approving and Authorizing Finance Transaction.
On August 30, 2019, National Express Transit Corporation (National Express), an intrastate passenger motor carrier, filed an application for National Express to acquire control of Fox Bus
Comments may be filed by November 12, 2019. If any comments are filed, National Express may file a reply by November 26, 2019. If no opposing comments are filed by November 12, 2019, this notice shall be effective on November 13, 2019.
Comments may be filed with the Board either via e-filing or in writing addressed to: Surface Transportation Board, 395 E Street SW, Washington, DC 20423-0001. In addition, send one copy of comments to: Andrew K. Light, Scopelitis, Garvin, Light, Hanson & Feary, P.C., 10 W Market Street, Suite 1400, Indianapolis, IN 46204.
Jonathon Binet at (202) 245-0368. Assistance for the hearing impaired is available through the Federal Relay Service at (800) 877-8339.
According to the application, National Express is a motor carrier incorporated under the laws of Delaware, and it primarily provides intrastate passenger transportation services and utilizes approximately 1,158 passenger-carrying vehicles and 1,609 drivers. (Appl. 1-2.) National Express represents that it does not have interstate carrier authority, but it owns and controls two passenger motor carrier subsidiaries that hold interstate carrier authority: Aristocrat Limousine and Bus, Inc. (Aristocrat), and Trans Express, Inc. (Trans Express). (
National Express states that it is indirectly wholly owned and controlled by a publicly-held British corporation, National Express Group, PLC (Express Group). (
• Aristocrat (the National Express subsidiary), which provides public passenger charter services in New Jersey, New York, and Pennsylvania, and intrastate passenger charter services in New Jersey;
• Beck Bus Transportation Corp., which primarily provides student school bus transportation services in Illinois, and charter passenger services to the public;
• Chicagoland Coach Lines LLC, which provides charter passenger services in the Chicago, Ill. area;
• Durham School Services, L.P., which primarily provides student school bus transportation services in several states, and charter passenger services to the public;
• New Dawn Transit LLC, which primarily provides non-regulated school bus transportation services in New York, and charter passenger services to the public;
• Petermann Ltd., which primarily provides non-regulated school bus transportation services in Ohio, and charter passenger services to the public;
• Petermann Northeast LLC, which primarily provides non-regulated school bus transportation services primarily in Ohio and Pennsylvania, and charter passenger services to the public;
• Petermann STSA, LLC, which primarily provides non-regulated school bus transportation services in Kansas, and charter passenger services to the public;
• Quality Bus Service LLC, which primarily provides non-regulated school bus transportation services in New York, and charter passenger services to the public;
• Queen City Transportation, LLC, which primarily provides non-regulated school bus transportation services in Ohio, and charter passenger services to the public;
• Free Enterprise System/Royal LLC, which provides interstate and intrastate passenger transportation services in Illinois and Indiana, and surrounding states, and corporate and university shuttle services for employees and students in the Chicago area;
• Trans Express (the National Express subsidiary), which provides interstate and intrastate passenger transportation services in New York;
• Trinity, Inc., which provides non-regulated school bus transportation services in southeastern Michigan, and charter service to the public;
• Trinity Student Delivery LLC, which provides non-regulated school bus transportation services in northern Ohio, and passenger charter services to the public;
• White Plains Bus Company, Inc., d/b/a Suburban Paratransit Service, which primarily provides non-regulated school bus transportation services in New York, paratransit services, and charter service to the public; and
• Wise Coaches, Inc., which provides interstate passenger charter services in Tennessee and its surrounding states, and intrastate passenger charter and shuttle services in Tennessee.
National Express states that Fox is a Massachusetts corporation, doing business as Silver Fox Coaches, that holds interstate carrier operating authority. (
According to the application, Sellers collectively own all the outstanding equity shares of Fox. (
National Express represents that, through this transaction, it will acquire all the outstanding equity shares of Fox, which will place Fox under its control. (
Under 49 U.S.C. 14303(b), the Board must approve and authorize a transaction that it finds consistent with the public interest, taking into consideration at least: (1) The effect of the proposed transaction on the adequacy of transportation to the public; (2) the total fixed charges that result; and (3) the interest of affected carrier employees. National Express has submitted the information required by 49 CFR 1182.2, including information to demonstrate that the proposed transaction is consistent with the public interest under 49 U.S.C. 14303(b),
National Express asserts that the proposed transaction is not expected to have a material, detrimental impact on the adequacy of transportation services available to the public in the Service Area. (Appl. 10.) National Express states that it anticipates that services available to the public will be improved as operating efficiencies are realized and additional services and capacity are made available. (
National Express claims that neither competition nor the public interest will be adversely affected by the proposed transaction. (
National Express states that fixed charges are not contemplated to have a material impact on the proposed transaction. (
The Board finds that the acquisition as proposed in the application is consistent with the public interest and should be tentatively approved and authorized. If any opposing comments are timely filed, these findings will be deemed vacated, and, unless a final decision can be made on the record as developed, a procedural schedule will be adopted to reconsider the application.
This action is categorically excluded from environmental review under 49 CFR 1105.6(c).
Board decisions and notices are available at
1. The proposed transaction is approved and authorized, subject to the filing of opposing comments.
2. If opposing comments are timely filed, the findings made in this notice will be deemed vacated.
3. This notice will be effective November 13, 2019, unless opposing comments are filed by November 12, 2019.
4. A copy of this notice will be served on: (1) The U.S. Department of Transportation, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590; (2) the U.S. Department of Justice, Antitrust Division, 10th Street & Pennsylvania Avenue NW, Washington, DC 20530; and (3) the U.S. Department of Transportation, Office of the General Counsel, 1200 New Jersey Avenue SE, Washington, DC 20590.
By the Board, Board Members Begeman, Fuchs, and Oberman.
Federal Aviation Administration (FAA), Department of Transportation.
Notice of submission deadline.
Under this notice, the FAA announces the submission deadline of October 3, 2019, for Summer 2020 flight schedules at Chicago O'Hare International Airport (ORD), John F. Kennedy International Airport (JFK), Los Angeles International Airport (LAX), and San Francisco International Airport (SFO). The deadline coincides with the schedule submission deadline for the International Air Transport Association (IATA) Slot Conference for the Summer 2020 scheduling season.
Schedules must be submitted no later than October 3, 2019.
Schedules may be submitted by mail to the Slot Administration Office, AGC-200, Office of the Chief Counsel, 800 Independence Avenue SW, Washington, DC 20591; facsimile: 202-267-7277; or by email to:
Al Meilus, Manager (Acting), Slot Administration, AJR-G, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone (202) 267-2822; email
This document provides routine notice to carriers serving capacity-constrained airports in the United States.
The FAA has designated LAX, ORD, and SFO as IATA Level 2 airports
The FAA is primarily concerned about scheduled and other regularly conducted commercial operations during peak hours, but carriers may submit schedule plans for the entire day. The peak hours for the Summer 2020 scheduling season are: At LAX and SFO from 0600 to 2300 Pacific Time (1300 to 0600 UTC), at ORD from 0600 to 2100 Central Time (1100 to 0200 UTC), and at JFK from 0600 to 2300 Eastern Time (1000 to 0300 UTC). These hours are unchanged from previous scheduling seasons. Carriers should submit schedule information in sufficient detail including, at minimum, the marketing or operating carrier, flight number, scheduled time of operation, frequency, aircraft equipment, and effective dates. IATA standard schedule information format and data elements for communications at Level 2 and Level 3 airports in the IATA Standard Schedules Information Manual (SSIM) Chapter 6 may be used. The WSG provides additional information on schedule submissions at Level 2 and Level 3 airports.
The U.S. summer scheduling season is from March 29, 2020, through October 24, 2020, in recognition of the IATA northern Summer scheduling period.
As stated in the WSG, schedule facilitation at a Level 2 airport is based on the following: (1) Schedule adjustments are mutually agreed upon between the airlines and the facilitator; (2) the intent is to avoid exceeding the airport's coordination parameters; (3) the concepts of historic precedence and series of slots do not apply at Level 2 airports; although WSG recommends giving priority to approved services that plan to operate unchanged from the previous equivalent season at Level 2 airports, and (4) the facilitator should adjust the smallest number of flights by the least amount of time necessary to avoid exceeding the airport's coordination parameters. Consistent with the WSG, the success of Level 2 in the U.S. depends on the voluntary cooperation of all carriers.
The FAA considers several factors and priorities as it reviews schedule and slot requests at Level 2 and Level 3 airports, which are consistent with the WSG, including—historic slots or services from the previous equivalent season over new demand for the same timings, services that are unchanged over services that plan to change time or other capacity relevant parameters, introduction of year-round services, effective period of operation, regularly planned operations over
At Level 2 airports, the FAA seeks to improve communications with carriers and terminal schedule facilitators on potential runway schedule issues or terminal and gate issues that may affect the runway times. The FAA also seeks to reduce the time that carriers consider proposed offers on schedules. Retaining open offers for extended periods of time may delay the facilitation process for the airport. Reducing this delay is particularly important to allow the FAA to make informed decisions at airports where operations in some hours are at or near the scheduling limits. The agency recognizes that there are circumstances that may require some schedules to remain open. However, the FAA expects to substantially complete the review process on initial submissions each scheduling season within 30 days of the end of the Slot Conference. After this time, the agency would confirm the acceptance of proposed offers, as applicable, or issue a denial of schedule requests.
Slot management in the U.S. differs in some respect from procedures in other countries. In the United States, the FAA is responsible for facilitation and coordination of runway access for takeoffs and landings at Level 2 and Level 3 airports; however, the airport authority or its designee is responsible for facilitation and coordination of terminal/gate/airport facility access. The process with the individual airports for terminal access and other airport services is separate from, and in addition to, the FAA schedule review based on runway capacity. Approval from the FAA for runway availability and the airport authority for airport facility availability is necessary before implementing schedule plans. Carriers seeking terminal approval should contact the schedule facilitator for that airport.
Generally, the FAA uses average hourly runway capacity throughput for airports and performance metrics in its schedule review at Level 2 airports and determining the scheduling limits at Level 3 airports included in FAA rules or orders.
Finally, the FAA notes that the schedule information submitted by carriers to the FAA may be subject to disclosure under the Freedom of Information Act (FOIA). The WSG also provides for release of information at certain stages of slot coordination and schedule facilitation. In general, once it acts on a schedule submission or slot request, the FAA may release information on slot allocation or similar slot transactions or schedule information reviewed as part of the schedule facilitation process. The FAA does not expect that practice to change and most slot and schedule information would not be exempt from release under FOIA. The FAA recognizes that some carriers may submit information on schedule plans that is both customarily and actually treated as private. Carriers that submit such confidential schedule information should clearly mark the information as “PROPIN”. The FAA will take the necessary steps to protect properly designated information to the extent allowable by law.
In the previous Notice of Submission Deadline published for the Winter 2019/2020 scheduling season, the FAA advised it was reviewing the Level 2 runway designations at LAX, ORD, and SFO to determine if the designations at these airports continue to be necessary for future scheduling seasons and announced a suspension on a trial basis of the Level 2 runway designation at ORD for Winter 2019/2020 schedules.
The FAA held discussions with the airport operators of LAX, ORD, and SFO as well as various airlines serving the airports to obtain their views on whether Level 2 remains appropriate and whether the FAA's advance review of scheduled demand can yield improved performance. The FAA discussed the Level 2 review with airlines and airport operators in meetings at the 144th IATA Slot Conference, the domestic slot conference hosted by Airlines for America, as well as other individual meetings. No formal written comments were received. The FAA reviewed air traffic operations and constraints, performance metrics, and airport/airfield construction plans at the individual airports that might impact airport operations or capacity. The Air Traffic Organization and other FAA offices also regularly meet with stakeholders on national and local levels to address operational issues and ways to improve efficiency.
The FAA has determined that a Level 2 designation for LAX, ORD, and SFO remains appropriate at this time and these designations will remain in effect until the FAA announces a change in the
LAX was designated Level 2 in 2015 based on multiple runway construction projects that were planned through 2018.
The FAA reviewed the recent scheduled demand at LAX, the typical airport arrival and departure rates with four available runways, how runway capacity was impacted with the series of runway construction projects since 2015, and the anticipated impacts when Runway 7R/25L closes for construction. Surface operations at LAX present a challenging air traffic operational environment with limited movement and holding areas, multiple taxiway and runway restrictions based on aircraft types and operating characteristics, and limitations due to the distance between the north runways. The airfield construction over the last few years and continuing with current and upcoming taxiway and terminal construction increases the operational complexity for runway configuration and surface movements.
Stakeholders did not have strong views on whether the FAA's schedule review is needed in the long term as LAWA is also actively managing gates and terminal access for international passenger flights, has relocated terminals and gates for multiple airlines to improve efficiency and better match airport facilities with airline operations, and recently deployed surface management tools. Stakeholders acknowledged LAWA efforts and some international operators viewed LAWA's schedule facilitation for terminal access as sufficient. Some airlines expressed concern that the airport has been under construction for significant portions of the past several years with ongoing taxiway and terminal construction and this has increased delays and operational challenges. Some expressed concern that it may not be appropriate to change the airport level and that it should be considered after the next runway closure and major construction projects are done. Some airlines indicated that they wanted to grow their operations at LAX in the future and the airport could benefit from Level 2 to help prevent delays through facilitation of voluntary schedule adjustments while others were concerned that under Level 2 they might not be able to operate at their preferred times. The airlines generally indicated there is minimal burden associated with providing schedules noting that they were already providing information to the airport for terminal planning purposes or that providing information to the FAA was largely an automated process. Airlines noted that providing schedule information to the FAA before it is final and, in many cases, before it is publicly available, allows the FAA to identify periods of potential congestion. Several airlines stated that if changes were needed to avoid or reduce delays, they would rather know as early as possible in the planning process when it is easier to adjust schedules.
The FAA has determined that Level 2 at LAX remains appropriate given the airport demand and the potential capacity impacts and anticipated operational impacts from the upcoming airport construction. The aircraft fleet mix includes a significant percentage of heavy aircraft that require additional spacing in the air and specific routings or other limitations on the surface. Multiple airlines operate at LAX as a hub airport or focus city and plan schedules independently. There are periods when scheduled demand is relatively high such as the morning and evening hours and excessive demand has the potential to increase air traffic delays. The schedule facilitation and cooperation by airlines to voluntarily make necessary schedule changes would continue to provide an opportunity to manage scheduled demand during upcoming construction.
The FAA designated ORD as Level 2 in 2008 to allow for a smoother transition as slot control under Level 3 was phased out with the opening of a new runway in November 2008.
While it conducted its review of the ORD Level 2 designation, the FAA suspended the runway schedule review on a trial basis for the Winter 2019/2020 scheduling season noting that demand is typically within the airport's runway capacity. This suspension was for Winter 2019/2020 only and does not change the designation for any other scheduling season unless a subsequent change is announced. The FAA also indicated it would publish the findings of its broad review of the ORD Level 2 designation in the notice for the Summer 2020 scheduling season. The FAA noted when it announced the trial suspension that it was not aware of any major schedule or hub structure changes planned for the Winter 2019/2020 season and none are apparent based on currently published schedules. The FAA will continue to monitor schedules
The City of Chicago is continuing plans to improve the airport's throughput, efficiency, and terminal access. New construction of Runway 9C/27C is expected to continue through 2020. An extension of Runway 9R by about 3,000 feet and shortening of Runway 27L by about 300 feet and Terminal 5 expansion are in progress. Both projects are expected to continue into late 2021. Various taxiway construction projects are underway or planned for the next few years. Some of these projects, especially runway closures, impact capacity while others such as taxiway and terminal construction may limit surface movements and options for holding aircraft, or increase operational complexity in the short term. There is currently Level 2 schedule facilitation for Terminal 5 and the terminal is constrained at peak times.
Several airlines and the airport operator expressed support for continuation of Level 2 to address potential congestion issues over the next few years. Many of the statements made by airlines summarized in the LAX section of this Notice on submitting schedules for review, including a preference for early notice of adjustments, were also expressed with regard to ORD. No airlines expressed a preference for a change to Level 1 in the near term. Additionally, the FAA notes that ORD is uniquely situated as one of the few airports in the U.S. that is a major hub for two airlines, each of which has a substantial portion of the total operations at the airport. Currently, there is a degree of separation between the arrival and departure banks of the hub airlines that limits schedule peaking. There have been occasions when one or both airlines have changed schedule banks and overlapped schedules causing demand to exceed capacity. The resulting in delays and flight cancellations impacted ORD and other airports in the National Airspace System (NAS). The FAA worked with airlines to revise schedules. Until the changes were effective, there was significant impact to the operation and disruption to airline networks and passengers. The FAA finds that given ORD's demand and the importance of the airport to the NAS, the Level 2 process provides an opportunity to try to work with airlines to voluntarily adjust schedules before they take effect and reduce potential delays.
The FAA designated SFO as Level 2 effective in 2012 as a result of low on-time performance relative to other airports, expected growth in scheduled demand, and runway construction.
Stakeholders generally expressed support for retaining the Level 2 designation to help facilitate the movement of scheduled flights into less congested periods. Operationally, surface constraints limit holding and staging areas for aircraft and demand for gates remains high. Terminal 1 construction is underway and expected to be completed in 2022. SFO facilitates international passenger flights under the Level 2 process, which is complementary to the FAA runway review. As with LAX and ORD, airlines generally favored retaining the FAA's Level 2 designation. Some opined that SFO's runway layout limits the airport capacity, especially in adverse weather conditions, and the delays and performance strongly support continuing efforts under Level 2 to manage schedules and reduce delays. The FAA finds that the Level 2 process should be retained at SFO in order to facilitate voluntary schedule adjustments in an effort to reduce potential delay associated with growing scheduled demand.
Office of Foreign Assets Control, Department of the Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Additionally, OFAC is publishing the names of one or more persons that have been removed from the SDN List. Their property and interests in property are no longer blocked, and U.S. persons are no longer generally prohibited from engaging in transactions with them.
See
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website (
A. On September 24, 2019, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authority listed below.
1. CAROIL TRANSPORT MARINE LTD (a.k.a. CAROIL TRANSPORT MARINE LIMITED), Arch Makariou III Avenue 284, Fortuna Court, Block B, 2nd Floor, Limassol, Cyprus; Identification Number IMO 1869514; Registration Number HE 47364 (Cyprus) [VENEZUELA-EO13850].
Designated pursuant to section 1(a)(i) of Executive Order 13850 (E.O. 13850) of November 1, 2018, “Blocking Property of Additional Persons Contributing to the Situation in Venezuela,” as amended by Executive Order 13857, “Taking Additional Steps to Address the National Emergency with Respect to Venezuela,” of January 25, 2019, for operating in the oil sector of the Venezuelan economy.
2. TOVASE DEVELOPMENT CORP, Panama City, Panama; Identification Number IMO 5447549; Company Number 568507 (Panama) [VENEZUELA-EO13850].
Designated pursuant to section 1(a)(i) of E.O. 13850, as amended by E.O. 13857, for operating in the oil sector of the Venezuelan economy.
3. TROCANA WORLD INC., Panama City, Panama; Identification Number IMO 5411381; Company Number 582152 (Panama) [VENEZUELA-EO13850].
Designated pursuant to section 1(a)(i) of E.O. 13850, as amended by E.O. 13857, for operating in the oil sector of the Venezuelan economy.
4. BLUELANE OVERSEAS SA, Panama City, Panama; Identification Number IMO 6109861 [VENEZUELA-EO13850].
Designated pursuant to section 1(a)(i) of E.O. 13850, as amended by E.O. 13857, for operating in the oil sector of the Venezuelan economy.
1. CARLOTA C Chemical/Products Tanker Panama flag; Vessel Registration Identification IMO 9502453 (vessel) [VENEZUELA-EO13850] (Linked To: CAROIL TRANSPORT MARINE LTD).
Identified pursuant to E.O. 13850, as amended by E.O. 13857, as property in which CAROIL TRANSPORT MARINE LTD, a person whose property and interest in property are blocked pursuant to E.O. 13850, as amended by E.O. 13857, has an interest.
2. PETION Products Tanker Panama flag; Vessel Registration Identification IMO 9295098 (vessel) [VENEZUELA-EO13850] (Linked To: CAROIL TRANSPORT MARINE LTD; Linked To: TROCANA WORLD INC.).
Identified pursuant to E.O. 13850, as amended by E.O. 13857, as property in which CAROIL TRANSPORT MARINE LTD and TROCANA WORLD INC., persons whose property and interest in property are blocked pursuant to E.O. 13850, as amended by E.O. 13857, have an interest.
3. SANDINO Chemical/Products Tanker Panama flag; Vessel Registration Identification IMO 9441178 (vessel) [VENEZUELA-EO13850] (Linked To: CAROIL TRANSPORT MARINE LTD; Linked To: TOVASE DEVELOPMENT CORP).
Identified pursuant to E.O. 13850, as amended by E.O. 13857, as property in which CAROIL TRANSPORT MARINE LTD and TOVASE DEVELOPMENT CORP, persons whose property and interest in property are blocked pursuant to E.O. 13850, as amended by E.O. 13857, have an interest.
4. GIRALT Crude Oil Tanker Panama flag; Vessel Registration Identification IMO 9259692 (vessel) [VENEZUELA-EO13850] (Linked To: BLUELANE OVERSEAS SA).
Identified pursuant to E.O. 13850, as amended by E.O. 13857, as property in which BLUELANE OVERSEAS SA, a person whose property and interested in property are blocked pursuant to E.O. 13850, as amended by E.O. 13857, has an interest.
B. OFAC previously determined on January 8, 2019; April 12, 2019; and on May 10, 2019 that the persons listed below met one or more of the criteria under E.O. 13850. On September 24, 2019, OFAC determined that circumstances no longer warrant the inclusion of the following persons on the SDN List under this authority. These persons are no longer subject to the blocking provisions of Section 1(a) of E.O. 13850.
1. LIMA SHIPPING CORPORATION (a.k.a. LIMA SHIPPING CORP), 80 Broad Street, Monrovia, Liberia; Identification Number IMO 4063640 [VENEZUELA-EO13850].
2. SERENITY MARITIME LIMITED (a.k.a. SERENITY MARITIME LTD.; a.k.a. SERENITY MARITIME LTD-LIB), Broad Street 80, Monrovia 1000, Liberia [VENEZUELA-EO13850].
1. NEW HELLAS Crude Oil Tanker Greece flag; Vessel Registration Identification IMO 9221891 (vessel) [VENEZUELA-EO13850] (Linked To: LIMA SHIPPING CORPORATION).
2. LEON DIAS Chemical/Oil Tanker Panama flag; Vessel Registration Identification IMO 9396385 (vessel) [VENEZUELA-EO13850] (Linked To: SERENITY MARITIME LIMITED).
3. N133JA; Aircraft Model Mystere Falcon 50EX; Aircraft Manufacturer's Serial Number (MSN) 268; Aircraft Tail Number N133JA (aircraft) [VENEZUELA-EO13850] (Linked To: PERDOMO ROSALES, Gustavo Adolfo).
Office of the General Counsel, IRS, Treasury.
Under the authority granted to me as Chief Counsel of the Internal Revenue Service by the General Counsel of the Department of the Treasury by General Counsel Directive 15, pursuant to the Civil Service Reform Act, I have appointed the following persons to the Legal Division Performance Review Board, Internal Revenue Service Panel:
This publication is required by 5 U.S.C. 4314(c)(4).
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on continuing information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning original issue discount.
Written comments should be received on or before November 26, 2019 to be assured of consideration.
Direct all written comments to Laurie Brimmer, Internal Revenue Service, Room 6529, 1111 Constitution Avenue NW, Washington, DC 20224.
Requests for additional information or copies of the form should be directed to Kerry Dennis, at (202) 317-5751 or Internal Revenue Service, Room 6529, 1111 Constitution Avenue NW, Washington DC 20224, or through the internet, at
The following paragraph applies to all of the collections of information covered by this notice.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
The Department of Veterans Affairs (VA) gives notice under the Federal Advisory Committee Act, that a meeting and site visit of the Federal Advisory Committee on Prosthetics and Special-Disabilities Programs will be held on Tuesday, October 22—Wednesday, October 23, 2019, at VA Central Office, 810 Vermont Avenue NW, Washington, DC 20420, in conference room 630. The meeting sessions will begin and end as follow:
The meeting sessions are open to the public.
The purpose of the Committee is to advise the Secretary of Veterans Affairs on VA's prosthetics programs designed to provide state-of-the-art prosthetics and the associated rehabilitation research, development, and evaluation of such technology. The Committee also provides advice to the Secretary on special-disabilities programs, which are defined as any program administered by the Secretary to serve Veterans with spinal cord injuries, blindness or visual impairments, loss of extremities or loss of function, deafness or hearing impairment, and other serious incapacities in terms of daily life functions.
On October 22, 2019, the Committee will convene open sessions on Ethics; Establishment of New Subcommittees; MISSION Act Update; VHA Modernization Update; Chiropractic Care; and Clinical Orthotic and Prosthetic Services. On October 23, 2019, the Committee members convene open sessions on Physical Medicine and Rehabilitation, Polytrauma/Amputation System of Care; Blind Rehabilitation Service; and Spinal Cord Injury and Disorders System of Care.
No time will be allocated for receiving oral presentations from the public; however, members of the public may direct questions or submit written statements for review by the Committee in advance of the meeting to Judy Schafer, Ph.D., Designated Federal Officer, Rehabilitation and Prosthetic Services (10P4R), Patient Care Services, Veterans Health Administration, VA, 810 Vermont Avenue NW, Washington, DC 20420, or by email at
Wage and Hour Division, Department of Labor.
Final rule.
The Department of Labor is updating and revising the regulations issued under the Fair Labor Standards Act implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees.
This final rule is effective on January 1, 2020.
Amy DeBisschop, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Copies of this final rule may be obtained in alternative formats (Large Print, Braille, Audio Tape or Disc), upon request, by calling (202) 693-0675 (this is not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-5627 to obtain information or request materials in alternative formats.
Questions of interpretation and/or enforcement of the agency's regulations may be directed to the nearest WHD district office. Locate the nearest office by calling WHD's toll-free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or log onto WHD's website for a nationwide listing of WHD district and area offices at
The Fair Labor Standards Act (FLSA or Act) requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime premium pay of at least 1.5 times the regular rate of pay. Section 13(a)(1) of the FLSA, commonly referred to as the “white collar” or “EAP” exemption, exempts from these minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity.” The statute delegates to the Secretary of Labor (Secretary) the authority to define and delimit the terms of the exemption. Since 1940, the regulations implementing the exemption have generally required each of the following three tests to be met: (1) The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (the “salary level test”); and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”).
The Department of Labor (Department) has long used the salary level test as a tool to help define the white collar exemption on the basis that employees paid less than the salary level are unlikely to be bona fide executive, administrative, or professional employees, and, conversely, that nearly all bona fide executive, administrative, and professional employees are paid at least that much. The salary level test provides certainty for employers and employees, as well as efficiency for government enforcement agencies. The salary level test's usefulness, however, diminishes as the wages of employees entitled to overtime increase and inflation reduces the real value of the salary threshold.
The Department increased the standard salary level from $455 per week ($23,660 per year) to $913 per week ($47,476 per year) in a final rule published May 23, 2016 (“2016 final rule”). That rulemaking was challenged in court, and on November 22, 2016, the U.S. District Court for the Eastern District of Texas enjoined the Department from implementing and enforcing the rule. On August 31, 2017, the court granted summary judgment against the Department, invalidating the 2016 final rule because it “makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee's job duties.”
Taking into account the
The Department published a Notice of Proposed Rulemaking (NPRM) on March 22, 2019. The NPRM stated that the standard salary level needed to exceed $455 per week to more effectively serve its purpose, but that the 2016 final rule's increase to $913 per week was inappropriate because it excluded from exemption 4.2 million employees whose duties would have otherwise qualified them for exemption, a result in significant tension with the text of section 13(a)(1). Noting the conclusions of the district court that invalidated the 2016 final rule, the Department explained that the 2016 final rule's inappropriately high salary level “untethered the salary level test from its historical justification” of “[s]etting a dividing line between nonexempt and potentially exempt employees” by screening out only those employees who, based on their compensation level, are unlikely to be bona fide executive, administrative, or professional employees. To address the district court's and the Department's concern with the 2016 final rule and set a more appropriate salary level, the NPRM proposed to rescind the 2016 final rule and update the salary level by applying the same methodology as the 2004 final rule to current earnings data.
In 2004, the Department set the standard salary level at $455 per week ($23,660 per year), which was approximately the 20th percentile of full-time salaried workers in the South and in the retail industry nationally.
The 60-day comment period on the NPRM ended on May 21, 2019, and the Department received more than 116,000 comments. The vast majority of these comments, including tens of thousands of duplicate or similar submissions, were campaign comments using similar template language.
The Department estimates that in 2020, 1.2 million currently exempt employees who earn at least $455 per week but less than the standard salary level of $684 per week will, without some intervening action by their employers, gain overtime eligibility. The Department also estimates that an additional 2.2 million white collar workers who are currently nonexempt because they do not satisfy the EAP duties tests and currently earn at least $455 per week, but less than $684 per week, will have their overtime-eligible status strengthened in 2020 because these employees will now fail both the salary level and duties tests. Lastly, an estimated 101,800 employees who are currently exempt under the HCE test will be affected by the increase in the HCE total annual compensation level. The Department has not made any changes to the duties tests in this final rule.
This rule is considered an Executive Order 13771 deregulatory action. When the Department uses a perpetual time horizon to allow for cost comparisons under Executive Order 13771, and using the 2016 rule as the baseline, the annualized cost savings of this rule is $534.8 million with 7 percent discounting.
Because the Department is currently enforcing the 2004 salary level, much of the economic analysis uses the 2004 rule as the baseline for calculating costs and transfers. The economic analysis
The FLSA generally requires covered employers to pay their employees at least the federal minimum wage (currently $7.25 an hour) for all hours worked, and overtime premium pay of at least 1.5 times the regular rate of pay for all hours worked over 40 in a workweek.
Employees who meet the requirements of part 541 are not subject to the FLSA's minimum wage and overtime pay requirements. Some state laws have stricter exemption standards than federal law. The FLSA does not preempt any such stricter state standards. If a State establishes a higher standard than the provisions of the FLSA, the higher standard applies in that State.
The Department has consistently used its rulemaking authority to define and clarify the section 13(a)(1) exemptions. The implementing regulations have generally required each of three tests to be met for the exemptions to apply: (1) The salary basis test; (2) the salary level test; and (3) the duties test.
The first version of part 541, establishing the criteria for exempt status under section 13(a)(1), was promulgated in October 1938.
From 1949 until 2004, the part 541 regulations contained two different tests for exemption—a “long” test that paired a more rigorous duties test with a lower salary level, and a “short” test that paired a more flexible duties test with a higher salary level. On April 23, 2004, the Department issued a final rule, which replaced the “long” and “short” test system for determining exemption status with a single “standard” salary level paired with a “standard” duties test.
On May 23, 2016, the Department issued another final rule, which raised the standard salary level to the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, resulting in a salary level of $913 per week. Additionally, the Department set the HCE total annual compensation level equal to the 90th percentile of earnings of full-time salaried workers nationally ($134,004 annually). The Department also included in the final rule a mechanism to automatically update (every three years) the salary and compensation thresholds, and for the first time permitted nondiscretionary bonuses, incentives, and commissions paid at least quarterly to count toward up to 10 percent of the required salary level.
On November 22, 2016, the United States District Court for the Eastern District of Texas issued a preliminary injunction, enjoining the Department from implementing and enforcing the 2016 final rule, pending further review.
On July 26, 2017, the Department published an RFI asking for public input
On October 30, 2017, the Government appealed the
On March 22, 2019, the Department issued its NPRM, proposing to update and revise the EAP regulations.
The regulations in 29 CFR part 541 contain specific criteria that define each category of exemption provided by section 13(a)(1) for bona fide executive, administrative, professional, and outside sales employees, as well as teachers and academic administrative personnel. The regulations also define those computer employees who are exempt under section 13(a)(1) and section 13(a)(17). The employer bears the burden of establishing the applicability of any exemption from the FLSA's pay requirements.
To qualify for the EAP exemption, employees must meet certain tests regarding their job duties
The 2004 final rule created the HCE test for exemption. Under the HCE test, employees who receive at least a specified total annual compensation (which must include at least the standard salary amount per week paid on a salary or fee basis) are exempt from the FLSA's overtime requirements if they customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative, or professional employee identified in the standard tests for exemption.
On March 22, 2019, the Department issued its proposal to update and revise the regulations issued under section 13(a)(1) of the FLSA.
The Department received more than 116,000 timely comments on the NPRM during the 60-day comment period that ended on May 21, 2019. The Department received comments from a broad array of constituencies, including small business owners, employer and industry associations, individual workers, worker advocacy groups, unions, non-profit organizations, law firms (representing both employers and employees), educational organizations and representatives, religious organizations, economists, Members of Congress, state and local governments, professional associations, and other interested members of the public. All timely received comments may be viewed on the
Some of the comments the Department received were general statements of support or opposition, and the Department also received many identical or nearly identical “campaign” comments sent in response to organized comment initiatives. Nearly all commenters favored some change to the currently enforced regulations, and commenters expressed a wide variety of views on the merits of particular aspects of the Department's proposal. Some commenters, including tens of thousands who submitted similar comments as part of a comment
Significant issues raised in the comments are discussed below, along with the Department's responses to those comments. Some commenters appear to have mistakenly filed comments intended for this rulemaking into the dockets for the Department's rulemakings concerning the regular rate (docket ID WHD-2019-0002) or joint employer status (docket ID WHD-2019-0003) under the FLSA. The Department did not consider these misfiled comments in this rulemaking.
The Department received a number of comments that are beyond the scope of this rulemaking. These include, for example, a request that the Department reconsider the scope of the exemption at 29 U.S.C. 207(i) for certain employees of retail and service establishments, and a request for tax write-offs for businesses that pass an annual audit by the Department. In addition, some non-profit organizations asked the Department to work with other federal agencies to create a mechanism that non-profits with government grants and contracts could use to adjust reimbursement rates to cover unanticipated increased costs, such as labor costs due to this rule. For example, in a joint comment, the National Council of Nonprofits and others recommended addressing this issue through changes to the relevant Federal Acquisition Regulations. The Department does not address such issues in this final rule.
Some commenters raised miscellaneous issues that more directly relate to other parts of the Department's regulations. For example, one commenter urged the Department to amend its regular rate regulations to allow the exclusion of any payments that do not count toward the salary level test; one commenter requested that private colleges and universities be permitted to use compensatory time off instead of cash payments for overtime hours; two commenters requested a safe harbor from joint-employment liability for franchisors who help their franchisees implement this rule; and one commenter asked the Department to permit hourly paid employees (beyond just computer employees) to qualify for the exemption. Some commenters requested that the Department make changes to the duties test, either as an alternative to raising the salary level more significantly or regardless of what salary level applies. The Department did not propose any of these changes in the NPRM, and declines to make such changes in this final rule.
A number of commenters asked the Department to provide guidance on how the FLSA applies to non-profit organizations.
In the NPRM, the Department referenced an anticipated effective date of January 2020 for purposes of projecting forward the proposed standard salary level and proposed HCE total annual compensation level. Many commenters, while not expressly referencing the effective date, conveyed their view that updates to these regulations are “long overdue.”
Other commenters did specifically address the final rule's effective date. Nearly all of these commenters conveyed the need for employers to have sufficient time to adjust to and implement the rule, but they disagreed on how much time the Department should provide. The National Association of Landscape Professionals favored a period of 90 to 120 days between the rule's publication and its effective date, while several other commenters favored a minimum of 120 days, which was the applicable period of time in the 2004 final rule.
Relatedly, multiple commenters requested that the Department “phase in” any new salary/compensation levels over a period of time. Suggested phase-in periods varied widely. Independent Sector and the National Council of Young Men's Christian Associations of the United States of America (YMCA) favored a two-year phase-in period. An individual employee commenter proposed a 3- to 5-year phase-in period for non-profit organizations. Some commenters who requested a phase-in period did not specify a particular timeframe. Many commenters who supported a phase-in cited the importance of providing sufficient time for employers to adapt to and implement the new levels.
The Department has set an effective date of January 1, 2020, for the final rule. The Department agrees with the commenters who expressed the view that this update to the regulations is “long overdue,” and with those who encouraged the Department to increase the salary level as soon as possible. The time between this rule's publication and effective date exceeds the 30-day minimum required under the Administrative Procedure Act (APA), 5 U.S.C. 553(d), and the 60 days mandated for a “major rule” under the Congressional Review Act, 5 U.S.C. 801(a)(3)(A). While the 2004 rule provided for 120 days between the rule's publication and effective date,
Additionally, while the 2016 rule provided 192 days from the rule's publication until its effective date, the salary level increase in this rule is more modest, and affects fewer workers—two factors that favor a shorter period. Moreover, given that the Department is currently enforcing the 2004 standard salary level, which an overwhelming majority of commenters agreed needs to be updated, the Department concludes that a lengthier delayed effective date would be imprudent. Additionally, a January 1 date may be convenient for those employers who use the calendar year as their fiscal year, or who use budgets, software systems, or other practices on a calendar-year basis. The Department is also declining to delay the effective date, or create a phase-in, specifically for non-profits. As discussed in more detail in the standard salary level discussion below, consistent with past practice, the Department is declining to create special rules for the application of the part 541 exemptions to non-profits.
While some employer representatives expressed concern that the proposed HCE level increase would pose unique challenges for employers compared to the change to the standard salary level, given the change in methodology for setting the HCE threshold in the final rule, discussed in further detail below, the Department does not believe a delayed effective date for this provision is necessary. The Department believes that the January 1, 2020 effective date will provide employers adequate time to make any changes that are necessary to comply with the final regulations, and for similar reasons concludes that a phase-in of the new thresholds is not warranted. The Department will also provide significant outreach and compliance assistance, and will issue a number of guidance documents in connection with the publication of this final rule.
The primary goal of this rulemaking is to update the standard salary level that helps define and delimit the EAP exemption. This will ensure that the level works effectively with the standard duties test to distinguish potentially exempt EAP employees from overtime-protected white collar workers. Due to the
The Department is also updating the total annual compensation requirement for the HCE test for exemption to ensure that this threshold remains a meaningful and appropriate standard when paired with the more-lenient HCE duties test. In an effort to modernize the part 541 regulations to account for changing methods of workplace compensation, the Department also proposed allowing nondiscretionary bonuses and incentive payments (including commissions) to count toward up to 10 percent of the standard or special salary levels. Finally, in its proposal the Department explained the importance of updating the salary thresholds more frequently. Regular updates promote greater stability, avoid the disruptive salary level increases that can result from lengthy gaps between updates, and provide appropriate wage protection for those under the threshold. With these goals in mind, in the NPRM, the Department affirmed its intention to issue a proposal to update the earnings thresholds every four years, unless the Secretary determines that economic or other factors warrant forestalling such an update.
The Department is formally rescinding the 2016 final rule and is replacing it with a new rule that updates the part 541 earnings thresholds. The Department is setting the standard salary level by applying the methodology from the 2004 final rule to current data, resulting in a new standard salary level of $684 per week. In addition, the Department is setting a special salary level of $455 per week for Puerto Rico, the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands; a special salary level of $380 per week for American Samoa; and an updated weekly “base rate” of $1,043 per week for the motion picture producing industry. Nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis may be used to satisfy up to 10 percent of the standard salary level or the special salary levels applicable to the U.S. territories. The Department is also setting the HCE annual compensation amount at the 80th percentile of full-time salaried workers nationally, resulting in a new HCE level of $107,432. These revisions are discussed in further detail below.
Congress enacted the FLSA on June 25, 1938, and the first version of part 541, which the Department issued in October 1938, set a salary level of $30 per week for executive and administrative employees.
In 1949, the Department evaluated salary data from state and federal agencies, including the Bureau of Labor Statistics (BLS). The Department considered wages in small towns and low-wage industries, wages of federal employees, average weekly earnings for exempt employees, starting salaries for college graduates, and salary ranges for different occupations such as bookkeepers, accountants, chemists, and mining engineers.
In 1958, the Department set the long test salary levels using data collected by WHD on salaries paid to employees who met the applicable salary and duties tests, grouped by geographic region, broad industry groups, number of employees, and city size, and supplemented with BLS and Census data to reflect income increases for white collar and manufacturing employees during the period not covered by the Department's investigations.
The Department followed a similar methodology when determining the salary level increase in 1963. The Department examined data on salaries paid to exempt workers collected in a 1961 WHD survey.
The Department applied a similar methodology when adopting salary level increases in 1970. After examining data from WHD investigations, BLS wage data, and information provided in a report issued by the Department in 1969 that included salary data for executive, administrative, and professional employees, the Department increased the long test salary level for executive employees to $125 per week when the salary level data showed that 20 percent of executive employees from all regions and 12 percent of executive employees in the West earned less than $130 a week.
In 1975, rather than follow the prior approaches, the Department updated the 1970 salary levels based on increases in the Consumer Price Index, but adjusted downward “to eliminate any inflationary impact.”
In 2004, the Department replaced the separate long and short tests with a single “standard” salary level test of $455 per week, which was paired with a “standard” duties test for executive, administrative, and professional employees, respectively. The Department noted, in accord with numerous comments received during that rulemaking, that as a result of the outdated salary level, “the `long' duties tests [had], as a practical matter, become effectively dormant” because relatively few salaried employees earned below the short test salary level.
In setting the new standard salary level in 2004, the Department used Current Population Survey (CPS) Merged Outgoing Rotation Group (MORG) data collected by BLS that encompassed most salaried employees, including nonexempt salaried employees. The Department selected a standard salary level of $455 per week, which at the time was roughly equivalent to earnings at the 20th percentile of two subpopulations: (1) Salaried employees in the South and (2) salaried employees in the retail industry nationwide. Although prior salary levels had been based on salaries of approximately the lowest 10 percent of exempt salaried employees in low-wage regions and industries, the Department explained that the change in methodology was warranted in part to account for the elimination of the short and long tests, and because the data sample included nonexempt salaried employees, as opposed to only exempt salaried employees.
The Department published a final rule updating the salary level twelve years later, in 2016.
The FLSA states that its minimum wage and overtime requirements “shall not apply with respect to . . . any employee employed in a bona fide executive, administrative, or professional capacity . . . (as such terms are defined and delimited from time to time by regulations of the Secretary . . .).”
In 1949, the Department summarized the role of the salary level tests over the preceding decade, explaining:
In this long experience, the salary tests, even though too low in the later years to serve their purpose fully, have amply proved their effectiveness in preventing the misclassification by employers of obviously nonexempt employees, thus tending to reduce litigation. They have simplified enforcement by providing a ready method of screening out the obviously nonexempt employees, making an analysis of duties in such cases unnecessary. The salary requirements also have furnished a practical guide to the inspector as well as to employers and employees in borderline cases. In an overwhelming majority of cases, it has been found by careful inspection that personnel who did not meet the salary requirements would also not qualify under other sections of the regulations as the Divisions and the courts have interpreted them.
The Department again referenced these principles in the Kantor Report, reiterating, for example, that the salary level tests “provide[”] a ready method of screening out the obviously nonexempt employees[,]” and that employees “who do not meet the salary test are generally also found not to meet the other requirements of the regulations.”
For over 75 years the Department has used a salary level test as a criterion for identifying bona fide executive, administrative, and professional employees. Some statements in the Department's regulatory history have at times, however, suggested a greater role for the salary level test. These include, for instance, a statement from the 1940 Stein Report that salary is “ `the best single test of the employer's good faith in characterizing the employment as of a professional nature.' ”
As explained in the NPRM, the
The district court's summary judgment decision endorsed the Department's historical approach to setting the salary level and held the 2016 final rule unlawful because it departed from it. The district court approvingly cited the Weiss Report and explained that setting “the minimum salary level as a floor to 'screen[ ] out the obviously nonexempt employees' ” is “consistent with Congress's intent.”
By excluding from exemption, without regard to their duties, 4.2 million workers who would have otherwise been exempt because they passed the salary basis and duties tests established under the 2004 final rule, the 2016 final rule was in tension with the Act and with the Department's longstanding policy of setting a salary level that does not “disqualify[ ] any substantial number of” bona fide executive, administrative, and professional employees from exemption.
The Department has therefore reexamined the 2016 final rule in light of the district court's decision and the salary level's historical purpose. The district court's decision underscores that except at the relatively low levels of compensation where EAP employees are unlikely to be found, the salary level is not a substitute for an analysis of an employee's duties. It is, at most, an indicator of those duties. For most white collar, salaried employees, the exemption should turn on an analysis of their actual functions, not their salaries, as Congress instructed. The salary level test's primary and modest purpose is to identify potentially exempt employees by screening out obviously nonexempt employees.
In light of these considerations, as noted in the NPRM, the Department has concluded that, while an increase in the standard salary level from $455 per week is warranted, the increase to $913 per week in the 2016 final rule was inappropriate. The Department has therefore engaged in this rulemaking to realign the salary level with its appropriate limited purpose, to address the concerns about the 2016 final rule identified by the district court, and to update the salary level in light of increased employee earnings.
In its NPRM, the Department proposed to rescind formally the 2016 final rule and to update the salary level by setting the salary level equal to the 20th percentile of earnings of full-time salaried workers in the lowest-wage region (the South) and/or in the retail industry nationally. The Department applied this method to pooled CPS MORG data for 2015 to 2017, adjusted to 2017, producing a level of $641 per week. To reflect employees' anticipated compensation at the time the rule would become effective, the Department then inflated this level to January 2020 using the compound annual growth rate in earnings since the 2004 rule. This methodology resulted in a proposed salary level of $679 per week ($35,308 per year). The Department estimated that at this level, 1.1 million employees who earn at least $455 per week but less than $679 per week would, without some intervening action by their employers, gain overtime eligibility.
The Department also stated that applying the 2004 final rule's methodology to set the salary level would ensure that overtime-eligible workers continue to receive the protections Congress intended, while avoiding the concerns that led to the invalidation of the 2016 rule. 84 FR 10903. The Department explained that adhering to the 2004 final rule's methodology was reasonable and appropriate, noting that it has enforced the 2004 final rule's salary level for nearly 15 years—the second-longest period (after the salary levels set in 1975) for any part 541 salary test.
In the final rule, the Department adopts its proposed methodology for setting the standard salary level, with one minor modification. The Department will set the salary level equal to the 20th percentile of earnings of full-time salaried workers in the lowest-wage region (the South) and/or in the retail industry nationally. To calculate the salary level, the Department used updated CPS earnings data that BLS has compiled since the Department drafted its proposal. Specifically, the Department applied the adopted methodology to pooled CPS MORG data for July 2016 to June 2019, adjusted to reflect 2018/2019. As discussed below, rather than projecting the salary level to January 2020, as proposed in the NPRM, the Department has instead used the most recent data available at the time the Department drafted this final rule. This results in a salary level of $684 per week.
The Department believes that this method will set an appropriate dividing line between nonexempt and potentially exempt employees by screening out from exemption employees who, based on their compensation, are unlikely to be bona fide executive, administrative, or professional employees. In addition, the use of earnings data from the South and the retail industry will ensure that the salary level is suitable for employees in low-wage regions and industries. This approach will also maintain the prominence of the duties test by ensuring that the salary level alone does not disqualify from exemption a substantial number of employees who meet the duties test. This is consistent with the duties test's historical function, and will alleviate a major concern—overemphasis on the salary level test—that led to the 2016 rule's invalidation.
Once this rule is effective, white collar employees who are subject to the salary level test and earn less than $684 per week will not qualify for the EAP exemption, and therefore will be entitled to overtime pay. Employees earning this amount or more on a salary or fee basis will be exempt if they meet the standard duties test. As a result of this updated salary level, 1.2 million currently exempt employees who earn at least $455 but less than the updated standard salary level of $684 per week will, without some intervening action by their employers, gain overtime eligibility. In addition, 2.2 million white collar workers earning within this salary range who are currently nonexempt because they do not meet the standard duties test will have their overtime-eligible status strengthened because their exemption status will be clear based on their salary alone.
As was the case in the responses to the July 26, 2017 RFI and in feedback received at the public listening sessions, commenters to the NPRM overwhelmingly agreed that the salary
The vast majority of commenters also agreed that the Department should continue to set the salary level on a nationwide basis rather than having different salary levels that vary by region, industry, or some other factor.
The Department maintains that the FLSA's delegation of authority to the Secretary to “define[ ] and delimit[ ]” the terms of the section 13(a)(1) exemption includes the authority to set a salary level. While the language of section 13(a)(1) precludes the Department from adopting a salary-only test because salary “is not 'capacity' in and of itself,” 84 FR 10907;
The Department agrees with the vast majority of commenters who supported increasing the salary level. The currently enforced level of $455 was set a decade and a half ago in 2004. Like all previous salary levels, its effectiveness as a dividing line between nonexempt and potentially exempt employees has diminished over time, and the level should therefore be updated to align with growth in earnings in the intervening years. While the Department is sensitive to the views of commenters who contended that any increase would be challenging for businesses, historical experience has shown that incremental, reasonable salary level increases such as the one in this final rule are feasible and do not have significant adverse economic consequences. Additionally, as discussed below, the salary level set in this final rule takes these commenters' concerns into account by using wages in the South and the retail industry.
As in the past, the Department chooses to set a nationwide salary level and declines to establish multiple salary levels based on region, industry, employer size, or any other factor. Having multiple salary levels would make the regulations more complicated; for example, regional variations would introduce unnecessary complexity, particularly for employers and employees who operate or work across state lines. As the Department has explained when previously rejecting regional salary thresholds, adopting multiple different salary levels would, at minimum, create significant administrative difficulties “because of the large number of different salary levels this would require.” 69 FR 22171; 81 FR 32411. Likewise, the Department declines to set any additional industry-specific salary levels. The Department has rarely created such levels.
Commenters diverged regarding the appropriate level at which to set the new salary level. As a general matter, with some exceptions, employer representatives supported the Department's proposal, while employee representatives opposed it and favored a level at least as high as the one set in the 2016 final rule.
The vast majority of employer representatives supported the Department's proposal to use the 2004 methodology to update the salary level.
Commenters who supported the proposal also stated that unlike the 2016 final rule, the proposal was suitable and manageable for low-wage regions and
Many employer representatives maintained that the proposed rule's salary level resulted in a more appropriate number of employees who would become newly nonexempt—1.1 million in the first year—compared to the 2016 final rule, which would have resulted in 4.2 million such workers in the first year. They noted that the smaller number of newly nonexempt employees would make it easier for employers to absorb the costs of compliance,
A few commenters, while generally supportive of the Department's approach in the NRPM, advocated for a salary level lower than the one proposed. These stakeholders maintained that to ensure that the salary level could accommodate low-wage regions and industries, the Department should exclude higher-wage states from the earnings data used to set the salary level. For example, some commenters urged the Department to include only the East South Central and West South Central Census Divisions, which include the lower-wage states of Kentucky, Tennessee, Alabama, Mississippi, Louisiana, Arkansas, Oklahoma, and Texas,
Employee representatives, conversely, generally stated that the salary level should be raised significantly above the level proposed in the NPRM or that the duties test should be significantly strengthened.
Many employee representatives maintained that the salary level proposed in the NPRM is inconsistent with the purpose of the FLSA and the EAP exemption. In general, these commenters contended that the proposed salary level was too low to adequately distinguish between bona fide EAP employees and those who were intended to be eligible for overtime, and that the rule would result in the exemption of lower-wage workers with limited bargaining power, whom the statute was designed to protect.
Commenters also noted that according to the Department's own estimates, 84 FR 10951, the proposed rule would result in 2.8 million fewer workers newly entitled to overtime pay in the first year than the 2016 final rule.
Some commenters also asserted that the proposed salary level would result in a higher risk of misclassification relative to the 2016 final rule, as well as more litigation, because more employees' exempt status would turn on the duties test rather than the salary level test.
Commenters who opposed the proposed rule also criticized the Department's reliance on the reasoning of the
Many employee commenters asserted that if the Department did not substantially raise the salary level above the proposed level, it should establish a more rigorous duties test such as the former long test, which set specific limits on the performance of nonexempt work.
Finally, several employee representatives also asserted that by adopting the 2004 methodology in the NPRM, the Department perpetuated a methodological error that the 2016 final rule characterized as a “mismatch.”
Conversely, employer representatives disagreed with the “mismatch” rationale. They stated, for example, that the standard duties test is not identical to the short duties test, and that in 2004, the Department accounted for its change in the structure and data set used for the EAP exemption by adjusting the percentile used for determining the salary level.
The Department appreciates the thoughtful comments it received regarding the salary level. After considering these comments, the Department has decided to retain the approach from the proposed rule with one small change. As proposed, the Department is using CPS earnings data to set the salary level equal to the 20th percentile of full-time salaried workers in the lowest-wage Census Region (the South) and/or the retail industry nationwide. To set the salary level, the Department applied this methodology to pooled CPS MORG data for July 2016 to June 2019, adjusted to reflect 2018/2019. This results in a final rule salary level of $684 per week ($35,568 for a full-year worker). For the reasons discussed below, the Department is not inflating the salary level forward to January 2020 as was proposed in the NPRM, but instead has used the most recent available actual wage data.
As an initial matter, the Department believes that the proposed salary level is consistent with, and faithful to, the FLSA's purpose. As noted in the NPRM, the FLSA explicitly directs that bona fide executive, administrative, and professional employees “shall not” be subject to the statute's minimum wage and overtime requirements. 29 U.S.C. 213(a)(1); 84 FR 10903. As such, when defining the contours of the EAP exemption, while the Department must, of course, ensure that employees who are subject to the Act's coverage receive its benefits, it must also ensure that employees whom Congress has directed “shall” be exempt from coverage are, in fact, exempt. The 2016 final rule was in tension with this purpose, as it would have newly disqualified 4.2 million workers from exemption simply because of their salaries, regardless of their duties.
The Department believes that this final rule strikes the appropriate balance by using the salary level, in line with its historical purpose, to screen out obviously nonexempt employees. As explained above, the Department articulated this purpose in the Weiss Report in 1949, when it explained that the salary level tests “prevent[ed] the misclassification by employers of obviously nonexempt employees, thus tending to reduce litigation” and “simplified enforcement by providing a ready method of screening out the obviously nonexempt employees” who, “[i]n an overwhelming majority of cases . . . would also not qualify under other sections of the regulations as the Divisions and the courts have interpreted them.” Weiss Report at 8. Likewise, in the Kantor Report, the Department stated the salary level tests “provide[ ] a ready method of screening out the obviously nonexempt employees,” and that employees “who do not meet the salary test are generally also found not to meet the other requirements of the regulations.” Kantor Report at 2-3. The Department referenced the screening function again in the 2004 final rule.
The Department disagrees with the proposition advanced by some employee representatives that this
Conversely, as explained in the NPRM, the 2016 final rule went beyond this purpose, and instead suggested that the salary level had a much greater role to play in determining exempt status. For example, in the 2016 final rule the Department took the position that, in light of the single standard duties test that is less rigorous than the long duties test, “the salary threshold must play a greater role in protecting overtime-eligible employees,” and that “it [was] necessary to set the salary level higher . . . because the salary level must perform more of the screening function previously performed by the long duties test.” 81 FR 32412, 32465-66.
As a result, the $913 per week salary level newly excluded 4.2 million salaried workers from exemption regardless of the duties they performed. The district court concluded that this would exclude from exemption “so many employees who perform exempt duties,” and in fact excluded “entire categories of previously exempt employees who perform `bona fide executive, administrative, or professional capacity' duties[.]” 275 F. Supp. 3d at 806-7. Accordingly, it invalidated the rule.
In sum, as explained in the NPRM, the Department believes that the 2016 final rule “untethered the salary level test from its historical justification[,]” 84 FR 10901, and that this resulted in its invalidation by the district court. For this reason, the Department declines to return to the 2016 methodology or to set an even higher salary level. In contrast, as noted in the NPRM, the methodology in the 2004 final rule, which the Department is applying in this rule, “has withstood the test of time, is familiar to employees and employers, and can be used without causing significant hardship or disruption to employers or the economy, while ensuring overtime-eligible workers continue to receive the protections intended by Congress.”
The Department also believes that the number of workers affected by the salary level set in this final rule confirms that the level is appropriate. The Department estimates that the final rule will result in 1.2 million workers who will be newly overtime-eligible in the first year as a result of the increased salary level. The number of affected workers is very similar to the 1.3 million workers affected by the 2004 rule's salary level increase.
Moreover, as the Department explained in the NPRM, because the 2016 final rule set the salary level “at the low end of the historical salary range of short test salary levels,” 81 FR 32414, it failed to account for the absence of a long test that historically exempted white collar workers with lower salaries but whose duties confirmed they were bona fide EAP employees. Thus, the impact of the 2016 final rule would have been the inverse of the “mismatch” the Department sought to correct. It would have resulted in employees who, due to the nature of their duties, have historically been classified as exempt suddenly becoming nonexempt simply because of their salaries.
As a result, the 2016 final rule was in tension with the salary level's limited role in defining the EAP exemption, as it conflicted with the Department's longtime practice of setting a salary level that did not “disqualify[ ] any substantial number of” bona fide executive, administrative, and professional employees from exemption, Kantor Report at 5, leading directly to the district court's invalidation of the rule. While the Department has long recognized that it is inevitable that some employees will be incorrectly excluded from exemption since the salary level is “a dividing line [that] cannot be drawn with great precision but can at best be only approximate[,]” Weiss Report at 11, the Department may not disregard Congress's express directive to exempt bona fide EAP employees. Conversely, the 1.2 million lower-income workers who will become nonexempt as a result of this rule's increase to the standard salary level will not include a substantial number of workers whose duties have historically qualified them as bona fide EAP employees.
Thus, while employee representatives criticized the narrower scope of this rule compared to the 2016 final rule, the fact that this final rule affects considerably fewer employees than the 2016 final rule confirms, rather than undermines, its appropriateness. Given that the 2016 final rule was invalidated due to its overbreadth, that rule is not a reasonable benchmark for concluding that the number of affected employees under this rule is too low.
As noted above, employee commenters also objected to the Department's reliance on the
Such reliance is reasonable and prudent as it reduces the vulnerability of new rules to legal challenges or injunctions, and maximizes the likelihood that a new rule can be implemented immediately. Notably, it has been over three years since the 2016 rule was published, and nearly three years since its stated effective date. Because of the rule's invalidation, however, the currently enforced salary level remains at $455 per week, which the Department and nearly all commenters agree must be updated. Adoption of a salary level that reduces, to the extent possible, the likelihood that the rule will be enjoined is the best way to ensure that workers can reap the rule's benefits as soon as possible rather than waiting for the outcome of potentially lengthy litigation. The Department believes that the salary level in this final rule accomplishes that objective, particularly given the district court's implicit endorsement of the 2004 methodology.
Additionally, the Department is mindful of the concerns the district court cited. As articulated in the NPRM and above, the 2016 final rule was, at minimum, in tension with the FLSA because it resulted in 4.2 million employees, including employees who were historically exempt under the long test, becoming nonexempt based on their salaries alone, even though the Act directs that the EAP exemption be based on “capacity.” This threatened to make “salary rather than an employee's duties determinative” of an employee's status under the EAP exemption.
The Department disagrees with the employee commenters who asserted that the 2004 methodology created a “mismatch” that must be corrected by a salary level comparable to the one from the 2016 final rule or a restoration of the long duties test.
The commenters relying on the “mismatch” theory appear to assert that the 2004 final rule should have paired the single duties test with a higher salary threshold such as the short test because the Department was obligated to preserve the previous structure of pairing a more rigorous duties test with a lower salary level test, or a less rigorous duties test with a higher salary level.
Moreover, the Department believes it would have been inappropriate to adopt the higher short test salary level after removing the long duties test in the 2004 final rule.
Indeed, the 2016 final rule's attempt to correct the “mismatch” by setting the salary level “at the low end of the historical range of short test salary levels,” 81 FR 32409, created the precise legal risks that the 2004 final rule attempted to avoid. While the Department previously relied on the mismatch theory in defending the 2016 final rule in litigation, the district court, in declaring the 2016 final rule invalid for the reasons set forth above, implicitly rejected application of the mismatch theory in reaching its conclusion. As explained above, the district court found that the salary level set by the 2016 final rule improperly substituted employee salaries for an analysis of employees' duties.
Additionally, as noted in the NPRM, the mismatch rationale failed to account for the substantial number of years during which the long duties test was effectively dormant. 84 FR 10908-09;
The Department continues to believe that the post-1991 landscape is “highly relevant” to its approach here, 84 FR 10909, and disagrees with the employee representatives contending otherwise. The one-test system effectively in place for the nearly three decades has created significant reliance interests and
Regarding EPI's request that the Department “include the value of the Kantor long test in the final rule,” as explained below and as described in more detail in the economic analysis, the Department has considered the Kantor long test methodology as an alternative. But as the 2004 final rule explained, the Kantor method, which uses the lowest 10 percent of exempt salaried employees in low-wage regions and industries, requires “uncertain assumptions regarding which employees are actually exempt[.]” 69 FR 22167. It is also more complex to model and thus is less accessible and transparent. And it presents a circularity problem: The Kantor method would determine the population of exempt salaried employees, while being determined by the make-up of that population. The 2004 methodology of setting the minimum salary level based on the lowest 20 percent of
The Department also disagrees with commenters who stated that a significantly higher salary level is justified in order to reduce further the risk of employee misclassification. The Department recognizes that, in addition to conferring minimum wage and overtime protections on newly nonexempt employees, an updated salary level clarifies and strengthens the nonexempt status of employees who fail the duties test and earn between the previous salary level and the new one (
But the laudable goal of reducing misclassification cannot overtake the statutory text, which grounds an analysis of exemption status in the “capacity” in which someone is employed—
The Department also declines to adopt a lower salary level than the one proposed in the NPRM, as some employer representatives suggested. As explained above, by setting the salary level at the low end—the 20th percentile—of the earnings of full-time salaried employees in the South and/or retail industry, the Department, consistent with its historical practice, has tailored the salary level to the needs of the lowest-wage regions and industries. While some employer representatives stated that the Department could use an even narrower subset of data by eliminating from consideration higher-wage states, the Department believes that using the entire South—the lowest-wage Census Region—in addition to the retail industry nationwide strikes the appropriate balance by setting a salary level that is based on low-wage areas but can still serve as a meaningful dividing line in higher-wage areas as well.
In sum, after considering the comments received, the Department has decided to update the salary level by applying the 2004 methodology to current data. As noted in the NPRM, using this methodology “promotes familiarity and stability for the workplace, ensures workers the important wage protections contained in the Act, . . . minimizes the uncertainty and potential legal vulnerabilities that could accompany a novel and untested approach,” “avoids new regulatory burdens,” and sets a salary level that “accounts for nationwide differences in employee earnings and . . . work[s] appropriately with the standard duties test.” 84 FR 10909.
The Department declines to make any changes to the duties test, such as adopting a duties test similar to the long duties test, which some employee representatives advocated as an alternative or complement to a higher salary level. As explained above, the standard duties test has been in effect for 15 years, and the short duties test, to which it is similar, was functionally the predominant test in use for the preceding 13 years. This approach has never been challenged. As a result, both employees and employers are accustomed to these tests. Moreover, a large body of jurisprudence interprets these duties tests, and so changing these tests could increase regulatory uncertainty and result in costly litigation. The Department also remains
Accordingly, the Department declines to return to the more complicated long duties test. The Department believes that the standard duties test, which focuses on whether an employee's “primary duty” consists of EAP tasks, can appropriately distinguish bona fide EAP employees from nonexempt workers.
The Department considered a number of alternatives to the salary level in this final rule.
In light of comments from some employer representatives, the Department also considered using the 2004 methodology but eliminating the District of Columbia, Maryland, and Virginia from the data set used to determine the salary level due to their higher levels of employee earnings. However, as discussed above, the Department believes that using the entire South and the retail industry nationwide results in an appropriate nationwide salary level that is based on low-wage regions but can still serve as a meaningful dividing line in higher-wage regions. Using the entire South is also consistent with the methodology used in the 2004 final rule.
In response to a comment from EPI, the Department also considered adopting the methodology that was used to derive the long test salary level prior to 2004 (the Kantor long test method), which used the lowest 10 percent of exempt salaried employees in low-wage regions and industries. However, as explained in greater detail above, the Department declined to do so because while the Kantor methodology produces a salary level that differs from the level set in this final rule by less than 6 percent, it depends on uncertain and circular assumptions, and is more complex to model and thus less accessible and transparent.
Finally, the Department considered using the methodology from the 2016 final rule to set the salary level, as suggested by many employee representatives. However, as explained at length above, the Department believes that methodology was inappropriate because it resulted in too many employees being newly classified as nonexempt based on their salaries alone, thus supplanting the role of the duties test. Moreover, the district court invalidated the 2016 final rule. Therefore, the Department has chosen to use the 2004 methodology, which, as noted above, screens out obviously nonexempt workers, works well with the standard duties test, and has never been challenged during the fifteen years in which it has been enforced by the Department.
The Department proposed to inflate the salary level to reflect anticipated wage growth to January 2020, the final rule's estimated effective date. Most commenters did not address this aspect of the proposal, but some employer representatives opposed it. A few stated that the proposed approach was inconsistent with the Department's past practice of setting the salary level using the most recent available data on actual salaries paid to employees, rather than inflationary metrics.
In the final rule, instead of projecting the salary level to January 2020, the Department has set the salary level using the most recent data available at the time the Department has drafted the final rule. The Department is using pooled CPS MORG data from July 2016 to June 2019, adjusted to reflect 2018/2019. As some commenters noted, using recent actual wage data is consistent with the approach the Department has taken in prior rulemakings.
It is also consistent with the Department's historical practice (with only one exception, in 1975) of declining to use inflation to adjust the salary level for the part 541 exemption.
Many employer representatives who commented on the issue supported the NPRM's independent proposal to rescind the 2016 final rule.
The Department is finalizing the formal rescission of the 2016 final rule as proposed. Thus, in addition to replacing the 2016 final rule functionally by revising the part 541 regulatory text in the Code of Federal Regulations, this final rule also formally rescinds the 2016 final rule. This rescission operates independently of the new content in this final rule, as the Department intends it to be severable from the substantive rule for revising part 541. Thus, even if the substantive provisions of this final rule revising part 541 are invalidated, enjoined, or otherwise not put into effect, the Department intends the 2004 final rule to remain operative, not the enjoined 2016 final rule that it is rescinding.
Particularly given the recent history of litigation in this area, the rescission of the 2016 final rule is necessary to provide certainty and clarity to employees and employers about what salary level will be effective if this final rule were to be invalidated, enjoined, or otherwise not put into effect. As explained at length above, the Department believes that the salary level set in the 2016 final rule was inappropriate. Moreover, given the district court's invalidation of the 2016 final rule, the 2004 final rule, which has never been challenged in court, is the logical framework to take the place of this rule if this rule were to be struck down.
The Department has applied the standard salary level to Puerto Rico since 2004.
It is the Department's belief that PROMESA does not apply to this final rule as it is a new rulemaking, and thus not “related to” the 2015 overtime rule NPRM within the meaning of PROMESA. Section 404, however, reflected Congress's apprehension with increasing the salary level in Puerto Rico, and given the current economic climate there, the Department proposed to set a special salary level in Puerto Rico of $455 per week—the level that currently applies under PROMESA.
The Department also currently applies the standard salary level to the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands (CNMI).
Few commenters addressed this issue, but those who did all supported the Department's proposal. The Saipan Chamber of Commerce, for example, stated that “U.S. territories face economic challenges not experienced by businesses and employers on the U.S. mainland,” and the World Floor Covering Association (WFCA) similarly cited the “unique economies” in these territories. The Hotel Association of the Northern Mariana Islands referenced several CNMI-specific concerns, including that “[w]ages across all industries in the CNMI, including the hospitality industry, have been historically lower than their stateside counterparts.” The CNMI chapter of SHRM expressed similar concerns.
After reviewing the comments received, the Department is finalizing this aspect of the NPRM as proposed. As such, in this final rule the Department will set a special salary level of $455 per week for Puerto Rico, the Virgin Islands, Guam, and the CNMI.
As discussed in the NPRM, the Department has historically applied a special salary level test to employees in American Samoa because minimum wage rates there have remained lower than the federal minimum wage.
The special salary level test for employees in American Samoa has historically equaled approximately 84 percent of the standard salary level.
The Department received no comments on this proposal and will adopt the methodology set forth in the NPRM. Accordingly, in this final rule the Department will set a special salary level of $380 per week for employees in American Samoa.
The Department has permitted employers to classify as exempt employees in the motion picture producing industry who are paid a specified base rate per week (or a proportionate amount based on the number of days worked), so long as they meet the duties tests for the EAP exemption.
The Department did not receive any comments on the proposed base rate for motion picture employees. The final rule adopts the methodology set forth in our proposal, which using the new standard salary level ($684 per week) results in a base rate of $1,043 per week (or a proportionate amount based on the number of days worked).
In the 2016 final rule, the Department for the first time allowed employers to count nondiscretionary bonuses and incentive payments toward the standard or special salary levels.
Most commenters representing employers supported allowing nondiscretionary bonuses and incentive payments to count towards the standard salary level requirement. Employer representatives supporting the bonuses proposal (or an expanded version of it) asserted that nondiscretionary bonuses and incentive payments constitute a large and important part of the total compensation package for many exempt employees. Several commenters, including the Chamber, FMI, IFA, and NRA, noted that, in light of commenter feedback, the Department has previously acknowledged this point in the NPRM and in the 2016 final rule.
Although several employer representatives supported the proposal without reservation, a larger number objected to the proposal's restriction that nondiscretionary bonuses and incentive payments could only satisfy up to 10 percent of the standard salary level. Some of these commenters urged the Department to allow bonuses to satisfy more than 10 percent of the standard salary level, but declined to specify an exact amount.
Some commenters critical of the proposed 10 percent limit asserted that it is not reflective of the compensation practices in their industry, where bonuses and incentive payments often exceed 10 percent of an employee's fixed salary.
Although few organizations representing employees commented on the bonuses proposal, those who did were unanimous in voicing their opposition. NELA, Nichols Kaster, Rudy Exelrod, and Smith Summerset & Associates LLC (Smith Summerset) asserted that allowing annual bonuses and incentive payments to satisfy any portion of the salary level test would undermine the premise that only workers with a minimum level of dependable and predictable pay should be exempt from the FLSA's overtime protections. Relatedly, the AFL-CIO expressed concern that the proposal would “provide a means for employers to manipulate employees' salaries to
Several commenters disputed that nondiscretionary bonuses and incentive payments are indicative of exempt status. For example, NELA and TELA emphasized that such payments do not convey ownership interests in the business, and asserted that their members “have represented many categories of employees who receive various nondiscretionary bonuses, including middle management and lower level employees[.]” By contrast, Smith Summerset asserted that nondiscretionary bonuses and incentive payments “are not an important pay component for the relatively lowly paid employees who would be affected by the [proposal],” who the firm described as “most in need of the certainty and regularity of a salary” (emphasis in original).
Finally, employee representatives worried that the proposal would undermine the clarity and effectiveness of the salary level test. For example, AFL-CIO stated that “[i]ncluding bonuses in the calculation could create confusion as to whether employees meet the salary threshold test and are overtime eligible.”
After carefully considering commenter feedback, the Department has decided to adopt the proposal without modification—
Feedback from employer representatives responding to the NPRM has reinforced the Department's view in the previous rulemaking that the provision of nondiscretionary bonus and incentive payments has become sufficiently correlated with EAP status. At the same time, the Department acknowledges that nonexempt employees may receive nondiscretionary bonuses and incentive payments, and that the part 541 regulations have historically looked only to payments made on a salary or fee basis to satisfy the minimum salary level. The Department believes that allowing employers to credit nondiscretionary bonuses towards up to 10 percent of the standard or special salary levels strikes an appropriate balance between accommodating legitimate pay practices for a growing number of bona fide EAP employees, while not undermining the salary basis requirement.
The Department has decided against raising or eliminating the proposal's 10 percent limitation. The Department continues to believe in the basic logic of the salary requirement. Capping the crediting of nondiscretionary bonuses and incentive payments at 10 percent of the standard salary level ensures that the salary level test remains predominantly a test of
For similar reasons, the Department has decided against expanding the proposal to allow additional kinds of payments to count towards the standard salary level, such as discretionary bonuses, employer benefit contributions, or the value of board, lodging, and facilities. The Department has never allowed such payments to count towards any of the earning thresholds required for the EAP exemption, including under the HCE test created in 2004.
NELA, Smith Summerset, and other commenters questioned how the proposed rule would treat employees affected by the proposal whose employment ends before the end of a 52-week period. Here, consistent with the treatment of employees under the existing HCE test,
The final rule permits employers to meet the salary level requirement by making a catch-up payment within one pay period of the end of the 52-week period.
The Department is sensitive to concerns raised by employee representatives and some employer commenters that the bonuses provision may increase compliance costs and litigation. These effects, however, are mitigated by the fact that crediting nondiscretionary bonuses and incentive pay towards the standard salary level is purely optional. Employers, who would predominantly bear the cost of compliance and litigation expenses, are presumably best positioned to evaluate whether the potential costs of such crediting would outweigh the potential benefits. While the AFL-CIO contends that the bonuses proposal could theoretically “lead to anomalous results, where employees working side by side performing the same job would be exempt and nonexempt, simply because inclusion of the bonus would raise one employee over the salary threshold[,]” this has always been true of the salary level test, given that employees performing identical job duties may receive different salaries.
The Department emphasizes that this rulemaking does not change the requirement in § 541.601(b)(1) that highly compensated employees must receive at least the standard salary amount each pay period on a salary or fee basis without regard to the payment of nondiscretionary bonuses and incentive payments. While nondiscretionary bonuses and incentive payments (including commissions) may be counted toward the HCE total annual compensation requirement, the HCE test does not allow employers to credit these types of payments toward the standard salary requirement. The Department continues to believe that permitting employers to use nondiscretionary bonuses and incentive payments to satisfy the standard salary portion of the HCE test is not appropriate because employers are already permitted to fulfill more than three quarters of the HCE total annual compensation requirement with commissions, nondiscretionary bonuses, and other forms of nondiscretionary deferred compensation (paid at least annually). Thus, when conducting the HCE analysis, employers must remain mindful that HCEs must receive the full standard salary amount each pay period on a salary or fee basis.
Finally, nothing adopted in this final rule alters the Department's longstanding position that employers may pay their exempt EAP employees additional compensation of any form beyond the minimum amount needed to satisfy the salary basis and salary level tests.
As noted in the NPRM, the Department's 2004 final rule created a new test under the EAP exemption, known as the highly compensated employee (HCE) test, based on the rationale that it is unnecessary to apply the standard duties test in its entirety to employees who earn at least a certain amount annually—an amount substantially higher than the annual equivalent of the weekly standard salary level—because such employees “have almost invariably been found to meet all the other requirements of the regulations for exemption.”
To meet the HCE test, an employee must earn at least the amount specified in the regulation in total annual compensation and must customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee.
The Department stated in the NPRM that it continues to believe that the HCE test is a useful alternative to the standard salary level and duties tests for highly compensated employees.
The Department received fewer comments addressing the HCE proposal than on many other issues in the NPRM, and those who addressed the HCE proposal often did not provide detailed feedback. Nearly all the commenters on the HCE proposal were employer representatives, most of whom opposed the Department's proposal to increase the HCE compensation level to a level equal to the 90th percentile of all full-time salaried workers ($147,414). These commenters instead supported keeping the HCE level at $100,000,
Commenters who favored keeping the HCE threshold at $100,000 or increasing it by a lower amount expressed concern that the proposed level was so high as to put the HCE test for the EAP exemption out of reach for employers in lower-wage regions and industries. For example, the Chamber stated that such employers would not be able to access the HCE test “on equal terms,” because “[w]hether an employee qualifies for exemption under the highly compensated test would depend more on where the employee works than how much the employer values the employee's duties.” Some of these commenters suggested that the Department should calculate the HCE threshold using data from a lower-wage region of the country, such as the South Census Region or a subset thereof, which would result in a lower threshold than using a national data set.
Other commenters objected to the Department's proposed HCE threshold on the ground that it would require employers to reassess the exempt status of many employees using the standard duties test, rather than the simpler HCE test. The HR Policy Association and PPWO explained that “[a] significant amount of administrative effort will be needed to determine that an employee who had been classified as exempt through application of the HCE test remains exempt under application of the standard duties test.” The National Association of Manufacturers explained that this process “is certain to be lengthy” as “employers will need to survey managers, conduct follow-up interviews, hold new budget discussions, and plan and implement changes to each individual employee's duties or status.”
The Department has considered the comments regarding the HCE test for exemption and decided to lower the percentile at which to set the HCE threshold from that proposed in the NPRM. The Department agrees with commenters that increasing the HCE threshold so dramatically would result in significant administrative burdens and compliance costs, including costs associated with reassessing the exempt status of many highly paid white collar workers under the standard duties test. Yet while employers would incur these burdens and costs, the vast majority of currently exempt HCE employees would remain exempt (under the standard test).
Accordingly, the Department is setting the HCE total annual compensation level at the 80th percentile of full-time salaried workers nationally using pooled 2018/2019 CPS data.
As the Department noted in the NPRM, even a well-calibrated salary
Throughout the years, various stakeholders have submitted comments asking the Department to establish a mechanism to update the thresholds automatically. The Department has twice declined such requests, once in 1970, when it concluded that “such a proposal [would] require further study,” 35 FR 884, and once in 2004, 69 FR 22171-72. However, in the 2016 final rule, the Department for the first time adopted a mechanism to automatically update the earnings thresholds every three years, applying the same methodology used to initially set each threshold in that rulemaking. 81 FR 32430. The district court's summary judgment decision invalidating the 2016 final rule stated that because the standard salary level established by the 2016 final rule was unlawful, the mechanism to automatically update that standard salary level was “similarly . . . unlawful.”
In the NPRM, the Department expressed its intent to evaluate the part 541 earnings thresholds more frequently through rulemaking. 84 FR 10914-15. Specifically, the Department stated in the NPRM that it intended to propose updates to the standard salary level and HCE total compensation threshold on a quadrennial basis (
Some commenters supported the Department's proposal to propose updates to the earnings thresholds every four years unless unwarranted due to economic or other factors.
Other commenters did not support the Department's commitment to evaluate the thresholds regularly. Many commenters felt that there was no need to adhere to a fixed schedule, with some asserting that doing so could deprive the Department of flexibility to adapt to unanticipated circumstances. These commenters advocated for the Department to continue its practice of updating the salary whenever it deems such updates appropriate.
Other commenters, including employee representatives, took the opposite tack, requesting that the Department automatically update the salary thresholds.
A number of commenters generally supported regular updates to the earnings thresholds, but suggested a frequency other than every four years. For instance, ASTA suggested that a six-year gap “would strike a better balance in recognizing [its] and [its] member employers' legitimate concerns . . . than the four-year interval included in the NPRM.” The Pennsylvania Credit Union Association wrote in support of updating the thresholds no less frequently than every three years, while Representative Daniel Lipinski “urge[d] the Department to review the [standard salary] threshold more frequently than once every four years.” AFSCME supported annual updates.
In this final rule, the Department reaffirms its intent to update the standard salary level and HCE total annual compensation threshold more regularly in the future using notice-and-comment rulemaking. The Department agrees with those commenters who stated that long periods without updates serve neither employee nor employer interests, since they diminish the usefulness of the salary level test and cause future increases to be larger and
After reviewing the comments received on this issue, however, the Department declines to finalize its proposal to propose updates to the part 541 regulations quadrennially. The Department agrees with commenters who stated that this commitment could deprive the Department of flexibility to adapt to unanticipated circumstances, and believes that prevailing economic conditions, rather than fixed timelines, should drive future updates. While some commenters supported the Department's updating proposal, the reasons often underlying that support—
The Department's intention to update the part 541 regulations more regularly using notice-and-comment rulemaking will also ensure ample opportunity for public input, and provide the Department with the flexibility to update the earnings thresholds in a manner that is tailored to wages and economic conditions at the time of the update. Because the Department believes that it is important to preserve the Department's flexibility to adapt to different types of circumstances, the Department declines the suggestions by employee representatives to adopt an automatic updating mechanism as in the 2016 final rule. Lastly, while the Department understands commenter concerns regarding the lengthy time periods between recent rulemakings, in this final rule the Department is reaffirming its commitment to better implement Congress's instruction to define and delimit the EAP exemptions “from time to time”
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
In accordance with the PRA, the Department solicited comments on the FLSA information collections and the Employment Information Form collections in the NPRM published March 22, 2019,
FLSA section 11(a) provides that the Secretary of Labor may investigate and gather data regarding the wages, hours, or other conditions and practices of employment in any industry subject to the FLSA, and may enter and inspect such places and such records (and make such transcriptions thereof), question such employees, and investigate such facts, conditions, practices, or matters deemed necessary or appropriate to determine whether any person has violated any provision of the FLSA. 29 U.S.C. 211(a). The information collection approved under OMB control number 1235-0021 provides a method for the Wage and Hour Division of the U.S. Department of Labor to obtain information from complainants regarding alleged violations of the labor standards the agency administers and enforces. This final rule revises the existing information collections previously approved under OMB control number 1235-0018 (Records to be Kept by Employers—Fair Labor Standards Act) and OMB control number 1235-0021 (Employment Information Form).
This final rule does not impose new information collection requirements; rather, burdens under existing requirements are expected to increase as more employees receive minimum wage and overtime protections due to the proposed increase in the salary level requirement. More specifically, the changes adopted in this final rule may cause an increase in burden on the regulated community because employers will have additional employees to whom certain long-established recordkeeping requirements apply (
In response to these comments, the Department notes that most employers currently have both exempt and nonexempt workers and therefore have systems already in place for employers to track hours. The Department also notes that commenters did not offer alternatives for estimates or make suggestions regarding the methodology for calculating the PRA burdens. The actual recordkeeping requirements are not changing in the final rule. However, the pool of workers for whom employers will be required to make and maintain records has increased under the final rule, and as a result the burden hours have increased. Included in this PRA section are the regulatory familiarization costs for this final rule. We note, however, that this is a duplication of the regulatory familiarization costs contained in the economic impact analysis,
An agency may not conduct an information collection unless it has a currently valid OMB approval, and the Department has submitted the identified information collection contained in the proposed rule to OMB for review under the PRA under the Control Numbers 1235-0018 and 1235-0021.
Total annual burden estimates, which reflect both the existing and new responses for the recordkeeping and complaint process information collections, are summarized as follows:
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of a regulation and to adopt a regulation only upon a reasoned determination that the regulation's net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity) justify its costs. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.
Under Executive Order 12866, the Office of Management and Budget (OMB) determines whether a regulatory action is a “significant regulatory action,” which includes an economically significant action that has an annual effect of $100 million or more on the economy. Significant regulatory actions are subject to review by OMB. As described below, this final rule is economically significant.
When the Department uses a perpetual time horizon to allow for cost comparisons under Executive Order 13771,
The FLSA requires covered employers to: (1) Pay employees who are covered and not exempt from the Act's requirements not less than the federal minimum wage for all hours worked and overtime premium pay at a rate of not less than one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek, and (2) make, keep, and preserve records of their employees and of the wages, hours, and other conditions and practices of employment.
The FLSA provides a number of exemptions from the Act's minimum wage and overtime pay provisions, including one for bona fide executive, administrative, and professional (EAP) employees. The exemption applies to employees employed in a bona fide executive, administrative, or professional capacity and to outside sales employees, as those terms are “defined and delimited” by the Department.
In 2004, the Department determined that two earnings level tests should be used to help employers distinguish nonexempt employees from exempt employees: The standard salary test, which it set at $455 a week, and the highly compensated employee (HCE) total-compensation test, which it set at $100,000 per year (see section II.C for further discussion). In 2016, the Department published a final rule setting the standard salary level at $913 per week and the HCE annual compensation level at $134,004. As previously discussed, the U.S. District Court for Eastern District of Texas declared the 2016 final rule invalid.
The Department has updated the salary level test many times since its implementation in 1938. Table 1 presents the weekly salary levels
To restore the value of the standard salary level as a line of demarcation between those workers for whom Congress clearly intended to provide minimum wage and overtime protections and other workers who may be bona fide EAPs, and to maintain the salary level's continued validity, the Department is updating the standard salary level by applying the 2004 methodology to current Current Population Survey (CPS) data.
The Department estimated the number of affected workers and quantified costs and transfer payments associated with this final rule, using the currently-enforced 2004 salary level as the baseline. To produce these estimates, the Department used pooled CPS MORG data.
This analysis quantifies three direct costs to employers: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs (
In addition to the costs described above, this rule will also transfer income from employers to employees in the form of wages. The Department estimated annualized transfers will be $298.8 million. The majority of these transfers will be attributable to the FLSA's overtime provision; a smaller share will be attributable to the FLSA's minimum wage requirement. Transfers also include salary increases for some affected EAP workers
This section explains the methodology used to estimate the number of workers who are subject to the part 541 regulations and the number of potentially affected EAP workers. In this final rule, as in the 2004 final rule, the Department estimated the number of EAP exempt workers because there is no data source that identifies workers as EAP exempt. Employers are not required to report EAP exempt workers to any central agency or as part of any employee or establishment survey.
The estimates of EAP exempt workers were based on data drawn from the CPS MORG, which is sponsored jointly by the U.S. Census Bureau and BLS. The CPS is a large, nationally representative sample of the labor force. Households are surveyed for four months, excluded from the survey for eight months, surveyed for an additional four months, then permanently dropped from the sample. During the last month of each rotation in the sample (month 4 and month 16), employed respondents complete a supplementary questionnaire in addition to the regular survey.
Although the CPS MORG is a large scale survey, administered to approximately 15,000 households monthly representing the entire nation, it is still possible to have relatively few observations when looking at subsets of employees, such as exempt workers in a specific occupation employed in a specific industry, or workers in a specific geographic location. To increase the sample size, the Department pooled together three years of CPS MORG data (July 2016 through June 2019) to represent the single year from July 2018 through June 2019. Earnings for each observation from the last six months of 2016, 2017, and the first six months of 2018 were inflated to 2018/19 dollars using the Consumer Price Index for All Urban Consumers (CPI-U). For ease of presentation and because inflation is low enough for this to be trivial, these will be referred to as 2019 dollars throughout this analysis. The weight of each observation was adjusted so that the total number of potentially affected EAP workers in the pooled sample remained the same as the number for the July 2018 through June 2019 CPS MORG. Thus, the pooled CPS MORG sample uses roughly three times as many observations to represent the same total number of workers in 2018/19. The additional observations allow the Department to better characterize certain attributes of the potentially affected labor force. This pooled dataset
Some assumptions were necessary to use these data as the basis for the analysis. For example, the Department eliminated workers who reported that their weekly hours vary and provided no additional information on hours worked. This was done because the Department cannot estimate effects for these workers since it is unknown whether they work overtime and therefore unknown whether there would be any need to pay for overtime if their status changed from exempt to nonexempt. The Department reweighted the rest of the sample to account for this change (
To estimate the number of workers covered by the FLSA and subject to the Department's part 541 regulations, the Department excluded workers who are not subject to its regulations or whom the FLSA does not cover. This may happen, for instance, if a worker is not an employee under the FLSA. Excluded workers include military personnel, unpaid volunteers, self-employed individuals, clergy and other religious workers, and federal employees (with a few exceptions described below).
Many of these workers are excluded from the CPS MORG, including members of the military on active duty and unpaid volunteers. Self-employed and unpaid workers are included in the CPS MORG, but have no earnings data reported and thus are excluded from the analysis. The analysis excluded religious workers identified by their occupation codes: `clergy' (Census occupational code 2040), `directors, religious activities and education' (2050), and `religious workers, all other' (2060). Most employees of the federal government are covered by the FLSA but not the Department's part 541 regulations because the Office of Personnel Management (OPM) regulates their entitlement to minimum wage and overtime pay.
The Department estimated that in Year 1 there will be 164.5 million wage and salary workers in the United States (Figure 1). Of these, 139.4 million will be covered by the FLSA and subject to the Department's regulations (84.7 percent). The remaining 25.1 million workers will be excluded from FLSA coverage for the reasons described above. Figure 1 illustrates how the Department analyzed the U.S. civilian workforce through successive stages to estimate the number of potentially affected EAP workers.
After limiting the analysis to workers covered by the FLSA and subject to the Department's part 541 regulations, several other groups of workers were identified and excluded from further analysis since this final rule is unlikely to affect them. These include blue collar workers, workers paid on an hourly basis, and workers who are exempt under certain other (non-EAP) exemptions.
The Department excluded a total of 91.9 million workers from the analysis for one or more of these reasons, which often overlapped (
Also excluded from further analysis were workers who were exempt under certain other (non-EAP) exemptions. Although some of these workers may also be exempt under the EAP exemptions, they would independently remain exempt from the minimum wage and/or overtime pay provisions based on the non-EAP exemptions. The Department excluded an estimated 5.0 million workers, including some agricultural and transportation workers, from further analysis because they would be subject to another (non-EAP) overtime exemption.
Agricultural and transportation workers are two of the largest groups of workers excluded from the population of potentially affected EAP workers in the current analysis, and with some exceptions, they were similarly excluded in 2004. The 2004 final rule excluded all workers in agricultural industries from the analysis,
After excluding workers not subject to the Department's FLSA regulations and workers who are unlikely to be affected by this final rule (
• Be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test);
• earn at least a designated salary amount (the 2004 final rule set the salary level at $455 per week (the standard salary level test)); and
• primarily perform exempt work, as defined by the regulations (the standard duties test).
The 2004 final rule's HCE test allows certain highly-paid employees to qualify for exemption as long as they customarily and regularly perform one or more exempt job duties. The HCE annual compensation level set in the 2004 final rule was $100,000, including at least $455 per week paid on a salary or fee basis. The CPS annual earnings variable is topcoded at $150,000 (
The Department included only nonhourly workers in the analysis based on CPS data.
The CPS population of “nonhourly” workers includes workers who are paid on a piece-rate, a day-rate, or largely on bonuses or commissions. Data in the CPS are not available to distinguish between salaried workers and these other nonhourly workers. However, the Panel Study of Income Dynamics (PSID) provides additional information on how nonhourly workers are paid. In the PSID, respondents are asked how they are paid on their main job and are also asked for more detail if their response is other than salaried or hourly. Possible responses include piecework, commission, self-employed/farmer/profits, and by the job/day/mile. The Department analyzed the PSID data and found that relatively few nonhourly workers were paid by methods other than salaried. The Department is not aware of any statistically robust source that more closely reflects salary as defined in its regulations.
Weekly earnings are available in the CPS MORG data, which allowed the Department to estimate how many nonhourly workers pass the salary level tests.
The CPS MORG data do not capture information about job duties; therefore, the Department used occupational titles, combined with probability estimates of passing the duties test by occupational title, to estimate the number of workers passing the duties test. This methodology is very similar to the methodology used in the 2004 rulemaking, and the Department believes it is the best available methodology. In 2004, to determine whether a worker met the duties test, the Department used an analysis performed by WHD in 1998 in response to a request from the GAO. Because WHD enforces the FLSA's overtime requirements and regularly assesses workers' exempt status, WHD was uniquely qualified to provide the analysis. The analysis was used in both the GAO's 1999 white collar exemptions report
WHD examined 499 occupational codes, excluding nine that were not relevant to the analysis for various reasons (one code was assigned to unemployed persons whose last job was in the Armed Forces, some codes were assigned to workers who are not FLSA covered, others had no observations). Of the remaining occupational codes, WHD
The occupations identified in GAO's 1999 report and used by the Department in the 2004 final rule map to an earlier occupational classification scheme (the 1990 Census occupational codes). For this final rule, the Department used occupational crosswalks to map the previous occupational codes to the 2002 Census occupational codes and then to the 2010 Census occupational codes, which are used in the CPS MORG 2016 through 2019 data.
These codes provide information on the likelihood that an employee in a category met the duties test but they do not identify the workers in the CPS MORG who actually passed the test. Therefore, the Department designated workers as exempt or nonexempt based on the probabilities. For example, for every ten public relations managers, between five and nine were estimated to pass the standard duties test (based on probability category 2). However, it is unknown which of these ten workers are exempt; therefore, the Department must determine the status for these workers. Exemption status could be randomly assigned with equal probability, but this would ignore the earnings of the worker as a factor in determining the probability of exemption. The probability of qualifying for the exemption increases with earnings because higher paid workers are more likely to perform the required duties, an assumption to which both the Department in the 2004 final rule and the GAO in its 1999 Report adhered.
The Department estimated the probability of exemption for each worker as a function of both earnings and the occupation's exempt probability category using a gamma distribution.
The Department acknowledges that the probability codes used to determine the share of workers in an occupation who are EAP exempt are 21 years old. However, the Department believes the probability codes continue to estimate exemption status accurately given the fact that the standard duties test is not substantively different from the former short duties tests reflected in the codes. For the 2016 rulemaking, the Department looked at O*NET
The Department estimated that of the 47.6 million salaried white collar workers considered in the analysis, 33.4 million qualified for the EAP exemption under the currently-enforced regulations. Some of these workers were
Based on analysis of the occupational codes and CPS earnings data (described above), the Department has concluded that in Year 1, in the baseline scenario in which the rule does not take effect, of the 25.6 million potentially affected EAP workers, approximately 16.0 million will pass only the standard EAP test, 9.3 million will pass both the standard and the HCE tests, and approximately 343,000 will pass only the HCE test.
For the reasons discussed in section IV.A, the Department has decided to update the 2004 standard salary level by reapplying the 2004 methodology. Using pooled 2018/19 CPS MORG data, the 20th percentile of earnings for full-time salaried workers in the South Census region and/or in the retail industry nationally roughly corresponds to a standard salary level of $684. For the HCE compensation level, the Department used the 80th percentile of all full-time salaried workers nationwide, calculated using the 2018/19 CPS MORG. This results in an HCE annual compensation level of $107,432.
This final rule uses the same methodology used in 2004 for the standard salary level, setting it at the 20th percentile of full-time salaried workers in the South and/or in the retail industry nationally. After considering public comments pertaining to the HCE total annual compensation requirement, as discussed in section IV.D, the Department has set this threshold so as to be equivalent to the earnings of the 80th percentile of all full-time salaried workers nationally, as opposed to the 90th percentile as proposed in the NPRM. Additionally, to be consistent with the methodology for setting the standard salary level, the Department now uses three-year pooled data to estimate the HCE compensation level. Lastly, the Department has chosen not to project the earnings levels to January 2020 as proposed in the NPRM.
For this final rule, the Department also considered several alternatives for setting the standard salary level. Table 4 presents alternative standard salary levels calculated using pooled 2018/19 CPS data for each alternative approach considered.
•
•
•
•
•
Section VI.D details the transfers, costs, and benefits of the new salary level and the above alternatives.
As described above, the Department is updating the HCE compensation level using earnings for the 80th percentile of all full-time salaried workers nationally, $107,432 per year. The Department also evaluated the following alternative HCE compensation levels:
•
•
Table 5 presents possible 2018/19 HCE levels as calculated using each alternative approach considered. Section VI.D details the transfers, costs, and benefits of the new HCE compensation level and the two alternatives.
The Department believes that HCE alternative 1 is inappropriate because some increase to the HCE threshold is necessary to ensure that the HCE threshold continues to appropriately complement the more lenient HCE duties test. However, as explained in section IV.D, the Department does not believe the significantly higher threshold equal to the 90th percentile of full-time salaried workers nationally is necessary. Further, setting the HCE threshold at such a high level will result in significant administrative burdens, including the costs associated with the need to reassess, under the standard duties test, the exempt status of highly paid white collar workers, many of whom would remain exempt under that test. Accordingly, the Department rejected the second alternative because it believes that the HCE threshold set in this final rule is sufficiently high to ensure that those who meet that threshold will almost invariably pass the standard duties test.
The economic effects of increasing the EAP salary and compensation levels will depend on how employers respond. Employer response is expected to vary by the characteristics of the affected EAP workers. Transfers from employers to employees and between employees, and direct employer costs, depend on how employers respond to the final rule.
The Department has derived the standard salary level using the 2004 methodology, and has set the HCE compensation level at the 80th percentile of all full-time salaried workers nationwide. In both cases we used pooled 2018/19 CPS data to calculate the levels. Given that at the time this analysis was performed data was available through June 2019, the Department believes that using current data to estimate the economic effects of the rule taking effect in January 2020 is appropriate.
Table 6 presents the estimated number of affected workers, costs, and transfers associated with increasing the salary and compensation levels. The Department estimated that the direct employer costs of this final rule will total $543.0 million in the first year, with 10-year annualized direct costs of $164.0 million per year using a 3 percent real discount rate and $173.3 million per year using a 7 percent real rate.
In addition to these direct costs, this final rule will transfer income from employers to employees. Estimated Year 1 transfers will equal $396.4 million, with annualized transfers estimated at $295.0 million and $298.8 million per year using the 3-percent and 7-percent real discount rates, respectively. Potential employer costs due to reduced profits and additional hiring were not quantified but are discussed in section VI.D.iii.5.
The Department estimated there are 25.6 million potentially affected EAP workers—that is, EAP workers who either (1) passed the salary basis test, the standard salary level test, and the standard duties test, or (2) passed the salary basis test, the standard salary level test, the HCE total compensation level test, and the HCE duties test (but not the standard duties test). This number excluded workers in named occupations, who are not subject to the salary tests, or those who qualify for another (non-EAP) exemption.
Using the method described above, the Department estimated that the increase in the standard salary level from $455 per week to $684 per week will affect 1.2 million exempt workers in Year 1, while the increase in the HCE annual compensation level from $100,000 to $107,432 will impact 101,800 workers (Figure 2).
Table 7 presents the number of affected EAP workers, the mean number of overtime hours they work per week, and their average weekly earnings. The 1.2 million workers affected by the increase in the standard salary level work on average 1.6 usual hours of overtime per week and earn on average $581 per week.
Although most affected EAP workers who typically do not work overtime are unlikely to experience significant
The Department considered two types of overtime workers in this analysis: Regular overtime workers and occasional overtime workers.
In a representative week, the increases in the standard salary level and the HCE compensation level affected an estimated 45,900 occasional overtime workers (3.7 percent of all affected EAP workers). They averaged 8.4 hours of overtime in the weeks they worked overtime. This group represents the number of workers with occasional overtime hours in the week the CPS MORG survey was conducted. Because the survey week is a representative week, the Department believes the prevalence of occasional overtime in the survey week, and the characteristics of these workers, is representative of other weeks (even though a different group of workers would be identified as occasional overtime workers in a different week).
In this section, the Department examined the characteristics of affected EAP workers. Table 8 presents the distribution of affected EAP workers by industry and occupation, using Census industry and occupation codes. The industry with the most affected EAP workers is education and health services (288,000), while the industry with the highest percentage of affected EAP workers is leisure and hospitality (about 10 percent). The occupation category with the most affected EAP workers is management, business, and financial (506,000), while the occupation category with the highest percentage of affected EAP workers is services (about 15 percent).
Finally, 6.1 percent of potentially affected workers in private nonprofits are affected compared with 4.6 percent in private for-profit firms. However, as discussed in section VI.B.iii, the estimates of workers subject to the FLSA include workers employed by enterprises that do not meet the enterprise coverage requirements because there is no data set that would adequately inform an estimate of the size of this worker population. Although failing to exclude workers who work for non-covered enterprises would only affect a small percentage of workers generally, it may have a larger effect (and result in a larger overestimate) for workers in nonprofits because when determining enterprise coverage only
Table 9 presents the distribution of affected EAP workers based on Census Regions and Divisions, and metropolitan statistical area (MSA) status. The region with the most affected workers will be the South (544,000), but the South's percentage of potentially affected workers who are affected is still small (6.1 percent). Although 90 percent of affected EAP workers will reside in MSAs (1.13 of 1.26 million), so do a corresponding 88 percent of all workers subject to the FLSA.
Employers in low-wage industries, regions, and in non-metropolitan areas may be more affected because they typically pay lower wages and salaries. However, the Department believes the salary level adopted in this final rule is appropriate for these lower-wage sectors because the methodology used in 2004, and applied for this rulemaking, used earnings data in the low-wage retail industry and the low-wage South Region. Effects by region and industry are considered in section VI.D.vi.
EPI and a few other commenters asserted that the Department's use of pooled 2015-2017 data to calculate the number of affected workers “leads to an underestimate because it doesn't account for employment growth and other changes in the three years between 2017 and 2020.” The Department is using pooled CPS MORG data for July 2016 through June 2019, adjusted to reflect 2018/2019, in this final rule. The Department is not modeling employment growth between 2018/19 and the final rule's effective date because of uncertainty in the appropriate growth rates to project earnings and employment, and because of the relatively short period of time separating June 2019—the most recent CPS MORG data available at the time this impact analysis was developed—and January 1, 2020—the effective date of the final rule. However, as a sensitivity analysis undertaken in response to these comments, the Department used the BLS National Employment Matrix (NEM) for 2016 to 2026 to calculate growth rates for each occupation-industry category. Using these rates to adjust the number of affected employees in 2018/19 for one and a half years of employment growth increased the estimated number of affected workers by less than 1.8 percent.
The Department quantified three direct costs to employers in this analysis: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs. The Department estimated that in Year 1 (2020), regulatory familiarization costs will be $340.4 million, adjustment costs will be $68.2 million, and managerial costs will be $134.4 million (Table 10). Total direct employer costs in Year 1 will be $543.0 million.
Adjustment costs and managerial costs are recurring, so we also projected them for years 2 through 10 in section VI.D.viii. The Department discusses costs that are not quantified in section VI.D.iii.5.
This rule will impose direct costs on firms by requiring them to review the regulation. To estimate these “regulatory familiarization costs,” three pieces of information must be estimated: (1) The number of affected establishments; (2) a wage level for the employees reviewing the rule; and (3) the amount of time employees spend reviewing the rule.
It is unclear whether regulatory familiarization costs are a function of the number of establishments or the number of firms. To avoid underestimating these costs, the Department assumed that regulatory familiarization occurs at a decentralized level and used the number of establishments in its cost estimate; this results in a higher estimate than would result from using the number of firms. The most recent data on private sector establishments at the time this final rule was drafted are from the 2016 Statistics of U.S. Businesses (SUSB), which reports 7.76 million establishments with paid employees.
The Department believes that all establishments will incur some regulatory familiarization costs, even if they do not employ exempt workers, because all establishments will need to confirm whether this rule includes any provisions that may affect their employees. Firms with more affected EAP workers will likely spend more time reviewing the regulation than firms with fewer or no affected EAP workers (since a careful reading of the regulation will probably follow the initial decision that the firm is affected). However, the Department did not know the distribution of affected EAP workers across firms, so it used an average cost per establishment.
The Department believes one hour per establishment is appropriate because the EAP exemptions have existed in one form or another since 1938. The most significant change in this rulemaking is setting a new standard salary level for exempt workers, and the changed regulatory text is only a few pages. The Department thus believes that one hour is an appropriate average estimate for the time each establishment will spend reviewing the changes made by this rulemaking. Time spent to implement the necessary changes was included in adjustment costs. The Department's analysis assumed that mid-level human resource workers with a median wage of $26.56 per hour will review the final rule.
Some commenters asserted these cost estimates are too low. For example, SBA Office of Advocacy (SBA Advocacy) wrote: “we spoke to a small retail business in Alabama, who retained the services of an attorney for 10-15 hours to review the 2016 final rule.” International Bancshares Corporation described the necessary hours for regulatory familiarization and adjustment costs as “countless.” An individual commenter stated that the Department's estimated costs are too low but did not provide any information on what costs should be.
The Department continues to believe that an average of one hour per establishment is appropriate. The EAP exemptions have been in existence in one form or another since 1938, and a final rule was published as recently as 2016. Furthermore, employers who use the exemptions must apply them every time they hire an employee whom they seek to classify as exempt. Thus, employers should be familiar with the exemptions. The most significant change promulgated in this rulemaking is setting new earnings thresholds for exempt workers. The Department believes that, on average, one hour is sufficient to time to read and understand, for example, the changes to these thresholds, and we note that the regulatory text changes comprise only a few pages. Additionally, the estimated one hour for regulatory familiarization represents an average for all establishments in the U.S., even those without any affected or exempt workers, which are unlikely to spend much time reviewing the rule. Some businesses, of course, will spend more than one hour, and some will spend less, but for the reasons stated above, the Department believes that an average of one hour is an appropriate estimate.
This rule will also impose direct costs on firms by requiring them to evaluate the exemption status of employees, update and adapt overtime policies, notify employees of policy changes, and adjust their payroll systems.
The Department estimated that it will take establishments an average of 75
A reduction in the cost to employers of determining employees' exempt status may partially offset adjustment costs. Currently, to determine whether an employee is exempt, employers must apply the duties test to salaried workers who earn at least $455 per week. However, when the rule takes effect, firms will no longer be required to apply the potentially time-consuming duties test to employees earning less than the new standard salary level. This will be a clear cost savings to employers for the approximately 4.1 million salaried employees (2.2 million in white collar occupations and 1.9 million in blue collar occupations) who do not pass the duties test and earn at least $455 per week but less than the updated salary level. The Department did not estimate the potential size of this cost savings.
A few commenters expressed concern that the time estimate is too low. For example, as noted above, International Bancshares Corporation described the necessary hours for regulatory familiarization and adjustment costs as “countless.” SBA Advocacy wrote: “Small businesses have told Advocacy that it may take them many hours and several weeks to understand and implement this rule for their small businesses.” Two commenters, the National Association of Manufacturers and the HR Policy Association, expressed particular concern with adjustment costs stemming from the proposed increase in the HCE compensation level, noting that for each worker earning between $100,000 and the new HCE compensation level, the employee's job duties will need to be reassessed to determine whether the worker remains exempt under the standard salary level exemption. The National Association of Manufacturers elaborated that “across the manufacturing sector, the change in HCE threshold [proposed in the NPRM] may be even more difficult and consequential than updating the standard salary threshold.”
The Department is retaining its estimate of adjustment costs as 75 minutes per affected worker in the final rule. The Department notes that the vast majority of commenters, including employer representatives, did not contest this estimate. Additionally, this estimate is drawn from the 2016 final rule, and represents a 25 percent increase, in response to concerns from employer representatives, over the Department's original estimate of one hour per worker in the 2015 NPRM.
The Department also believes that the 75-minute-per-worker average time estimate appropriately takes into account adjustment time for HCE-affected workers (those passing only the HCE duties test and not the standard duties test). This estimate assumes that the average is concentrated in the subset of employees requiring more analysis to make a decision. For example, employers are likely to incur relatively low adjustment costs for some workers, such as those who work no overtime (described below as Type 1 workers). This leaves more time for employers to spend on adjustment costs for other workers, such as affected HCE employees who become newly subject to the more rigorous standard duties test. The Department further notes that in this final rule, the number of affected HCE employees has declined from the NPRM as a result of the Department's decision to decrease the HCE threshold from the proposed amount of $147,414 to $107,432. This adjustment also addresses concerns about the burdens that would have been associated, under the NPRM, with applying the standard duties test to a large number of formerly HCE exempt employees, many of whom would have remained exempt under the standard duties test. Thus, although some employers may spend more time adjusting for HCE-affected workers than for other workers, HCE workers will now comprise a smaller portion of the of the total number of affected workers, further affirming the Department belief that its estimate of 75 minutes per worker on average is appropriate.
If employers reclassify employees as overtime-eligible due to the changes in the salary levels, then firms may incur ongoing managerial costs because the employer may spend more time developing work schedules and closely monitoring an employee's hours to minimize or avoid overtime. For example, the manager of a reclassified worker may have to assess whether the marginal benefit of scheduling the worker for more than 40 hours exceeds the marginal cost of paying the overtime premium. Additionally, the manager may have to spend more time monitoring the employee's work and productivity since the marginal cost of employing the worker per hour has increased. Unlike regulatory familiarization and adjustment costs, which occur primarily in Year 1, managerial costs are incurred more uniformly every year. The Department applied managerial costs to workers who (1) are reclassified as nonexempt, overtime-protected and (2) either regularly work overtime or occasionally work overtime, but on a predictable basis—an estimated 304,500 workers (
The median hourly wage in 2018/19 for a manager was $31.18 and benefits were estimated to be paid at a rate of 46 percent of the base wage.
There was little precedent or data to aid in evaluating managerial costs. With the exception of the 2016 rulemaking, prior part 541 rulemakings did not estimate managerial costs. The Department likewise found no estimates of managerial costs after reviewing the literature. Thus, in the NPRM, the Department used the same methodology as the 2016 final rule, which the Department adopted after considering comments on the 2015 NPRM. However, for this final rule, the Department has increased the time estimate from 5 minutes to 10 minutes.
A few commenters generally expressed concern about the managerial costs for businesses. For example, one commenter noted: “There is no easy way to track hours for salaried folks easily, in most businesses. As a result, companies will be forced to begin this practice, adding more costs in administrative ways.” Another individual wrote that the proposed rule “would create a challenge by placing a burden on the employers to exaustively [sic] track these newly nonexempt employees' hours to ensure compliance with overtime pay and other requirements. This tracking of hours would also produce increased human resources paperwork and technology costs to our company.” The Kentucky Retail Federation wrote: “Reclassifying managers to hourly workers will require hours spent scheduling work hours to avoid overtime costs.” SBA Advocacy, asserting that the Department underestimated compliance costs, wrote: “Employers reclassifying managers to hourly staff may spend many hours a week scheduling and keeping track of employee work to avoid these extra overtime costs.”
The Department acknowledges that firms may incur costs monitoring and managing the hours of formerly exempt staff. In addition, the Department acknowledges that to the extent workers who lose their exempt status as a result of the change in the standard salary level telecommute, but hourly and other nonexempt salaried workers do not telecommute, it may be necessary to develop ways of tracking such work by newly nonexempt workers. However, the Department does not expect that such firms will spend “many hours a week” on such tasks, and believes an estimate of 10 minutes per worker per week is appropriate. First, the Department notes that EAP exempt employees account for less than 20 percent of the U.S. labor force; as such, the Department expects that the vast majority of employers of EAP exempt workers also employ nonexempt workers. Such employers already have in place recordkeeping systems and standard operating procedures for ensuring employees work overtime under only employer-prescribed circumstances. Thus, such systems generally do not need to be invented for managing formerly-exempt EAP employees. Second, the Department also notes that under the FLSA recordkeeping regulations in part 516, employers determine how to make and keep an accurate record of hours worked by employees; for example, employers may tell their workers to write their own time records and any timekeeping plan is acceptable as long as it is complete and accurate. Additionally, if the nonexempt employee works a fixed schedule,
In addition to the costs discussed above, the final rule may impose additional costs that have not been quantified. These costs are discussed qualitatively below, but we note that in some cases (
Exempt workers may enjoy more scheduling flexibility because their hours are less likely to be monitored than nonexempt workers. If so, the final rule could impose costs on newly nonexempt, overtime-eligible workers by, for example, limiting their ability to adjust their schedules to meet personal and family obligations. But the rule does not require employers to reduce scheduling flexibility. Employers can continue to offer flexible schedules and require workers to monitor their own hours and to follow the employers' timekeeping rules. Additionally, some exempt workers already monitor their hours for billing purposes. For these reasons, and because there is little data or literature on these costs, the Department did not quantify potential costs regarding scheduling flexibility.
Some of the workers who become nonexempt as a result of the final rule and whose pay is changed by their employer from salaried to hourly status may have preferred to remain salaried. Research has shown that salaried workers are more likely than hourly workers to receive benefits such as paid vacation time and health insurance,
If workers are reclassified as hourly, and hourly workers have fewer benefits than salaried workers, reclassification could reduce workers' benefits. But the Department notes that this rule does not require such reclassification. These newly nonexempt workers may continue to be paid a salary, as long as that salary is equivalent to a base wage at least equal to the minimum wage rate for every hour worked, and the employee receives a 50 percent
To the extent that employers respond to this rule by restricting employee work hours, this rulemaking could negatively affect the quality of public services provided by local governments and nonprofits. However, the Department believes the effect of the rule on public services will be small. The Department acknowledges that some employees who work overtime providing public services may see a reduction in hours as an effect of the rulemaking. But if the services are in demand, the Department believes additional workers may be hired, as funding availability allows, to make up some of these hours, and productivity increases may offset some reduction in services. In addition, the Department expects many employers will adjust base wages downward to some degree so that even after paying the overtime premium, overall pay and hours of work for many employees will be relatively minimally impacted. Additionally, as noted above, many nonprofits are non-covered enterprises because when determining enterprise coverage only revenue derived from business operations, not charitable activities, is included.
Business firms may pass along increased labor costs to consumers through higher prices. The Department anticipates that some firms may offset part of the additional labor costs through charging higher prices for the firms' goods and services. However, because costs and transfers are, on average, small relative to payroll and revenues, the Department does not expect the final rule to have a significant effect on prices. The Department estimated that, on average, costs and transfers make up less than 0.02 percent of payroll and less than 0.003 percent of revenues, although for specific industries and firms this percentage may be larger. Therefore, any potential change in prices would be modest. Further, any significant price increases would not represent a separate category of effects from those estimated in this economic analysis; rather, such price increases (where they occur) would be the channel through which consumers, rather than employers or employees, bear rule-induced costs (including transfers).
International Bancshares Corporation commented that the increased salary level could lead to increased prices, if “anticipated wage gains do not result in productivity increases.” As noted above, however, costs and transfers make up less than 0.02 percent of payroll; furthermore, payroll comprises only a fraction of the costs of producing goods and services in the U.S. economy. Therefore, the Department concludes the final rule will add little upward pressure to prices. To the extent that EAP-exempt employees are concentrated in some industries more than others, and thus specific industries might experience more pressure on wages, the Department notes that even in the industry where costs and transfers compose the highest percentage of payroll (agriculture, forestry, fishing, and hunting), that percentage is only 0.038 percent.
The increase in workers' earnings resulting from the revised salary level is a transfer of income from firms to workers, not a cost. The Department acknowledges that the increased employer costs and transfer payments as a result of this final rule may reduce the profits of business firms, although (1) some firms may offset some of these costs and transfers by making payroll adjustments, and (2) some firms may mitigate their reduced profits due to these costs and transfers through increased prices. To the extent that the final rule reduces profits at some business firms after all these adjustments are made, these firms would have marginally lower after-tax returns on new investments in equipment, structures, and intellectual property and could therefore make fewer such investments going forward. All else equal, less business investment slows economic growth and reduces employment. However, the Department expects that any anti-growth effects of the final rule would be minimal.
To the extent that firms respond to an update to the salary level test by reducing overtime hours, they may do so by spreading hours to other workers, including current workers employed for less than 40 hours per week by that employer, current workers who retain their exempt status, and newly hired workers. If new workers are hired to absorb these transferred hours, then the associated hiring costs are a cost of this final rule.
Some commenters asserted that the proposed rule would entail additional costs not detailed above. A few believe that the rule will result in increased employee turnover. SBA Advocacy wrote: “Small businesses that reclassified their salaried staff to hourly staff as a result of the 2016 final rule reported that their employee turnover increased by up to 50 percent,” forcing them to incur costs to hire and train new workers. According to SBA Advocacy, small businesses attributed this turnover to previously-exempt managers feeling “demoralized” by having to “clock in” due to their changed status, and suggested that this rule may have similar effects. Similarly, International Bancshares Corporation predicted that the proposed rule would result in layoffs, asserting that costs associated with “reviewing the final regulations and building a software system to implement and monitor their compliance with the regulations” would make it “extremely difficult for community and regional banks to . . . [avoid] laying off employees or curtailing their operations.”
The Department believes these concerns are overstated. First, this final rule's increases to the earnings thresholds are much more modest than the 2016 final rule's, and the associated impacts are correspondingly more moderate. Thus, the Department believes that any adverse effects, such as increased turnover, will be minimal. Therefore, the Department has not quantified the potential costs associated with increased turnover. Likewise, the Department does not believe that this final rule will cause a significant number of layoffs. As explained above, the vast majority of firms employ both exempt and nonexempt workers and therefore have systems in place for managing nonexempt employees, and affected employees comprise less than 4 percent of EAP exempt employees. As such, the Department does not believe that the increased earnings thresholds in this final rule will cause layoffs to any significant extent, and has not quantified such costs.
Transfer payments occur when income is redistributed from one party to another. The Department has quantified two transfers from employers to employees that will result from the final rule: (1) Transfers to ensure compliance with the FLSA minimum wage provision; and (2) transfers to ensure compliance with the FLSA
Because the overtime premium depends on the base wage, the estimates of minimum wage transfers and overtime transfers are linked. This can be considered a two-step approach. The Department first identified affected EAP workers with an implicit regular hourly wage lower than the minimum wage, and then calculated the wage increase necessary to reach the minimum wage.
For purposes of this analysis, the hourly rate of pay was calculated as usual weekly earnings divided by usual weekly hours worked. To earn less than the federal or most state minimum wages, this set of workers must work many hours per week. For example, a worker paid $455 per week must work 62.8 hours to earn less than the federal minimum wage of $7.25 per hour ($455/$7.25 = 62.8).
In response to an increase in the regular rate of pay to the minimum wage, employers may reduce the workers' hours. Since the quantity of labor hours demanded is inversely related to wages, a higher mandated wage will result in fewer hours of labor demanded. For the first year, the Department estimated the potential disemployment effects (
At the new standard salary level, the Department estimated that 22,200 affected EAP workers will, on average, see an hourly wage increase of $1.39, work 2.4 fewer hours per week, and receive an increase in weekly earnings of $65.29 as a result of coverage by the minimum wage provisions (Table 12). The total change in weekly earnings due to the payment of the minimum wage was estimated to be $1.4 million per week ($65.29 × 22,200) or $75.4 million in Year 1.
The final rule will transfer income to affected workers who work in excess of 40 hours per week. Requiring an overtime premium increases the marginal cost of labor, which employers will likely try to offset by adjusting wages and/or hours of affected workers. The size of the transfer will depend largely on how employers respond to the updated salary levels. Employers may respond by: (1) Paying overtime premiums to affected workers; (2) reducing overtime hours of affected workers and potentially transferring some of these hours to other workers; (3) reducing the regular rate of pay for affected workers working overtime (provided that the reduced rates still exceed the minimum wage); (4) increasing affected workers' salaries to the updated salary or compensation level to preserve their exempt status; or (5) using some combination of these responses. How employers will respond depends on many factors, including the relative costs of each of these alternatives; in turn, the relative costs of each of these alternatives are a function of workers' earnings and hours worked.
Two conceptual models are useful for thinking about how employers may respond to reclassifying certain employees as overtime-eligible: (1) The “fixed-wage” or “labor demand” model, and (2) the “fixed-job” or “employment contract” model.
In contrast, the fixed-job model assumes that the standard hourly wage is affected by the statutory overtime premium. Thus, employers can neutralize any reclassification of workers from overtime exempt to overtime nonexempt by reducing the standard hourly wage of affected workers so that their weekly earnings and hours worked are unchanged, except when minimum wage laws prevent employers from lowering the standard hourly wage below the minimum wage. Under the fixed-job model, a reclassification of workers from overtime exempt to overtime nonexempt would have different effects on minimum-wage workers and above-minimum-wage workers. Similar to the fixed-wage model, minimum-wage workers would experience a reduction in overtime hours, an increase in the prevalence of a 40-hour workweek at a given employer (though not necessarily overall), and an increase in earnings for the portion of minimum-wage workers who continue to work overtime for a given employer. Unlike the fixed-wage model, however, above-minimum-wage workers would experience no change.
The Department conducted a literature review to evaluate studies of how labor markets adjust to a change in the requirement to pay overtime. In general, these studies are supportive of the fixed-job model of labor market adjustment, in that wages adjust to offset the requirement to pay an overtime premium as predicted by the fixed-job model, but do not adjust enough to completely offset the overtime premium as predicted by the model.
The Department believes the two most important papers in this literature are the studies by Trejo (1991) and Barkume (2010). Analyzing the economic effects of the overtime pay provisions of the FLSA, Trejo (1991) found “the data analyzed here suggest the wage adjustments occur to mitigate the purely demand-driven effects predicted by the fixed-wage model, but these adjustments are not large enough to neutralize the overtime pay regulations completely.” Trejo noted, “In accordance with the fixed job model, the overtime law appears to have a greater impact on minimum-wage workers.” He also stated, “[T]he finding that overtime pay coverage status systematically influences the hours-of-work distribution for non-minimum wage works is supportive of the fixed-wage model. No significant differences in weekly earnings were discovered between the covered and non-covered sectors, which is consistent with the fixed-job model.” However, “overtime pay compliance is higher for union than for nonunion workers, a result that is more easily reconciled with the fixed wage model.” Trejo's findings are supportive of the fixed-wage model whose adjustment is incomplete largely due to the minimum-wage requirement.
A second paper by Trejo (2003) took a different approach to testing the consistency of the fixed-wage adjustment models with overtime coverage and data on hours worked. In this paper, he examined time-series data on employee hours by industry. After controlling for underlying trends in hours worked over 20 years, he found changes in overtime coverage had no impact on the prevalence of overtime hours worked. This result supports the fixed-job model. Unlike the 1991 paper, however, he did not examine impacts of overtime coverage on employees' weekly or hourly earnings, so this finding in support of the fixed-job model only analyzes one implication of the model.
Barkume (2010) built on the analytic method used in Trejo (1991).
In addition, Bell and Hart (2003) examined the standard hourly wage, average hourly earnings (including overtime), the overtime premium, and overtime hours worked in Britain. Unlike the United States, Britain does not have national labor laws regulating overtime compensation. Bell and Hart found that after accounting for overtime, average hourly earnings are generally uniform in a given industry because firms paying below-market level straight-time wages tend to pay above-market overtime premiums and firms paying above-market level straight-time wages tend to pay below-market overtime premiums. Bell and Hart concluded “this is consistent with a model in which workers and firms enter into an implicit contract that specifies total hours at a constant, market-determined, hourly wage rate.
Finally, Kuroda and Yamamoto (2009) examined “name only managers” in Japanese labor markets and found essentially 100 percent adjustment of implicit hourly wages to offset the overtime pay requirement.
However, there are some challenges in generalizing Kuroda and Yamamoto's results to U.S. labor markets. First, “name-only-managers would not be exempt in the U.S. because they do not meet the duties test for exemption. “Name-only-managers” are essentially identical to their peers, have no managerial responsibilities, and are distinguished only by their job title. This is not directly analogous to the case of EAP exempt employees, who do have managerial responsibilities, and must pass the duties test while other similar (but nonexempt) employees do not. Second, Kuroda also found that the pure fixed-job model results may not hold under all conditions. For example, in a following paper he found that during a recession, the labor market for “name-only-managers” behaved more like the fixed-wage model than the fixed-job model.
On balance, the Department finds strong support for the fixed-job model as the best approximation for the likely effects of a reclassification of above-minimum-wage workers from overtime exempt to overtime nonexempt and the fixed-wage model as the best approximation of the likely effects of a reclassification of minimum-wage workers from overtime exempt to overtime nonexempt. In addition, the studies suggest that although observed wage adjustment patterns are consistent with the fixed-job model, this evidence also suggests that the actual wage adjustment might, especially in the short run, be less than 100 percent as predicted by the fixed-job model. Thus, the hybrid model used in this analysis may be described as a substantial, but incomplete fixed-job model.
To determine the magnitude of the adjustment, the Department accounted for the following findings. Earlier research had demonstrated that in the absence of regulation some employers may voluntarily pay workers some overtime premium to entice them to work longer hours, to compensate workers for unexpected changes in their schedules, or as a result of collective bargaining.
The Department identified four types of workers whose work characteristics affect how it modeled employers' responses to the changes in both the standard and HCE salary levels:
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The Department began by identifying the number of workers in each type. After modeling employer adjustments, it estimated transfer payments. Type 3 and 4 workers were identified as those who regularly work overtime (CPS variable PEHRUSL1 greater than 40). Distinguishing Type 3 workers from Type 4 workers involved a four-step process. First, the Department identified all workers who regularly work overtime. Then the Department estimated each worker's weekly earnings if they became nonexempt, to which it added weekly managerial costs for each affected worker of $8.49 ($50.92 per hour × (10 minutes/60 minutes)).
Identifying Type 2 workers involved two steps. First, using CPS MORG data, the Department identified those who do not usually work overtime but did work overtime in the survey week (the week referred to in the CPS questionnaire, variable PEHRACT1 greater than 40). Next, the Department supplemented the CPS data with data from the Survey of Income and Program Participation (SIPP) to look at likelihood of working some overtime during the year. Based on 2012 data, the most recent available, the Department found that 39.4 percent of non-hourly workers worked overtime at some point in a year. Therefore, the Department classified a share of workers who reported they do not usually work overtime, and did not work overtime in the reference week (previously identified as Type 1 workers), as Type 2 workers such that a total of approximately 39.4 percent of affected workers were Type 2, 3, or 4.
The substantial, but incomplete fixed-job model (hereafter referred to as the incomplete fixed-job model) predicts that employers will adjust wages of regular overtime workers but not to the full extent indicated by fixed-job model, and thus some employees may receive a small increase in weekly earnings due to overtime pay coverage. When modeling employer responses with respect to the adjustment to the regular rate of pay, the Department used the incomplete fixed-job model.
In this portion of the analysis, the Department presents an estimate of the effect on the implicit hourly rate of pay for regular overtime workers should be determined using the average of two estimates of the incomplete fixed-job model adjustments: Trejo's (1991) estimate that the overtime-induced wage change is 40 percent of the adjustment toward the amount predicted by the fixed-job model, assuming an initial zero overtime pay premium, and Barkume's (2010) estimate that the wage change is 80 percent of the predicted adjustment assuming an initial 28 percent overtime pay premium.
Modeling changes in wages, hours, and earnings for Type 1 and Type 4 workers was relatively straightforward. Type 1 affected EAP workers will become overtime-eligible, but because they do not work overtime, they will see no change in their weekly earnings. Type 4 workers will remain exempt because their earnings will be raised to at least the updated EAP level (either the standard salary level or HCE compensation level). These workers' earnings will increase by the difference between their current earnings and the amount necessary to satisfy the new salary or compensation level. It is possible employers will increase these workers' hours in response to paying them a higher salary, but the Department did not have enough information to model this potential change.
Modeling changes in wages, hours, and earnings for Type 2 and Type 3 workers was more complex. The Department distinguished those who regularly work overtime (Type 3 workers) from those who occasionally work overtime (Type 2 workers) because employer adjustment to the final rule may differ accordingly. Employers are more likely to adjust hours worked and wages for regular overtime workers because their hours are predictable. However, in response to a transient, perhaps unpredicted, shift in market demand for the good or service such employers provide, employers are more likely to pay for occasional overtime rather than adjust hours worked and pay.
The Department treated Type 2 affected workers in two ways due to the uncertainty of the nature of these occasional overtime hours. The Department assumed that 50 percent of these occasional overtime workers worked
Since employers must now pay more for the same number of labor hours, for Type 2 and Type 3 EAP workers, the quantity of labor hours demanded by employers will decrease. It is the net effect of these two changes that will determine the final weekly earnings for affected EAP workers. The reduction in hours is calculated using the elasticity of labor demand with respect to wages. The Department used a short-term demand elasticity of -0.20 to estimate the percentage decrease in hours worked in Year 1 and a long-term elasticity of -0.4 to estimate the percentage decrease in hours worked in Years 2-10.
For Type 3 affected workers, and the 50 percent of Type 2 affected workers who worked
Figure 3 is a flow chart summarizing the four types of affected EAP workers. Also shown are the effects on exempt status, weekly earnings, and hours worked for each type of affected worker.
The Department estimated the final rule will affect 1.3 million workers (Table 13), of which 762,200 were Type 1 workers (60.6 percent of all affected EAP workers), 300,900 were estimated to be Type 2 workers (23.9 percent of all affected EAP workers), 154,000 were Type 3 workers (12.3 percent of all affected EAP workers), and 40,100 were estimated to be Type 4 workers (3.2 percent of all affected workers). All Type 3 workers and half of Type 2 employees (304,500) are assumed to work predictable overtime.
The final rule will affect some affected workers' hourly wages, hours, and weekly earnings. Predicted changes in implicit wage rates are outlined in Table 14, changes in hours in Table 15, and changes in weekly earnings in Table 16. How these will change depends on the type of worker, but on average the Department projects that weekly earnings will be unchanged or increase while hours worked will be unchanged or decrease.
Type 1 workers will have no change in wages, hours, or earnings.
Similarly, Type 3 workers will also receive decreases in their regular hourly wage as predicted by the incomplete fixed-job model but an increase in weekly earnings because these workers will now be eligible for the overtime premium. Type 4 workers' implicit hourly rates of pay will increase to meet the updated standard salary level or HCE annual compensation level.
Hours for Type 1 workers will not change. Similarly, hours will not change for the half of Type 2 workers who work irregular overtime. Half of Type 2 and all Type 3 workers will see a small decrease in their hours of overtime worked. This reduction in hours is relatively small and is due to the effect on labor demand from the increase in the average hourly wage as predicted by the incomplete fixed-job model (Table 15). Type 4 workers' hours may increase, but due to lack of data, the Department assumed hours would not change.
Because most Type 1 workers will not experience a change in their regular rate of pay or hours, they will have no change in earnings due to the final rule (Table 16).
At the new standard salary level, the average weekly earnings of affected workers will increase $4.93 (0.8 percent), from $581.42 to $586.34. Multiplying the average change of $4.93 by the 1.2 million EAP workers affected by the change in the standard salary level and 52 weeks equals an increase in earnings of $296.1 million in the first year (Table 17). For workers affected by the change in the HCE compensation level, average weekly earnings will increase by $18.96. When multiplied by 101,800 affected workers and 52 weeks, the national increase will be $100.3 million in the first year. Thus, total Year 1 transfer payments attributable to this final rule will total $396.4 million.
Rohwedder and Wenger (2015) analyzed the effects of increasing the standard salary level.
There may be additional transfers attributable to this final rule; however, the magnitude of these other transfers could not be quantified and therefore are discussed only qualitatively.
Holding regular rate of pay and work hours constant, payment of an overtime premium will increase weekly earnings for workers who work overtime. However, as discussed previously, employers may try to mitigate cost increases by reducing the number of overtime hours worked, either by transferring these hours to other workers or monitoring hours more closely. Depending on how hours are adjusted, a specific worker may earn less pay after this final rule.
Affected workers who remain exempt will see an increase in pay but may also see an increase in workload. The Department estimated the net changes in hours, but due to the data limitations as noted in section VI.D.iv.3, did not estimate changes in hours for affected workers whose salary is increased to the new threshold so they remain overtime exempt.
Employers may offset increased labor costs by reducing bonuses or benefits instead of reducing base wages or hours worked. Due to data limitations, the Department has not modeled this effect separately. The Department observes that any reductions in bonuses or benefits would be likely accompanied by smaller reductions in base wages or hours worked.
Several commenters stated that in order to pay for the higher payroll costs, they would decrease employee benefits. These comments were mostly general statements, often included in a list of changes the employer intends to make in response to the increased salary threshold. Others stated that employees would lose benefits due to being reclassified as hourly workers. However, as the Department previously noted, this regulation does not require that workers who become nonexempt must be
In response to the NPRM, the Department's RFI, and at listening sessions, some commenters provided information concerning their proposed wage and hour adjustments in anticipation of an increase to the standard salary level and HCE total compensation level. In comments on the NPRM, Capital Associated Industries submitted the results from a survey of their members, which conveyed that employers plan to respond in different ways such as increasing salaries of exempt employees so that they remain exempt, or decreasing the hours or hourly rates of newly nonexempt employees. A survey of members of the International Public Management Association for Human Resources found “an almost even split between those who would increase salaries of exempt employees to the new threshold and those who would shift currently exempt employees to nonexempt status” in response to the proposed standard salary level.
In responses to the Department's RFI, commenters representing employer interests indicated that employers would respond to a new salary level by making a variety of adjustments to wages, hours worked, or both. Some commenters' feedback supports adoption of an incomplete fixed-job model. For example, Littler Mendelson and the U.S. Chamber of Commerce reported that, among surveyed employers with exempt employees who would become nonexempt under the 2016 final rule, 28.7 percent reported that they planned to “allow [newly nonexempt employees] to work the same number of hours and earn overtime compensation without restriction,” compared to just 18.6 percent who planned to reduce effective hourly rates “so that their total pay remained the same.” The Chamber's survey did not ask whether employers planned to adopt a combination of those two responses (
In this final rule, the Department estimated that some workers will see their earnings increase to the new earnings levels and remain exempt. There is some evidence that employers will respond in this manner. For example, in response to the RFI, the Chamber reported that, of surveyed employers who had implemented or made plans to implement changes to comply with the 2016 final rule, 76.4 percent reported that they had increased or planned to increase the salaries of some exempt employees to retain their exempt status. Similarly, the American Hotel and Lodging Association reported that 43 percent of their members raised the salaries of at least one worker to a figure above the 2016 final rule's salary threshold. It is possible that employers will increase the salaries paid to some “occasional” overtime workers to maintain the exemption for those workers, but the Department has no way of identifying these workers.
Regarding the proposed transfer calculations, SBA Advocacy took issue with the Department's estimates that affected small business establishments would have, on average, $422 to $3,187 in additional payroll costs in the first year of the proposed rule. Rather, SBA Advocacy stated that “[s]mall businesses have told Advocacy that their [additional] payroll costs will be in the thousands of dollars.” This comment, however, does not explain what methodological approach the Department should use to estimate transfers; what error(s), if any, the Department's method contains; or how much, if at all, the Department's approach underestimated such transfers. Therefore, the Department has not made any changes to the methodology in response to this comment.
The National Association of Manufacturers (NAM), in its comment opposing the proposed rule's HCE total annual compensation threshold of $147,414, stated that such a threshold would impact many manufacturers who currently employ numerous exempt HCE employees. It contended that “[i]n the representative case of one large manufacturer, approximately 1,200 individuals—nearly 11% of the company's workforce—are exempt employees earning between $100,000 and $147,414 annually. For this manufacturer, the difference between `exempt' and `almost exempt' is estimated to be between $8 million and $20 million in potential overtime exposure per year.” Using the upper end of NAM's transfer cost range, this equates to $16,667 per affected worker. This single anecdote, however, does not provide a sufficient basis for the Department to change the methodology used to calculate transfers. Moreover, NAM's concerns are mitigated by the Department's decision to set the HCE total annual compensation level to $107,432 instead of to $147,414.
The Department further notes that its estimates of transfers are informed by its projection that employers will respond to the final rule in a number of ways. If, for example, an employer simply pays each affected employee the overtime premium for each hour worked in excess of 40 hours per week, without making any adjustments to wages, hours or duties, such an approach would maximize transfers from employers to employees. However, as discussed above, the Department believes that employers will respond to the final rule by adjusting wages, hours, and duties to minimize the cost of the rule. The Department's approach is supported by both the literature the Department reviewed examining employers' response to overtime premium pay requirements, as well as survey data and anecdotal evidence provided in response to the NPRM and RFI regarding employers' responses to the 2016 final rule and planned responses to this rulemaking. Accordingly, the actual amount of transfers will fall well short of the transfers that would result if employers simply paid each affected employee overtime premiums without adjusting wages, hours, or duties.
The Department has determined that the final rule will provide some benefits; however, these benefits could not be quantified due to data limitations, requiring the Department to discuss such benefits only qualitatively.
The revised salary level reduces the likelihood of workers being misclassified as exempt from overtime pay, providing an additional measure of the effectiveness of the salary level as a bright-line test delineating exempt and nonexempt workers. The Department's analysis of misclassification drew on CPS data and looked at workers who are white collar, salaried, subject to the FLSA and covered by part 541 regulations, earn a weekly salary of at least $455 but less than $684, and fail the duties test. Because only workers who work overtime may receive overtime pay, when determining the share of workers who are misclassified
RAND has conducted a survey to identify the number of workers who may be misclassified as EAP exempt. The survey, a special module to the American Life Panel, asks respondents: (1) Their hours worked, (2) whether they are paid on an hourly or salary basis, (3) their typical earnings, (4) whether they perform certain job responsibilities that are treated as proxies for whether they would justify exempt status, and (5) whether they receive any overtime pay. Using these data, Susann Rohwedder and Jeffrey B. Wenger
One result of enforcing the 2004 standard salary level for 15 years is that the established “dividing line” between EAP workers who are exempt and not exempt has gradually eroded and no longer holds the same relative position in the distribution of nominal wages and salaries. Therefore, as nominal wages and salaries for workers have increased over time, while the standard salary level has remained constant, more workers earn above the “dividing line” and have moved from nonexempt to potentially exempt. The Department's enforcement of the 2004 salary levels has burdened employers with performing duties tests to determine overtime exemption status of white collar workers for a larger proportion of workers than in 2004 and has created uncertainty regarding the correct classification of workers as nonexempt or exempt. This may have contributed to an increase in FLSA lawsuits since 2004,
Updating the standard salary level should restore the relative position of the standard salary level in the overall distribution of nominal wages and salaries as set forth in the 2004 rule. Increasing the standard salary level from $455 per week to the level set in this final rule of $684 per week will increase the number of white collar workers for whom the standard salary level test is determinative of their nonexempt status, and employers will no longer have to perform a duties analysis for these employees. This final rule's update to the standard salary level will reduce the burden on employers and may reduce legal challenges and the overall cost of litigation faced by employers in FLSA overtime lawsuits, specifically litigation that turns on whether workers earning above the current salary and earnings thresholds but below the levels set in this final rule pass the duties test. The size of the potential social benefit from fewer legal challenges and the corresponding decline in overall litigation costs is difficult to quantify, but a reduction in litigation costs would benefit employers and workers.
To provide a general estimate of the size of the potential benefits from reducing litigation, the Department used data from the federal courts' Public Access to Court Electronic Records (PACER) system and the CPS to estimate the number and percentage of FLSA cases that concern EAP exemptions and are likely to be affected by the final rule. For this step of the analysis, to avoid using data that could reflect changed behavior in anticipation of the 2016 final rule, the Department used the data gathered during the 2016 rulemaking. As explained in that rule, to determine the potential number of cases that will likely be affected by the final rule, the Department obtained a list of all FLSA cases closed in 2014 from PACER (8,256 cases).
The Department estimated the share of EAP cases that may be avoided due to the final rule by using data on the salaried earnings distribution from the 2018/19 CPS MORG to determine the share of EAP cases in which workers earn at least $455 but less than $684 per week or at least $100,000 but less than $107,432 annually. From CPS, the Department selected white collar, nonhourly workers as the appropriate reference group for defining the earnings distribution rather than exempt workers because if a worker is litigating his or her exempt status, then we do not know if that worker is exempt or not. Based on this analysis, the Department determined that 13.5 percent of white collar nonhourly workers had earnings within these ranges. Applying these findings to the 12 percent of cases associated with the EAP exemption yields an estimated 1.6 percent of FLSA cases, or about 133 cases, that may be avoidable. The assumption underlying this method is that workers who claim they are misclassified as EAP exempt have a similar earnings distribution as all white collar nonhourly workers.
After determining the potential number of EAP cases that the final rule may avoid, the Department examined a selection of 56 FLSA cases concluded between 2012 and 2015 that contained litigation cost information to estimate the average costs of litigation to assign
The Department did not receive any comments on the methodology it used to estimate potential reduced litigation costs.
Some commenters contended that the proposed salary level would not yield the benefits that a higher salary level would. They asserted that raising the salary level higher than the proposed level would result in less misclassification and less litigation. The law firm Winebrake & Santillo, LLC estimated that “if the executive exemption carried a $50,000/year salary threshold, over 75% of the [lawsuits the firm litigated involving alleged misclassification under the executive exemption] would never have been filed.” NELA provided an example of a misclassification case involving managers at a fast food chain earning $32,000-$40,000 whom a jury found had been misclassified, and stated that such litigation would have been unnecessary under a higher salary level such as the one in the 2016 final rule. EPI, a group of 14 State attorneys general and the Attorney General for the District of Columbia, and other commenters similarly stated that a higher salary level was necessary to further reduce the risk of employee misclassification and the costs of litigation.
While a higher salary level would likely result in fewer workers being misclassified as exempt, and potentially less litigation as a result, as explained above, the aim of reducing misclassification cannot be prioritized over the statutory text, which grounds an analysis of exemption status in the “capacity” in which someone is employed—
Likewise, many commenters expressed concern that the proposed salary level is too low and thus does not do enough to address income inequality. Other commenters asserted that a higher salary level would create jobs and/or stimulate the economy. As explained in greater detail above, however, the Department declined to set a higher salary level because it believes that the salary level set in this final rule appropriately screens out obviously nonexempt workers and distinguishes between nonexempt and potentially exempt employees, without threatening to supplant the role of the duties test. Accordingly, the Department declines to change the salary level methodology in response to these comments.
This section includes estimated costs and transfers using either different assumptions or segments of the population. First, the Department presents bounds on transfer payments estimated using alternative assumptions. Second, the Department considers costs and transfers by region and by industry.
Because the Department cannot predict employers' precise reactions to the final rule, the Department calculated bounds on the size of the estimated transfers from employers to workers. These bounds on transfers do not generate bounded estimates for costs.
For a reasonable upper bound on transfer payments, the Department assumed that all occasional overtime workers and half of regular overtime workers will receive the full overtime premium (
The plausible lower-transfer bound also depends on whether employees work regular overtime or occasional overtime. For those who regularly work overtime hours and half of those who work occasional overtime, the Department assumes the employees' wages will fully adjust as predicted by the fixed-job model.
The cost and transfer payment estimates associated with the bounds are presented in Table 19. Regulatory familiarization costs and adjustment costs do not vary across the scenarios. Managerial costs are lower under these alternative employer response assumptions because fewer workers' hours are adjusted by employers and thus managerial costs, which depend in part on the number of workers whose hours change, will be smaller.
This section presents estimates of the effects of this final rule by region and by industry. The Department compared the number of affected workers, costs, and transfers across the four Census Regions. The region with the largest number of affected workers will be the South (544,000). As a share of potentially affected workers in the region, the South has somewhat more affected workers relative to other regions (6.1 percent are affected compared with 4.1 to 4.4 percent in other regions). However, as a share of all workers in the region, the South will not be particularly affected relative to other regions (1.1 percent are affected compared with 0.7 to 0.9 percent in other regions).
Total transfers in the first year were estimated to be $396.4 million (Table 21). As expected, the transfers in the South will be the largest portion because the largest number of affected workers will be in the South; however, transfers per affected worker will be the lowest in the South. Annual transfers per worker will be $255 in the South, and $317 to $436 in other regions.
Direct employer costs are composed of regulatory familiarization costs, adjustment costs, and managerial costs. The Department estimates that total direct employer costs will be the highest in the South ($208.3 million) and lowest in the Northeast ($100.4 million) (Table 22). Direct employer costs in each region, as a percentage of the total direct costs, will range from 18.5 percent in the Northeast to 38.4 percent in the South. These proportions are almost the same as the proportions of the total workforce in each region: 18.2 percent in the Northeast and 36.5 percent in the South.
Another way to compare the relative effects of this final rule by region is to consider the transfers and costs as a proportion of payroll and revenues (Table 23). Nationally, employer costs and transfers will be approximately 0.012 percent of payroll. By region, direct employer costs and transfers as a percent of payroll will be approximately the same (between 0.010 and 0.013 percent of payroll). Employer costs and transfers as a percent of revenue will be 0.002 percent nationally and in each region.
In order to gauge the effect of the final rule on industries, the Department compared estimates of combined direct costs and transfers as a percent of payroll, profit, and revenue for the 13 major industry groups (Table 24).
The Department also estimated transfers and costs as a percent of profits.
Finally, the Department's estimates of transfers and costs as a percent of revenue by industry also indicated very small effects (Table 24) of less than 0.01 percent of revenues in any industry. The industry with the largest costs and transfers as a percent of revenue will be leisure and hospitality. However, the difference between this industry and the industry with the lowest costs and transfers as a percent of revenue (public administration) is only 0.008 percentage points. Table 24 illustrates that the differences in costs relative to revenues will be quite small across industry groupings.
Although labor market conditions vary by Census Region and industry, the effects from updating the standard salary level and the HCE compensation level will not unduly affect any of the regions or industries. The proportion of total costs and transfers in each region will be fairly consistent with the proportion of total workers in each region. Additionally, although the shares will be larger for some firms and smaller for others, the average estimated costs and transfers from this final rule are very small relative to current payroll or current revenue—less than a tenth of a percent of payroll and less than one-hundredth of a percent of revenue in each region and in each industry.
As mentioned earlier, the Department considered a range of alternatives before selecting its methods for updating the standard salary level and the HCE compensation level (
The Department projected affected workers, costs, and transfers forward for ten years. This involved several steps.
First, the Department calculated workers' projected earnings in future years. The wage growth rate is calculated as the compound annual growth rate in median wages using the historical CPS MORG data for occupation-industry categories from 2007 to 2017.
Second, the Department compared workers' counter-factual earnings (
Third, sampling weights were adjusted to reflect employment growth. The employment growth rate is the compound annual growth rate based on the ten-year employment projection from BLS' National Employment Matrix (NEM) for 2016 to 2026 within an occupation-industry category.
Adjusted hours for workers affected in Year 1 were re-estimated in Year 2 using a long-run elasticity of labor demand of -0.4.
The Department estimated that the final rule will affect 1.3 million EAP workers in Year 1 and 0.9 million workers in Year 10 (Table 26). The projected number of affected workers includes workers who were not EAP exempt in the base year but would have become exempt in the absence of this final rule in Years 2 through 10. For example, a worker who passes the standard duties test may earn less than $455 in Year 1 but between $455 and the new salary level in subsequent years; such a worker will be counted as an affected worker.
The Department quantified three types of direct employer costs in the ten-year projections: (1) Regulatory familiarization costs; (2) adjustment costs; and (3) managerial costs. Regulatory familiarization costs only occur in Year 1. Although start-up firms must still become familiar with the FLSA following Year 1, the difference between the time necessary for familiarization with the current part 541 regulations and the regulations as modified by the final rule is essentially zero. Therefore, projected regulatory familiarization costs for new entrants over the next nine years are zero.
Adjustment costs will occur in any year in which workers are newly affected. After Year 1, these costs will be relatively small since the majority of workers will be affected in Year 1. Management costs will recur each year for all affected EAP workers whose hours are adjusted. However, managerial costs generally decrease over time as the number of affected EAP workers decreases. The Department estimated that Year 1 managerial costs will be $134.4 million; by Year 10 these costs decline to $94.5 million.
The Department projected two types of transfers from employers to employees associated with workers affected by the regulation. Transfers due to the minimum wage provision will be $75.4 million in Year 1 and will fall to $26.1 million in Year 10 as increased earnings over time move workers' implicit rate of pay above the minimum wage.
Table 26 also summarizes annualized costs and transfers over the ten-year projection period, using 3 percent and 7 percent real discount rates. The Department estimated that total direct employer costs have an annualized value of $173.3 million per year over ten years when using a 7 percent real discount rate. The annualized value of total transfers was estimated to equal $298.8 million.
Other portions of this regulatory impact analysis contain estimates of the impacts of this final rule relative to the 2004 final rule, which is the rule that the Department is currently enforcing. However, OMB Circular A-4 states that multiple regulatory baselines may be analytically relevant. In this case, a second informative baseline is the 2016 final rule, which is currently in the Code of Federal Regulations (CFR).
To ensure that the estimated costs of the 2016 final rule can be directly and appropriately compared with the costs estimated for this final rule, the Department started with the analytic model for this final rule and replaced this final rule's salary and compensation thresholds with the thresholds that would be required by the 2016 final rule, including that rule's provision to automatically update the salary level on a triennial basis. The Department assumed that initial regulatory familiarization costs would be identical under adoption of either this final rule or the 2016 final rule, because the same number of employers would be potentially affected in Year 1. In addition, implementation of the 2016 rule would have resulted in the first automatic update occurring in 2020, and therefore the Department used that value to represent Year 1 of the 2016 rule for 2020. Similarly, automatic updates in Years 7 and 10 from the 2016 final rule become the second and third automatic updates in the comparison. Finally, the Department projected earnings levels for year 13 of the 2016 rule to use as the final automatic update in the comparison. Therefore, the
However, this approach means that the estimated costs presented here for the 2016 final rule are not directly comparable to those published in the
The estimated total perpetual annualized costs of the 2016 rule are $676.9 million using a 7 percent discount rate. For purposes of this E.O. 13771 analysis, the estimated total perpetual annualized costs of this final rule are $142.0 million using a 7 percent discount rate. The Department then subtracted direct regulatory costs expected to have been incurred under the 2016 final rule from the direct costs estimated under this final rule. Direct employer costs of this final rule are estimated to be, on average, $534.8 million lower per year in perpetuity than the 2016 final rule (using a 7 percent discount rate).
The cost savings from this final rule are primarily attributable to two factors. First, a lower standard salary level will result in fewer affected workers in any given year. If fewer workers are affected, then management must consider and make earnings adjustments for fewer employees, and must monitor hours worked for fewer employees. Second, this analysis does not incorporate automatic updating whereas the 2016 final rule incorporated a triennial automatic updating mechanism. Therefore, regulatory familiarization costs are now only incurred in Year 1 and adjustment costs are primarily incurred in Year 1. Additionally, managerial costs now gradually decrease over time rather than increasing every three years.
In the 2016 final rule, the Department estimated average annualized transfers of $1,189.1 million over a ten-year period using a discount rate of 7 percent. The Department also estimated that avoided litigation costs resulting from the rule could total approximately $31.2 million per year.
EPI compared the estimated number of affected workers under the 2016 final rule to the estimate in the proposed rule, and commented that the Department's estimate “that 2.8 million fewer workers will be impacted under its proposal than under the 2016 rule . . . is a vast underestimate.” The alleged underestimate of affected workers resulted in part from EPI comparing the estimated impacts of the 2016 final rule in 2020 (
EPI also contended that the Department underestimated the difference between the number of workers affected by the 2016 final rule and the number affected by the NPRM because the Department's analysis “[left] out an entire group of workers who would be affected by the rule—those who will no longer get
The Regulatory Flexibility Act of 1980 (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), hereafter jointly referred to as the RFA, requires that an agency prepare an initial regulatory flexibility analysis (IRFA) when proposing, and a final regulatory flexibility analysis (FRFA) when issuing, regulations that will have a significant economic impact on a substantial number of small entities. The agency is also required to respond to public comment on the NPRM.
The FLSA requires covered employers to: (1) Pay employees who are covered and not exempt from the Act's requirements not less than the Federal minimum wage for all hours worked and overtime premium pay at a rate of not less than one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek, and (2) make, keep, and preserve records of the persons employed by the employer and of the wages, hours, and other conditions and practices of employment.
The FLSA provides a number of exemptions from the Act's minimum wage and overtime pay provisions, including one for bona fide executive, administrative, and professional (EAP) employees. The exemption applies to employees employed in a bona fide executive, administrative, or professional capacity and for outside sales employees, as those terms are “defined and delimited” by the Department. 29 U.S.C. 213(a)(1). The Department's regulations implementing these “white collar” exemptions are codified at 29 CFR part 541.
For an employer to exclude an employee from minimum wage and overtime protection pursuant to the EAP exemption, the employee generally must
The Department has periodically updated the regulations governing these tests since the FLSA's enactment in 1938. The Department is currently enforcing the 2004 final rule, which, among other revisions, created the standard duties test and paired it with a salary level test of $455 per week. The 2004 final rule also created a new “highly compensated” test for exemption. Under this test, employees who are paid total annual compensation of at least $100,000 (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA's overtime requirements if they customarily and regularly perform at least one of the duties or responsibilities of an exempt EAP employee identified in the standard tests for exemption.
The Department's primary objective in this rulemaking is to ensure that the revised salary levels will continue to provide a useful and effective test for exemption. The premise behind the standard salary level is to be an appropriate dividing line between employees who are nonexempt and employees who may be performing exempt duties. The threshold essentially screens out obviously nonexempt employees whom Congress intended to be protected by the FLSA's minimum wage and overtime provisions. If left unchanged, the effectiveness of the salary level test as a means to help determine exempt status diminishes as nonexempt employee wages increase over time.
Employees who meet the requirements of part 541 are excluded from the Act's minimum wage and overtime pay protections. As a result, employees may work any number of hours in the workweek and not be subject to the FLSA's overtime pay requirements. Some state laws have stricter exemption standards than those described above. The FLSA does not preempt any such stricter state standards. If a state law establishes a higher standard than the provisions of the FLSA, the higher standard applies as a matter of state law in that specific state.
To restore the function of the standard salary level and the HCE total compensation requirements as appropriate bright-line tests between overtime-protected employees and those who may be bona fide EAP employees, the Department is increasing the minimum salary level necessary for exemption from the FLSA's minimum wage and overtime requirements as an EAP employee from $455 to $684 a week for the standard salary test, and from $100,000 to $107,432 per year for the HCE test.
Small business commenters expressed concerns with the Department's estimates of the proposed rule's costs and other impacts. These concerns are acknowledged and addressed in sections VI.d.iii and VI.d.iv, which we incorporate herein.
SBA's Office of Advocacy (SBA Advocacy) generally supported the Department's proposal. SBA Advocacy's comment was based largely on feedback received from small businesses, many of whom told SBA Advocacy that the higher threshold in the 2016 final rule ($47,476) would have been disruptive and costly to small businesses. In its roundtables on the 2019 rulemaking, in contrast, SBA Advocacy heard that most small businesses would only have a few affected employees, and could absorb the costs from this rulemaking. SBA Advocacy listed a few recommendations for the Department to consider. Several of these recommendations (and related issues raised by other commenters) are also addressed elsewhere in this final rule.
SBA Advocacy recommended an adjustment to the calculation of the standard salary level. It indicated that some small businesses recommended that the Department “adopt a narrower Census definition for areas with the lowest wages in the south when calculating and adjusting the new minimum salary threshold.” SBA Advocacy, along with other commenters, specifically recommended that the Department “focus on [a] more narrow geographic area like the East-South Central Census [Division] (which includes Alabama, Kentucky, Mississippi, and Tennessee) when adjusting the national wages; or provide more flexibility for these areas.” The Department evaluated an alternative that eliminates higher-wage areas (District of Columbia, Maryland, and Virginia) from the data set used to determine the salary level (see Sections VI.D.vii and IV.A.v.). As previously discussed, the Department ultimately decided not to adopt this alternative, because it believes that using the entire South Census Region and the retail industry nationwide results in an appropriate nationwide salary level that is based on a low-wage region but can still serve as a meaningful dividing line in higher-wage regions. Using the entire South is also consistent with the methodology used in the 2004 final rule.
SBA Advocacy and a few other commenters also asserted that the Department underestimated small business compliance costs. SBA Advocacy stated that small businesses disagreed with the Department's estimate that, on average, establishments (including small businesses) will have a one-hour burden for rule familiarization, a 1.25-hour burden per affected worker in adjustment costs, and a 5-minute burden per worker per week for scheduling and monitoring. SBA Advocacy stated that small businesses have told them “that it may take . . . many hours and several weeks to understand and implement this rule,” and that “[m]any small businesses spend a disproportionately higher amount of time and money on outside compliance staff.” As discussed in more detail above, however, the Department believes that its estimates of time for rule familiarization and adjustment costs are appropriate, particularly given that the final rule is limited in scope and that most small businesses are already likely familiar with their responsibilities under the part 541 regulations. Additionally, these estimates represent an average of all establishments, some of which will spend little time on these activities and some of whom will spend more time than the average. However, the Department acknowledges that the prior 5 minutes per newly nonexempt overtime worker may be low and has doubled this estimate to 10 minutes.
Regarding the proposed transfer calculations, SBA Advocacy took issue with the Department's estimates that affected small business establishments would have, on average, $422 to $3,187
The RFA defines a “small entity” as a (1) small not-for-profit organization, (2) small governmental jurisdiction, or (3) small business. The Department used the entity size standards defined by SBA, in effect as of October 1, 2017, to classify entities as small.
Parameters that are used in the small business cost analysis are provided in Table 28.
The Department obtained data from several sources to determine the number of small entities and employment in these entities for each industry. However, the Statistics of U.S. Businesses (SUSB) was used for most industries. Industries for which the Department used alternative sources include credit unions,
For each industry, the SUSB 2012 data tabulates total employment, establishment, and firm counts by both enterprise employment size (
The Department also estimated the number of small establishments by employer type (nonprofit, for-profit, government). The calculation of the number of establishments by employer type is similar to the calculation of the number of establishments by industry. However, instead of using SUSB data by industry, the Department used SUSB data by Legal Form of Organization for nonprofit and for-profit establishments, and data from the 2012 Census of Governments for small governments. The 2012 Census of Governments report includes a breakdown of state and local governments by the population of their underlying jurisdiction, allowing us to estimate the number of governments that are small. The estimated share of establishments that are small was applied to the 2016 SUSB data available and the estimated share of governments that are small was applied to the 2017 Census of Governments.
Table 29 presents the estimated number of establishments and small establishments in the U.S. (hereafter, the terms “establishment” and “entity” are used interchangeably and are considered equivalent for the purposes of this FRFA).
As discussed in section VI.B.iii, estimates of workers subject to the FLSA do not exclude workers employed by enterprises that do not meet the enterprise coverage requirements because there is no data set that would adequately inform an estimate of the size of this worker population. Although not excluding such workers only affects a small percentage of workers generally, it may have a larger effect (and result in a larger overestimate) for non-profits, because revenue from charitable activities is not included when determining enterprise coverage.
To estimate the probability that an exempt EAP worker in the CPS data is employed by a small establishment, the Department assumed this probability is equal to the proportion of all workers employed by small establishments in the corresponding industry. That is, if 50 percent of workers in an industry are employed in small entities, then on average small entities are expected to employ 1 out of every 2 exempt EAP workers in this industry.
The Department estimated that small entities employ 480,900 of the 1.3 million affected workers (38.2 percent) (Table 30). This composes 0.9 percent of the 53.1 million workers that small entities employ. The sectors with the highest total number of affected workers employed by small establishments are: Professional and technical services (79,700); retail trade (47,500); and health care services, except hospitals (43,500). The sectors with the largest percent of small business workers who are affected include: broadcasting (except internet) (2.0 percent); arts, entertainment, and recreation (1.9 percent); and insurance (1.9 percent).
Because no information is available on how affected workers are distributed among small establishments that employ affected workers, the Department estimated a range for effects. At one end of this range, the Department assumed that each small establishment employs no more than one affected worker, meaning that at most 480,900 of the 6.3 million small establishments will employ an affected worker. Thus, these assumptions provide an upper bound estimate of the number of affected small establishments (although it provides a lower bound estimate of the effect per small establishment because costs are spread over a larger number of establishments). The impacts experienced by an establishment would increase as the share of its workers that are affected increases. Establishments that employ only affected workers are most likely to experience the most severe effects. Therefore, to estimate a lower-end estimate for the number of affected establishments (which generates an upper-end estimate for impacts per establishment) the Department assumed that all workers employed by an affected establishment are affected.
For the purposes of estimating this lower-range number of affected small establishments, the Department used the average size of a small establishment as the typical size of an affected small establishment.
Table 31 summarizes the estimated number of affected workers that small establishments employ and the expected range for the number of affected small establishments by industry. The Department estimated that the rule will affect 480,900 workers who are employed by somewhere between 63,400 and 480,900 small establishments; this composes from 1.0 percent to 7.6 percent of all small establishments. It also means that from 5.9 million to 6.3 million small establishments incur no more than minimal regulatory familiarization costs (
For small entities, the Department projected various types of effects, including regulatory familiarization costs, adjustment costs, managerial costs, and payroll increases to employees. The Department estimated a range for the number of small affected establishments and the impacts they incur. However, few establishments are likely to incur the effects at the upper end of this range because it seems unlikely that the final rule would affect all employees at a small firm. While the upper and lower bounds are likely over- and under-estimates, respectively, of effects per small establishment, the Department believes that this range of costs and payroll increases provides the most accurate characterization of the effects of the rule on small employers.
The Department expects total direct employer costs will range from $80.1 million to $97.1 million for affected small establishments (Table 32) in the first year. Small establishments that do not employ affected workers will incur an additional $254.4 million to $272.5 million in regulatory familiarization costs. The three industries with the highest costs (professional and technical services; retail trade; and health care services, except hospitals) account for about 36 percent of the costs. The transportation equipment manufacturing industry is expected to incur the largest cost per establishment ($11,700 using the method where all employees are affected), although the costs are not expected to exceed 0.25 percent of payroll. The food services and drinking places industry is expected to experience the largest effect as a share of payroll (estimated direct costs compose 0.63 percent of average entity payroll).
It is possible that the costs of the final rule may be disproportionately large for small entities, especially because small entities often have limited or no human resources personnel on staff. However, the Department expects that small entities will rely upon compliance assistance materials provided by the Department or industry associations to become familiar with the final rule. Additionally, the Department notes that the final rule is quite limited in scope as it primarily makes changes to the salary component of the part 541 regulations. Finally, the Department believes that most entities have at least some nonexempt employees and, therefore, already have policies and systems in place for monitoring and recording their hours. The Department believes that applying those same policies and systems to the workers whose exemption status changes will not be an unreasonable burden on small businesses. Average weekly earnings for affected EAP workers in small establishments are expected to increase by about $6.07 per week per affected worker, using the incomplete fixed-job model
Table 34 presents estimated first year direct costs and payroll increases combined per establishment and the costs and payroll increases as a percent of average establishment payroll. The Department presents only the results for the upper bound scenario where all workers employed by the establishment are affected. Combined costs and payroll increases per establishment range from $1,700 in the accommodations industry to $31,100 in textile, apparel, and leather manufacturing. Combined costs and payroll increases compose more than 2 percent of average annual establishment payroll in two sectors: Food services and drinking places (3.7 percent) and textile, apparel, and leather manufacturing (2.7 percent). In all other sectors, they range from 0.2 percent to 1.9 percent of payroll.
However, comparing costs and payroll increases to payrolls overstates the effects on establishments because payroll represents only a fraction of the financial resources available to an establishment. The Department approximated revenue per small affected establishment by calculating the ratio of small business revenues to payroll by industry from the 2012 SUSB data then multiplying that ratio by average small entity payroll.
To determine how small businesses will be affected in future years, the Department projected costs to small businesses for nine years after Year 1 of the rule. Projected employment and earnings were calculated using the same methodology described in section VI.B.iii. Affected employees in small firms follow a similar pattern to affected workers in all establishments: the number decreases gradually in projected years. There are 480,900 affected workers in small establishments in Year 1 and 337,700 in Year 10. Table 35 reports affected workers in selected years only.
Costs to small establishments vary by year but generally decrease from Year 1 mostly because regulatory familiarization costs are zero in all projected years, and adjustment costs are relatively small. By Year 10, additional costs and payroll for small businesses have decreased from $231.9 million in Year 1 to $118.5 million (Table 36). The Department notes that, due to relatively small sample sizes, the estimates by detailed industry are not precise. This can cause some numbers in the data to vary across years by a greater amount than they will in the future.
The FLSA sets minimum wage, overtime pay, and recordkeeping requirements for employment subject to its provisions. Unless exempt, covered employees must be paid at least the minimum wage and not less than one and one-half times their regular rates of pay for overtime hours worked.
Every covered employer must keep certain records for each nonexempt worker. The regulations at part 516 require employers to maintain records for employees subject to the minimum wage and overtime pay provisions of the FLSA. The recordkeeping requirements are not new requirements; however, employers will need to keep some additional records for affected employees who become nonexempt. As indicated in this analysis, this final rule expands minimum wage and overtime pay coverage to 1.2 million affected EAP workers. This will result in an increase in employer burden and was estimated in the PRA portion (section V) of this final rule. Note that the burdens reported for the PRA section of this rule include the entire information collection and not merely the additional burden estimated as a result of this final rule.
This section discusses the description of the steps the agency has taken to minimize the economic impact on small entities, consistent with the stated objectives of the FLSA. It includes a statement of the factual, policy, and legal reasons for the selected standard and HCE levels adopted in the final rule and why alternatives were rejected.
In this final rule, the Department sets the standard salary level equal to the 20th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South) and/or the retail industry. Based on 2018/19 data, this results in a salary level of 684 per week, or 35,568 annually for a full-year worker. The Department believes that a standard salary level set at the 20th percentile of earnings of full-time salaried workers in the lowest-wage Census Region and/or retail industry will accomplish the goal of setting a salary threshold that adequately distinguishes between employees who may meet the duties requirements of the EAP exemption and those who likely do not, without necessitating the reintroduction of a limit on nonexempt work as existed under the long duties test. The Department sets the HCE total annual compensation level equal to the 80th percentile of earnings of full-time salaried workers nationally (107,432 annually based on 2018/19 data).
The Department is also revising the regulations to permit employers to count nondiscretionary bonuses, incentives, and commissions toward up to 10 percent of the required salary level for the standard exemption, so long as employers pay those amounts on an annually or more frequent basis.
This final rule provides no differing compliance requirements and reporting requirements for small entities. The Department has strived to minimize respondent recordkeeping burden by requiring no specific form or order of records under the FLSA and its corresponding regulations. Moreover, employers would normally maintain the records under usual or customary business practices.
The Department believes it has chosen the most effective option that updates and clarifies the rule and which results in the least burden. Among the options considered by the Department, the least restrictive option was taking no regulatory action. Taking no regulatory action does not address the Department's concerns discussed above under Objectives of, and Need for, the Final Rule. Pursuant to section 603(c) of the RFA, the following alternatives are to be addressed:
The Department is not aware of any federal rules that duplicate, overlap, or conflict with this final rule.
The Unfunded Mandates Reform Act of 1995 (UMRA),
This final rule is issued pursuant to section 13(a)(1) of the Fair Labor Standards Act (FLSA or Act), 29 U.S.C. 213(a)(1). The section exempts from the FLSA's minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of [the Administrative Procedure Act] . . .).”
For purposes of the UMRA, this rule includes a federal mandate that is expected to result in increased expenditures by the private sector of more than $165 million in at least one year, but the rule will not result in increased expenditures by state, local and tribal governments, in the aggregate, of $165 million or more in any one year.
UMRA requires agencies to estimate the effect of a regulation on the national economy if, at its discretion, such estimates are reasonably feasible and the effect is relevant and material.
The Department's RIA estimates that the total first-year costs (direct employer costs and payroll increases from employers to workers) of the final rule will be approximately $887.0 million for private employers and $52.1 million for state and local governments. Given OMB's guidance, the Department has determined that a full macro-economic analysis is not likely to show any measurable effect on the economy. Therefore, these costs are compared to payroll costs and revenue to demonstrate the feasibility of adapting to these new rules.
Total first-year private sector costs compose 0.013 percent of private sector payrolls nationwide.
Total first-year state and local government costs compose less than 0.01 percent of state and local government payrolls.
On July 26, 2017, the Department published an RFI to gather information to aid in formulating a proposal to revise the part 541 regulations. Later, between September 7 and October 17, 2018, the Department held listening sessions in all five Wage and Hour regions throughout the country, and in Washington, DC, to supplement feedback received as part of the RFI. A wide variety of state and local government entities filed comments in response to the 2017 RFI and/or participated in the 2018 listening sessions, and the Department took their views into consideration in drafting the NPRM published earlier this year. Although several tribal governments submitted comments in response to the Department's 2015 NPRM,
The Department received comments from a variety of commenters representing state and local governments, including from some elected officials.
As explained earlier in section IV.A, the Department agrees with the overwhelming majority of commenters that an increase to the $455 per week standard salary level currently being enforced is both necessary and overdue. While the adoption of any nationwide earning threshold has a disproportionate impact on employers operating in lower-income regions and industries, the Department believes that adopting multiple salary levels that vary by region would introduce confusion and compliance costs for employers (or employees) operating across different jurisdictions. By contrast, the Department concludes that reapplying the 2004 final rule's methodology to set the standard salary level appropriately accommodates employers operating in low-wage regions.
Some state and local government commenters opined on other aspects of the proposed rule. For example, NACo endorsed the Department's proposal to permit nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level test; this proposal has been finalized as proposed. The joint comment submitted by IPMA-HR, ICMA, and the GFOA objected to the NPRM's proposed increase to the total annual compensation threshold for highly compensated employees, asserting that the proposed threshold of $147,414 per year “would render the highly compensated employee exemption almost meaningless, especially for smaller governmental organizations in certain parts of the country.” As explained in section IV.D, the Department has finalized a lower increase to the HCE threshold, to $107,432 per year, which addresses such concerns.
State and local government commenters disagreed over how the Department should update the earnings thresholds going forward. Some commenters urged the Department to adopt a mechanism to automatically update the standard salary level and HCE total compensation levels, which they viewed as critical for ensuring that the effectiveness of the earnings thresholds does not erode over time.
Finally, IDHR requested a delayed effective date of at least 18 months, asserting that “[p]ublic entities, like the State [of Idaho], require sufficient time in the [budgeting] and legislative processes to address appropriations or to make statutory changes to existing state law affected by a federal law amendment.” As explained in section II.E, the Department has set an effective date of January 1, 2020, for the final rule. The time between this rule's publication and effective date exceeds the 30-day minimum required under the Administrative Procedure Act (APA), 5 U.S.C. 553(d), and the 60 days mandated for a “major rule” under the Congressional Review Act, 5 U.S.C. 801(a)(3)(A). Given that the Department is currently enforcing the 2004 standard salary level, which an overwhelming majority of commenters agreed needs to be updated, the Department concludes that a lengthier delayed effective date would be imprudent.
This final rule has described the Department's consideration of various options throughout the preamble and economic impact analysis (
Selecting a standard salary level inevitably affects both the risk and cost of misclassification of overtime-eligible employees earning above the salary level, as well as the risk and cost of providing overtime protection to employees performing bona fide EAP duties who are paid below the salary level. An unduly low level risks increasing employer liability from unintentionally misclassifying workers as exempt; but an unduly high standard salary level increases labor costs to employers precluded from claiming the exemption for employees performing bona fide EAP duties. Thus, the ultimate cost of the regulation is increased if the standard salary level is set either too low or too high. The Department determined that setting the standard salary level equivalent to the earnings of the 20th percentile of full-time salaried workers in the South and/or in the retail industry balances the risks and costs of misclassification of exempt status.
The Department has (1) reviewed this final rule in accordance with Executive Order 13132 regarding federalism and (2) determined that it does not have federalism implications.
This final rule would not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
Labor, Minimum wages, Overtime pay, Salaries, Teachers, Wages.
For the reasons set out in the preamble, the Department of Labor amends title 29 of the Code of Federal Regulations part 541 as follows:
29 U.S.C. 213; Pub. L. 101-583, 104 Stat. 2871; Reorganization Plan No. 6 of 1950 (3 CFR, 1945-53 Comp., p. 1004); Secretary's Order 01-2014 (Dec. 19, 2014), 79 FR 77527 (Dec. 24, 2014).
(a) * * *
(1) Compensated on a salary basis pursuant to § 541.600 at a rate of not less than $684 per week (or $455 per week if employed in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by employers other than the Federal government, or $380 per week if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities;
(a) * * *
(1) Compensated on a salary or fee basis pursuant to § 541.600 at a rate of not less than $684 per week (or $455 per week if employed in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by employers other than the Federal government, or $380 per week if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities;
(a) * * *
(1) Compensated on a salary or fee basis at a rate of not less than $684 per week (or $455 per week if employed in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by employers other than the Federal government, or $380 per week if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging, or other facilities; or on a salary basis which is at least equal to the entrance salary for teachers in the educational establishment by which employed; and
(a) * * *
(1) Compensated on a salary or fee basis pursuant to § 541.600 at a rate of not less than $684 per week (or $455 per week if employed in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by employers other than the Federal government, or $380 per week if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging or other facilities; and
(b) The section 13(a)(1) exemption applies to any computer employee who is compensated on a salary or fee basis at a rate of not less than $684 per week (or $455 per week if employed in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by employers other than the Federal government, or $380 per week if employed in American Samoa by employers other than the Federal government), exclusive of board, lodging, or other facilities. * * *
The revisions and additions read as follows:
(a) To qualify as an exempt executive, administrative or professional employee under section 13(a)(1) of the Act, an employee must be compensated on a salary basis at a rate of not less than $684 per week (or $455 per week if employed in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands by employers other than the Federal Government, or $380 per week if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities. * * *
(b) The required amount of compensation per week may be translated into equivalent amounts for periods longer than one week. For example, the $684-per-week requirement will be met if the employee is compensated biweekly on a salary basis of not less than $1,368, semimonthly on a salary basis of not less than $1,482, or monthly on a salary basis of not less than $2,964. However, the shortest period of payment that will meet this compensation requirement is one week.
(a)(1) Beginning on January 1, 2020, an employee with total annual compensation of at least $107,432 is deemed exempt under section 13(a)(1) of the Act if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee as identified in subparts B, C or D of this part.
(2) Where the annual period covers periods both prior to and after January 1, 2020, the amount of total annual compensation due will be determined on a proportional basis.
(b)(1) “Total annual compensation” must include at least $684 per week paid on a salary or fee basis as set forth in §§ 541.602 and 541.605, except that § 541.602(a)(3) shall not apply to highly compensated employees. Total annual compensation may also include commissions, nondiscretionary bonuses and other nondiscretionary compensation earned during a 52-week period. Total annual compensation does not include board, lodging and other facilities as defined in § 541.606, and does not include payments for medical insurance, payments for life insurance, contributions to retirement plans and the cost of other fringe benefits.
(2) If an employee's total annual compensation does not total at least the amount specified in the applicable subsection of paragraph (a) by the last pay period of the 52-week period, the employer may, during the last pay period or within one month after the end of the 52-week period, make one final payment sufficient to achieve the required level. For example, for a 52-week period beginning January 1, 2020, an employee may earn $90,000 in base salary, and the employer may anticipate based upon past sales that the employee also will earn $17,432 in commissions. However, due to poor sales in the final quarter of the year, the employee actually only earns $12,000 in commissions. In this situation, the employer may within one month after the end of the year make a payment of at least $5,432 to the employee. Any such final payment made after the end of the 52-week period may count only toward the prior year's total annual compensation and not toward the total annual compensation in the year it was paid. If the employer fails to make such a payment, the employee does not qualify as a highly compensated employee, but may still qualify as exempt under subparts B, C, or D of this part.
(a) * * *
(3) Up to ten percent of the salary amount required by § 541.600(a) may be satisfied by the payment of nondiscretionary bonuses, incentives and commissions, that are paid annually or more frequently. The employer may utilize any 52-week period as the year, such as a calendar year, a fiscal year, or an anniversary of hire year. If the employer does not identify some other year period in advance, the calendar year will apply. This provision does not apply to highly compensated employees under § 541.601.
(i) If by the last pay period of the 52-week period the sum of the employee's weekly salary plus nondiscretionary bonus, incentive, and commission payments received is less than 52 times the weekly salary amount required by § 541.600(a), the employer may make one final payment sufficient to achieve the required level no later than the next pay period after the end of the year. Any such final payment made after the end of the 52-week period may count only toward the prior year's salary amount and not toward the salary amount in the year it was paid.
(ii) An employee who does not work a full 52-week period for the employer, either because the employee is newly hired after the beginning of this period or ends the employment before the end of this period, may qualify for exemption if the employee receives a
(a) An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. Thus, for example, an exempt employee guaranteed at least $684 each week paid on a salary basis may also receive additional compensation of a one percent commission on sales. An exempt employee also may receive a percentage of the sales or profits of the employer if the employment arrangement also includes a guarantee of at least $684 each week paid on a salary basis. Similarly, the exemption is not lost if an exempt employee who is guaranteed at least $684 each week paid on a salary basis also receives additional compensation based on hours worked for work beyond the normal workweek. Such additional compensation may be paid on any basis (
(b) An exempt employee's earnings may be computed on an hourly, a daily or a shift basis, without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned. The reasonable relationship test will be met if the weekly guarantee is roughly equivalent to the employee's usual earnings at the assigned hourly, daily or shift rate for the employee's normal scheduled workweek. Thus, for example, an exempt employee guaranteed compensation of at least $725 for any week in which the employee performs any work, and who normally works four or five shifts each week, may be paid $210 per shift without violating the $684-per-week salary basis requirement. The reasonable relationship requirement applies only if the employee's pay is computed on an hourly, daily or shift basis. It does not apply, for example, to an exempt store manager paid a guaranteed salary per week that exceeds the current salary level who also receives a commission of one-half percent of all sales in the store or five percent of the store's profits, which in some weeks may total as much
(b) To determine whether the fee payment meets the minimum amount of salary required for exemption under these regulations, the amount paid to the employee will be tested by determining the time worked on the job and whether the fee payment is at a rate that would amount to at least the minimum salary per week, as required by §§ 541.600(a) and 541.602(a), if the employee worked 40 hours. Thus, an artist paid $350 for a picture that took 20 hours to complete meets the $684 minimum salary requirement for exemption since earnings at this rate would yield the artist $700 if 40 hours were worked.
The requirement that the employee be paid “on a salary basis” does not apply to an employee in the motion picture producing industry who is compensated at a base rate of at least $1,043 per week (exclusive of board, lodging, or other facilities). * * *
Environmental Protection Agency and National Highway Traffic Safety Administration, Department of Transportation.
Withdrawal of waiver; final rule.
On August 24, 2018, the Environmental Protection Agency (EPA) and the Department of Transportation's National Highway Traffic Safety Administration (NHTSA) jointly published in the
This joint action is effective November 26, 2019.
EPA and NHTSA have established dockets for this action under Docket ID No. EPA-HQ-OAR-2018-0283 and NHTSA 2018-0067, respectively. All documents in the docket are listed in the
On August 24, 2018, the Environmental Protection Agency (EPA) and the Department of Transportation's National Highway Traffic Safety Administration (NHTSA) (collectively, “the agencies”) jointly published in the
The SAFE Vehicles Rule received several hundred thousand public comments, which discussed in great detail all aspects of the proposal. The nature of the comments received related to the proposed standards and the proposed actions on preemption, though, were considerably different. That is, the vast majority of comments, whether one considers the number of commenters, the number of issues raised by commenters, or the length and level of detail of those comments, focused primarily on the agencies' proposed standards. In contrast, the comments to the preemption issues, though substantive and thorough, were fewer in number and length, and raised primarily legal issues, rather than the technical or economic issues that were the focus of many comments to the standards. Both the proposed waiver withdrawal and discussion of EPCA
Recent actions by the State of California taken after the publication of the NPRM have confirmed the need for final decision from the agencies that States do not have the authority to set GHG standards or establish ZEV mandates. First, on December 12, 2018, California unilaterally amended its “deemed to comply” provision, such that CARB's GHG standards can be satisfied only by complying with EPA's standards as those standards were promulgated in 2012.
In light of the divergence in the type of comments received to the proposal (
The agencies note that several comments claimed that the comment period of 63 days was inadequate or that the agencies did not hold a sufficient number of public meetings. Although the agencies will address this comment more directly in the forthcoming final rulemaking to establish standards, for purposes of this action, it is clear to the agencies that commenters had adequate time to respond to the issue of the waiver and EPCA preemption. Courts give broad discretion to agencies in determining whether the length of a comment period is reasonable and, in assessing the sufficiency of a comment period, look to whether the public had a meaningful opportunity to comment on a proposed action.
NHTSA is finalizing its proposal concerning preemption of State and local laws and regulations related to fuel economy standards. Congress passed EPCA to help achieve the important national objective of protecting the United States against petroleum price shocks through improvements in fuel efficiency for the light duty vehicle fleet. But Congress did not seek to do so at any cost—instead directing the Secretary of Transportation to balance statutory factors, such as the need of the nation to conserve energy, technological feasibility, and economic practicability, to arrive at stringent, but feasible, standards on a Federal basis.
Increasing fuel economy is an expensive undertaking for automakers, the costs of which are necessarily passed on to consumers, thereby discouraging new vehicle purchases and slowing the renewal of the nation's light duty fleet. That is why fuel economy standards must be set considering other critical factors.
This is also why the notion of national applicability and preemption of State or local laws or regulations related to fuel economy standards is so critical. Allowing State or local governments to establish their own fuel economy standards, or standards related to fuel
Uniform national fuel economy standards are essential to accomplishing the goals of EPCA. To ensure that the fuel economy standards NHTSA adopts constitute the uniform national requirements that Congress intended, NHTSA must address the extent to which State and local laws and regulations are preempted by EPCA.
Furthermore, EPCA states: “When an average fuel economy standard prescribed under this chapter is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under this chapter.” 49 U.S.C. 32919(a). As a limited exception, a State or local government “may prescribe requirements for fuel economy for automobiles obtained for its own use.” 49 U.S.C. 32919(c). In addition, when a Federal fuel economy labeling or information requirement is in effect, pursuant to 49 U.S.C. 32908, a State or local government may adopt or enforce an identical requirement on “disclosure of fuel economy or fuel operating costs.” 49 U.S.C. 32919(b). Absent this limited circumstance, a State or local government cannot even have laws in place that are identical to the Federal standards.
NHTSA will first summarize its discussion of preemption in the proposal before turning to discussion of issues raised by the comments. In this final rule, NHTSA fully reaffirms the discussion of preemption set forth in the proposal, which provides additional detail regarding NHTSA's views.
In the proposal, NHTSA described its preemption discussions in prior rulemakings, which are consistent with the views on preemption that NHTSA is finalizing in this document.
In the proposal, NHTSA also described certain developments, including the Supreme Court's decision in
NHTSA confirms its view, stated in the proposal on preemption, that the agencies' consideration in 2012 of California's “deemed to comply”
Congress's intent to provide for uniform national fuel economy standards is frustrated when State and local actors regulate in this area. In the proposal, NHTSA explained that the need for regulatory certainty, along with the clear prospect of disharmony, required it to address preemption.
NHTSA also discussed the broad and clear text of EPCA's express preemption provision.
NHTSA also described Supreme Court precedent interpreting the meaning of “related to.”
In adopting EISA, Congress did not repeal or amend EPCA's express preemption provision.
In the proposal, NHTSA also described in detail the reasons that tailpipe carbon dioxide emissions regulations or prohibitions are “related to” fuel economy standards.
NHTSA affirms in this final rule that a State or local requirement limiting tailpipe carbon dioxide emissions from automobiles has the direct and substantial effect of regulating fuel consumption and, thus, is “related to” fuel economy standards. Likewise, since carbon dioxide emissions constitute the overwhelming majority of tailpipe carbon emissions, a State regulation of all tailpipe greenhouse gas emissions from automobiles or prohibiting all tailpipe emissions is also “related to” fuel economy standards and preempted by EPCA.
NHTSA is also finalizing its conclusion that EPCA does not preempt all potential State or local regulation of greenhouse gas emissions from vehicles. As NHTSA explained in the proposal,
In addition, NHTSA and EPA are confirming their determination, in this joint final action, that a Clean Air Act waiver does not waive EPCA preemption. As explained in the proposal, a State or local law or regulation related to automobile fuel economy standards is void
427 (1819)).
As explained in the proposal, avoiding preemption under one Federal law has no necessary bearing on another Federal law's preemptive effect.
NHTSA and EPA also explained in the proposal their disagreement with decisions from district courts in California and Vermont that held that EPCA did not preempt State tailpipe greenhouse gas emissions standards.
NHTSA also reaffirms its views on implied preemption, as described in the proposal.
NHTSA also finalizes the view, as discussed in the proposal, that ZEV mandates are preempted by EPCA.
NHTSA also confirms its view that the preemption portion of this joint final action is a statement of what Federal law requires and is effective without regard to any particular model year of vehicles and without regard to the details of the fuel economy and greenhouse gas emissions standards the agencies have set previously or set in the future.
NHTSA is finalizing its conclusion that State requirements regulating tailpipe carbon dioxide emissions from automobiles are related to fuel economy standards. The relationship between fuel economy standards and regulations that limit or prohibit tailpipe carbon dioxide emissions from automobiles is a matter of science and mathematics. Commenters did not and cannot dispute the direct scientific link between tailpipe carbon dioxide emissions from automobiles and fuel economy. Thus, State and local laws and regulations that regulate such tailpipe emissions are preempted under EPCA.
The relationship between carbon dioxide and fuel economy is described in several statements in an appendix to parts 531 and 533 that NHTSA is finalizing in this document.
First, “[a]utomobile fuel economy is directly and substantially related to automobile tailpipe emissions of carbon dioxide.” 49 CFR part 531, appx. B, section (a)(1)(A); 49 CFR part 533, appx. B, section (a)(1)(A).
Second, “[c]arbon dioxide is the natural byproduct of automobile fuel consumption.” 49 CFR part 531, appx. B, section (a)(1)(B); 49 CFR part 533, appx. B, section (a)(1)(B).
Third, “[t]he most significant and controlling factor in making the measurements necessary to determine the compliance of automobiles with the fuel economy standards in this part [531 and 533] is their rate of tailpipe carbon dioxide emissions.” 49 CFR part 531, appx. B, section (a)(1)(C); 49 CFR part 533, appx. B, section (a)(1)(C).
Fourth, “[a]lmost all technologically feasible reduction of tailpipe emissions of carbon dioxide is achievable through improving fuel economy, thereby reducing both the consumption of fuel and the creation and emission of carbon dioxide.” 49 CFR part 531, appx. B, section (a)(1)(D); 49 CFR part 533, appx. B, section (a)(1)(D).
Fifth, “as a practical matter, regulating fuel economy controls the amount of tailpipe emissions of carbon dioxide, and regulating the tailpipe emissions of carbon dioxide controls fuel economy.” 49 CFR part 531, appx. B, section (a)(1)(E); 49 CFR part 533, appx. B, section (a)(1)(E).
These statements in the regulatory appendix concerning the scientific relationship between automobile carbon dioxide emissions and fuel economy provide the foundation for NHTSA's preemption analysis. Due to this scientific relationship, which no commenter refuted, a regulation of tailpipe carbon dioxide emissions from automobiles that does not explicitly state that it is regulating fuel economy nevertheless has the effect of doing so. The label a State chooses to put on its regulations certainly is not dispositive in a preemption analysis.
It is a matter of undisputed fact that the more fuel a vehicle burns or consumes, the more carbon dioxide it emits. There is a necessary relation between the regulation of one side of this equation and the regulation of the other. In other words, improving fuel economy has two inherently related benefits: Reducing fuel consumption and reducing carbon dioxide emissions. State and local governments cannot evade the preemptive sweep of EPCA by emphasizing only one side of these benefits and downplaying or ignoring the other when describing their regulations.
To further illustrate the situation, consider types of regulations for a swimming pool. If the pool has a hose on one side that is filling the pool and a hose on the other side that is draining the pool, you can regulate the water level in the pool by controlling either hose. Limiting the amount of water released by the inflow hose, is not itself a regulation of the outflow hose. But it is nonsensical to say that regulating the pool's inflow is not related to regulating its outflow. A regulation of either hose necessarily affects the level of water in the same pool. The Supreme Court has recognized preemption should appropriately apply in such contexts.
To ensure uniform national fuel economy standards, Congress determined that it was appropriate to preempt States and local governments from adopting or enforcing laws or regulations related to the Federal standards. Effectuating Congress's goal requires NHTSA to address preemption. Preemption is necessary to the effectiveness of NHTSA's existing and forthcoming fuel economy standards and regulatory certainty into the future, specifically, one set of national standards. Congress made clear, through the required comprehensive balancing of factors and underlined by its inclusion of an express preemption provision, that State and local requirements impede the national fuel economy program. Thus, NHTSA is exercising its authority in this document, under 49 U.S.C. 32901 through 32903, to promulgate regulations to protect the integrity of the national program. This confirms the clear preemptive nature of NHTSA's standards, as stated in 49 U.S.C. 329219 and provides additional clarity on the scope of preemption, to carry out NHTSA's statutory authority to set nationally applicable standards.
A consistent refrain throughout many of the comments NHTSA received on its preemption proposal was the need for one national standard.
In enacting EPCA's preemption provision, Congress explicitly recognized the need to avoid a patchwork of requirements related to fuel economy standards, and gave NHTSA the exclusive authority to set and enforce fuel economy standards with discrete and limited exceptions as set forth in 49 U.S.C. 32919. NHTSA's exclusive authority is exercised through joint rulemaking with EPA for the very reason that tailpipe carbon dioxide emissions standards are directly and substantially related to fuel economy standards and apply concurrently to the same fleet of vehicles. This joint action enables the Federal government to administer its overlapping obligations while avoiding inconsistency.
Recent developments in California provide good examples of the need for a national standard and the problem that Congress sought to address in enacting EPCA's preemption provision. After the agencies published the proposal, California amended its regulations such that manufacturers are bound to comply with requirements consistent with the no action alternative for model years 2021 through 2026,
Despite a widespread shared belief in the importance of one national standard, NHTSA's proposal on preemption received a mix of support and opposition in comments. Some commenters weighed in on preemption largely only to emphasize the importance of having a national standard.
The rule NHTSA is adopting in this document, under its authority to implement a national automobile fuel economy program in 49 U.S.C. 32901 through 32903, will ultimately provide needed certainty concerning preemption into the future. While EPCA's preemption provision has been in place for decades, the present circumstances demonstrate the need for greater clarity on this issue.
NHTSA's statutory role is to set nationwide standards based on a reasoned balancing of statutory factors. State and local requirements—unbound by these considerations—undermine NHTSA's ability to set standards applicable across the entire country. NHTSA is obliged to set standards at “the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year.” 49 U.S.C. 32902(a). The regulation NHTSA is finalizing in this document implements that authority in 49 U.S.C. 32902 by clarifying the State requirements that impermissibly interfere with its statutory role to set nationally applicable standards. As explained in the proposal, as a practical matter, State and local actors would generally only set requirements that have the effect of requiring a
California's recent action also demonstrates disregard for NHTSA's mandate to set standards in no more than 5 model year increments.
Automakers must comply with the Federal fuel economy and GHG emissions requirements, and do so at significant cost. States like California that do not abide by the constraints of Federal law, and instead set inconsistent or even duplicative requirements related to fuel economy standards unjustifiably increase manufacturers' compliance costs, which must be either passed along to consumers or absorbed by the industry. Clarity on preemption is therefore essential to ensure the industry has the ability to efficiently expend its resources to comply with the nationally applicable standards determined by the Federal government in light of the Federal statutory factors that must be balanced, without the need to separately account for or comply with State or local requirements.
While it is of course ideal for States to independently abide by the constraints of Federal law, this does not reflect the current state of affairs. NHTSA's awareness of laws and regulations already in place, as well as the public comments it received in response to its proposal, confirm the need for additional clarity on the boundaries of EPCA preemption. Wrongly decided decisions by district courts in California and Vermont (appeals of which were abandoned as a condition of the negotiated agreement prior to the 2012 rulemaking), as well as NHTSA's own silence on this issue in recent years, are sowing confusion, emphasizing the need for the clarity provided by this final rule affirmatively establishing One National Program.
This final rule provides needed clarity on the scope of EPCA preemption. NHTSA is adopting regulatory text, including a detailed appendix, in addition to discussing this issue in the preamble to the rule, specifically to provide clarity on EPCA's preemption provision.
NHTSA rejects the assertion advanced in one comment that NHTSA did not provide notice and a fair opportunity to comment on its interpretation of EPCA preemption.
NHTSA also disagrees with a comment from the California Air Resources Board (CARB) that asserted the proposal was not clear on the scope of preemption.
It should not be difficult for States or local governments to ascertain whether their laws or regulations regulate or prohibit tailpipe carbon dioxide emissions. As NHTSA explained in the proposal and reiterates in this document, both requirements specific to tailpipe carbon dioxide emissions from automobiles and those that address all tailpipe greenhouse gas emissions from automobiles are preempted, given that carbon dioxide emissions constitute the overwhelming majority of those emissions.
NHTSA also does not believe it should be difficult for States or local governments to determine if their laws or regulations have the direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions from automobiles or automobile fuel economy.
Moreover, contrary to assertions in some comments, NHTSA's adoption of regulatory text does provide a limiting principle
Through its adoption of specific regulatory text in this document, NHTSA is providing guidance on the boundary set by Congress, as well as under principles of implied preemption. Notably, NHTSA has not concluded that implied preemption broadens the scope of preemption established by Congress. As NHTSA recognized in its proposal, some greenhouse gas emissions from automobiles have no relation to fuel economy and therefore may be regulated by States or local governments without running afoul of EPCA preemption. NHTSA provided examples of State or local requirements that are not preempted. It also specifically invited comment on the extent to which State or local requirements can have some incidental impact on fuel economy or carbon dioxide emissions without being related to fuel economy standards, and thus are not preempted. NHTSA did not receive any directly responsive comments regarding this issue, including from State and local government commenters, suggesting that they do not currently have questions about how preemption would apply to their laws or regulations.
As an additional limiting principle, NHTSA reiterates the statement in its proposal that only a portion of a law or regulation would be preempted, where possible. This would be the case if the law or regulation combined multiple severable elements that were allowable and not allowable, such as with a regulation of both vehicular refrigerant leakage and tailpipe carbon dioxide emissions—refrigerant leakage requirements could remain in place while tailpipe carbon dioxide emissions regulations would necessarily be preempted.
NHTSA rejects the argument made by certain commenters that the presumption against preemption applies in this context.
NHTSA reaffirms the view that EPCA's express preemption provision is broad and clear. NHTSA's review and assessment of comments has not changed its view. Some comments noted that the statute specifically preempts laws or regulations related to fuel economy
EPCA preempts State and local laws and regulations that relate to: (1) Fuel economy standards,
The regulation NHTSA is finalizing in this document implements that authority in 49 U.S.C. 32902 by making clear that State and local requirements that relate to fuel economy standards for future model year vehicles conflict with NHTSA's ability to set nationally applicable standards for those vehicles in the future and thus are impliedly preempted. Manufacturers make design decisions well in advance of production, as Congress recognized by adding “lead time” provisions to the statute. State and local requirements for automobiles not yet covered by a NHTSA standard could force manufacturers into plans that are not economically practical or otherwise inconsistent with EPCA's statutory factors—since States and local governments are not bound by those considerations. By the time future model year vehicles are produced, they will be covered by a NHTSA standard. If States or local governments were permitted to issue regulations related to fuel economy for future model year vehicles, manufacturers would at least act at risk of running afoul of those non-Federal regulations. At least some manufacturers would undoubtedly feel compelled to conform with such non-Federal regulations until the Federal government sets its own standards. Even if non-Federal regulations are not ultimately enforceable as to produced vehicles (since a Federal fuel economy standard will be adopted, in time), they clearly conflict with the congressionally imposed constraint of issuing standards for not more than 5 model years. Such far-reaching regulations are based on predictions about the future that are inevitably less reliable the further in time they reach. Manufacturers are therefore put in an untenable position of either planning towards State and local regulations based on potentially outdated or unrealistic expectations about the future, or ignoring them before knowing the Federal standards that will eventually apply and acting at risk of enforcement by non-Federal actors. Moreover, different States could impose different and conflicting fuel economy requirements on manufacturers for future model years, a result directly at odds with the single national standard established by EPCA. Any of these scenarios demonstrates that the position that EPCA preemption does not reach regulation of model year vehicles not currently covered by a NHTSA standard is flawed. State or local requirements related to fuel economy standards for any model year automobiles are preempted.
The regulatory text and preamble discussion clearly articulates NHTSA's views on the meaning of “related to” in EPCA's express preemption provision, which are confirmed following NHTSA's review and assessment of comments. As discussed in the proposal, EPCA is not unique in using the phrase “related to” to set the scope of preemption.
However, NHTSA, of course, agrees that “related to” is not unlimited.
With respect to implied preemption, NHTSA agrees with comments that assert it is a fact-driven analysis.
Contrary to CARB's contention in its comments, the fact that NHTSA acknowledged that some State requirements that incidentally affect greenhouse gas emissions are not preempted does not demonstrate that there is an insufficient record for finding that other laws do pose a conflict to NHTSA's statutory role to set nationwide fuel economy standards for automobiles.
NHTSA also disagrees with the claim made in some comments that it does not have delegated authority to issue a regulation on this topic, and is not owed deference or weight for its regulation implementing EPCA's express preemption provision or the conflict resulting from State or local laws or regulations.
NHTSA is also finalizing its view that its regulation concerning EPCA preemption is independent and severable from any particular CAFE standards adopted by NHTSA. NHTSA's implementation of its authority to set nationally applicable fuel economy standards under 49 U.S.C. 32902, by clarifying the scope of preemption, is separate from its decision on the appropriate standards for any given model years. No commenter disagreed that this portion of the proposed rule is severable. The Alliance of Automobile Manufacturers agreed, noting case law stating that whether a regulation is severable depends on the agency's intent and whether the remainder of the regulation may still function sensibly.
NHTSA is also finalizing its conclusion that a State law or regulation that either explicitly prohibits tailpipe carbon dioxide emissions from automobiles or has the direct or substantial effect of doing so is preempted, both pursuant to the express preemption provision in 49 U.S.C. 32919 and implied preemption, as an obstacle to NHTSA's national program pursuant to 49 U.S.C. 32901-32903.
As explained in greater detail in the proposal, carbon dioxide emissions constitute the overwhelming majority of tailpipe carbon emissions.
ZEV mandates force the development and commercial deployment of ZEVs, irrespective of the technological feasibility or economic practicability of doing so. The Alliance of Automobile Manufacturers commented that this interference with NHTSA's balancing of
In setting fuel economy standards, among the factors that NHTSA must consider are technological feasibility and economic practicability. 49 U.S.C. 32902(f). NHTSA is also required to set performance-based standards, and not design mandates.
NHTSA disagrees with comments that expressed the view that ZEV mandates are not related to fuel economy standards because ZEVs emit no criteria pollutants or greenhouse gases.
NHTSA also disagrees with a comment that argued ZEV mandates are not preempted because the definition of fuel economy in EPCA is in reference to gasoline or equivalent fuel.
Many commenters expressed support for ZEV mandates as matter of policy.
NHTSA reiterates, as it discussed in the proposal, that EISA did not narrow the express preemption clause in 49 U.S.C. 32919. In fact, EISA did not alter EPCA's express preemption clause in any way. As a factual matter, Congress neither amended or nor repealed EPCA's preemption clause with the enactment of EISA. EISA's savings clause did not amend EPCA. The savings clause, codified at 42 U.S.C. 17002, states: “Except to the extent expressly provided in this Act or an amendment made by this Act, nothing in this Act or an amendment made by this Act supersedes, limits the authority provided or responsibility conferred by, or authorizes any violation of any provision of law (including a regulation), including any energy or environmental law or regulation.”
As described in the proposal, EISA's savings clause does not expand any pre-existing authority. Instead, the clause expressly states that it did not impose a new limitation on such authority. By its plain text, EISA also does not authorize any violation of any provision of law. This includes EPCA's express preemption clause. Thus, activities prohibited by the express preemption clause before EISA, such as State laws related to fuel economy standards, continued to be prohibited after EISA.
The text of the savings clause is what controls its meaning, not statements by individual Members of Congress. South Coast claims that NHTSA did not discuss such statements in detail, including statements by Senator Feinstein.
NHTSA likewise does not find persuasive the argument that Congress did not enact additional statutory language in EISA preempting California from regulating tailpipe greenhouse gas
Given the words of the savings clause, NHTSA rejects the argument made by South Coast that the “EISA saving provision designedly narrows EPCA's express preemption provision, and Congress intended this result.”
Because NHTSA disagrees that States could permissibly regulate tailpipe greenhouse gas emissions from automobiles prior to EISA, it also disagrees with comments that argue that Congress “preserved” the ability of States to do so through the savings clause (or, alternatively, that efforts to “revoke” such preexisting authority failed).
NHTSA also disagrees with a comment by South Coast that argues that EISA's savings provision forecloses implied preemption.
The provision in EISA concerning minimum requirements for Federal government vehicles also does not change NHTSA's view. Several comments referenced this provision, which states that the EPA “Administrator shall take into account the most stringent standards for vehicle greenhouse gas emissions applicable to and enforceable against motor vehicle manufacturers for vehicles sold anywhere in the United States” in identifying vehicles for the Federal government fleet. 42 U.S.C. 13212(f)(3)(B).
However, EPCA
In enacting this provision in EISA, Congress required the EPA Administrator to “issue guidance identifying the makes and model number of vehicles that are low greenhouse gas emitting vehicles” to aid in identifying vehicles for the Federal government's own fleet. 42 U.S.C. 13212(f)(3)(A). The provision requiring the Administrator to “take into account the most stringent standards for vehicles greenhouse gas emissions” provides a consideration for that guidance.
Further, to read this procurement-related provision as somehow showing that Congress intended to allow California to establish laws related to fuel economy standards is unreasonable, as doing so would put California in an unequal setting vis-a-vis other states, and that would not make sense in this context. “The Act also differentiates between the States, despite our historic tradition that all the States enjoy `equal sovereignty.' ”
Certain comments opposed to NHTSA's proposal rely upon the Supreme Court's decision in
Moreover, as discussed above, NHTSA and EPA conduct joint rulemaking consistent with the Supreme Court's decision. The Court acknowledged that NHTSA and EPA's statutory obligations may overlap, but that the agencies may both administer those obligations while avoiding inconsistency.
A number of comments also rely on the prior district court decisions in California and Vermont in opposing NHTSA's proposal on preemption.
The Vermont district court also attempted to reconcile EPCA and the Clean Air Act by asserting that a Clean Air Act waiver converts State requirements to “other motor vehicle standards” that NHTSA must consider in setting fuel economy standards. As NHTSA noted in the proposal, even the California district court found that there was no legal foundation for the view that a State regulation pursuant to a Clean Air Act waiver becomes the equivalent of a Federal regulation.
As described in the proposal, NHTSA also disagrees with the California and Vermont district courts' implied preemption analyses.
Given NHTSA's previously stated views on those decisions, arguments that rely on the decisions are not persuasive. Commenters did not provide any new information or analysis of those district court decisions that caused the agency to change its view on the decisions.
While NHTSA need not belabor its views again here, it is worth emphasizing, as did commenters, that both district courts ignored NHTSA's published prior statements on preemption in rendering their decisions.
One commenter also erroneously asserts that collateral estoppel will bar the Department of Justice from defending a final rule that asserts State greenhouse gas emissions regulations are preempted by EPCA.
Both agencies are finalizing their tentative conclusion from the proposal that a Clean Air Act waiver does not also foreclose EPCA preemption. EPCA does not provide for a waiver of preemption, either by NHTSA or by another Federal agency. EPA, like NHTSA, does not have the authority to waive EPCA preemption. Therefore, its grant of a Clean Air Act waiver cannot operate to waive EPCA preemption. NHTSA discussed the basis for its view that a Clean Air Act waiver does not “federalize” EPCA-preempted State requirements in detail in its proposal. NHTSA reaffirms that discussion.
Several comments recited the district court's holding in
NHTSA also finalizes its view that preempted standards are void
NHTSA agrees with South Coast, which suggested in its comments that EPCA does not outweigh the Clean Air Act.
NHTSA has rejected the argument that a Clean Air Act waiver renders EPCA preemption inapplicable, and likewise rejects the even more attenuated argument concerning EPA's approval of preempted State requirements as a part of a State Implementation Plan (SIP) submission for areas that do not meet National Ambient Air Quality Standards (NAAQS). A State has no authority to adopt or enforce a requirement that falls within the scope of EPCA preemption. 49 U.S.C. 32919(a). This is true even if adopting the unlawfully enacted requirement would assist the State in coming into compliance with the NAAQS. The inclusion of an invalid fuel economy requirement in an air quality SIP does not render the requirement suddenly valid.
Moreover, EPCA preemption applies directly to States and local governments which are obliged to adhere to the constraints of the Supremacy Clause. EPCA explicitly prohibits States and local governments from adopting or enforcing a law or regulation related to fuel economy standards. It is unreasonable for States to expect a Federal agency (EPA) acting under one statutory scheme (the Clean Air Act) to analyze whether the State has adopted preempted regulations in contravention of an entirely separate statute (EPCA) administered by a different Federal agency (NHTSA). In fact, as noted above, historically EPA has declined to address questions unrelated to CAA section 209, such as preemption analysis, in its waiver decisions. NHTSA strongly disagrees with the assertion that EPA's approval of a SIP silently acts as an implied waiver of EPCA preemption. This suggestion is particularly hollow given that neither EPA nor NHTSA has the authority to waive EPCA preemption.
NHTSA agrees with the general principle that an approved SIP is enforceable as a matter of Federal law.
Since SIPs are binding on States, the agencies recognize that certain States may need to work with EPA to revise their SIPs in light of this final action.
NHTSA considers the views of all interested stakeholders—including States and local governments—in carrying out its statutory obligation to set nationally applicable fuel economy standards. However, EPCA does not permit States or local governments to act as co-regulators with NHTSA in the process of setting fuel economy standards. Indeed, EPCA precludes them from doing so, with the sole exception of information disclosure requirements identical to Federal requirements, and for requirements for fuel economy for automobiles obtained for a State or local governments' own use. A number of commenters urged NHTSA to work cooperatively with California, and to negotiate with and reach a compromise with California.
The very limited exceptions to preemption set forth in EPCA—covering vehicles for a government's own use, and for disclosure requirements that are identical to Federal requirements—only confirm the breadth of preemption.
For California, or any other State or local government, to regulate in this area would require NHTSA to waive EPCA preemption, but commenters did not and cannot identify any statutory authorization for NHTSA to do so and no such authority exists, either expressly or impliedly. The Clean Air Act requires EPA to waive Clean Air Act preemption under a specific section of that statute unless it makes certain findings. But because EPCA does not enable NHTSA to issue a waiver of preemption, it also does not set forth terms upon which a waiver would be appropriate.
Absent the affirmative authority to approve of or consent to State or locality's requirements related to fuel economy standards, commenters appear to ask NHTSA to simply to look aside. That is inconsistent with NHTSA's legal responsibility to set nationally applicable standards. It is also inconsistent with the self-executing nature of EPCA preemption, meaning that State or local requirements related to fuel economy standards are void
NHTSA also disagrees that it is appropriate to ignore EPCA preemption as a strategy to avoid litigation over this issue, a strategy strongly suggested by a large number of commenters. NHTSA understands the concerns of such commenters who hope to avoid prolonged litigation.
Those commenters that ask NHTSA to negotiate with California demonstrate the nature of the problem.
As discussed above, many comments emphasized a desire for maintaining a National Program. Neither California nor any other State, of course, has the authority to set national standards in any area. If California were to adopt and enforce requirements related to fuel economy standards, there could only be uniform standards applicable throughout the country if California agrees with the standards set by NHTSA or vice versa. But EPCA requires that “[e]ach standard shall be the maximum feasible average fuel economy level that the Secretary”—not a regulatory agency in the State of California—“decides that the manufacturers can achieve in that model year.”
Moreover, a faithful application of EPCA requires more than just avoiding inconsistency. For that reason, it is unavailing that CARB has previously implemented its program purportedly consistent with the Federal government.
In addition, there is no legal basis in EPCA or the APA for California or any other State to receive preferential treatment for their views in this statutory scheme or rulemaking process.
While States or local governments may not adopt or enforce requirements related to fuel economy standards, NHTSA, of course, is considering their views in setting appropriate standards. Many State and local governments commented at great length on both the preemption and standard setting portions of NHTSA's proposal.
NHTSA also disagrees with the view expressed by some commenters that there is not a direct conflict between State regulation of tailpipe carbon dioxide emissions from automobiles issued pursuant to a Clean Air Act waiver and NHTSA's ability to set fuel economy standards under EPCA. South Coast argues that when there are inconsistent standards, automakers can avoid a conflict by complying with the more stringent standard.
NHTSA disagrees that this situation does not pose a conflict. Higher standards than those NHTSA has determined are “maximum feasible” after balancing the statutory factors negates the agency's judgment in setting national standards, including traffic safety. NHTSA addressed this conflict in detail in the proposal and reiterates that discussion here.
South Coast also asserted in its comments that there is no direct conflict between the purpose of EPCA to reduce fuel consumption by increasing fuel economy and the purpose of the Clean Air Act to protect public health from air pollution, including by allowing California to establish motor vehicle standards if it meets the criteria for a waiver.
NHTSA also disagrees with comments that assert it did not properly consider federalism concerns. Specifically, South Coast claimed that NHTSA violated the executive order on federalism, Executive Order 13132, although South Coast acknowledges the Executive Order does not create an enforceable right or benefit.
Moreover, the executive order supports NHTSA's action in construing preemption through rulemaking.
EPCA preemption also does not improperly impinge on the rights of States. Several commenters argued for allowing States to regulate in this area due to asserted benefits of State regulation.
Notwithstanding these asserted interests of policy, Congress determined that NHTSA should have exclusive authority to set fuel economy standards and that States are not authorized to adopt or enforce regulations related to those standards, with limited exceptions described above. No commenter argued that EPCA's preemption provision is unconstitutional. Some commenters, however, have argued that special treatment afforded to the California is problematic.
NHTSA recognizes that California may have different policy views, as do many interested parties, including both those who expressed views in favor of and in opposition to the proposal. However, Congress gave NHTSA the duty to balance competing considerations. NHTSA also rejects the notion that California has valid reliance interests in regulations that are void
No commenter offered alternative regulatory text for consideration by the
While not advocating for a change to the regulatory text, comments from South Coast and CARB persuaded us to make changes to ensure consistency with EPCA's express preemption provision, as was NHTSA's intention.
CARB also pointed out in its comments that the statute preempts laws or regulations “related to fuel economy
In addition, to ensure consistency throughout the regulatory text and with the preamble discussion, NHTSA is clarifying that a State law or regulations having either a direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions or fuel economy is a law or regulation related to fuel economy. The proposal included this statement in the proposed regulatory text: “Automobile fuel economy is directly and substantially related to automobile tailpipe emissions of carbon dioxide.” This provides the foundation for NHTSA's express and implied preemption analysis. NHTSA is therefore clarifying that requirements directly or substantially related to fuel economy are preempted by adding “or substantially” to two places in the regulatory text. This is consistent with the proposal, which explained that requirements with no bearing on fuel economy or those with only an incidental impact on fuel economy are not preempted.
In addition, several references throughout the proposed regulatory text addressed a “state law or regulation.” Consistent with EPCA and the discussion in the notice of proposed rulemaking, NHTSA intended to address laws and regulations of States and their political subdivisions. For clarity, NHTSA revised all references in its regulatory text to cover States and their political subdivisions.
Specifically, in the rule NHTSA is finalizing in this document, appendix B, section (a)(3) reads: “A law or regulation
Finally, NHTSA also added clarifying language to 49 CFR 531.7(b) and 533.7(b) to indicate that the references to “section 32908” are to section 32908 of title 49 of the United States Code.
These clarifying changes are consistent with the discussion in the preamble to NHTSA's proposed rule.
In this section of this joint action, EPA is finalizing its August 2018 proposal to withdraw aspects of its January 2013 waiver of Clean Air Act (CAA) section 209 preemption of the State of California's Advanced Clean Car (ACC) program.
On January 9, 2013, EPA granted California's request for a waiver of preemption to enforce its Advanced Clean Car (ACC) program regulations under CAA section 209(b)(1).
Since publication of the SAFE proposal, California has clarified its “deemed to comply” provision, under which manufacturers are afforded the option of complying with CARB's GHG standards by showing that they comply with the applicable federal GHG standards. As amended, CARB's “deemed to comply” provision now provides that compliance with CARB's GHG standards can be satisfied only by complying with the federal standards as those standards were promulgated in 2012. In other words, while the content of CARB's GHG standards has never been identical to the corresponding Federal standards, the “deemed to comply” provision as originally designed, and as it existed when EPA issued the January 2013 waiver, would have shielded automobile manufacturers from having to comply with two conflicting sets of standards unless they chose to do so. After the December 2018 amendment, however, CARB's regulations now contain within them a mechanism which will automatically impose that state of affairs the moment that the Federal government should exercise its authority to revise its standards. California has further recently announced a “voluntary agreement” with four automobile manufacturers that, among other things, requires the automobile manufacturers to refrain from challenging California's GHG and ZEV programs. This “voluntary agreement” further provides that California will accept automobile manufacturer compliance with a less stringent standard (and one that extends the phase-in of the GHG standard from 2025 to 2026) than either the California program that was the subject of the 2013 waiver or the Federal standards as promulgated in 2012. Neither California's amendment of its “deemed to comply” provision, nor its more recent announcement of the new “voluntary agreement,” constitute a necessary part of the basis for the waiver withdrawal and other actions that EPA finalizes in this document, and EPA would be taking the same actions that it takes in this document even in their absence. Nevertheless, EPA does not believe it appropriate to ignore these recent actions and announcements on the State's part, and, as discussed below, believes that they confirm that this action is appropriate.
On January 9, 2013, EPA granted CARB's request for a waiver of preemption to enforce its ACC program regulations pursuant to CAA section 209(b). 78 FR 2112. The ACC program comprises regulations for ZEV, tailpipe GHG emissions standards, and low-emission vehicles (LEV) regulations
As explained in the SAFE proposal (83 FR 83 FR 23245-46), up until the 2008 GHG waiver denial, EPA had interpreted CAA section 209(b)(1)(B) as requiring a consideration of California's need for a separate motor vehicle program designed to address local or regional air pollution problems and not whether the specific standard that is the subject of the waiver request is necessary to meet such conditions (73 FR 12156; March 6, 2008). We also explained that California would typically seek a waiver of particular aspects of its new motor vehicle program up until the ACC program waiver request. We further explained that in the 2008 GHG waiver denial, which was a waiver request for only GHG emissions standards, EPA had determined that its interpretation of CAA section 209(b)(1)(B) as calling for a consideration of California's need for a separate motor vehicle program was not appropriate for GHG standards because such standards are designed to address global air pollution problems in contrast to local or regional air pollution problems specific to and caused by conditions specific to California (73 FR 12156-60). In the 2008 GHG waiver denial, EPA further explained that its previous reviews of California's waiver request under CAA section 209(b)(1)(B) had usually been cursory and undisputed, as the fundamental factors leading to California's air pollution problems—geography, local climate conditions (like thermal inversions), significance of the motor vehicle population—had not changed over time and over different local and regional air pollutants. These fundamental factors applied similarly for all of California's air pollution problems that are local or regional in nature. In the 2008 GHG waiver denial, EPA noted that atmospheric concentrations of GHG are substantially uniform across the globe, based on their long atmospheric life and the resulting mixing in the atmosphere. EPA therefore posited that with regard to atmospheric GHG concentrations and their environmental effects, the California specific causal factors that EPA had considered when reviewing previous waiver applications under CAA section 209(b)(1)(B)—the geography and climate of California, and the large motor vehicle population in California, which were considered the fundamental causes of the air pollution in California—do not have the same relevance to the question at hand. EPA explained that the atmospheric concentration of GHG in California is not affected by the geography and climate of California. The long duration of these gases in the atmosphere means they are well-mixed throughout the global atmosphere, such that their concentrations over California and the U.S. are substantially the same as the global average. The number of motor vehicles in California, while still a notable percentage of the national total and still a notable source of GHG emissions in the State, is not a significant percentage of the global vehicle fleet and bears no closer relation to the levels of GHG in the atmosphere over California than any other comparable source or group of sources of GHG anywhere in the world. Emissions of greenhouse gases from California cars do not generally remain confined within California's local environment but instead become one part of the global pool of GHG emissions, with this global pool of emissions leading to a relatively homogenous concentration of GHG over the globe. Thus, the emissions of motor vehicles in California do not affect California's air pollution problem in any way that is different from how emissions from vehicles and other pollution sources all around the U.S. (and, for that matter, the world) do.
In 2009, EPA reversed its previous denial and granted California's preemption waiver request for its GHG emission standards “for 2009 and later model years.” 74 FR 32744. EPA announced that it was returning to what it styled as the traditional interpretation of CAA section 209(b)(1)(B), under which it would only consider whether California had a “need for its new motor vehicle emissions program as a whole,”
In this action, EPA finalizes its proposed determination that it has the authority to withdraw a waiver in appropriate circumstances. EPA explains below (in this subsection, III.B) the basis for its conclusions that it has authority to withdraw a waiver in appropriate circumstances, and (in subsections III.C and III.D) that it is appropriate for EPA to exercise that authority at this time.
Agencies generally have inherent authority to reconsider their prior actions. Nothing in CAA section 209(b) indicates Congressional intent to remove that authority with respect to waivers that it has previously granted. The text, structure, and context of CAA section 209(b) support EPA's interpretation that it has this authority. And no cognizable reliance interests have accrued sufficient to foreclose EPA's ability to exercise this authority here.
In considering EPA's authority to withdraw a waiver, it is clear that EPA has authority to review and grant California's applications for a waiver based on its evaluation of the enumerated criteria in CAA section 209(b). In this action, we affirm the Agency's proposed view that the absence of explicit language with regard to withdrawal of a waiver does not foreclose agency reconsideration and withdrawal of a waiver.
As explained at proposal, California's ability to obtain a waiver under CAA section 209(b)(1) in the first instance is not unlimited. Specifically, CAA section 209(b)(1) provides that “no such waiver will be granted” if the Administrator finds
Congress could have simply carved out an exemption from preemption under CAA section 209(b)(1), similar to the exemption it created in CAA section 211(c)(4)(B) for California fuel controls and prohibitions. Under CAA section 211(c)(4)(A), states and political subdivisions are preempted from prescribing or attempting “to enforce, for purposes of motor vehicle emission control, any control or prohibition, respecting any characteristic or component of a fuel or fuel additive in a motor vehicle or motor vehicle engine” if EPA has prescribed a control or prohibition applicable to such characteristic or component of the fuel or fuel additive under CAA section 211(c)(1). EPA may waive preemption for states other than California to prescribe and enforce nonidentical fuel controls or prohibitions subject to certain conditions. Further, waivers are not required where states adopt state fuel controls or prohibitions that are identical to federal controls or for California to adopt fuel controls and prohibitions. CAA sections 211(c)(4)(A)(ii) and 211(c)(4)(B). This stands in stark contrast to CAA section 209(b), which requires EPA to make a judgment about California's request for a waiver of preemption.
Under the third waiver prong, CAA section 209(b)(1)(C), for example, EPA is to review the consistency of California's standards with CAA section 202(a), a provision of the Clean Air Act that EPA solely implements.
In tying the third waiver prong to CAA section 202(a), Congress gave a clear indication that, in determining whether to grant a waiver request, EPA is to engage in a review that involves a considerable degree of future prediction, due to the expressly future-oriented terms and function of CAA section 202(a).
Under CAA section 202(a), standards are often technology-forcing and thus involve predictions on the part of EPA with regard to future trends in technological and economic factors. This calls for “substantial room for deference to the EPA's expertise in projecting the likely course of development.”
Thus, the structure of the statute—where State standards may only be granted a waiver under CAA section 209(b) to the extent that they are consistent with CAA section 202(a)—confirms that EPA has inherent authority to reconsider its prior determination that a request for a waiver for California standards met the criteria of CAA section 209(b). This renders untenable the stance taken by some commenters that EPA is somehow precluded from conducting a subsequent review and withdrawing a waiver even when it becomes aware that its initial predictions in this regard have proven inaccurate.
Further, as discussed in the SAFE proposal, the legislative history of CAA section 209(b) confirms that Congress intended EPA's authority under CAA section 209(b) to include the authority to withdraw a previously granted waiver under appropriate circumstances. 83 FR 43242-43243.
Some commenters that oppose the proposed withdrawal of the waiver concede that the agency may review California's waiver applications under the third waiver prong but then argue that such agency review is a “narrow one.”
At least one commenter argued that this legislative history did not support the position that EPA has authority to withdraw a previously granted waiver because the legislative history relates to the original creation of the waiver provision in the Air Quality Act of 1967, whereas the Clean Air Act Amendments of 1977 revised language in the root text of CAA section 209(b)(1). Specifically, Congress in 1977 amended CAA section 209(b)(1) to establish as a prerequisite for the grant of a waiver that the State determine that its standards “will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards” for EPA to issue a waiver, rather than the original requirement that State standards be “more stringent” than corresponding federal standards.
Some commenters question whether EPA has any authority at all to reconsider a previously granted waiver. It is well-settled, however, that EPA has inherent authority to reconsider, revise, or repeal past decisions to the extent permitted by law. At proposal, EPA explained that, although CAA section 209(b)(1) may not expressly communicate that EPA has authority to reconsider and withdraw a waiver, both the legislative history of the waiver provision and fundamental principles of administrative law establish that EPA necessarily possesses that authority. The authority to reconsider prior agency decisions need not be rooted in any particular “magic words” in statutory text. Subject to certain limitations, administrative agencies possess inherent authority to reconsider their decisions.
The commenters' position that EPA does not have any authority to reconsider either a grant or a denial of a waiver founders in light of these principles. As explained in the SAFE proposal, 83 FR 43242-43243, EPA does have that authority, in part because its interpretations of the statutes it administers “are not carved in stone.”
Other commenters assert that EPA's proposal to withdraw the waiver is solely based on a change in Presidential administration. There is no basis for this claim. While EPA noted in the SAFE proposal that the agency can review and reconsider a prior decision “in response to . . . a change in administration,”
At proposal, EPA noted that California had given public notice that it was considering amending its “deemed to comply” provision to provide that that provision would be applicable only to vehicles that meet the standards originally agreed to by California, the federal government, and automakers in 2012.
Thus, contrary to some commenters' assertions, reconsideration of the grant of the waiver, and EPA's proposal to withdraw the waiver, was not solely motivated by a change in Presidential administration. The policy, technical, and legal considerations discussed in the proposal and in this final action provide the rationale for EPA's actions here. It is therefore distinguishable from the instance where, for example, an agency undertook reconsideration subsequent to a change in administration because “the withdrawn decision was doubtful in light of changing policies.”
Further, as earlier noted, California has now entered into a voluntary agreement with at least four automobile manufacturers that amongst other things, requires the automobile manufacturers to refrain from challenging California's GHG and ZEV programs, and provides that California will accept automobile manufacturer compliance with a less stringent standard than either the California program that was the subject of the 2013 waiver or the Federal standards as promulgated in 2012.
In short, the text, structure, and history of CAA section 209(b)(1) support EPA's authority to withdraw previously granted waivers.
EPA also disagrees with some commenters' assertions that ostensible reliance interests foreclose withdrawal of the waiver for MY 2021-2025 GHG and ZEV standards. According to these commenters, “California, and the section 177 states that have elected to adopt those standards as their own have incurred reliance interests ultimately flowing from those standards. For instance, California has incurred reliance interests because it is mandated to achieve an aggressive GHG emissions reduction target for 2030.”
The federal GHG standards that EPA promulgated in 2012 included a commitment to conduct and complete a Mid-Term Evaluation (MTE) of the GHG standards for MY 2022-2025, given the lengthy phase-in compliance period, EPA projections of control technology availability or feasibility for MY 2021-2025, and the fact that EPA promulgated those standards in a joint action with NHTSA, where NHTSA was acting under a statute which limited its promulgation of fuel economy standards to periods of five years.
In these circumstances, where GHG standards were being set far into the future with an explicit commitment to revisit them, where California agreed to deem compliance with certain federal GHG standards to constitute compliance with California standards, and where all parties were provided ample notice that EPA would be revisiting federal standards and, accordingly, the waiver granted for a program that acceded to those standards through the “deemed to comply” provision, neither the State of California nor other parties (such as automakers) have reasonable reliance interests sufficient to foreclose the extension of federal standards to California. Likewise, under CAA section 177, even though States other than California, under certain circumstances and conditions, may “adopt and enforce” standards that are “identical to the California standards for which EPA has granted a waiver for such model year,” given that Title I
As a general matter, “[w]henever a question concerning administrative, or judicial, reconsideration arises, two opposing policies immediately demand recognition: The desirability of finality, on the one hand, and the public interest in reaching what, ultimately, appears to be the right result on the other.”
For the reasons stated above, there was no “finality” in the federal MY 2021-2025 GHG standards that EPA promulgated in 2012 in the sense required for cognizable reliance to accrue sufficient to foreclose EPA's exercise of authority to reconsider and, if appropriate, withdraw the waiver. Nor is such “finality” to be found in the January 2013 grant of the waiver for California's MY 2021-2025 GHG and ZEV standards. As explained at proposal, in granting the waiver for the ACC program GHG and ZEV standards, EPA had evaluated certain compliance flexibilities allowed by California under the third waiver prong, CAA section 209(b)(1)(C) (consistency with CAA section 202(a)). Specifically, EPA evaluated California regulations that included an optional compliance provision (the “deemed to comply” provision) that would allow automobile and engine manufacturers to demonstrate compliance with CARB's GHG standards for MY 2017-2025 by complying with applicable national or federal GHG standards. 78 FR 2136. During the waiver proceedings, most automobile manufacturers either opposed the grant of the waiver for MY 2021-2025 GHG and ZEV standards as not consistent with CAA section 202(a)
Regarding whether EPA is foreclosed from reconsidering its January 2013 waver grant due to the passage of time, on January 12, 2017, well in advance of the April 2018 deadline that it had set for itself, EPA completed the Mid-Term Evaluation called for under the 2012 national GHG standards, determining that the MY 2017-2025 GHG standards promulgated in that rulemaking were appropriate. Automobile manufacturers, however, petitioned EPA for reconsideration of that January 2017 determination. In March 2017, EPA granted this petition for reconsideration. 82 FR 14671 (Mar. 22, 2017). In March 2017 California completed its own Mid-Term Evaluation review, in which it arrived at different conclusions on technological feasibility and costs for these standards than those that EPA would later reach. Subsequently, in April 2018, consistent with the timing specified in its regulations, EPA revised its finding on the appropriateness of the federal MY 2022-2025 GHG standards, concluding that those standards “are not appropriate and, therefore, should be revised.”
These procedural aspects of the federal GHG standards and the grant of a waiver for California's ACC program are indicative of the absence of the possibility of reasonable reliance in the “finality” of the waiver, contrary to commenters' assertion of reliance interests. For instance, as shown above, the engine and vehicle manufacturers have not only complained about the stringency of MY 2021-2025 GHG and ZEV standards, but also requested reconsideration of both the waiver as it relates to the ZEV standards, and the 2017 Mid-Term Evaluation that addresses the “deemed to comply” provision, which California provided in response to their request. EPA has also initiated joint rulemaking with NHTSA that proposes amended EPA GHG standards and fuel economy standards for MY 2021-2026. See, the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks. 83 FR 42986 (Aug. 24, 2018). As also previously noted, automobile and engine manufacturers operated under the assumption that both California and national standards would, or at least could, be revised.
California's comments argue that EPA cannot revisit its waiver with respect to the ZEV standards in particular because EPA, in a SIP approval action, approved ZEV provisions into the State's SIP. Final CARB Detailed Comments, at 351. But in so doing, EPA noted that California's
Similarly, some commenters argued that EPA reconsideration would constitute impermissible retroactive action, citing
For all these reasons, EPA concludes it has authority under CAA section 209 to reconsider its prior grant of the ACC waiver and to withdraw the waiver for MY 2021-2025 GHG and ZEV standards, consistent with the SAFE proposal.
In the SAFE proposal, EPA explained its historical practice of reviewing waiver requests under the prism of CAA section 209. Specifically, EPA has “historically declined to consider as part of the waiver process whether California standards are constitutional or otherwise legal under other Federal statutes apart from the Clean Air Act.” 83 FR 42340.
In the January 2013 waiver, EPA stated: “Evaluation of whether California's GHG standards are preempted, either explicitly or implicitly, under EPCA, is not among the criteria listed under section 209(b). EPA may only deny waiver requests based on the criteria in section 209(b), and inconsistency with EPCA is not one of those criteria. In considering California's request for a waiver, [EPA] therefore [has] not considered whether California's standards are preempted under EPCA.” 78 FR at 2145.
EPA believes that this January 2013 statement was inappropriately broad, to the extent it suggested that EPA is categorically
EPA does not intend in future waiver proceedings concerning submissions of California programs in other subject areas to consider factors outside the statutory criteria in CAA section 209(b)(1)(A)-(C). But the unique situation in which EPA and NHTSA, coordinating their actions to avoid inconsistency between their administration of their respective statutory tasks, address in a joint administrative action the issues of the preemptive effect of EPCA and its implications for EPA's waivers, has no readily evident analogue.
Consistent with the SAFE proposal, NHTSA is finalizing a determination that EPCA preempts State GHG and ZEV standards. EPA agrees with commenters that EPA is not the agency that Congress has tasked with administering and interpreting EPCA. This is especially so because “[t]he waiver proceeding produces a forum ill-suited to the resolution of constitutional claims.”
This conclusion is consistent with the Supreme Court's holding in
EPA's finding that California's GHG and ZEV standards are preempted as a result of NHTSA's finalized determinations, issued in this joint action, with respect to EPCA's preemptive effect on State GHG and ZEV standards, is effective upon the effective date of this joint action. This finding is separate and apart from findings with respect to EPA's 2013 waiver for CARB's Advanced Clean Car Program as it pertains to its 2021 through 2025 MY relating to GHG and ZEV standards and accompanying withdrawal of the waiver, pursuant to CAA section 209(b)(1), as set forth in subsection D below; as a matter of EPA's administration of CAA section 209(b), without reference to EPCA's preemptive effect as determined by NHTSA, that withdrawal applies to 2021 through 2025 MY GHG and ZEV standards, as proposed in the SAFE proposal.
Under CAA section 209(b)(1)(B), EPA cannot grant a waiver request if EPA finds that California “does not need such State standards to meet compelling and extraordinary conditions.”
EPA notes in this regard that regulation of emissions from new motor vehicles and new motor vehicle engines under CAA section 202(a) is triggered by a determination that “the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines . . . cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” This “endangerment finding,” which triggers EPA's ability to use the CAA section 202(a) regulatory authority which CAA section 209(a) preempts the states from exercising (subject to the availability of a CAA section 209(b) preemption waiver), links (1) emission of pollutants from sources; to (2) air pollution; and (3) resulting endangerment to health and welfare.
Congress enacted waiver authority for California under CAA section 209(b) against the backdrop of traditional, criteria pollutant environmental problems, under which all three links in this chain bear a particularized nexus to specific local California features: (1) Criteria pollutants are emitted from the tailpipes of the California motor vehicle fleet; (2) those emissions of criteria pollutants contribute to air pollution by concentrating locally in elevated ambient levels, which concentration, in turn; (3) results in health and welfare effects (
It is important to note that, while this interpretation of CAA section 209(b)(1)(B) departs in major respects from the interpretation applied in the 2009 waiver denial reversal (74 FR 32744) and the 2013 waiver grant (78 FR 2112), it does not simply constitute a re-adoption of the interpretation applied in the 2008 waiver denial (73 FR 12156). The 2008 waiver denial applied what it styled as two alternative approaches to determining whether California “need[ed]” its own vehicle GHG emissions program to address global climate change “to meet compelling and extraordinary conditions”: One that looked at the
In this action, EPA adopts an interpretation of CAA section 209(b)(1)(B) that it concludes is more in accord with the text, structure, purpose, and legislative history of that provision than were either the position in the 2008 denial (because it does not separate causal issues and effects issues into alternatives) or the position the 2009 and 2013 grants (because it considers application of CAA section 209(b)(1)(B) to California's need for a GHG/climate program, rather than subordinating that consideration to California's need for a criteria pollutant program). Under this interpretation, EPA begins by noting that only one state, California, is entitled to apply under CAA section 209(b) for a waiver of the preemptive effect of CAA section 209(a). CAA section 209(a), in turn, provides that (unless a waiver is issued) no state may regulate new motor vehicle or new motor vehicle engine emissions. That authority instead is conferred on EPA under CAA section 202(a), subject to an “endangerment finding.” That finding requires EPA to consider the relationship between [1] sources and their emissions of
It is against this backdrop that EPA believes the text of CAA section 209(b)(1)(B) is best interpreted. Informed by the criteria-pollutant context in which California's pre-1970 program was enacted, the legislative history, and the principle, as discussed elsewhere in this action, that differential treatment of the states by Congress in a geographically disparate way is extraordinary and is justified only by a sufficient link between that differential treatment and particularized local facts, EPA interprets Congress's command in CAA section 209(b)(1)(B), that it may not grant a preemption waiver for a California state vehicle emissions program if California does not “need” that program “to meet compelling and extraordinary conditions,” to condition the issuance of a waiver on a
The Supreme Court's opinion in
Furthermore, the fact that GHG emissions may affect criteria pollutant concentrations (
EPA further notes that elsewhere in the 2009 waiver denial reversal, EPA took the position that
EPA proposed to determine that the balance of textual, contextual, structural, and legislative history evidence supports the conclusion that the statute is ambiguous in one particular respect: Whether CAA section 209(b)(1)(B) refers to an individual standard or the California standards as a whole when referring to the Administrator's review of state standards submitted for a waiver, to determine whether the state “needs such State standards to meet compelling and extraordinary conditions.” We explained that “such State standards” in CAA section 209(b)(1)(B) is ambiguous with respect to the scope of EPA's analysis. For example, it is unclear whether EPA is meant to evaluate either the standard or standards at issue in the waiver request or all of California's standards in the aggregate. We also explained that CAA section 209(b)(1)(B) does not specifically employ terms that could only be construed as calling for a standard-by-standard analysis or each individual standard. For example, it does not contain phrases such as “each State standard” or “the State standard.” Nor does the use of the plural term “standards” definitively answer the question of the proper scope of EPA's analysis, given that the variation in the use of singular and plural form of a word in the same law is often insignificant and a given waiver request typically encompasses multiple “standards.” Thus, we explained that while it is clear that “such State standards” refers at least to all of the standards that are the subject of the particular waiver request before the Administrator, that phrase could reasonably be considered as referring either to the standards in the entire California program, the program for similar vehicles, or the particular standards for which California is requesting a waiver under the pending request.
We did explain, however, that there are reasons to doubt that “such State standards” is intended to refer to all standards in California's program, including all standards that it has previously adopted and obtained waivers for, because this would limit EPA's ability to consider and act on standards that are the subject of particular waiver applications, even where that individualized consideration is reasonable or the only rational approach. Specifically, given that the term “extraordinary” should refer to circumstances that are specific to California, such as thermal inversions resulting from local geography and wind patterns, and primarily responsible for causing the air pollution problems that the standards are designed to address, standards which address pollution problems that lack that type of particularized nexus to California are particularly appropriate candidates for an individualized consideration. EPA affirms this view as it relates to the review of GHG standards, given that GHG emissions from in California cars, and their consequences for California, bear no particular relation to these California-specific circumstances—
The waiver under CAA section 209(b) is a waiver of, and is logically dependent on and presupposes the existence of, the prohibition under CAA section 209(a), which forbids (absent a waiver) any State to “adopt or attempt to enforce any
Several commenters disagreed with our view of ambiguity and the proposal to construe “such state standards,” in the context of our reconsideration and proposal to withdraw the January 2013 waiver for California's GHG and ZEV provisions, as applying to those provisions themselves, rather than California's entire, aggregate program consisting of
Additionally, as shown in further detail in section D.2., below, the term “extraordinary” refers to circumstances that are specific to California, such as thermal inversions resulting from local geography and wind patterns, and that are primarily responsible for causing the air pollution problems that the standard under waiver review is designed to address. EPA affirms the view that the term “extraordinary” refers primarily to factors that tend to produce higher levels of pollution: Geographical and climatic conditions (like thermal inversions) that in combination with large numbers and high concentrations of automobiles, create serious air pollution problems in California (73 FR 12156, 12159-60).
The text, context, and structure of CAA section 209(b) support EPA's reasoning that the relevant “conditions” are those conditions present in a particular state and that have a particularized nexus to emissions in that state. The statute calls for an examination of whether the “State” needs such “state standards” in the context of a prohibition in CAA section 209(a) of a “state or other political subdivision” adopting or attempting to enforce alternative standards. It would be inconsistent with the overall structure for a state's own preferred policy approach to addressing national or global—rather than local and state-specific—“conditions” to permit a waiver from a scheme that otherwise establishes a uniform, national policy.
Notably, pertinent legislative history supports this view of the text and structure of 209(b), insofar as it refers to California's “peculiar local conditions” and “unique problems.” S. Rep. No. 403, 90th Cong. 1st Sess., at 32 (1967). This legislative history also indicates that California is to demonstrate “compelling and extraordinary circumstances sufficiently different from the nation as a whole to justify standards on automobile emissions which may, from time to time, need to be more stringent than national standards.”
As further explained in section D2., below, GHG is a globally distributed pollutant with environmental effects that are different from emissions of criteria pollutants. For example, GHG emissions from the California vehicle fleet bear no more relation to GHG emissions in California than fleet in other parts of the country. As also explained in the SAFE proposal, EPA believes that the GHG and ZEV standards are standards that would not meaningfully address global air pollution problems posed by GHG emissions, in contrast to local or regional air pollution problem with causal ties to conditions in California. Additionally, the impacts of California vehicles' GHG emissions on California are mediated through the context of the global mixture of elevated levels of GHG in the upper atmosphere. As also shown below, EPA finds that while potential conditions in California related to global climate change could be substantial, they are not sufficiently different from the potential conditions in the nation as a whole to justify separate state standards under CAA section
CARB argues that what it characterizes as EPA's reading of “compelling and extraordinary” as equivalent to “unique” or “sufficiently different from” the rest of the country “is inconsistent with Section 209(b)(1)(B), other provisions of the Clean Air Act, and the legislative history.” CARB also asserts that EPA “cites no case” to support this reading. At the same time, CARB claims that EPA has either interpreted legislative history incorrectly or relies entirely on legislative history for the 1967 CAA, which does note California's “unique problems,” instead of legislative history for the 1977 amendments; CARB asserts that the latter legislative history is more relevant, given that the addition of section 177 in the 1977 CAA meant that Congress did not intend that Section 209(b)(1)(B) be construed as requiring “California's problems to be entirely unique or sufficiently different from those in other States.” CARB also contends that EPA is limiting application of CAA section 209(b)(1)(B) to smog, even though EPA has granted waivers for pollutants that do not contribute to smog, such as particulate matter. In addition, CARB maintains that what it characterizes as EPA's reading “compelling and extraordinary conditions” as restricted to “local” or “regional” pollutants would weaken Congress's intent that California retain its own regulatory program and continue to lead the nation as a “laboratory of innovation.” CARB further argues that EPA provides no support for this “geographic distinction,” while also casting the reading as “illusory.” According to CARB, both local and global pollution cause compelling and extraordinary conditions, as evidenced by provisions of the CAA that address long-range transport of emissions (beyond the state level). In sum, CARB argues that “compelling and extraordinary conditions” is expansive enough to be read as including GHG emissions and that EPA's “exacting and unrealistic” reading can only be met by “a rare air pollution problem.” CARB comments at 360-365.
EPA disagrees. First, as explained at proposal, the 1977 Amendments revised CAA section 209(b)(1) in only one material aspect. Specifically, California is required to determine that standards it seeks a waiver for will be “in the aggregate, at least as protective of public health and welfare than applicable Federal standards,” rather than the “more stringent” standard under 1967 Clean Air Act. 83 FR 43247 n.579. Second, there is relevant legislative history from the 1977 amendments, which describes EPA's role in reviewing California's protectiveness determination, under CAA section 209(b)(1)(A), as whether “the State acted unreasonably in evaluating the relative risks of various pollutants in light of air quality, topography, photochemistry and climate in that State.” This 1977 legislative history further supports a reading requiring a particularized nexus. H. Rep. No. 294, 95th Cong., 1st Sess. 302 (1977), U.S. C.C.A.N. 1977, p. 1381. Third, in support of the proposed reading, EPA cited
Under CAA section 209(b)(1)(B) of the Clean Air Act, the Administrator may not grant a waiver if he finds that the “State does not need such State standards to meet compelling and extraordinary conditions.” EPA proposed to find that CARB does not need its own GHG and ZEV standards to meet compelling and extraordinary conditions in California, on the grounds that “compelling and extraordinary conditions” mean environmental conditions with causes and effects particular or unique to, California whereas GHG emissions present global air pollution problems. Specifically, EPA proposed to determine that the GHG-related standards are designed to address global air pollution and its consequences, in contrast to local or regional air pollution problems with causal ties to conditions in California. EPA also proposed to find that, while effects related to climate change in California could be substantial, they are not sufficiently different from the conditions in the nation as a whole to justify separate State standards under CAA section 209(b)(1)(B). 83 FR 43248-43250. Lastly, EPA proposed to find that the State's GHG-related standards would not have a meaningful impact on the potential conditions related to global climate change. Because EPA has traditionally interpreted and applied CAA section 209(b)(1)(B) in a manner that examines whether the conditions that Congress identified (
In general, EPA has in the past recognized California's unique underlying conditions and serious air pollution problems when reviewing waiver requests.
EPA determines that it in this context it is appropriate to review whether California needs its GHG standards to meet compelling and extraordinary conditions separately from the need for the remainder of California's new motor vehicle program, which has historically addressed criteria pollutants with a particular causal link to local and regional conditions both in the nature and quantity of emissions and in the particularized local and regional impacts of the pollution to which those emissions contribute. EPA bases this decision on the fact that California's GHG standards are designed to address global climate change problems that are different from the local pollution conditions and problems that California has addressed previously in its new motor vehicle program. The climate change problems are different in terms of the distribution of the pollutants and the effect of local California factors, including the local effect of motor vehicle emissions as differentiated from other GHG emissions worldwide on the GHG concentrations in California. In
This waiver decision falls within the context of a few instances of EPA applying the CAA section 209(b)(1)(B) criterion to a California waiver request for a fundamentally global air pollution problem.
Moreover, because both CAA sections 209(b)(B) and (C) employ the term “such state standards,” it is appropriate for EPA to read the term consistently between prongs (B) and (C). Under CAA section 209(b)(1)(C) EPA conducts review of standards California has submitted to EPA for the grant of a waiver to determine if they are consistent with CAA section 202(a).
In past waivers that addressed local or regional air pollution, EPA has interpreted CAA section 209(b)(1)(B) as requiring it to consider whether California needs a separate motor vehicle program to meet compelling and extraordinary conditions. Under this approach, EPA does not consider whether the specific standards at issue are needed to meet compelling and extraordinary conditions related to that air pollutant. For example, EPA reviewed this issue in detail with regard to particulate matter in a 1984 waiver decision.
The Administrator agreed with California that it was appropriate to look at the program as a whole in determining compliance with CAA section 209(b)(1)(B). One justification of the Administrator was that many of the concerns with regard to having separate State standards were based on the manufacturers' worries about having to meet more than one motor vehicle program in the country, but that once a separate California program was permitted, it should not be a greater administrative hindrance to have to meet further standards in California. The Administrator also justified this decision by noting that the language of the statute referred to “such state standards,” which referred back to the use of the same phrase in the criterion looking at the protectiveness of the standards in the aggregate. He also noted that the phrase referred to standards in the plural, not individual standards. He considered this interpretation to be consistent with the ability of California to have some standards that are less stringent than the federal standards, as long as, under CAA section 209(b)(1)(A), in the aggregate its standards were at least as protective as the federal standards.
The Administrator further stated that in the legislative history of CAA section 209, the phrase “compelling and extraordinary circumstances” refers to “certain general circumstances,
The Administrator summarized that the question to be addressed in the second criterion is whether these “fundamental conditions” (
From this it can be seen that EPA's interpretation in the context of reviewing standards designed to address local or regional air pollution has looked at the local causes of the air pollution problems: Geographic and climatic conditions that turn local emissions into air pollution problems, such as thermal inversions, combined with a large number of motor vehicles in California emitting in the aggregate large quantities of emissions. Under the interpretation EPA adopts in this document, it is the particularized nexus between the emissions from California vehicles, their contribution to local pollution, and the extraordinary impacts that that pollution has on California due to California's specific characteristics, that set California apart from other areas when Congress adopted this provision.
EPA's review of this criterion has usually been cursory and not in dispute, as the fundamental factors leading to these traditional criteria air pollution problems—geography, local climate conditions (like thermal inversions), significance of the motor vehicle population—have not changed over time and over different local and regional air pollutants. These fundamental factors have applied similarly for all of California's air pollution problems that are local or regional in nature. California's circumstances of geography, climate, and motor vehicle population continue to show that it has compelling and extraordinary conditions leading to such local air pollution problems related to traditional pollutants.
California's motor vehicle program has historically addressed air pollution problems that are generally local or regional in nature. The emission standards have been designed to reduce emissions coming from local vehicles, in circumstances where these local emissions lead to air pollution in California that will affect directly the local population and environment in California. The narrow question in this waiver proceeding is whether this interpretation is appropriate when considering motor vehicle standards designed to address a global air pollution problem and its effects, as compared to a local or regional air pollution problem that has particular causal ties to conditions in California.
As EPA observed in the SAFE proposal, the agency has articulated differing interpretations of CAA section 209(b)(1)(B). Historically, EPA has interpreted this provision to require that California needs to have its own separate new motor vehicle program in the aggregate to meet compelling and extraordinary conditions in California, not whether the state needs the specific standards under consideration. In 2008, in contrast, when EPA first considered whether State GHG emission regulations meet the requirements for a CAA section 209(b) waiver, EPA determined that the better reading of CAA section 209(b)(1)(B) would be to consider whether California “need[s]” the particular standards at issue “to meet compelling and extraordinary conditions,” and the agency denied the waiver on these grounds. Then, when EPA reconsidered that denial in 2009, the agency reverted to the interpretation that it had previously applied for criteria pollutants and granted the waiver.
EPA concludes that the long and contentious history of this question, and the recent measures that California has taken even during the pendency of this administrative action to amend its State regulations beyond the form in which they were granted the waiver in 2013 and, even more recently, to purport to establish “voluntary” programs creating yet a third program distinct both from that for which CAA preemption was waived in 2013 and the Federal standards promulgated in 2012 and currently under review by the Federal government, confirm that extension of CAA section 209(b) waivers to State GHG and ZEV programs was inappropriate. Such waivers have led to actions by California increasingly at odds with the clear Congressional design and intent that national standards would be set by the federal government with California having an ability to apply for targeted waivers of preemption to address its own particular problems. EPA therefore views this interpretation and application of CAA section 209(b)(1)(B) set forth here as, at minimum, a reasonable one that gives appropriate meaning and effect to this provision and does not second-guess California's policy judgment notwithstanding assertions to the contrary.
The air pollution problem at issue here is elevated atmospheric concentrations of greenhouse gases, and the concern is the impact these concentrations have on global climate change and the effect of global climate change on California. In contrast to local or regional air pollution problems, the atmospheric concentrations of these greenhouse gases are substantially uniform across the globe, based on their long atmospheric life and the resulting mixing in the atmosphere. The factors looked at in the past when considering waiver requests for State standards addressing criteria pollutants—the geography and climate of California, and the large motor vehicle population in California, which were considered the fundamental causes of the air pollution levels found in California—cannot form the basis of a meaningful analysis of the causal link between California vehicles' GHG emissions and climate effects felt in California. The concentration of greenhouse gases in the upper atmosphere may affect California, but that concentration is not affected in any particular way by the geography and climate of California. The long duration of these gases in the atmosphere means they are well-mixed throughout the global atmosphere, such that their concentrations over California and the U.S. are, for all practical purposes, the same as the global average. The number of motor vehicles in California, while still a notable percentage of the national total and still a notable source of GHG emissions in the State, bears no more relation to the levels of greenhouse gases in the atmosphere over California than any other comparable source or group of sources of greenhouse gases anywhere in the world. Emissions of greenhouses gases from California cars do not generally remain confined within California's local environment (and, indeed, were they to do so, rather than rise to the upper atmosphere to become well-mixed with other GHG emissions, those locally located emissions would not, by definition, contribute to the “pollution” that is at issue here). Instead, those GHG emissions from vehicles operating in California become one part of the global pool of GHG emissions, with this global pool of emissions leading to a relatively homogenous concentration of greenhouse gases over the globe. Thus, the emissions of motor vehicles in
Given the different, and global, nature of the pollution at issue, EPA determines that the conceptual basis underlying the practice of considering California's motor vehicle program as a whole (in the context of criteria emission regulations) does not meaningfully apply with respect to elevated atmospheric concentrations of GHGs. Therefore, EPA has considered whether it is appropriate to apply this criterion in a different manner for this kind of air pollution problem; that is, a global air pollution problem.
As previously explained, the text and relevant legislative history of CAA section 209 also supports EPA's decision to examine the application of the second waiver denial criterion (CAA section 209(b)(1)(B)) with regard to California's GHG and ZEV standards specifically in the context of global climate change. It indicates that Congress was moved to allow waivers of preemption for California motor vehicle standards based on the particular effects of local conditions in California on the air pollution problems in California. Congress discussed “the unique problems faced in California as a result of its climate and topography.” H.R. Rep. No. 728, 90th Cong. 1st Sess., at 21 (1967).
EPA concludes that in the context of reviewing California GHG related standards designed to address global climate change, it is appropriate to apply the second criterion separately for GHG standards.
The intent of Congress, in enacting CAA section 209(b) and in particular Congress's decision to have a separate CAA section 209(b)(1)(B), was to require EPA to specifically review whether California continues to have compelling and extraordinary conditions and the need for State standards to address those conditions. Thus, EPA concludes that it is appropriate to review California's GHG standards separately from the remainder of the State's motor vehicle emission control program for purposes of CAA section 209(b)(1)(B).
In this context it is appropriate to give meaning to this criterion by looking at whether the emissions from California motor vehicles, as well as the local climate and topography in California, are the fundamental causal factors for the air pollution problem—elevated concentrations of greenhouse gases—apart from the other parts of California's motor vehicle program, which are intended to remediate different air pollution concerns.
The appropriate criteria to apply therefore is whether the emissions of California motor vehicles, as well as California's local climate and topography, are the fundamental causal factors for the air pollution problem of elevated concentrations of greenhouse gases.
Under CAA section 209(b)(1)(B), EPA proposed to withdraw the waiver of preemption of the ACC program GHG and ZEV standards for MY 2021-2025 on two alternative grounds. Specifically, (1) California “does not need” these standards “to meet compelling and extraordinary conditions;” and (2) even if California does have compelling and extraordinary conditions in the context of global climate change, California does not “need” these standards because they will not meaningfully address global air pollution problems of the sort associated with GHG emissions. 83 FR 43248.
As previously explained, EPA proposed to determine that the balance of textual, contextual, structural, and legislative history evidence provide reasonable support for the conclusion that the statute is ambiguous in one particular respect: Whether section 209(b)(1)(B) refers to an individual standard or the California standards as a whole when referring to the Administrator's review of state standards submitted for a waiver, to determine whether the state “needs such State standards to meet compelling and extraordinary conditions,” and that the approach of examining the need for GHG-related standards separate from the other, traditional aspects of California's program is reasonable given, among other factors, the unique nature of the global pollutant. EPA recognizes that Congress's purpose in establishing the prohibition in CAA section 209(a) and the waiver in CAA section 209(b) was to
Commenters supportive of EPA's proposal to withdraw the waiver commented that California should not continue to enjoy a waiver for separate State GHG standards because those State standards are not needed to meet compelling and extraordinary conditions because there is no link between California-based motor vehicle GHG emissions and any alleged extraordinary conditions in California. These commenters state that while California spends a great deal of time discussing the effects of climate change in California, California does not link its GHG standards to those effects. They note that GHGs are not localized pollutants that can affect California's local climate, or that are problematic due to California's specific topography. Instead, emissions from vehicles in California become mixed with the global emissions of GHG and affect global climate (including California's climate) in the same way that any GHG from around the world affect global (and California) climate conditions. They claim that Congress authorized EPA to grant a waiver of preemption only in cases where California standards were necessary to address peculiar local air quality problems. They claim that there can be no need for separate California standards if the standards are not aimed at, and do not redress, a California-specific problem.
In previous waiver decisions, EPA was asked to waive preemption of standards regulating emissions that were local or regional in effect. Local air pollution problems are affected directly by local conditions in California, largely the emissions from motor vehicles in California in the context of the local climate and topography. As a result, State standards regulating such local motor vehicle emissions will have a direct effect on the concentration of pollutants directly affecting California's environment. They are effective mechanisms to reduce the levels of local air pollution in California because local conditions are the primary cause of that kind of air pollution problem. In addition, reductions in emissions from motor vehicles that occur elsewhere in the United States will not have the same impact, and often will have no impact, on reducing the levels of local air pollution in California.
By contrast, GHGs emitted by California motor vehicles become part of the global pool of GHG emissions that affect concentrations of GHGs on a uniform basis throughout the world. The local climate and topography in California have no significant impact on the long-term atmospheric concentrations of greenhouse gases in California. Greenhouse gas emissions from vehicles or other pollution sources in other parts of the country and the world will have as much effect on California's environment as emissions from California vehicles. As a result, reducing emissions of GHGs from motor vehicles in California has the same impact or effect on atmospheric concentrations of GHGs as reducing emissions of GHGs from motor vehicles or other sources elsewhere in the U.S., or reducing emissions of GHGs from other sources anywhere in the world. California's motor vehicle standards for GHG emissions do not affect only California's concentration of GHGs, but affect such concentrations globally, in ways unrelated to the particular topography in California. Similarly, emissions from other parts of the world affect the global concentrations of GHGs, and therefore concentrations in California, in exactly the same manner as emissions from California's motor vehicles.
Further, as explained in the SAFE proposal, California's claims that it is uniquely susceptible to certain risks because it is a coastal State does not differentiate California from other coastal States such as Massachusetts, Florida, and Louisiana, much less that conditions in California are any more “extraordinary” as compared to any other coastal States, particularly those coastal States that may possess a greater percentage of low-lying territory than California. Any effects of global climate change (
EPA has discussed the reasons for concluding that it is appropriate to consider California's GHGs standards separately in determining whether the State needs those standards to meet compelling and extraordinary conditions, as compared to looking at its need for a motor vehicle program in general. These reasons also lead to the conclusion that California does not need these GHG standards to meet compelling and extraordinary conditions. The text, structure, and legislative history indicates that Congress's intent in the second waiver criterion, CAA section 209(b)(1)(B), was to allow California to adopt new motor vehicle standards because of compelling and extraordinary conditions in California that were causally related to local or regional air pollution levels in California. These factors—including topography and large population of motor vehicles—cause these kinds of local or regional air pollution levels in California and because of this causal link, California's motor vehicle standards can be effective mechanisms to address these local problems. Reductions outside California would lack that causal link to local or regional air quality conditions inside California.
Congress did not indicate any intent to allow California to promulgate local standards to deal with global air pollution like atmospheric concentrations of GHGs. In California's comments on the SAFE proposal, it asserted that it has a need for reductions in GHG atmospheric concentrations and therefore emissions, but the issue is not whether such reductions are needed as a matter of general policy, but whether Congress intended them to be effectuated on a State-specific basis by California through EPA granting a waiver for the GHG aspects of the State's new motor vehicle program. This type of pollution seems ill-fitted to Congress's intent to provide California with a method of handling its local air pollution concentrations and related problems with local emission control measures. EPA determines that standards regulating emissions of global pollutants like greenhouse gases were not part of the compromise envisioned by Congress in passing CAA section 209(b).
In the SAFE proposal, EPA proposed to determine, as an additional basis for the waiver withdrawal, that California's ZEV and GHG standards for new MY 2021 through 2025 are not consistent with section 202(a) of the Clean Air Act. That proposed determination was intertwined with the SAFE proposal's assessment with regard to the technological feasibility of the Federal GHG standards for MY 2021 through 2025 and the proposed revisions thereto. Because EPA and NHTSA are not at this time finalizing that assessment or taking final action on the proposal to revise the Federal standards, and because the finalized determinations under CAA section 209(b)(1)(B) and the discussion of the implications of EPCA preemption with regard to the waiver previously granted with respect to those standards set forth above are each independent and adequate grounds for the waiver withdrawal, EPA at this time is not finalizing any determination with respect to CAA section 209(b)(1)(C). EPA may do so in connection with potential future final action with regard to the Federal standards.
In this final action, EPA determines that the California Air Resources Board's (CARB's) regulations pertaining to greenhouse gases-related (GHG) emission standards for 2021 through 2025 model year (MY) passenger cars, light-duty trucks, and medium-duty vehicles are not needed to meet compelling and extraordinary conditions. EPA concludes that CAA section 209(b) was intended to allow California to promulgate State standards applicable to emissions from new motor vehicles to address pollution problems that are local or regional, and that have a particular nexus to emissions from vehicles in California.
EPA's 2013 waiver for CARB's Advanced Clean Car Program (as it pertains to its 2021 through 2025 MY relating to greenhouse gas emissions and the ZEV mandate) is withdrawn. This is separate and apart from EPA's determination that it cannot and did not validly grant a waiver with respect to those California State measures which are preempted under NHTSA's determination in this document that EPCA preempts State GHG and ZEV programs, which, as explained above, is effective on the effective date of this joint action.
At proposal, EPA explained that CAA section 177 provides that other States, under certain circumstances and with certain conditions, may “adopt and enforce” standards that are “identical to the California standards for which a waiver has been granted for [a given] model year.” 42 U.S.C. 7507. As a result, EPA proposed to determine that this section does not apply to CARB's GHG standards given that they are intended to address global air pollution. We also noted that the section is titled “New motor vehicle emission standards in nonattainment areas' and that its application is limited to “any State which has [state implementation] plan provisions approved under this part”—
We received comments in support of and against our proposal. Commenters opposing our interpretation argued that CAA section 177 does not contain any text that could be read as limiting its applicability to certain pollutants only. They also argued that EPA has inappropriately relied on the heading for CAA section 177 to construe a statutory provision as well as arrogated authority to implement an otherwise self-implementing provision. We disagree with these commenters, conclude that the text (including both the title and main text), structural location, and purpose of the provision confirm that it does not apply to GHG standards, and are finalizing this determination as proposed.
Under the Clean Air Act, EPA establishes national ambient air quality standards (NAAQS) to protect public health and welfare and has established such ambient standards for the following criteria pollutants: ozone, carbon monoxide, nitrogen dioxide, sulfur dioxide, lead, and particulate matter. As also explained at proposal, areas are only designated nonattainment with respect to criteria pollutants for which EPA has issued a NAAQS, and nonattainment State Implementation Plan (SIPs) are intended to assure that those areas attain the NAAQS.
Congress added CAA section 177 in the 1977 Clean Air Act amendments cognizant that states might need to address air pollution within their boundaries similar to California but were otherwise preempted under CAA section 209(a) from setting new motor vehicle and engine standards.
Contrary to commenters' assertions, therefore, the text, placement in Title I, and relevant legislative history are all indicative that CAA section 177 is in fact intended for NAAQS attainment planning and not to address global air pollution. As further explained in section D.2, GHG is a globally distributed pollutant with environmental effects that are different enough from emissions of criteria pollutants. For example, GHG emissions from fleet in California bear no more relation to GHG emissions in California than fleet in other parts of the country. Where states are now adopting standards for intents and purposes far removed from NAAQS attainment planning or more specifically directed at global air pollution, EPA as the agency charged with implementing the Clean Air Act is acting well within that role in setting out an interpretation that aligns with Congressional intent.
EPA intends that its withdrawal of the January 2013 waiver for California's GHG and ZEV programs on the basis of EPCA preemption, to take effect upon the effective date of this joint action, as set forth in subsection III.C, on the one hand, is separate and severable from its withdrawal of the January 2013 waiver for those programs on the basis of an interpretation and application of CAA section 209(b)(1)(B), beginning in model year 2021, as set forth in subsection III.D, on the other. EPA further intends that its withdrawal of the waiver with regard to California's GHG program is severable from its withdrawal of the waiver with regard to California's ZEV program. The basis for this distinction (
Pursuant to CAA section 307(b)(1), judicial review of this final action may be sought only in the United States Court of Appeals for the District of Columbia Circuit. For the reasons explained in this section, this final waiver withdrawal action is nationally applicable for purposes of CAA section 307(b)(1). To the extent a court finds this action to be locally or regionally applicable, for the reasons explained in this section, EPA determines and finds for purposes of CAA section 307(b)(1) that this final waiver withdrawal action is based on a determination of nationwide scope or effect. As also explained at proposal, CAA Section 307(b)(1) of the CAA provides in which Federal courts of appeal petitions of review of final actions by EPA must be filed. This section provides, in part, that petitions for review must be filed in the Court of Appeals for the District of Columbia Circuit if: (i) The Agency action consists of “nationally applicable regulations promulgated, or final action taken, by the Administrator,” or (ii) such action is locally or regionally applicable, but “such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.” Additionally, we proposed to find that any final action resulting from the August 2018 SAFE proposal is based on a determination of “nationwide scope or effect” within the meaning of CAA section 307(b)(1). We explained that the withdrawal, when finalized, would affect persons in California and those manufacturers and/or owners/operators of new motor vehicles nationwide who must comply with California's new motor vehicle requirements. For instance, California's program provides that manufacturers may generate credits in CAA section 177 States as a means to satisfy those manufacturers' obligations to comply with the mandate that a certain percentage of their vehicles sold in California be ZEV (or be credited as such from sales in CAA section 177 States). In addition, other States have adopted aspects of California's ACC program; this decision would also affect those States and those persons in such States, which are in multiple EPA regions and federal circuits.
This final action is distinguishable from the situation faced by the D.C. Circuit in
As it is relevant to many of the following discussions, it is important to clarify at the outset that this action does not finalize or otherwise affect either EPA's GHG standards or NHTSA's CAFE standards and, thus, the various impacts associated with those standards have not been considered below. Further, consistent with its past practice, EPA's withdrawal of the waiver does not add or amend regulatory text and is, therefore, subject to considerably fewer of the below discussions than NHTSA's final rule establishing regulatory text on preemption.
Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, Oct. 4, 1993), as amended by Executive Order 13563, “Improving Regulation and Regulatory Review” (76 FR 3821, Jan. 21, 2011), provides for making determinations whether a regulatory action is “significant” and therefore subject to the Office of Management and Budget (OMB) review and to the requirements of the Executive Order.
Under section 3(f) of Executive Order 12866, NHTSA's final rule has been determined to be a “significant regulatory action,” but not an economically significant action. EPA's withdrawal on the waiver, however, is not a rule under E.O. 12866, as consistent with the agency's historical classification of its notices and decisions related to the waiver. However, as part of its commitment to working together with NHTSA to establish a consistent Federal program for fuel economy and GHG emissions, EPA has submitted this action to the OMB for review and any changes made in response to OMB recommendations have been documented in the docket for this action. EPA's action here, however, is not a rule as defined by Executive Order 12866, consistent with its previous actions on waiver requests, and is therefore exempt from review by the Office of Management and Budget as required for rules and regulations by Executive Order 12866.
In determining the economic impact of this action, it is important to be clear that the rule establishing new standards for the Model Years within scope of the NPRM is expected to continue to be economically significant and is, thus, anticipated, to include a full FRIA. Moreover, as EPA's action is not a rule and not subject to E.O. 12866, its consideration of costs has been limited to the role costs play under section 209. Accordingly, the following discussion only concerns the economic impact associated with NHTSA's final regulatory text clarifying its views on EPCA preemption.
As a general matter, NHTSA has determined that there may be some nonsignificant economic impact arising out of its clarification, particularly some reduction in costs, to this final rule, but the agency has not quantified any such impact in this rulemaking, which has been determined to be “significant” but not “economically significant” under Executive Order 12866. This rulemaking merely clarifies the existing statutory provisions relating to preemption that have been in effect since EPCA was enacted and does not modify any Federal requirement. As such, as in the NPRM, the agency has provided a qualitative discussion of the impacts in response to the comments, which themselves raised qualitative issues.
In the NPRM, NHTSA mentioned at a general, qualitative, level that California's currently existing GHG program and ZEV mandate lead to increased compliance costs, with some greater discussion of potential increases in costs due specifically to the ZEV mandate, which constrains an OEMs ability to meet their CAFE and GHG requirements in the most cost-effective way.
The agencies received many comments on the economic analysis as it relates to the CAFE and GHG standards, but only received a small number of comments that specifically dealt with the issue of the economic impact of the regulatory text concerning EPCA preemption. These comments, similar to how the agency addressed the issue in the NPRM, generally made qualitative and general points about the economic impact.
Many of the comments that addressed the economic impacts of preemption did so by stating that one important aspect of the “One National Program” established beginning in 2009 was that it would reduce regulatory cost by not allowing for the creation of different Federal and California programs, with different levels of stringency and different compliance regimes. NHTSA agrees with this concern, but this is exactly why Congress provided that any State or local law “related to” fuel economy is preempted. This final rule will provide more certainty on this issue than the prior approach, which would always be subject to California removing itself from the program. This is exactly what has occurred in recent months, as the State has taken action to amend the “deemed to comply” provision and then announced that it entered into an agreement with several automakers to apply a different set of standards on a national basis.
Various other commenters noted that the GHG program and ZEV mandate would increase compliance costs. Most of these comments only made general statements to this effect and did not provide specific or detailed information about potential costs. One commenter approvingly noted NHTSA's citation of a study that found that the ZEV mandate could potentially lead to increased costs, though the author of the cited study also commented that the cited value did not provide a complete picture of the economic effect. The agency agrees that programs such as these are likely to introduce additional costs, which, of course, was a significant part of Congress's motivation in providing NHTSA with its broad preemptive authority over fuel economy. The agency, though, like commenters, has found calculation of these costs to be challenging, as they constrain the avenues of compliance with the Federal standards without actually altering what must be, ultimately, achieved.
With regard to benefits, some commenters believed that California's GHG program and ZEV mandate could provide additional benefits, but, as with costs, these commenters did not provide detailed information about the benefits of these programs independent of the Federal standards. One commenter argued that a separate State GHG program is unlikely to have any
The comments, therefore, reaffirm NHTSA's preliminary determination that State and Local programs including, and similar to, California's GHG and ZEV programs are likely to lead to increased compliance costs and highly uncertain, if any, benefits because they constrain the ability of OEMs to meet the Federal standard without in anyway altering their obligations under that standard. Further, the agency's decision that State or local laws such as the GHG program and ZEV mandate should be preempted is not based on any evaluation of the policy or other merits of either program, but simply the fact that these programs are clearly related to fuel economy.
The final rule is also significant within the meaning of the Department of Transportation's Order 2100.6, “Policies and Procedures for Rulemakings.” Regulatory Policies and Procedures.
NHTSA's final rule is expected to be an E.O. 13771 deregulatory action, but NHTSA has not estimated any quantifiable cost savings. EPA's withdrawal is not a regulatory action and thus outside the scope of E.O. 13771.
Pursuant to the Congressional Review Act (5 U.S.C. 801
Executive Order 13211 applies to any rule that: (1) Is determined to be economically significant as defined under E.O. 12866, and is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. If the regulatory action meets either criterion, the agencies must evaluate the adverse energy effects of the proposed rule and explain why the proposed regulation is preferable to other potentially effective and reasonably feasible alternatives considered. NHTSA's final rule is not subject to E.O. 13211 because it is not economically significant and is not a significant energy action. As discussed in the E.O. 12866 section, NHTSA's final rule merely clarifies the contours of its existing preemption authority and does not in any way change the existing fuel economy standards. As EPA's withdrawal is not within the scope of E.O. 12866, it is also not within scope of E.O. 13211.
The National Environmental Policy Act (NEPA)
NHTSA has not prepared a separate environmental analysis pursuant to NEPA for this final action on preemption. This final rule provides clarity on the scope of EPCA's preemption provision. Ultimately, the determination of whether a particular State or local law is preempted under EPCA is not determined based upon its environmental impact but solely whether it is “related to fuel economy standards or average fuel economy standards.” Any preemptive effect
It bears noting that this action only concerns the question of preemption; it does not set CAFE standards. Fundamentally, this action is about which sovereign entity (
NHTSA intends to fully respond to all substantive comments received on the Draft EIS in the forthcoming Final EIS, consistent with CEQ regulations. NHTSA received numerous public comments on the Draft EIS that related to the revocation of California's waiver and EPCA preemption. The following summarizes and briefly addresses those comments.
Multiple commenters called NHTSA's DEIS inadequate because it did not analyze an alternative that would keep the California waiver and regulations (as well as similar regulations adopted in the District of Columbia and other States pursuant to section 177 of the CAA) in place.
One commenter criticized NHTSA for failing to consider the criteria pollutant impacts of alternatives that keep the waiver in place and that account for California's specific electricity grid.
One commenter noted that if California's waiver is revoked, the State would be unable to address pollution issues through adoption of California's or its own standards, making it difficult to attain or maintain compliance with the Clean Air Act.
The Clean Air Act (42 U.S.C. 7401
No Federal agency may “engage in, support in any way or provide financial assistance for, license or permit, or approve” any activity in a nonattainment or maintenance area that does not “conform” to a SIP or Federal Implementation Plan after EPA has approved or promulgated it.
(1) The Transportation Conformity Rule
(2) The General Conformity Rule
This action is not developed, funded, or approved under title 23 or chapter 53 of title 49, U.S.C. Accordingly, this action is not subject to transportation conformity. Under the General Conformity Rule, a conformity determination is required when a Federal action would result in total direct and indirect emissions of a criteria pollutant or precursor originating in nonattainment or maintenance areas equaling or exceeding the rates specified in 40 CFR 93.153(b)(1) and (2), and the action is not otherwise exempt. As explained below, NHTSA's action results in neither direct nor indirect emissions as defined in 40 CFR 93.152.
The General Conformity Rule defines direct emissions as “those emissions of a criteria pollutant or its precursors that are caused or initiated by the Federal action and originate in a nonattainment or maintenance area and occur at the same time and place as the action and are reasonably foreseeable.”
Indirect emissions under the General Conformity Rule are “those emissions of a criteria pollutant or its precursors: (1) That are caused or initiated by the Federal action and originate in the same nonattainment or maintenance area but occur at a different time or place as the action; (2) That are reasonably foreseeable; (3) That the agency can practically control; and (4) For which the agency has continuing program responsibility.”
Furthermore, NHTSA cannot practically control, nor does it have continuing program responsibility for, any emissions that could occur as a result of preemption. “[E]ven if a Federal licensing, rulemaking, or other approving action is a required initial step for a subsequent activity that causes emissions, such initial steps do not mean that a Federal agency can practically control any resulting emissions.”
For the foregoing reasons, this action does not cause direct or indirect emissions under the General Conformity Rule, and a general conformity determination is not required. NHTSA will address any responsibilities under the General Conformity Rule as it pertains to potential changes to the fuel economy standards in the forthcoming final rule for that action.
Under Section 7(a)(2) of the Endangered Species Act (ESA), Federal agencies must ensure that actions they authorize, fund, or carry out are “not likely to jeopardize the continued existence” of any Federally listed threatened or endangered species or result in the destruction or adverse modification of the designated critical habitat of these species. 16 U.S.C. 1536(a)(2). If a Federal agency determines that an agency action may affect a listed species or designated critical habitat, it must initiate consultation with the appropriate Service—the U.S. Fish and Wildlife Service (FWS) of the Department of the Interior (DOI) and/or the National Oceanic and Atmospheric Administration's National Marine Fisheries Service of the Department of Commerce (together, “the Services”), depending on the species involved—in order to ensure that the action is not likely to jeopardize the species or destroy or adversely modify designated critical habitat.
Pursuant to Section 7(a)(2) of the ESA, the agencies have reviewed this action and have considered applicable ESA regulations, case law, and guidance to determine what, if any, obligations the agencies have under the ESA. The agencies have considered issues related to emissions of CO
NHTSA's final rule adopts regulatory text (including a detailed appendix) regarding EPCA's preemption provision, in addition to discussing the issue in this preamble to the rule, specifically to provide needed clarity on that provision. The new regulatory text provides for why any law or regulation of a State or a political subdivision of a State regulating or prohibiting tailpipe carbon dioxide emissions from automobiles is expressly and impliedly preempted by EPCA. Any preemptive effect resulting from this final action is not the result of the exercise of Agency discretion, but rather reflects the operation and application of the Federal statute. NHTSA does not have authority to waive any aspect of EPCA preemption no matter the potential impacts; rather, preempted standards are void
EPA's action is to withdraw the waiver it had previously provided in January 2013 to California for that State's GHG and ZEV programs under section 209 of the Clean Air Act. This action is being undertaken on two separate and independent grounds. First, EPA has determined EPCA preemption renders its prior grant of a waiver for those aspects of California's regulations that EPCA preempts invalid, null, and void, thereby necessitating withdrawal of the waiver. Second, EPA concludes that CAA section 209(b)(1)(B), which provides that EPA shall not issue a waiver if California does not “need” separate state standards “to meet compelling and extraordinary conditions,” was not intended to allow California to promulgate State standards for emissions from new motor vehicles designed to address global climate change problems. Therefore, California does not meet the necessary criteria to receive a waiver for these aspects of its program. Similar to NHTSA, these decisions are not discretionary, but rather reflect EPA's conclusion that EPCA preemption and the requirements
The Supreme Court has held that Section 7(a)(2) of the ESA and its implementing regulations apply only to actions in which there is discretionary Federal authority.
The agencies believe this holding applies to the instant action as well. As this action results from nondiscretionary authorities, the Section 7(a)(2) implementing regulations expressly exclude them from coverage. Neither ECPA nor the Clean Air Act include the protection of threatened or endangered species as a consideration for the application of preemption (which operates by statute) or the prohibition on the granting of a waiver (under the enumerated statutory criterion in CAA section 209(b)(1)(B)). Although there is some judgment in considering the application of EPCA and the CAA, neither action involves the type of discretion that would require a Section 7(a)(2) consultation by the agencies with the Services.
In addition, the agencies have considered the potential effects of this action to listed threatened or endangered species or designated critical habitat of these species and concludes that any such effects are too attenuated to require Section 7(a)(2) consultation. The agencies base this conclusion both on the language of the Section 7(a)(2) implementing regulations and on the long history of actions and guidance provided by DOI.
The Section 7(a)(2) implementing regulations require consultation if a Federal agency determines its action “may affect” listed species or critical habitat.
The Services' recently published final rule revising the definition of “effects of the action” to be “all consequences to listed species or critical habitat that are caused by the proposed action, including the consequences of other activities that are caused by the proposed action. A consequence is caused by the proposed action if it would not occur but for the proposed action and it is reasonably certain to occur.”
Any potential effects of this action to threatened or endangered species or designated critical habitat would be a result of changes to GHG or criteria air pollutant emissions. In the next section, the agencies discuss why this action is not anticipated to result in changes to GHG or criteria air pollutant emissions. However, even if such changes to emissions were to occur, the agencies do not believe resulting impacts to listed species or critical habitat satisfy the “but for” test or are “reasonably certain to occur.”
GHG emissions are relevant to Section 7(a)(2) consultation because of the potential impacts of climate change on listed species or critical habitat. For example, one comment to the NPRM documented the potential impacts of climate change on federally protected species and included a five-page table of species listed during 2006 to 2015 for which the commenters claim climate change was a listing factor.
Similarly, with regard to criteria air pollutants, States are still subject to the Clean Air Act, which requires limitations on emissions of those pollutants. Furthermore, since California and other Section 177 States have “deemed” compliance with the Federal standards to be compliance with the State standards, it is not clear that this action would result in changes to emissions. Any impacts associated with potential changes to Federal standards are not a result of this action and are purely speculative until the agencies finalize a change. We again note California's statement in its 2013 waiver request that “[t]here is no criteria emissions benefit from including the ZEV proposal in terms of vehicle (tank-to-wheel or TTW) emissions. The LEV III criteria pollutant fleet standard is responsible for those emission reductions in the fleet . . . .”
The agencies have also considered the long history of actions and guidance provided by DOI. To that point, the agencies incorporate by reference Appendix G of the MY 2012-2016 CAFE standards EIS.
Subsequent to the publication of that Appendix, a court vacated the Polar Bear Special Rule on NEPA grounds, though it upheld the ESA analysis as having a rational basis.
In addition to the foregoing a Section 7(a)(2) consultation is not required because this action will have no effect on a listed species or designated critical habitat. This notification and final rule only address the issues of California's waiver and preemption; they do not set CAFE standards. Fundamentally, this action is about which sovereign entity (
As previously described, absent this action, OEMs would likely produce more efficient vehicles for sale in California and the States that have adopted California's standards, but the increased fuel economy of these vehicles would likely be offset by less efficient vehicles produced for sale in the rest of the U.S., leading to little to no change in either fuel use or GHG emissions at a national level. Further, as EPA and NHTSA have not finalized any action to amend the Federal GHG and fuel economy standards that were promulgated in 2012, California's “deemed to comply” provision remains operative. As OEMs are anticipated to make use of this compliance mechanism, CARB's GHG standards are functionally identical to Federal standards, and their preemption would not result in additional environmental impacts. Any impacts associated with potential changes to Federal standards are not a result of this action and are purely speculative until the agencies finalize a change.
Finally, we again note California's 2013 waiver request statement that there is no criteria emissions benefit associated with the ZEV program because the LEV III criteria pollution standard is responsible for those emissions reductions. This action clarifies that criteria pollutant standards are not preempted unless they have a direct or substantial relationship to fuel economy standards. California's LEV III criteria pollution standard would not be preempted under this approach. Therefore, those benefits are anticipated to remain in place.
For the foregoing reasons, automobile emissions are not anticipated to change as a result of this action. Even if they do, any change would be so minimal as to be unlikely to pose any effects on a listed species or critical habitat. Because any effect on a listed species or critical habitat is not reasonably certain to occur, the agencies conclude that there will be no effect on listed species or critical habitat under the Section (7)(a)(2) implementing regulations, and no Section 7(a)(2) consultation is required for this action.
The NHPA (54 U.S.C. 300101
The FWCA (16 U.S.C. 2901
The Coastal Zone Management Act (16 U.S.C. 1451
The agencies conclude that the CZMA is not applicable to this action because it does not involve an activity within, or outside of, the nation's coastal zones that affects any land or water use or natural resource of the coastal zone. This conclusion is supported by the lack of discretion over preemption and the underlying justification for the withdrawal of the waiver to California, the fact that any causal relationship between effects on coastal zones as a result of emissions from the sale and operation of motor vehicles in California and section 177 States and this action are too attenuated, and the conclusion that impacts are not reasonably foreseeable.
These Orders require Federal agencies to avoid the long- and short-term adverse impacts associated with the occupancy and modification of floodplains, and to restore and preserve the natural and beneficial values served by floodplains. Executive Order 11988 also directs agencies to minimize the impact of floods on human safety, health and welfare, and to restore and preserve the natural and beneficial values served by floodplains through evaluating the potential effects of any actions the agency may take in a floodplain and ensuring that its program planning and budget requests reflect consideration of flood hazards and floodplain management. DOT Order 5650.2 sets forth DOT policies and procedures for implementing Executive Order 11988. The DOT Order requires that the agency determine if a proposed action is within the limits of a base floodplain, meaning it is encroaching on the floodplain, and whether this encroachment is significant. If significant, the agency is required to conduct further analysis of the proposed action and any practicable alternatives. If a practicable alternative avoids floodplain encroachment, then the agency is required to implement it.
In this action, the agencies are not occupying, modifying and/or encroaching on floodplains. The agencies, therefore, conclude that the Orders are not applicable to this action.
These Orders require Federal agencies to avoid, to the extent possible, undertaking or providing assistance for new construction located in wetlands unless the agency head finds that there is no practicable alternative to such construction and that the proposed action includes all practicable measures to minimize harms to wetlands that may result from such use. Executive Order 11990 also directs agencies to take action to minimize the destruction, loss or degradation of wetlands in “conducting Federal activities and programs affecting land use, including but not limited to water and related land resources planning, regulating, and licensing activities.” DOT Order 5660.1a sets forth DOT policy for interpreting Executive Order 11990 and requires that transportation projects “located in or having an impact on wetlands” should be conducted to assure protection of the Nation's wetlands. If a project does have a significant impact on wetlands, an EIS must be prepared.
In this action, the agencies are not undertaking or providing assistance for new construction located in wetlands and conclude that these Orders do not apply to this action.
The MBTA (16 U.S.C. 703-712) provides for the protection of certain migratory birds by making it illegal for anyone to “pursue, hunt, take, capture, kill, attempt to take, capture, or kill, possess, offer for sale, sell, offer to barter, barter, offer to purchase, purchase, deliver for shipment, ship, export, import, cause to be shipped, exported, or imported, deliver for transportation, transport or cause to be transported, carry or cause to be carried, or receive for shipment, transportation, carriage, or export” any migratory bird covered under the statute.
The BGEPA (16 U.S.C. 668-668d) makes it illegal to “take, possess, sell, purchase, barter, offer to sell, purchase or barter, transport, export or import” any bald or golden eagles.
The agencies conclude that the MBTA, BGEPA, and Executive Order 13186 do not apply to this action because there is no disturbance, take, measurable negative impact, or other covered activity involving migratory birds or bald or golden eagles involved in this rulemaking. This conclusion is supported by the lack of discretion over preemption and the reasons underlying justification for the withdrawal of the waiver to California, the fact that any causal relationship between effects on migratory birds or bald or golden eagles as a result of emissions from the sale
Section 4(f) of the Department of Transportation Act of 1966 (49 U.S.C. 303), as amended, is designed to preserve publicly owned park and recreation lands, waterfowl and wildlife refuges, and historic sites. Specifically, Section 4(f) provides that DOT agencies cannot approve a transportation program or project that requires the use of any publicly owned land from a public park, recreation area, or wildlife or waterfowl refuge of national, State, or local significance, or any land from a historic site of national, State, or local significance, unless a determination is made that:
(1) There is no feasible and prudent alternative to the use of land, and
(2) The program or project includes all possible planning to minimize harm to the property resulting from the use.
These requirements may be satisfied if the transportation use of a Section 4(f) property results in a de minimis impact on the area.
NHTSA concludes that Section 4(f) is not applicable to its final rule here because this rulemaking is not an approval of a transportation program or project that requires the use of any publicly owned land.
Executive Order (E.O.) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.
The agencies have determined that this action will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not change existing Federal standards. This conclusion is supported by the lack of discretion over preemption and the underlying justification for the withdrawal of the waiver to California, the fact that any causal relationship between effects on minority or low-income populations as a result of emissions from the sale and operation of motor vehicles in California and section 177 States and this action are too attenuated, and the conclusion that impacts are not reasonably foreseeable.
This action is not subject to E.O. 13045 (62 FR 19885, April 23, 1997) because it is not an economically significant regulatory action as defined by E.O. 12866, and the agencies have no reason to believe that the environmental health or safety risks related to this action may have a disproportionate effect on children because it does not change existing Federal standards. This conclusion is supported by the lack of discretion over preemption and the underlying justification for the withdrawal of the waiver to California, the fact that any causal relationship between effects on children as a result of emissions from the sale and operation of motor vehicles in California and section 177 States and this action are too attenuated, and the conclusion that impacts are not reasonably foreseeable.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601
This joint action only concern the question of preemption; the joint action does not set CAFE or emissions standards themselves. Further, as the California waiver withdrawal is not a rulemaking, it is not subject to the RFA. Accordingly, only NHTSA's final rule establishing regulatory text related to preemption is at issue in this action. NHTSA has considered the impacts of this document under the Regulatory Flexibility Act and certifies that this rule would not have a significant economic impact on a substantial number of small entities. One commenter, Workhorse Group, Inc. (Workforce), in comments echoed by a trade association, argued that it was a small business and would be affected the preemption provisions because it would no longer be able to earn and sell credits under the ZEV mandates established by California and the other 177 States. This argument is not persuasive, as the preemption regulation has no direct effect on Workforce or any other similar entity because it does not regulate any private entity, but instead clarifies the agency's views on what State or local laws are preempted. Thus, any effect on Workhorse or any other similar entities is, at most, indirect. Any effect is even further attenuated by the fact that small entities such as Workhorse are not even subject to a ZEV mandate, but choose to participate in the program voluntarily.
Additionally, in keeping with previous waiver actions, EPA's action is not a rule as defined in the Regulatory Flexibility Act, 5 U.S.C. 601(2). Therefore, EPA has not prepared a supporting regulatory flexibility analysis addressing the impact of this action on small business entities.
Executive Order 13132 requires federal agencies to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” The Order defines the term “Policies that have federalism implications” to include regulations that 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.” Under the Order, agencies may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, unless the Federal government
Pursuant to Executive Order 12988, “Civil Justice Reform,”
This final rule does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). This rule will be implemented at the Federal level. Thus, Executive Order 13175 does not apply to this rule. Two commenters raised issues associated with this Executive Order. Issues raised in these comments related to the standards will be addressed that forthcoming rulemaking. One commenter, in an apparent reference to the preemption actions being finalized in this document, argued that the NPRM would weaken tribal abilities to set GHG standards. This is incorrect: The finalization of the EPCA preemption provisions merely clarifies the law that any law or regulation of a State or political subdivision of a State “related to” fuel economy is preempted, while EPA's decision in this document only affects a State, not a Tribal government.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to prepare a written assessment of the costs, benefits, and other effects of a proposed or final rule that includes a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year (adjusted for inflation with base year of 1995). Adjusting this amount by the implicit gross domestic product price deflator for 2016 results in $148 million (111.416/75.324 = 1.48).
The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. You may use the RIN contained in the heading at the beginning of this document to find this action in the Unified Agenda.
Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) requires NHTSA and EPA to evaluate and use existing voluntary consensus standards in its regulatory activities unless doing so would be inconsistent with applicable law (
49 U.S.C. 32902(j)(2) requires that “Before taking final action on a standard or an exemption from a standard under this section, the Secretary of Transportation shall notify the Secretary of Energy and provide the Secretary of Energy a reasonable time to comment.” As this action does not establish a standard or provide an exemption, it is not subject to this requirement. However, NHTSA has submitted this action to OMB for interagency review and, thus, the Department of Energy has been afforded the opportunity to review.
The Paperwork Reduction Act (PRA) of 1995, Public Law 104-13,
In accordance with 5 U.S.C. 553(c), the agencies solicited comments from the public to better inform the rulemaking process. These comments are posted, without edit, to
NHTSA and EPA undertake this joint action under their respective authorities pursuant to the Energy Policy and Conservation Act and the Clean Air Act, mindful of the Supreme Court's statement in
Fuel economy.
In consideration of the foregoing, under the authority of 49 U.S.C. 322, 32901, 32902, and 32903, and delegation of authority at 49 CFR 1.95, NHTSA amends 49 CFR chapter V as follows:
49 U.S.C. 32902, delegation of authority at 49 CFR 1.50.
(a)
(b)
(c)
(a) Express Preemption:
(1) To the extent that any law or regulation of a State or a political subdivision of a State regulates or prohibits tailpipe carbon dioxide emissions from automobiles, such a law or regulation relates to average fuel economy standards within the meaning of 49 U.S.C. 32919.
(A) Automobile fuel economy is directly and substantially related to automobile tailpipe emissions of carbon dioxide;
(B) Carbon dioxide is the natural by-product of automobile fuel consumption;
(C) The most significant and controlling factor in making the measurements necessary to determine the compliance of automobiles with the fuel economy standards in this part is their rate of tailpipe carbon dioxide emissions;
(D) Almost all technologically feasible reduction of tailpipe emissions of carbon dioxide is achievable through improving fuel economy, thereby reducing both the consumption of fuel and the creation and emission of carbon dioxide;
(E) Accordingly, as a practical matter, regulating fuel economy controls the amount of tailpipe emissions of carbon dioxide, and regulating the tailpipe emissions of carbon dioxide controls fuel economy.
(2) As a law or regulation related to fuel economy standards, any law or regulation of a State or a political subdivision of a State regulating or prohibiting tailpipe carbon dioxide emissions from automobiles is expressly preempted under 49 U.S.C. 32919.
(3) A law or regulation of a State or a political subdivision of a State having the direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions from automobiles or automobile fuel economy is a law or regulation related to fuel economy standards and expressly preempted under 49 U.S.C. 32919.
(b) Implied Preemption:
(1) A law or regulation of a State or a political subdivision of a State regulating tailpipe carbon dioxide emissions from automobiles, particularly a law or regulation that is not attribute-based and does not separately regulate passenger cars and light trucks, conflicts with:
(A) The fuel economy standards in this part;
(B) The judgments made by the agency in establishing those standards; and
(C) The achievement of the objectives of the statute (49 U.S.C. Chapter 329) under which those standards were established, including objectives relating to reducing fuel consumption in a manner and to the extent consistent with manufacturer flexibility, consumer choice, and automobile safety.
(2) Any law or regulation of a State or a political subdivision of a State regulating or prohibiting tailpipe carbon dioxide emissions from automobiles is impliedly preempted under 49 U.S.C. Chapter 329.
(3) A law or regulation of a State or a political subdivision of a State having the direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions from automobiles or automobile fuel economy is impliedly preempted under 49 U.S.C. Chapter 329.
49 U.S.C. 32902; delegation of authority at 49 CFR 1.50.
(a)
(b)
(c)
(a) Express Preemption:
(1) To the extent that any law or regulation of a State or a political subdivision of a State regulates or prohibits tailpipe carbon dioxide emissions from automobiles, such a law or regulation relates to average fuel economy standards within the meaning of 49 U.S.C. 32919.
(A) Automobile fuel economy is directly and substantially related to automobile tailpipe emissions of carbon dioxide;
(B) Carbon dioxide is the natural by-product of automobile fuel consumption;
(C) The most significant and controlling factor in making the measurements necessary to determine the compliance of automobiles with the fuel economy standards in this part is their rate of tailpipe carbon dioxide emissions;
(D) Almost all technologically feasible reduction of tailpipe emissions of carbon dioxide is achievable through improving fuel economy, thereby reducing both the consumption of fuel and the creation and emission of carbon dioxide;
(E) Accordingly, as a practical matter, regulating fuel economy controls the amount of tailpipe emissions of carbon dioxide, and regulating the tailpipe emissions of carbon dioxide controls fuel economy.
(2) As a law or regulation of a State or a political subdivision of a State related to fuel economy standards, any state law or regulation regulating or prohibiting tailpipe carbon dioxide emissions from automobiles is expressly preempted under 49 U.S.C. 32919.
(3) A law or regulation of a State or a political subdivision of a State having the direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions from automobiles or automobile fuel economy is a law or regulation related to fuel economy standards and expressly preempted under 49 U.S.C. 32919.
(b) Implied Preemption:
(1) A law or regulation of a State or a political subdivision of a State regulating tailpipe carbon dioxide emissions from automobiles, particularly a law or regulation that is not attribute-based and does not separately regulate passenger cars and light trucks, conflicts with:
(A) The fuel economy standards in this part;
(B) The judgments made by the agency in establishing those standards; and
(C) The achievement of the objectives of the statute (49 U.S.C. Chapter 329) under which those standards were established, including objectives relating to reducing fuel consumption in a manner and to the extent consistent with manufacturer flexibility, consumer choice, and automobile safety.
(2) Any law or regulation of a State or a political subdivision of a State regulating or prohibiting tailpipe carbon dioxide emissions from automobiles is impliedly preempted under 49 U.S.C. Chapter 329.
(3) A law or regulation of a State or a political subdivision of a State having the direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions from automobiles or automobile fuel economy is impliedly preempted under 49 U.S.C. Chapter 329.