The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to the review and determination of the Board.

On March 3, 2020, the Board voted to approve a 1/2 percentage point decrease in the primary credit rate in effect at each of the twelve Federal Reserve Banks, thereby decreasing from 2.25 percent to 1.75 percent the rate that each Reserve Bank charges for extensions of primary credit. In addition, the Board had previously approved the renewal of the secondary credit rate formula, the primary credit rate plus 50 basis points. Under the formula, the secondary credit rate in effect at each of the twelve Federal Reserve Banks decreased by 1/2 percentage point as a result of the Board's primary credit rate action, thereby decreasing from 2.75 percent to 2.25 percent the rate that each Reserve Bank charges for extensions of secondary credit. The amendments to Regulation A reflect these rate changes.

The 1/2 percentage point decrease in the primary credit rate was associated with a 1/2 percentage point decrease in the target range for the federal funds rate (from a target range of 1 1/2 percent to 1 3/4 percent to a target range of 1 percent to 1 1/4 percent) announced by the Federal Open Market Committee on March 3, 2020, as described in the Board's amendment of its Regulation D published elsewhere in today's Federal Register.

In general, the Administrative Procedure Act (“APA”)  1 imposes three principal requirements when an agency promulgates legislative rules (rules made pursuant to Congressionally-delegated authority): (1) Publication with adequate notice of a proposed rule; (2) followed by a meaningful opportunity for the public to comment on the rule's content; and (3) publication of the final rule not less than 30 days before its effective date. The APA provides that notice and comment procedures do not apply if the agency for good cause finds them to be “unnecessary, impracticable, or contrary to the public interest.”  2 Section 553(d) of the APA also provides that publication at least 30 days prior to a rule's effective date is not required for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) a rule for which the agency finds good cause for shortened notice and publishes its reasoning with the rule. 3 The APA further provides that the notice, public comment, and delayed effective date requirements of 5 U.S.C. 553 do not apply “to the extent that there is involved . . . a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.”  4

Regulation A establishes the interest rates that the twelve Reserve Banks charge for extensions of primary credit and secondary credit. The Board has determined that the notice, public comment, and delayed effective date requirements of the APA do not apply to these final amendments to Regulation A. The amendments involve a matter relating to loans and are therefore exempt under the terms of the APA. Furthermore, because delay would undermine the Board's action in responding to economic data and conditions, the Board has determined that “good cause” exists within the meaning of the APA to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to the final amendments to Regulation A.

The Regulatory Flexibility Act (“RFA”) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. 5 As noted previously, a general notice of proposed rulemaking is not required if the final rule involves a matter relating to loans. Furthermore, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

I. Statutory and Regulatory Background

For monetary policy purposes, section 19 of the Federal Reserve Act (“Act”) imposes reserve requirements on certain types of deposits and other liabilities of depository institutions. 1 Regulation D, which implements section 19 of the Act, requires that a depository institution meet reserve requirements by holding cash in its vault, or if vault cash is insufficient, by maintaining a balance in an account at a Federal Reserve Bank (“Reserve Bank”). 2 Section 19 also provides that balances maintained by or on behalf of certain institutions in an account at a Reserve Bank may receive earnings to be paid by the Reserve Bank at least once each quarter, at a rate or rates not to exceed the general level of short-term interest rates. 3 Institutions that are eligible to receive earnings on their balances held at Reserve Banks (“eligible institutions”) include depository institutions and certain other institutions. 4 Section 19 also provides that the Board may prescribe regulations concerning the payment of earnings on balances at a Reserve Bank. 5 Prior to these amendments, Regulation D specified a rate of 1.60 percent for both IORR and IOER. 6

The Board is amending § 204.10(b)(5) of Regulation D to specify that IORR is 1.10 percent and IOER is 1.10 percent. This 0.50 percentage point decrease in each rate was associated with a decrease in the target range for the federal funds rate, from a target range of 1 1/2 to 1 3/4 percent to a target range of 1 to 1 1/4 percent, announced by the FOMC on March 3, 2020 with an effective date of March 4, 2020. The FOMC's press release on the same day as the announcement noted that:

The Federal Reserve Implementation Note released simultaneously with the announcement stated:

The Board of Governors of the Federal Reserve System voted unanimously to set the interest rate paid on required and excess reserve balances at 1.10 percent, effective March 4, 2020.

As a result, the Board is amending § 204.10(b)(5) of Regulation D to change IORR to 1.10 percent and IOER to 1.10 percent.

In general, the Administrative Procedure Act (“APA”)  7 imposes three principal requirements when an agency promulgates legislative rules (rules made pursuant to Congressionally-delegated authority): (1) Publication with adequate notice of a proposed rule; (2) followed by a meaningful opportunity for the public to comment on the rule's content; and (3) publication of the final rule not less than 30 days before its effective date. The APA provides that notice and comment procedures do not apply if the agency for good cause finds them to be “unnecessary, impracticable, or contrary to the public interest.”  8 Section 553(d) of the APA also provides that publication at least 30 days prior to a rule's effective date is not required for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) a rule for which the agency finds good cause for shortened notice and publishes its reasoning with the rule. 9

The Board has determined that good cause exists for finding that the notice, public comment, and delayed effective date provisions of the APA are unnecessary, impracticable, or contrary to the public interest with respect to these final amendments to Regulation D. The rate changes for IORR and IOER that are reflected in the final amendments to Regulation D were made with a view towards accommodating commerce and business and with regard to their bearing upon the general credit situation of the country. Notice and public comment would prevent the Board's action from being effective as promptly as necessary in the public interest and would not otherwise serve any useful purpose. Notice, public comment, and a delayed effective date would create uncertainty about the finality and effectiveness of the Board's action and undermine the effectiveness of that action. Accordingly, the Board has determined that good cause exists to dispense with the notice, public comment, and delayed effective date procedures of the APA with respect to these final amendments to Regulation D.

The Regulatory Flexibility Act (“RFA”) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. 10 As noted previously, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

In accordance with the Paperwork Reduction Act (“PRA”) of 1995, 11 the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA.

For the reasons set forth in the preamble, the Board amends 12 CFR part 204 as follows:

I. Background

On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the Act), Public Law 114-74, 129 Stat. 584, was enacted. The Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101-410, 104 Stat 890 (the 1990 Inflation Adjustment Act), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The Act required agencies to issue a final rule by August 1, 2016, to adjust the level of civil monetary penalties with an initial “catch-up” adjustment and to annually adjust these monetary penalties for inflation by January 15 of each subsequent year. The Act authorizes agencies to implement the annual adjustments without regard to the requirements for public notice and comment or delayed effective date under the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(3)(B) and (d)(3), respectively.

In addition, based on the definition of a “civil monetary penalty” in the 1990 Inflation Adjustment Act, agencies are to make adjustments only to the civil penalties that (i) are for a specific monetary amount as provided by Federal law or have a maximum amount provided for by Federal law; (ii) are assessed or enforced by an agency; and (iii) are enforced or assessed in an administrative proceeding or a civil action in the Federal courts. Therefore, penalties that are stated as a percentage of an indeterminate amount or as a function of a violation (penalties that encompass actual damages incurred) are not to be adjusted.

SBA published in the Federal Register an interim final rule with its initial adjustments to the civil monetary penalties, including an initial “catch-up” adjustment, on May 19, 2016 (81 FR 31489), with an effective date of August 1, 2016. SBA published its first annual adjustments to the monetary penalties on February 9, 2017 (82 FR 9967), with an immediate effective date. SBA published its subsequent annual adjustments for 2018 on February 21, 2018 (83 FR 7361), and for 2019 on April 1, 2019 (84 FR 12059), both with immediate effective dates. This rule will establish the adjusted penalty amounts for 2020 with immediate effective date upon publication.

On December 16, 2019, the Office of Management and Budget published its annual guidance memorandum for 2020 civil monetary penalties inflation adjustments (M-20-05, Implementation of Penalty Inflation Adjustments for 2020, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015). The guidance memorandum provides the formula for calculating the annual adjustments based on the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October preceding the adjustment, and specifically on the change between the October CPI-U preceding the date of adjustment and the prior year's CPI-U. Based on this methodology, the 2020 civil monetary penalty inflation adjustment is October 2019 CPI-U (257.346)/October 2018 CPI-U (252.885) = 1.01764. The annual adjustments identified in this rule were obtained by applying this multiplier of 1.01764 to the most recently adjusted penalty amounts that were published in SBA's 2019 adjustments to civil monetary penalties (84 FR 12059, April 1, 2019).

This rule adjusts civil monetary penalties authorized by the Small Business Act, the Small Business Investment Act of 1958 (SBIAct), the Program Fraud Civil Remedies Act, and the Byrd Amendment to the Federal Regulation of Lobbying Act. These penalties and the implementing regulations are discussed below.

SBA licenses, regulates and provides financial assistance to financial entities called small business investment companies (SBICs). Pursuant to section 315 of the SBIAct, 15 U.S.C. 687g, SBA may impose a penalty on any SBIC for each day that it fails to comply with SBA's regulations or directives governing the filing of regular or special reports. The penalty for non-compliance is incorporated in § 107.665 of the SBIC program regulations.

This rule amends § 107.665 to adjust the current civil penalty from $266 to $271 per day of failure to file. The current civil penalty of $266 was multiplied by the multiplier of 1.01764 to reach a product of $271, rounded to the nearest dollar.

According to the regulations at § 120.465, any SBA Supervised Lender, as defined in 13 CFR 120.10, that violates a regulation or written directive issued by the SBA Administrator regarding the filing of any regular or special report is subject to the civil penalty amount stated in § 120.465(b) for each day the company fails to file the report, unless the SBA Supervised Lender can show that there is reasonable cause for its failure to file. This penalty is authorized by section 23(j)(1) of the Small Business Act, 15 U.S.C. 650(j)(1).

This rule amends § 120.465(b) to adjust the current civil penalty from $6,623 to $6,740 per day of failure to file. The current civil penalty of $6,623 was multiplied by the multiplier of 1.01764 to reach a product of $6,740, rounded to the nearest dollar.

SBA has promulgated regulations at 13 CFR part 142 to implement the civil penalties authorized by the Program Fraud Civil Remedies Act of 1986 (PFCRA), 31 U.S.C. 3801-3812. Under the current regulation at 13 CFR 142.1(b), a person who submits, or causes to be submitted, a false claim or a false statement to SBA is subject to a civil penalty of not more than $11,463, for each statement or claim. The adjusted civil penalty amount was calculated by multiplying the current civil penalty of $11,463 by the multiplier of 1.01764 to reach a product of $11,665, rounded to the nearest dollar.

SBA's regulations at 13 CFR part 146 govern lobbying activities by recipients of federal financial assistance. These regulations implement the authority in 31 U.S.C. 1352, which was established in 1989, and impose penalties on any recipient that fails to comply with certain requirements in the part. Specifically, under § 146.400(a) and (b), penalties may be imposed on those who make prohibited expenditures or fail to file the required disclosure forms or to amend such forms, if necessary.

This rule amends § 146.400(a) and (b) to adjust the current civil penalty amounts to “not less than $20,489 and not more than $204,892.” The current civil penalty amounts of $20,134 and $201,340 were multiplied by the multiplier of 1.01764 to reach a product of $20,489 and $204,892, respectively, rounded to the nearest dollar.

This rule also amends § 146.400(e) to adjust the civil penalty that may be imposed for a first-time violation of § 146.400(a) and (b) to $20,489 and to adjust the civil penalty that may be imposed for second and subsequent offenses to “not less than $20,489 and not more than $204,892.” The current civil penalty amounts of $20,134 and $201,340 were multiplied by the multiplier of 1.01764 to reach a product of $20,489 and $204,892 respectively, rounded to the nearest dollar.

The Act provides that agencies shall annually adjust civil monetary penalties for inflation notwithstanding Section 553 of the APA. Additionally, the Act provides a non-discretionary cost-of-living formula for annual adjustment of the civil monetary penalties. For these reasons, the requirements in sections 553(b), (c), and (d) of the APA, relating to notice and comment and requiring that a rule be effective 30 days after publication in the Federal Register , are inapplicable.

Section 553(d) requires agencies to publish their rules at least 30 days before their effective dates, except if the agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest. By expressly exempting this rule from section 553, the Act has provided SBA with the good cause justification for this rule to become effective on the date it is published in the Federal Register .

The Office of Management and Budget has determined that this final rule is not a significant regulatory action under Executive Order 12866. This is also not a major rule under the Congressional Review Act, 5 U.S.C. 800.

This action meets applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

For the purpose of Executive Order 13132, SBA has determined that the rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, this final rule has no federalism implications warranting preparation of a federalism assessment.

This rule is not an Executive Order 13771 regulatory action, because this rule is not significant under Executive Order 12866.

SBA has determined that this rule does not impose additional reporting or recordkeeping requirements.

The Regulatory Flexibility Act (“RFA”) requires agencies to consider the effect of their regulatory actions on small entities, including small non-profit businesses, and small local governments. Pursuant to the RFA, when an agency issues a rule, the agency must prepare an analysis that describes whether the impact of the rule will have a significant economic impact on a substantial number of such small entities. However, the RFA requires such analysis only where notice and comment rulemaking are required. As stated above, SBA has express statutory authority to issue this rule without regard to the notice and comment requirement of the APA. Since notice and comment is not required before this rule is issued, SBA is not required to prepare a regulatory analysis.

For the reasons set forth in the preamble, SBA amends 13 CFR parts 107, 120, 142, and 146 as follows:

Discussion

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2019-0099R2, dated September 6, 2019 (referred to after this as “the MCAI”), to address an unsafe condition for the specified products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0179.

The FAA reviewed RR Alert Non-Modification Service Bulletin (NMSB) Trent 1000 72-AK316, Revision 3, dated July 16, 2019. The NMSB describes procedures for performing a BSI of the HPT blades. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA reviewed RR Service Bulletin (SB) Trent 1000 72-J550, Initial Issue, dated November 21, 2017. The SB introduces HPT blades with optimized cooling.

This product has been approved by EASA and is approved for operation in the United States. Pursuant to our bilateral agreement with the European Community, EASA has notified us of the unsafe condition described in the MCAI and service information referenced above. The FAA is issuing this AD because it evaluated all the relevant information provided by EASA and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires initial and repetitive BSI of the HPT blades. This AD also requires replacement of the HPT blades with parts eligible for installation when the HPT blades fail inspection or reach the new life limit.

The FAA has found the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because no domestic operators use this product. It is unlikely that the FAA will receive any adverse comments or useful information about this AD from U.S. operators. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are unnecessary. In addition, for this same reason, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, the FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2020-0179 and Product Identifier MCAI-2019-00125-E at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this final rule. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to https://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact received about this final rule.

Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Stephen Elwin, Aerospace Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA, 01803. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because the FAA has determined that it has good cause to adopt this rule without notice and comment, RFA analysis is not required.

The FAA estimates that this AD affects no engines installed on airplanes of U.S. registry.

The FAA estimates the following costs to comply with this AD:

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to engines, propellers, and associated appliances to the Manager, Engine and Propeller Standards Branch, Policy and Innovation Division.

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

For the reasons discussed above, I certify this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866, and

(2) Will not affect intrastate aviation in Alaska.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of 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 modifies the National Airspace System as necessary to preserve the safe and efficient flow of air traffic.

The FAA published a notice of proposed rulemaking for Docket No. FAA-2018-1028 in the Federal Register (83 FR 67165; December 28, 2018), amending VOR Federal airway V-18 due to planned decommissioning of the Talladega, AL, VOR/DME navigation aid. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

Subsequent to the issuance of the above NPRM, in a separate action, the FAA amended V-18 due to the planned decommissioning of the Guthrie, TX, VOR/DME (Docket No. FAA-2018-0769; 84 FR 27937; June 17, 2019). That amendment, became effective on August 15, 2019, removed the segments of V-18 between Guthrie, TX, and the Millsap, TX, VORTAC. Consequently, the V-18 description published in the NPRM on December 28, 2018 differs from the airway description in this rule since the Guthrie to Millsap segment has been removed.

Therefore, this final rule amends V-18, by removing the airway segments between the Vulcan, AL, VORTAC, and the Colliers, SC, VORTAC, due to the planned decommissioning of the Talladega, AL, VOR/DME.

In addition, this rule removes the compulsory reporting point requirement for the HEFIN, AL, navigation fix as published in FAA Order 7400.11D. Pursuant to 14 CFR 71.5, Subpart H of FAA Order 7400.11D lists those geographic locations at which the position of an aircraft must be reported to air traffic control (ATC). The FAA determined that ATC no longer has a compulsory requirement for pilots to report crossing the HEFIN fix and removed the requirement from the National Airspace System database. Therefore, an editorial change is being made to remove the HEFIN fix from the compulsory reporting point list in Subpart H—Reporting Points as published in Order 7400.11D. The HEFIN fix will continue to be depicted on aeronautical charts as a non-compulsory reporting point.

VOR Federal airways are published in paragraph 6010(a); and low altitude reporting points are published in paragraph 7001, respectively, 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 VOR Federal airway and reporting point listed in this document will be subsequently published in, or removed from, the Order.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

This document amends 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 ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by amending the description of VOR Federal airway V-18, due to the planned decommissioning of the Talladega, AL, VOR/DME. The airway change is outlined below.

V-18: V-18 currently extends between the Millsap, TX, VORTAC and the Charleston, SC, VORTAC. Due to the planned decommissioning of the Talladega, AL, VOR/DME, the FAA is removing the airway segments between the Vulcan, AL, VORTAC and the Colliers, SC, VORTAC. This results in a gap in the airway between Vulcan, AL, and Colliers, SC. Therefore, the amended V-18 route consists of two separate sections: First, between the Millsap, TX, VORTAC and the Vulcan, AL, VORTAC; and second, after the gap, the airway resumes between the Colliers, SC, VORTAC, and the Charleston, SC, VORTAC.

Area Navigation (RNAV) route T-294 replaces V-18 between the Vulcan, AL, VORTAC and the HEFIN, AL, navigation fix. Alternative routing between Vulcan, AL, and Colliers, SC is available by continuing on T-294 from the HEFIN, AL, fix to the GRANT, GA, fix, then via V-155 to Colliers, then via V-18 to Charleston, SC.

Additionally, this action removes the compulsory reporting point requirement for the HEFIN, AL, fix as published in FAA Order 7400.11D. The HEFIN fix will continue to be depicted on aeronautical charts as a non-compulsory reporting point.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. 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 only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action of modifying VOR Federal airway V-18 between Vulcan, AL, and Colliers, SC, qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of 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 modifies the route structure in the National Airspace System as necessary to preserve the safe and efficient flow of air traffic.

The FAA published a notice of proposed rulemaking for Docket No. FAA-2019-0339 in the Federal Register (84 FR 24403; May 28, 2019) establishing seven new low altitude RNAV routes, designated T-303, T-307, T-320, T-324, T-335, T-356, and T-358, in the northeastern United States. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

The above NPRM proposed to establish seven RNAV routes. Subsequent to the issuance of the NPRM, the FAA determined that further development work was needed for routes T-303, T-307, T-320, T-324, and T-335. Consequently, the FAA is removing T-303, T-307, T-320, T-324, and T-335 from this docket action. These routes will be addressed in separate docket actions at a later date. The FAA also determined that establishing routes T-356 and T-358 is essential to enhancing the management of air traffic operations in the vicinity of Baltimore/Washington International Thurgood Marshall Airport (KBWI). Therefore, this rule establishes routes T-356 and T-358 as proposed in the NPRM.

Low altitude RNAV T-routes are published in paragraph 6011 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 T-routes listed in this document will be subsequently published in the Order.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

This document amends 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 ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing two new low altitude RNAV routes, designated T-356 and T-358, in the northeastern United States. The routes will expand the availability of RNAV and improve the efficiency of the NAS by reducing the dependency on ground-based navigation systems. The following is a general description of the proposed routes.

T-356: T-356 extends between the WOOLY, MD, fix (38 NM east of the Martinsburg, WV, (MRB) VORTAC) eastward to the SWANN, MD, fix; then northeastward to the ELUDE, MD, fix (9 NM west of the Dupont, DE, (DQO) VORTAC). T-356 replaces VOR Federal airway V-214 between the WOOLY, MD, fix and the ODESA, MD, fix.

T-358: T-358 extends between the Martinsburg, WV, (MRB) VORTAC, and the AVALO, NJ, fix (10 NM south of the Atlantic City, NJ, (ACY) VORTAC). T-358 overlies VOR Federal airway V-268 between the SWANN, MD, fix, and the AVALO, NJ, fix.

Full descriptions of the above routes are listed in “The Amendment” section, below.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. 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 only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action establishing RNAV routes T-356 and T-358, in the northeastern United States, qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures. The applicable categorical exclusion in FAA Order 1050.1F is paragraph § 5-6.5(a): Rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). This action is not expected to cause any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

The Commission is adopting amendments to 17 CFR 275.203(l)-1 [rule 203(l)-1] and 17 CFR 275.203(m)-1 [rule 203(m)-1] under the Investment Advisers Act of 1940 [15 U.S.C. 80b]. 1

The RBIC Advisers Relief Act of 2018 (the “RBIC Advisers Relief Act”)  2 amended the Investment Advisers Act of 1940 (the “Advisers Act”) to provide one new and two expanded exemptions from registration for investment advisers who advise rural business investment

Please note that all comments received are considered part of the public record. They will, unless reasonable cause is given, be made available by the Drug Enforcement Administration (DEA) for public inspection online at http://www.regulations.gov. Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter. The Freedom of Information Act (FOIA) applies to all comments received. If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be made publicly available, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also place all of the personal identifying information you do not want made publicly available in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment, but do not want it to be made publicly available, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify the confidential business information to be redacted within the comment.

Comments containing personal identifying information and confidential business information identified as directed above will generally be made publicly available in redacted form. If a comment has so much confidential business information or personal identifying information that it cannot be effectively redacted, all or part of that comment may not be made publicly available. Comments posted to http://www.regulations.gov may include any personal identifying information (such as name, address, and phone number) included in the text of your electronic submission that is not identified as directed above as confidential.

An electronic copy of this document and supplemental information, including the complete Department of Health and Human Services (HHS) and DEA eight-factor analyses, to this interim final rule are available at http://www.regulations.gov for easy reference.

Pursuant to 21 U.S.C. 811(a), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. 551-559. 21 CFR 1308.41-1308.45; 21 CFR part 1316, subpart D. Interested persons may file requests for a hearing, or notices of intent to participate in a hearing, in conformity with the requirements of 21 CFR 1308.44(a) or (b), and include a statement of interest in the proceeding and the objections or issues, if any, concerning which the person desires to be heard. Any interested person may file a waiver of an opportunity for a hearing or to participate in a hearing together with a written statement regarding the interested person's position on the matters of fact and law involved in any hearing as set forth in 21 CFR 1308.44(c).

All requests for a hearing and waivers of participation must be sent to DEA using the address information provided above.

Under the Improving Regulatory Transparency for New Medical Therapies Act (Pub. L. 114-89), which was signed into law on November 25, 2015, DEA is required to commence an expedited scheduling action with respect to certain new drugs approved by the United States Food and Drug Administration (FDA). As provided in 21 U.S.C. 811(j), this expedited scheduling is required where both of the following conditions apply: (1) The Secretary of the Department of Health and Human Services (Secretary of HHS or the Secretary) has advised DEA that a New Drug Application (NDA) has been approved for a drug that has a stimulant, depressant, or hallucinogenic effect on the central nervous system (CNS), and that it appears that such drug has an abuse potential; and, (2) the Secretary recommends that DEA control the drug in schedule II, III, IV, or V pursuant to 21 U.S.C. 811(a) and (b). In these circumstances, DEA is required to issue an interim final rule controlling the drug within 90 days.

The law further states that the 90-day timeframe starts the later of: (1) The date DEA receives HHS' scientific and medical evaluation/scheduling recommendation or (2) the date DEA receives notice of the NDA approval by HHS. In addition, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring DEA to demonstrate good cause therefor. Thus, the purpose of subsection (j) is to speed the process by which DEA schedules newly approved drugs that are currently either in schedule I or not controlled (but which have sufficient abuse potential to warrant control) so that such drugs may be marketed without undue delay following FDA approval. 1

Subsection (j) further provides that the interim final rule shall give interested persons the opportunity to comment and to request a hearing. After the conclusion of such proceedings, DEA must issue a final rule in accordance with the scheduling criteria of subsections 21 U.S.C. 811(b), (c), and (d) and 21 U.S.C. 812(b).

Cenobamate is a new molecular entity with CNS depressant properties, and is chemically known as [(1R)-1-(2-chlorophenyl)-2-(tetrazol-2-yl)ethyl] carbamate. Cenobamate is a voltage-gated sodium channel (Na V ) blocker that also has gamma-aminobutyric acid (GABA)-A channel positive allosteric modulator (PAM) activity. On November 21, 2018, SK Life Science (Sponsor) submitted an NDA to FDA for XCOPRI (cenobamate) 12.5, 25, 50, 100, 150, and 200 mg oral tablets. On November 22, 2019, DEA received notification from HHS that FDA, on November 21, 2019, approved the NDA for XCOPRI (cenobamate) under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), for the treatment of partial-onset seizures in adult patients.

Pursuant to 21 U.S.C. 811(a)(1), proceedings to add a drug or substance to those controlled under the CSA may be initiated by request of the Secretary of HHS. 2 On December 10, 2019, DEA received from HHS a scientific and medical evaluation document (dated December 3, 2019) prepared by FDA, titled “Basis for the Recommendation to Control Cenobamate and Its Salts in Schedule V of the Controlled Substances Act.” Pursuant to 21 U.S.C. 811(b) and (c), this document contained an eight-factor analysis of the abuse potential of cenobamate, along with HHS' recommendation to control cenobamate under schedule V of the CSA.

On January 15, 2020, DEA received from HHS a supplemental letter (dated January 15, 2020) clarifying factors 6 and 7 listed in 21 U.S.C. 811(c), as well as the third finding under 21 U.S.C. 812(b)(5), to control cenobamate in schedule V. This letter did not change HHS' overall recommendation to place cenobamate in schedule V.

In response, DEA reviewed the scientific and medical evaluation and scheduling recommendation provided by HHS, along with all other relevant data, and completed its own eight-factor review document pursuant to 21 U.S.C. 811(c). DEA concluded that cenobamate met the 21 U.S.C. 812(b)(5) criteria for placement in schedule V of the CSA.

Pursuant to subsection 811(j), and based on HHS recommendation, NDA approval by HHS/FDA, and DEA's determination, DEA is issuing this interim final rule to schedule cenobamate as a schedule V controlled substance under the CSA.

Included below is a brief summary of each factor as analyzed by HHS and DEA, and as considered by DEA in its scheduling action. Please note that both DEA and HHS analyses are available in their entirety under “Supporting Documents” in the public docket for this interim final rule at http://www.regulations.gov, under Docket Number “DEA-581.” Full analysis of, and citations to, the information referenced in the summary may also be found in the supporting and related material.

1. Its Actual or Relative Potential for Abuse: Cenobamate is a new molecular entity and is not currently available or marketed in any country. Evidence regarding its diversion, illicit manufacturing, or deliberate ingestions is currently lacking. However, as reported by HHS, preclinical studies show that cenobamate shares similar mechanisms of action as substances in schedules IV or V. Cenobamate, like the schedule V substance lacosamide, is a voltage-gated sodium channel (Na v ) blocker. In addition, cenobamate, like the schedule IV substances alprazolam, chlordiazepoxide, and midazolam, has gamma-aminobutyric acid (GABA)-A channel positive allosteric modulator (PAM) activity and increases the effects of the inhibitory neurotransmitter, GABA. Data obtained from general behavioral studies demonstrate that cenobamate produces abuse-related CNS activity. In a preclinical drug discrimination study in rats, cenobamate mimicked the discriminative stimulus effects of the schedule IV substance chlordiazepoxide. However, in a separate drug discrimination study, cenobamate only partially mimicked the discriminative stimulus effects of the schedule IV substance midazolam. In addition, cenobamate, like midazolam, produced reinforcing effects in a rat self-administration assay by significantly increasing the number of infusions compared to saline infusions. In human abuse potential (HAP) studies, cenobamate produced drug-liking visual analog scale scores that were significantly higher compared to placebo but significantly lower than the schedule IV substance alprazolam. Thus, these studies demonstrate that cenobamate produced behavioral effects in rats comparable to that of schedule IV substances ( i.e., similar to chlordiazepoxide but less than midazolam); whereas in humans, cenobamate produced drug-liking effects that were significantly less than that of the schedule IV substance alprazolam. Thus, cenobamate likely has abuse potential less than that of schedule IV substances but similar to that of schedule V substances of the CSA. Based on the totality of the available scientific data, HHS concluded that cenobamate has an abuse potential similar to that of substances in schedule V of the CSA.

2. Scientific Evidence of Its Pharmacological Effects, if Known: Cenobamate shares similar mechanisms of action to substances in schedule IV or V and has anti-epileptic activity in humans. Cenobamate, like the schedule V substance lacosamide, is a voltage-gated sodium channel blocker. In addition, cenobamate, like the schedule IV benzodiazepines chlordiazepoxide, midazolam, and alprazolam, is a GABA-A channel positive allosteric modulator. Cenobamate and other GABAergic substances interact directly with the GABA-A receptor which is a ligand-gated chloride ion channel consisting of five subunits and a central chloride channel to enhance the opening of the ligand-gated chloride channel and the influx of chloride. Cenobamate's ability to bind to GABA-A receptors and sodium channel sites is consistent with the action of anti-epileptic or sedative drugs, such as chlordiazepoxide, midazolam, alprazolam, and lacosamide (schedule IV or V substances).

As described in HHS' review document, studies evaluating cenobamate's effect in these general behavioral studies showed that cenobamate mimicked or partially mimicked substances such as chlordiazepoxide, alprazolam, or midazolam (schedule IV substances) in producing behaviors that are associated with abuse. In an in vivo drug discrimination study in rats, cenobamate produced chlordiazepoxide-like (schedule IV) discriminative stimulus effects. In a separate drug discrimination study, cenobamate produced discriminative stimulus effects that partially mimicked the effects of the schedule IV substance midazolam. In self-administration studies, cenobamate was self-administered by rodents, but the self-administration ( i.e., number of infusions) of cenobamate was lower than that of midazolam, a schedule IV substance. In HAP studies, cenobamate produced drug-liking scores higher than placebo but less than that of the schedule IV substance alprazolam. Based on these studies, HHS concluded that cenobamate has mechanisms of actions that are similar to that of substances in schedule IV or V but the abuse potential of cenobamate is less than that of alprazolam, a schedule IV substance.

3. The State of Current Scientific Knowledge Regarding the Drug or Other Substance: Cenobamate is a new molecular entity. It is chemically known as [(1R)-1-(2-chlorophenyl)-2-(tetrazol-2-yl)ethyl] carbamate. Other chemical names for cenobamate include: 2H-tetrazole-2-ethanol, alpha-(2-chlorophenyl)-, carbamate (ester), (alphaR)-; and carbamic acid (R)-(+)-1-(2-chlorophenyl)-2-(2H-tetrazol-2-yl)ethyl ester. It has a molecular formula of C 10 H 10 ClN 5 O 2 and a molecular weight of 267.67 g/mol. Cenobamate is a white to off-white crystalline solid that has a melting point between 96.8-98.3 °C. It is partially soluble in water at a pH between 2 and 12. Pharmacokinetic data indicate that cenobamate is rapidly absorbed, has good bioavailability, and has a long half-life. Additional studies in humans show that cenobamate is not extensively metabolized and does not produce any major circulating metabolites. On November 21, 2019, FDA approved an NDA for XCOPRI (cenobamate) for the treatment of partial-onset seizures in adult patients. Thus, cenobamate has an accepted medical use in the United States.

4. Its History and Current Pattern of Abuse: There is no information on the history and current pattern of abuse for cenobamate, since it has not been marketed, legally or illegally, in any country.

On December 19, 2019, DEA conducted a search on the National Forensic Laboratory Information System (NFLIS)  3 and the STARLiMS  4 databases for cenobamate's encounters. Consistent with the fact that cenobamate is a new molecular entity, these databases had no records of encounters by law enforcement.

The pharmacological activity of cenobamate, like schedule IV or V GABAergic or anti-epileptic substances, at sodium channels and GABA-A receptors suggests that cenobamate's pattern of abuse would be less than that of schedule IV substances but similar to that of schedule V anti-epileptic drugs.

5. The Scope, Duration, and Significance of Abuse: Cenobamate is not marketed, legally or illegally, in any country. However, HHS stated that based on the preclinical and clinical study data of cenobamate, the scope, duration, and significance of cenobamate abuse would likely be similar to that of schedule V substances.

6. What, if any, Risk There is to the Public Health: According to HHS, the public health risk associated with cenobamate is due to its abuse potential. Thus, HHS concluded that the data from preclinical and clinical studies (see Factor 2, above) showed that cenobamate has abuse potential and physical or psychological dependence (Factor 7) similar to that of substances in schedule V.

7. Its Psychic or Physiological Dependence Liability: The psychic or physiological dependence liability of drugs can be demonstrated by abuse-related animal and human studies (see Factor 2, above). In animal studies, there were no significant alterations in the withdrawal phase of the study in the measured parameters at either of the tested doses. However, in human studies, cenobamate led to a mild withdrawal syndrome characterized by insomnia, decreased appetite, depressed mood, tremor, and amnesia. Based on these studies, HHS concluded that cenobamate has a psychic or physiological dependence liability similar to that of substances in schedule V.

8. Whether the Substance is an Immediate Precursor of a Substance Already Controlled under the CSA: Cenobamate is not an immediate precursor of any substance already controlled in the CSA.

Conclusion: After considering the scientific and medical evaluation conducted by HHS, HHS' recommendation, and its own eight-factor analysis, DEA has determined that these facts and all relevant data constitute substantial evidence of a potential for abuse of cenobamate. As such, DEA hereby schedules cenobamate as a controlled substance under the CSA.

The CSA lists the findings required to place a drug or other substance in any particular schedule (I, II, III, IV, or V). 21 U.S.C. 812(b). After consideration of the analysis and recommendation of the Assistant Secretary for Health of HHS and review of all available data, the Acting Administrator of DEA, pursuant to 21 U.S.C. 812(b)(5), finds that:

(1) Cenobamate has a low potential for abuse relative to the drugs or other substances in schedule IV.

Cenobamate, similar to the schedule IV substance lacosamide, is a voltage-gated sodium channel blocker that also has GABA-A channel PAM activity similar to schedule IV benzodiazepines. In drug discrimination studies, cenobamate partially generalized to the discriminative stimulus effects of midazolam (schedule IV) but fully generalized to the discriminative stimulus effects of chlordiazepoxide (schedule IV) in rats. In self-administration studies, cenobamate was self-administered by rodents, but the self-administration ( i.e., number of infusions) of cenobamate was lower than that of midazolam. In the HAP studies, cenobamate produced drug-liking scores higher than placebo but less than that of alprazolam, a schedule IV substance. Based on all of these studies, HHS concluded that cenobamate has an abuse potential similar to that of substances in schedule V of the CSA. Thus, DEA finds that the potential for abuse of cenobamate is less than that of schedule IV benzodiazepines but similar to that of substances in schedule V of the CSA.

(2) Cenobamate has a currently accepted medical use in the United States.

FDA recently approved an NDA for cenobamate as a treatment for partial-onset seizures in adult patients. Thus, cenobamate has a currently accepted medical use in treatment in the United States.

(3) Abuse of Cenobamate may lead to limited physical dependence or psychological dependence relative to the drugs or other substances in schedule IV.

HHS reported in Factor 7 that cenobamate may lead to mild withdrawal syndromes characterized by insomnia, decreased appetite, and amnesia in humans. Thus, based on clinical study and preclinical data, HHS concluded in Factor 6 that cenobamate has a physical or psychological dependence liability similar to that of substances controlled in schedule V. In a separate letter, dated January 15, 2020, HHS further stated that based on the totality of available scientific data, cenobamate may lead to physical or psychological dependence that is low relative to substances in schedule IV of the CSA and similar to that of substances in schedule V. Based on these data, DEA finds that the abuse of cenobamate may lead to limited physical or psychological dependence relative to the drugs or other substances in schedule IV.

Based on these findings, the Acting Administrator of DEA concludes that cenobamate warrants control in schedule V of the CSA. 21 U.S.C. 812(b)(5).

Cenobamate is subject to the CSA's schedule V regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, dispensing, importing, exporting, research, and conduct of instructional activities and chemical analysis with, and possession involving schedule V substances, including the following:

1. Registration. Any person who handles (manufactures, distributes, reverse distributes, dispenses, imports, exports, engages in research, or conducts instructional activities or chemical analysis with, or possesses) cenobamate, or who desires to handle cenobamate, must be registered with DEA to conduct such activities pursuant to 21 U.S.C. 822, 823, 957, and 958 and in accordance with 21 CFR parts 1301 and 1312. Any person who currently handles or intends to handle cenobamate, and is not registered with DEA, must submit an application for registration and may not continue to handle cenobamate, unless DEA has approved that application for registration, pursuant to 21 U.S.C. 822, 823, 957, and 958, and in accordance with 21 CFR parts 1301 and 1312.

2. Disposal of stocks. Any person who does not desire or is not able to maintain a schedule V registration must surrender all quantities of currently held cenobamate or may transfer all quantities of cenobamate to a person registered with DEA in accordance with 21 CFR part 1317, in addition to all other applicable federal, state, local, and tribal laws.

3. Security. Cenobamate is subject to schedule III-V security requirements and must be handled and stored in accordance with 21 CFR 1301.71-1301.93.

4. Labeling and Packaging. All labels, labeling, and packaging for commercial containers of cenobamate must comply with 21 U.S.C. 825 and 958(e), and be in accordance with 21 CFR part 1302.

5. Inventory. Every DEA registrant who possesses any quantity of cenobamate must take an inventory of cenobamate on hand, pursuant to 21 U.S.C. 827 and 958, and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

Any person who becomes registered with DEA to handle cenobamate must take an initial inventory of all stocks of controlled substances (including cenobamate) on hand on the date the registrant first engages in the handling of controlled substances, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

After the initial inventory, every DEA registrant must take a new inventory of all stocks of controlled substances (including cenobamate) on hand every two years, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

6. Records and Reports. DEA registrants must maintain records and submit reports for cenobamate, pursuant to 21 U.S.C. 827 and 958(e), and in accordance with 21 CFR parts 1304, 1312, and 1317.

7. Prescriptions. All prescriptions for cenobamate, or products containing cenobamate, must comply with 21 U.S.C. 829, and be issued in accordance with 21 CFR parts 1306 and 1311, subpart C.

8. Manufacturing and Distributing. In addition to the general requirements of the CSA and DEA regulations that are applicable to manufacturers and distributors of schedule V controlled substances, such registrants should be advised that (consistent with the foregoing considerations) any manufacturing or distribution of cenobamate may only be for the legitimate purposes consistent with the drug's labeling, or for research activities authorized by the FDCA and the CSA.

9. Importation and Exportation. All importation and exportation of cenobamate must be in compliance with 21 U.S.C. 952, 953, 957, and 958, and in accordance with 21 CFR part 1312.

10. Liability. Any activity involving cenobamate not authorized by, or in violation of, the CSA or its implementing regulations, is unlawful, and may subject the person to administrative, civil, and/or criminal sanctions.

Section 553 of the Administrative Procedure Act (APA) (5 U.S.C. 553) generally requires notice and comment for rulemakings. However, 21 U.S.C. 811 provides that in cases where a certain new drug is (1) approved by HHS and (2) HHS recommends control in CSA schedule II-V, DEA shall issue an interim final rule scheduling the drug within 90 days. Additionally, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring DEA to demonstrate good cause.

In accordance with 21 U.S.C. 811(a) and (j), this scheduling action is subject to formal rulemaking procedures performed “on the record after opportunity for a hearing,” which are conducted pursuant to the provisions of 5 U.S.C. 556 and 557. The CSA sets forth the procedures and criteria for scheduling a drug or other substance. Such actions are exempt from review by the Office of Management and Budget (OMB) pursuant to section 3(d)(1) of Executive Order 12866 and the principles reaffirmed in Executive Order 13563.

This interim final rule is not an Executive Order 13771 regulatory action pursuant to Executive Order 12866 and OMB guidance. 5

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate drafting errors and ambiguity, minimize litigation, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.

This rulemaking does not have federalism implications warranting the application of Executive Order 13132. The rule does 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 rule does not have tribal implications warranting the application of Executive Order 13175. It does 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.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) applies to rules that are subject to notice and comment under section 553(b) of the APA. Under 21 U.S.C. 811(j), DEA is not required to publish a general notice of proposed rulemaking. Consequently, the RFA does not apply to this interim final rule.

In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1501 et seq., DEA has determined that this action would not result in any Federal mandate that may result “in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year.” Therefore, neither a Small Government Agency Plan nor any other action is required under UMRA of 1995.

This action does not impose a new collection of information requirement under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action would not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. 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.

This rule is not a major rule as defined by the Congressional Review Act (CRA), 5 U.S.C. 804. This rule will not result in: An annual effect on the economy of $100,000,000 or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based companies to compete with foreign based companies in domestic and export markets. However, pursuant to the CRA, DEA has submitted a copy of this interim final rule to both Houses of Congress and to the Comptroller General.

For the reasons set out above, DEA amends 21 CFR part 1308 as follows:

Electronic Availability

This document and additional information concerning OFAC are available on OFAC's website ( www.treasury.gov/ofac ).

On January 23, 1995, the President issued Executive Order 12947, “Prohibiting Transactions With Terrorists Who Threaten To Disrupt the Middle East Peace Process” (E.O. 12947), declaring a national emergency with respect to “grave acts of violence committed by foreign terrorists that disrupt the Middle East peace process,” and invoking the authority, inter alia, of the International Emergency Economic Powers Act (50 U.S.C. 1701-1706). In E.O. 12947, the President blocked all property and interests in property of (1) persons listed in the Annex to E.O. 12947; (2) foreign persons designated by the Secretary of State, in coordination with the Secretary of the Treasury and the Attorney General, because they are found (a) to have committed, or to pose a significant risk of committing, acts of violence that have the purpose or effect of disrupting the Middle East peace process, or (b) to assist in, sponsor, or provide financial, material, or technological support for, or services in support of, such acts of violence; and (3) persons determined by the Secretary of the Treasury, in coordination with the Secretary of State and the Attorney General, to be owned or controlled by, or to act for or on behalf of, any of the foregoing persons.

On February 2, 1996, OFAC issued the Terrorism Sanctions Regulations, 31 CFR part 595 (the “Regulations”), as a final rule to implement E.O. 12947. The Regulations were amended on several occasions.

On August 20, 1998, the President issued Executive Order 13099, “Prohibiting Transactions With Terrorists Who Threaten To Disrupt the Middle East Peace Process” (E.O. 13099), amending the Annex to E.O. 12947 in order to take additional steps with respect to the national emergency declared in E.O. 12947. On February 16, 2005, the President issued Executive Order 13372, “Clarification of Certain Executive Orders Blocking Property and Prohibiting Certain Transactions,” further amending E.O. 12947 in order to clarify steps taken in E.O. 12947 as amended by E.O. 13099.

On September 9, 2019, the President issued Executive Order 13886, “Modernizing Sanctions To Combat Terrorism” (E.O. 13886). In E.O. 13886, the President found that it was necessary to consolidate and enhance sanctions to combat acts of terrorism and threats of terrorism by foreign terrorists. Accordingly, he terminated the national emergency declared in E.O. 12947, as amended, and revoked that order.

As a result, OFAC is removing the Regulations from the Code of Federal Regulations. Pursuant to section 202 of the National Emergencies Act (50 U.S.C. 1622), termination of the national emergency declared in E.O. 12947, as amended, shall not affect any action taken or proceeding pending and not finally concluded or determined as of 12:01 a.m. eastern daylight time on September 10, 2019 (the effective date of E.O. 13886), any action or proceeding based on any act committed prior to the effective date, or any rights or duties that matured or penalties that were incurred prior to the effective date.

Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date, as well as the provisions of Executive Order 13771, are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

The Paperwork Reduction Act does not apply because this rule does not impose information collection requirements that would require the approval of the Office of Management and Budget under 44 U.S.C. 3501 et seq.

The Coast Guard will enforce the special local regulations in 33 CFR 100.1101 for the California Half Ironman Triathlon in Oceanside, CA from 6 a.m. to 10 a.m. on April 4, 2020. This action is being taken to provide for the safety of life on navigable waterways during the triathlon event. Our regulation for marine events within the Eleventh Coast Guard District, Table 1 to § 100.1101, item 2, specifies the location of the regulated area for the California Half Ironman Triathlon which encompasses the waters of Oceanside Harbor, CA, including the entrance channel. Under the provisions of § 100.1101, persons and vessels are prohibited from anchoring, blocking, loitering, or impeding within this regulated area unless authorized by the Captain of the Port, or his designated representative. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

In addition to this document in the Federal Register , the Coast Guard will provide the maritime community with advance notification of this enforcement period via the Local Notice to Mariners, Broadcast Notice to Mariners, and local advertising by the event sponsor.

If the Captain of the Port Sector San Diego or his designated representative determines that the regulated area need not be enforced for the full duration stated on this document, he or she may use a Broadcast Notice to Mariners or other communications coordinated with the event sponsor to grant general permission to enter the regulated area.

The Coast Guard will enforce the special local regulations in 33 CFR 100.1101 Table 1, Item 3 of that section for the San Diego Crew Classic in Mission Bay, CA from 6 a.m. to 7 p.m. on April 4, 2020, and from 6 a.m. to 7 p.m. on April 5, 2020. This action is being taken to provide for the safety of life on navigable waterways during the 2-day rowing race event. Our regulation for marine events within the Eleventh Coast Guard District, § 100.1101, specifies the location of the regulated area for the San Diego Crew Classic which encompasses the waters of Mission Bay to include South Pacific Passage, Fiesta Bay, and the waters around Vacation Isle. Under the provisions of § 100.1101, persons and vessels are prohibited from anchoring, blocking, loitering, or impeding within this regulated area unless authorized by the Captain of the Port, or his designated representative. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

In addition to this notice of enforcement in the Federal Register , the Coast Guard will provide the maritime community with advance notification of this enforcement period via the Local Notice to Mariners, Broadcast Notice to Mariners, and local advertising by the event sponsor.

If the Captain of the Port Sector San Diego or his designated representative determines that the regulated area need not be enforced for the full duration stated on this document, he or she may use a Broadcast Notice to Mariners or other communications coordinated with the event sponsor to grant general permission to enter the regulated area.

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

On September 27, 2018, the Massachusetts Department of Environmental Protection (DEP) submitted a formal revision to its State Implementation Plan (SIP). The SIP revision contains the Commonwealth's “Certification of Adequacy of the Massachusetts State Implementation Plan Regarding Clean Air Act Sections 110(a)(1) and (2) for the 2015 Ozone National Ambient Air Quality Standards.” When EPA promulgates a new or revised NAAQS, states must submit these certifications (or infrastructure SIPS) to ensure that their SIP provides for implementation, maintenance, and enforcement of the respective NAAQS.

EPA previously approved Massachusetts' infrastructure SIP for the 2008 ozone standard (as part of a notice approving five total NAAQS infrastructure SIPS) on December 21, 2016 (81 FR 93627). The September 27, 2018 submission contains virtually the same information as the previous SIP approved version, with a few minor updates and date changes. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Whenever EPA promulgates a new or revised NAAQS, CAA section 110(a)(1) requires states to make SIP submissions to provide for the implementation, maintenance, and enforcement of the NAAQS. This particular type of SIP submission is commonly referred to as an “infrastructure SIP.” These submissions must meet the various requirements of CAA section 110(a)(2), as applicable. Due to ambiguity in some of the language of CAA section 110(a)(2), EPA believes that it is appropriate to interpret these provisions in the specific context of acting on infrastructure SIP submissions. EPA has previously provided comprehensive guidance on the application of these provisions through a guidance document for infrastructure SIP submissions and through regional actions on infrastructure submissions. 1 Unless otherwise noted below, we are following that existing approach in acting on this submission. In addition, in the context of acting on such infrastructure submissions, EPA evaluates the submitting state's SIP for compliance with statutory and regulatory requirements, not for the state's implementation of its SIP. 2 The EPA has other authority to address any issues concerning a state's implementation of the rules, regulations, consent orders, etc. that comprise its SIP.

EPA highlighted the statutory requirement to submit infrastructure SIPs within 3 years of promulgation of a new NAAQS in an October 2, 2007, guidance document entitled “Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8-hour Ozone and PM 2.5 National Ambient Air Quality Standards” (2007 guidance). EPA has issued additional guidance documents and memoranda, including a September 13, 2013, guidance document entitled “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2)” (2013 guidance).

The following review evaluates the state's submissions regarding CAA section 110(a)(2) requirements and relevant EPA guidance.

This section of the Act requires SIPs to include enforceable emission limits and other control measures, means or techniques, schedules for compliance, and other related matters. However, EPA has long interpreted emission limits and control measures for attaining the standards as being due when nonattainment planning requirements are due. 3 In the context of an infrastructure SIP, EPA is not evaluating the existing SIP provisions for this purpose. Instead, EPA is only evaluating whether the state's SIP has basic structural provisions for the implementation of the NAAQS. Massachusetts General Law (M.G.L.) c. 21A, section 8, Executive Office of Energy and Environmental Affairs Organization of Departments; powers, duties and functions, creates and sets forth the powers and duties of the Department of Environmental Protection (MassDEP) within the Executive Office of Energy and Environmental Affairs. In addition, M.G.L. c. 111, sections 142A through 142N, which, collectively, are referred to as the Massachusetts Pollution Control Laws, provide MassDEP with broad authority to prevent pollution or contamination of the atmosphere and to prescribe and establish appropriate regulations. Furthermore, M.G.L. c. 21A, section 18, Permit applications and compliance assurance fees; timeline action schedules; regulations, authorizes MassDEP to establish fees applicable to the regulatory programs it administers.

MassDEP has adopted numerous regulations within the Code of Massachusetts Regulations (CMR) in furtherance of the objectives set out by these statutes, including 310 CMR 4.00, Timely Action & Fee Schedule Regulations, 310 CMR 6.00, Ambient Air Quality Standards for the Commonwealth of Massachusetts, and 310 CMR 7.00, Air Pollution Control Regulations. For example, many SIP-approved State air quality regulations within 310 CMR 7.00 provide enforceable emission limitations and other control measures, means or techniques, schedules for compliance, and other related matters that satisfy the requirements of the CAA section 110(a)(2)(A) for the 2015 ozone NAAQS, including but not limited to 7.18, Volatile and Halogenated Organic Compounds, 7.19, Reasonably Available Control Technology (RACT) for Sources of NOx, and 7.29, Emission Standards for Power Plants. EPA finds that MassDEP meets the infrastructure SIP requirements of section 110(a)(2)(A) with respect to the 2015 ozone NAAQS.

This section requires SIPs to provide for establishment and operation of appropriate devices, methods, systems, and procedures necessary to monitor, compile, and analyze ambient air quality data, and make these data available to EPA upon request. Each year, states submit annual air monitoring network plans to EPA for review and approval. EPA's review of these annual monitoring plans includes our evaluation of whether the State: (i) Monitors air quality at appropriate locations throughout the State using EPA-approved Federal Reference Methods or Federal Equivalent Method monitors; (ii) submits data to EPA's Air Quality System (AQS) in a timely manner; and (iii) provides EPA Regional Offices with prior notification of any planned changes to monitoring sites or the network plan.” Under MGL c. 111, sections 142B to 142D, MassDEP operates an air monitoring network. EPA approved the state's most recent Annual Air Monitoring Network Plan on November 25, 2019. In addition to having an adequate air monitoring network, MassDEP populates AQS with air quality monitoring data in a timely manner and provides EPA with prior notification when considering a change to its monitoring network or plan. EPA finds that MassDEP has met the infrastructure SIP requirements of section 110(a)(2)(B) with respect to the 2015 ozone NAAQS.

States are required to include a program providing for enforcement of all SIP measures and the regulation of construction of new or modified stationary sources to meet NSR requirements under PSD and nonattainment new source review (NNSR) programs. Part C of the CAA (sections 160-169B) addresses PSD, while part D of the CAA (sections 171-193) addresses NNSR requirements. The evaluation of each state's submission addressing the infrastructure SIP requirements of section 110(a)(2)(C) covers the following: (i) Enforcement of SIP measures; (ii) PSD program for major sources and major modifications; and, (iii) permitting program for minor sources and minor modifications.

MassDEP staffs and implements an enforcement program pursuant to authorities provided within the following laws: M.G.L. c. 111, section 2C, Pollution violations; orders of department of environmental protection, which authorizes MassDEP to issue orders enforcing pollution control regulations generally; M.G.L. c. 111, sections 142A through 142O, Massachusetts Air Pollution Control Laws, which, among other things, more specifically authorize MassDEP to adopt regulations to control air pollution, enforce such regulations, and issue penalties for non-compliance; and, M.G.L. c. 21A, section 16, Civil Administrative Penalties, which provides additional authorizations for MassDEP to assess penalties for failure to comply with the Commonwealth's air pollution control laws and regulations. Moreover, SIP-approved regulations, such as 310 CMR 7.02(12)(e) and (f), provide a program for the enforcement of SIP measures. Accordingly, EPA finds that Massachusetts has met this requirement of section 110(a)(2)(C) with respect to the 2015 ozone NAAQS.

Sub-element 2 of section 110(a)(2)(C) requires that states provide for the regulation of modification and construction of any stationary source as necessary to assure that the NAAQS are achieved, including a program to meet PSD and NNSR requirements. PSD applies to new major sources or modifications made to major sources for pollutants where the area in which the source is located is in attainment of, or unclassifiable regarding, the relevant NAAQS, and NNSR requires similar actions in nonattainment areas.

As MassDEP recognizes in the submittal, Massachusetts does not have an approved state PSD program and has long been subject to a Federal Implementation Plan (FIP). The Commonwealth implements and enforces the federal PSD program through a delegation agreement. See 76 FR 31241 (May 31, 2011). Accordingly, EPA is issuing a finding of failure to submit with respect to the PSD-related requirements of this sub-element for the 2015 ozone NAAQS. This finding will not trigger any additional FIP obligation by the EPA, because the deficiency is addressed by the FIP already in place. Nor is the Commonwealth subject to mandatory sanctions solely as a result of this finding because the SIP submittal deficiencies are neither with respect to a sub-element that is required under part D nor in response to a SIP call under section 110(k)(5) of the Act.

To address the pre-construction regulation of the modification and construction of minor stationary sources and minor modifications of major stationary sources, an infrastructure SIP submission should identify the existing EPA-approved SIP provisions and/or include new provisions that govern the minor source pre-construction program that regulates emissions of the relevant NAAQS pollutants. EPA's most recent approval of the Commonwealth's minor NSR program occurred on April 5, 1995. 60 FR 17226. Since this date, Massachusetts and EPA have relied on the existing minor NSR program to ensure that new and modified sources not captured by the major NSR permitting programs do not interfere with attainment and maintenance of the 2015 ozone NAAQS.

In summary, EPA finds that Massachusetts meets the enforcement-related aspects of Section 110(a)(2)(C) discussed above within sub-element 1, and the preconstruction permitting requirements for minor sources discussed in sub-element 3, for the 2015 ozone NAAQS. As to preconstruction PSD permitting of major sources and major modifications, EPA finds that the Commonwealth has failed to make the required submission.

This section contains a comprehensive set of air quality management elements pertaining to the transport of air pollution with which States must comply. It covers the following five topics, categorized as sub-elements: Sub-element 1, Significant contribution to nonattainment, and interference with maintenance of a NAAQS; Sub-element 2, PSD; Sub-element 3, Visibility protection; Sub-element 4, Interstate pollution abatement; and Sub-element 5, International pollution abatement. Sub-elements 1 through 3 above are found under section 110(a)(2)(D)(i) of the Act, and these items are further categorized into the four prongs discussed below, two of which are found within sub-element 1. Sub-elements 4 and 5 are found under section 110(a)(2)(D)(ii) of the Act and include provisions insuring compliance with sections 115 and 126 of the Act relating to interstate and international pollution abatement.

Section 110(a)(2)(D)(i)(I) of the CAA requires a SIP to prohibit any emissions activity in the State that will contribute significantly to nonattainment or interfere with maintenance of the NAAQS in any downwind State. EPA commonly refers to these requirements as prong 1 (significant contribution to nonattainment) and prong 2 (interference with maintenance), or jointly as the “Good Neighbor” or “transport” provisions of the CAA. EPA has previously approved Massachusetts' Good Neighbor SIP for the 2015 ozone NAAQS. 4 85 FR 5772 (January 31, 2020). Therefore, Massachusetts has already met this requirement for the 2015 ozone NAAQS.

To prevent significant deterioration of air quality, this sub-element requires SIPs to include provisions that prohibit any source or other type of emissions activity in one State from interfering with measures that are required in any other State's SIP under Part C of the CAA. One way for a State to meet this requirement, specifically with respect to in-State sources and pollutants that are subject to PSD permitting, is through a comprehensive PSD permitting program that applies to all regulated NSR pollutants and that satisfies the requirements of EPA's PSD implementation rules. For in-State sources not subject to PSD, this requirement can be satisfied through a fully-approved nonattainment new source review (NNSR) program with respect to any previous NAAQS.

As discussed under element C above and as noted in the submittal, Massachusetts has long been subject to a PSD FIP and has implemented and enforced the federal PSD program through a delegation agreement with EPA. Accordingly, EPA makes a finding of failure to submit with respect to the PSD requirement of this sub-element for the 2015 ozone NAAQS. This finding does not trigger any sanctions or additional FIP obligation for the same reasons discussed under element C above.

Under prong 3 of 110(a)(2)(D)(i)(II), EPA also reviews the potential for in-State sources not subject to PSD to interfere with PSD in an attainment or unclassifiable area of another State. EPA generally considers a fully approved NNSR program adequate for purposes of meeting this requirement of prong 3 with respect to in-state sources and pollutants not subject to PSD. See 2013 guidance. EPA last approved the Commonwealth's NNSR program on May 29, 2019. 84 FR 24719. Accordingly, we approve Massachusetts' submittal for the 2015 ozone NAAQS for the NNSR aspect of prong 3.

Regarding the applicable requirements for visibility protection of section 110(a)(2)(D)(i)(II), States are subject to visibility and regional haze program requirements under part C of the CAA (which includes sections 169A and 169B). The 2013 guidance explains that these requirements can be satisfied by an approved SIP addressing reasonably attributable visibility impairment, if required, or an approved SIP addressing regional haze. A fully approved regional haze SIP meeting the requirements of 40 CFR 51.308 will ensure that emissions from sources under an air agency's jurisdiction are not interfering with measures required to be included in other air agencies' plans to protect visibility. On September 19, 2013, EPA approved Massachusetts' Regional Haze SIP as meeting the requirements of 40 CFR 51.308. See 78 FR 57487. Accordingly, EPA finds that Massachusetts meets the visibility protection requirements of 110(a)(2)(D)(i)(II) for the 2015 ozone NAAQS.

This sub-element requires that each SIP contain provisions requiring compliance with requirements of section 126 relating to interstate pollution abatement. Section 126(a) requires new or modified sources to notify neighboring States of potential impacts from the source. The statute does not specify the method by which the source should provide the notification. States with SIP-approved PSD programs must have a provision requiring such notification by new or modified sources.

As mentioned elsewhere in this document, Massachusetts does not have a SIP-approved PSD program and is currently subject to a PSD FIP, which includes a requirement to notify any State whose lands may be affected by emissions from the Massachusetts PSD source. See 40 CFR 52.21(q), 124.10(c)(1)(vii); see also id. section 52.1165. While we find that the Commonwealth failed to make a submittal for the 2015 ozone NAAQS for section 110(a)(2)(D)(ii) with respect to the PSD-related notice of interstate pollution, such finding does not trigger any additional FIP obligation by the EPA under section 110(c)(1), because the federal PSD rules address the notification issue. Nor does the finding trigger any sanctions. Finally, Massachusetts has no obligations under any other provision of section 126.

This sub-element also requires each SIP to contain provisions requiring compliance with the applicable requirements of section 115 relating to international pollution abatement. Section 115 authorizes the Administrator to require a state to revise its SIP to alleviate international transport into another country where the Administrator has made a finding with respect to emissions of the particular NAAQS pollutant and its precursors, if applicable. There are no final findings under section 115 against Massachusetts for the 2015 ozone NAAQS. Therefore, EPA finds that Massachusetts meets the applicable infrastructure SIP requirements of section 110(a)(2)(D)(ii) related to section 115 of the CAA (international pollution abatement) for the 2015 ozone NAAQS.

Section 110(a)(2)(E)(i) requires each SIP to provide assurances that the State will have adequate personnel, funding, and legal authority under state law to carry out its SIP, and related issues. Additionally, Section 110(a)(2)(E)(ii) requires each state to comply with the requirements with respect to state boards under section 128. Finally, section 110(a)(2)(E)(iii) requires that, where a state relies upon local or regional governments or agencies for the implementation of its SIP provisions, the state retain responsibility for ensuring adequate implementation of SIP obligations with respect to relevant NAAQS. This last sub-element, however, is not applicable to this action, because Massachusetts does not rely upon local or regional governments or agencies for the implementation of its SIP provisions.

Massachusetts, through its infrastructure SIP submittals, has documented that its air agency has the requisite authority and resources to carry out its SIP obligations. Massachusetts General Laws c. 111, sections 142A to 142N, provide MassDEP with the authority to carry out the state's implementation plan. The Massachusetts SIP, as originally submitted in 1971 and subsequently amended, provides descriptions of the staffing and funding necessary to carry out the plan. In the submittals, MassDEP provides assurances that it has adequate personnel and funding to carry out the SIP during the five years following infrastructure SIP submission and in future years. Additionally, the Commonwealth receives CAA section 103 and 105 grant funds through Performance Partnership agreements and provides state matching funds, which together enable Massachusetts to carry out its SIP requirements. EPA finds that Massachusetts meets the infrastructure SIP requirements of section 110(a)(2)(E)(i) for the 2015 ozone NAAQS.

Section 110(a)(2)(E) also requires each SIP to contain provisions that comply with the state board requirements of section 128(a) of the CAA. That provision contains two explicit requirements: (1) That any board or body which approves permits or enforcement orders under this chapter shall have at least a majority of members who represent the public interest and do not derive any significant portion of their income from persons subject to permits and enforcement orders under this chapter, and (2) that any potential conflicts of interest by members of such board or body or the head of an executive agency with similar powers be adequately disclosed.

Massachusetts does not have a state board that approves permits or enforcement orders under the CAA. Instead, permits and enforcement orders are approved by the Commissioner of MassDEP. Thus, Massachusetts is not subject to the requirements of paragraph (a)(1) of section 128. As to the conflict of interest provisions of section 128(a)(2), Massachusetts has cited to M.G.L. c. 268A of the Commonwealth's Conflict of Interest law in its infrastructure SIP submittal for the 2015 ozone NAAQS. EPA previously approved M.G.L. c. 268A, sections 6 and 6A, into the SIP in satisfaction of this infrastructure SIP requirement. 81 FR 93627 (December 21, 2016). Pursuant to these state provisions, state employees in Massachusetts, including the head of an executive agency with authority to approve air permits or enforcement orders, are required to disclose potential conflicts of interest to, among others, the state ethics commission. EPA finds that the Massachusetts SIP satisfies the requirements of section 110(a)(2)(E)(ii) of the Clean Air Act for the 2015 ozone NAAQS.

States must establish a system to monitor emissions from stationary sources and submit periodic emissions reports. Each plan shall also require the installation, maintenance, and replacement of equipment, and the implementation of other necessary steps, by owners or operators of stationary sources to monitor emissions from such sources. The state plan shall also require periodic reports on the nature and amounts of emissions and emissions-related data from such sources, and correlation of such reports by each state agency with any emission limitations or standards established pursuant to this chapter. Lastly, the reports shall be available at reasonable times for public inspection.

Pursuant to M.G.L. c. 111, sections 142A to 142D, MassDEP has the necessary authority to maintain and operate air monitoring stations and coordinates with EPA in determining the types and locations of ambient air monitors across the state. The Commonwealth uses this authority to require the installation, maintenance, and replacement of emissions monitoring equipment by, and to collect information on air emissions from, sources in the state. Additionally, Massachusetts statutes and regulations provide that emissions data shall be available for public inspection. See, e.g., M.G.L. c. 21I, section 20(K), M.G.L. c. 111, section 142B; 310 CMR section 3.33(5), 7.12(4)(b); 7.14(1). The following SIP-approved regulations enable the accomplishment of the Commonwealth's emissions recording, reporting, and correlating objectives:

EPA recognizes that Massachusetts routinely collects information on air emissions from its industrial sources and makes this information available to the public. EPA therefore finds that the Commonwealth meets the infrastructure SIP requirements of section 110(a)(2)(F) with respect to the 2015 ozone NAAQS.

This section requires that a plan provide for authority analogous to that provided in section 303 of the CAA, and adequate contingency plans to implement such authority. Section 303 of the CAA provides authority to the EPA Administrator to seek a court order to restrain any source from causing or contributing to emissions that present an “imminent and substantial endangerment to public health or welfare, or the environment.” Section 303 further authorizes the Administrator to issue “such orders as may be necessary to protect public health or welfare or the environment” in the event that “it is not practicable to assure prompt protection . . . by commencement of such civil action.”

We find that the Commonwealth's ISIP submittal demonstrates that a combination of state statutes and regulations provide for authority comparable to that in section 303. Massachusetts' submittal cites M.G.L. C. 111, section 2B, Air Pollution Emergencies, which authorizes the Commissioner of the MassDEP to “declare an air pollution emergency” if the Commissioner “determines that the condition or impending condition of the atmosphere in the Commonwealth . . . constitutes a present or reasonably imminent danger to health.” During such an air pollution emergency, the Commissioner is authorized pursuant to section 2B, to “take whatever action is necessary to maintain and protect the public health, including but not limited to . . . prohibiting, restricting and conditioning emissions of dangerous or potentially dangerous air contaminants from whatever source derived . . .” Additionally, sections 2B and 2C authorize the Commissioner to issue emergency orders.

Moreover, M.G.L. c. 21A, section 8 provides that, “[i]n regulating . . . any pollution prevention, control or abatement plan [or] strategy . . . through any . . . departmental action affecting or prohibiting the emission . . . of any hazardous substance to the environment . . . the department may consider the potential effects of such plans [and] strategies . . . on public health and safety and the environment . . . and said department shall act to minimize and prevent damage or threat of damage to the environment.”

These duties are implemented, in part, under MassDEP regulations at 310 CMR 8.00, Prevention and Abatement of Air Pollution Episodes and Air Pollution Incident Emergencies, the most recent revisions to which EPA approved into the SIP on March 4, 2019. 84 FR 7299. These regulations establish levels that would constitute significant harm or imminent and substantial endangerment to health for ambient concentrations of pollutants subject to a NAAQS, consistent with the significant harm levels and procedures for state emergency episode plans established by EPA in 40 CFR part 51.150 and 51.151. Finally, M.G.L. c. 111, section 2B authorizes the state to seek injunctive relief in the superior court for violation of an emergency order issued by the MassDEP Commissioner. While no single Massachusetts statute or regulation mirrors the authorities of CAA section 303, we find that the combination of state statutes and regulations discussed herein provide for comparable authority to immediately bring suit to restrain, and issue orders against, any person causing or contributing to air pollution that presents an imminent and substantial endangerment to public health or welfare, or the environment.

Section 110(a)(2)(G) also requires that, for any NAAQS, States have an approved contingency plan for any Air Quality Control Region (AQCR) within the state that is classified as Priority I, IA, or II. See 40 CFR 51.152(c). Two AQCRs in Massachusetts are classified as Priority I for ozone, with the remaining AQCRs classified as Priority III for ozone. Id. 52.1121. As noted above, EPA approved 310 CMR 8.00 into the SIP to satisfy the contingency plan requirements of CAA section 110(a)(2)(G) for a previous infrastructure SIP submittal for the 2008 ozone NAAQS. 84 FR 7299. This state regulation satisfies the applicable requirements for contingency plans at 40 CFR part 51, subpart H (40 CFR 51.150 through 51.153) ( Prevention of Air Pollution Emergency Episodes ). For the above reasons, EPA finds that Massachusetts meets the infrastructure SIP requirements of CAA section 110(a)(2)(G) for the 2015 ozone NAAQS.

This section requires that a state's SIP provide for revision as may be necessary to take account of changes in the NAAQS or availability of improved methods for attaining the NAAQS and whenever the EPA finds that the SIP is substantially inadequate. Massachusetts General Laws c. 111, section 142D provides in relevant part that, “ From time to time the department shall review the ambient air quality standards and plans for implementation, maintenance and attainment of such standards adopted pursuant to this section and, after public hearings, shall amend such standards and implementation plan so as to minimize the economic cost of such standards and plan for implementation, provided, however, that such standards shall not be less than the minimum federal standards.” This authorizing statute gives MassDEP the power to revise the Massachusetts SIP from time to time as may be necessary to take account of changes in the NAAQS or availability of improved methods for attaining the NAAQS and whenever the EPA finds that the SIP is substantially inadequate. Accordingly, EPA finds that Massachusetts meets the infrastructure SIP requirements of CAA section 110(a)(2)(H) for the 2015 ozone NAAQS.

The CAA requires that each plan or plan revision for an area designated as a nonattainment area meet the applicable requirements of part D of the CAA. Part D relates to nonattainment areas. EPA has determined that section 110(a)(2)(I) is not applicable to the infrastructure SIP process. Instead, EPA takes action on part D attainment plans through separate processes.

Section 110(a)(2)(J) of the CAA requires that each SIP “meet the applicable requirements of section 121 of this title (relating to consultation), section 127 of this title (relating to public notification), and part C of this subchapter (relating to PSD of air quality and visibility protection).” The evaluation of the submission from Massachusetts with respect to these requirements is described below.

Section 121 of the Act requires states to provide a process for consultation with local governments and Federal Land Managers (FLMs) in carrying out NAAQS implementation requirements.

Pursuant to EPA-approved Massachusetts regulations at 310 CMR 7.02(12)(g)(2), MassDEP notifies the public “by advertisement in a newspaper having wide circulation” in the area of the particular facility of the opportunity to comment on certain proposed permitting actions and sends “a copy of the notice of public comment to the applicant, the EPA, and officials and agencies having jurisdiction over the community in which the facility is located, including local air pollution control agencies, chief executives of said community, and any regional land use planning agency.” In addition, Massachusetts Executive Order 145, “Consultation with Cities & Towns on Administrative Mandates,” which EPA approved into the SIP on June 24, 2019, establishes a process for agencies of the Commonwealth to consult with local governments. 84 FR 29380. In its submittal, Massachusetts lists additional authorities and processes on which it relies to provide for consultation with local governments when carrying out requirements of the CAA. MassDEP notes that, with respect to the requirement to consult with FLMs, it relies in part on the FLM consultation requirement contained in the PSD FIP to meet this obligation. As previously mentioned, Massachusetts does not have an approved state PSD program, but rather is subject to a PSD FIP, which, as MassDEP notes, includes a provision requiring consultation with FLMs. See 40 CFR 52.21(p). Consequently, with respect to the 2015 ozone NAAQS, EPA finds that Massachusetts has met the consultation with local governments requirement of this portion of section 110(a)(2)(J) but issues a finding of failure to submit with respect to the FLM consultation requirement for PSD permitting. Because the federal PSD program, which Massachusetts implements and enforces, addresses this FLM consultation requirement, a finding of failure to submit does not result in sanctions or new FIP obligations.

Section 127 of the Act requires states to: Notify the public if NAAQS are exceeded in an area; advise the public of health hazards associated with exceedances; and enhance public awareness of measures that can be taken to prevent exceedances and of ways in which the public can participate in regulatory and other efforts to improve air quality.

Massachusetts regulations specify criteria for air pollution episodes and incidents and provide for notice to the public via news media and other means of communication. See 310 CMR 8.00. The Commonwealth also provides a daily air quality forecast to inform the public about concentrations of fine particles and, during the ozone season, provides similar information for ozone. Real time air quality data for NAAQS pollutants are also available on the MassDEP's website, as are information about health hazards associated with NAAQS pollutants and ways in which the public can participate in regulatory efforts related to air quality. The Commonwealth is also an active partner in EPA's AirNow and EnviroFlash air quality alert programs, which notify the public of air quality levels through EPA's website, alerts, and press releases. In light of the above, we find that Massachusetts meets the infrastructure SIP requirements of this requirement of section 110(a)(2)(J) with respect to the 2015 ozone NAAQS.

Pursuant to Section 110(a)(2)(J), States must also meet applicable requirements of Part C of the Act (relating to PSD). The Commonwealth's PSD program in the context of infrastructure SIPs has already been discussed in the paragraphs addressing sections 110(a)(2)(C), (D)(i)(II), and (D)(ii), and our actions for those sections are consistent with the proposed action for this portion of section 110(a)(2)(J). Specifically, we are making a finding of failure to submit with respect to the PSD sub-element of section 110(a)(2)(J) for the 2015 ozone NAAQS and note that such a finding does not result in any sanctions or new FIP obligations.

With regard to the applicable requirements for visibility protection, states are subject to visibility and regional haze program requirements under part C of the CAA (which includes sections 169A and 169B). In the event of the establishment of a new NAAQS, however, the visibility and regional haze program requirements under part C do not change. Thus, we find that there is no new visibility obligation “triggered” under section 110(a)(2)(J) when a new NAAQS becomes effective. In other words, the visibility protection requirements of section 110(a)(2)(J) are not germane to infrastructure SIP for the 2015 Ozone NAAQS.

Section 110(a)(2)(K) of the Act requires that a SIP provide for the performance of such air-quality modeling as the EPA Administrator may prescribe to predict the effect on ambient air quality of any emissions of any air pollutant for which EPA has established a NAAQS, and the submission, upon request, of data related to such air quality modeling. EPA has published modeling guidelines at 40 CFR part 51, Appendix W, for predicting the effects of emissions of criteria pollutants on ambient air quality. EPA recommends in the 2013 guidance that, to meet section 110(a)(2)(K), a State submit or reference the statutory or regulatory provisions that provide the air agency with the authority to conduct such air quality modeling and to provide such modeling data to EPA upon request.

Massachusetts state law implicitly authorizes MassDEP to perform air quality modeling and provide such modeling data to EPA upon request. See M.G.L. c. 21A, section 2(2), (10), (22); M.G.L. c. 111, sections 142B-142D. In addition, 310 CMR 7.02 authorizes MassDEP to require air dispersion modeling analyses from certain sources and permit applicants. Massachusetts implements and enforces the federal PSD program through a delegation agreement (included in the docket for today's action) that requires MassDEP to follow the applicable procedures in EPA's permitting regulations at 40 CFR 52.21, as amended from time to time. The Commonwealth also collaborates with the Ozone Transport Commission (OTC), the Mid-Atlantic Regional Air Management Association, and EPA to perform large scale urban airshed modeling. EPA finds that Massachusetts meets the infrastructure SIP requirements of section 110(a)(2)(K) for the 2015 ozone NAAQS.

This section requires SIPs to mandate that each major stationary source pay permitting fees to cover the costs of reviewing, approving, implementing, and enforcing a permit.

Massachusetts implements and operates the Title V permit program, which EPA approved on September 28, 2001. See 66 FR 49541. To gain approval, Massachusetts demonstrated, among other things, that it collects fees sufficient to cover the costs of reviewing and acting on Title V permit applications and implementing and enforcing the permits. See 61 FR 3827 (February 2, 1996); 40 CFR 70.9. Section 18 of M.G.L. c. 21A authorizes MassDEP to promulgate regulations establishing fees. To collect fees from sources of air emissions, the MassDEP promulgated and implements 310 CMR 4.00, Timely Action Schedule and Fee Provisions. These regulations set permit application and compliance fees for existing major sources and for new and modified major sources. EPA proposes that the Commonwealth meets the infrastructure SIP requirements of section 110(a)(2)(L) for the 2015 ozone NAAQS.

To satisfy element M, states must provide for consultation with, and allow participation by, local political subdivisions affected by the SIP. Pursuant to M.G.L. c. 111, section 142D, MassDEP must hold public hearings prior to revising its SIP. In addition, M.G.L. c. 30A, Massachusetts Administrative Procedures Act, requires MassDEP to provide notice and the opportunity for public comment and hearing prior to adoption of any regulation. Moreover, the Commonwealth's Executive Order No. 145 (discussed earlier in the context of element J) requires state agencies, including MassDEP, to provide notice to the Local Government Advisory Committee to solicit input on the impact of proposed regulations and other administrative actions on local governments. MassDEP's submittal also notes that the agency consults with local political subdivisions though a state “SIP Steering Committee” and conducts stakeholder outreach with local entities as a matter of policy when revising the SIP or adopting air regulations. Therefore, EPA proposes that Massachusetts meets the infrastructure SIP requirements of section 110(a)(2)(M) with respect to the 2015 ozone NAAQS.

EPA is approving most portions of the Massachusetts infrastructure SIP requirements for the 2015 ozone NAAQS. We are also issuing a finding of failure to submit pertaining to the various aspects of infrastructure SIPS relating to the prevention of significant deterioration (PSD). The Commonwealth has long been subject to a Federal Implementation Plan (FIP) regarding PSD, thus the finding of failure to submit will result in no mandatory sanctions or further FIP requirements. This rulemaking also does not include any action on the interstate transport portion of the Commonwealth's submittal. This action is being taken in accordance with the Clean Air Act.

The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should relevant adverse comments be filed. This rule will be effective May 11, 2020 without further notice unless the Agency receives relevant adverse comments by April 9, 2020.

If the EPA receives such comments, then EPA will publish a notice withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on May 11, 2020 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

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); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the 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 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 et seq. );

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

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

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

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

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

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; 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 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

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 May 11, 2020. 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. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register , rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

On June 2, 2010, EPA promulgated a revised primary SO 2 NAAQS with a level of 75 parts per billion (ppb), based on a 3-year average of the annual 99th percentile of 1-hour daily maximum concentrations. See 75 FR 35520 (June 22, 2010). Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS or within such shorter period as EPA may prescribe. These SIPs, which EPA has historically referred to as “infrastructure SIPs,” are to provide for the “implementation, maintenance, and enforcement” of such NAAQS, and the requirements are designed to ensure that the structural components of each state's air quality management program are adequate to meet the state's responsibility under the CAA. Section 110(a) of the CAA requires states to make a SIP submission to EPA for a new or revised NAAQS, but the contents of individual state submissions may vary depending upon the facts and circumstances. The content of the changes in such SIP submissions may also vary depending upon what provisions the state's approved SIP already contains. Section 110(a)(2) requires states to address basic SIP elements such as requirements for monitoring, basic program requirements, and legal authority that are designed to assure attainment and maintenance of the NAAQS.

Section 110(a)(2)(D)(i)(I) of the CAA requires SIPs to include provisions prohibiting any source or other type of emissions activity in one state from emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in another state. The two clauses of this section are referred to as prong 1 (significant contribution to nonattainment) and prong 2 (interference with maintenance of the NAAQS).

Through a letter dated August 20, 2018, 1 the Alabama Department of Environmental Management (ADEM) submitted a revision to the Alabama SIP addressing prongs 1 and 2 of CAA section 110(a)(2)(D)(i)(I) for the 2010 1-hour SO 2 NAAQS. EPA is approving ADEM's August 20, 2018, SIP submission because the State demonstrated that Alabama will not contribute significantly to nonattainment, or interfere with maintenance, of the 2010 1-hour SO 2 NAAQS in any other state. All other elements related to the infrastructure requirements of section 110(a)(2) for the 2010 1-hour SO 2 NAAQS for Alabama are addressed in separate rulemakings. 2

In a notice of proposed rulemaking (NPRM) published on December 31, 2019 (84 FR 72278), EPA proposed to approve Alabama's August 20, 2018, SIP revision for the 2010 1-hour SO 2 NAAQS. The details of the SIP revision and the rationale for EPA's action is explained in the NPRM. Comments on the proposed rulemaking were due on or before January 30, 2020. EPA received two sets of adverse comments from anonymous commenters (collectively referred to as the “Commenter”). These comments are included in the docket for this final action. EPA has summarized the comments and provided responses below.

Comment 1: The Commenter states that EPA has not demonstrated that Alabama will not contribute significantly to nonattainment or interfere with maintenance of the 2010 1-hour SO 2 NAAQS in any other state. The Commenter claims this is “best evidenced” in Escambia County, Alabama, and disputes EPA's proposed finding in the NPRM that no further analysis is necessary for assessing the potential impacts of the interstate transport of SO 2 emissions from Escambia Operating Company—Big Escambia Creek Plant (Big Escambia). The Commenter asserts that there are gaps in EPA's analysis, and as summarized below, raises specific concerns regarding several aspects of the analysis of Big Escambia as it relates to interstate transport of SO 2 emissions.

Comment 1.a: The Commenter notes that EPA identified Georgia-Pacific's Brewton LLC facility (Brewton) as a possible contributor to modeled violations but that the facility was not included in the Big Escambia modeling for EPA's Data Requirements Rule (DRR). The Commenter asserts that the decrease in SO 2 emissions from Brewton from 2014 to 2017 (972 tons to 103 tons) identified in the NPRM's Technical Support Document (TSD) “does not unequivocally mean that there is no transport of SO 2 (or causation or contribution to nonattainment)” in Florida. The Commenter claims that EPA's belief that excluding Brewton from the model does not invalidate the model and does not answer the question as to whether there is transport from the facility, and that EPA should offer some weight of evidence (WOE), model Brewton, or ask the State to model Brewton, in order to demonstrate no transport of SO 2 emissions from Brewton into the neighboring state of Florida.

Comment 1.b: The Commenter further indicates a concern with the lack of modeling of certain emissions from the Big Escambia facility. The Commenter notes that EPA's TSD indicates the fact that the difference in the lower modeled emissions and the higher reported emissions at Big Escambia (a difference of 1,575.6 tons in 2014) is due to emissions being diverted to a flare at the facility. The Commenter states that EPA did not consider the emission release characteristics and asserts that EPA's estimate of what the unmodeled concentrations would be in Florida from the flare is therefore “unsubstantiated.” The Commenter also notes that EPA assumed that the increase in concentrations from the flare would increase overall concentrations at Big Escambia by 50 percent (%) and argues that “some explanation of how the emissions from the flare are released and where the maximum impacts will occur is necessary instead of just adding 50% to highest modeled impact from the source based on emissions changes alone” because “[e]missions changes alone are not directly proportional to modeled impacts.”

Comment 1.c: The Commenter notes that, although the Big Escambia DRR modeling receptor grid extended into Florida, the grid did not extend 13 kilometers (km) into Florida, which the Commenter asserts is the approximate distance from the Florida border to Breitburn Operating, L.P. (Breitburn), a source located in Florida. The Commenter therefore asserts that there is “an unmodeled area in Florida for which we don't know the air quality impacts.” The Commenter further states that given the maximum reported SO 2 concentration (58.8 ppb) from the Big Escambia modeling, the 1,575.6 unmodeled tons of SO 2 from the flare at Big Escambia, and the unmodeled space between Breitburn and the Alabama/Florida border, EPA's conclusion that sources in Alabama will not contribute significantly to nonattainment or interfere with maintenance of the NAAQS in any other state is “off base.” The Commenter claims that EPA should either ask the State to “properly model” Big Escambia with the flare emissions and the entire land area between the Alabama and Florida sources included or EPA should rerun the modeling.

Comment 1.d: The Commenter states that EPA often responds to comments such as this by saying that the Commenter has not provided evidence indicating a contribution to nonattainment or interference with maintenance and standing by its conclusions. The Commenter argues that private citizens and organizations do not have the expertise or resources to perform the necessary modeling to provide definitive answers like EPA does, and asks why EPA doesn't run the modeling for Big Escambia properly “instead of making unsubstantiated technical assumptions that run counter to why modeling is used in the first place.”

Response 1: EPA disagrees with the Commenter's claim that EPA has not demonstrated that Alabama will not contribute significantly to nonattainment or interfere with maintenance of the 2010 1-hour SO 2 NAAQS in any other state and responds to the Commenter's specific concerns below.

Response 1.a: Regarding the Commenter's concerns with EPA's analysis for Brewton, EPA continues to believe that the exclusion of Brewton from the DRR modeling for Big Escambia does not render the model invalid for use in assessing interstate transport of SO 2 into the neighboring state of Florida. EPA did not rely on the modeling alone in drawing the conclusion that, based on the information available, sources in Alabama will not significantly contribute to nonattainment or interfere with maintenance in other states. Rather, EPA considered additional WOE factors to evaluate potential impacts of Alabama sources on air quality in other states.

Relevant to the Commenter's contention, EPA considered the fact that SO 2 emissions at Brewton in 2017 were 103 tons and that the distance between Brewton and Big Escambia is approximately 24 km. EPA therefore determined that it was not necessary for this source to be included in the modeling because it is unlikely to interact with the emissions from Big Escambia. 3 Since publication of the NPRM, EPA evaluated more recent emissions data from EPA's Emissions Inventory System which indicates that Brewton emitted 27 tons of SO 2 in 2018. 4 A source with this magnitude of emissions is unlikely to contribute to an air quality problem in Florida, regardless of Big Escambia's impact in the State. Further, with respect to the significant decrease in emissions of SO 2 since 2017, seven units at the facility (three recovery furnace units, three smelt dissolving tank units, and one package boiler unit) have permanently shut down as requested in the title V permit renewal application submitted by Brewton in June of 2017. 5 In addition, the No. 2 Power Boiler, rated at 323 million British thermal units per hour, is currently capable of burning natural gas only. 6 These recent changes at the facility indicate that emissions from Brewton are likely to remain low in the future.

Thus, the WOE available regarding Brewton indicates that it will not contribute significantly to nonattainment or interfere with maintenance in any other state, and the Commenter has not provided any information to contradict EPA's determination. Therefore, EPA continues to believe that the exclusion of Brewton from Big Escambia's modeling is not problematic as it relates to an evaluation of the interstate transport of SO 2 emissions into Florida, and this modeling, weighed along with other WOE factors described in the NPRM, supports EPA's conclusion that Alabama has satisfied the good neighbor provision for the 2010 1-hour SO 2 NAAQS.

Response 1.b: Regarding the Commenter's statements about emissions from the Big Escambia flare, 7 the release characteristics of the flare, specifically the tall stack height (42 meters), the exit velocity (20 meters/second), and the high stack temperature (1,273 degrees Kelvin), make it likely that the emissions released from the flare would be highly dispersive and therefore concentrations would likely be well below the 2010 1-hour SO 2 NAAQS at the 8 km distance to the Florida border.

A comparison of the flare characteristics to other modeled sources at Big Escambia, as well as the location of the modeled design concentration and the concentration gradient, also support EPA's conclusion. A comparable source, the sulfur recovery unit (incinerator—Source ID S1201), with a stack height of 66 meters, an exit velocity of 50 meters/second, and a stack temperature of 617 degrees Kelvin is the primary source of emissions at Big Escambia. In ADEM's modeling, emissions from the incinerator were varied hourly having a rate greater than or equal to one-half of a ton per hour for 30 percent of the hours and a maximum hourly rate of 3.7 tons per hour. Given the similarities in the characteristics of the flare to that of the incinerator, the dispersion characteristics of the plume from the flare are likewise expected to be very similar to those of the plume from the incinerator with regard to modeled concentrations and concentration gradient.

The area of maximum modeled concentrations is bimodal, i.e., with two areas of high concentrations located in different directions from Big Escambia. The modeled design concentration is actually located at the northwestern fenceline of the Big Escambia facility. There is a secondary area of high concentrations at the southern fenceline. In both regions, the maximum concentrations are located within a distance of only 600-700 meters of the incinerator, the primary SO 2 source, with a steep concentration gradient of decreasing concentrations occurring within the first kilometer beyond the fenceline. The flare is located on the northern side of the facility, about 250 meters northeast of the incinerator, and is almost 1 km from the secondary area of maximum modeled concentrations near the southern fenceline, toward the Florida border. Given the location of the flare relative to the incinerator and the distance of the flare to the southern Big Escambia fenceline, additional emissions from the flare would not be expected to have a significant impact on modeled concentrations at the Alabama/Florida border. Based on EPA's analysis of the similar emissions from the incinerator, EPA continues to believe that the unmodeled SO 2 emissions from the flare would not result in a significant concentration gradient in Florida. In other words, the nature of the flare and the distance from Big Escambia to the Florida border make it highly unlikely that the additional emissions from the flare (stated by Alabama to be due to startup, shutdown, malfunction and upset conditions), had they been included in the model, would have increased modeled concentrations in Florida to a level above the 2010 1-hour SO 2 NAAQS.

Response 1.c: EPA disagrees with the Commenter's assertion that the receptor grid needs to be expanded before EPA can approve Alabama's SIP submittal as meeting the CAA's good neighbor provision. As part of its WOE analysis, EPA evaluated the issues with the original DRR modeling for Big Escambia  8 and how ADEM addressed them for the purpose of assessing interstate transport of SO 2 . In particular, ADEM provided supplemental information pertaining to Big Escambia's DRR modeling intended to address the issues identified with the original modeling for the purpose of evaluating potential ambient air impacts in the neighboring state of Florida (“Big Escambia Supplement”). 9 With respect to Breitburn, the Big Escambia modeling included Breitburn at allowable emissions, a level 6.4 times higher than actual emissions in 2017, indicating that ADEM's assessment of Breitburn's impact within the modeling grid was conservative. Additionally, the most recent actual emissions available for the Big Escambia facility in EPA's Emissions Inventory System database were 2,990 tons/year in 2018. This level is more than 500 tons/year less than the Big Escambia emissions that were modeled during 2013-2015 timeframe, which also adds to the conservatism of the modeling. Although the modeling grid did not cover Breitburn, a portion of the modeling grid did extend into Florida and therefore assessed the potential impacts of Breitburn and Big Escambia within that portion of the State. 10 That analysis showed that the maximum modeled impact in Florida remained below the level of the 2010 1-hour SO 2 NAAQS.

While, as discussed above in response to Comment 1.b, the Big Escambia modeling did not include all emissions from the flare, the inclusion of Breitburn at its allowable emission levels indicates that air quality at the Alabama/Florida border is likely characterized conservatively. Moreover, given the response to Comment 1.b above regarding the locations of the areas of maximum modeled concentrations in Alabama, their close proximity to the modeled emission sources at Big Escambia, and the nature of the concentration gradients near Big Escambia, EPA further concludes that it is unlikely that there is a violation of the 2010 1-hour SO 2 NAAQS located in the portions of Florida that extend outside of the receptor grid where emissions from Big Escambia may have an impact. EPA continues to believe that the Big Escambia DRR modeling and Supplement provide a conservative estimation of potential SO 2 impacts in Florida and Big Escambia's lack of significant contribution to impacts in Florida when the factors discussed in the NPRM and associated TSD are weighed together.

While EPA acknowledges that the modeling grid does not address all potential impacts within Florida from the Breitburn and Big Escambia emissions, in the absence of any information demonstrating a potential violation in Florida, EPA continues to believe that the WOE analysis provided in the NPRM is adequate to determine the potential downwind impact from Alabama to neighboring states. EPA's WOE analysis includes the following factors: (1) Potential ambient air quality impacts of SO 2 emissions from certain facilities in Alabama on neighboring states based on available air dispersion modeling results; (2) SO 2 emissions from Alabama sources; (3) SO 2 ambient air quality for Alabama and neighboring states; (4) SIP-approved Alabama regulations that address SO 2 emissions; and (5) Federal regulations that reduce SO 2 emissions at Alabama sources. This information, when weighed together, does not provide any indication of an air quality problem in Florida due to emissions from Alabama sources with respect to the 2010 1-hour SO 2 NAAQS and instead supports EPA's conclusion that, based on the available information, Alabama will not significantly contribute to nonattainment or interfere with maintenance of the standard in other states.

Response 1.d: Regarding the Commenter's suggestion that EPA should rely on its own resources and expertise to model whether or not Alabama sources in Escambia County significantly contribute to nonattainment or interfere with maintenance in Florida, EPA does not believe the uncertainties of the modeling performed by Alabama identified in the NPRM invalidate consideration of the modeling for transport purposes as part of a WOE analysis. EPA does not believe that modeling is required in all cases under CAA section 110(a)(2)(D)(i)(I) to evaluate good neighbor obligations, particularly where other available information can be used to qualitatively and quantitatively assess the potential for downwind impacts from upwind state emission sources. Here, EPA has evaluated a number of different factors in a WOE analysis based on available information and found no basis to conclude that Alabama emissions will have an adverse impact on downwind states in violation of the good neighbor provision. Therefore, as stated in our response to Comment 1.c, EPA continues to believe that the WOE analysis provided in the NPRM is adequate to determine the potential downwind impact from Alabama to neighboring states.

EPA is approving Alabama's August 20, 2018, SIP submission as demonstrating that emissions from Alabama will not contribute significantly to nonattainment or interfere with maintenance of the 2010 1-hour SO 2 NAAQS in another state.

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

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

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

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

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

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

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

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

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

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

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

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 May 11, 2020 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).

For the reasons set out in the preamble, 40 CFR part 52 is amended as follows:

You may be potentially affected by this action if you produce, import, process, or use either intergeneric T. reesei or intergeneric B. amyloliquefaciens or any other eligible recipient microorganisms listed in 40 CFR 725.420. 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:

• Basic Chemical Manufacturing (NAICS code 3251).

• Pesticide, Fertilizer and other Agricultural Chemical manufacturing (NAICS code 3253).

• Other Chemical Product and Preparation Manufacturing (NAICS code 3259).

If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

This action is being taken under the authority of TSCA section 5(h)(4) (15 U.S.C. 2604(h)(4)). TSCA section 5(a)(1) requires that persons notify EPA at least 90 days before they manufacture (the term “manufacture” includes import under TSCA) for commercial purposes a “new” chemical substance, or manufacture (including import) or process a chemical substance for a “significant new use” (15 U.S.C. 2604(a)(1)(B)(i)). TSCA furthermore prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)). TSCA defines “chemical substance” broadly and in terms that cover intergeneric microorganisms as well as traditional chemical substances. Therefore, for the purposes of TSCA, a “new microorganism” is one that is not listed on the TSCA Chemical Substances Inventory (TSCA Inventory) compiled under TSCA section 8(b).

TSCA section 5(h)(4) authorizes EPA, upon application and by rule, to exempt the manufacturer of any new chemical substance from part or all of the provisions of TSCA section 5, if EPA determines that the manufacture, processing, distribution in commerce, use, or disposal of the new chemical substance will not present an unreasonable risk of injury to human health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified by the Administrator under the conditions of use.

In 2012, EPA proposed to add T. reesei strain QM6a and its derivatives (hereafter, T. reesei QM6a) and B. amyloliquefaciens subspecies (subsp.) amyloliquefaciens to the list of recipient microorganisms in 40 CFR 725.420 that may be used to qualify for Tier I and Tier II exemptions from full notification and reporting procedures under TSCA for new microorganisms that are being manufactured into commerce. EPA is finalizing the proposal.

EPA received petitions to add T. reesei and B. amyloliquefaciens to the list of microorganisms that may be used as recipient microorganisms in order to qualify for the exemption from full notification and reporting procedures under TSCA for new microorganisms that are being manufactured for introduction into commerce. EPA proposed to add certain strains of these two microorganisms to the list of recipient microorganisms based on EPA's preliminary determination. EPA is now issuing a final rule that incorporates certain changes in response to public comment.

EPA has evaluated the potential costs of the addition of the two microorganisms to the list of recipient microorganisms eligible for Tier I and Tier II exemptions. The final rule is expected to generate cost savings for organizations that, in the absence of the rule, would submit Microbial Commercial Activity Notices (MCANs) for new intergeneric T. reesei or B. amyloliquefaciens strains. The rule will result in costs savings for both the industry and the Agency. EPA estimates the annualized industry savings of the rule to be approximately $260,000 per year over a ten-year period, with a 3 percent discount rate, and $252,000 per year with a 7 percent discount rate. Annualized agency savings are approximately $178,000 per year with a 3 percent discount rate and $173,000 per year with a 7 percent discount rate over the ten-year period, for a total annualized savings to society of approximately $438,000 per year with a 3 percent discount rate and $424,000 per year with a 7 percent discount rate. The economic analysis is available in the docket and is summarized in Unit IX. of this final rule. Costs and benefits of adding T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens to 40 CFR 725.420 are also discussed in Unit VIII.C.2. through 4.

EPA received petitions to add T. reesei and B. amyloliquefaciens to the list of recipient microorganisms at 40 CFR 725.420 that are eligible for the regulatory exemptions applicable to new microorganisms that are manufactured for introduction into commerce (Refs. 1-3). In the Federal Register of September 5, 2012 (77 FR 54499) (FRL-9348-1) (“2012 Proposed Rule”) (Ref. 4), the Agency proposed to add certain strains of these two microorganisms to the list of recipient microorganisms at 40 CFR 725.420 based on EPA's preliminary determination that both of the microorganisms, with certain limitations, meet the criteria for addition to the list— i.e., they will not present an unreasonable risk of injury to health or the environment provided that the other conditions of the exemptions at 40 CFR part 725, subpart G, relating to the introduced genetic material, and the physical containment of the new microorganisms, have been met. EPA is now issuing a final rule that incorporates certain changes made in response to public comments received on the 2012 Proposed Rule. These changes are described in the following paragraphs.

In the 2012 Proposed Rule, EPA proposed to restrict the exemption for T. reesei to the T. reesei strain QM6a and its derivatives. In addition, EPA proposed to restrict the T. reesei QM6a exemption to use of the microorganism only under submerged standard industrial fermentation operations used for enzyme production; as described in this proposed rule, these conditions are typical throughout the fermentation industry and meet the existing physical containment and control requirements for the tiered exemptions under 40 CFR 725.422. Any subsequent deliberate fermentation of solid plant material or insoluble substrates with T. reesei QM6a and its derivatives as defined at 40 CFR 725.3 could only be initiated after inactivation of the viable T. reesei cells as delineated in 40 CFR 725.422(d), i.e., by a procedure that has been demonstrated and documented to be effective in reducing the viable microbial population by at least 6 logs ( i.e., six orders of magnitude).

In addition, EPA proposed to limit the exemption for B. amyloliquefaciens to only strains of B. amyloliquefaciens that would fall under the subspecies B. amyloliquefaciens amyloliquefaciens.

In response to comments received on its original proposal, EPA has modified the regulatory text in 40 CFR 725.3 and 725.420 slightly to better clarify EPA's original intent. These revisions to the regulatory text in 40 CFR 725.3 and 725.420 merely represent a clarification of the original proposal.

Existing regulatory requirements and exemptions for intergeneric microorganisms are discussed in Unit III. of this proposed rule. EPA's response to public comments received on the 2012 Proposed Rule are provided in Unit IV. Unit V. provides EPA's evaluation of available information on T. reesei and B. amyloliquefaciens for the criteria delineated in 40 CFR 725.67. Physical containment and control technologies as well as release and exposure assessments for the two microorganisms are discussed in Unit VI. EPA's risk assessments for T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens are summarized in Unit VII., and EPA's rationale for adding the two microorganisms to the list of recipients eligible for exemption is discussed in Unit VIII. EPA's Risk Assessment documents (Refs. 5 and 6), available in the public docket, provide more detailed information, and supporting references, for EPA's evaluation of the available information and the potential risks to health and the environment.

Manufacturers are required to report certain information to EPA 90 days before commencing the manufacture of intergeneric microorganisms that are not listed on the TSCA Inventory. EPA regulations at 40 CFR part 725 establish the mechanisms for reporting this information. TSCA prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)).

Any manufacturer of a living intergeneric microorganism who is required to report under TSCA section 5 must file a MCAN with EPA, unless the activity is eligible for one of the specific exemptions. Section 5(h)(4) authorizes EPA, by rule and upon request, to exempt manufacturers from these requirements if the Administrator determines that the manufacture, processing, distribution in commerce, use or disposal of the chemical substance “will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified by the Administrator under the conditions of use.” TSCA section 3(4) defines “conditions of use” to mean “the circumstances, as determined by the Administrator, under which a chemical substance is intended, known or reasonably foreseen to be manufactured, processed, distributed in commerce, used, or disposed of.” TSCA section 3(12) defines “potentially exposed or susceptible subpopulation” to mean “a group of individuals within the general population. . .who, due to either greater susceptibility or greater exposure, may be at greater risk than the general population of adverse health effects from exposure to a chemical substance or mixture, such as infants, children, pregnant women, workers, or the elderly.” 15 U.S.C. 2601 et seq. The general procedures for filing MCANs are described in 40 CFR part 725, subpart B.

EPA regulations establish two exemptions for new microorganisms, after the research and development stage, which are being manufactured for introduction into commerce: Tier I and Tier II exemptions.

Under the Tier I exemption, if certain criteria are met, manufacturers are required to notify EPA 10 days prior to manufacturing a new microorganism that qualifies for this exemption, and to keep certain records. 40 CFR 725.400. To qualify for the Tier I exemption, a manufacturer must use one of the recipient organisms listed in 40 CFR 725.420, and must implement specific physical containment and control technologies listed in 40 CFR 725.422. In addition, the genetic material introduced into the recipient microorganism must be well-characterized, limited in size, poorly mobilizable, and free of certain sequences. 40 CFR 725.421.

A manufacturer who meets the conditions of the Tier I exemption may modify the specified containment restrictions or level of inactivation but must submit a Tier II exemption notification 40 CFR 725.428. The Tier II exemption requires manufacturers to submit an abbreviated notification describing the modified containment and provides for a 45-day period during which EPA would review the proposed containment. 40 CFR 725.450 and 725.470. The manufacturer may not proceed under this exemption until EPA approves the exemption. 40 CFR 725.470.

EPA established a petition process at 40 CFR 725.67 for the public to propose additional microorganisms for the tiered exemptions. EPA's regulations at 40 CFR 725.67 direct petitioners to submit information to demonstrate that the activities affected by the requested exemption meet the requirements of TSCA section 5(h)(4), i.e. “will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified by the Administrator under the conditions of use.” 15 U.S.C. 2604(h)(4). In addition, a petitioner is responsible for providing supporting information for this determination in four general categories:

The regulations at 40 CFR 725.67 specify that when applying to list a recipient microorganism for the tiered exemption under 40 CFR 725.420, petitioners should include information addressing six specified criteria, which EPA will use to evaluate the microorganism for listing. 40 CFR 725.67(a)(3)(iii). The six criteria are:

The Agency received three comments on the 2012 Proposed Rule (Ref. 4). One comment, from an anonymous submitter (Ref. 7), concerned mold problems in rental housing and thus was not relevant to the proposed rule. A second comment, from an individual (Ref. 8), supported the proposed rule.

The third comment was a joint set of comments from the Biotechnology Industry Organization (BIO) and the Enzyme Technical Association (ETA) (Ref. 9). While generally supportive of the proposed rule, BIO/ETA raised three important issues with respect to EPA's proposed rule.

First, BIO/ETA expressed concern that the proposed wording in section 725.420(k), that reads “ Trichoderma reesei strain QM6a used only in . . .” does not accurately reflect the range of T. reesei strain QM6a microorganisms currently being used in standard industrial fermentations. BIO/ETA requested that the phrase be reworded as “ Trichoderma reesei strain QM6a and its derivatives used only in . . .” EPA agrees that the commenter's suggested language more accurately reflects the Agency's original intent. EPA did not originally intend to restrict the exemption to the naturally occurring QM6a isolate. Most of the strains of T. reesei currently used in industrial production are not the naturally occurring QM6a isolate, but are strains derived from QM6a that have been modified by physical or chemical mutagenesis to obtain microorganisms with improved enzyme-producing abilities. Accordingly, EPA has adopted the commenter's suggested revision to clarify that the exemption applies not only to the naturally occurring strain, but also to any strain derived from the naturally occurring QM6a.

Second, BIO/ETA expressed concern that the proposed regulation was too broadly worded and as drafted would not clearly distinguish between standard industrial fermentation operations used to produce enzymes, and fermentation operations conducted for other purposes. Specifically, the commenter raised concern that the inclusion of an unqualified restriction in proposed 40 CFR 725.420(k) that “no solid plant material or insoluble substrate is present in the fermentation broth” would prohibit the use of T. reesei in submerged standard industrial fermentation operations used for enzyme production. Enzyme production is the first phase of some industrial applications such as cellulosic ethanol production where the first fermentation is to grow the microorganism to produce enzymes, followed by another fermentation of pretreated plant biomass for conversion of the cellulose and hemicellulose to simple sugars ( i.e., saccharification), followed by a third fermentation of the sugars to ethanol by yeast or another ethanologen. As part of the process of growing the microbes for enzyme production by T. reesei QM6a and its derivatives, nutrients need to be available, including those from plant materials such as soy or corn, which may contain insoluble components. The second fermentation operation of saccharification of plant biomass may occur only after the T. reesei microorganism has been inactivated. The use of nutrients supplied by plant material ( e.g., soy meal, corn steep liquor) in the first fermentation for enzyme production has a long history of safe use.

To address this issue, the commenter suggested revising the regulatory text to ensure that the typical industry practice of supplying nutrients in the form of solid plant materials during the initial enzyme fermentation would fall within the scope of the proposed exemption. EPA agrees and is therefore changing the regulatory text to allow the use of solid plant material in the enzyme fermentation step. Under the final regulatory text, the use of the conventional fermentation ingredients from solid plant material—for example, soy or corn meal and other insoluble fermentation ingredients from corn or soy which contain insoluble components—is allowed when used specifically to provide nutrients for growth of the microorganism during standard enzyme fermentation as described in part 1 of the definition at 40 CFR 725.3.

The commenter further suggested adding text to clarify that the requirement to inactivate the organism applies prior to “subsequent fermentation operations, and not to the initial enzyme production stage.” EPA agrees that the commenter has identified a reasonable basis for concern with respect to the proposed regulatory text. EPA acknowledges that nutrients for microbial growth in submerged standard industrial fermentation during the initial enzyme production phase of the fermentation operation may be supplied by soybean meal, corn steep liquor, or other plant-derived materials that may contain insoluble substrates. The use of such plant materials as nutrient sources for microbial growth in submerged standard industrial fermentation operations used for enzyme production is a standard industry practice with a long history of safe use, and it does not result in the production of secondary toxic metabolites such as paracelsin because the fermentations involve the logarithmic growth of the cells in the presence of optimal concentrations of carbon and nitrogen and other nutrients (see Unit V. for more detail on paracelsin). EPA did not originally intend to preclude such operations and agrees that revision to the regulatory text is warranted to clarify that solid plant material can be used to provide nutrients for growth of the microorganism during submerged standard enzyme fermentation operations.

However, EPA continues to have concern about the potential for the production of paracelsin during the second fermentation phase of cellulosic ethanol production, i.e., the saccharification of the pretreated plant biomass, because of the presence of solid surfaces and an excess of carbon substrate with live T. reesei QM6a (and its derivatives) cells. Therefore, EPA is retaining the requirement that fermentation operations subsequent to the enzyme production fermentation phase may only be initiated after inactivation of the viable T. reesei cells as delineated in 40 CFR 725.422(d) ( i.e., by a procedure that has been demonstrated and documented to be effective in reducing the viable microbial population by at least 6 logs). Inactivation of T. reesei QM6a prior to a subsequent or secondary fermentation that may contain solid plant material or insoluble substrates (as defined at 40 CFR 725.3) avoids the potential for production of paracelsin.

BIO/ETA also commented that paracelsin may be produced under non-standard conditions of fermentation, such as “surface fermentation media with large concentrations of biomass,” and requested that EPA revise the rule to reflect this. EPA interprets this comment to mean “surface fermentation media with large concentrations of biomass” is the only condition under which paracelsin can be produced and that BIO/ETA is requesting that the rule be amended accordingly. EPA agrees that paracelsin may be produced under non-standard conditions of fermentation, such as surface fermentation with large concentrations of biomass. However, available scientific literature indicates that paracelsin may also be produced under certain other fermentation conditions. Scientific literature suggests that surface fermentation is synonymous with solid-state fermentation where microorganisms are grown on the surface of a solid support that is not submerged. While it is likely that the potential for paracelsin production is greater with solid-state/surface fermentation, the production of peptaibols (of which paracelsin is one) by Trichoderma species has been shown to occur even in liquid broth culture in the presence of plant material or insoluble substrates in laboratory studies. Thus, paracelsin production potentially may be produced in fermentation broth amended with plant material providing excess carbon. Therefore, EPA is not amending the rule to indicate that the only conditions in which paracelsin potentially may be produced are with surface fermentations with large concentrations of biomass.

Pursuant to 40 CFR 725.67, Genencor International, Inc., (subsequently supported by the Enzyme Technical Association (ETA)) and Novozymes North America, Inc., submitted Letters of Application to EPA requesting that T. reesei and B. amyloliquefaciens (Refs. 1 and 2) be added to 40 CFR 725.420 as candidate recipient microorganisms for the tiered exemptions. The letters of application provided information that the submitters believed demonstrate that activities affected by the requested exemptions would not present an unreasonable risk of injury to health or the environment. Information regarding the criteria specified in 40 CFR 725.67(a)(2) and 725.67(a)(3)(iii) were addressed in these letters of application to list T. reesei and B. amyloliquefaciens as recipient microorganisms under 40 CFR 725.420.

EPA has made the determination based on the information provided in the Letters of Application (Refs. 1 and 2), supplemental information provided by ETA (Refs. 10 and 11), and other information available to EPA that T. reesei QM6a, with certain restrictions, and B. amyloliquefaciens subsp. amyloliquefaciens will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation, when used as recipient microorganisms provided that: (a) The existing criteria for the introduced genetic material listed in 40 CFR 725.422 are met, and (b) the physical containment and control technologies criteria listed at 40 CFR 725.422 are met. In making this determination, EPA identified workers as a potentially exposed or susceptible subpopulation to the substances under the conditions of use and concluded that, with the limitations described above, the substances will not present an unreasonable risk of injury to health or the environment. EPA's Risk Assessments for these two microorganisms (Refs. 5 and 6) are available in the docket.

This unit presents a summary of EPA's evaluation of the available information pertinent to the six criteria delineated in 40 CFR 725.67(a)(3)(iii) for both microorganisms.

1. Identification and classification of the microorganism using available genotypic and phenotypic information.

T. reesei is a hypercellulolytic fungus originally isolated in the Solomon Islands in 1944. T. reesei was found on deteriorating military fabrics such as tents and clothing. This isolate, designated as QM6a, was initially named Trichoderma viride. Approximately 20 years later, QM6a was re-classified as Trichoderma reesei.

T. reesei is the species name given to the anamorphic form (this form reproduces asexually) of the fungus whose teleomorphic form (this form reproduces sexually) is now understood to be Hypocrea jecorina.

Recent taxonomic studies have shown that the species T. reesei consists only of this single isolate QM6a and its derivatives. Many other strains called T. reesei isolated elsewhere have now been proposed as belonging to a newly named species, T. parareesei, based on differences in habitat, sporulation, and metabolic versatility. T. reesei has been shown to belong to a single species now referred to as H. jecorina/T. reesei (QM6a) which reflects its relationship to its teleomorph H. jecorina. The only anamorphic strains within the species H. jecorina/T. reesei are those of QM6a and its derivatives. The petition to add T. reesei to the list of microorganisms at 40 CFR 725.420 requested that EPA include all strains of T. reesei. However, given these recent taxonomic publications, all fungal strains correctly named T. reesei are, by definition, QM6a or a derivative.

Adequate genotypic and phenotypic information is available for classification of T. reesei QM6a and its derivatives. The American Type Culture Collection (ATCC) designation for this original strain of T. reesei QM6a is ATCC 13631.

2. Information to evaluate the relationship of the microorganism to any other closely related microorganisms that have a potential for adverse effects on health or the environment.

Closely related members of section Longibrachiatum do not have a potential for adverse effects; other less closely related Trichoderma species have a potential to cause adverse effects as pathogens of commercially produced mushrooms. These less closely related species include various species of the Harzianum clade, T. aggressivum, T. pleuotrophilum, and T. fulvidum that are responsible for significant loss of the mushroom crops of Agaricus bisporus and Pleurotus ostreatus.

T. reesei/H. jecorina can be distinguished from other Trichoderma species by a comprehensive approach employing criteria of the Genealogical Concordance Phylogenetic Species Recognition (GCPSR) concept, which commonly requires the use of genealogies of three or four genes, not just the sequences of spacer regions as previously utilized for identification. Use of the GCPSR protocol would separate T. reesei (sensu lato) from the opportunistic pathogens within the section Longibrachiatum, including T. longibrachiatum and T. citrinoviride/H. schweinitzii, as well as the mold disease pathogens of mushrooms.

3. A history of safe commercial use for the microorganism.

T. reesei QM6a has a long history of safe use producing a variety of commercial enzymes. T. reesei QM6a cellulases, beta-glucanases, and xylanases are used by the animal feed, baking, beverages, textile processing, detergent, pulp and paper, industrial chemicals, and biofuels industries.

For industrial enzyme production, T. reesei is generally grown in a closed, submerged standard industrial fermentation system. In submerged standard industrial fermentation operations used for enzyme production, growth of the microorganism occurs beneath the surface of the liquid growth medium. As described in this unit, this type of fermentation system appears to be typical throughout the industry, based on EPA's review of MCAN submissions over the years.

Under this type of fermentation system, the fermentation broth is a defined mixture of carbon and nitrogen sources, some of which may be supplied from plant material or soluble substrates ( e.g., soy meal, corn steep liquor), minerals, salts, and other nutrients, is maintained at optimal pH and temperature, and is typically aerated and mixed. These conditions support the active growth and productivity of the organisms for enzyme production. Submerged standard industrial fermentation operations used for enzyme production systems reduce the potential for exposure of workers to the production organism and fermentation broth aerosols, reduce the potential for contamination of the culture and make the collection of extracellular enzymes simpler and less costly. The fermentation process is terminated before the T. reesei QM6a organisms go into the stationary growth phase ( i.e., before secondary metabolism begins). At the end of the fermentation process, the production organisms are separated from the fermentation broth and inactivated.

Several enzymes produced by T. reesei QM6a have Generally Recognized as Safe (GRAS) status with the Food and Drug Administration (FDA) or FDA had no questions about the GRAS conclusions about them contained in GRAS submissions to FDA. This supports the Agency's conclusion that commercial use of T. reesei QM6a and its derivatives as a recipient microorganism for commercial enzyme production will not present an unreasonable risk of injury to health or the environment. T. reesei QM6a enzymes used in foods that have been granted GRAS status or for whose claimed GRAS status FDA had no questions include cellulase, hemicellulase, transglucosidase, pectin lyase, acid fungal protease, and a chymosin enzyme preparation. Data supporting the GRAS notices included the results of pathogenicity tests for the T. reesei QM6a production organisms and toxicity tests for the enzyme products. The data showed that the production strains are not pathogenic and did not produce toxins during enzyme fermentation.

4. Commercial uses indicating that the microorganism products might be subject to TSCA.

EPA has reviewed 48 MCANs involving intergeneric T. reesei production organisms used to manufacture a number of industrial enzymes, including amylases, glucosidases, proteases, phytase, laccase, and numerous cellulolytic enzyme preparations. Amylases and glucosidases are used for the breakdown of starch into sugars and have been used in laundry detergents and in textile processing. More recently, industrial enzymes produced by T. reesei have been produced for corn and cellulosic ethanol production. T. reesei produces numerous cellulases and hemicellulases that are efficient in degrading plant biomass. Intergeneric T. reesei strains could also be used to manufacture industrial chemicals other than enzymes such as surfactants or specialty chemicals. More detailed information on MCANs submitted to EPA can be viewed on EPA's TSCA Biotechnology Program web page: https://www.epa.gov/regulation-biotechnology-under-tsca-and-fifra/overview-biotechnology-under-tsca.

5. Studies which indicate the potential for the microorganism to cause adverse effects to health or the environment.

a. Human health hazards — i. Pathogenicity. T. reesei QM6a is not pathogenic to humans. Due to its long history of use for production of enzymes used in food applications, the potential for the fungus and its products to be pathogenic or toxic to humans has been evaluated numerous times. Various studies have been conducted assessing T. reesei QM6a's pathogenic potential in healthy and immunocompromised laboratory animals. With the exception of one study where a high inoculum of intravenous (iv) and intraperitoneal (ip) injection of spores in immunocompromised mice resulted in pathogenic effects, studies have demonstrated a lack of pathogenicity of T. reesei QM6a. Numerous pathogenicity studies have been conducted as part of GRAS notices to FDA for several different enzymes used in the food industry. Studies using injection of T. reesei QM6a in rats, using both healthy and immunosuppressed rats, and using ip injection of viable and heat-killed cells of T. reesei QM6a in rats have all demonstrated a lack of potential pathogenicity to humans.

T. reesei QM6A is not known to possess any virulence factors associated with colonization or disease such as adherence factors, penetration factors, necrotic factors, toxins, or the ability to grow at human body temperature, 37 °C. There are no reports of harmful effects associated with the use of or exposure to T. reesei QM6A strains, even after decades of commercial use for enzyme production. The body of evidence indicates that T. reesei QM6A does not pose concerns regarding human pathogenicity.

ii. Toxicity. Available data indicate that T. reesei QM6a strains used in submerged standard industrial fermentation operations used for enzyme production do not present human toxicity concerns. A number of studies have been conducted assessing the potential for T. reesei QM6a to produce toxins during submerged standard industrial fermentation operations used for enzyme production for food, pharmaceutical, or industrial uses. A cellulase enzyme known as celluclast produced by T. reesei QM6a has been tested for general oral toxicity and inhalation toxicity. Acute oral toxicity studies conducted in mice, rats, and dogs showed that T. reesei QM6a cellulase was not toxic to any of the test animals. Subchronic toxicity studies showed no evidence of systemic effects in dogs or rats. Additional toxicity studies have been conducted on other enzymes produced by T. reesei QM6a, the results of which have been presented in various GRAS petitions. Acute oral toxicity tests on two endoglucanases and a glucoamylase showed a lack of toxins. Subchronic feeding studies conducted on a cellulase, two xylanases, two endoglucanases, a protease, and a glucoamylase also showed a lack of toxicity in rats.

Under typical industry practice, industrial fermentations of T. reesei QM6a for enzymes to be used in food are routinely checked by the enzyme producers to confirm the absence of antibiotic activity and toxins (Ref. 12). Relying on the data that show T. reesei QM6a has a long history of safe use in the production of food enzymes, EPA has concluded that strains used industrially would not be expected to produce these toxins under the conditions of submerged standard industrial fermentation used for enzyme production.

iii. Mycotoxins and other secondary metabolites. The only health concern associated with T. reesei QM6a is its ability to produce a peptaibol secondary metabolite called paracelsin. Peptaibols are small linear peptides of 1,000-2,000 daltons characterized by a high content of the non-proteinogenic amino acid α-amino-isobutyric acid (Aib), with an N -terminus that is typically acetylated, and a C -terminus that is linked to an amino alcohol, which is usually phenylalaninol, or sometimes valinol, leucinol, isoleucinol, or tryptophanol. Peptaibols are associated with a wide variety of biological activities and have antifungal, antibacterial, sometimes antiviral, antiparasitic, and neurotoxic activity. Paracelsin has been shown to damage mammalian cells such as human erythrocytes with an in vitro hemolytic activity of C 50 = 3.7 x 10 -5 mole/liter (mol/L) (Ref. 5).

Paracelsin has not been detected in the use of T. reesei QM6a under the submerged standard industrial fermentation operations used for enzyme production, and numerous toxicity studies on enzyme products of T. reesei QM6a have demonstrated a lack of toxicity to laboratory animals. EPA therefore expects that paracelsin production would be of insignificant concern, provided the microorganisms are produced with submerged standard industrial fermentation operations used for enzyme production as described at 40 CFR 725.3.

Under other conditions of fermentation, for example with the deliberate fermentation of cellulosic biomass for saccharification of plant material or extended fermentation, paracelsin may be produced (Ref. 5). Neither the information submitted with the petition, nor the information that is otherwise available is sufficient to allow EPA to determine the extent of paracelsin formation under these non-standard conditions. Consequently, EPA is unable to determine whether the use of the microbe under conditions other than submerged standard industrial fermentation operations used for enzyme production ( i.e., specific conditions under which paracelsin is not expected to be formed) will not pose an unreasonable risk to human health and/or the environment (Ref. 5).

b. Environmental hazards —i. Hazards to animals. T. reesei QM6a is not pathogenic to domesticated animals or wildlife. However, the secondary metabolite paracelsin has been shown to exhibit toxicity to aquatic species. A 24-hr exposure of paracelsin to Artemia salina (brine shrimp) resulted in a lethal concentration of 50% (LC 50 ) of 21.26 micromoles (µM) (40.84 micrograms per milliliter (µg/ml)) which decreased to 9.66 µM (18.56 µg/ml) with a 36-hr exposure. With Daphnia magna, paracelsin was found to be moderately toxic, with an LC 50 of 7.70 µM (14.79 µg/ml) with a 24-hr exposure, and 5.60 µM (10.76 µg/ml) with a 36-hr exposure.

ii. Hazards to plants. T. reesei QM6a is not a pathogen of plants. Although it is capable of degrading cellulose and hemicellulose due to the copious quantities of the enzymes it can produce, it cannot be a primary colonizer on plant tissue. Genetic studies have shown that T. reesei QM6a does not contain any genes for ligninases, required for initial breakdown of plant material. This species is known as a wood rot fungus, but it apparently attacks only decaying plant material, not live plants.

iii. Effects on other organisms. Peptaibols are toxic to Gram-positive bacteria and various fungi. The inhibitory action of peptaibols on various fungi is the reason that many species of Trichoderma are used as biocontrol agents of plant pathogenic fungi. The peptaibol produced by T. reesei, QM6a paracelsin, has been shown to be inhibitory to one particular fungus, Phoma destructiva.

Some species of Trichoderma, specifically T. aggressivum, T. pleuotrophilum, and T. fulvidum are pathogens of mushrooms. However, T. reesei QM6a is not a pathogen of mushrooms.

6. Studies which indicate the survival characteristics of the microorganism in the environment. The species T. reesei is known only from the single original isolate QM6a from the Solomon Islands. Therefore, there is little information on its prevalence or behavior in the environment. Microcosm studies have been conducted that suggest it would survive in the environment in the plant rhizosphere and in bulk soils if inadvertently released.

Although T. reesei was originally isolated from a tropical climatic region, it would be expected to persist in soils for extended periods of time, even after cold temperatures.

1. Identification and classification of the microorganism using available genotypic and phenotypic information.

B. amyloliquefaciens was initially proposed as a unique species in 1943. The name B. amyloliquefaciens lost standing when it was not included on the Approved List of Bacterial Names with Standing in Nomenclature in 1980. Since classical phenotypic tests could not differentiate it as a unique species from Bacillus subtilis, it was regarded as a subspecies of B. subtilis for several decades. However, molecular evidence from subsequent studies led to the conclusion that B. amyloliquefaciens did indeed deserve independent status. The DNA homology between B. subtilis and B. amyloliquefaciens is only about 15%. In addition, there were several phenotypic properties that differed between the two species. Chemotaxonomic studies revealed additional capability of separating strains of B. amyloliquefaciens from the other related species, Bacillus subtilis, Bacillus licheniformis, and Bacillus pumilus. The species has remained within the genus Bacillus sensu stricto since it was last established as a separate species.

Recently, it has been proposed that there are two subspecies within the species B. amyloliquefaciens, B. amyloliquefaciens subsp. amyloliquefaciens and B. a myloliquefaciens subsp. plantarum. The former subspecies includes the type strain and likely most, if not all, of the industrial strains of B. amyloliquefaciens used for enzyme production. The latter subspecies consists of plant-associated strains used as biocontrol agents due to the production of several antifungal lipopeptide and antibacterial polyketide toxins. This exemption is restricted to the subspecies B. amyloliquefaciens subsp. amyloliquefaciens which contains the industrial strains used for enzyme production. Adequate genotypic and phenotypic information is available to accurately identify B. amyloliquefaciens subsp. amyloliquefaciens.

2. Information to evaluate the relationship of the microorganism to any other closely related microorganisms which have a potential for adverse effects on health or the environment.

There are several species in the genus Bacillus that are known pathogens. These include Bacillus anthracis, which is pathogenic to humans and other animals, and Bacillus cereus, which is a common cause of food poisoning. Bacillus thuringiensis, Bacillus larvae, Bacillus lentimorbus, Bacillus popilliae, and some strains of Bacillus sphaericus are pathogenic or toxigenic to certain insects. The new subspecies Bacillus amyloliquefaciens subsp. plantarum has been shown to exhibit toxicity mainly to plant pathogenic fungi but can also be cytotoxic to mammalian cells. It is possible, using polyphasic approaches, to differentiate between B. amyloliquefaciens subsp. amyloliquefaciens and these other species and subspecies that have the potential to adversely affect humans or other organisms. B. amyloliquefaciens can be distinguished from the very similar Bacillus subtilis by a few phenotypic traits and DNA dissimilarity.

3. A history of safe commercial use for the microorganism.

B. amyloliquefaciens subsp. amyloliquefaciens has been used to produce commercial enzymes for more than 50 years. It produces carbohydrases, proteases, nucleases, xylanases, and phosphatases that have applications in the food, brewing, distilling, and textile industries.

For commercial enzyme production, B. amyloliquefaciens subsp. amyloliquefaciens is grown in a closed submerged fermentation. In submerged fermentation, growth of the microorganism occurs beneath the surface of the liquid growth medium. The fermentation broth is a defined mixture of carbon and nitrogen sources, minerals, salts, and other nutrients that is maintained at optimal pH and temperature. These conditions support the active growth and productivity of the organisms. Submerged fermentation systems reduce the potential for exposure of workers to the production organism and fermentation broth aerosols, reduce the potential for contamination of the culture, and make the collection of extracellular enzyme simpler and less costly. The fermentation process is terminated before the B. amyloliquefaciens subsp. amyloliquefaciens organisms enter the stationary growth phase, and the production organisms are separated from the fermentation broth and inactivated. The enzyme preparation may also be subjected to other purification processes.

B. amyloliquefaciens subsp. amyloliquefaciens has a long history of safe use for enzyme production in food and industrial applications with no incidences associated with human pathogenicity. In response to a petition from the ETA, FDA affirmed that carbohydrase enzyme preparations and protease enzyme preparations derived from either Bacillus subtilis or Bacillus amyloliquefaciens are GRAS for use as direct food ingredients. The European Food Safety Authority (EFSA) has put B. amyloliquefaciens on their list of bacteria that have a “qualified presumption of safety” because of a long history of apparent safe use in food and feed production. However, it was put on the list with a qualifier that only strains of B. amyloliquefaciens that do not have toxigenic potential be used.

One strain of B. amyloliquefaciens has been used as a biopesticide. A naturally occurring strain of B. amyloliquefaciens subsp. plantarum was registered in 2000 as a biopesticide active ingredient under the Federal Insecticide, Fungicide, and Rodenticide Act. It can only be used on certain ornamental, non-food plants in greenhouses and other closed structures.

4. Commercial uses indicating that the microorganism products might be subject to TSCA.

It is expected that intergeneric strains of B. amyloliquefaciens subsp. amyloliquefaciens would be used to produce enzymes and to manufacture other industrial chemicals subject to TSCA. Many enzymes produced by B. amyloliquefaciens, particularly α-amylase, are used in laundry detergents and in textile processing. B. amyloliquefaciens also makes a surfactant known as surfactin which functions as an antibiotic.

5. Studies which indicate the potential for the microorganism to cause adverse effects to health or the environment.

a. Human health hazards— i. Pathogenicity. B. amyloliquefaciens is not pathogenic to humans. There are no reports in the literature associating B. amyloliquefaciens with infection or disease in humans. B. amyloliquefaciens has been categorized as a Biosafety Level 1(BSL1) microorganism by the Centers for Disease Control and Prevention (CDC). BSL1 microorganisms are well-characterized agents not known to consistently cause disease in immunocompetent adult humans, and which present minimal potential hazard to laboratory personnel and the environment. Animal toxicity studies were performed with B. amyloliquefaciens strain FZB24 to support its registration as a biopesticide. Tests for acute oral toxicity/pathogenicity, acute pulmonary toxicity/pathogenicity, and acute injection toxicity/pathogenicity showed little to no adverse effects, which indicated low mammalian toxicity and a lack of pathogenicity/infectivity.

ii. Toxins and other secondary metabolites. Although another species in the genus Bacillus, B. cereus, has the potential to produce food poisoning toxins which cause both emetic and diarrheal syndromes, and a variety of local and systemic infections, the risk of food-borne disease caused by bacilli other than B. cereus is generally considered to be negligible because usually only B. cereus has the genes that encode food poisoning toxins. Industrial strains of Bacillus species belonging to the Bacillus subtilis group, which includes B. amyloliquefaciens, do not express B. cereus toxins. In addition, there are no reported cases of food poisoning associated with B. amyloliquefaciens.

Some strains of B. amyloliquefaciens have been shown to produce bioactive cyclic lipopeptide metabolites such as iturin, surfactin, fengycin, and bacillomycin D. These are cyclical lipoprotein biosurfactants produced by non-ribosomal peptide synthesis. They have a low mammalian toxicity as demonstrated by a lethal dose of 50% (LD 50 ) of >2,500 milligram/kilogram (mg/kg) in an acute toxicity test of surfactin C, and a no observed adverse effect level of 500 mg/kg-day in a repeat dose oral gavage study. Some strains of B. amyloliquefaciens may also produce the polyketide toxins macrolactin, bacillanene, and difficidin. B. amyloliquefaciens also produces the protein toxin barnase and the antifungal protein baciamin.

There are reports of the isolation of B. amyloliquefaciens from water-damaged buildings in which occupants were suffering ill health symptoms. Extracts from biomass of isolated strains of Bacillus exhibiting antifungal properties were assessed for toxicity endpoints. All of the isolated B. cereus and B. amyloliquefaciens strains studied showed cytotoxicity as evidenced by inhibition of boar spermatozoa motility; however, the B. amyloliquefaciens strains affected boar spermatozoa differently from the indoor B. cereus isolates and the reference food-poisoning strain.

The isolation of cytotoxic strains of B. amyloliquefaciens from water-damaged buildings is of little concern in relation to the exemption of B. amyloliquefaciens subsp. amyloliquefaciens. It is important to note that the Bacillus amyloliquefaciens strains studied in water-damaged buildings were specifically selected for further study because the isolates exhibited antifungal activity. Some of the secondary metabolites produced by these strains of B. amyloliquefaciens also exhibited cytotoxicity to mammalian cells ( i.e., boar spermatozoa). However, industrial strains of B. amyloliquefaciens that are classified as B. amyloliquefaciens subsp. amyloliquefaciens have been shown not to produce most, if not all, of the antifungal and antibacterial lipopeptides and polyketides produced by the biocontrol-type strains. The genome of the type strain of B. amyloliquefaciens DSM 7 T (now B. amyloliquefaciens subsp. amyloliquefaciens ) is very similar to the genome of the biocontrol strain FZB42 ( B. amyloliquefaciens subsp. plantarum ). However, the latter subspecies had genomic islands carrying prophage sequences, transposases, integrases, and recombinases that the DSM 7 T type strain did not have. The DSM 7 T type strain was shown to have a diminished capacity to non-ribosomally synthesize secondary metabolites with antifungal and antibacterial activities. The DSM 7 T type strain could not produce the polyketides difficidin or macrolantin, and could not produce lipopeptide such as iturin, macrolantin, and other compounds except for the compound surfactin.

Although there are isolated reports of toxin production in several antifungal, environmental isolates of B. amyloliquefaciens, the larger body of studies available on the safety and toxicity of B. amyloliquefaciens strains used industrially for enzyme production (Ref. 6) indicate that these strains are safe and non-toxic. For example, the industrial strains of B. amyloliquefaciens, Bacillus subtilis, and Bacillus licheniformis used for large-scale enzyme production did not exhibit any cytotoxicity in Chinese hamster ovary tests. In Europe, the toxicity of two strains of B. amyloliquefaciens used in the production of α-amylase and bacillolysin was assessed by EFSA's Scientific Panel on Additives and Products or Substances used in Animal Feed. The panel concluded that the B. amyloliquefaciens production strains DSM9553 and DSM9554, when used as a source of extracellular enzyme, do not present a toxigenic risk. Given its widespread distribution in the environment, its long history of safe use in industrial fermentation, the absence of reports on pathogenicity to humans, and the limited reports of cytotoxicity, EPA concludes that the use of B. amyloliquefaciens in fermentation facilities for production of enzymes or specialty chemicals does not present a human health concern.

b. Environmental hazards— i. Hazards to animals. There are no reports suggesting that B. amyloliquefaciens is pathogenic to domesticated animals or wildlife. The cytotoxicity of antifungal secondary metabolites to mammalian cells by biocontrol strains of B. amyloliquefaciens subsp. plantarum is discussed in this Unit.

ii. Hazards to plants. B. amyloliquefaciens is not pathogenic to plants. The plant-associated strains of B. amyloliquefaciens are beneficial to plants because they inhibit the growth of fungal plant pathogens. Antifungal and antibacterial secondary metabolites produced by strains of B. amyloliquefaciens such as iturins, surfactins, fengycin, bacillomycins, and azalomycin have been shown to inhibit the growth of Rhizoctonia solani, Xanthomonas campestris pv. campestris, Alternaria brassicae, Botyris cinerea, Leptosphaeria maculans, Verticillium longisporum, Pythium ultimatum, Aspergillus spp., Fusarium spp., Bipolaris sorokiniana, and Fusarium oxysporum.

In addition to producing antifungal and antibacterial compounds, B. amyloliquefaciens is known as a plant growth-promoting rhizobacterium, and some of the biological control strains of B. amyloliquefaciens were shown to produce the phytohormone indole-3-acetic acid.

6. Studies which indicate the survival characteristics of the microorganism in the environment.

Several studies assessing the survival of B. amyloliquefaciens are available in the public literature and are described in EPA's Risk Assessment of B. amyloliquefaciens (Ref. 6). Given that the natural habitat for B. amyloliquefaciens is typically in soil, on plant roots, or as an endophyte within the roots or stems of plants, the bacterium is likely to survive for a least some period of time if inadvertently released to the environment. However, like other bacilli, survival in soil may occur predominately as the resistant endospore state, whereas in the rhizosphere, it may exist as active vegetative cells.

The estimated releases of the microorganism from an enzyme manufacturing facility and exposures of workers, the general population, and the environment to the microorganisms are based on a generic scenario developed by EPA in 1997 for large-scale closed system enzyme fermentation. The generic scenario assumes the facility operates 350 days/year, produces 100 batches/year, the maximal cell concentration in the fermentation broth is 1 x 10 7 colony-forming units (cfu)/ml, and the volume of the fermentation broth is 70,000 L. The process consists of the main steps of laboratory propagation, fermentation, inactivation, and recovery where filtration operations separate out the microbial biomass from the concentrated desired product. The operations, sources of exposure and release are described in more detail in EPA's Release and Exposure Assessment (Ref. 13).

Exposures of workers to the microorganisms in during processing operations using submerged standard industrial fermentation do not pose concerns. The release of microbial cells in aerosols or in liquid and solid waste streams in submerged standard industrial fermentation operations with the containment and inactivation conditions of the Tier I exemption, are considered low. Thus, potential exposures to the general human population to the microorganism through inhalation or drinking water ingestion and to the environment are also low.

The estimated releases of the microorganism from an enzyme manufacturing facility and exposures of the microorganisms to workers, the general population, and the environment are based on a generic scenario developed by EPA in 1997 for large-scale closed system enzyme fermentation. The generic scenario assumes the facility operates 350 days/year, produces 100 batches/year, the maximal cell concentration in the fermentation broth is 1 × 10 11 cfu/ml and the volume of the fermentation broth is 70,000 L. The process consists of the main steps of laboratory propagation, fermentation and then recovery where filtration operations separate out the biomass from the concentrated desired product. The operations, sources of exposure and release are described in more detail in EPA's Release and Exposure Assessment (Ref. 14).

Exposures of workers to the microorganisms during processing operations using submerged standard industrial fermentation do not pose concerns. The release of microbial cells in aerosols or in liquid and solid waste streams in submerged standard industrial fermentaion operations with the containment and inactivation conditions of the Tier I exemption are considered low. Thus, potential exposures to the general human population to the microorganism through inhalation or drinking water ingestion and to the environment are also low.

EPA's Risk Assessment documents (Refs. 5 and 6) provide more detailed information, and supporting references, for EPA's evaluation of the available information and the potential risks to health and the environment. EPA has determined that because of the low hazard potential and safe history of use of T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens, the TSCA section 5(h)(4) exemption will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk of injury to a potentially exposed or susceptible subpopulation under the conditions of use, provided that the other conditions of the exemptions at 40 CFR part 725, subpart G, relating to the introduced genetic material, and the physical containment of the new microorganisms, have been met.

There is only one potential concern for human health and environmental hazards associated with T. reesei QM6a, and that is for paracelsin production. Paracelsin production is not expected to occur in submerged standard industrial fermentation operations conducted solely for growth of the microorganism to produce enzymes. There is no concern for potential pathogenicity of T. reesei QM6a to humans, plants, domesticated animals, or wildlife. The body of evidence of pathogenicity testing on various industrial strains indicates that T. reesei is not pathogenic to humans. Toxicity testing on a number of enzymes produced by T. reesei indicates that the fungus does not produce toxins when used in the submerged standard industrial fermentation operations used for enzyme production.

T. reesei has a long history of safe use and is expected to present low hazard to workers, the general public, and the environment. Although direct monitoring data are unavailable, estimates of potential exposures made by EPA in its assessment of potential risks (Ref. 5) do not indicate high levels of exposure of T. reesei to either workers or the public from submerged standard industrial fermentation operations used for enzyme production. Standard industrial hygiene management practices currently used in the fermentation industry reduce the potential for adverse health effects in the workplace. The use of engineering controls (closed fermentation systems), appropriate work practices, personal protective equipment, and personal hygiene reduce the potential for worker exposure. Thus, current practices reduce the potential for the dermal and respiratory exposures estimated by EPA.

Based on worst-case exposure scenarios and toxicity of the microorganism, EPA has made the determination that the potential risk to workers, the general public, and to the environment resulting from the use of T. reesei QM6a in submerged standard industrial fermentation operations used for enzyme production is low, provided the additional criteria of the tiered exemptions for the introduced genetic material and the physical containment conditions are met (Ref. 5).

Industrial strains of B. amyloliquefaciens subsp. amyloliquefaciens are not pathogenic to humans, plants, domesticated animals, or wildlife, and do not produce many of the toxic secondary metabolites found in biological control strains of B. amyloliquefaciens subsp. plantarum. The long history of safe use of enzymes produced by industrial strains of B. amyloliquefaciens in food is evidence that the bacterium does not produce toxins under standard conditions used for enzyme production.

Current practices in the fermentation industry reduce the potential for adverse health effects in the workplace. The use of engineering controls (closed fermentation systems), appropriate work practices, personal protective equipment, and personal hygiene reduce the potential for worker exposure and reduce the potential for the dermal and respiratory exposures.

Industrial strains of B. amyloliquefaciens have a long history of safe use and are expected to present low hazard to workers, the general public, and the environment. Although direct monitoring data are unavailable, exposure estimates do not suggest high levels of exposure of B. amyloliquefaciens subsp. amyloliquefaciens to either workers or the public resulting from the industrial fermentation procedures that are standard throughout the industry.

Based on worst-case exposure scenarios and toxicity of the microorganism, EPA has made the determination that the potential risk to workers, the general public, and the environment associated with the use of industrial strains of B. amyloliquefaciens subsp. amyloliquefaciens in submerged standard industrial fermentation is low provided the additional criteria of the tiered exemptions for the introduced genetic material and the physical containment conditions are met (Ref. 6).

On June 22, 2016, the “Frank R. Lautenberg Chemical Safety for the 21st Century Act,” amended TSCA (15 U.S.C. 2601 et seq. ) (Ref. 15). Pursuant to TSCA section 5(h)(4), EPA is authorized, upon request and by rule, to exempt the manufacturer of any new chemical substance from all or part of the requirements of TSCA section 5 if EPA determines that the manufacture, processing, distribution in commerce, use, or disposal of the chemical substance, or any combination of such activities, will not present an unreasonable risk of injury to human health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified by the Administrator under the conditions of use. The amended language of the statute with regard to section 5(h)(4) did not alter EPA's approach to balancing the considerations of the costs and benefits of issuing an exemption rule.

In determining whether T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens will not present an unreasonable risk of injury to human health or the environment, the Agency considered more than just the inherent risks presented by the two microorganisms. The Agency also considered the full range of societal benefits associated with the exemption; for example, as discussed in more detail below, EPA considered not only the cost savings to the users of the microorganism, but also the societal benefits that flow from promotion of the use of low-risk recipient microorganisms, while allowing the Agency to direct its resources toward reviewing higher risk microorganisms.

It is important that EPA is revising one aspect of the existing tiered exemptions at 40 CFR 725.420 by expanding the exemption to apply to two specific microorganisms. The narrow scope of this action affected the scope of EPA's cost-benefit analysis in which EPA compared the risks and benefits of the two microorganisms being considered for an exemption with the risks that would have resulted if those same two microorganisms remained subject to full MCAN submission requirements and 90-day EPA review. EPA did not compare the risks and benefits that would result from use of these two microorganisms in the absence of any regulation.

It is also significant that the standard applicable to this rule is that the microorganisms “will not present unreasonable risk,” rather than “no risk.” It is not possible to eliminate all risks associated with the manufacture, processing, distribution in commerce, use, and disposal of any new microorganism.

The following is an explanation of the factors and their analyses relevant to the no unreasonable risk finding.

1. Risks associated with these two microorganisms. EPA's evaluation of the available information concerning T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens against these criteria is presented in detail in Unit V., and is summarized again here for the readers' convenience.

The Agency developed specific criteria in 40 CFR 725.67 that the Agency uses in determining the extent of a potential recipient microorganism's risks, and its eligibility for listing at 40 CFR 725.420. These criteria were explained in detail in the proposed “biotech” rule (Ref. 16), the final “biotech” rule (Ref. 17), and are discussed in Unit V. EPA's conclusions for these two microorganisms are based on the available data and EPA's experience under 40 CFR part 725. T. reesei QM6a is not pathogenic to humans, plants, domesticated animals, or wildlife and the fungus does not produce toxins under submerged standard industrial fermentation operations used for enzyme production. T. reesei QM6a has a long history of safe use and is generally expected to present low risk to workers, the general public, and the environment resulting from submerged standard industrial fermentation operations used for enzyme production that are standard throughout the industry.

Under non-standard conditions of fermentation, such as with the deliberate fermentation of cellulosic biomass for saccharification of plant material or extended fermentation, paracelsin may be produced. The risks associated with the production of paracelsin may be significant due to its toxicity to mammalian cells, aquatic species, Gram-positive bacteria, and various fungi. However, the potential risk associated with paracelsin production is expected to be significantly reduced by this rule, which limits the exemption to fermentation operations using submerged standard industrial fermentation operations used for enzyme production.

Industrial strains of B. amyloliquefaciens subspecies amyloliquefaciens are not pathogenic to humans, plants, domesticated animals, or wildlife, and do not produce toxins under standard conditions used for enzyme production. Industrial strains of B. amyloliquefaciens subsp. amyloliquefaciens used for the production of enzymes have a long history of safe use and are expected to present low hazards to human health and the environment.

Only strains of B. amyloliquefaciens that fall into the subspecies B. amyloliquefaciens amyloliquefaciens were considered as the eligible recipient microorganism at 40 CFR 725.420. In this rule, EPA is excluding other strains/subspecies of these two species for which:

• The Agency has insufficient data and review experience to find that they will not present an unreasonable risk of injury or

• The Agency has found that, under certain conditions, based on data on the species in question, a strain or subspecies may present an unreasonable risk, thereby requiring a closer examination of the conditions of manufacturing, processing, distribution in commerce, use, and disposal during a 90-day MCAN review. Consequently, additional information would be necessary to make an appropriate determination about the organisms' potential risks.

The Agency believes that the requirement for submission of a MCAN followed by a 90-day review period for new intergeneric microorganisms that use T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens as recipient microorganisms is not necessary to address the risks associated with these microorganisms and would not result in any additional protection than would be achieved by this rule. This conclusion is based, in part, on EPA's findings regarding the intrinsically low level of hazard that these two organisms pose to human health and the environment. The requirements of the Tier I and Tier II exemptions and the restrictions in this rule on fermentation conditions place sufficient constraints to significantly limit the potential risks of injury to human health or the environment, including potential risks to potentially exposed or susceptible subpopulations under the conditions of use. In making this determination, EPA identified workers as a potentially exposed or susceptible subpopulation to the substance under the conditions of use and concluded that, with the limitations described above, the substances will not present an unreasonable risk of injury to health or the environment.

The Agency concludes that the criteria set forth in this rule are sufficient to mitigate the identified risks associated with these microorganisms. Because of the low hazard potential and safe history of use of T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens, EPA concludes that the TSCA section 5(h)(4) exemption will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk of injury to a potentially exposed or susceptible subpopulation under the conditions of use, provided that the other conditions of the exemptions at 40 CFR part 725, subpart G, relating to the introduced genetic material, and the physical containment of the new microorganisms, have been met.

2. Costs. As discussed in Unit X., this rule is anticipated to reduce costs to currently regulated entities in the long run. Expanding the list of recipient microorganisms eligible for exemption does not otherwise impose any additional cost or other burden on currently regulated entities, or existing fermentation processes.

Limiting the use of this exemption to the identified fermentation conditions is also estimated to impose no burden on affected entities. The restriction merely codifies existing industrial fermentation procedures for manufacturing operations that currently seek to use tiered exemptions. Consequently, EPA expects that most, if not all, manufacturers using these microbes would already have the measures in place to qualify for the exemption. Equally important, this limitation would add no burden to any existing fermentation processes. Currently, fermentation operations with either of these microbes are not eligible for the tiered exemption, and thus a MCAN must be submitted. Any company that chooses to use a different fermentation process could continue to operate under the status quo and simply submit a MCAN. This rule simply offers an additional, less costly option, to facilities that choose to use the fermentation operations discussed in this rule.

3. Benefits. The following discussion describes the benefits of expanding the list of recipient microorganisms eligible for exemption in a qualitative manner; for a more quantitative approach, see the economic analysis prepared for this rule (Ref. 18). A summary of that economic analysis is also provided in Unit IX.

The benefits analyzed encompass more than the direct benefits associated with submitting a Tier I or Tier II exemption for a new intergeneric microorganism rather than a MCAN. EPA's benefit analysis included a consideration of the broader benefits to society. EPA's unreasonable risk determination is based on broader benefits to society as well as those benefits attributable to a reduction in the burden associated with submission of Tier I and Tier II exemptions rather than MCANs.

EPA has concluded that manufacturers of new intergeneric microorganisms based on these low-risk microorganisms currently bear an unnecessary regulatory burden. By adding T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens to the list of eligible recipient microorganisms in 40 CFR 725.420, the Agency removes unnecessary regulatory impediments to the design, manufacture, and commercialization of these low risk new intergeneric microorganisms, and of the chemical substances that can be produced by these safer microorganisms. This action will also reduce the costs associated with industry's reporting burden, including the costs associated with the preparation of the submission, and with the delay in the commercial market introduction of the new intergeneric microorganism. Some of the cost-savings benefits may accrue to small businesses, either as developers of the exempt microorganisms, as producers of fermentation chemicals using the live microorganisms, or as customers for enzymes or other products made using the microorganisms.

There will also be a reduction in the Agency review resources currently allocated to reviews of MCANs for these two microorganisms. These Agency resources will be shifted to the review of new intergeneric microorganisms or chemical substances of greater concern.

The addition of the two microorganisms to the list of microorganisms eligible for exemption is expected to encourage innovation in the industry. It is reasonable to assume that a new intergeneric microorganism would either possess a new function or serve an existing function more efficiently or at a lower cost. The reduction in delay for that new intergeneric microorganism to be introduced into commerce is expected to be a benefit to both manufacturers and the general public who will have access to the substance more quickly. The expected benefits to innovation have not been quantified but include: Reduced time to develop and commercialize organisms; decreased cost of some downstream industrial products, such as fuel ethanol; improved consumer appeal of some products, such as certain textiles; and reduced costs of some consumer products, such as detergent and leather goods.

4. Risk/benefit balance. Determining the presence or absence of an unreasonable risk for purposes of issuing an exemption pursuant to TSCA section 5(h)(4) requires balancing of the benefits and risks posed by a regulatory action. EPA has determined that the risks are generally low based on the inherent properties and intended uses of T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens and will be adequately managed by the restrictions in the rule, combined with the existing requirements of the Tier I and Tier II exemptions.

EPA anticipates that expanding the list of microorganisms eligible for exemption will impose no costs and will reduce costs to currently regulated entities that use those recipients. The limitation to certain fermentation conditions is not a cost that will be imposed by this rule but rather a limitation on the amount of regulatory relief it will provide. The limitations on fermentation conditions reflect industrial fermentation procedures that are currently common practices for the affected industry.

EPA has also concluded that the benefits of the addition of T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens as recipient microorganisms to the list of recipient microorganisms at 40 CFR 725.420 are quite significant. This addition reduces the overall regulatory burden for affected entities by reducing the reporting requirements and by eliminating the delay of these products into commerce. The rule benefits both regulated entities and the general public by promoting the expedited manufacture and use of the chemical substances produced using these low-risk organisms and manufacturing processes. There is also the added benefit of concentrating limited EPA resources on regulation of chemical substances which have a greater potential to present significant risks, rather than on these two microorganisms. While this is difficult to quantify, it is considered substantial.

In sum, the criteria set forth in this exemption are sufficient to mitigate the low level of potential risks presented by these organisms, particularly when compared to the benefits, in toto, of this exemption, to levels that are consistent with the statutory standard for an exemption. Consequently, EPA has determined that adding T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens as recipient microorganisms to the list of recipient microorganisms at 40 CFR 725.420 is appropriate. The two microorganisms will not present an unreasonable risk of injury to human health or the environment when manufactured under the conditions of this exemption.

EPA's economic analysis (Ref. 18) evaluates the potential for significant economic impacts as a result of the addition of two microorganisms ( T. reesei QM6a and B. amyloliquefaciens subsp. amyloliquefaciens ) to 40 CFR 725.420, which lists recipient microorganisms eligible for Tier I and Tier II exemptions. Over the course of the first 10 years after the effective date of the final rule, EPA estimates that the addition of the two microorganisms to the list will generate a total cost savings to society of approximately $4.5 million. Industry is estimated save approximately $2.7 million and the Agency approximately $1.8 million. The equivalent, annualized cost savings to industry are expected to be $260,000 per year and $252,000 per year at a 3% and 7% discount rate, respectively. EPA estimates that there will be a net decrease in burden to industry of 27,864 hours over this 10-year period.

EPA has used scientific information, technical procedures, measures, methods, protocols, methodologies, and models consistent with the best available science, as applicable. These sources supply information relevant to a determination that the microorganisms subject to this rule will not present an unreasonable risk of injury to health or the environment, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified by the Administrator under the conditions of use. The clarity and completeness of the data, assumptions, methods, quality assurance, and analyses employed are documented, as applicable and to the extent necessary for purposes of this rule, in Units V. through VIII. and in the references. The extent to which the various information, procedures, measures, methods, protocols, methodologies or models used in EPA's decision have been subject to independent verification or peer review is adequate to justify their use, collectively, in the record for this rule.

The following is a listing of the documents that are specifically referenced in this document. The docket includes these documents and other information considered by EPA, including documents that are referenced within the documents that are in the docket, even if the referenced document is not physically located in the docket. For assistance in locating these other documents, please consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

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

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011).

This is considered a deregulatory action under Executive Order 13771 (82 FR 9339, February 3, 2017) because this rule is expected to provide meaningful burden reduction by adding T. reesei and B. amyloliquefaciens subspecies a myloliquefaciens to the list of recipient microorganisms that may be used to qualify for the Tier I and Tier II exemptions from full notification and reporting under TSCA for new microorganisms that are being manufactured for introduction into commerce. The rule is expected to generate cost savings for organizations that, in the absence of the rule, would submit MCANs for new intergeneric T. reesei or B. amyloliquefaciens strains. EPA estimates that the rule will result in cost savings for both industry and the Agency.

This action does not impose any new information collection requirements or related burden that would require additional review or approval by OMB under the PRA, 44 U.S.C. 3501 et seq. The information collection activities associated with the submission of Tier 1 and Tier 2 notices under TSCA have already been approved by OMB pursuant to the PRA and are covered by the following existing Information Collection Requests (ICRs): OMB control numbers 2070-0012 (EPA ICR No. 0574.15) and 2070-0038 (EPA ICR No. 1188.11). In granting these exemptions, this rule does not impose any new information collection requirements and is expected to reduce the amount of required reporting by allowing firms to submit less information for qualifying microorganisms. Over the ten-year period, industry is expected to subtract a total of 27,864 hours at an average of 2,786 hours per year.

Pursuant to section 605(b) of the RFA, 5 U.S.C. 601 et seq., I certify that this final rule will not have a significant economic impact on a substantial number of small entities. In making this determination, EPA believes that the impact of concern is any adverse economic impact on small entities, and that EPA may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This action establishes exemptions from existing requirements that apply regardless of the size of the entity. The factual basis for this certification is presented in the small entity impact analysis that was prepared as part of the Economic Analysis for this rule (Ref. 18) and is briefly summarized in Unit VIII.

This action does not contain an unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action is not expected to impose enforceable duty on any state, local or tribal governments, and the requirements imposed on the private sector are not expected to result in annual expenditures of $100 million or more for the private sector. As such, EPA has determined that the requirements of UMRA sections 202, 203, 204, or 205 do not apply to this action.

This action does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). 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. EPA has no information to indicate that any state or local government commercially manufactures or processes the microorganisms covered by this action. Thus, Executive Order 13132 does not apply to this action.

This action does not have tribal implications as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes. EPA has no information to indicate that any tribal government commercially manufactures or processes the microorganisms covered by this action. Thus, E.O. 13175 does not apply to this action.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997), as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of Executive Order 13045 has the potential to influence the regulation. This action is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks.

This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866, and is not likely to have a significant adverse effect on energy supply, distribution, or use.

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

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898 (59 FR 7629, February 16, 1994), because it does not establish an environmental health or safety standard.

This action is subject to the CRA, 5 U.S.C. 801 et seq., and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows:

This is a summary of the Commission's Report and Order (Order) in WC Docket Nos. 19-126, 10-90; FCC 20-5, adopted on January 30, 2020 and released on February 7, 2020. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW, Washington, DC 20554 or at the following internet address: https://www.fcc.gov/document/fcc-launches-20-billion-rural-digital-opportunity-fund-0.

1. Bringing digital opportunity to Americans living on the wrong side of the digital divide continues to be the Federal Communication Commission's top priority. It is imperative that the Commission take prompt and expeditious action to deliver on its goal of connecting all Americans, no matter where they live and work. Without access to broadband, rural communities cannot connect to the digital economy and the opportunities for better education, employment, healthcare, and civic and social engagement it provides.

2. In recent years, the Commission has made tremendous strides toward its goal of making broadband available to all Americans. But while the digital divide is closing, more work remains to be done. Therefore, in the Order, the Commission adopts the framework for the Rural Digital Opportunity Fund. It builds on the successful model from 2018's CAF Phase II auction, which allocated $1.488 billion to deploy networks serving more than 700,000 unserved rural homes and businesses across 45 states. The Rural Digital Opportunity Fund represents the Commission's single biggest step to close the digital divide by providing up to $20.4 billion to connect millions more rural homes and small businesses to high-speed broadband networks. It will ensure that networks stand the test of time by prioritizing higher network speeds and lower latency, so that those benefitting from these networks will be able to use tomorrow's internet applications as well as today's.

3. To ensure continued and rapid deployment of broadband networks to unserved Americans, the Commission establishes the Rural Digital Opportunity Fund, which will commit up to $20.4 billion over the next decade to support up to gigabit speed broadband networks in rural America. The Commission opts to allocate this funding through a multi-round, reverse, descending clock auction that favors faster services with lower latency and encourages intermodal competition in order to ensure that the greatest possible number of Americans will be connected to the best possible networks, all at a competitive cost. In light of the need to bring service both to consumers in areas wholly unserved by 25/3 Mbps, as well as those living in areas partially served, the Commission will assign funding in two phases: Phase I will target those areas that current data confirm are wholly unserved; and, Phase II will target unserved locations within areas that data demonstrates are only partially served, as well as any areas not won in Phase I. By relying on a two-phase process, the Commission can move expeditiously to commence an auction in 2020 for those areas it already knows with certainty are currently unserved, while also ensuring that other areas are not left behind by holding a second auction once the Commission has identified any additional unserved locations through improvements to its broadband deployment data collection.

4. The Rural Digital Opportunity Fund Phase I auction will make use of many of the rules that made the CAF Phase II auction a success, with some exceptions to account for the passage of time and other changed circumstances. Most importantly, in addition to the weighting of performance tiers and latency, the Commission will assign support in the auction's clearing round to the bidder with the lowest weight. After the auction, the Commission will require Phase I support recipients to offer the required voice and broadband service to all eligible homes and small businesses within the awarded areas, without regard to the number of locations identified by the Connect America Cost Model (CAM), and instead as determined subsequently by the Wireline Competition Bureau (the Bureau). This approach differs from that used in the CAF Phase II auction, which tied the deployment and service obligations to a specific number of locations within awarded areas but allowed the recipients to demonstrate that their obligations should be reduced (along with a corresponding reduction in support) where there were fewer locations than the CAM specified. As discussed in the following, the Commission will use its cost model and current data to establish initial service milestones and to monitor interim progress, but the Commission emphasizes that Phase I bidders will be competing for support amounts to offer service to all locations ultimately identified in an area, not just to the specific number of locations in that area identified prior to the auction, without adjusting awarded support amounts.

5. The Commission adopts a term of support of 10 years for the Rural Digital Opportunity Fund. The Commission believes that the stability of a 10-year term of support was partially responsible for the robust participation that occurred in the CAF Phase II auction. The Commission expects that the same principles regarding encouraging long-term investments and auction participation will also apply to the Rural Digital Opportunity Fund. Most commenters addressing this issue agree that a 10-year term of support will provide the certainty and stability needed to encourage broadband deployment in unserved and underserved locations and attract participation from a wide variety of participants. Moreover, disbursing support over a 10-year term minimizes the impact on the contribution factor. The Commission does not agree that adopting a 10-year term risks funding unsustainable projects, as one commenter suggests, because it expects bidders to seek sufficient support to build and maintain their network without an expectation of ongoing support after the 10-year support term expires. Nor does the Commission agree that bidders proposing 25/3 Mbps deployments should be offered only a five-year term. First, given that bids will be weighted to prioritize faster services, the Commission expects bidders seeking support for the 25/3 Mbps tier will win support only in areas where higher speeds are not economical, and that a five-year term may simply increase the amount sought in order to recover the same amount of costs in a shorter timeframe. The Commission also more generally finds no benefit to having multiple terms of support within the same program.

6. The Commission adopts its proposal to establish a budget of $20.4 billion for the Rural Digital Opportunity Fund. The Commission also adopts its proposal to make available $16 billion for Phase I, and to make available for Phase II a budget based on the remaining $4.4 billion, along with any unawarded funds from Phase I. The Commission sought comment on whether it should reassess the adequacy of the budget after the Phase I auction. Although commenters generally supported the proposed budget, several commenters suggested that the size of the budget may be insufficient to serve all the unserved locations and supported reassessing the adequacy of the budget after Phase I. The Commission expects $16 billion to be sufficient, given the areas eligible for Phase I, to balance its objectives of encouraging robust competition for support below the reserve price and closing the digital divide. The Commission agrees that it may be appropriate after the Phase I auction, when it knows the areas eligible for Phase II and how many unserved locations will be eligible for Phase II within those areas, to reassess the total amount of funds available for Phase II and expect to revisit this issue at that time.

7. The Rural Digital Opportunity Fund will target support to areas that lack access to both fixed voice and 25/3 Mbps broadband services in two stages. For Phase I, the Commission targets census blocks that are wholly unserved with broadband at speeds of 25/3 Mbps. For Phase II, the Commission targets census blocks that it later determined through the Digital Opportunity Data Collection, or suitable alternative data source, are only partially served, as well as census blocks unawarded in the Phase I auction. Because the Commission will have an additional opportunity to seek comment on how best to target Phase II support as it gathers more granular data on where broadband has been actually deployed, the Commission focused here on the areas eligible for Phase I of the auction.

8. A number of commenters support moving forward to the extent the Commission can identify unserved areas using existing data. The Commission agrees. The Commission currently has the tools and the data to identify census blocks that are wholly unserved, and directs the Bureau to use the CAM with updated coverage data using the most recent publicly available FCC Form 477 data to identify census blocks that are unserved with broadband at speeds of at least 25/3 Mbps for the auction. The FCC Form 477 data have been criticized for identifying partially served blocks as “served,” but the Commission is not aware of cases in which the data has identified as “unserved” a census block that is in fact served.

9. The Commission disagrees with commenters who argue that it should delay the auction until it has more granular data. The primary shortcomings of FCC Form 477 data do not come into play under the two-phased framework the Commission adopts here. Thus, the Commission sees no value in denying the benefits of broadband to those rural Americans it knows lacks service because there may be other unserved Americans living in other areas that it has not yet identified. Waiting for the availability of more granular data before moving forward would only further disadvantage those millions of Americans that the Commission knows does not currently have access to digital opportunity.

10. The Commission directs the Bureau to compile a preliminary list of eligible areas for Phase I of the Rural Digital Opportunity Fund auction using the following methodology. First, the Commission will include: (1) The census blocks for which price cap carriers currently receive CAF Phase II model-based support; (2) any census blocks that were eligible for, but did not receive, winning bids in the CAF Phase II auction; (3) any census blocks where a CAF Phase II auction winning bidder has defaulted; (4) the census blocks excluded from the offers of model-based support and the CAF Phase II auction because they were served with voice and broadband of at least 10/1 Mbps; (5) census blocks served by both price cap carriers and rate-of-return carriers to the extent that the census block is in the price cap carrier's territory, using the most recent study area boundary data filed by the rate-of-return carriers to identify their service areas and determine the portion of each census block that is outside this service area; (6) any unserved census blocks that are outside of price cap carriers' service areas where there is no certified high-cost eligible telecommunications carrier (ETC) providing service, such as the Hawaiian Homelands, and any other populated areas unserved by either a rate-of-return or price cap carrier; and (7) any census blocks identified by rate-of-return carriers in their service areas as ones where they do not expect to extend broadband (as the Commission did with the CAF Phase II auction). Not included in these categories for Phase I eligibility are census blocks where a winning bidder in the CAF Phase II auction is obligated to deploy broadband service, and census blocks where a Rural Broadband Experiment support recipient is obligated to offer at least 25/5 Mbps service over networks capable of delivering 100/25 Mbps.

11. Second, the Commission will exclude those census blocks where a terrestrial provider offers voice and 25/3 Mbps broadband service according to the most recent publicly available FCC Form 477 data. In addition, the Commission will exclude those census blocks which have been identified as having been awarded funding through the U.S. Department of Agriculture's ReConnect Program, or awarded funding through other similar federal or state broadband subsidy programs to provide 25/3 Mbps or better service. This is consistent with the Commission's overarching goal of ensuring that finite universal service support is awarded in an efficient and cost-effective manner and does not go toward overbuilding areas that already have service. Although the Commission sought comment on whether there are any other areas that it should include in the initial list of eligible areas, such as areas in legacy rate-of-return areas that are almost entirely overlapped by an unsubsidized competitor, it declines to expand the list of eligible areas at this time and instead focus Phase I on the known wholly unserved census blocks.

12. After compiling the preliminary list of eligible areas, the Bureau will conduct a limited challenge process for the Rural Digital Opportunity Fund Phase I auction consistent with the process the Bureau used for the CAF Phase II auction. Because there is an inevitable lag between the time when areas are served and the time that service is reflected in publicly available FCC Form 477 data, parties will be given an opportunity to identify areas that have subsequently become served, and the Bureau will have the opportunity to compare the preliminary list of eligible areas with the final list to identify any obvious reporting errors. As discussed in this document, good policy requires the Commission to avoid making limited federal funding available in areas where broadband providers already are receiving support to deploy 25/3 Mbps broadband service. Thus, in order to identify which areas to exclude, the Commission directs the Bureau to provide an opportunity to identify census blocks that have been awarded support by a federal or state broadband subsidy program to provide 25/3 Mbps or better service. The Commission does this to ensure that its auction does not award duplicative or unnecessary support. The Commission does not agree with commenters who argue that a limited challenge process is insufficient and that it should provide a “robust” challenge process to identify census blocks that are not actually served, and thus should be eligible for Phase I. The Commission finds that such a challenge process would be administratively burdensome, time-consuming, and unnecessary. In a previous challenge process, the Commission found that it was very difficult to prove a negative—that is, that an area was not served. The Commission also notes that in Phase II, any areas that are reported as served based on its current data but are ultimately deemed unserved will be eligible, and expect that Phase II will occur sooner if Phase I is not delayed by a more burdensome challenge process. The Commission directs the Bureau to release a list and map of initially eligible census blocks based on the most recent publicly available FCC Form 477 data. If more recent FCC Form 477 data is available when the Commission adopts the specific procedures for the Phase I auction, the Bureau should use the more recent data and publish a final list.

13. CAF Phase II support was targeted to “census blocks where the cost of service is likely to be higher than can be supported through reasonable end-user rates alone” by using a cost benchmark that reflected the expected amount of revenue that could reasonably be recovered from end users. In the CAF Phase II auction, the Commission included high-cost areas where the CAM estimated the cost per location to exceed $52.50 per month. The Commission departs from that decision here in the Rural Digital Opportunity Fund auction and it will also include some census blocks where the CAM suggests the costs of deployment are below that $52.50 high-cost threshold, but deployment has nonetheless not yet occurred. When the Commission proposed including at least some low-cost blocks, then-current data indicated that 6.3 million locations with costs below a $52.50 per month benchmark still lacked 25/3 Mbps broadband (including 3.4 million locations that lacked even 10/1 Mbps broadband based on staff analysis of current FCC Form 477 data), suggesting that potential end-user revenue alone had not incentivized deployment despite the model's predictions. Therefore, to encourage deployment of high-speed broadband in rural census blocks that are wholly unserved, the Commission will use a lower funding threshold to include blocks where the CAM estimates the cost per location equals or exceeds $40 per month, rather than $52.50. Although some commenters do not agree with providing support in such lower cost areas, the Commission finds that a modest reduction in the funding threshold is warranted given the number of census blocks where market forces alone have been insufficient to bring broadband to these areas.

14. To account for the unique challenges of deploying broadband to rural Tribal communities, the Commission will use a funding threshold of $30 per month. This approach is consistent with the Tribal Broadband Factor established for Tribal areas for carriers that elected model-based rate-of-return support, which used a 25% decrease compared to the $52.50 benchmark. Because the Commission will use a $40 benchmark for the Phase I auction, the $30 benchmark for Tribal areas reflects a 25% decrease compared to the $40 funding threshold. Using a $30 funding threshold for census blocks in Tribal areas, in addition to including blocks below the $40 threshold, has the effect of increasing the reserve price in all Tribal areas by $10 per location. Finally, to provide additional incentives in wholly unserved areas that even lack 10/1 Mbps, the Commission will also use a $30 per month funding threshold in these areas. A number of commenters agree that the Commission should prioritize these areas, and it finds that an increased reserve price could encourage deployment in areas where rural consumers have been left behind.

15. Consistent with the approach the Commission took in the CAF Phase II auction, it adopts a general auction framework and eligibility criteria in the Order and leaves the specific procedures to be established as part of the pre-auction process, including determining auction-related timing and dates, identifying areas eligible for support, and establishing detailed bidding procedures consistent with the Order.

16. Auction Framework. For Phase I, the Commission adopts a single nationwide, multi-round reverse auction with competition within and across eligible geographic areas to identify areas that will receive support and determine support amounts, as it did for the CAF Phase II auction. The Commission's experience in the CAF II auction demonstrates that reverse auctions allow for market forces to maximize the impact of finite universal service resources while awarding support to those providers that will make the most efficient use of the budgeted funds. Utilizing an auction mechanism will allow the Commission to distribute support consistent with its policy goals and priorities in a transparent manner. An auction provides a straightforward means of identifying those providers that are willing to provide voice and broadband at a competitive cost to the Fund, targeting support to prioritized areas, and determining support levels that awardees are willing to accept in exchange for the obligations the Commission imposes. Moreover, a reverse auction is consistent with the Commission's decision to provide support to at most one provider per area.

17. Commenters broadly support the use of a reverse auction to distribute Rural Digital Opportunity Fund support. For example, commenters state that based on the success of the CAF Phase II auction, reverse auctions can be expected to produce robust deployment cost-effectively. The Nebraska Public Service Commission, on the other hand, raised concerns that a reverse auction focuses on “the cheapest way to get to the minimum speed of a given speed tier to a coverage area” rather than “focusing on robust and scalable technology.” The Commission disagrees. As demonstrated in CAF Phase II, reverse auctions are the best available tool to achieve the Commission's overall goal of closing the digital divide in a transparent and efficient manner while maintaining fiscal responsibility and cost- effectiveness. Moreover, in most instances, CAF Phase II winning bidders agreed to provide a higher speed than the minimum; thus, the Commission was able to push finite universal service support to many more locations at a much lower cost and higher speeds. The Commission therefore maintains that a reverse auction is the most efficient means of awarding Rural Digital Opportunity Fund support, consistent with its goal of supporting the buildout of the best possible networks in the most cost-effective manner possible.

18. Similar to the CAF Phase II auction, the Commission adopts an auction design in which bidders committing to different performance levels will have their bids weighted to reflect its preference for higher speeds, greater usage allowances, and lower latency. However, in addition to the weights for each performance tier and latency combination adopted in the following, the Commission adopts bid processing procedures specific to the “clearing round” of the Rural Digital Opportunity Fund Phase I auction. In the clearing round, the bidding system will take into account the combined performance tier and latency weight when assigning support to bidders competing for support in the same area at the base clock percentage. Among other modifications to the procedures used in the CAF II auction, the bidding system will assign support in the clearing round to the bidder with the lowest performance tier and latency weight instead of, as was done in the CAF II auction, carrying forward all bids at the base clock percentage for the same area for bidding in additional clock rounds. If two or more bids were submitted with the same lowest performance tier and latency weight in the clearing round, bidding for an area will continue in additional clock rounds.

19. In the CAF II auction, the Commission adopted an auction that considered all bids simultaneously, “so that bidders that propose to meet one set of performance standards will be directly competing against bidders that propose to meet other performance standards.” In the Rural Digital Opportunity Fund auction, the Commission will continue to accept bids committing to different performance levels. In Phase I, however, once the budget has cleared, the Commission will prioritize bids with lower tier and latency weights, thereby encouraging the deployment of networks that will be sustainable even as new advancements are made and which will be capable of delivering the best level of broadband access for many years to come, all while keeping funding within the Phase I budget. Although this approach could result in less intra-area competition after the clearing round in some areas, the auction will have selected the best possible service, at a competitive level of support, for the same number of consumers living in those areas, and this will result in more rapid and efficient funding for such deployment. In other words, the Commission's goal to close the digital divide is balanced against its goal to support the deployment of future-proof networks by this auction. Overall, the Commission does not expect this approach to adversely impact competition. The Commission will still accept competitive bids proposing to offer performance that meets or exceeds the minimums at each performance tier and latency, but for those areas where there is still competition as of the clearing round, the Commission will prioritize selection of bidders that propose to offer the highest speeds, most usage, and lowest latency for each area.

20. The Commission also adopts the same general competitive bidding rules, which allow for the subsequent determination of additional, specific final auction procedures based on additional public input during the pre-auction process, and the Commission will apply as appropriate any modifications to those rules that it may adopt. Those competitive bidding rules, together with the additional rules the Commission adopts in this document, will establish Rural Digital Opportunity Fund winning bidders' performance obligations, eligible areas, and post-auction obligations and oversight. As it typically does for Commission auctions, the Commission will seek further comment on auction procedures at a future date, so it does not address the comments in the Order that speak to those issues. A number of commenters propose specific changes to the auction that would be better evaluated during the process to develop detailed auction procedures.

21. Reserve Prices. Consistent with the CAF Phase II auction procedures, the Commission will use the CAM to establish area-specific reserve prices. The Commission makes several adjustments to its approach in the CAF II auction to include some unserved areas that were excluded from the CAF Phase II auction and to potentially provide additional funding to extremely high-cost areas. Specifically, the Commission concludes it is appropriate to reduce the high-cost support threshold to $40 per location. The Commission also increases the per-location support cap to $212.50. This approach will add additional locations above the new threshold and increase inter-area bidding. Finally, the Commission will prioritize areas entirely lacking 10/1 Mbps and Tribal areas by further lowering the funding threshold for such areas by 25% to $30.

22. The reserve price in each wholly-unserved, eligible census block will be equal to the average per-location cost of deploying and operating a network (as calculated by the CAM) above the $40 support threshold and up to the per-location support cap of $212.50, multiplied by the number of locations in the block. Lowering the support threshold from $52.50 to $40 per locations will provide support to unserved areas in which the CAM may be understating costs, while still being cognizant about not offering support in areas market forces alone are likely to extend broadband. The Commission previously determined that a CAM-calculated average per-location cost of $52.50 reflected an appropriate line between areas requiring support and those where market forces would be sufficient. Where some areas have not yet seen unsubsidized deployment of broadband networks, it could be an indication that the assumptions underlying the CAM do not always reflect the reality facing service providers, and the Commission now concludes it is appropriate to revisit the high-cost threshold. Likewise, the Commission increases the per-location support cap to ensure that the highest-cost areas, many of which did not receive winning bids in the CAF II auction, will see sufficient interest from bidders in the Rural Digital Opportunity Fund. Thus, the Commission will set the reserve price based on a lower support threshold of $40 for all areas and raise the per-location support cap from $146.10 to $212.50, ultimately helping promote participation and competition in the Rural Digital Opportunity Fund Phase I auction.

23. The Commission's goal with this auction is to target support and provide incentives to serve areas that are known to currently lack service at speeds of at least 25/3 Mbps. Whereas the CAF Phase II auction targeted support to high-cost areas where the incumbent price cap carrier declined the offer of model-based support and extremely high-cost areas nationwide, here the Commission expands its focus to include certain areas that remain unserved despite being identified by the CAM as lower cost. As the Commission stated in the Rural Digital Opportunity Fund NPRM, 84 FR 43543, August 21, 2019, the new lower support threshold of $40 will ensure that only census blocks above the new support threshold will be eligible for the auction. Buckeye Hills Regional Council asserts that the Commission should lower the cost threshold to $20 or $30 for difficult to serve parts of the country such as Appalachia. However, lowering the threshold any further than $40 would provide more support than needed and many locations could be included that are more likely to be served without universal service support.

24. Certain commenters oppose including unserved low-cost census blocks in Phase I of the auction, raising concerns that the auction would shift funding to more densely populated areas at the expense of more rural consumers and census blocks. The Commission notes that these areas remain unserved, despite being identified as low cost by CAM more than five years ago. Moreover, the Commission is lowering the support threshold in all eligible census blocks, thereby increasing reserve prices (and potentially available support) throughout. The Commission declines to adopt NCTA's proposal to reduce the cost threshold only to account for the costs of upgrading an already deployed network capable of providing 10/1 Mbps to one capable of providing 25/3 Mbps,” to “ensure the . . . fund does not . . . pay more than necessary to serve these areas.” The Commission disagrees. NCTA's approach focuses on areas that already have 10/1 Mbps but not 25/3 Mbps and presumes that the existing provider would be the auction winner. While an existing provider should in many cases be able to seek less support from the auction in order to upgrade existing facilities, it may ultimately be more efficient for a new provider to serve that same biddable unit with new facilities, in addition to serving neighboring areas that lack 10/1 Mbps broadband services.

25. The Commission also adopts its proposal in the Rural Digital Opportunity Fund NPRM to prioritize census blocks that lack 10/1 Mbps over eligible census blocks that have 10/1 Mbps service, but lack service at 25/3 Mbps based on Form 477 data. Specifically, the Commission accomplishes this by reducing the support threshold for such census blocks by an additional 25% to $30, which will have the effect of raising the support cap for these blocks to $222.50. Some commenters support prioritizing areas that lack 10/1 Mbps and some suggest the reserve prices in such areas should be increased to incentivize bidders in those areas. USTelecom opposes focusing first on areas that lack 10/1 Mbps stating that it would be difficult to implement “absent mapping” and due to ongoing CAF Phase II deployment. Pacific Dataport objects to a 10/1 Mbps prioritization and argues it is a “desperate attempt to force-fit a terrestrial solution whether or not the economics make sense.” The Commission disagrees with both commenters. As stated in this document, the Commission has the data to identify census blocks that are wholly unserved by broadband speeds of at least 10/1 Mbps and are not aware of cases where Form 477 data have identified as “unserved” a census block that is in fact served. One of the Commission's goals in this proceeding is to provide incentives to serve locations that lack any terrestrial option. Prioritizing areas that lack 10/1 entirely is consistent with the Commission's statutory mandate that such services are deployed to areas lacking broadband and makes sure this auction does not leave on the wrong side of the digital divide those areas lacking even basic broadband access.

26. For Tribal areas, the Commission similarly adopts the Tribal Broadband Factor as a 25% decrease, to $30, of the support threshold applied to Tribal areas. More specifically, with regard to census blocks located within the geographic area defined by the boundaries of the Tribal land, all eligible census blocks for which the CAM-derived cost is more than $30 will be included in the auction, and the reserve price for such blocks will be the CAM-derived cost minus $30, up to a per-location support cap of $222.50. The Commission recognizes the difficulty Tribal lands have faced in obtaining broadband deployment, and by incorporating this Tribal Broadband Factor, the Commission seeks to incentivize network buildout to ensure that Tribal Nations and their members obtain access to advanced communications services. The record before the Commission provides ample support for adopting a 25% decrease of the cost benchmark to incentivize Rural Digital Opportunity Fund participants to bid on and serve rural Tribal census blocks. A Tribal Broadband Factor will attach to the eligible Tribal areas, and thus reflect the additional cost of serving Tribal lands. While the Commission remains committed to promoting deployment on Tribal lands, it declines to extend a Tribal-specific preference to Tribal entities or to require a nontribal entity to “prove an established partnership” prior to the auction. The Commission concludes that it serves the public interest to maximize participation, and to award support to the most cost-effective bids, subject to the performance and latency weights it adopts in the following.

27. Bidding Credits. The Commission declines to adopt bidding credits for offsetting bidding weights or committing to certain buildout requirements, as proposed by some bidders. Adopting bidding credits to reward bidders for simply having met prior regulatory obligations, for example, would be contrary to the competitive nature of the auction, and, could ultimately reduce the potential reach of the Rural Digital Opportunity Fund. While the Commission declines to adopt a Tribal bidding credit, in this document, it has incorporated into the reserve prices for Tribal lands a Tribal Broadband Factor, similar to what the Commission previously incorporated into the recent offer of model-based support to rate-of-return carriers serving Tribal lands, which will reflect the higher costs unique to deploying service on Tribal lands that may not otherwise already be included in the CAM, and satisfy the Commission's goal of bridging the digital divide.

28. Minimum Geographic Area for Bidding. The Commission concludes that the minimum geographic area for bidding will be no smaller than a census block group, as identified by the U.S. Census Bureau, containing one or more eligible census blocks. As the Commission determined in the CAF Phase II Procedures PN, using census block groups ensures that all interested bidders, including small entities, have flexibility to design a network that matches their business model and the technologies they intend to use. Nevertheless, as the Commission did in the CAF Phase II auction, it reserves the right to select census tracts, or other groupings of areas, when it finalizes the auction design if necessary to limit the number of discrete biddable units. While some commenters support bidding based on eligible census blocks, the Commission declines to adopt individual census blocks as the minimum geographic area for bidding because of the significantly larger number of eligible census blocks, increasing the complexity of the bidding process both for bidders and the bidding system and minimizing the potential for broad coverage by winning bidders. Furthermore, using census blocks as the minimum geographic area could create more challenges for providers in putting together a bidding strategy that aligns with their intended network construction or expansion.

29. The Commission adopts technology-neutral standards for voice and broadband services supported by the Rural Digital Opportunity Fund, based on its experience in the CAF Phase II auction and its success in awarding support to a variety of service providers to deploy broadband in unserved rural areas, and consistent with long-standing Commission policy. Specifically, the Commission will permit bids in four performance tiers, and for each tier will differentiate between bids that would offer either low- or high-latency service. The Minimum performance tier means 25/3 Mbps with a usage allowance that is the greater of 250 GB per month or the average usage of a majority of fixed broadband customers as announced by the Bureau on an annual basis; the Baseline performance tier means 50/5 Mbps speeds with a 250 GB monthly usage allowance or a monthly usage allowance that reflects the average usage of a majority of fixed broadband customers as announced by the Bureau on an annual basis, whichever is higher; the Above-Baseline performance tier means 100/20 Mbps speeds with 2 TB of monthly usage; and the Gigabit performance tier means 1 Gbps/500 Mbps speeds with a 2 TB monthly usage allowance. The Commission adopts 250 GB as the minimum monthly usage allowance for the Baseline performance tier rather than the 150 GB as proposed because based on Measuring Broadband America October 2018-September 2019 usage data, the average monthly usage for fixed broadband customers is 251.45 GBs per month.

30. Low- or high-latency bids will be required to meet the same latency requirements as the CAF Phase II auction high- and low-latency bidders. Low latency means 95% or more of all peak period measurements of network round trip latency are at or below 100 milliseconds, and high latency means 95% or more of all peak period measurements of network round trip latency are at or below 750 milliseconds and a demonstration of a score of 4 or higher using the Mean Opinion Score with respect to voice performance.

31. The Commission maintains a Minimum performance tier for the Rural Digital Opportunity Fund but increase the speed from 10/1 Mbps to 25/3 Mbps. In the CAF Phase II auction, winning bids in a Minimum performance tier, which required only 10/1 Mbps broadband, covered less than 1% of locations awarded support. The record generally supports eliminating the 10/1 Mbps performance tier. Although the Navajo Nation and the Navajo Nation Telecommunications Regulatory Commission (NNTRC) request that the Commission establish a 10/1 Mbps bidding tier for Indian Country because costs of deploying 25/3 Mbps on reservations may discourage bidders, they provided no specific, detailed information about differences in cost. Moreover, allowing another performance tier only in certain areas would complicate the bidding system and the Commission believes the Tribal Broadband Factor will be sufficient to increase support on Tribal lands and incent providers to bid on Tribal lands.

32. Some commenters argue that a Baseline tier of 25/3 Mbps is too low and the Commission should establish a higher speed tier as the minimum eligible for the auction, or that bidders proposing 25/3 Mbps should be required to deploy to all locations in three years and receive only five years of support. Although the Commission has a preference for higher speeds, it recognizes that some sparsely populated areas of the country are extremely costly to serve and providers offering only 25/3 Mbps may be the only viable alternative in the near term. Accordingly, the Commission declines to raise the required speeds in the Minimum tier and it is not persuaded that bidders proposing 25/3 Mbps should be required to build out more quickly or have their support term reduced by half.

33. Several others argue that the Commission should include a fourth performance tier between the Minimum and Gigabit tiers, some suggesting a tier between 25/3 Mbps and 100/20 Mbps, and others suggesting a tier between 100/20 Mbps and the Gigabit tier. The Commission agrees, and accordingly, add an additional performance tier. The Commission finds that allowing bidders to offer 50/5 Mbps service is “critical to reaching the truly high-cost areas in a cost effective way” while meeting the “immediate broadband needs” of consumers today. Adding a performance tier at 50/5 Mbps furthers the Commission's goal of incentivizing providers to deploy networks that will deliver services that consumers need today as well as in the future, but also ensures Minimum speed service will be available in the hardest to serve areas.

34. The Commission declines to make any modifications to its two latency tiers. Some commenters propose a third, very low-latency tier. Commenters have provided no persuasive evidence that suggests technologies meeting latency standards below 100 milliseconds would have such a material benefit for consumers when compared to services meeting the Commission's existing long-standing low-latency requirements that it should potentially divert support to those lower-latency technologies and would not expect consumers to notice the lower latency that would make it worth weighting the auction differently. The Commission notes that providers are encouraged to offer service that improves upon the Commission's minimum tier thresholds.

35. Satellite providers argue that the Commission's existing latency tiers do not account for certain satellites capable of providing lower latency, and that the high-latency weight discourages hybrid networks. SES Americom, which offers middle-mile capacity on its satellites to telecommunications carriers, argues its medium earth orbit satellites can provide broadband service with a latency between 120 milliseconds and 150 milliseconds. Viasat and Hughes ask that the Commission permits a provider to qualify at the low-latency weight if it demonstrates a mean opinion score of 4 or more for VoIP service and routes latency-sensitive traffic over links in which 95% or more of all peak period measurements of network round trip latency are at or below 100 milliseconds. Although medium earth orbit satellites and hybrid satellite technologies have the potential to deliver high-speed broadband to previously unserved rural areas, these technologies have not been deployed widely to deliver service to residential consumers; therefore, it would be premature to modify the Commission's latency standards based on the record to qualify these technologies in the Phase I auction to bid with a lower-latency weight, or add an additional interim latency weight. This decision does not preclude the Commission from reconsidering the feasibility of modifying latency standards to accommodate medium earth orbit satellite and hybrid satellite technologies for Phase II of the Rural Digital Opportunity Fund.

36. As in the CAF Phase II auction, the Commission adopts weights that reflect its preference for higher speeds, higher usage allowances, and low latency. The Commission also anticipates that terrestrial fixed networks will likely result in significant fiber deployment that can serve as a backhaul for rural 5G networks. Accordingly, the Commission chooses performance tier and latency weights to encourage the deployment of higher speed, low-latency services. Specifically, the Commission adopts weights of 50 for the Minimum performance tier, 35 for the Baseline performance tier, 20 for the Above Baseline performance tier, and 0 for the Gigabit performance tier, as well as a weight of 40 for high-latency bids and 0 for low-latency bids to favor higher- than Baseline speeds and low-latency services. Under the descending clock auction format the Commission will use the weights, when subtracted from the clock percentage for the round, to indicate the percentage of an area's reserve price that a winning bidder would receive in per-location support for serving the locations in that area.

37. The following charts summarize the Commission's approach:

38. The Commission declines to modify the 90-point maximum spread between the tiers that the Commission used in the CAF II auction. Many commenters argued that the Commission should increase the 90-point spread between the highest and lowest tiers to favor higher speeds even more. Others argue that the Commission should narrow the weighting spread. Although the Commission does value higher speed services, it also recognizes that different technologies may be better suited for different areas. Based on the Commission's experience with the CAF Phase II auction and its weights, the Commission believes the weights it adopts will provide an opportunity for providers using various technologies to participate in the auction and to compete for appropriate levels of support while providing a minimum level of service to consumers in all awarded areas.

39. The Commission adopts its proposal to establish a weight of 40 points as the weight for high-latency services, which is an increase from the CAF Phase II weight of 25. Satellite providers oppose increasing the weight for high latency. Viasat claims that substantially increasing the latency weight would effectively preclude meaningful participation by geostationary orbit (GSO) satellite providers in the auction and would give Viasat and other GSO satellite providers virtually no chance of participating successfully. Moreover, Viasat argues that increasing the latency weight would significantly reduce the number of supported locations, leaving behind areas where no terrestrial provider bids, and substantially increase the average per-location subsidies in areas where terrestrial providers do bid. On the other side, several commenters argue the Commission should assign an even greater weight to high-latency bids. USTelecom argues that satellite broadband service is not a bridge to next-generation 5G broadband services and suggests that the Commission exclude satellite from bidding in the Phase I auction, or at a minimum, increase the high-latency weighting to 60. The Commission's decision to introduce a more moderate increase to the high-latency weight reflects the importance of latency to interactive, real-time applications and voice services, as well as the secondary benefits of terrestrial facilities, but also recognizes the importance of allowing all technologies the ability to participate in the auction and offer service to unserved areas. Moreover, adopting a fourth performance tier will moderate some of the effects of the Rural Digital Opportunity Fund NPRM's proposed weights. The 90-point spread the Commission adopts in this document will allow high-latency bidders to compete for appropriate levels of support in a much larger auction.

40. All Rural Digital Opportunity Fund support recipients, like all other high-cost ETCs, will be required to offer standalone voice service and offer voice and broadband services at rates that are reasonably comparable to rates offered in urban areas. Some commenters urge the Commission to eliminate the standalone voice requirement. WISPA argues that RDOF recipients should not be required to offer standalone voice service, because, consumers increasingly are subscribing to voice as a component of their broadband connections. SpaceX claims the standalone voice requirement is no longer useful for nearly all consumers because Americans no longer choose to buy standalone voice, and the requirement adds costs to develop and make available voice equipment and provide voice-specific customer support. GeoLinks urges the Commission to simply require that auction winners offer a voice service option, which can be available via a service bundle. The National Association of Counties states that “unfortunately, the unintended consequence of this requirement would prevent willing and able entities from providing high-speed broadband internet services solely because they do not provide voice services in addition to broadband.”

41. Section 254 of the Communications Act of 1934, as amended, gives the Commission the authority to support telecommunications services, which the Commission has defined as “voice telephony service.” The Commission made clear when it adopted the standalone voice requirement as a condition of receiving Connect America Fund support in 2011 that the definition of the supported service, voice telephony service, is technologically neutral, allowing ETCs to provision voice service over many platforms. When it adopted the broadband reasonable rate comparability requirement in 2014, the Commission explained that “high-cost recipients are permitted to offer a variety of broadband service offerings as long as they offer at least one standalone voice service plan and one service plan that provides broadband that meets the Commission's requirements.” In 2018, the Commission dismissed requests to eliminate the standalone voice requirement. The Commission reasoned that auction funding recipients, unlike funding recipients of other USF mechanisms, “may be the only ETC offering voice in some areas and not all consumers may want to subscribe to broadband service.” The record does not show that these facts have changed, and voice telephony is still the supported service. Therefore, the Commission requires all ETCs receiving Rural Digital Opportunity Fund support to provide standalone voice service meeting the reasonable comparability requirements in the areas in which they receive support.

42. Some commenters suggest that the Commission adopts additional public interest obligations. For example, the Schools, Health & Libraries Broadband Coalition argues that the Commission should specifically require recipients of Rural Digital Opportunity Fund support to deploy high-quality broadband to anchor institutions in their service territories. The California Emerging Technology Fund argues that the Commission should require every provider to propose a low-income package with a rate not to exceed $20. The Commission notes that support recipients, like all high-cost ETCs, will be required to report annually the number of anchor institutions to which they newly began providing service and to comply with all relevant Lifeline rules. Additional obligations regarding anchor institutions and low-income subscribers are more properly addressed in the Commission's other universal service programs.

43. The Commission adopts interim service milestones for the Rural Digital Opportunity Fund that are based on those the Commission adopted for the CAF Phase II auction for monitoring progress in meeting deployment obligations. The Commission will require support recipients to commercially offer voice and broadband service to 40% of the CAM-calculated number of locations in a state by the end of the third full calendar year following funding authorization, and 20% each year thereafter. The Commission modifies that approach, however, in the way it accounts for possible disparities between the CAM location counts and the actual number of locations in a winning bidder's service territory in a state. Although initial service milestones will be based on the number of locations identified by the CAM, the Commission is confident that it will have access to more accurate location data in the next few years, whether as a result of the Digital Opportunity Data Collection, the development of a broadband serviceable location database, the 2020 Census and/or some other data source. The Commission concludes that winning bidders will be required to serve the number of locations subsequently identified in each respective area. The Commission is persuaded by commenters who argue that the costs of building and operating broadband networks are predominantly governed by the size and characteristics of the areas served rather than the precise number of locations. The Commission accordingly directs the Bureau to seek comment on the updated location data and publish revised location counts no later than the end of service milestone year six, which the Commission expects to be 2027. The Commission will then use the new location counts to determine whether a Rural Digital Opportunity Fund support recipient offers the required voice and broadband service throughout the designated area by the end of milestone year eight.

44. The Commission takes this approach because the record reflects considerable concern about the proposed pro rata reductions in a winning bidder's support if, ultimately, there are fewer locations than originally identified by the Commission. For the CAF Phase II auction, the Commission created a process to facilitate appropriate adjustments to the defined deployment obligations, with associated support reductions, and delegated the implementation of this process to the Bureau. Most commenters in this proceeding oppose the pro rata support reductions, and argue that the Commission should not penalize support recipients when the location data used to establish milestones overstates the number of locations in an area. The Commission agrees and will not reduce support if the Bureau's updated location counts indicate fewer actual locations in the awarded areas in most circumstances.

45. Location counts in the CAM are based on 2011 Census data and the Commission recognizes that there may be some disparity between the number of locations identified before the auction occurs and the “facts on the ground.” Moreover, circumstances may change before the end of the 10-year support term. Some rural areas may experience a decrease in population, and in other areas new housing developments may be built. By requiring build-out to the entire designated area even in light of the possibility that location numbers could change, the Commission seeks to ensure the availability of broadband and voice services to as many rural consumers and small businesses within the Phase I auction areas by the end of the ten-year term as possible.

46. Until the Bureau adopts new location counts, the Commission will measure compliance with service milestones against the CAM location counts across the awarded areas for each Phase I support recipient. The Commission will require support recipients to commercially offer voice and broadband service to 40% of the CAM-calculated number of locations in a state by the end of the third full calendar year following funding authorization, and 20% each year thereafter, consistent with the CAF Phase II deployment obligations. In the following, the Commission explains how service milestones will be revised in various circumstances after the Bureau gathers more accurate location counts.

47. More Locations. After the Bureau adopts updated location counts, in areas where there are more locations than the number of CAM locations, the Commission will not require a support recipient to commercially offer voice and qualifying broadband to 100% of the new number of locations until year eight. The Commission will continue to use the CAM location counts to measure compliance with interim service milestones up to 100% of the CAM locations by the end of the sixth calendar year. If there are more new locations than CAM locations, recipients should be able to meet those milestones, and measuring compliance against the new number of locations later in the term will give carriers the opportunity to revise and update deployment plans after the Bureau announces the new number of locations. The Commission does not adopt an interim milestone for the end of year seven, although carriers will be required to report to Universal Service Administrative Company (USAC), consistent with current high-cost rules, any locations deployed in that calendar year. Support recipients will be required to offer service to 100% of the new location count by the end of year eight. Carriers for which the new location count exceeds the CAM locations within their area in each state by more than 35% will have the opportunity to seek additional support or relief from the Commission.

48. Any such ETC with increased deployment obligations may also seek to have its new location count adjusted to exclude additional locations, beyond the number identified by CAM, that it determines before the end of year eight are ineligible ( e.g., are not habitable), unreasonable to deploy to ( e.g., if it would require a carrier to install new backhaul facilities or other major network upgrades solely to provide broadband to that location), or part of a development newly built after year six for which the cost and/or time to deploy before the end of the support term would be unreasonable.

49. Fewer Locations. In areas where there are fewer locations than CAM locations, a support recipient must notify the Bureau no later than the March 1 following the fifth year of deployment. Upon confirmation by the Bureau, the Commission will require support recipients to reach 100% of the new number by the end of the sixth calendar year. While planning and deploying its network, a support recipient that discovers there are not enough locations to even meet its service milestones in years three and four, which are based on the number of CAM locations, should seek a waiver from the Bureau. Carriers for which the new location count is less than 65% of the CAM locations within their area in each state shall have their support amount reduced on a pro rata basis by the number of reduced locations.

50. Newly Built Locations. In addition to offering voice and broadband service to the updated number of locations identified by the Bureau, the Commission requires support recipients to offer service on reasonable request to locations built subsequently. Support recipients are not obligated to offer service to these newly built locations that do not request service, or to those with exclusive arrangements with other providers. Assuming a two-year deployment cycle, support recipients similarly are not required to deploy to any locations built after milestone year eight.

51. The Commission aligns the service milestones and related reporting deadlines with those of other high-cost programs to minimize the administrative burdens on the Commission, USAC, and support recipients. Regardless of when a Rural Digital Opportunity Fund recipient is authorized to begin receiving support, each service milestone will occur on December 31. The Commission acknowledges that, by aligning the service milestones, some Rural Digital Opportunity Fund support recipients likely will have more than three years to complete their 40% milestone. CenturyLink suggests that the Commission authorize funding for all winning bidders to begin on January 1, 2022 to align all Rural Digital Opportunity Fund support recipients on calendar year basis for receipt of support and corresponding obligations. The Commission finds that its method of aligning service milestones is preferable because it establishes December 31 as the service milestone date for all participants regardless of authorization date but still allows the Commission to authorize support for a participant and thus to begin broadband deployment in unserved areas as soon as possible.

52. The Commission concludes that a support recipient will be deemed to be commercially offering voice and/or broadband service to a location if it provides service to the location or could provide it within 10 business days upon request. All ETCs must advertise the availability of their voice services through their service areas, and the Commission requires support recipients also to advertise the availability of their broadband services within their service area. Compliance with service milestone requirements will be determined on a state-level basis, so that a support recipient would be in compliance with a service milestone if it offers service meeting the relevant performance requirements to the required percentage of locations across all of the awarded areas included in its winning bids in a state.

53. The Commission also sought comment on whether it should require support recipients to build out more quickly earlier in their support terms by offering voice and broadband to 50% of the requisite number of locations in a state by the end of the third year. A few commenters supported an accelerated buildout schedule, while the Navajo Nation and NNTRC asked the Commission to extend build-out milestones on Tribal Lands to recognize the difficulty in deploying infrastructure in Indian Country. Upon consideration, the Commission finds that using the same interim milestones as in the CAF II auction strikes the appropriate balance and, thus, adopts the identical first service milestone that it used there. Recipients have ample incentive to reach their buildout milestones as quickly as possible to increase their subscribership and revenues. However, the Commission also recognizes that deploying broadband in some areas will be more challenging than in others and may require all the time allowed by the deployment milestones.

54. To ensure that support recipients are meeting their deployment obligations, the Commission adopts essentially the same reporting requirements for the Rural Opportunity Digital Fund that it adopted for the CAF Phase II auction. Consistent with the Commission's decision in this document to align the interim service milestones, it requires Rural Digital Opportunity Fund support recipients to file annually location and technology data in the HUBB at the same time and to make the same certifications when they have met their service milestones. The Commission also amends section 54.316 of its rules to require all Rural Digital Opportunity Fund support recipients, as all high-cost support recipients currently do, to file their annual location data in the HUBB by March 1, and the Commission encourages them to file such data on a rolling basis.

55. The Commission also requires Rural Digital Opportunity Fund support recipients to file the same information in their annual FCC Form 481s that it requires of the CAF Phase II auction support recipients. Specifically, in addition to the certifications and information required of all high-cost ETCs in the FCC Form 481, Rural Digital Opportunity Fund support recipients will be required to certify each year after they have met their final service milestone that the network they operated in the prior year meets the Commission's performance requirements. In addition, they will be required to identify the number, names, and addresses of community anchor institutions to which they newly began providing access to broadband service in the preceding calendar year as well as identify the total amount of support that they used for capital expenditures in the previous calendar year. Moreover, support recipients will need to certify that they have available funds for all project costs that will exceed the amount of support they will receive in the next calendar year. Finally, Rural Digital Opportunity Fund support recipients will be subject to the same annual section 54.314 certifications, the same record retention and audit requirements, and the same support reductions for untimely filings as all other high-cost ETCs.

56. In the event a support recipient does not meet a service milestone, the Commission adopts the same non-compliance measures that are applicable to all high-cost ETCs, the same framework for support reductions applicable to high-cost ETCs that are required to meet defined service milestones, and the same process the Commission adopted for drawing on letters of credit for the CAF Phase II auction. The Commission also adopts additional non-compliance measures for a support recipient that fails to meet its third-year service milestone by more than 50%. Specifically, the Commission relies on the following non-compliance tiers (which are described in more detail in section 54.320 of the Commission's rules):

57. A support recipient will have the opportunity to move tiers as it comes into compliance and will receive any withheld support as it increases build-out and moves from one of the higher tiers ( i.e., Tiers 2-4) to Tier 1 status during the build-out period. If a support recipient misses the six year or eight year service milestone as applicable, it will have 12 months from the date of the service milestone deadline to come into full compliance.

58. Given that the Commission is modifying the service deployment milestones to account for the Bureau's updated location counts, the Commission makes commensurate modifications to the consequences if an ETC does not come into full compliance after the grace period for its sixth-year service milestone or, for an ETC with a new location count that is greater than its CAM location count, its eighth-year service milestone. At the sixth-year service milestone, support will be recovered as follows: (1) If an ETC has deployed to 95% or more of the CAM location count, or of the adjusted CAM location count if there are fewer locations, but less than 100%, USAC will recover an amount of support that is equal to 1.25 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (2) if an ETC has deployed to 90% or more of the CAM location count, or of the adjusted CAM location count if there are fewer locations, but less than 95%, USAC will recover an amount of support that is equal to 1.5 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 5% of the support recipient's total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state; and (3) if an ETC has deployed to fewer than 90% of the CAM location count, or of the adjusted CAM location count if there are fewer locations, USAC will recover an amount of support that is equal to 1.75 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 10% of the support recipient's total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state.

59. If the ETC's new location count is greater than its CAM location count, and recognizing the increased obligations of such ETCs, support will be recovered as follows if the ETC does not meet the eighth year service milestone: (1) If an ETC has deployed to 95% or more of its new location count, but less than 100%, USAC will recover an amount of support that is equal to the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (2) if an ETC has deployed to 90% or more of its new location count, but less than 95%, USAC will recover an amount of support that is equal to 1.25 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations; (3) if an ETC has deployed to 85% or more of its new location count, but less than 90%, USAC will recover an amount of support that is equal to 1.5 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 5% of the support recipient's total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state; and (4) if an ETC has deployed to less than 85% of its new location count, USAC will recover an amount of support that is equal to 1.75 times the average amount of support per location received in the state for that ETC over the support term for the relevant number of locations, plus 10% of the support recipient's total Rural Digital Opportunity Fund support authorized over the ten-year support term for that state.

60. The same support reductions will apply if USAC later determines in the course of a compliance review that a support recipient does not have sufficient evidence to demonstrate that it was offering service to all of the locations required by the sixth or eighth service milestones.

61. As in the CAF Phase II auction, USAC will be authorized to draw on an ETC's letter of credit to recover all of the support that is covered by the letter of credit in the event that a support recipient does not meet the relevant service milestones, does not come into compliance during the cure period, and does not timely repay the Commission the support associated with the non-compliance gap. If a support recipient is in Tier 4 status during the build-out period or has not deployed to 100% of CAM locations by the end of year six (or the adjusted location total if there are fewer locations), and USAC has initiated support recovery as described in this document, the support recipient will have six months to pay back the support that USAC seeks to recover. If the support recipient does not repay USAC by the deadline, the Bureau will issue a letter to that effect and USAC will draw on the letter of credit to recover all of the support that is covered by the letter of credit. If a support recipient has closed its letter of credit and it is later determined that the support recipient does not have sufficient evidence to demonstrate that it was offering service to the total number of required locations, that support recipient will be subject to additional non-compliance measures if it does not repay the Commission after six months. And like other high-cost ETCs, support recipients will be subject to other sanctions for non-compliance with the terms and conditions of high-cost funding, including but not limited to the Commission's existing enforcement procedures and penalties, reductions in support amounts, potential revocation of ETC designations, and suspension or debarment.

62. The Commission sought comment on whether there are additional measures it could adopt that would help ensure that Rural Digital Opportunity Fund support recipients will meet their third-year service milestones, and on what steps it should take if it appears support recipients will not be able to meet their service milestones. The National Rural Electric Cooperative Association (NRECA) suggested the Commission make more detailed inquiries of a support recipient to the extent it substantially misses the 40% service obligation at the three-year benchmark and possibly terminate support payments. The Commission agrees with NRECA that it is unlikely that a recipient that substantially misses its third-year milestone would be able to come into compliance in the following year. The Commission therefore directs any support recipient that believes it cannot meet its year three milestone to notify the Bureau and provide information explaining this expected deficiency. If a support recipient has not made such notification by March 1 following the third-year service milestone and has deployed by the end of the third-year milestone to fewer than 20% of its required locations in that state, the Commission will find the recipient to be in default, rather than withholding support and providing an additional six months to come into compliance.

63. The Commission declines to adopt additional performance targets to provide greater incentives for Rural Digital Opportunity Fund support recipients to enroll customers in the eligible areas. The Commission specifically sought comment on a proposal to adopt subscribership milestones set at 70% of the yearly deployment benchmarks and reduce support accordingly for failure to meet the subscription target. Most commenters opposed a subscription requirement and argued that a 70% subscription requirement was too high and unrealistic in rural areas. Even some commenters supporting the concept of a subscription requirement thought 70% was too high and suggested any subscribership requirement should be as low as 35%. Commenters argued that a subscribership requirement with reductions in support for failure to meet those targets would discourage participation in the auction, and change the focus of the Rural Digital Opportunity Fund program from a deployment program to an adoption program.

64. The Commission agrees that requiring specific subscription milestones is likely to discourage many bidders from participating in the auction because they would risk losing funding when they likely need it most to complete the buildout of their networks. Commenters pointed out that support recipients have a statutory obligation to advertise the availability of their services throughout their service areas and argue that they have the incentive to attract customers to increase their revenues. Commenters also argued that subscription rates of 70% in some rural, low-income areas would be almost impossible to attain. In addition, support recipients must be prepared to provide service meeting the relevant public interest obligations within 10 business days to any locations they report in the HUBB for purposes of meeting the service milestones, which will give support recipients added incentive to ensure their networks have sufficient capacity to serve the required number of locations. Given these requirements, the risk of discouraging participation in the auction, and the administrative complexity of monitoring subscribership, the Commission declines to require a certain level of subscription as a condition of Rural Digital Opportunity Fund support.

65. Consistent with prior Commission auctions and based on its recent experience with the CAF Phase II auction, the Commission adopts the two-stage application process that will govern the auction process for the Rural Digital Opportunity Fund, including pre-auction and post-auction requirements.

66. The Commission concludes that participants in the Rural Digital Opportunity Fund Phase I auction process will be required to comply with the same short-form and long-form application process. Specifically, in the pre-auction short-form application, a potential bidder will be required to establish its eligibility to participate in the auction by providing, among other things, basic ownership information and certifying to its qualifications to receive support. Once approved as qualified to bid by the Bureau, the company may participate in the auction. After the auction, winning bidders must file more extensive information for the long-form application, demonstrating to the Commission that they are legally, technically and financially qualified to receive support. As in CAF Phase II, the Commission stresses that each potential bidder has the sole responsibility to perform its due diligence research and analysis before proceeding to participate in the Rural Digital Opportunity Fund auction. The Commission directs the Bureau, the Office of Economics and Analytics, and the Rural Broadband Auctions Task Force, to adopt the format and deadlines for the submission of documentation for the short-form and long-form applications.

67. Consistent with the approach in the CAF Phase II auction and proposed in the Rural Digital Opportunity Fund NPRM, the Commission adopts its existing universal service competitive bidding rules so that applicants will be required to provide information that will establish their identity, including disclosing parties with ownership interests and any agreements the applicants may have relating to the support to be sought through the Rural Digital Opportunity Fund auction. Interested parties will submit a pre-auction short-form application, providing basic information and certifications regarding their eligibility to receive support. Commission staff will then review the short-form applications, determining whether the applicants are eligible to participate in the auction. Thereafter, Commission staff will release a public notice indicating which short-form applications are deemed complete and which are deemed incomplete. Consistent with CAF Phase II, applicants whose short-form applications are deemed incomplete will be given a limited opportunity to cure defects and to resubmit correct applications, excluding major modifications. As in CAF Phase II, a second public notice will be released designating the applicants that are qualified to participate in the Rural Digital Opportunity Fund auction.

68. Ownership. The Commission will require that each auction applicant provide information in its short-form application to establish its identity, including information concerning its real parties in interest and its ownership, and to identify all real parties in interest to any agreements relating to the participation of the applicant in the competitive bidding. The Commission will also require an applicant to provide in its short-form application a brief description of any such agreements, including any joint bidding arrangements. Commission staff would use such information to identify relationships among applicants, including those that might be commonly controlled or members of a joint bidding arrangement. The Commission will also require every applicant to certify in its short-form application that it has not entered into any explicit or implicit agreements, arrangements, or understandings of any kind related to the support to be sought through the Rural Digital Opportunity Fund auction, other than those disclosed in the short-form application.

69. Types of Technologies. The Commission will also require all applicants to indicate the type of bids that they plan to make and describe the technology or technologies they will use to provide service for each bid. This information is imperative to establishing bidders' eligibility for the bidding weights the Commission adopts. Consistent with CAF Phase II, the Commission will allow an applicant to use different technologies within a state as well as hybrid networks to meet its public interest obligations.

70. Technical and Financial Qualifications Certifications. Likewise, applicants will be required to certify that they are financially and technically qualified to meet the public interest obligations in each area for which they seek Rural Digital Opportunity Fund support. Based on the Commission's experience with CAF Phase II, this approach is an appropriate screening process to ensure serious participation, without being overly burdensome to applicants and recipients.

71. Operational History. Applicants will be required to provide additional assurances to the Commission that the entities that intend to bid in the auction have experience operating networks. The Commission adopts a requirement that applicants certify in their short-form application that they have provided voice, broadband, and/or electric distribution or transmission services for at least two years and that they specify the number of years they have been operating, or that they are the wholly-owned subsidiary of an entity that meets these requirements. Applicants that have provided voice or broadband services must also certify that they have filed FCC Form 477s as required during that time period. As the Commission determined in CAF Phase II, it also will accept certifications from entities that have provided electric distribution or transmission services for at least two years (or their wholly owned subsidiaries).

72. An applicant that can certify it has provided voice, broadband, and/or electric distribution or transmission services for at least two years, or that it is a wholly-owned subsidiary of such an entity, will provide the Commission with sufficient assurance before the auction that it has the ability to build and maintain a network.

73. The Commission will require each applicant that does not have two years of operational experience, to submit with its short-form application its (or its parent company's) financial statements that have been audited by an independent certified public accountant from the three prior fiscal years, including the balance sheets, incomes, and cash flow statements, along with a qualified opinion letter. The Commission's interest in having a level of insight into the financial health of a potential Rural Digital Opportunity Fund auction bidder over a longer period of time is a necessary prequalification to bid, particularly because this subset of bidders will not able to demonstrate that they have operated and maintained a voice, broadband and/or electric distribution or transmission network for at least two years. Likewise, such applicants will also be required to submit a letter of interest from a bank meeting the Commission's eligibility requirements stating that the bank would provide a letter of credit to the applicant if the applicant becomes a winning bidder and is awarded support of a certain dollar magnitude. A letter of interest from the bank will provide the Commission with an independent basis for some additional assurance regarding the financial status of the entity.

74. The Commission declines to adopt a suggestions from USTelecom and Windstream to limit the total bid based on the bidder's annual revenues, while Verizon proposes further pre-auction scrutiny “on applicants that are seeking authority to bid for a large number of locations, relative to the size of their existing customer base, or are planning to bid for performance tiers in which they currently provide little or no commercial service.” The Commission is not persuaded that either of these proposals are an effective method to guarantee the financial qualifications of bidders to perform; instead, they would more likely limit competition by arbitrarily excluding bidders with more limited revenues or existing customer bases. The Commission is generally reluctant to adopt additional measures that limit competition from bidders and any concerns with financial qualifications will be resolved during the short-form applications.

75. The Commission declines to collect less financial and technical information from existing USF support recipients on the short-form than it did in CAF Phase II as suggested by some commenters. It is important for Commission staff to review the same specific information from each carrier when evaluating carriers' qualifications to bid. However, CAF Phase II auction participants that subsequently defaulted on their entire award will be barred from participating in the Rural Digital Opportunity Fund. The Commission declines to bar participants that defaulted in other universal service programs as well as decline to subject participants to additional scrutiny that subsequently defaulted in CAF Phase II, as suggested by other commenters, or that have filed for bankruptcy or that have been bankrupt in the recent past. The Commission is capable of evaluating the circumstances of a prior default and the outcome of any subsequent enforcement action without collecting additional information in the short-form application. All applicants will be subject to a thorough financial and technical review in both the short-form application stage and the long-form application stage prior to bidding and ultimately receiving support.

76. Conversely, some commenters stated that the Commission should increase the short-form requirements. For instance, NTCA asserted that the Commission should require that a prospective bidder demonstrate “more thorough qualifications at the short-form stage” focusing on technical and operational qualifications. NRECA proposes shifting to the short-form review more of the detailed technical and financial showings conducted at the long-form review. USTelecom states that the Commission should require an applicant to provide information about subscribership trends and employee expertise to show that it has the expertise and experience “to scale its network.” Subscribership and employee expertise do not necessarily suggest that the entity is unqualified to bid in the Rural Digital Opportunity Fund auction. The Commission's interest in maximizing participation in the Rural Digital Opportunity Fund auction outweighs the potential risk of qualifying a less experienced entity to participate in the auction without reviewing that bidder's subscribership and employee counts, particularly given that it adopts the requirement that bidders will be required to submit their audited financial statements. This will allow the Commission to scrutinize the bidder's audited financial statements at the long-form application stage before authorizing that entity to begin receiving support. The Commission believes that requiring more technical and operational information before the auction begins will provide significant barriers to entry for some participants and unnecessarily extend the short-form review period and delay the auction. Moreover, additional technical information at the short-form stage would be speculative based on a presumption of what a winning area would look like.

77. Similarly, the Commission declines NTCA's proposal to require applicants to submit propagation maps to show where they intend to bid, as it would be burdensome on applicants “particularly given the maps may not be relevant if an applicant does not become qualified or does become qualified but does not win support in that area.” The Commission concludes on balance that its short-form process provides significant assurances for serious participation and its long-form post-auction process, as discussed in the following, will provide an in-depth extensive review of the winning bidders' qualifications.

78. Audited Financials. The Commission will require each applicant that has certified that it has at least two years of operational experience to submit financial statements that have been audited by an independent certified public accountant from the prior fiscal year, including balance sheets, net income and cash flow, along with a qualified opinion letter with its short-form application. If such an applicant (or its parent company) is not audited in the ordinary course of business, the Commission will require the applicant to submit unaudited financial statements from the prior fiscal year with its short-form application and to certify that it will submit audited financials during the long-form application process. The Commission will require winning bidders that take advantage of this option to submit their audited financials no later than the deadline for submitting their proof of ETC designation (which is within 180 days of the public notice announcing winning bidders). If the audit process is expected to exceed 180 days, a winning bidder will have the option of seeking a waiver of this deadline. In considering such waiver requests, the Commission directs the Bureau to determine whether the entity demonstrated in its waiver petition that it took steps to prepare for an audit prior to being named a winning bidder and that it took immediate steps to obtain an audit after being announced as a winning bidder. Applicants that certify that they have at least two years of operational experience and fail to submit audited financial statements as required, will be subject to the same base forfeiture of $50,000 that the Commission adopted for the CAF Phase II auction. The Commission notes that most CAF Phase II auction support recipients were able to obtain audited financial statements by the required deadlines. As with the CAF Phase II auction, the Commission does not extend to applicants that lack two years of operational history the option of submitting audited financial statements during the long-form application stage. They must submit audited financial statements from the three prior fiscal years with their short-form application, as described in this document.

79. Eligible Telecommunications Carrier Designation. The Commission adopts the same CAF Phase II flexibility with respect to ETC designations and do not require an applicant to obtain its designation as an ETC in the areas where it seeks support prior to bidding in the Rural Digital Opportunity Fund auction. The Commission does, however, require an applicant to disclose in its short-form application its status as an ETC in any area for which it will seek support or if it will become an ETC in any area where it wins support. The Commission is not persuaded that it should require an applicant to secure its ETC designation prior to the auction. As the Commission determined in CAF Phase II, permitting entities to obtain ETC designation after the announcement of winning bidders for support, encourages broader participation in the competitive process by a wider range of entities. Additionally, the Commission's experience with CAF Phase II indicates that most applicants were ultimately designated within the long form review period, even if it took them longer than the ETC designation proof deadline. The Commission will continue to presume that an entity acted in good faith if it files its ETC application within 30 days of the release of the public notice announcing that it is a winning bidder, but as with both the rural broadband experiments and the CAF Phase II auction, the Commission discovered there were various circumstances impacting the ability of individual bidders to file their ETC applications and that when an application was filed did not always determine whether an applicant was designated within the 150 remaining days.

80. Spectrum Access. Additionally, with respect to eligibility requirements relating to spectrum access, applicants will be required to disclose and certify the source of the spectrum they plan to use to meet Rural Digital Opportunity Fund obligations in the particular area(s) for which they plan to bid. Specifically, applicants will be required to disclose whether they currently hold a license or lease the spectrum, including any necessary renewal expectancy, and whether such spectrum access is contingent on obtaining support in the auction. Consistent with CAF Phase II, the Commission will require applicants intending to use spectrum to indicate the spectrum band(s) they will use for the last mile, backhaul, and any other parts of the network; and the total amount of uplink and downlink bandwidth (in megahertz) that they have access to in each spectrum band for last mile. Applicants must also describe the authorizations they have obtained to operate in the spectrum and list the call signs and/or application file numbers associated with their spectrum authorizations, if applicable. Applicants must have secured any Commission approvals necessary for the required spectrum access prior to submitting an auction application, if applicable. Moreover, applicants will be required to certify that they will retain their access to the spectrum for at least ten years from the date support is authorized. NTCA argues that applicants who do not have access to spectrum should be required to show how they would acquire it. The Commission agrees and, consistent with its treatment of this situation in CAF Phase II, it will find a recipient in default if it is unable to meet its obligations, including if the authorization is not renewed during the support term.”

81. Also, any applicant that intends to provide service using satellite technology will be required to identify in its short-form application its expected timing for applying for any earth station licenses it intends to use in the areas where it intends to bid, if it has not already obtained these licenses. The Commission does not require satellite providers to obtain all necessary earth station licenses by the short-form application deadline. An earth station license requires that a satellite provider bring the station into operation within one year of obtaining a license and a satellite provider may not be ready to meet this requirement by the short-form filing deadline. Moreover, because an applicant can apply to obtain a microwave license at any time, the Commission will permit an applicant that intends to obtain microwave license(s) for backhaul to meet its public interest obligations for the Rural Digital Opportunity Fund by describing in its short-form application its expected timing for applying for such license(s), if it has not already obtained them.

82. Due Diligence Certification. Consistent with the procedures adopted for the CAF Phase II auction, the Commission adopts the requirement that an applicant certify that it has performed due diligence concerning its potential participation in the Rural Digital Opportunity Fund auction so the applicant understands its obligations. Specifically, the Commission adopts the requirement that each applicant make the following certification in its short-form application under penalty of perjury:

83. This proposed certification will help ensure that each applicant acknowledges and accepts responsibility for its bids and any forfeitures imposed in the event of default, and that the applicant will not attempt to place responsibility for the consequences of its bidding activity on either the Commission or third parties.

84. Winning bidders for the Rural Digital Opportunity Fund support will be required to comply with the same long-form application process the Commission adopted for CAF Phase II. The rules the Commission adopts in the following provide the basic framework and requirements for winning bidders to demonstrate their qualifications for support. After the close of the auction, the Bureau will release a public notice declaring the auction closed, identifying the winning bidders, and establishing details and deadlines for next steps. Winning bidders will then be required to submit extensive information detailing their respective qualifications in their long-form applications, allowing for a further in-depth review of their qualifications prior to authorization of support. Any additional information that is required to establish whether an applicant is eligible for Rural Digital Opportunity Fund support will be announced by public notice. The Commission notes that very few commenters addressed the Commission's proposed post-auction long-form application processes and none of those commenters raised significant concerns. The Commission therefore concludes the rules it adopts in this document will best serve the Commission's ability to determine whether the applicants are ultimately eligible for Rural Digital Opportunity Support authorization funding, providing a fair and efficient review process.

85. Ownership Disclosure. The Commission adopts the ownership disclosure requirements proposed in the Rural Digital Opportunity Fund NPRM. Specifically, an applicant for Rural Digital Opportunity Fund support must fully disclose its ownership structure as well as information regarding the real party- or parties-in-interest of the applicant or application. Ownership disclosure reports from the short-form process must be updated if any information reported in the short-form has changed.

86. Financial and Technical Capability Certification. Consistent with CAF Phase II, the Commission will require a long-form applicant to certify that it is financially and technically capable of providing the required coverage and performance levels within the specified timeframe in the geographic areas in which it won support.

87. Public Interest Obligations Certifications. The Commission next adopts proposed rule 54.804(b)(2)(iii), concluding that a long-form applicant must certify in its long-form application that it will meet the relevant public interest obligations for each performance tier and latency combination for which it was deemed a winning bidder, including the requirement that it will offer service at rates that are equal to or lower than the Commission's reasonable comparability benchmarks for fixed services offered in urban areas.

88. Description of Technology and System Design. Due to the varying types of technologies that entities may use to fulfill their Rural Digital Opportunity Fund competitive bidding process obligations, the Commission finds that it is also reasonable to require each winning bidder to submit a description of the technology and system design it intends to use to deliver voice and broadband service, including a network diagram, which must be certified by a professional engineer. The professional engineer must certify that the network is capable of delivering, to at least 95% percent of CAM locations in each relevant state, voice and broadband service that meets the requisite performance requirements. There must be sufficient capacity to meet customer demand at or above the prescribed levels during peak usage periods. Entities proposing to use wireless technologies also must provide a description of their spectrum access in the areas for which they seek support and demonstrate that they have the required licenses to use that spectrum if applicable. This documentation will enable Commission staff to have assurance from an engineer that the proposed network will be able to fulfill the service obligations to which the bidders will have to commit. Filing deadlines will be strictly enforced, and bidders should not presume that they may obtain a waiver absent extraordinary circumstances.

89. Available Funds Certification. Next the Commission adopts proposed rule 54.804(b)(2)(v), concluding that an applicant must certify in its long-form application that it will have the funds available for all project costs that exceed the amount of support to be received, and that it will comply with all program requirements. Simultaneously, the Commission will also require that winning bidders describe in their long-form application how the required construction will be funded and include financial projections that demonstrate that they can cover the necessary debt service payments over the life of the loan. Additionally, these requirements include the public interest obligations contained in the Commission's rules.

90. ETC Eligibility and Documentation. Consistent with the CAF Phase II auction rules, a winning bidder in the Rural Digital Opportunity Fund auction will be permitted to obtain its ETC designation after the close of the auction, submitting proof within 180 days of the public notice identifying winning bidders. The Commission declines to forbear from the ETC requirement. The Commission recognizes the statutory role that Congress created for state commissions and the FCC with respect to ETC designations, and the Commission does not disturb that framework. Nothing in the record addresses the standards necessary to find forbearance in the public interest, even if some interested parties may prefer not to become ETCs with all of the associated obligations. Therefore, the Commission will continue to require service providers to obtain ETC status to qualify for universal service support. A winning bidder must demonstrate with appropriate documentation that it has been designated as an ETC covering each of the geographic areas for which it seeks to be authorized for support. For example, in addition to providing the relevant state or Commission orders, each winning bidder will need to demonstrate that its ETC designation covers the areas of its winning bid(s) ( e.g., census blocks, wire centers, etc.). Such documentation could include map overlays of the winning bid areas, or charts listing designated areas. Furthermore, each winning bidder will be required to submit a letter with its documentation from an officer of the company certifying that its ETC designation for each state covers the relevant areas where the winning bidders will receive support. As the Commission experienced with CAF Phase II, these requirements will help them verify that each winning bidder is permitted to operate in the areas where it will be receiving support.

91. Forbearance from Service Area Redefinition Process. The Commission adopts its proposal to forbear from the statutory requirement that the ETC service area of a Rural Digital Opportunity Fund participant conform to the service area of the rural telephone company serving the same area. As in the CAF Phase II auction, the Commission will be maximizing the use of Rural Digital Opportunity Fund support by making it available for only one provider per geographic area. Moreover, the Commission expects that the incumbent rural telephone company's service area will no longer be relevant because the incumbent service provider may be replaced by another Rural Digital Opportunity Fund recipient in portions of its service area. Thus, forbearance is appropriate and in the public interest.

92. Accordingly, for those entities that obtain ETC designations as a result of being selected as winning bidders for the Rural Digital Opportunity Fund, the Commission forbears from applying section 214(e)(5) of the Act, insofar as this section requires that the service area of such an ETC conform to the service area of any rural telephone company serving an area eligible for Rural Digital Opportunity Fund support. The Commission notes that forbearing from the service area conformance requirement eliminates the need for redefinition of any rural telephone company service areas in the context of the Rural Digital Opportunity Fund competitive bidding process. However, if an existing ETC seeks support through the Rural Digital Opportunity Fund competitive bidding process for areas within its existing service area, this forbearance will not have any impact on the ETC's pre-existing obligations with respect to other support mechanisms and the existing service area. Likewise, as in CAF Phase II, some of the price cap carrier study areas that may become eligible for the Rural Digital Opportunity Fund competitive bidding process meet the statutory definition so that the carrier serving those study areas would be classified as a rural telephone company.

93. Thus, the Commission concludes that forbearance is warranted in these limited circumstances. The Commission's objective is to distribute support to winning bidders as soon as possible so that they can begin the process of deploying new broadband to consumers in those areas. Case-by-case forbearance would likely delay the Commission's post-selection review of entities once they are announced as winning bidders. The Act requires the Commission to forbear from applying any requirement of the Act or its regulations to a telecommunications carrier if the Commission determines that: (1) Enforcement of the requirement is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of that requirement is not necessary for the protection of consumers; and (3) forbearance from applying that requirement is consistent with the public interest. For the same reasons set forth in the CAF Phase II Auction Order, 81 FR 44414, July 7, 2016, the Commission concludes each of these statutory criteria is met for winning bidders of the Rural Digital Opportunity Fund competitive bidding process.

94. Letters of Credit. The Commission next adopts letter of credit rules that provide appropriate protection for Rural Digital Opportunity Fund support, with reduced burdens on participants. In CAF Phase II, the Commission found that requiring bidders to obtain an irrevocable standby letter of credit, covering the first year of support of a recipient's winning bid, was an effective means to safeguard the universal service funds. Moreover, the letter of credit was subject to a phase-down schedule, reducing the burdens on the recipients. The letter of credit requirement did not deter broad participation in the CAF Phase II auction where the Commission awarded $1.488 billion in support to 103 winning bidders and, as of December 2019, nearly 90 percent of carriers have been authorized after securing valid letters of credit. Thus, the Commission is not persuaded to adopt suggestions from commenters that it removes the letter of credit requirement entirely, either for all winning bidders or for certain groups of winning bidders such as Tribally owned and controlled carriers or established rural carriers.

95. The Commission finds appropriate, however, certain modifications to the letter of credit requirements proposed in the Rural Digital Opportunity Fund NPRM. The Commission makes these changes after hearing from commenters concerned about the fees associated with maintaining the larger letters of credit required because of the size of the Rural Digital Opportunity Fund. The Commission concludes that the modified letter of credit requirements it adopts in the following, which establishes a mechanism to easily recover disbursed funding in the event of non-compliance, fulfills its responsibility to protect program funds while also reducing for applicants the costs of participating in the Rural Digital Opportunity Fund.

96. First, the Commission's revised approach allows a support recipient to reduce the amount of its letter of credit as it meets—and USAC verifies that a support recipient has completed—service milestones. Specifically, the Commission requires support recipients to report their deployed locations in the HUBB by March 1 following each support year. Upon verification of the buildout by USAC, the Commission will then allow the recipient to reduce its letter of credit to an amount equal to only one year of total support. And once a support recipient reduces its letter of credit obligation to one year of total support, it will be able to maintain its letter of credit at that level for the remainder of the deployment term, as long as USAC verifies that the support recipient successfully and timely meets its remaining service milestones.

97. Second, the Commission creates an optional 20% service milestone in year two. Doing so allows a support recipient to demonstrate concrete progress in building its network earlier than existing milestones (40% in year three), thus allowing it to reduce its letter of credit earlier than it could otherwise. The Commission reiterates that this 20% buildout benchmark is optional; if a support recipient does not meet this milestone, it will not be able to reduce its letter of credit, but it will not face any reductions in support.

98. Third, the Commission finds that support recipients do not need to wait for the specific support years to end to meet their deployment milestones. For example, if a support recipient is able to deploy to 20% of its locations by the end of year one, it may report those locations and request that USAC complete the verification process for those locations in order to allow it to reduce its letter of credit to one year of support. In those instances, the Commission requires that these support recipients be able to immediately produce the necessary documentation to minimize the time required for USAC to verify its milestone.

99. Fourth, the Commission adopts a modified letter of credit requirement for the time periods before any required service milestones must be met and verified by USAC. Specifically, at the beginning of the first year of its support term, a support recipient must obtain a letter of credit equal to one year of the total support it will receive. In year two, it will be required to obtain a letter of credit equal to eighteen months of its total support. In year three, it will be required to obtain a letter of credit equal to two years of its total support. And in year four, it will be required to obtain a letter of credit equal to three years of its total support. This schedule balances the need to protect federal funds against the costs of a letter of credit for those that decline to meet the optional 20% deployment milestone.

100. Fifth, the Commission finds it necessary to maintain larger letters of credit for support recipients that fail to meet service milestones. If the support recipient misses a required service milestone, it will be required to obtain a letter of credit covering an additional year of total support for the next applicable support year, up to a letter of credit covering a total of three years of support. Likewise, any support recipient failing to meet two or more service milestones will be required to maintain a letter of credit in the amount of three years of support and will be subject to additional non-compliance penalties as outlined in this document. The Commission finds these increased letter of credit requirements will both protect federal funds from potential default and serve as an incentive to timely deployment.

101. Sixth, consistent with CAF Phase II, the Commission will require that the letter of credit only remain open until the recipient has certified that it has deployed broadband and voice service meeting the Commission's requirements to 100% of the CAM locations by the end of year six, and USAC has verified that the recipient has fully deployed its network. The Commission does not expect new additional locations in years seven and eight to be significant enough that it would be necessary to secure that additional deployment with a letter of credit, but recipients will be subject to other sanctions for non-compliance with the terms and conditions of Rural Digital Opportunity Fund support, including but not limited to the Commission's existing enforcement procedures and penalties, reductions in support amounts, potential revocation of ETC designations, and suspension or debarment.

102. In short, the Commission provides a letter of credit trajectory that recognizes that once support recipients have demonstrated significant and verifiable steps toward meeting their deployment obligations, they should have the opportunity to avoid some of the more significant credit requirements, consistent with their proven performance in the Rural Digital Opportunity Fund. For those support recipients that elect to deploy quickly and meet the 20% optional milestone early in the support term, and continue to meet all milestones, their letters of credit may never exceed 18 months' support at any time during the support term. At the same time, the more gradual increase in the letter of credit requirements the Commission adopts for support recipients that do not elect to make use of the optional 20% milestone will reduce potential financial strain on support recipients, and still allow those support recipients to maintain a smaller letter of credit once their first mandatory deployment milestone is met in year three.

103. The Commission declines to adopt the specific parameters of the letter of credit proposals advanced and supported by several parties. After thorough review of these constructive proposals, the Commission determines that they fail to sufficiently account for the Commission's interests in ensuring that universal service dollars are being used efficiently and for their intended purposes, as well as protecting against the potential for those carriers that may fail to fulfill their broadband deployment obligations. However, the approach the Commission adopts here is consistent with the proposals advocated by parties in that it recognizes that the letter of credit rules, as originally proposed, would impose a disproportionate financial burden on support recipients and result in less funding going directly to broadband deployment. Moreover, given that the Rural Digital Opportunity Fund will award up to almost 15 times the amount of funding as the CAF Phase II auction, the Commission acknowledges that a one-size-fits-all approach to letter of credit requirements may not properly reflect the realities of a particular auction. Thus, the Commission's revised approach strives to carefully balance the interest of potential support recipients in minimizing their financial cost over the course of the deployment term with the Commission's interest in ensuring that universal funding is protected as the Rural Digital Opportunity Fund progresses.

104. Consistent with CAF Phase II, the Commission will only authorize USAC to draw on the letter of credit for the entire amount of the letter of credit if the entity does not repay them for the support associated with its compliance gap. Additionally, as stated in CAF Phase II, “if the entity fails to pay this support amount, the Commission concludes that the risk that the entity will be unable to continue to serve its customers or may go into bankruptcy is more likely, and thus it is necessary to ensure that the Commission can recover the entire amount of support that it has disbursed.” The Commission also requires each winning bidder to submit a commitment letter from a bank no later than the number of days provided by public notice. A long-form applicant must submit a letter from a bank acceptable to the Commission, committing to issue an irrevocable stand-by letter of credit, to the long-form applicant. The letter must, at a minimum, provide the dollar amount of the letter of credit and the issuing bank's agreement to follow the terms and conditions of the Commission's model letter of credit provided in Appendix C of the Order.

105. Once a winning bidder has been authorized, the Commission will require an irrevocable standby letter of credit from a bank that is acceptable to them in substantially the same form as the model letter of credit provided in Appendix C of the Order. The letters of credit for winning bidders must be obtained from a domestic or foreign bank meeting the requirements adopted herein. For U.S. banks, the bank must be insured by the Federal Deposit Insurance Corporation and have a Weiss bank safety rating of B- or higher committing to issue a letter of credit. Similarly, for non-U.S. banks, the Commission requires that the bank be among the 100 largest non-U.S. banks in the world (determined on the basis of total assets as of the end of the calendar year immediately preceding the issuance of the letter of credit, determined on a U.S. dollar equivalent basis as of such date). Winning bidders also have the option of obtaining a letter of credit from CoBank or the National Rural Utilities Cooperative Finance Corporation so long as they continue to meet the Commission's requirements. When a winning applicant obtains a letter of credit, it must be at least equal to the amount of the first year of authorized support. Before the winning applicant can receive its next year's support, it must modify, renew, or obtain a new letter of credit. The Commission concludes that requiring recipients to obtain a letter of credit on at least an annual basis will help minimize administrative costs for USAC and the recipient rather than having to negotiate a new letter of credit for each monthly disbursement.

106. However, the Commission will require all winning bidders to provide a single letter of credit covering all of their winning bids within a single state. The Commission declines to allow multiple letters of credit that cover all bids in a state as it did for CAF Phase II, as this option was not used and is administratively burdensome on the Commission and USAC. Thus, a default in one census block could result in a draw on the entire letter of credit.

107. As the Commission has previously recognized, it will again allow for the option of greater flexibility regarding letter of credit for Tribally owned and controlled winning bidders. Consistent with CAF Phase II, if any Tribally owned and controlled Rural Digital Opportunity Fund winning bidder is unable to obtain a letter of credit, it may file a petition for a waiver of the letter of credit requirement. Consistent with the Commission's precedent, waiver applicants must show, with evidence acceptable to them, that the Tribally owned and controlled winning bidder is unable to obtain a letter of credit.

108. The determinations the Commission reaches in this document take into consideration the comments submitted on the burdens associated with the letter of credit requirement. The Commission concludes, however, that the letter of credit requirement best protects the Fund. While the Commission understands that there are costs associated with the letter of credit, it continues to believe bidders can incorporate these costs when determining their strategies prior to the auction. The universal service program provides significant benefits when weighed against the costs of the letter of credits, which in turn provide significant security of public funding. As the Commission has previously stated, letters of credit have “the added advantage of minimizing the possibility that the support becomes property of a recipient's bankruptcy estate for an extended period of time, thereby preventing the funds from being used promptly to accomplish the Commission's goals.”

109. Commenters renewed requests for other safeguard measures, yet none of the measures fully guarantee that the Commission will be able to recover past support disbursements from a defaulting recipient. Several commenters suggested performance bonds or sureties. For example, WISPA and WTA assert the Commission should require auction winners to obtain performance bonds as an alternative to obtaining letters of credit, costing participants substantially less than a letter of credit. USTelecom agrees, commenting that the Commission should reconsider its proposals requiring Rural Digital Opportunity Fund winners to obtain a letter of credit as it is a substantial barrier to participation. Letters of credit, unlike performance bonds, allow for an immediate reclamation of support in the event the recipient is not properly using those funds. Performance bonds, on the other hand, would not provide the same level of protection and would require the involvement of a third party to adjudicate any disputes that arise, which would complicate the Commission processes and unnecessarily limit the authority of the Commission to allocate funds. A letter of credit, unlike a performance bond, has the benefit of the “independence principle” in that the letter of credit is independent of the underlying transaction. The bank's obligation to pay under the letter of credit does not depend on the auction winner's default but on the presentation of documents evidencing the default. Being independent in this way assures that USAC can collect monies due to it promptly without engaging in disputes with the winning bidder, the performance bond guarantor or the winning bidder's trustee in bankruptcy over whether the funds should be paid or even whether the funds are available to the Fund due to competing claims of creditors.

110. Similarly, Frontier and Windstream recommend placing money in escrow prior to bidding because they claim letters of credit are too expensive. The record also includes several comments opposing letter of credits or suggesting other means of protecting the Commission's interests. However, the Commission is not persuaded that escrow agreements, or other alternatives, would provide protection equal to the letters of credit that it now requires. Escrow agreements would put an amount of money with a third party who releases it when a contingency is satisfied. The auction winner would be a party to the escrow agreement, with the possibility that the support becomes the property of an auction winner's bankruptcy. Additionally, the auction winner would be required to place the same amount of funds in escrow as were disbursed by USAC, which could cause “administrative burdens” on the Commission and “could potentially delay the auction.” The Commission itself would need to create an escrow account, attain the money of all recipients, and manage and ensure proper payment to all recipients, an unnecessary and inefficient duplication of a system banks already have in place with letters of credit, with none of the advantages. Instead, the Commission can rely on the expertise of banks' experience in managing letters of credit, guaranteeing payment, and ensuring security for the Commission and ultimately the Fund. Therefore, the Commission declines to implement escrow accounts and maintain the letter of credit requirement.

111. Finally, consistent with CAF Phase II, the Commission will require each winning bidder to submit a bankruptcy opinion letter from outside legal counsel. That opinion letter must clearly state, subject only to customary assumptions, limitations, and qualifications, that in a proceeding under the Bankruptcy Code, the bankruptcy court would not treat the letter of credit or proceeds of the letter of credit as property of the account party's bankruptcy estate, or the bankruptcy estate of any other competitive bidding process recipient-related entity requesting issuance of the letter of credit under section 541 of the Bankruptcy Code. The West Virginia Council argues that the bankruptcy opinion letter requirement is unduly burdensome and should be eliminated “to accommodate non-traditional service providers like co-ops, non-profits, and government entities . . . .” However, it is important to receive confirmation from each winning bidder that its letter of credit would not be consolidated in the estate. Therefore, the Commission declines to eliminate this requirement and concludes that the limited burden imposed on winning bidders to obtain this letter is outweighed by its policy goal to be fiscally responsible with finite universal service funds.

112. The Commission next adopts rules that establish the framework under which a Rural Digital Opportunity Fund winning bidder will be subject to a forfeiture under section 503 of the Act if it defaults on its winning bid(s) before it is authorized to begin receiving support. A recipient will be considered in default and will be subject to forfeiture if it fails to timely file a long-form application, fails to meet the document submission deadlines outlined in this document, is found ineligible or unqualified to receive support, or otherwise defaults on its bid or is disqualified for any reason prior to the authorization of support. Consistent with CAF Phase II, a winning bidder will be subject to the base forfeiture for each separate violation of the Commission's rules.

113. For Rural Digital Opportunity Fund competitive bidding purposes, the Commission defines a violation as any form of default with respect to each geographic unit subject to a bid. The Commission maintains that each violation should not be unduly punitive and expect the forfeiture to be proportionate to the overall scope of the winning bidder's bid. The Commission concludes that it is reasonable to subject all bidders to the same $3,000 base forfeiture per violation subject to adjustment based on the criteria set forth in its forfeiture guidelines. To determine the final forfeiture amount, the Commission's Enforcement Bureau will consider the “nature, circumstances, extent and gravity of the violations.”

NMFS manages the GOA groundfish fisheries in the exclusive economic zone of the GOA under the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP). The Council prepared the FMP under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801 et seq. Regulations governing U.S. fisheries and implementing the FMP appear at 50 CFR parts 600, 679, and 680.

The FMP and its implementing regulations require that NMFS, after consultation with the Council, specify the total allowable catch (TAC) for each target species, the sum of which must be within the optimum yield (OY) range of 116,000 to 800,000 metric tons (mt) (50 CFR 679.20(a)(1)(i)(B)). Section 679.20(c)(1) further requires that NMFS publish and solicit public comment on proposed annual TACs and apportionments thereof, Pacific halibut prohibited species catch (PSC) limits, and seasonal allowances of pollock and Pacific cod. Upon consideration of public comment received under § 679.20(c)(1), NMFS must publish notice of final harvest specifications for up to two fishing years as annual TACs and apportionments, Pacific halibut PSC limits, and seasonal allowances of pollock and Pacific cod, per § 679.20(c)(3)(ii). The final harvest specifications set forth in Tables 1 through 29 of this rule reflect the outcome of this process, as required at § 679.20(c).

The proposed 2020 and 2021 harvest specifications for groundfish of the GOA and Pacific halibut PSC limits were published in the Federal Register on December 3, 2019 (84 FR 66109). Comments were invited and accepted through January 2, 2020. NMFS received two letters of comment on the proposed harvest specifications; the comments are summarized and responded to in the “Comments and Responses” section of this rule. No changes were made to the final rule in response to the letters of comment received. In December 2019, NMFS consulted with the Council regarding the 2020 and 2021 harvest specifications. After considering public comment, as well as biological and socioeconomic data that were available at the Council's December 2019 meeting, NMFS is implementing the final 2020 and 2021 harvest specifications, as recommended by the Council. For 2020, the sum of the TAC amounts is 399,239 mt. For 2021, the sum of the TAC amounts is 407,982 mt.

In October 2019, the Council recommended that sculpins be reclassified in the FMP as an “ecosystem component” species, which is a category of non-target species that are not in need of conservation and management. Currently, NMFS annually sets an overfishing level (OFL), Acceptable Biological Catch (ABC), and TAC for sculpins in the GOA groundfish harvest specifications. Under the Council's recommended action, OFL, ABC, and TAC specifications for sculpins would no longer be required. NMFS intends to develop rulemaking to implement the Council's recommendation for sculpins. Such rulemaking would prohibit directed fishing for sculpins, maintain recordkeeping and reporting, and establish a sculpin maximum retainable amount when directed fishing for groundfish species at 20 percent to discourage retention, while allowing flexibility to prosecute groundfish fisheries. Further details (and public comment on the sculpin action) will be available on publication of the proposed rule to reclassify sculpins as an ecosystem component species of the FMP. If the FMP amendment and its implementing regulations are approved by the Secretary of Commerce, the action is anticipated to be effective in 2021. Until effective, NMFS will continue to publish OFLs, ABCs, and TACs for sculpins in the GOA groundfish harvest specifications.

On February 8, 2019, NMFS published a final rule (84 FR 2723) that modified regulations for the AFA Program and CR Program participants subject to limits on the catch of specific species (sideboard limits) in the GOA. Sideboard limits are intended to prevent participants who benefit from receiving exclusive harvesting privileges in a particular fishery from shifting effort to other fisheries. Specifically, the final rule established regulations to prohibit directed fishing for most groundfish species or species groups subject to sideboard limits under the AFA Program and CR Program, rather than prohibiting directed fishing through the annual GOA harvest specifications. Since the final rule is now effective, NMFS is no longer publishing in the annual GOA harvest specifications the AFA Program and CR Program sideboard limit amounts for groundfish species or species groups subject to the final rule. Those groundfish species subject to the final rule associated with sideboard limits are now prohibited to directed fishing in regulation (§§ 679.20(d)(1)(iv)(D) and 680.22(e)(1)(i) and (iii) and Tables 54, 55, and 56 to 50 CFR part 679). NMFS is publishing in the annual GOA harvest specifications the AFA Program and CR Program sideboard limit amounts for groundfish species or species groups that were not subject to the final rule (see Tables 18, 19, 21 and 22 of this action).

In June 2019, the Council recommended for Secretarial review Amendment 109 to the FMP. Amendment 109 would revise pollock seasons and Pacific cod seasonal allocations. Amendment 109 would modify the existing annual pollock TAC allocation to two equal seasonal allocations (50 percent of TAC), rather than four equal seasonal allocations (25 percent of TAC). The pollock A and B seasons would be combined into a January 20 through May 31 A season, and the pollock C and D seasons would be combined into a September 1 through November 1 B season. Additionally, Amendment 109 would revise the Pacific cod TAC seasonal apportionments to the trawl catcher vessel (CV) sector by increasing the A season allocation and decreasing the B season allocation. Further details (and public comment on Amendment 109) will be available on publication of the proposed rule to implement Amendment 109. If Amendment 109 and its implementing regulations are approved by the Secretary of Commerce, the action is anticipated to be effective in 2021.

In December 2019, the Council's Scientific and Statistical Committee (SSC), its Advisory Panel (AP), and the Council reviewed the most recent biological and harvest information about the condition of the GOA groundfish stocks. The Council's GOA Groundfish Plan Team (Plan Team) compiled and presented this information in the 2019 SAFE report for the GOA groundfish fisheries, dated November 2019 (see ADDRESSES ). The SAFE report contains a review of the latest scientific analyses and estimates of each species' biomass and other biological parameters, as well as summaries of the available information on the GOA ecosystem and the economic condition of the groundfish fisheries off Alaska. From these data and analyses, the Plan Team recommends, and the SSC sets, an OFL and ABC for each species or species group. The 2019 SAFE report was made available for public review during the public comment period for the proposed harvest specifications.

In previous years, the greatest changes from the proposed to the final harvest specifications have been based on recent NMFS stock surveys, which provide updated estimates of stock biomass and spatial distribution, and changes to the models used for producing stock assessments. At the November 2019 Plan Team meeting, NMFS scientists presented updated and new survey results, changes to stock assessment models, and accompanying stock assessment estimates for groundfish species and species groups that are included in the 2019 SAFE report per the stock assessment schedule found in the 2019 SAFE report introduction. The SSC reviewed this information at the December 2019 Council meeting. Changes from the proposed to the final 2020 and 2021 harvest specifications are discussed below.

The final 2020 and 2021 OFLs, ABCs, and TACs are based on the best available biological and socioeconomic information, including projected biomass trends, information on assumed distribution of stock biomass, and revised methods used to calculate stock biomass. The FMP specifies the formulas, or tiers, to be used to compute OFLs and ABCs. The formulas applicable to a particular stock or stock complex are determined by the level of reliable information available to fisheries scientists. This information is categorized into a successive series of six tiers to define OFL and ABC amounts, with Tier 1 representing the highest level of information quality available and Tier 6 representing the lowest level of information quality available. The Plan Team used the FMP tier structure to calculate OFL and ABC amounts for each groundfish species. The SSC adopted the final 2020 and 2021 OFLs and ABCs recommended by the Plan Team for most groundfish species, with the exception of sablefish and Pacific cod.

For sablefish, as discussed in the proposed 2020 and 2021 harvest specifications (84 FR 66109, December 3, 2019) the SSC considered the appropriateness of continuing to specify sablefish OFLs at the separate Bering Sea, Aleutian Islands, and GOA management area levels. The SSC reviewed the information available regarding area apportionment of the OFL, and decided that the best scientific information available regarding stock structure for sablefish supports an Alaska-wide OFL specification. Therefore, based on biological considerations, the SSC recommended specification of a single Alaska-wide sablefish OFL, which includes the Bering Sea, Aleutian Islands, and the GOA. Also, the SSC agreed with the Plan Team that a substantial reduction in the 2020 and 2021 ABCs from the maximum permissible ABCs were warranted. However, the SSC revised the Plan Team's recommendation for the sablefish ABCs by revising the method and amount of the reduction of the sablefish ABCs from the maximum permissible ABCs.

For Pacific cod, the SSC accepted the Plan Team's recommendation for the 2020 Pacific cod ABC, but also decreased the 2021 ABC to equal the lower 2020 ABC. There is considerable uncertainty about future Pacific cod recruitment and potential effects of the recent marine heat wave on Pacific cod mortality. The 2020 Pacific cod assessment should provide more clarity about future trends.

The Council adopted the SSC's OFLs and ABCs and the AP's TAC recommendations, with the exception of Pacific cod TACs (further described below). The final TAC recommendations are based on the ABCs as adjusted for other biological and socioeconomic considerations, including maintaining the sum of all TACs within the required OY range of 116,000 to 800,000 mt.

The Council recommended 2020 and 2021 TACs that are equal to ABCs for pollock in the Southeast Outside (SEO) District, shallow-water flatfish in the Central GOA and the West Yakutat and SEO Districts, deep-water flatfish, rex sole, arrowtooth flounder in the Central GOA, flathead sole in the West Yakutat and SEO Districts, Pacific ocean perch, northern rockfish, shortraker rockfish, dusky rockfish, rougheye and blackspotted rockfish, demersal shelf rockfish, thornyhead rockfish, “other rockfish,” big skate, longnose skate, other skates, sculpins, sharks, and octopuses in the GOA. The Council recommended TACs for 2020 and 2021 that are less than the ABCs for pollock in the Western and Central GOA and the West Yakutat District, Pacific cod, shallow-water flatfish in the Western GOA, arrowtooth flounder in the Western GOA and the West Yakutat and SEO Districts, flathead sole in the Western and Central GOA, and Atka mackerel. The Council recommended 2020 sablefish TACs that are less than the 2020 ABCs, and 2021 sablefish TACs that are equal to 2021 ABCs. Setting the 2020 sablefish TACs less than 2020 ABCs is intended to provide an incremental increase to the 2020 sablefish TACs, rather than the very large increase in the 2020 sablefish TACs if they were set equal to ABCs.

The combined Western, Central, and West Yakutat pollock TAC and the GOA Pacific cod TACs are set to accommodate the State of Alaska's (State's) guideline harvest levels (GHLs) so that the ABCs for pollock and Pacific cod are not exceeded. Additionally, the Council recommended a further decrease to the Pacific cod TACs as an additional conservation measure due to this stock's low spawning biomass level (further discussed in the section titled “Specification and Apportionment of TAC Amounts”). The Western GOA shallow-water flatfish, Western GOA arrowtooth flounder, and Western GOA flathead sole TACs are set to allow for increased harvest opportunities for these target species while conserving the halibut PSC limit for use in other, more fully utilized fisheries. Similarly, the Western Yakutat and SEO Districts arrowtooth flounder TACs and the Central GOA flathead sole TACs are set lower than ABC to conserve halibut PSC limit for use in other fisheries or because there is limited commercial interest and participation in these fisheries. The Atka mackerel TAC is set to accommodate incidental catch amounts in other fisheries.

The final 2020 and 2021 harvest specifications approved by the Secretary of Commerce are unchanged from those recommended by the Council, and are consistent with the preferred harvest strategy alternative in the EIS (see ADDRESSES ).

NMFS finds that the Council's recommended OFLs, ABCs, and TACs are consistent with the biological condition of the groundfish stocks as described in the final 2019 SAFE report. NMFS also finds that the Council's recommendations for OFLs, ABCs, and TACs are consistent with the biological condition of groundfish stocks as adjusted for other biological and socioeconomic considerations, including maintaining the total TAC within the OY range. NMFS reviewed the Council's recommended TACs and apportionments, and NMFS approves these harvest specifications under 50 CFR 679.20(c)(3)(ii). The apportionment of TAC amounts among gear types and sectors, processing sectors, and seasons is discussed below.

Tables 1 and 2 list the final 2020 and 2021 OFLs, ABCs, TACs, and area apportionments of groundfish in the GOA. The 2020 harvest specifications set in this final action will supersede the 2020 harvest specifications previously set in the final 2019 and 2020 harvest specifications (84 FR 9416, March 14, 2019). The 2021 harvest specifications will be superseded in early 2021 when the final 2021 and 2022 harvest specifications are published. Pursuant to this final action, the 2020 harvest specifications therefore will apply for the remainder of the current year (2020), while the 2021 harvest specifications are projected only for the following year (2021) and will be superseded in early 2021 by the final 2021 and 2022 harvest specifications. Because this final action (published in early 2020) will be superseded in early 2021 by the publication of the final 2021 and 2022 harvest specifications, it is projected that this final action will implement the harvest specifications for the Gulf of Alaska for approximately one year.

NMFS's apportionment of groundfish species is based on the distribution of biomass among the regulatory areas over which NMFS manages the species. Additional regulations govern the apportionment of pollock, Pacific cod, and sablefish and are described below.

The ABC for the pollock stock in the combined Western and Central Regulatory Areas and the West Yakutat (WYK) District of the Eastern Regulatory Area (the W/C/WYK) includes the amount for the GHL established by the State for the Prince William Sound (PWS) pollock fishery. The Plan Team, SSC, AP, and Council have recommended that the sum of all State water and Federal water pollock removals from the GOA not exceed ABC recommendations. For 2020 and 2021, the SSC recommended and the Council approved the W/C/WYK pollock ABC, including the amount to account for the State's PWS GHL. At the November 2019 Plan Team meeting, State fisheries managers recommended setting the PWS pollock GHL at 2.5 percent of the annual W/C/WYK pollock ABC. For 2020, this yields a PWS pollock GHL of 2,712 mt, a decrease of 684 mt from the 2019 PWS pollock GHL of 3,396 mt. For 2021, the PWS pollock GHL is 2,797 mt, a decrease of 599 mt from the 2019 PWS pollock GHL of 3,396 mt. After the GHL reductions, the 2020 and 2021 pollock ABCs for the combined W/C/WYK areas are then apportioned between four statistical areas (Areas 610, 620, 630, and 640) as both ABCs and TACs, as described below and detailed in Tables 1 and 2. The total ABCs and TACs for the four statistical areas, plus the State PWS GHL, do not exceed the combined W/C/WYK ABC.

Apportionments of pollock to the W/C/WYK areas are considered to be “apportionments of annual catch limits (ACLs)” rather than “ABCs.” This more accurately reflects that such apportionments address management, rather than biological or conservation, concerns. In addition, apportionments of the ACL in this manner allow NMFS to balance any transfer of TAC among Areas 610, 620, and 630 pursuant to § 679.20(a)(5)(iv)(B) to ensure that the combined W/C/WYK ACL, ABC, and TAC are not exceeded.

NMFS establishes pollock TACs in the Western (Area 610) and Central (Areas 620 and 630) Regulatory Areas and the West Yakutat (Area 640) and the SEO (Area 650) Districts of the GOA (see Tables 1 and 2). NMFS also establishes seasonal apportionments of the annual pollock TACs in the Western and Central Regulatory Areas of the GOA among Statistical Areas 610, 620, and 630. These apportionments are divided equally among each of the following four seasons: The A season (January 20 through March 10), the B season (March 10 through May 31), the C season (August 25 through October 1), and the D season (October 1 through November 1) (§§ 679.23(d)(2)(i) through (iv), and 679.20(a)(5)(iv)(A) and (B)). Additional detail is provided in this rule; Tables 3 and 4 list these amounts.

The 2020 and 2021 Pacific cod TACs are set to accommodate the State's GHL for Pacific cod in State waters in the Western and Central Regulatory Areas, as well as in PWS. The Plan Team, SSC, AP, and Council recommended that the sum of all State water and Federal water Pacific cod removals from the GOA not exceed ABC recommendations. The Council set the 2020 and 2021 Pacific cod TACs in the Western, Central, and Eastern Regulatory Areas to account for State GHLs. Therefore, the 2020 and 2021 Pacific cod TACs are less than the ABCs by the following amounts: (1) Western GOA, 2,866 mt; (2) Central GOA, 4,652 mt; and (3) Eastern GOA, 672 mt. These amounts reflect the State's 2020 and 2021 GHLs in these areas, which are 30 percent of the Western GOA ABC and 25 percent of the Eastern and Central GOA ABCs. For 2020, this results in a Western GOA Pacific cod GHL of 1,483 mt. This also results in a 2,115 mt GHL and 305 mt GHL in the Central GOA and Eastern GOA, respectively. The 2020 and 2021 Pacific cod TACs also incorporate an additional reduction from the Pacific cod ABCs, as the Council and NMFS have set the Pacific cod TACs at a conservative level of 60 percent of the available ABCs, after deduction of the State GHL amounts. The Council chose, and NMFS agrees, to make this additional reduction to the Pacific cod TAC because the most recent biological assessment available of the stock condition for Pacific cod in the GOA has determined that the spawning biomass will be below 20 percent of the projected unfished spawning biomass during 2020.

NMFS establishes seasonal apportionments of the annual Pacific cod TAC in the Western and Central Regulatory Areas. Sixty percent of the annual TAC is apportioned to the A season for hook-and-line, pot, and jig gear from January 1 through June 10, and for trawl gear from January 20 through June 10. Forty percent of the annual TAC is apportioned to the B season for jig gear from June 10 through December 31, for hook-and-line and pot gear from September 1 through December 31, and for trawl gear from September 1 through November 1 (§§ 679.23(d)(3) and 679.20(a)(12)). The Western and Central GOA Pacific cod TACs are allocated among various gear and operational sectors. The Pacific cod sector apportionments are discussed in detail in a subsequent section and in Tables 5 and 6 of this rule.

In accordance with § 679.20(d)(4), NMFS has determined that a biological assessment of stock condition for Pacific cod in the GOA projects that the spawning biomass in the GOA will be below 20 percent of the projected unfished spawning biomass during 2020. Consequently, NMFS prohibited directed fishing for Pacific cod in the GOA on January 1, 2020, through December 31, 2020 (84 FR 70438, December 23, 2019). While this closure is effective the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip. Pursuant to § 679.20(d)(4), the directed fishery for Pacific cod in the GOA will remain closed until a subsequent biological assessment projects that the spawning biomass for Pacific cod in the GOA will exceed 20 percent of the projected unfished spawning biomass during a fishing year.

The Council's recommendation for sablefish area apportionments takes into account the prohibition on the use of trawl gear in the SEO District of the Eastern Regulatory Area (§ 679.7(b)(1)) and makes available 5 percent of the combined Eastern Regulatory Area TACs to vessels using trawl gear for use as incidental catch in other trawl groundfish fisheries in the WYK District (§ 679.20(a)(4)(i)). Tables 7 and 8 list the final 2020 and 2021 allocations of sablefish TAC to fixed gear and trawl gear in the GOA.

In October 2019, the Council's recommendations for the proposed 2020 and 2021 harvest specifications (84 FR 66109, December 3, 2019) were based largely on information contained in the final 2018 SAFE report for the GOA groundfish fisheries, dated November 2018. The final 2018 SAFE report for the GOA is available from the Council (see ADDRESSES ). The Council proposed that the final OFLs, ABCs, and TACs established for the 2020 groundfish fisheries (84 FR 9416, March 14, 2019) be used for the proposed 2020 and 2021 harvest specifications (84 FR 66109, December 3, 2019), pending completion and review of the 2019 SAFE report at the Council's December 2019 meeting.

As described previously, the SSC recommended the final 2020 and 2021 OFLs and ABCs as recommended by the Plan Team. The Council adopted as its recommendations the SSC's OFL and ABC recommendations and the AP's TAC recommendations (except for Pacific cod) for 2020 and 2021.

The final 2020 ABCs are higher than the proposed 2020 ABCs published in the proposed 2020 and 2021 harvest specifications (84 FR 66109, December 3, 2019) for pollock, sablefish, rex sole, Pacific ocean perch, northern rockfish, dusky rockfish, big skate, and octopuses. The final 2020 ABCs are lower than the proposed 2020 ABCs for Pacific cod, shallow-water flatfish, deep-water flatfish, arrowtooth flounder, flathead sole, shortraker rockfish, rougheye/blackspotted rockfish, demersal shelf rockfish, other rockfish, longnose skate, other skates, and sculpins.

The final 2021 ABCs are higher than the proposed 2021 ABCs for pollock, sablefish, shallow-water flatfish, rex sole, flathead sole, Pacific ocean perch, big skate, and octopuses. The final 2021 ABCs are lower than the proposed 2021 ABCs for Pacific cod, deep-water flatfish, arrowtooth flounder, northern rockfish, shortraker rockfish, dusky rockfish, rougheye/blackspotted rockfish, demersal shelf rockfish, other rockfish, longnose skates, other skates, and sculpins. For the remaining target species, the Council recommended the final 2020 and 2021 ABCs that are the same as the proposed 2020 and 2021 ABCs.

Additional information explaining the changes between the proposed and final ABCs is included in the final 2019 SAFE report, which was not available when the Council made its proposed ABC and TAC recommendations in October 2019. At that time, the most recent stock assessment information was contained in the final 2018 SAFE report. The final 2019 SAFE report contains the best and most recent scientific information on the condition of the groundfish stocks, as previously discussed in this preamble, and is available for review (see ADDRESSES ). The Council considered the 2019 SAFE report in December 2019 when it made recommendations for the final 2020 and 2021 harvest specifications. In the GOA, the total final 2020 TAC amount is 399,239 mt, a decrease of 2 percent from the total proposed 2020 TAC amount of 408,534 mt. The total final 2021 TAC amount is 407,982 mt, a decrease of 0.1 percent from the total proposed 2021 TAC amount of 408,534 mt. Table 1a summarizes the difference between the proposed and final TACs.

Annual stock assessments incorporate a variety of new or revised inputs, such as survey data or catch information, as well as changes to the statistical models used to estimate a species' biomass and population trend. Changes to biomass and ABC estimates are primarily based on fishery catch updates to species' assessment models. Some species, such as pollock and sablefish, have additional surveys conducted on an annual basis, which resulted in additional data being available for the 2019 assessments for these stocks.

The changes from the proposed 2020 TACs to the final 2020 TACs are within a range of plus 13 percent or minus 59 percent, and the changes from the proposed 2021 TACs to the final 2021 TACs are within a range of plus 44 percent or minus 59 percent. Based on changes in the estimates of overall biomass in the stock assessment for 2020 and 2021, as compared to the estimates previously made for 2019 and 2020, the species or species group with the greatest TAC percentage increases are sablefish (in 2021), Pacific ocean perch, and big skate. Based on changes in the estimates of biomass, the species or species group with the greatest decreases in TACs are Pacific cod, deep-water flatfish, shortraker rockfish, rougheye/blackspotted rockfish, other rockfish, longnose skates, and other skates. For all other species and species groups, changes from the proposed 2020 TACs to the final 2020 TACs and changes from the proposed 2021 TACs to the final 2021 TACs are less than a 10 percent change (either increase or decrease). These TAC changes correspond to associated changes in the ABCs and TACs, as recommended by the SSC, AP, and Council.

Detailed information providing the basis for the changes described above is contained in the final 2019 SAFE report. The final TACs are based on the best scientific information available, including biological and socioeconomic information. These TACs are specified in compliance with the harvest strategy described in the proposed and final rules for the 2020 and 2021 harvest specifications.

The final 2020 and 2021 TAC amounts for the GOA are within the OY range established for the GOA and do not exceed the ABC for any species or species group. Tables 1 and 2 list the final OFL, ABC, and TAC amounts for GOA groundfish for 2020 and 2021, respectively.

Section 679.20(b)(2) requires NMFS to set aside 20 percent of each TAC for pollock, Pacific cod, flatfish, sculpins, sharks, and octopuses in reserve for possible apportionment at a later date during the fishing year. For 2020 and 2021, NMFS proposed reapportionment of all the reserves in the proposed 2020 and 2021 harvest specifications published in the Federal Register on December 3, 2019 (84 FR 66109). NMFS did not receive any public comments on the proposed reapportionments. For the final 2020 and 2021 harvest specifications, NMFS reapportioned, as proposed, all the reserves for pollock, Pacific cod, flatfish, sculpins, sharks, and octopuses back to the original TAC limit from which the reserve was derived (§ 679.20(b)(3)). This was done because NMFS expects, based on recent harvest patterns, that such reserves are not necessary and that the entire TAC for each of these species will be caught. The TACs listed in Tables 1 and 2 reflect reapportionments of reserve amounts to the original TAC limit for these species and species groups, i.e., each final TAC for the above mentioned species or species groups contains the full TAC recommended by the Council.

In the GOA, pollock is apportioned by season and area, and is further allocated for processing by inshore and offshore components. Pursuant to § 679.20(a)(5)(iv)(B), the annual pollock TAC specified for the Western and Central Regulatory Areas of the GOA is apportioned into four equal seasonal allowances of 25 percent. As established by § 679.23(d)(2)(i) through (iv), the A, B, C, and D season allowances are available from January 20 to March 10, March 10 to May 31, August 25 to October 1, and October 1 to November 1, respectively.

Pollock TACs in the Western and Central Regulatory Areas of the GOA are apportioned among Statistical Areas 610, 620, and 630 in proportion to the distribution of the pollock biomass, pursuant to § 679.20(a)(5)(iv)(A). In the A and B seasons, the apportionments previously were in proportion to the distribution of pollock biomass based on the four most recent NMFS winter surveys. In the C and D seasons, the apportionments were in proportion to the distribution of pollock biomass based on the four most recent NMFS summer surveys. For 2020 and 2021, the Council recommended, and NMFS approved, following the apportionment methodology that was used previously for the 2019 and 2020 harvest specifications. This methodology averages the winter and summer distribution of pollock in the Central Regulatory Area for the A season instead of using the distribution based on only the winter surveys. The average is intended to reflect the best available information about migration patterns, distribution of pollock, and the performance of the fishery in the area during the A season for the 2020 and 2021 fishing years. For the A season, the apportionment is based on an adjusted estimate of the relative distribution of pollock biomass of approximately 2 percent, 75 percent, and 23 percent in Statistical Areas 610, 620, and 630, respectively. For the B season, the apportionment is based on the relative distribution of pollock biomass of approximately 2 percent, 89 percent, and 9 percent in Statistical Areas 610, 620, and 630, respectively. For the C and D seasons, the apportionment is based on the relative distribution of pollock biomass of approximately 36 percent, 27 percent, and 37 percent in Statistical Areas 610, 620, and 630, respectively. The pollock chapter of the 2019 SAFE report (see ADDRESSES ) contains a comprehensive description of the apportionment process and reasons for the minor changes from past apportionments.

Within any fishing year, the amount by which a pollock seasonal allowance is underharvested or overharvested may be added to, or subtracted from, subsequent seasonal allowances for the Western and Central Regulatory Areas in a manner to be determined by the Regional Administrator (§ 679.20(a)(5)(iv)(B)). The rollover amount is limited to 20 percent of the subsequent seasonal TAC apportionment for the statistical area. Any unharvested pollock above the 20-percent limit could be further distributed to the other statistical areas, in proportion to the estimated biomass in the subsequent season in those statistical areas and in an amount no more than 20 percent of the seasonal TAC apportionment in those statistical areas (§ 679.20(a)(5)(iv)(B)). The pollock TACs in the WYK and the SEO Districts of 5,554 mt and 10,148 mt, respectively, in 2020, and 5,728 mt and 10,148 mt, respectively, in 2021, are not allocated by season.

Tables 3 and 4 list the final 2020 and 2021 seasonal biomass distribution of pollock in the Western and Central Regulatory Areas, area apportionments, and seasonal allowances. The amounts of pollock for processing by the inshore and offshore components are not shown. Section 679.20(a)(6)(i) requires the allocation of 100 percent of the pollock TAC in all GOA regulatory areas and all seasonal allowances to vessels catching pollock for processing by the inshore component after subtraction of pollock amounts projected by the Regional Administrator to be caught by, or delivered to, the offshore component incidental to directed fishing for other groundfish species. Thus, the amount of pollock available for harvest by vessels harvesting pollock for processing by the offshore component is that amount that will be taken as incidental catch during directed fishing for groundfish species other than pollock, up to the maximum retainable amounts allowed by § 679.20(e) and (f). At this time, these incidental catch amounts of pollock are unknown and will be determined during the fishing year during the course of fishing activities by the offshore component.

Pursuant to § 679.20(a)(12)(i), NMFS seasonally allocates the 2020 and 2021 Pacific cod TACs in the Western and Central Regulatory Areas of the GOA among gear and operational sectors. NMFS also allocates the Pacific cod TACs annually between the inshore (90 percent) and offshore (10 percent) components in the Eastern Regulatory Area of the GOA (§ 679.20(a)(6)(ii)). In the Central GOA, the Pacific cod TAC is apportioned seasonally first to vessels using jig gear, and then among CVs less than 50 feet in length overall using hook-and-line gear, CVs equal to or greater than 50 feet in length overall using hook-and-line gear, catcher/processors (C/Ps) using hook-and-line gear, CVs using trawl gear, C/Ps using trawl gear, and vessels using pot gear (§ 679.20(a)(12)(i)(B)). In the Western GOA, the Pacific cod TAC is apportioned seasonally first to vessels using jig gear, and then among CVs using hook-and-line gear, C/Ps using hook-and-line gear, CVs using trawl gear, C/Ps using trawl gear, and vessels using pot gear (§ 679.20(a)(12)(i)(A)). The overall seasonal apportionments in the Western and Central GOA are 60 percent of the annual TAC to the A season and 40 percent of the annual TAC to the B season.

Under § 679.20(a)(12)(ii), any overage or underage of the Pacific cod allowance from the A season may be subtracted from, or added to, the subsequent B season allowance. In addition, any portion of the hook-and-line, trawl, pot, or jig sector allocations that is determined by NMFS as likely to go unharvested by a sector may be reallocated to other sectors for harvest during the remainder of the fishery year.

Pursuant to § 679.20(a)(12)(i)(A) and (B), a portion of the annual Pacific cod TACs in the Western and Central GOA will be allocated to vessels with a Federal fisheries permit that use jig gear before the TACs are apportioned among other non-jig sectors. In accordance with the FMP, the annual jig sector allocations may increase to up to 6 percent of the annual Western and Central GOA Pacific cod TACs, depending on the annual performance of the jig sector (see Table 1 of Amendment 83 to the FMP for a detailed discussion of the jig sector allocation process (76 FR 74670, December 1, 2011)). Jig sector allocation increases are established for a minimum of two years.

NMFS has evaluated the 2019 harvest performance of the jig sector in the Western and Central GOA, and is establishing the 2020 and 2021 Pacific cod apportionments to this sector based on its historical harvest performance from 2014 to 2019. For 2020 and 2021, NMFS allocates the jig sector 3.5 percent of the annual Pacific cod TAC in the Western GOA. This is an increase from the 2019 jig sector allocation of 2.5 percent. The 2020 and 2021 allocations consist of a base allocation of 2.5 percent of the Western GOA Pacific cod TAC, and a 1.0 percent performance increase because in 2019 the jig sector harvested greater than 90 percent of its 2019 Pacific cod allocation.

For 2020 and 2021, NMFS allocates the jig sector 1.0 percent of the annual Pacific cod TAC in the Central GOA. This is the same percent as the 2019 jig sector allocation because in 2019 this sector harvested less than 90 percent of its 2019 Pacific cod allocation. The 2020 and 2021 allocations consist of a base allocation of 1.0 percent of the Central GOA Pacific cod TAC, and no additional performance increase in the Central GOA.

Tables 5 and 6 list the seasonal apportionments and allocations of the 2020 and 2021 Pacific cod TACs.

Section 679.20(a)(4)(i) and (ii) require allocations of sablefish TACs for each of the regulatory areas and districts to fixed and trawl gear. In the Western and Central Regulatory Areas, 80 percent of each TAC is allocated to fixed gear, and 20 percent of each TAC is allocated to trawl gear. In the Eastern Regulatory Area, 95 percent of the TAC is allocated to fixed gear, and 5 percent is allocated to trawl gear. The trawl gear allocation in the Eastern Regulatory Area may only be used to support incidental catch of sablefish using trawl gear while directed fishing for other target species (§ 679.20(a)(4)(i)).

In recognition of the prohibition against trawl gear in the SEO District of the Eastern Regulatory Area, the Council recommended and NMFS approves specifying for incidental catch the allocation of 5 percent of the combined Eastern Regulatory Area sablefish TAC to trawl gear in the WYK District of the Eastern Regulatory Area. The remainder of the WYK District sablefish TAC is allocated to vessels using fixed gear. NMFS allocates 100 percent of the sablefish TAC in the SEO District to vessels using fixed gear. This action results in a 2020 allocation of 300 mt to trawl gear and 2,043 mt to fixed gear in the WYK District, a 2020 allocation of 3,663 mt to fixed gear in the SEO District, and a 2021 allocation of 464 mt to trawl gear in the WYK District. Table 7 lists the allocations of the 2020 sablefish TACs to fixed and trawl gear. Table 8 lists the allocations of the 2021 sablefish TACs to trawl gear.

The Council recommended that a trawl sablefish TAC be established for two years so that retention of incidental catch of sablefish by trawl gear could commence in January in the second year of the groundfish harvest specifications. Both the 2020 and 2021 trawl allocations are specified in these final harvest specifications, in Tables 7 and 8, respectively.

The Council also recommended that the fixed gear sablefish TAC be established annually to ensure that this IFQ fishery is conducted concurrently with the halibut IFQ fishery and is based on the most recent survey information. Since there is an annual assessment for sablefish and since the final harvest specifications are expected to be published before the IFQ season begins in March 2020, the Council recommended that the fixed gear sablefish TAC be set annually, rather than for two years, so that the best scientific information available could be considered in establishing the sablefish ABCs and TACs. Accordingly, Table 7 lists the 2020 fixed gear allocations, and the 2021 fixed gear allocations will be specified in the 2021 and 2022 harvest specifications.

With the exception of the trawl allocations that are provided to the Rockfish Program (see Table 28c to 50 CFR part 679), directed fishing for sablefish with trawl gear in the GOA is closed during the fishing year. Also, fishing for groundfish with trawl gear is prohibited prior to January 20 (§ 679.23(c)). Therefore, it is not likely that the sablefish allocation to trawl gear would be reached before the effective date of the final 2020 and 2021 harvest specifications.

These final 2020 and 2021 harvest specifications for the GOA include the fishery cooperative allocations and sideboard limitations established by the Rockfish Program. Program participants are primarily trawl CVs and trawl C/Ps, with limited participation by vessels using longline gear. The Rockfish Program assigns quota share and cooperative quota to participants for primary species (Pacific ocean perch, northern rockfish, and dusky rockfish) and secondary species (Pacific cod, rougheye and blackspotted rockfish, sablefish, shortraker rockfish, and thornyhead rockfish), allows a participant holding a license limitation program (LLP) license with rockfish quota share to form a rockfish cooperative with other persons, and allows holders of C/P LLP licenses to opt out of the fishery. The Rockfish Program also has an entry level fishery for rockfish primary species for vessels using longline gear. Longline gear includes hook-and-line, jig, troll, and handline gear.

Under the Rockfish Program, rockfish primary species in the Central GOA are allocated to participants after deducting for incidental catch needs in other directed groundfish fisheries (§ 679.81(a)(2)). Participants in the Rockfish Program also receive a portion of the Central GOA TAC of specific secondary species. In addition to groundfish species, the Rockfish Program allocates a portion of the halibut PSC limit (191 mt) from the third season deep-water species fishery allowance for the GOA trawl fisheries to Rockfish Program participants (§ 679.81(d) and Table 28d to 50 CFR part 679). The Rockfish Program also establishes sideboard limits to restrict the ability of harvesters operating under the Rockfish Program to increase their participation in other, non-Rockfish Program fisheries. These restrictions and halibut PSC limits are discussed in a subsequent section in this rule titled “Rockfish Program Groundfish Sideboard and Halibut PSC Limitations.”

Section 679.81(a)(2)(ii) and Table 28e to 50 CFR part 679 require allocations of 5 mt of Pacific ocean perch, 5 mt of northern rockfish, and 50 mt of dusky rockfish to the entry level longline fishery in 2020 and 2021. The allocation for the entry level longline fishery may increase incrementally each year if the catch exceeds 90 percent of the allocation of a species. The incremental increase in the allocation would continue each year until it reaches the maximum percent of the TAC for that species. In 2019, the catch of Pacific ocean perch, northern rockfish, and dusky rockfish did not attain the 90 percent threshold, and those final allocations for 2020 remain the same as the 2019 allocations. The remainder of the TACs for the rockfish primary species are allocated to the CV and C/P cooperatives (§ 679.81(a)(2)(iii)). Table 9 lists the allocations of the 2020 and 2021 TACs for each rockfish primary species to the entry level longline fishery, the potential incremental increases for future years, and the maximum percentages of the TACs assigned to the Rockfish Program that may be allocated to the rockfish entry level longline fishery.

Section 679.81 requires allocations of rockfish primary species among various sectors of the Rockfish Program. Tables 10 and 11 list the final 2020 and 2021 allocations of rockfish primary species in the Central GOA to the entry level longline fishery, and rockfish CV and C/P cooperatives in the Rockfish Program. NMFS also is setting aside incidental catch amounts (ICAs) for other directed fisheries in the Central GOA of 3,000 mt of Pacific ocean perch, 300 mt of northern rockfish, and 250 mt of dusky rockfish. These amounts are based on recent average incidental catches in the Central GOA by other groundfish fisheries.

Allocations among vessels belonging to CV or C/P cooperatives are not included in these final harvest specifications. Rockfish Program applications for CV cooperatives and C/P cooperatives are not due to NMFS until March 1 of each calendar year; therefore, NMFS cannot calculate 2020 and 2021 allocations in conjunction with these final harvest specifications. NMFS will post the 2020 allocations on the Alaska Region website at https://www.fisheries.noaa.gov/alaska/sustainable-fisheries/alaska-fisheries-management-reports#central-goa-rockfish when they become available after March 1.

Section 679.81(c) and Table 28c to 50 CFR part 679 require allocations of rockfish secondary species to CV and C/P cooperatives in the Central GOA. CV cooperatives receive allocations of Pacific cod, sablefish from the trawl gear allocation, and thornyhead rockfish. C/P cooperatives receive allocations of sablefish from the trawl gear allocation, rougheye and blackspotted rockfish, shortraker rockfish, and thornyhead rockfish. Tables 12 and 13 list the apportionments of the 2020 and 2021 TACs of rockfish secondary species in the Central GOA to CV and C/P cooperatives.

Section 679.21(d) establishes annual halibut PSC limit apportionments to trawl gear and hook-and-line gear, and authorizes the establishment of apportionments for pot gear. In December 2019, the Council recommended halibut PSC limits of 1,706 mt for trawl gear, 257 mt for hook-and-line gear, and 9 mt for the demersal shelf (DSR) rockfish fishery in the SEO District for both 2020 and 2021.

The DSR fishery in the SEO District is defined at § 679.21(d)(2)(ii)(A). This fishery is apportioned 9 mt of the halibut PSC limit in recognition of its small-scale harvests of groundfish (§ 679.21(d)(2)(i)(A)). The separate halibut PSC limit for the DSR fishery is intended to prevent that fishery from being impacted from the halibut PSC incurred by other GOA fisheries. NMFS estimates low halibut bycatch in the DSR fishery because (1) the duration of the DSR fisheries and the gear soak times are short, (2) the DSR fishery occurs in the winter when there is less overlap in the distribution of DSR and halibut, and (3) the directed commercial DSR fishery has a low DSR TAC. The Alaska Department of Fish and Game sets the commercial GHL for the DSR fishery after deducting (1) estimates of DSR incidental catch in all fisheries (including halibut and subsistence); and (2) the allocation to the DSR sport fishery. Of the 261 mt TAC for DSR in 2019, 50 mt were available for directed fishing by the DSR commercial fishery, of which 18 mt were harvested (through December 16, 2019).

The FMP authorizes the Council to exempt specific gear from the halibut PSC limits. NMFS, after consultation with the Council, exempts pot gear, the sablefish IFQ hook-and-line gear fishery categories, and jig gear from the non-trawl halibut PSC limit for 2020 and 2021. The Council recommended, and NMFS approves, these exemptions because: (1) The pot gear fisheries have low annual halibut bycatch mortality, (2) IFQ program regulations prohibit discard of halibut if any halibut IFQ permit holder on board a catcher vessel holds unused halibut IFQ for that vessel category and the IFQ regulatory area in which the vessel is operating (§ 679.7(f)(11)), (3) some sablefish IFQ fishermen hold halibut IFQ permits and are therefore required to retain the halibut they catch while fishing sablefish IFQ, and (4) NMFS estimates negligible halibut mortality for the jig gear fisheries given the small amount of groundfish harvested by jig gear, the selective nature of jig gear, and the high survival rates of halibut caught and released with jig gear.

The best available information on estimated halibut bycatch consists of data collected by fisheries observers during 2019. The calculated halibut bycatch mortality through December 31, 2019, is 1,102 mt for trawl gear and 76 mt for hook-and-line gear for a total halibut mortality of 1,178 mt. This halibut mortality was calculated using groundfish and halibut catch data from the NMFS Alaska Region's catch accounting system. This accounting system contains historical and recent catch information compiled from each Alaska groundfish fishery.

Section 679.21(d)(4)(i) and (ii) authorizes NMFS to seasonally apportion the halibut PSC limits after consultation with the Council. The FMP and regulations require that the Council and NMFS consider the following information in seasonally apportioning halibut PSC limits: (1) Seasonal distribution of halibut; (2) seasonal distribution of target groundfish species relative to halibut distribution; (3) expected halibut bycatch needs on a seasonal basis relative to changes in halibut biomass and expected catch of target groundfish species; (4) expected bycatch rates on a seasonal basis; (5) expected changes in directed groundfish fishing seasons; (6) expected actual start of fishing effort; and (7) economic effects of establishing seasonal halibut allocations on segments of the target groundfish industry. The Council considered information from the 2019 SAFE report, NMFS catch data, State of Alaska catch data, International Pacific Halibut Commission (IPHC) stock assessment and mortality data, and public testimony when apportioning the halibut PSC limits. NMFS concurs with the Council's recommendations listed in Table 14, which shows the final 2020 and 2021 Pacific halibut PSC limits, allowances, and apportionments.

Section 679.21(d)(4)(iii) and (iv) specifies that any underages or overages of a seasonal apportionment of a halibut PSC limit will be added to or deducted from the next respective seasonal apportionment within the fishing year.

Section 679.21(d)(3)(ii) authorizes further apportionment of the trawl halibut PSC limit to trawl fishery categories listed in § 679.21(d)(3)(iii). The annual apportionments are based on each category's proportional share of the anticipated halibut bycatch mortality during the fishing year and optimization of the total amount of groundfish harvest under the halibut PSC limit. The fishery categories for the trawl halibut PSC limits are: (1) A deep-water species fishery, composed of sablefish, rockfish, deep-water flatfish, rex sole, and arrowtooth flounder; and (2) a shallow-water species fishery, composed of pollock, Pacific cod, shallow-water flatfish, flathead sole, Atka mackerel, and “other species” (sculpins, sharks, and octopuses) (§ 679.21(d)(3)(iii)). Halibut mortality incurred while directed fishing for skates with trawl gear accrues towards the shallow-water species fishery halibut PSC limit (69 FR 26320, May 12, 2004).

NMFS will combine available trawl halibut PSC limit apportionments on May 15 during the second season deep-water and shallow-water species fisheries for use in either fishery from May 15 through June 30 (§ 679.21(d)(4)(iii)(D)). This is intended to maintain groundfish harvest while minimizing halibut bycatch by these sectors to the extent practicable. This provides the deep-water and shallow-water species trawl fisheries additional flexibility and the incentive to participate in fisheries at times of the year that may have lower halibut PSC rates relative to other times of the year.

Table 15 lists the final 2020 and 2021 apportionments of trawl halibut PSC limits between the trawl gear deep-water and shallow-water species fishery categories.

Table 28d to 50 CFR part 679 specifies the amount of the trawl halibut PSC limit that is assigned to the CV and C/P sectors that are participating in the Rockfish Program. This includes 117 mt of halibut PSC limit to the CV sector and 74 mt of halibut PSC limit to the C/P sector. These amounts are allocated from the trawl deep-water species fishery's halibut PSC third seasonal apportionment. After the combined CV and C/P halibut PSC limit allocation of 191 mt to the Rockfish Program, 150 mt remains for the trawl deep-water species fishery's halibut PSC third seasonal apportionment.

Section 679.21(d)(4)(iii)(B) limits the amount of the halibut PSC limit allocated to Rockfish Program participants that could be re-apportioned to the general GOA trawl fisheries during the current fishing year to no more than 55 percent of the unused annual halibut PSC limit apportioned to Rockfish Program participants. The remainder of the unused Rockfish Program halibut PSC limit is unavailable for use by any person for the remainder of the fishing year (§ 679.21(d)(4)(iii)(C)).

Section 679.21(d)(2)(i)(B) requires that the “other hook-and-line fishery” halibut PSC limit apportionment to vessels using hook-and-line gear must be apportioned between CVs and C/Ps in accordance with § 679.21(d)(2)(iii) in conjunction with these harvest specifications. A comprehensive description and example of the calculations necessary to apportion the “other hook-and-line fishery” halibut PSC limit between the hook-and-line CV and C/P sectors were included in the proposed rule to implement Amendment 83 to the FMP (76 FR 44700, July 26, 2011) and are not repeated here.

Pursuant to § 679.21(d)(2)(iii), the hook-and-line halibut PSC limit for the “other hook-and-line fishery” is apportioned between the CV and C/P sectors in proportion to the total Western and Central GOA Pacific cod allocations, which vary annually based on the proportion of the Pacific cod biomass between the Western, Central, and Eastern GOA. Pacific cod is apportioned among these three management areas based on the percentage of overall biomass per area, as calculated in the 2019 Pacific cod stock assessment. Updated information in the final 2019 SAFE report describes this distributional calculation, which allocates ABC among GOA regulatory areas on the basis of the three most recent stock surveys. For 2020 and 2021, the distribution of the total GOA Pacific cod ABC is 32 percent to the Western GOA, 59 percent to the Central GOA, and 9 percent to the Eastern GOA. Therefore, the calculations made in accordance with § 679.21(d)(2)(iii) incorporate the most recent information on GOA Pacific cod distribution with respect to establishing the annual halibut PSC limits for the CV and C/P hook-and-line sectors. Additionally, the annual halibut PSC limits for both the CV and C/P sectors of the “other hook-and-line fishery” are divided into three seasonal apportionments, using seasonal percentages of 86 percent, 2 percent, and 12 percent.

For 2020 and 2021, NMFS apportions halibut PSC limits of 144 mt and 113 mt to the hook-and-line CV and hook-and-line C/P sectors, respectively. Table 16 lists the final 2020 and 2021 apportionments of halibut PSC limits between the hook-and-line CV and the hook-and-line C/P sectors of the “other hook-and-line fishery.”

No later than November 1 of each year, NMFS will calculate the projected unused amount of halibut PSC limit by either of the CV or C/P hook-and-line sectors of the “other hook-and-line fishery” for the remainder of the year. The projected unused amount of halibut PSC limit is made available to the other hook-and-line sector for the remainder of that fishing year (§ 679.21(d)(2)(iii)(C)), if NMFS determines that an additional amount of halibut PSC is necessary for that sector to continue its directed fishing operations.

The IPHC annually assesses the abundance and potential yield of the Pacific halibut stock using all available data from the commercial and sport fisheries, other removals, and scientific surveys. Additional information on the Pacific halibut stock assessment may be found in the IPHC's 2019 Pacific halibut stock assessment (December 2019), available on the IPHC website at www.iphc.int. The IPHC considered the 2019 Pacific halibut stock assessment at its February 2020 annual meeting when it set the 2020 commercial halibut fishery catch limits.

To monitor halibut bycatch mortality allowances and apportionments, the Regional Administrator uses observed halibut incidental catch rates, halibut discard mortality rates (DMRs), and estimates of groundfish catch to project when a fishery's halibut bycatch mortality allowance or seasonal apportionment is reached. Halibut incidental catch rates are based on observers' estimates of halibut incidental catch in the groundfish fishery. DMRs are estimates of the proportion of incidentally caught halibut that do not survive after being returned to the sea. The cumulative halibut mortality that accrues to a particular halibut PSC limit is the product of a DMR multiplied by the estimated halibut PSC. DMRs are estimated using the best scientific information available in conjunction with the annual GOA stock assessment process. The DMR methodology and findings are included as an appendix to the annual GOA groundfish SAFE report.

In 2016, the DMR estimation methodology underwent revisions per the Council's directive. An interagency halibut working group (IPHC, Council, and NMFS staff) developed improved estimation methods that have undergone review by the GOA Plan Team, SSC, and the Council. A summary of the revised methodology is contained in the GOA proposed 2017 and 2018 harvest specifications (81 FR 87881, December 6, 2016), and the comprehensive discussion of the working group's statistical methodology is available from the Council (see ADDRESSES ). The DMR working group's revised methodology is intended to improve estimation accuracy, transparency, and transferability in the methodology used for calculating DMRs. The working group will continue to consider improvements to the methodology used to calculate halibut mortality, including potential changes to the reference period (the period of data used for calculating the DMRs). Future DMRs may change based on additional years of observer sampling, which could provide more recent and accurate data and which could improve the accuracy of estimation and progress on methodology. The new methodology will continue to ensure that NMFS is using DMRs that more accurately reflect halibut mortality, which will inform the different sectors of their estimated halibut mortality and allow specific sectors to respond with methods that could reduce mortality and, eventually, the DMR for that sector.

At the December 2019 meeting, the SSC, AP, and the Council concurred with the revised DMR estimation methodology, and NMFS adopts for 2020 and 2021 the DMRs calculated under the revised methodology, which uses an updated 2-year reference period. The final 2020 and 2021 DMRs in this rule are unchanged from the DMRs in the proposed 2020 and 2021 harvest specifications (84 FR 66109, December 3, 2019). Table 17 lists these final 2020 and 2021 DMRs.

Amendment 93 to the FMP (77 FR 42629, July 20, 2012) established separate Chinook salmon PSC limits in the Western and Central GOA in the directed pollock trawl fishery. These limits require that NMFS close the pollock directed fishery in the Western and Central Regulatory Areas of the GOA if the applicable Chinook salmon PSC limit in that regulatory area is reached (§ 679.21(h)(8)). The annual Chinook salmon PSC limits in the pollock directed fishery of 6,684 salmon in the Western GOA and 18,316 salmon in the Central GOA are set at § 679.21(h)(2)(i) and (ii).

Amendment 97 to the FMP (79 FR 71350, December 2, 2014) established an initial annual PSC limit of 7,500 Chinook salmon for the trawl non-pollock groundfish fisheries in the Western and Central GOA. This limit is apportioned among three sectors directed fishing for groundfish species other than pollock: 3,600 Chinook salmon to trawl C/Ps; 1,200 Chinook salmon to trawl CVs participating in the Rockfish Program; and 2,700 Chinook salmon to trawl CVs not participating in the Rockfish Program (§ 679.21(h)(4)). NMFS will monitor the Chinook salmon PSC in the trawl non-pollock groundfish fisheries and close an applicable sector if it reaches its Chinook salmon PSC limit.

The Chinook salmon PSC limit for two sectors, trawl C/Ps and trawl CVs not participating in the Rockfish Program, may be increased in subsequent years based on the performance of these two sectors and their ability to minimize their use of their respective Chinook salmon PSC limits. If either or both of these two sectors limits its use of Chinook salmon PSC to a specified threshold amount in 2019 (3,120 for trawl C/Ps and 2,340 for Non-Rockfish Program trawl CVs), that sector will receive an incremental increase to its 2020 Chinook salmon PSC limit (§ 679.21(h)(4)). In 2019, the trawl C/P sector did not exceed 3,120 Chinook salmon PSC; therefore, the 2020 trawl C/P sector Chinook salmon PSC limit will be 4,080 Chinook salmon. In 2019, the Non-Rockfish Program trawl CV sector did exceed 2,340 Chinook salmon PSC; therefore, the 2020 Non-Rockfish Program trawl CV sector Chinook salmon PSC limit will be 2,700 Chinook salmon.

Section 679.64 establishes groundfish harvesting and processing sideboard limitations on AFA C/Ps and CVs in the GOA. These sideboard limits are necessary to protect the interests of fishermen and processors who do not directly benefit from the AFA from those fishermen and processors who receive exclusive harvesting and processing privileges under the AFA. Section 679.7(k)(1)(ii) prohibits listed AFA C/Ps and C/Ps designated on a listed AFA C/P permit from harvesting any species of groundfish in the GOA. Additionally, § 679.7(k)(1)(iv) prohibits listed AFA C/Ps and C/Ps designated on a listed AFA C/P permit from processing any pollock harvested in a directed pollock fishery in the GOA and any groundfish harvested in Statistical Area 630 of the GOA.

AFA CVs that are less than 125 feet (38.1 meters) length overall, have annual landings of pollock in the Bering Sea and Aleutian Islands less than 5,100 mt, and have made at least 40 GOA groundfish landings from 1995 through 1997 are exempt from GOA CV groundfish sideboard limits under § 679.64(b)(2)(ii). Sideboard limits for non-exempt AFA CVs in the GOA are based on their traditional harvest levels of TAC in groundfish fisheries covered by the FMP. Section 679.64(b)(3)(iv) establishes the CV groundfish sideboard limitations in the GOA based on the aggregate retained catch of non-exempt AFA CVs of each sideboard species or species group from 1995 through 1997 divided by the sum of the TACs for that species or species group available to CVs over the same period.

As discussed earlier in this preamble, NMFS published a final rule (84 FR 2723, February 8, 2019) that establishes regulations to prohibit directed fishing for specific groundfish species or species groups subject to sideboard limits, rather than prohibiting directed fishing for non-exempt AFA CV sideboards through the GOA annual harvest specifications. Those groundfish species or species groups with sideboard limits subject to the final rule are now prohibited to directed fishing in regulation (§ 679.20(d)(1)(iv)(D) and Table 56 to 50 CFR part 679). Beginning with the 2020 and 2021 harvest specifications, NMFS is incorporating these changes into the specification and management of non-exempt AFA CV sideboard limits and will continue to publish only those sideboard limit amounts for groundfish species or species groups not subject to the final rule. This decreases the overall number of sideboard limits specified in the GOA harvest specifications, compared to previous years.

Tables 18 and 19 list the final 2020 and 2021 groundfish sideboard limits for non-exempt AFA CVs. NMFS will deduct all targeted or incidental catch of sideboard species made by non-exempt AFA CVs from the sideboard limits listed in Tables 18 and 19.

The halibut PSC sideboard limits for non-exempt AFA CVs in the GOA are based on the aggregate retained groundfish catch by non-exempt AFA CVs in each PSC target category from 1995 through 1997 divided by the retained catch of all vessels in that fishery from 1995 through 1997 (§ 679.64(b)(4)(ii)). Table 20 lists the final 2020 and 2021 non-exempt AFA CV halibut PSC limits for vessels using trawl gear in the GOA.

Section 680.22 establishes groundfish catch limits for vessels with a history of participation in the Bering Sea snow crab fishery to prevent these vessels from using the increased flexibility provided by the Crab Rationalization (CR) Program to expand their level of participation in the GOA groundfish fisheries. Sideboard limits restrict these vessels' catch to their collective historical landings in each GOA groundfish fishery (except the fixed-gear sablefish fishery). Sideboard limits also apply to catch made using an LLP license derived from the history of a restricted vessel, even if that LLP license is used on another vessel.

The basis for these sideboard limits is described in detail in the final rules implementing the major provisions of the CR Program, including Amendments 18 and 19 to the Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner Crabs (Crab FMP) (70 FR 10174, March 2, 2005), Amendment 34 to the Crab FMP (76 FR 35772, June 20, 2011), Amendment 83 to the GOA FMP (76 FR 74670, December 1, 2011), and Amendment 45 to the Crab FMP (80 FR 28539, May 19, 2015).

As discussed earlier in this preamble, NMFS published a final rule (84 FR 2723, February 8, 2019) that establishes regulations to prohibit directed fishing for specific groundfish species or species groups subject to sideboard limits, rather than prohibiting directed fishing for non-AFA crab vessel sideboards through the GOA annual harvest specifications. Those groundfish species or species groups with sideboard limits subject to the final rule are now prohibited to directed fishing in regulation (§ 680.22(e)(1)(i) and (iii)). Beginning with the 2020 and 2021 harvest specifications, NMFS is incorporating such changes into the specification and the management of non-AFA crab vessel sideboard limits and will continue to publish only those non-AFA crab vessel sideboard limit amounts for groundfish species not subject to the final rule. This decreases the overall number of sideboard limits specified in the GOA harvest specifications, compared to previous years.

Tables 21 and 22 list the final 2020 and 2021 groundfish sideboard limitations for non-AFA crab vessels. All targeted or incidental catch of sideboard species made by non-AFA crab vessels or associated LLP licenses will be deducted from these sideboard limits.

The Rockfish Program establishes three classes of sideboard provisions: CV groundfish sideboard restrictions, C/P rockfish sideboard restrictions, and C/P opt-out vessel sideboard restrictions (§ 679.82(c)(1)). These sideboards are intended to limit the ability of rockfish harvesters to expand into other GOA groundfish fisheries.

CVs participating in the Rockfish Program may not participate in directed fishing for dusky rockfish, Pacific ocean perch, and northern rockfish in the West Yakutat District and Western GOA from July 1 through July 31. Also, CVs may not participate in directed fishing for arrowtooth flounder, deep-water flatfish, and rex sole in the GOA from July 1 through July 31 (§ 679.82(d)).

C/Ps participating in Rockfish Program cooperatives are restricted by rockfish and halibut PSC sideboard limits. These C/Ps are prohibited from directed fishing for dusky rockfish, Pacific ocean perch, and northern rockfish in the West Yakutat District and Western GOA from July 1 through July 31 (§ 679.82(e)(2)). Holders of C/P-designated LLP licenses that opt out of participating in a Rockfish Program cooperative will be able to access that portion of each rockfish sideboard limit that is not assigned to rockfish cooperatives (§ 679.82 (e)(7)). The sideboard ratio for each fishery in the West Yakutat District and the Western GOA is set forth in § 679.82(e)(4). Tables 23 and 24 list the final 2020 and 2021 Rockfish Program C/P sideboard limits in the West Yakutat District and the Western GOA. Due to confidentiality requirements associated with fisheries data, the sideboard limits for the West Yakutat District are not displayed.

Under the Rockfish Program, the C/P sector is subject to halibut PSC sideboard limits for the trawl deep-water and shallow-water species fisheries from July 1 through July 31 (§ 679.82(e)(3) and (5)). Halibut PSC sideboard ratios by fishery are set forth in § 679.82(e)(5). No halibut PSC sideboard limits apply to the CV sector, as CVs participating in cooperatives receive a portion of the annual halibut PSC limit. C/Ps that opt out of the Rockfish Program are able to access that portion of the deep-water and shallow-water halibut PSC sideboard limit not assigned to C/P rockfish cooperatives. The sideboard provisions for C/Ps that elect to opt out of participating in a rockfish cooperative are described in § 679.82(c), (e), and (f). Sideboard limits are linked to the catch history of specific vessels that may choose to opt out. After March 1, NMFS will determine which C/Ps have opted-out of the Rockfish Program in 2020, and NMFS will know the ratios and amounts used to calculate opt-out sideboard ratios. NMFS will then calculate any applicable opt-out sideboards for 2020 and post these limits on the Alaska Region website at https://www.fisheries.noaa.gov/alaska/sustainable-fisheries/alaska-fisheries-management-reports#central-goa-rockfish. Table 25 lists the final 2020 and 2021 Rockfish Program halibut PSC sideboard limits for the C/P sector.

Amendment 80 to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (Amendment 80 Program) established a limited access privilege program for the non-AFA trawl C/P sector. The Amendment 80 Program established groundfish and halibut PSC catch limits for Amendment 80 Program participants to limit the ability of participants eligible for the Amendment 80 Program to expand their harvest efforts in the GOA.

Section 679.92 establishes groundfish harvesting sideboard limits on all Amendment 80 program vessels, other than the F/V Golden Fleece, to amounts no greater than the limits listed in Table 37 to 50 CFR part 679. Under § 679.92(d), the F/V Golden Fleece is prohibited from directed fishing for pollock, Pacific cod, Pacific ocean perch, dusky rockfish, and northern rockfish in the GOA.

Groundfish sideboard limits for Amendment 80 Program vessels operating in the GOA are based on their average aggregate harvests from 1998 through 2004 (72 FR 52668, September 14, 2007). Tables 26 and 27 list the final 2020 and 2021 groundfish sideboard limits for Amendment 80 Program vessels. NMFS will deduct all targeted or incidental catch of sideboard species made by Amendment 80 Program vessels from the sideboard limits in Tables 26 and 27.