The regulations in 2 CFR chapter IV set forth the United States Department of Agriculture's (USDA) regulations for grants and agreements. The regulations in part 417 were established in a final rule published May 25, 2010 (75 FR 29185), the regulations in part 421 in a final rule published December 8, 2011 (76 FR 76610), and the remainder of the chapter (parts 400, 415, 416, 418, and 422) in a final rule published December 19, 2014 (79 FR 75982). The regulations in 2 CFR chapter IV updated and replaced provisions that had previously been found in 7 CFR parts 3015 through 3019, 3021, and 3052.

The regulations of several USDA agencies in title 7 refer to and cite the grants and agreements regulations. Following the publication of the various final rules establishing the regulations in 2 CFR chapter IV, those agencies updated their regulations so that they referred to the new grants and agreements regulations in title 2 rather than the predecessor regulations in Title 7. However, we have identified a number of instances where the necessary updates were inadvertently overlooked. This final rule makes those updates.

This rule relates to internal agency management and makes various nonsubstantive changes to the regulations in title 7, Code of Federal Regulations to correct outdated citations to the Department's grants and agreements regulations. Accordingly, notice and other public procedure on this rule are unnecessary and contrary to the public interest. Therefore, pursuant to 5 U.S.C. 553, notice of proposed rulemaking and opportunity to comment are not required, and this rule may be made effective less than 30 days after publication in the Federal Register . Further, since this rule relates to internal agency management, it is exempt from the provisions of Executive Orders 12866, 12988, and 13771. Finally, this action is not a rule as defined by the Regulatory Flexibility Act (5 U.S.C. 501) and, thus, is exempt from the provisions of that Act.

This final rule contains no new reporting, recordkeeping, or third-party disclosure requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Accordingly, 7 CFR parts 6, 11, 25, 1530, 1580, 1940, 2500, 2903, and 4288 are amended as follows:

FCIC amends the Common Crop Insurance Regulations by revising 7 CFR 457.161 Canola and Rapeseed Crop Insurance Provisions to be effective for the 2021 and succeeding crop years.

The changes to 7 CFR 457.161 Canola and Rapeseed Crop Insurance Provisions are as follows:

1. Section 1—FCIC is revising the definition of “harvest” to incorporate a new term, “pushed”, that is being added to section 1. The definition specifies that canola that is swathed prior to combining is not considered harvested. The revised definition says that canola that is swathed or pushed prior to combining is not considered harvested.

FCIC is adding the definition of “latest final planting date” to specify the final planting date for those counties that have only spring-planted acreage, only fall-planted acreage, or both spring-planted and fall-planted acreage.

FCIC is adding a definition of “prevented planting” to specify it is the same definition found in the Basic Provisions except that the references to “final planting date” contained in the definition in the Basic Provisions are replaced with the “latest final planting date.” This is consistent with other crop provisions that have both fall and spring planted acreage.

FCIC is adding a definition of “pushed.” Pushed is a method by which the stems of the canola are mechanically bent prior to maturity. When the stems are pushed, the stems and pods remain intact to ripen naturally while being protected from weather events. This process is not harmful to the canola and is completed prior to harvest.

2. Section 3—FCIC is revising paragraphs (b)(1) and (b)(2) to replace the phrase “insured fall planted acreage” with the phrase “insurable fall planted acreage.” This subsection provides guidance regarding the date by which producers can make changes to their insurance coverage depending on whether they have insured fall planted acreage. The previous provisions stated that if producers have insured fall planted acreage, no changes can be made after the fall sales closing date. If producers do not have insured fall planted acreage, then they can make changes up until the spring sales closing. According to section 6 of the Crop Provisions, all the producer's acreage of the crop in the county must be insured. Therefore, if the producer plants fall planted acreage and it is insurable, then it must be insured. FCIC received input from insurance companies that the phrase “insured fall planted acreage” indicates that if producers planted fall planted acreage but did not insure it, then they have until the spring sales closing date to make changes to the insurance coverage on the spring-planted acreage. That is not the intent of the provisions. Therefore, FCIC is revising the language to indicate that if there is insurable fall planted acreage, then no changes may be made after the fall sales closing date.

3. Section 5—FCIC is revising the table to make two changes: (1) To specify what the cancellation and termination dates are for each state and county where canola insurance is available; and (2) to specify the cancellation and termination dates in two separate columns.

The wording does not list specific states, but rather identifies the cancellation and termination dates based on whether a county has or does not have fall planted types listed in the actuarial documents (or all counties for Alabama and Georgia):

a. Counties without fall-planted types on the actuarial documents have a cancellation and termination date of March 15; and

b. Counties with fall-planted types on the actuarial documents have a cancellation and termination date of August 31.

The wording of this table caused confusion when insured producers and their insurance providers were seeking written agreements in counties where canola and rapeseed crop insurance is not available (because the county does not appear in the actuarial documents). A written agreement provides insurance for insurable crops when coverage or rates are currently unavailable in the county, or is used to modify existing terms and conditions in the crop insurance policy when specifically permitted by the policy. Section 18(e)(2)(ii) of the Common Crop Insurance Policy, Basic Provisions (Basic Provisions) had specified that written agreements must be provided on or before the cancellation date to insure a crop in a county that does not have actuarial documents for the crop (If the Crop Provisions do not provide a cancellation date for the county, the cancellation date for other insurable crops in the same State that have similar final planting and harvesting dates will be applicable). According to the Canola and Rapeseed Crop Provisions and section 18 of the Basic Provisions, the written agreement must be submitted by March 15 for counties without fall-planted types on the actuarial documents and August 31 for counties with fall-planted types on the actuarial documents.

In an example that was brought to our attention, an insured producer planted fall canola in a county for which there is no canola and rapeseed crop insurance coverage. This county falls within the category of not having fall-planted types listed on the actuarial documents; therefore, the deadline to submit the written agreement would be the March 15th cancellation date. However, the insured producer planted the crop months prior to the deadline and may be able to adversely select against insurance due to information the insured has about their crop prior to the attachment of insurance. With the revised changes to the table, the deadline for the written agreement in this county would default to the provisions in section 18(e)(2)(ii) of the Basic Provisions: (If the Crop Provisions do not provide a cancellation date for the county, the cancellation date for other insurable crops in the same State that have similar final planting and harvesting dates will be applicable). In this example, according to section 18 of the Basic Provisions, the cancellation date would have been more-appropriately aligned with the counties in the states with an August 31st cancellation date.

In Idaho, there are six counties that have only spring-planted types of canola. In the remaining counties in Idaho, and in all counties in Oregon and Washington, there are fall and spring-planted types. The six counties in Idaho are now specifically named in the table and fall within the cancellation and termination dates of March 15th. The remaining counties in Idaho and all counties in Oregon and Washington have a Special Provisions statement that changes the termination date from August 31 to October 31. By adding a separate column for the termination dates in the table, FCIC can incorporate the termination date addressed in the Special Provisions statement. The Special Provisions statement will no longer be needed.

4. Section 10—FCIC is revising paragraph (d) for consistency with other crops that have both fall and spring planted acreage. The provisions state that the production guarantee, premium, projected and harvest prices and replant payments will be based on the crop type that is replanted and insured. The provisions do not address situations when a damaged winter crop type is replanted to a spring crop type, but retains insurance based on the winter crop type; and when the replanted acreage is planted at a reduced seeding rate into a partially-damaged stand of the insured crop. These situations are addressed in other crop provisions that have both fall and spring planted acreage; therefore, these situations are added to these crop provisions for consistency.

5. Section 14—FCIC is adding a sentence at the beginning to clarify in counties for which the Special Provisions designate a spring final planting date, the prevented planting production guarantee will be based on the approved yield for spring-planted acreage of the insured crop. This change is consistent with other crop provisions that have both fall and spring planted acreage.

The Administrative Procedure Act (APA, 5 U.S.C. 553) provides that the notice and comment and 30-day delay in the effective date provisions do not apply when the rule involves specified actions, including matters relating to contracts. This rule governs contracts for crop insurance policies and therefore falls within that exemption.

For major rules, the Congressional Review Act requires a delay the effective date of 60 days after publication to allow for Congressional review. This rule is not a major rule under the Congressional Review Act, as defined by 5 U.S.C. 804(2). Therefore, this final rule is effective May 28, 2020. Although not required by APA or any other law, FCIC has chosen to request comments on this rule.

Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The requirements in Executive Orders 12866 and 13563 for the analysis of costs and benefits apply to rules that are determined to be significant. Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” established a federal policy to alleviate unnecessary regulatory burdens on the American people.

The Office of Management and Budget (OMB) designated this rule as not significant under Executive Order 12866, “Regulatory Planning and Review,” and therefore, OMB has not reviewed this rule and analysis of the costs and benefits is not required under either Executive Order 12866 or 13563.

Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” requires that in order to manage the private costs required to comply with Federal regulations that for every new significant or economically significant regulation issued, the new costs must be offset by the elimination of at least two prior regulations. As this rule is designated as not significant, it is not subject to Executive Order 13771. In a general response to the requirements of Executive Order 13777, USDA created a Regulatory Reform Task Force, and USDA agencies were directed to remove barriers, reduce burdens, and provide better customer service both as part of the regulatory reform of existing regulations and as an ongoing approach. FCIC reviewed this regulation and made changes to improve any provision that was determined to be outdated, unnecessary, or ineffective.

Executive Order 12866, as supplemented by Executive Order 13563, requires each agency to write all rules in plain language. In addition to your substantive comments on this rule, we invite your comments on how to make the rule easier to understand. For example:

• Are the requirements in the rule clearly stated? Are the scope and intent of the rule clear?

• Does the rule contain technical language or jargon that is not clear?

• Is the material logically organized?

• Would changing the grouping or order of sections or adding headings make the rule easier to understand?

• Could we improve clarity by adding tables, lists, or diagrams?

• Would more, but shorter, sections be better? Are there specific sections that are too long or confusing?

• What else could we do to make the rule easier to understand?

The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by SBREFA, generally requires an agency to prepare a regulatory analysis of any rule whenever an agency is required by APA or any other law to publish a proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule is not subject to the Regulatory Flexibility Act because as noted above, this rule is exempt from APA and no other law requires that a proposed rule be published for this rulemaking initiative.

In general, the environmental impacts of rules are to be considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347) and the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508). FCIC conducts programs and activities that have been determined to have no individual or cumulative effect on the human environment. As specified in 7 CFR 1b.4, FCIC is categorically excluded from the preparation of an Environmental Analysis or Environmental Impact Statement unless the FCIC Manager (agency head) determines that an action may have a significant environmental effect. The FCIC Manager has determined this rule will not have a significant environmental effect. Therefore, FCIC will not prepare an environmental assessment or environmental impact statement for this action and this rule serves as documentation of the programmatic environmental compliance decision.

Executive Order 12372, “Intergovernmental Review of Federal Programs,” requires consultation with State and local officials that would be directly affected by proposed Federal financial assistance. The objectives of the Executive Order are to foster an intergovernmental partnership and a strengthened Federalism, by relying on State and local processes for State and local government coordination and review of proposed Federal financial assistance and direct Federal development. For reasons specified in the final rule related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs and activities in this rule are excluded from the scope of Executive Order 12372.

This rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This rule will not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rule. Before any judicial actions may be brought regarding the provisions of this rule, the administrative appeal provisions of 7 CFR part 11 are to be exhausted.

This rule has been reviewed under Executive Order 13132, “Federalism.” The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government, except as required by law. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that 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.

FCIC has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that require Tribal consultation under E.O. 13175. The regulation changes do not have Tribal implications that preempt Tribal law and are not expected have a substantial direct effect on one or more Indian Tribes. If a Tribe requests consultation, FCIC will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified in this rule are not expressly mandated by Congress.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4) requires Federal agencies to assess the effects of their regulatory actions of State, local, and Tribal governments or the private sector. Agencies generally must prepare a written statement, including cost benefits analysis, for proposed and final rules with Federal mandates that may result in expenditures of $100 million or more in any 1 year for State, local or Tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates, as defined in Title II of UMRA, for State, local, and Tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

The title and number of the Federal Domestic Assistance Program listed in the Catalog of Federal Domestic Assistance to which this rule applies is No. 10.450—Crop Insurance.

In accordance with the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35, subchapter I), the rule does not change the information collection approved by OMB under control numbers 0563-0053.

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

For the reasons discussed above, FCIC amends 7 CFR part 457 as follows:

I. Background

The OCC recognizes the recent disruptions and significant challenges faced by national banks and Federal savings associations as a result of the coronavirus disease 2019 (COVID-19) emergency. Health and safety advisories declared in response to the COVID-19 emergency, including those relating to social distancing, are impeding the ability of national banks and Federal savings associations to hold in-person meetings, such as board of director, shareholder, and member meetings. However, neither the National Bank Act or the Home Owners' Loan Act, as applicable, nor OCC regulations require that director, shareholder, or member meetings take place in person. 1 Furthermore, remote communication tools such as telephone or internet-based conferencing are available to institutions so that they may comply with internal and regulatory meeting requirements within the parameters of the social distancing guidelines. The OCC is issuing this IFR to clarify that national banks and Federal savings associations may use remote communication tools to conduct these meetings. Specifically, this IFR allows national banks and Federal savings associations to permit remote participation by shareholders, directors, and as applicable, members at shareholder, board of directors, and member meetings. Under this authority, institutions could hold in-person meetings with some participants attending remotely or hold these meetings exclusively by means of remote communication.

The amendments made by this IFR will enable national banks and Federal savings associations to conduct necessary meetings remotely during the COVID-19 emergency as well as during any other future emergency when in-person meetings may not be feasible. Because these amendments will be permanent and will not expire after the COVID-19 emergency has ended, they also will provide national banks and Federal savings associations, on an ongoing basis, with more flexibility in planning and holding director, shareholder, and, as applicable, member meetings; could permit greater director, shareholder, and member participation at these meetings for those participants not able to attend in person; and may reduce the burden and costs of in-person meetings for national banks and Federal savings associations, as well as meeting participants. The OCC expects that national banks and Federal savings associations allowing remote participation will provide fair treatment and transparency for shareholders or members participating telephonically or electronically.

Member and Shareholder Meetings. Twelve CFR 5.21 governs the procedures and requirements for charters and bylaws of Federal mutual savings associations. Paragraph (j)(2)(i) of § 5.21 requires the association's bylaws to indicate that the association will provide for and conduct an annual meeting of its members for the election of directors and any other business of the association. Paragraph (j)(2)(i) also provides that the annual meeting must be held at any convenient place the board of directors may designate, and at a date and time within 150 days after the end of the association's fiscal year. 3 Paragraph (j)(2)(ii) of § 5.21 requires the bylaws to include procedures for calling and conducting special meetings of Federal mutual savings association members.

Section 5.22 governs the procedures and requirements for Federal stock savings association charters and bylaws and generally parallels § 5.21. Paragraph (k)(1) of § 5.22 provides that all annual and special meetings of shareholders must be held at any convenient place the board of directors may designate.

To clarify that both a Federal mutual savings association and a Federal stock savings association may use remote communication tools to conduct these meetings, the OCC is amending §§ 5.21(j)(2)(i) and (j)(2)(ii) and 5.22(k)(1) to permit an association's bylaws to provide for telephonic or electronic participation of members and shareholders, as applicable, at both annual and special meetings. This amendment also provides that members or shareholders participating telephonically or electronically in an annual or special meeting will be deemed present in person for purposes of the quorum requirement in §§ 5.21(j)(2)(v) or 5.22(k)(5), as applicable. 4 As noted below, OCC regulations and model bylaw provisions governing annual and special meetings of the board of directors of Federal mutual savings associations and special meetings of the board of directors of Federal stock savings associations currently permit “telephonic and electronic participation.” The OCC is using the phrase “telephonic and electronic participation” in its amendments to the shareholder meeting provisions and maintaining the use of this phrase in its board of director provisions to provide consistent terminology for Federal savings associations and to avoid the cost and burden of any bylaw changes that could result from modifying this terminology in this IFR. The OCC requests comment on whether this terminology is appropriate in light of current technology or whether the OCC should use a different phrase in describing remote participation at shareholder and board of directors meetings.

This IFR also requires Federal savings associations to have procedures in place for telephonic and electronic participation at member or shareholder meetings and provides associations with a choice of procedures to follow. The procedures available to Federal mutual savings associations and those available to Federal stock savings associations differ only with respect to the State law procedures they may choose. As explained below, this difference is based on the State corporate governance procedures available to each type of entity under current OCC regulations.

With respect to Federal mutual savings associations, the IFR amends § 5.21(j)(2)(i) (annual meetings of members) and § 5.21(j)(2)(ii) (special meetings of members) to require the association to follow the procedures for telephonic or electronic participation of: (1) The State corporate governance procedures it is permitted to elect pursuant to § 5.21(j)(3)(iii), if those State corporate governance procedures include telephonic or electronic participation procedures; (2) the Delaware General Corporation Law  5 (with “member” substituting for “stockholder”); or (3) the Model Business Corporation Act  6 (with “member” substituting for “shareholder”), provided that such procedures are not inconsistent with applicable Federal statutes and regulations and safety and soundness. With certain exceptions, § 5.21(j)(3)(iii) provides that a Federal mutual savings association may elect to follow the corporate governance procedures of the laws of the State where the home office of the institution is located. Therefore, pursuant to this IFR, a Federal mutual savings association has the choice of following either the procedures for remote participation of the laws of its home State if these procedures exist, the procedures for remote participation under Delaware General Corporation Law, or the procedures for remote participation under the Model Business Corporation Act. To inform members of its choice of procedures, the IFR requires the association to indicate the use of these procedures in its bylaws.

With respect to Federal stock savings associations, § 5.22(k)(1) as amended by this IFR requires the association to elect to follow, pursuant to § 5.22(j)(2)(iii), corporate governance procedures for shareholder meetings that include procedures for telephonic or electronic participation. With certain exceptions, § 5.22(j)(2)(iii) provides that a Federal stock association may elect to follow the corporate governance procedures of: (1) The laws of the State where the home office of the association is located; (2) the laws of the State where the association's holding company, if any, is incorporated or chartered; (3) the Delaware General Corporation Law; or (4) the Model Business Corporation Act, provided that such procedures are not inconsistent with applicable Federal statutes and regulations and safety and soundness. This amendment, therefore, permits a Federal stock savings association to choose from any of the sources listed in § 5.22(j)(2)(iii) for its telephonic and electronic participation procedures. As with the amendments for Federal mutual savings associations, this IFR requires a Federal stock savings association to indicate in its bylaws which procedures it will use to inform its shareholders of these procedures.

As a result of these amendments, this IFR will ensure that if a Federal savings association's bylaws provide for telephonic or electronic participation at member or shareholder meetings, the Federal savings association must have procedures in place for this remote participation even if it has not elected to follow any particular corporate governance law pursuant to §§ 5.21(j)(3)(iii) or 5.22(j)(2)(iii), or if the corporate governance law it has elected to follow does not contain procedures for remote participation at meetings.

As indicated above, the IFR requires a Federal savings association to amend its bylaws if it wishes to utilize remote means of communication for its meetings. Current §§ 5.21(j)(3) and 5.22(j)(2) provide that, in general, a Federal savings association must submit an amendment to its bylaws to the OCC 30 days prior to adoption by its board of directors and that the amendment is effective 30 days after filing with the OCC. However, pursuant to §§ 5.21(j)(3)(i)(B) and 5.22(j)(2)(i)(B), if an association adopts a bylaw amendment that includes the language of the OCC's model or optional bylaws without change and files the bylaw with the OCC within 30 days after adoption, the bylaw is effective upon adoption. To permit Federal savings associations to utilize the remote communication provisions included in this IFR as quickly as possible during the COVID-19 emergency, the OCC is issuing concurrent with this IFR optional model bylaw provisions for telephonic and electronic participation at shareholder and member meetings. 7

The OCC also is considering updating the member and shareholder meeting notice requirements contained in §§ 5.21 and 5.22. Section 5.21(j)(2)(iii) requires a Federal mutual savings association to publish a notice of the annual or special meeting in a newspaper of general circulation in the city or county in which the principal place of business of the association is located or to mail the notice postage prepaid to each of its members of record. This provision also requires the Federal mutual savings association to post notice of the meeting in a conspicuous place in each of its offices during the 14 days immediately preceding the date on which the meeting convenes. The OCC requests comment on whether it should amend this provision to permit a Federal mutual savings association to deliver the meeting notice to a member electronically if the member receives electronic communications. In addition, the OCC requests comment on whether it should amend this provision to permit the Federal mutual savings association to post the notice of the meeting on its website instead of in its offices. Section 5.22(k)(2) requires a Federal savings association to deliver a written notice of a shareholder meeting either personally or by mail to each shareholder of record entitled to vote at the meeting. If mailed, the notice is deemed delivered when deposited in the mail, addressed to the shareholder at the address appearing on the stock transfer books or records of the association as of the record date, with postage thereon prepaid. As with § 5.21(j)(2)(iii), the OCC requests comment on whether it should amend § 5.22(k)(2) to permit the Federal stock savings association to deliver the meeting notice to the shareholder electronically if the shareholder receives electronic communications and that this electronic notice be deemed delivered when sent to the shareholder's electronic address appearing on the books or records of the association as of the record date. The OCC believes that these amendments to the notice provisions would update the OCC's rules to reflect modern communication methods and complement the amendments made by this IFR. The OCC also believes that these amendments would benefit members and shareholders by providing them with notice by means consistent with other communications they receive from the association and allow a Federal savings association to announce a member or shareholder meeting through less costly or burdensome methods.

Board of Directors Meetings. Current § 5.21(j)(2)(ix) provides that the board of directors of a Federal mutual savings association may permit telephonic or electronic participation at its meetings. Current § 5.22(l)(8) permits the bylaws of a Federal stock savings association to provide for electronic participation at special meetings of the board of directors. The OCC's model bylaws for Federal mutual and stock savings associations also permit telephonic or similar communication at meetings of the board of directors. 8 However, current § 5.22(l)(3), which provides requirements for regular meetings of the board of directors of a Federal stock savings association, is silent with respect to electronic participation. To make these provisions consistent with each other, as well as with the model bylaws, the OCC is amending § 5.22(l)(3) to provide that the bylaws of a Federal stock savings association may provide for telephonic or electronic participation of board members at regular meetings. The OCC also is making technical changes to § 5.22(l)(8) by revising it to include telephonic in addition to electronic participation so that it is consistent with the other provisions of this IFR and to specify that this telephonic and electronic participation provision applies to special meetings of the board.

As with the amendments to §§ 5.21 and 5.22, the OCC is permitting national banks to provide for telephonic or electronic participation at shareholder and board of directors meetings. To accomplish this, the OCC is combining current 12 CFR 7.2001, which provides procedures for notifying shareholders of shareholder meetings, into current § 7.2003, which provides the rule for annual shareholder meetings that fall on a holiday; adding new telephonic and electronic participation language to 12 CFR 7.2003 as new paragraphs (c) and (d); and retitling § 7.2003 as “Shareholder meetings; Board of directors meetings.” The OCC is not making any substantive changes to current § 7.2001, which becomes § 7.2003(a), or current § 7.2003, which becomes § 7.2003(b). Combining §§ 7.2001 and 7.2003 puts all amendments related to shareholder meetings are held in one section.

New paragraph (c) to § 7.2003 permits a national bank to provide for telephonic or electronic participation at shareholder meetings. Further, new paragraph (c) requires a national bank to have procedures for telephonic or electronic participation in shareholder meetings. As with Federal savings associations, a national bank may choose these procedures from several sources: (1) The corporate governance procedures it has elected to follow pursuant to § 7.2000(b), 9 if those elected procedures include telephonic or electronic participation procedures; (2) the Delaware General Corporation Law; or (3) the Model Business Corporation Act. However, these procedures must not be inconsistent with applicable Federal statutes and regulations and safety and soundness. To inform shareholders of its choice of procedures, the IFR requires the national bank to indicate the use of these procedures in its bylaws. In general, Federal law does not require a national bank to file its bylaws and any amendments with, or to seek approval of its bylaws from, the OCC. 10

As with the amendments to §§ 5.21(j)(2)(i) and (j)(2)(ii) and 5.22(k)(1) for Federal savings associations, this provision will ensure that a national bank has procedures in place for remote participation at shareholder meetings even if the corporate governance law it has elected to follow does not contain procedures for remote participation at shareholder meetings or if it has not elected to follow any particular corporate governance law pursuant to § 7.2000(b).

New paragraph (d) of § 7.2003 provides that a national bank may provide for telephonic or electronic participation at a meeting of its board of directors. This provision codifies OCC Interpretive Letter No. 860  11 and makes the national bank rule consistent with rules for Federal savings associations.

The OCC seeks comment on all aspects of the IFR in addition to those specific requests noted in the SUPPLEMENTARY INFORMATION . In addition, please comment on the following:

• Should the OCC limit the ability of national banks and Federal savings associations to hold shareholder or member meetings exclusively by means of remote communication to emergency situations or when extenuating circumstances exist? If so, in what extenuating circumstances should national banks and Federal savings associations have authority to hold meetings exclusively by means of remote communication?

• Would holding shareholder or member meetings exclusively by means of remote communication limit participation by some shareholders or members, and if so, how?

• Should the OCC require national banks and Federal savings associations to provide in-person options for each shareholder or member meeting or require national banks or Federal savings associations to adopt procedures that permit shareholder participation at virtual meetings? If so, why?

• Should the OCC adopt regulatory procedures governing telephonic and electronic participation at shareholder meetings instead of requiring national banks and Federal savings associations to follow State corporate law, Delaware General Corporation Law, or Model Business Corporation Act procedures? If so, what specific procedures should the OCC adopt?

• Should the OCC provide risk management standards to mitigate any security risks arising from telephonic or electronic meetings? If so, what specific standards should the OCC adopt?

The OCC is issuing the IFR without prior notice and the opportunity for public comment and the delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA). 12 Pursuant to section 553(b)(B) of the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”  13

The OCC believes that the public interest is best served by implementing the IFR immediately upon publication in the Federal Register . National banks and Federal savings associations are acutely impacted by the COVID-19 emergency. Health and safety advisories in response to the COVID-19 emergency, including those relating to social distancing, are impeding the ability of national banks and Federal savings associations to hold in-person meetings, such as board of director, shareholder, and member meetings. The IFR amends the OCC's rules to permit telephonic and electronic participation at these meetings, thereby allowing national banks and Federal savings associations to conduct all necessary board of director, shareholder, and member meetings during the COVID-19 emergency. For these reasons, the OCC finds that there is good cause consistent with the public interest to issue the rule without advance notice and comment. 14

The APA also requires a 30-day delayed effective date, except for: (1) Substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause. 15 As described above, the OCC believes it has good cause to issue this rule without a delayed effective date. Therefore, the IFR is exempt from the APA's delayed effective date requirement. 16

While the OCC believes that there is good cause to issue the rule without advance notice and comment and with an immediate effective date, the OCC is interested in the views of the public and requests comment on all aspects of the IFR.

For purposes of the Congressional Review Act, the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a “major rule.”  17 If a rule is deemed a “major rule” by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication. 18

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in: (1) An annual effect on the economy of $100,000,000 or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 19

The delayed effective date required by the Congressional Review Act does not apply to any rule for which an agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 20 For the same reasons set forth above, the OCC is adopting the IFR without the delayed effective date generally prescribed under the Congressional Review Act. In light of the COVID-19 emergency, the OCC believes that delaying the effective date of the rule would be contrary to the public interest.

As required by the Congressional Review Act, the OCC will submit the IFR and other appropriate reports to Congress and the Government Accountability Office for review.

Certain provisions of the proposed rulemaking contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the OCC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.

The OCC reviewed the IFR and determined that it revises certain information collection requirements previously cleared by OMB under OMB Control No. 1557-0014. The OCC has submitted the revised information collection to OMB for review under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and section 1320.11 of the OMB's implementing regulations (5 CFR 1320).

The information collection requirements are as follows:

• National banks and FSAs must have procedures in place for holding remote meetings.

• FSAs will need to amend their bylaws if they wish to utilize remote means of communication for its meetings.

• Depending on which state or law the FSA elects to follow for procedures for remote means of communication, the FSA may have to amend its bylaws and file with the OCC.

• National banks must indicate the use of telephonic or electronic participation at shareholder meetings in their bylaws.

• The OCC is considering allowing alternative/electronic means of notifying members/shareholders of meetings.

The OCC estimates that there will be no change in burden as a result of these changes.

Title of Information Collection: Licensing Manual.

Frequency: Event generated.

Affected Public: Businesses or other for-profit.

Estimated number of respondents: 1,174

Total estimated annual burden for the collection: 12,534 hours.

Comments are invited on:

a. Whether the collections of information are necessary for the proper performance of the agencies' functions, including whether the information has practical utility;

b. The accuracy or the estimate of the burden of the information collections, including the validity of the methodology and assumptions used;

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

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

e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.

All comments will become a matter of public record. Comments on aspects of this notice that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the addresses listed in the ADDRESSES section of this document. A copy of the comments may also be submitted to the OMB desk officer by mail to U.S. Office of Management and Budget, 725 17th Street NW, #10235, Washington, DC 20503; facsimile to (202) 395-6974; or email to oira_submission@omb.eop.gov, Attention, Federal Banking Agency Desk Officer.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), 21 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with the principle of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form, with certain exceptions, including for good cause. 22 For the reasons described above, the OCC finds good cause exists under section 302 of RCDRIA to publish this IFR with an immediate effective date.

As such, the IFR will be effective immediately. Nevertheless, the OCC seeks comment on RCDRIA.

The Regulatory Flexibility Act (RFA)  23 requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities. 24 The RFA applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed previously, consistent with section 553(b)(B) of the APA, the OCC has determined for good cause that general notice and opportunity for public comment is unnecessary, and therefore the OCC is not issuing a notice of proposed rulemaking. Accordingly, the OCC has concluded that the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply.

Nevertheless, the OCC seeks comment on whether, and the extent to which, the IFR would affect a significant number of small entities.

As a general matter, the Unfunded Mandates Act of 1995 (UMRA)  25 requires the preparation of a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. However, the UMRA does not apply to final rules for which a general notice of proposed rulemaking was not published. 26 Therefore, because the OCC has found good cause to dispense with notice and comment for this IFR, the OCC has not prepared an economic analysis of the rule under the UMRA.

For the reasons set out in the preamble, the OCC amends 12 CFR part 5 and part 7 as follows:

On August 6, 2018, the Board published in the Federal Register a final rule to establish single-counterparty credit limits (SCCL) for bank holding companies and foreign banking organizations (FBOs) with total consolidated assets of at least $250 billion, pursuant to section 165(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (final SCCL rule). 1 The rule was amended as part of the Board's recent tailoring rule establishing risk-based categories for determining prudential standards for large U.S. banking organizations and FBOs. 2 For FBOs, the amended final SCCL rule established separate SCCL applicable to (1) the combined U.S. operations of an FBO that is subject to Category II or III standards or that has total global consolidated assets of $250 billion or more, and (2) any U.S. intermediate holding company (IHC) that is subject to Category II or III standards. With respect to the SCCL applicable to the combined U.S. operations of an FBO, the final SCCL rule established different compliance dates based on whether the FBO has the characteristics of a global systemically important banking organization (GSIB). An FBO that has the characteristics of a GSIB must comply with these SCCL beginning on January 1, 2020, while an FBO that does not have the characteristics of a GSIB must comply beginning on July 1, 2020, unless that time is extended by the Board in writing. 3

The final SCCL rule allows an FBO to comply with the SCCL applicable to its combined U.S. operations by certifying to the Board that it meets, on a consolidated basis, SCCL standards established by its home country supervisor that are consistent with the large exposures framework published by the Basel Committee on Banking Supervision in 2014 (BCBS Large Exposure Standard). Because the BCBS Large Exposure Standard is consistent with the Board's final SCCL rule, this approach reduces burden. 4

Following the Board's adoption of the final SCCL rule, many foreign banks and their trade associations noted that, although efforts are underway in many jurisdictions to implement the BCBS Large Exposure Standard, the framework may not be fully implemented in the home countries of FBOs before the initial compliance dates of the final SCCL rule. Foreign banks indicated that it would be significantly burdensome to build systems to permit their combined U.S. operations to report compliance with the Board's final SCCL rule solely for use during the implementation gap period, since those FBOs will eventually be subject instead to a home-country large exposures framework consistent with the BCBS Large Exposure Standard on a consolidated basis.

The home countries of the FBOs whose combined U.S. operations are subject to the Board's final SCCL rule are China, Canada, Switzerland, Japan, the United Kingdom, and member states of the European Union. Those countries generally have made progress over the past year on implementing the BCBS Large Exposure Standard. At this time, China, Canada, and Switzerland have final frameworks that have become effective. 5 The European Union has finalized an SCCL framework that will become effective on June 28, 2021. 6 Japan does not yet have a final effective framework. The United Kingdom is expected to follow the European Union's final framework. 7

In adopting the final SCCL rule, the Board agreed to defer to home country compliance with the BCBS Large Exposure Standard to prevent application of two largely redundant SCCL frameworks to the combined U.S. operations of FBOs. 8 For the above reasons, on November 20, 2019, the Board issued a proposed rule to modify the initial compliance dates regarding the SCCL applicable to an FBO's combined U.S. operations by 18 months to July 1, 2021, for an FBO that has the characteristics of a GSIB, and January 1, 2022, for any other FBO subject to the final SCCL rule, unless that time is extended by the Board in writing.

The comment period for the Board's proposal to modify the final SCCL rule's initial compliance dates as described above ended on December 20, 2019. The Board received four comment letters on the proposed extension, three of which supported the proposed 18-month extension of time, and one of which was not directly relevant to the proposal. No commenter requested any alternate or additional extension of time for specific events or circumstances, although one commenter suggested that, to the extent certain home countries need additional time to implement the BCBS Large Exposure Standard, the Board should allow individual FBOs to seek reasonable, limited extensions beyond the proposed 18-month period.

Having considered these comments, the Board is adopting the rule as proposed. The 18-month period takes into account the effective date of the EU's framework, and the Board believes it provides a reasonable period for firms to come into compliance with the final SCCL rule, either through direct compliance or certification of compliance with a home-country framework consistent with the BCBS Large Exposure Standard. To the extent an individual FBO believes its specific circumstances warrant an additional, limited extension of time, that FBO may request an extension of time from the Board in writing. The Board will consider such requests on a case-by-case basis.

The Board is issuing the final rule without the delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA). 9 The APA requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause. 10 Because the rule relieves a restriction, the final rule is exempt from the APA's delayed effective date requirement. 11

Certain provisions of the final rule contain “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The Board may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Board reviewed the final rule under the authority delegated to the Board by OMB. The Board did not receive any specific comments on the PRA for the proposal.

The final rule contains revisions to the compliance date for the reporting and recordkeeping requirements subject to the PRA. To implement these requirements, the Board is revising the Single-Counterparty Credit Limits (FR 2590; OMB No. 7100-NEW).

Report Title: Single-Counterparty Credit Limits.

Agency Form Number: FR 2590.

OMB Control Number: 7100-0377.

Frequency: Quarterly, annual, and event-generated.

Affected Public: Businesses or other for-profit.

Respondents: U.S. global systemically important bank holding companies (GSIBs) and other U.S. bank holding companies (BHCs) or savings and loan holding companies (SLHCs) that are subject to Category I, II, or III standards; foreign banking organizations (FBOs) that are subject to Category II or III standards or that have $250 billion or more in total global consolidated assets; and U.S. intermediate holding companies (IHCs) that are subject to Category II or III standards.

Estimated Number of Respondents: 75.

Estimated Average Hours per Response:

One-Time Implementation: 1,273 hours.

Ongoing: 254 hours.

Requests for Temporary Relief: 10 hours.

Recordkeeping: 0.25 hours.

Estimated Annual Burden Hours:

One-Time Implementation: 95,475 hours.

Ongoing: 76,200 hours.

Requests for Temporary Relief: 30 hours.

Recordkeeping: 75 hours.

General description of report : The FR 2590 is being implemented in connection with the Board's single-counterparty credit limits rule (final SCCL rule), 12 which has been codified in the Board's Regulation YY—Enhanced Prudential Standards (12 CFR part 252). 13

The information collected by the Single-Counterparty Credit Limits reporting form (FR 2590 report) will allow the Board to monitor a covered company's or a covered foreign entity's compliance with the final SCCL rule. As amended by the Board's final tailoring rule, a covered company is any U.S. bank holding company (BHC) or savings and loan holding company (SLHC) that is subject to Category I, II, or III standards. 14 A covered foreign entity is any foreign banking organization (FBO) that is subject to Categories II or III standards or that has total global consolidated assets that equal or exceed $250 billion and any U.S. intermediate holding company (IHC) that is subject to Category II or III standards. 15 In addition to the reporting form, the FR 2590 information collection incorporates notice requirements pertaining to requests that may be made by a covered company or covered foreign entity to request temporary relief from specific requirements of the final SCCL rule. A respondent must retain one exact copy of each completed FR 2590 in electronic form, and these records must be kept for at least three years.

Legal authorization and confidentiality : The FR 2590 is authorized pursuant to section 5(c) of the Bank Holding Company Act of 1956 (BHC Act) (12 U.S.C. 1844(c)), section 165(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5365(e)), and section 10(b) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)). With respect to FBOs and their subsidiary IHCs, the FR 2590 is authorized pursuant to section 5(c) of the BHC Act, in conjunction with section 8 of the International Banking Act of 1978 (12 U.S.C. 3106). The FR 2590 is mandatory.

The data collected on the FR 2590 form will be kept confidential under exemption 4 of the Freedom of Information Act (FOIA), which protects from disclosure trade secrets and commercial or financial information (5 U.S.C. 552(b)(4)), and exemption 8 of FOIA, which protects from disclosure information related to the supervision or examination of a regulated financial institution (5 U.S.C. 552(b)(8)).

Regarding notices associated with requests for temporary relief from specific requirements of the SCCL rule, a firm may request confidential treatment under the Board's rules regarding confidential treatment of information at 12 CFR 261.15. The Board will consider whether such information may be kept confidential in accordance with exemption 4 of FOIA (5 U.S.C. 552(b)(4)) or any other applicable FOIA exemption.

Current Actions: The final SCCL rule had an effective date of October 5, 2018, and an initial compliance date of January 1, 2020, for a foreign banking organization that has the characteristics of a global systemically important banking organization, and July 1, 2020, for any other foreign banking organization subject to the rule, unless that time is extended by the Board in writing. The Board is modifying these initial compliance dates to July 1, 2021, and January 1, 2022, respectively, regarding the SCCL applicable to such a foreign banking organization's combined U.S. operations only. 16 There are no proposed changes to the reporting or recordkeeping requirements for such entities, and the burden hours would remain the same.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), generally requires an agency, in connection with a final rulemaking, to prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of a proposed rule on small entities. However, a final regulatory flexibility analysis is not required if the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $600 million. 17 The Board has considered the potential impact of the final rule on small entities in accordance with the RFA. Based on its analysis, and for the reasons stated below, the Board certifies that the rule will not have a significant economic impact on a substantial number of small entities. 18

As discussed in the SUPPLEMENTARY INFORMATION , the final SCCL rule generally applies to U.S. bank holding companies subject to Category I, II, or III standards, and foreign banking organizations that are subject to Category II or III standards or that have total global consolidated assets of at least $250 billion. Companies that are subject to the final SCCL rule have consolidated assets that substantially exceed the $600 million asset threshold at which a banking organization is considered a “small entity” under SBA regulations. Because the final SCCL rule does not apply to any small entities for purposes of the RFA, the amendments to the rule to extend the initial compliance dates applicable to FBOs subject to SCCL with respect to their combined U.S. operations would not affect any small entity for purposes of the RFA. The Board's final rule would not impose any new recordkeeping, reporting, or other compliance requirements. In light of the foregoing, the Board believes that the final rule would not have a significant economic impact on a substantial number of small entities.

Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113 Stat. 1338, 1471, 12 U.S.C. 4809) requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The Board sought to present the final rule in a simple and straightforward manner and did not receive any comments on the use of plain language.

For the reasons stated in the preamble, the Board of Governors of the Federal Reserve System amends 12 CFR part 252 as follows:

The COVID-19 pandemic has created uncertainty for FICUs and their members. The Board is working with federal and state regulatory agencies, in addition to FICUs, to assist FICUs in managing their operations and to facilitate continued assistance to credit union members and communities impacted by the coronavirus. As part of these ongoing efforts, the Board is temporarily modifying certain regulatory requirements to help ensure that FICUs continue to operate efficiently, to ensure that FICUs maintain sufficient liquidity, and to account for the potential temporary increase in shares that FICUs may experience during the COVID-19 pandemic. Specifically, the temporary amendments in this interim final rule will allow FICUs to better utilize resources by reducing the administrative burden associated with a temporary increase in shares. The Board has concluded that the amendments will provide FICUs with necessary additional flexibility in a manner consistent with the NCUA's responsibility to maintain the safety and soundness of the credit union system. The temporary amendments are effective upon publication and will be in place through the end of calendar year 2020.

In 1998, Congress enacted the Credit Union Membership Access Act (“CUMAA”). 1 CUMAA amended the Federal Credit Union Act (“the Act”) to require the NCUA to adopt by regulation a system of PCA consisting of minimum capital standards and corresponding remedies to improve the net worth of federally-insured “natural person” credit unions. 2 The purpose of PCA is to “resolve the problems of insured credit unions at the least possible long-term loss to the [National Credit Union Share Insurance Fund (`NCUSIF')].”  3

The statute designated three principal components of PCA: (1) A framework combining mandatory actions prescribed by statute with discretionary actions developed by the NCUA; (2) an alternative system of PCA to be developed by the NCUA for FICUs which CUMAA defines as “new;” and (3) a risk-based net worth requirement to apply to FICUs which the NCUA defines as “complex.” For FICUs other than those meeting the statutory definition of a “new” FICU, CUMAA mandated a framework of mandatory and discretionary supervisory actions indexed to five statutory net worth categories. These categories include “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” The mandatory actions and conditions triggering conservatorship and liquidation are expressly prescribed by statute. 4 To supplement the mandatory actions, the statute directed the NCUA to develop discretionary actions which are “comparable” to the “discretionary safeguards” available under section 38 of the Federal Deposit Insurance Act, which is the statute that applies PCA to other federally-insured depository institutions. 5

The Act addresses the earnings retention requirement applicable to FICUs that are not well capitalized. 6 Such FICUs are required to annually set aside as net worth an amount equal to not less than 0.4% of their total assets. 7 The Board has the authority to decrease the earnings retention requirement. 8 To accomplish this, the Board may issue an order, if it determines that the decrease is necessary to avoid a significant redemption of shares and further the purpose of that PCA provision of the Act. The Act also requires the Board to periodically review any order issued under that section. 9

Separately, 12 U.S.C. 1790d(f) sets forth requirements related to NWRPs, which FICUs must submit to the NCUA and which the NCUA must review when a FICU becomes undercapitalized. The regulatory provisions addressing the procedures and documentation requirements for NWRPs are codified at 12 CFR 702.206 and are detailed below.

In February 2000, the NCUA Board adopted part 702 and subpart L of part 747, establishing a comprehensive system of PCA that combines mandatory supervisory actions prescribed by the statute with discretionary supervisory actions developed by the NCUA (2000 final rule). 10 Each of these supervisory actions index to the five statutory net worth categories noted above. In addition, the 2000 final rule permits the NCUA to impose “other action to better carry out the purpose of PCA” than any discretionary supervisory action available in that category. 11 In the proposal that provided the basis for the 2000 final rule, the Board noted that “Part 702 also amplifies the terms of the statutory exception to the 0.4% minimum set aside. Specifically, the Board stated that it interprets the phrase by order to indicate that exceptions to the 0.4% statutory minimum are to be granted on a case-by-case basis.”  12 The Board has historically interpreted these orders on a case-by-case basis. However, given the current unprecedented situation where many FICUs broadly face similar circumstances that affect net worth, the Board has determined that it is appropriate to implement the changes in this rule, as detailed below.

In this rulemaking, the Board is adopting two changes to the PCA requirements. The first amends § 702.201 of the NCUA's regulations to allow the Board to temporarily waive the earnings retention requirement for an adequately capitalized FICU, and the second modifies § 702.206(c) of the NCUA's regulations with respect to NWRPs.

Section III of this preamble discusses the temporary regulatory amendments in greater detail.

The Board is issuing this interim final rule pursuant to its authority under the Act. 13 The Act grants the Board a broad mandate to issue regulations governing both federal credit unions and, more generally, all FICUs. For example, section 120 of the Act is a general grant of regulatory authority and authorizes the Board to prescribe rules and regulations for the administration of the Act. 14 Section 209 of the Act is a plenary grant of regulatory authority to issue rules and regulations necessary or appropriate for the Board to carry out its role as share insurer for all FICUs. 15 Other provisions of the Act confer specific rulemaking authority to address prescribed issues or circumstances. 16 Accordingly, the Act grants the Board broad rulemaking authority to ensure that the credit union industry and the NCUSIF remain safe and sound. Such specific rulemaking authority is set forth in section 216(b) with respect to PCA. 17

With respect to earnings retention, a FICU that is classified as “adequately capitalized” or lower must increase the dollar amount of its net worth quarterly by an amount equivalent to at least 1/10 th of a percent of its total assets and must quarterly transfer at least that amount (for a total of 0.4% annually) from undivided earnings to its regular reserve account every quarter until it is “well capitalized.”  18 The purpose of this provision is to restore a FICU that is less than well capitalized to a well- capitalized position in an incremental manner.

As discussed above, current § 702.201 provides that the Board may waive this requirement on a case-by-case basis upon application by an affected FICU. The Act provides broader authority for the Board to issue an order to waive this requirement and does not require an application or individual orders. 19 In response to the COVID-19 pandemic and resulting economic disruption, the Board has determined that it is appropriate to amend § 702.201 temporarily to provide express regulatory authority for the Board to issue a single order waiving the earnings retention requirement for all FICUs that are classified as adequately capitalized during this time, subject to the applicable Regional Director retaining authority to subsequently require an application if a particular FICU poses undue risk to the NCUSIF or exhibits material safety and soundness concerns. Amending the regulation in this manner will allow the Board to respond to circumstances broadly affecting many FICUs with a single issuance rather than numerous individual waiver approvals. This provision will be effective on May 28, 2020 and will expire on December 31, 2020, consistent with other recent COVID-19 regulatory relief rules that the Board has issued. Separate from this regulatory amendment, the Board intends to issue the order described above, which will be applicable to adequately capitalized FICUs and will grant relief from the earnings retention requirement without requiring those FICUs to submit applications and receive individual waiver approvals, subject to the qualification noted above.

The Board is exercising this authority under 12 U.S.C. 1790d(e)(2) in order to enhance flexibility in the application of the earnings retention requirement to avoid a reduction of shares and thus retain system liquidity and capital adequacy, thereby furthering the purpose of PCA. The Board further notes that during this time, FICU operations have been significantly disrupted because of stay-at-home orders, reduced staff, and related complications. This procedure will lessen the administrative burden on FICUs, and the NCUA in providing this relief, by avoiding the need for numerous waiver applications and responses. The Board notes that qualification in the planned order regarding FICUs that pose undue risk or material safety and soundness concerns will help ensure that the purposes of PCA are maintained during this time.

This approach affords the agency the flexibility to address potential difficulties faced by FICUs during this time of unprecedented economic hardship. The Board also notes that the current, specific requirements on earnings retention waivers are based on a regulatory provision rather than a specific statutory directive. 20 Accordingly, the Board has flexibility to modify the regulatory provision to address the financial circumstances of individual FICUs as well as the broader credit union system. This is consistent with the overall statutory structure of PCA, which combines both mandatory and discretionary provisions.

Credit union members are facing unprecedented pressures and looking to FICUs to provide necessary credit or access to funds, which could place strain on FICU liquidity. Allowing for a broad order relieving adequately capitalized FICUs from this requirement is consistent with the statutory criteria for issuing such an order, namely avoiding a significant redemption of shares and furthering the purpose of 12 U.S.C. 1790d to “resolve the problems of insured credit unions at the least possible long-term loss to the Fund.”  21

Accordingly, the Board is amending § 702.201 to adopt the temporary provision to issue a broadly applicable order. The Board plans to issue through a separate action an order consistent with this new provision to set forth the terms of relief from the earnings retention requirement.

With respect to NWRPs, the Act provides a broad directive that a FICU that is less than adequately capitalized must submit an applicable net worth restoration plan to the NCUA. The NCUA, by regulation, has provided additional details to flesh out this statutory provision. Section 702.206(a) of the NCUA's regulations specifies the schedule for filing the plan, and § 702.206(c) of the NCUA's regulations outlines the contents of a net worth restoration plan. 22

The Board has decided that it is appropriate to waive the net worth restoration plan content requirements for FICUs that become classified as undercapitalized (has a net worth ratio of 4 percent to 5.99 percent) predominantly as a result of share growth. In these cases, the FICU may submit a significantly simpler net worth restoration plan to the applicable Regional Director noting that the FICU fell to undercapitalized because of share growth. Specifically, a FICU would be required to attest that its reduction in capital was caused by share growth and that such share growth is a temporary condition due to the COVID-19 pandemic. Federally insured, state-chartered credit unions must comply with applicable state requirements when submitting NWRPs for state supervisory authority approval.

When reviewing NWRPs submitted under this authority, the Regional Director will determine if the decrease in the net worth ratio was predominantly a result of share growth. To assess the reason for the decrease, the Regional Director will analyze the numerator and denominator of the net worth ratio. If there is no change or an increase in the numerator and an increase in the denominator, this would indicate that the decrease in the net worth ratio was due to share growth. If there is an increase in the denominator and a decrease in the numerator, the Regional Director will analyze whether the decrease in the numerator would have caused the credit union to fall to a lower net worth classification if there were no change in the denominator. If so, the credit union's net worth decline would not be predominantly due to share growth and the credit union would not be eligible to submit a streamlined NWRP.

The Board has determined that it is appropriate to modify the regulation addressing NWRPs given the disruption caused by the COVID-19 pandemic. The Board believes that it will be able to fulfill its statutory duty to evaluate the net worth restoration plan even if the plan is more concise and streamlined than plans submitted prior to the COVID-19 crisis. Such a streamlined approach is acceptable because the more extensive information required under the current requirements may not be practicable or useful under the current situation. Further, the current requirement addresses methods for the Board to evaluate the plan and not for approval. The Board believes it can determine if a plan is acceptable even if it lacks some of the detailed submissions that the current regulation specifies. The Board further notes that if a FICU temporary falls below being adequately capitalized (or lower) because of share growth, the risk is limited and net worth will likely increase as the shares are withdrawn.

The Board is issuing the interim final rule without prior notice and the opportunity for public comment and the delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA). 23 Pursuant to the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”  24

The Board believes that the public interest is best served by implementing the interim final rule immediately upon publication in the Federal Register . The Board notes that the COVID-19 pandemic is unprecedented. It is a rapidly changing and difficult to anticipate how the disruptions caused by the pandemic will manifest themselves within the financial system and how individual FICUs may be impacted. Because of the widespread impact of a pandemic and the speed with which disruptions have transmitted throughout the United States, the Board believes it is has good cause to determine that ordinary notice and public procedure are impracticable and that moving expeditiously in the form of an interim final rule is in the best of interests of the public and the FICUs that serve that public. The temporary regulatory changes are proactive steps that are designed to alleviate potential liquidity and resource strains including strains on capital adequacy and are undertaken with expedience to ensure the maximum intended effects are in place at the earliest opportunity.

The Board values public input in its rulemakings and believes that providing the opportunity for comment enhances its regulations. Accordingly, the Board is soliciting comments on its rules even when not required under the APA, such as for the rules it issues on an interim-final basis. The amendment made by the interim final rule will automatically expire at the close of December 31, 2020, and are limited in number and scope. For these reasons, the Board finds that there is good cause consistent with the public interest to issue the rule without advance notice and comment. 25

The APA also requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause. 26 Because the rule relieves currently codified limitations and restrictions, the interim final rule is exempt from the APA's delayed effective date requirement. As an alternative basis to make the rule effective without the 30-day delayed effective date, the Board finds there is good cause to do so for the same reasons set forth above regarding advance notice and opportunity for comment.

For purposes of the Congressional Review Act, 27 the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a “major” rule. If the OMB deems a rule to be a “major rule,” the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 28

For the same reasons set forth above, the Board is adopting the interim final rule without the delayed effective date generally prescribed under the Congressional Review Act. The delayed effective date required by the Congressional Review Act does not apply to any rule for which an agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 29 In light of current market uncertainty, the Board believes that delaying the effective date of the rule would be contrary to the public interest for the same reasons discussed above.

As required by the Congressional Review Act, the Board will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.

The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden (44 U.S.C. 3507(d)). For purposes of the PRA, a paperwork burden may take the form of a reporting, recordkeeping, or a third-party disclosure requirement, referred to as an information collection.

The amendment to § 702.201 is decreasing the earnings retention requirement for all FICUs that are classified as adequately capitalized during this time. Currently, FICUs must request a waiver for each quarterly transfer made from undivided earning to its regular reserve account until well capitalized. By the actions of this rule the waiver requirement is temporary suspended for adequately capitalized credit unions and the information collection requirement will be reduced from 113 respondents providing three waivers annually to 23 respondents.

Section 702.206 provides that a FICU that is less than adequately capitalized must submit an applicable NWRP to the NCUA. The temporary rule allows a FICU that becomes undercapitalized to submit a significantly simpler NWRP to NCUA, which will reduce the estimated burden associated with the preparation from 27 hours to 2 hours. This would affect an estimated 31 FICUs that would fall under the category of undercapitalized.

The information collection requirements of part 702 (subparts A through D) are currently covered by OMB control number 3133-0154. These temporary amendments will reduce the number of estimated responses from 482 to 155, with a decrease in the estimated total burden hours by 2,854, for a total information collection burden of 569 hours.

NCUA has obtain emergency approval from the Office of Management and Budget for a 6-month period. During this time the Agency will accept public comments on the information collection requirements and take appropriate action in the final request for PRA approval.

OMB Control Number: 3133-0154.

Title of information collection: Prompt Corrective Actions, 12 CFR 702 (Subparts A-D).

Estimated number of respondents: 89.

Estimated number of responses per respondent: 1.74.

Estimated total annual responses: 155.

Estimated burden per response: 3.67.

Estimated total annual burden: 569.

The NCUA invites comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and cost of operation, maintenance, and purchase of services to provide information.

All comments are a matter of public records. Interested persons are invited to submit written comments on the information collection to Dawn Wolfgang, National Credit Union Administration, 1775 Duke Street, Suite 6032, Alexandria, Virginia 22314; Fax No. 703-519-8579; or email at PRAComments@ncua.gov. Given the limited in-house staff because of the COVID-19 pandemic, email comments are preferred.

Executive Order 13132  30 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. The NCUA, an independent regulatory agency, as defined in 44 U.S.C. 3502(5), voluntarily complies with the Executive order to adhere to fundamental federalism principles. The interim final 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. The Board has therefore determined that this rule does not constitute a policy that has federalism implications for purposes of the Executive order.

The NCUA has determined that this interim final rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, 1999. 31

The Regulatory Flexibility Act (RFA) generally requires that when an agency issues a proposed rule or a final rule pursuant to the APA  32 or another law, the agency must prepare a regulatory flexibility analysis that meets the requirements of the RFA and publish such analysis in the Federal Register . 33 Specifically, the RFA normally requires agencies to describe the impact of a rulemaking on small entities by providing a regulatory impact analysis. For purposes of the RFA, the Board considers FICUs with assets less than $100 million to be small entities. 34

As discussed previously, consistent with the APA, 35 the Board has determined for good cause that general notice and opportunity for public comment is unnecessary, and therefore the Board is not issuing a notice of proposed rulemaking. Rules that are exempt from notice and comment procedures are also exempt from the RFA requirements, including conducting a regulatory flexibility analysis, when among other things the agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. Accordingly, the Board has concluded that the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply.

Nevertheless, the Board seeks comment on whether, and the extent to which, the interim final rule would affect a significant number of small entities.

For the reasons set forth above, the Board amends 12 CFR part 702 as follows:

In Proclamation 9994 of March 13, 2020 (Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak), President Trump declared a national emergency recognizing the threat that the novel (new) coronavirus known as SARS-CoV-2 poses to the Nation's healthcare systems. The President declared the policy of the United States to respond to the ongoing, unprecedented outbreak of COVID-19 (the disease caused by SARS-CoV-2) with every tool and resource available to the United States Government. Consistent with this policy, the President has suspended and limited the entry of aliens recently present in certain foreign jurisdictions where significant COVID-19 outbreaks have occurred. These jurisdictions include the People's Republic of China (excluding the Special Administrative Regions of Hong Kong and Macau), the Islamic Republic of Iran, the Schengen Area, the United Kingdom (excluding overseas territories outside of Europe), the Republic of Ireland, and, effective at 11:59 p.m. EDT on May 26, 2020, the Federative Republic of Brazil.

The potential for widespread further transmission of this virus by infected individuals seeking to enter the United States threatens the security of our transportation system and infrastructure, and the national security. Noting the President's actions and recent pronouncements by the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC) for the novel coronavirus outbreak, including the categorization by WHO of COVID-19 as a pandemic on March 11, 2020, and to assist in preventing the introduction, transmission, and spread of this communicable disease globally and in the United States, DHS, in coordination with CDC and other Federal, state, and local agencies charged with protecting the American public, is implementing enhanced protocols to ensure that all travelers seeking to enter the United States with recent travel from, or who were otherwise recently present within, Brazil are provided appropriate public health services.

DHS previously published similar arrival restrictions in the Federal Register . This document does not modify those documents, except that the Secretary is adding two airports to the list of airports where flights subject to those arrival restrictions are permitted to land. The previously published arrival restrictions are as follows:

• Notification of Arrival Restrictions Applicable to Flights Carrying Persons Who Have Recently Traveled From or Were Otherwise Present Within the People's Republic of China, 85 FR 6044 (Feb. 4, 2020);

• Notification of Arrival Restrictions Applicable to Flights Carrying Persons Who Have Recently Traveled From or Were Otherwise Present Within the People's Republic of China, 85 FR 7214 (Feb. 7, 2020);

• Notification of Arrival Restrictions Applicable to Flights Carrying Persons Who Have Recently Traveled From or Were Otherwise Present Within the People's Republic of China or the Islamic Republic of Iran, 85 FR 12731 (Mar. 4, 2020);

• Notification of Arrival Restrictions Applicable to Flights Carrying Persons Who Have Recently Traveled From or Were Otherwise Present Within the Countries of the Schengen Area, 85 FR 15059 (Mar. 17, 2020); and

• Notification of Arrival Restrictions Applicable to Flights Carrying Persons Who Have Recently Traveled From or Were Otherwise Present Within the United Kingdom or the Republic of Ireland, 85 FR 15714 (Mar. 19, 2020).

Enhanced traveler arrival protocols are part of a layered approach used with other public health measures already in place to detect arriving travelers who are exhibiting overt signs of illness. Additional measures include requiring carriers to distribute a CDC health declaration form to passengers on flights originating in the People's Republic of China, excluding the Special Administrative Regions of Hong Kong and Macau; the Islamic Republic of Iran; specified countries comprising the Schengen Area; the United Kingdom (excluding overseas territories outside Europe); the Republic of Ireland; and Brazil, to support CDC passenger health screening and contact tracing. U.S. Government Representatives will collect this form from passengers upon arrival in the United States. Other measures to protect the public include reporting of ill travelers by carriers during travel to appropriate public health officials for evaluation and referral of ill travelers arriving at a U.S. port of entry by CBP to appropriate public health officials.

To ensure that travelers with recent presence in Brazil are screened appropriately, DHS directs that all flights to the United States carrying persons who have recently traveled from, or were otherwise present within, Brazil arrive at airports where enhanced public health services and protocols have been implemented. Although DHS will continue to work with carriers to ensure that they identify persons who may have traveled from, or who may have otherwise recently been present within, the affected areas prior to boarding, carriers shall comply with the requirements of this document in all cases, including when such persons are identified after boarding but prior to takeoff.

On Friday, January 31, 2020, DHS posted a document on the Federal Register public inspection page, announcing the DHS Secretary's decision that arrival restrictions regarding the People's Republic of China (excluding the Special Administrative Regions of Hong Kong and Macau) would go into effect at 5 p.m. Eastern Daylight Time on Sunday, February 2, 2020, at seven airports. The document announcing this decision was published in the Federal Register on February 4, 2020 at 85 FR 6044. On Friday, February 7, 2020, DHS published a document adding four airports to the list of airports where flights subject to the arrival restrictions are permitted to land and describing when the arrival restrictions would include those airports. See 85 FR 7214. On Friday, March 13, 2020, DHS posted a document on the Federal Register public inspection page adding two airports to the list of airports where flights subject to the arrival restrictions are permitted to land. The document announcing this decision was published in the Federal Register on March 17, 2020, at 85 FR 15059.

As with actions related to the People's Republic of China, the Islamic Republic of Iran, the countries of the Schengen Area, the United Kingdom, and Ireland, DHS anticipates that airlines will be able to fully support implementation of these arrival restrictions.

Pursuant to 19 U.S.C. 1433(c), 19 CFR 122.32, 49 U.S.C. 114, and 49 CFR 1544.305 and 1546.105, DHS has the authority to limit the locations where all flights entering the United States from abroad may land. Under this authority and effective for flights departing after 11:59 p.m. Eastern Daylight Time on Tuesday, May 26, 2020, I hereby direct all operators of aircraft to ensure that all flights carrying persons who have recently traveled from, or were otherwise present within, Brazil land only at one of the following 15 airports:

• John F. Kennedy International Airport (JFK), New York;

• Chicago O'Hare International Airport (ORD), Illinois;

• San Francisco International Airport (SFO), California;

• Seattle-Tacoma International Airport (SEA), Washington;

• Daniel K. Inouye International Airport (HNL), Hawaii;

• Los Angeles International Airport, (LAX), California;

• Hartsfield-Jackson Atlanta International Airport (ATL), Georgia;

• Washington-Dulles International Airport (IAD), Virginia;

• Newark Liberty International Airport (EWR), New Jersey;

• Dallas/Fort Worth International Airport (DFW), Texas;

• Detroit Metropolitan Airport (DTW), Michigan;

• Boston Logan International Airport (BOS), Massachusetts;

• Miami International Airport (MIA), Florida;

• Fort Lauderdale-Hollywood International Airport (FLL), Florida; and

• George Bush Intercontinental/Houston Airport (IAH), Texas.

This direction considers a person to have recently traveled from, or otherwise been present within, Brazil if that person departed from, or was otherwise present within, Brazil within 14 days of the date of the person's entry or attempted entry into the United States.

For purposes of this document, crew and flights carrying only cargo ( i.e., no passengers or non-crew) are excluded from the applicable measures set forth in this notification.

This direction is subject to any changes to the airport landing destination that may be required for aircraft and/or airspace safety, as directed by the Federal Aviation Administration.

This list of affected airports may be modified by the Secretary of Homeland Security, in consultation with the Secretary of Health and Human Services and the Secretary of Transportation. This list of affected airports may be modified by an updated publication in the Federal Register or by posting an advisory to follow at www.cbp.gov. The restrictions will remain in effect until superseded, modified, or revoked by publication in the Federal Register .

For purposes of this Federal Register document, “United States” means the States of the United States, the District of Columbia, and territories and possessions of the United States (including Puerto Rico, the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam).

The Acting Secretary of Homeland Security, Chad F. Wolf, having reviewed and approved this document, is delegating the authority to electronically sign this document to Chad R. Mizelle, who is the Senior Official Performing the Duties of the General Counsel for DHS, for purposes of publication in the Federal Register .

Subject to various exceptions, section 6033(a)(1) of the Internal Revenue Code (Code) requires every organization exempt from taxation under section 501(a) (tax-exempt organization) to file an annual return, stating specifically the items of gross income, receipts, and disbursements, and such other information for the purpose of carrying out the internal revenue laws as the Secretary of the Treasury or his delegate (Secretary) may by forms or regulations prescribe, and keep such records, render under oath such statements, make such other returns, and comply with such rules and regulations as the Secretary may from time to time prescribe. This requirement also applies to certain political organizations described in section 527(e)(1) (section 527 organizations). The annual information returns required under section 6033 are Forms 990, “Return of Organization Exempt From Income Tax;” 990-EZ, “Short Form Return of Organization Exempt From Income Tax;” 990-PF, “Return of Private Foundation;” and 990-BL, “Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons.” Annual returns filed by tax-exempt organizations, section 527 organizations, nonexempt private foundations described in section 6033(d), and section 4947(a)(1) trusts (which are both treated as organizations described in section 501(c)(3) for this purpose) are information returns intended to help ensure that the filing organizations comply with applicable federal tax laws. Most information on these annual returns is available for public inspection under section 6104.

Section 6033(a)(3) provides a list of organizations that are excepted from the filing requirements imposed under section 6033(a)(1). Specifically, section 6033(a)(3)(A)(ii) provides that section 6033(a)(1) shall not apply to any organization (other than a private foundation) that is described in section 6033(a)(3)(C) whose gross receipts are not normally more than $5,000 annually. The list of organizations provided in section 6033(a)(3)(C) includes certain fraternal beneficiary societies, orders or associations described in section 501(c)(8); certain organizations described in section 501(c)(3) (such as religious organizations and educational organizations described in section 170(b)(1)(A)(ii)); and organizations described in section 501(c)(1) that are corporations wholly owned by the United States or any agency or instrumentality thereof or wholly-owned subsidiaries of such corporations.

Section 6033(a)(3)(B) provides discretionary authority to the Secretary to relieve any organization required to file under section 6033(a)(1) (other than supporting organizations described in section 509(a)(3)) from filing an information return where he determines that such filing is “not necessary to the efficient administration of the internal revenue laws.”

Section 6033(b) provides a list of items that are generally required to be furnished annually by organizations described in section 501(c)(3), “at such time and in such manner as the Secretary may by forms or regulations prescribe.” The statutory list of items generally required to be furnished annually has been amended by Congress from time to time to account for additional requirements of organizations described in section 501(c)(3). For example, section 6033(b) was updated by the Taxpayer Bill of Rights 2, Public Law 104-168, in 1996 to include items in sections 6033(b)(10) (relating to taxes imposed on certain lobbying and political expenditures by organizations described in section 501(c)(3)) and 6033(b)(11) (relating to taxes imposed with respect to an organization, an organization manager, or any disqualified person under section 4958).

Section 6033(g) provides that a section 527 organization that has gross receipts of $25,000 or more for a taxable year  1 shall file an annual return containing the information required by section 6033(a)(1) for organizations exempt from taxation under section 501(a). The statute authorizes the Secretary to modify the information required to be reported to require only information that is necessary for purposes of carrying out section 527 and such other information as the Secretary deems necessary to carry out the provisions of section 6033(g).

Section 6033(h) provides additional reporting requirements for controlling organizations, within the meaning of section 512(b)(13). Section 6033(h) requires controlling organizations to include on their returns any (1) interest, annuities, royalties, or rents received from each controlled entity (within the meaning of section 512(b)(13)), (2) any loans made to each such controlled entity, and (3) any transfers of funds between such controlling organization and each such controlled entity.

Section 6033(k) provides additional reporting requirements for sponsoring organizations described in section 4966(d)(1). Section 6033(k) requires each such organization to report on its annual return (1) the total number of donor advised funds (as defined in section 4966(d)(2)) it owns at the end of such taxable year, (2) the aggregate value of assets held in such funds at the end of such taxable year, and (3) the aggregate contributions to and grants made from such funds during such taxable year.

Section 6033(l) provides additional reporting requirements for supporting organizations described in section 509(a)(3). Section 6033(l) requires each supporting organization to report on its annual return: (1) The supported organizations (as defined in section 509(f)(3)) with respect to which such organization provides support; (2) whether the organization meets the requirements of clause (i), (ii), or (iii) of section 509(a)(3)(B); and (3) a certification that the organization meets the requirements of section 509(a)(3)(C).

The general rule regarding confidentiality of returns is found in section 6103, which provides that returns and return information shall be confidential, and, except as authorized by the Code, no person having access to this information shall disclose any return or return information obtained by that person in any manner.

Section 6104 provides an exception to the general rule regarding confidentiality of returns. In general, under section 6104(b), the Secretary must make the annual returns filed under section 6033 available to the public. However, section 6104(b) does not authorize the Secretary to disclose to the public the name or address of any contributor to any tax-exempt organization except a private foundation (as defined in section 509(a), including a trust described in section 4947(a)(1) that is treated as a private foundation) or a section 527 organization. Section 301.6104(b)-1(b)(2) provides that although the names and addresses are not to be disclosed, the amounts of contributions to an organization shall be made available for public inspection unless the disclosure of such information can reasonably be expected to identify any contributor.

In addition to the required disclosure of annual returns by the Secretary, section 6104(d) and § 301.6104(d)-1 require certain tax-exempt organizations to provide their annual information returns to a member of the public upon request. Similar to the restrictions on disclosing contributor information placed on the Secretary by section 6104(b), section 6104(d)(3)(A) provides that an organization, other than a private foundation or a section 527 organization, is not required to disclose the names and addresses of its contributors.

The Treasury Regulations in effect prior to this Treasury Decision (prior regulations), which remain largely unchanged, reflected many of the statutory requirements of section 6033. Consistent with section 6033(a)(1), § 1.6033-2(a)(1) of the regulations provides that “except as provided in section 6033(a)(3) and paragraph (g) [of § 1.6033-2], every organization exempt from taxation under section 501(a) shall file an annual information return specifically setting forth its items of gross income, gross receipts and disbursements, and such other information as may be prescribed in the instructions, issued with respect to the return.”

Although the information to be reported for any particular tax year is set forth in the forms and instructions for each such year, § 1.6033-2(a)(2)(ii) of the regulations also provides a list of “information generally required to be furnished by an organization exempt under section 501(a)” on the annual return, which generally tracks section 6033(b). 2 However, the list in the prior regulations had not been updated to reflect certain information that the statute generally requires to be reported because the statute had been amended following the original issuance of the regulations. Specifically, items in sections 6033(b)(10) (relating to taxes imposed on certain lobbying and political expenditures by organizations described in section 501(c)(3)) and 6033(b)(11) (relating to taxes imposed with respect to an organization, an organization manager, or any disqualified person under section 4958) were not reflected in the prior regulations.

Two provisions of the prior regulations expanded upon the statute with regard to the reporting of certain contributor information. First, section 6033(b)(5) requires organizations described in section 501(c)(3) generally to provide on the annual information return filed with the IRS the names and addresses of persons who contribute $5,000 or more during the taxable year. Section 1.6033-2(a)(2)(ii)(F) of the prior regulations had extended this requirement beyond section 501(c)(3) organizations to all organizations exempt from taxation under section 501(a). Second, § 1.6033-2(a)(2)(iii)(D) of the prior regulations provided that organizations described in section 501(c)(7) (social clubs), section 501(c)(8) (fraternal beneficiary societies), or section 501(c)(10) (domestic fraternal societies) generally must report the name of each person who contributes more than $1,000 to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.

Incorporating the statutory filing exceptions of section 6033(a)(3), § 1.6033-2(g)(1) provides a list of organizations that are not required to file an annual return under section 6033(a)(1). Within that list, § 1.6033-2(g)(1)(iii) previously provided that certain specified organizations described in section 6033(a)(3)(C) whose gross receipts are generally not more than $5,000 annually are not required to file the return required under section 6033(a)(1). Further, § 1.6033-2(g)(6) provides that the Commissioner may relieve any organization or class of organizations (other than a supporting organization described in section 509(a)(3)) from filing, in whole or in part, the annual return required under section 6033 if the Commissioner “determines that such returns are not necessary for the efficient administration of the internal revenue laws.”

Accordingly, other than with regard to supporting organizations, section 6033 and the regulations under section 6033 provide the Commissioner with broad discretionary authority to determine what information must be reported and to grant relief, in whole or in part, from the annual filing requirements of tax-exempt organizations if the Commissioner determines that the information is not necessary for the efficient administration of the internal revenue laws.

For decades, the Commissioner has exercised discretion under section 6033(a)(3)(B) and § 1.6033-2(g)(6) to relieve organizations of filing requirements under section 6033 through subregulatory guidance such as revenue procedures and annual information return instructions including, for example, Rev. Proc. 95-48, 1995-2 C.B. 418, which grants reporting relief for governmental units and affiliates of governmental units, and Rev. Proc. 96-10, 1996-1 C.B. 577, which relieves from a filing requirement under section 6033(a) certain organizations that are operated, controlled, or supervised by one or more churches, integrated auxiliaries, or conventions or associations of churches. (Both revenue procedures are discussed further in Part VI of the Summary of Comments and Explanation of Provisions section of this preamble.) Revenue Procedure 83-23, 1983-1 C.B. 687, represents another exercise of this discretion. In that revenue procedure, the Department of the Treasury (Treasury Department) and the IRS increased to $25,000 the minimum amount of gross receipts normally required to be received in a year by an organization exempt under section 501(a) to trigger a filing requirement under section 6033(a). That revenue procedure also expanded the group of tax-exempt organizations not required to file an annual information return due to a gross receipts threshold beyond those listed in section 6033(a)(3)(C). Revenue Procedure 2011-15, 2011-3 I.R.B. 322, further increased this gross receipts threshold amount to $50,000 for most organizations exempt under section 501(a). 3 Revenue Procedure 2011-15 also relieved most foreign organizations and organizations formed in a United States possession from a filing requirement under section 6033(a) if their gross receipts from sources within the United States do not exceed the $50,000 threshold and if they have no significant activity (including lobbying and political activity and the operation of a trade or business, but excluding investment activity) in the United States.

Similarly, consistent with past exercises of authority under section 6033 and the prior regulations, the Treasury Department and the IRS issued Rev. Proc. 2018-38, 2018-31 I.R.B. 280, granting tax-exempt organizations required to file the Form 990 or Form 990-EZ, other than organizations described in section 501(c)(3), relief from reporting the names and addresses of contributors on Schedules B, “Schedule of Contributors,” filed with Form 990 or 990-EZ (or completing the similar portions of Part IV of the Form 990-BL). Revenue Procedure 2018-38 also provided that organizations described in sections 501(c)(7), (8), or (10) need not provide the names and addresses of persons who contributed more than $1,000 during the taxable year to be used for exclusively charitable purposes on their annual information returns required under section 6033. Revenue Procedure 2018-38 did not affect the information required to be reported on Forms 990, 990-EZ, or 990-PF by organizations described in section 501(c)(3) (which for purposes of section 6033 include nonexempt charitable trusts described in section 4947(a)(1) and nonexempt private foundations described in section 6033(d)) or section 527 organizations.

On July 30, 2019, the United States District Court for the District of Montana set aside Rev. Proc. 2018-38 on procedural grounds because, in the court's view, the notice and comment procedures of the Administrative Procedure Act applied and Rev. Proc. 2018-38 had not been subject to such notice and comment. See Bullock, et al. v. IRS, 401 F.Supp.3d 1144 (D. Mont. Jul. 30, 2019). However, the court emphasized that its ruling did not implicate the merits of the revenue procedure and that “the substance” of the Commissioner's ultimate decision on reporting the names and addresses of contributors “remains subject to the Commissioner's discretion.” Id. at 1154, 1159.

On September 10, 2019, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-102508-16) in the Federal Register (84 FR 47447) containing proposed regulations under section 6033 (2019 proposed regulations). The Treasury Department and the IRS received 8,387 written and electronic comments responding to the 2019 proposed regulations. Comments are available at www.regulations.gov or upon request. A public hearing on the 2019 proposed regulations was held on February 7, 2020.

After consideration of all comments received on the 2019 proposed regulations and the testimony presented at the public hearing, this Treasury Decision adopts the proposed regulations with minor modifications, as described in the Summary of Comments and Explanation of Provisions.

The 2019 proposed regulations proposed to modify the regulations under section 6033 to align them with certain statutory amendments to section 6033 that had not previously been reflected in the regulations, and to update them to encompass certain instances in which the Commissioner has previously exercised discretion under the statute and regulations to relieve organizations, in whole or in part, from the filing requirements set forth in section 6033 or in the regulations issued under section 6033.

Specifically, the proposed changes included the following: (1) Adding items listed in section 6033(b)(10) and (11), as applicable, to the list of items generally required to be reported and adding other statutory reporting requirements for controlling organizations, sponsoring organizations, and supporting organizations; (2) amending the gross receipts threshold (with an additional requirement for foreign organizations and United States possession organizations) that triggers a filing requirement under section 6033 for tax-exempt organizations (other than private foundations and supporting organizations); (3) clarifying that section 527 organizations with gross receipts greater than $25,000 generally are subject to the reporting requirements under section 6033(a)(1) as if they were exempt from taxes under section 501(a); and (4) specifying that only organizations described in section 501(c)(3) and section 527 organizations generally would continue to be required to provide names and addresses of contributors on their Forms 990, Forms 990-EZ, and Forms 990-PF.

The following sections address these proposed changes in more detail, summarize the comments received on the proposed changes, provide the responses of the Treasury Department and the IRS to the comments, and describe the final regulation adopted in this Treasury Decision.

In the 2019 proposed regulations, the Treasury Department and the IRS proposed to amend § 1.6033-2(a)(2)(ii) by adding two new provisions to reflect information to be furnished annually that had been added to section 6033(b) but that had not yet been added to the list in the regulations of items generally required to be reported on an organization's annual information return. These items of information are listed in section 6033(b)(10) (relating to taxes imposed on certain lobbying and political expenditures by organizations described in section 501(c)(3)) and 6033(b)(11) (relating to taxes imposed with respect to an organization, an organization manager, or any disqualified person on any excess benefit transaction under section 4958). In addition, a cross-reference to § 1.6033-2(a)(1) was proposed to be added to the introductory sentence of § 1.6033-2(a)(2)(ii).

The Treasury Department and the IRS also proposed to incorporate into the regulations the statutory reporting requirements found in section 6033(h) for controlling organizations (as defined in section 512(b)(13)), section 6033(k) for sponsoring organizations (as defined in section 4966(d)(1)), and section 6033(l) for supporting organizations (as defined in section 509(a)(3)).

The Treasury Department and the IRS did not receive any comments on these additions to § 1.6033-2. This Treasury Decision adopts these provisions from the 2019 proposed regulations without change.

Consistent with the discretionary authority granted by section 6033(a)(1)(B), the Treasury Department and the IRS previously determined that the efficient administration of the tax laws does not require the filing of returns by organizations that are exempt under section 501(a) (other than private foundations and supporting organizations) that normally have less than $50,000 in gross receipts annually, except for foreign organizations and organizations formed in a United States possession that have significant activity (including lobbying and political activity and the operation of a trade or business, but excluding investment activity) in the United States. See Rev. Proc. 2011-15. In the 2019 proposed regulations, the Treasury Department and the IRS proposed to amend § 1.6033-2(g)(1)(iii) to reflect the $50,000 gross receipts filing threshold currently in effect, rather than the $5,000 gross receipts threshold found in section 6033(a)(3)(A)(ii), and the application of the $50,000 threshold to organizations other than those listed in section 6033(a)(3)(C).

The Treasury Department and the IRS received two comments expressing support for amending the regulations to reflect the $50,000 threshold and one comment stating, without explaining why, that organizations with annual gross receipts normally not more than $50,000 but more than $25,000 ought to be required to file a return. As discussed earlier in this section III, the Treasury Department and the IRS increased the filing threshold from $25,000 to $50,000 in 2011 based on a consideration of the needs of tax administration. The Treasury Department and the IRS continue to consider the $50,000 threshold to strike an appropriate balance between the efficient use of resources for both tax-exempt organizations and the IRS, and ensuring compliance with the tax laws by tax-exempt organizations. Organizations with gross receipts below the threshold must continue to file Form 990-N under section 6033(i).

Accordingly, the final regulations provide that the gross receipts threshold for all organizations (other than private foundations and supporting organizations) formed in the United States is $50,000. The final regulations also incorporate the previously granted relief from the filing requirement under section 6033(a) for foreign organizations and organizations formed in a United States possession (other than private foundations and supporting organizations) that is reflected in Rev. Proc. 2011-15.

In the 2019 proposed regulations, the Treasury Department and the IRS also proposed to amend § 1.6033-2(g)(6) to clarify that the Commissioner has authority to provide further relief (including possible further increases in filing thresholds) through forms, instructions to forms, or guidance published in the Internal Revenue Bulletin. The Treasury Department and the IRS did not receive any comments on this proposed clarification, and the final regulations incorporate the language as proposed.

In the 2019 proposed regulations, the Treasury Department and the IRS proposed to add § 1.6033-2(a)(5) to state the current requirement that section 527 organizations, subject to the filing exceptions provided by section 6033(g)(3) or as permitted under section 6033(g)(4), follow the reporting requirements under section 6033(a)(1) in the same manner as tax-exempt organizations, except to the extent that the Commissioner revises those requirements as appropriate to carry out the purposes of section 527. Proposed § 1.6033-2(a)(5) would also state the current requirement that section 527 organizations, like organizations described in section 501(c)(3), must continue to report the names and addresses of certain contributors on the section 527 organizations' annual Forms 990 or Forms 990-EZ.

The Treasury Department and the IRS did not receive comments on this clarification of the treatment of section 527 organizations in § 1.6033-2(a)(5). This Treasury Decision adopts these provisions from the 2019 proposed regulations without change.

The Treasury Department and the IRS received one comment requesting that all qualified state and local political organizations described in section 527(e)(5) be exempted from annual filing requirements. Section 6033(g)(1) generally requires a section 527 organization to file an annual information return if it has annual gross receipts of $25,000 or more for the taxable year (subject to mandatory exceptions in section 6033(g)(3)) but provides a higher threshold of $100,000 or more of gross receipts for qualified state and local political organizations. Under section 6033(g)(4), the Secretary has discretionary authority to relieve any section 527 organization from filing an information return if the Secretary determines that such filing is “not necessary to the efficient administration of the internal revenue laws.” Because the filing threshold for qualified state and local political organizations under section 6033(g)(1) already is higher than the threshold that applies to organizations exempt from tax under section 501(a), the Treasury Department and the IRS do not adopt this suggestion.

As stated in the 2019 proposed regulations, section 6033 does not specify that the names and addresses of contributors to tax-exempt organizations, other than those described in section 501(c)(3), be reported on annual information returns. Consistent with the Secretary's broad discretion under section 6033(a) to set forth information reporting requirements “for the purpose of carrying out the internal revenue laws . . . by forms or regulations,” § 1.6033-2(a)(2)(ii) lists items that are generally required to be included in the annual filings of organizations exempt under section 501(a). In the 2019 proposed regulations, the Treasury Department and the IRS proposed to amend the regulations to specify that the need to provide the names and addresses of substantial contributors will generally apply only to tax-exempt organizations described in section 501(c)(3), and to remove reference to the provision of names of certain contributors to organizations described in sections 501(c)(7), (8), and (10). The proposed regulations did not alter the existing requirement contained in Schedule B of the Form 990 and 990-EZ for tax-exempt organizations to report annually the amounts of contributions from each substantial contributor, or the existing requirement to maintain the names and addresses of substantial contributors should the IRS need this information on a case-by-case basis.

In proposing to exercise this discretion, the Treasury Department and the IRS sought to balance the IRS's need for the information for tax administration purposes against the costs and risks associated with reporting of the information.

The majority of the comments the Treasury Department and the IRS received in response to the 2019 proposed regulations concerned the general requirement for reporting of names and addresses of substantial contributors. 4 This information is reported on Schedule B, “Schedule of Contributors,” to Forms 990, 990-EZ, or 990-PF. The next several sections of this preamble summarize and respond to those comments.

Some commenters favoring the proposed changes stated that the IRS does not need the names and addresses of substantial contributors to tax-exempt organizations to which the relief extends to be reported annually, and expected that other information contained in Forms 990 or 990-EZ would be adequate for administration of the Code. Commenters favoring the proposed changes also noted that the names and addresses are still required to be maintained and the IRS can obtain that information on examination. These commenters asserted that such an approach is more appropriately tailored to the IRS's need for the information than a blanket reporting requirement.

Several other commenters opposing the proposed changes asserted instead that the IRS would not be as efficient in enforcing federal tax laws without direct access to the names and addresses of substantial contributors to the tax-exempt organizations affected by the proposed rule. These commenters asserted that information contained elsewhere in Forms 990 and 990-EZ were not adequate substitutes for information contained in Schedule B for purposes of evaluating private benefit or enforcing political activity limits on organizations described in section 501(c)(4). Some commenters also asserted that obtaining contributor names and addresses on examination was not a sufficient substitute for having the information on hand for the following reasons. Some commenters suggested that requesting the information on examination could be a “tip-off” to the organization that it is under additional scrutiny, leading the organization to hide assets and destroy or falsify evidence. Some commenters suggested that Schedule B contains information that helps the IRS initially determine whether or not it should conduct an examination. And some commenters suggested that requesting information on an ad hoc basis is not efficient for the IRS or affected tax-exempt organizations.

The concerns expressed by commenters opposing the proposed changes are misplaced. As explained in the preamble to the 2019 proposed regulations, the IRS does not need the names and addresses of substantial contributors to tax-exempt organizations not described in section 501(c)(3) to be reported annually on Schedule B of Form 990 or Form 990-EZ in order to administer the internal revenue laws. For the specific purpose of evaluating possible private benefit or inurement or other potential issues relating to qualification for exemption, the IRS can obtain sufficient information from other elements of the Form 990 or Form 990-EZ and can obtain the names and addresses of substantial contributors, along with other information, upon examination, as needed. In light of the inefficiencies involved in collecting, maintaining, and redacting this information if it were reported annually, the Treasury Department and the IRS do not agree with comments suggesting that requiring affected tax-exempt organizations to provide name and address information of substantial contributors upon examination is less efficient for the IRS and affected tax-exempt organizations. Moreover, as noted in the proposed regulations, the primary utility of the names and addresses of substantial contributors arises during the examination process. While some commenters suggested that such information could be used before an examination to determine whether an examination is warranted, the IRS takes various factors into account when deciding whether to select a case for examination, and the IRS's process for selection would not be affected by this change. Since examinations are initiated by prescribed correspondence, the taxpayer will already know of the IRS's compliance interest before receiving the request for the particular information.

Therefore, the Treasury Department and the IRS have determined that the annual collection of the names and addresses of substantial contributors to tax-exempt organizations, other than organizations described in section 501(c)(3), is not necessary for the efficient administration of the internal revenue laws. Instead, requiring all tax-exempt organizations to report the amounts of contributions from each substantial contributor on the Schedule B of the Form 990 and 990-EZ, as well as requiring them to maintain the names and addresses of substantial contributors should the IRS need this information on a case-by-case basis, is sufficient for the efficient administration of the Code.

Commenters supporting the proposed changes relating to the furnishing of certain contributors' names and addresses expressed general concerns about the privacy of contributors to tax-exempt organizations. While the IRS is statutorily required to maintain the confidentiality of contributor names and addresses pursuant to section 6104(b), some commenters expressed concern that such information may accidentally be disclosed or that IRS systems could be breached. Some commenters also discussed the risk of disclosure by state authorities to the extent contributor names and addresses are shared by the IRS with an appropriate state officer consistent with section 6104(c). A few commenters also expressed concern that politically or ideologically motivated IRS employees could leak contributor names and addresses or select certain contributors for additional tax scrutiny. In contrast, however, some commenters, who opposed the proposed changes eliminating the requirement to report certain contributor names and addresses, asserted that the risk of disclosure is insubstantial.

The IRS takes seriously its duty to protect confidential information as required by section 6103 and to enforce the internal revenue laws with integrity and fairness to all. However, reporting the names and addresses of substantial contributors on an annual basis poses a risk of inadvertent disclosure of information that is not open to public inspection because information on Schedule B generally must be redacted from an otherwise disclosable information return. The IRS has experienced incidents of inadvertent disclosure and has taken other steps to reduce future occurrences of such disclosures. By removing the general requirement to report names and addresses of substantial contributors to tax-exempt organizations not described in section 501(c)(3), the final regulations further reduce the risk of inadvertent disclosure of names and addresses of contributors for such organizations. Without a tax administration need to collect this information on an annual basis, the Treasury Department and the IRS have determined this change in affected tax-exempt organizations' reporting obligations furthers the steps already taken to protect confidential taxpayer information.

Commenters supporting the proposed change also discussed, often in connection with the risk-of-disclosure issue, the concern that supporters of certain causes or organizations face possible reprisals (such as harassment, threats of violence, or economic retribution) if their status as contributors is revealed publicly. Additional commenters discussed the concern that fear of exposure and fear of reprisal may have a “chilling effect,” discouraging or deterring potential contributors from giving to certain tax-exempt organizations and reducing public participation in organizations benefiting social welfare. Many of these commenters believed this “chilling effect” implicates constitutional rights such as freedom of speech and freedom of association.

Other commenters opposing the proposed change asserted that requiring reporting to the IRS of substantial contributors' names and addresses is constitutional, citing federal appellate court decisions upholding state laws requiring that charitable organizations provide state regulators with copies of unredacted Schedules B. 5

The Treasury Department and the IRS note that the names and addresses of substantial contributors provided to the IRS are generally required to be kept confidential in accordance with section 6103. By removing the general requirement to report annually names and addresses of substantial contributors to organizations exempt under section 501(a) but not described in section 501(c)(3), the final regulations reduce the risk of inadvertent disclosure of names and addresses of contributors for such organizations and thereby address concerns expressed by some commenters regarding potential adverse consequences of any such public disclosures.

Some commenters supporting the proposed changes to the general requirement to report names and addresses of substantial contributors mentioned an expectation that the changes would reduce the compliance burden on affected tax-exempt organizations, allowing such organizations to spend more time and resources on their missions. Commenters also expressed an expectation that the proposed changes would reduce the burden on the IRS associated with the redaction of information as required by section 6104(b).

Other commenters opposed the proposed changes regarding the general requirement to report names and addresses of substantial contributors, stating that both the compliance costs associated with reporting contributor names and addresses and the IRS burden associated with redacting such information are insubstantial. Some commenters further argued that the proposed changes would lead to an increase in compliance costs for tax-exempt organizations as individual states, no longer able to rely on Schedule B information obtained from the IRS, would develop their own disparate reporting requirements.

The Treasury Department and the IRS agree with certain commenters that limiting the general requirement to report names and addresses of substantial contributors will reduce costs with respect to federal tax compliance. While it is true that all tax-exempt organizations will continue to be required to maintain records regarding their substantial contributors, removing the annual reporting requirement will lessen their overall compliance burden. In addition, this change will obviate the need for an affected tax-exempt organization to redact name and address information if the tax-exempt organization must provide its Schedule B to a member of the public if requested under section 6104(b). Particularly for smaller tax-exempt organizations with limited resources, few dedicated staff, and less access to advisors regarding the rules governing tax-exempt organizations eliminating this requirement will be beneficial.

Without a tax administration need for annually reporting name and address information, the Treasury Department and the IRS determined that it is valuable to save tax-exempt organizations the administrative burdens of reporting and redacting it. While some commenters have suggested that some states may choose to impose their own reporting requirements, thereby increasing the compliance burden on tax-exempt organizations, the Treasury Department and the IRS expect that each state can determine the appropriateness of the burdens it may impose in light of its own tax administration needs.

Similarly, the potential burden on the IRS associated with redacting Schedule B information is lessened when fewer organizations are required to report names and addresses on Schedule B. This reduction in burden, when combined with the lack of tax administration need discussed earlier in this preamble, supports specifying that the need to provide the names and addresses of substantial contributors will generally apply only to organizations described in section 501(c)(3), as provided in the statute.

A few commenters supported the proposed changes, but also requested that the Treasury Department and the IRS extend the relief from reporting the names and addresses of substantial contributors to organizations described in section 501(c)(3). One commenter asserted that the IRS had exceeded its statutory authority by requiring the reporting of the names and addresses of substantial contributors to organizations described in section 501(c)(3) (other than private foundations). That commenter contends that the Secretary only has the authority to request the names and addresses of substantial contributors as that term is defined in section 507(d)(2). This definition, according to the commenter, would limit the existence of substantial contributors solely to contributors to private foundations and would require that a contributor have provided more than two percent of the total contributions to the organization over its lifetime.

The Treasury Department and the IRS do not agree with this interpretation of section 6033(b). Section 507(d)(2) specifically limits the application of the definition of “substantial contributor” found therein to section 507(d)(1). Section 6033 does not incorporate the definition of substantial contributor found in section 507(d)(2) and provides the Secretary with broad discretion to prescribe information to be collected on an annual return that is necessary for carrying out the purposes of the Code. Accordingly, consistent with section 6033(b), the Treasury Department and the IRS have the authority to continue to require that organizations described in section 501(c)(3) report the names and addresses of substantial contributors on Schedule B. The Treasury Department and the IRS decline to extend the relief from reporting names and addresses of substantial contributors to organizations described in section 501(c)(3) in this final regulation.

Commenters opposing the proposed changes to the general requirement to report names and addresses of substantial contributors commonly invoked concerns about the use of tax-exempt entities, including by special interests, to anonymously influence elections and enable improper interference in U.S. elections. Commenters asserted that the proposed changes would lead to an increase in the flow of money into U.S. elections through organizations described in sections 501(c)(4) and (6). Several commenters also suggested that the changes would make it more difficult to detect foreign spending or federal contractor spending on U.S. elections in violation of federal campaign finance laws. One commenter discussed 52 U.S.C. 30111(f), asserting that Congress had directed the IRS to “consult and work with” the Federal Election Commission (FEC) on rulemakings regarding campaign finance matters.

Other commenters supporting the proposed changes stated that there are other, better measures in place to track foreign spending on U.S. elections than Schedule B and that it is unlikely that contributors who are intending to violate campaign finance laws will use foreign addresses or otherwise make clear their violation in a manner subject to reporting to the IRS on Schedule B. Commenters also stated that the IRS generally cannot share Schedule B information with the agencies charged with enforcing campaign finance laws.

As stated in the preamble to the 2019 proposed regulations, the Treasury Department and the IRS reiterate that Congress has not authorized the IRS to enforce campaign finance laws. Schedule B reflects the enforcement needs related to the Code, not the campaign finance laws. Furthermore, section 6103 generally prohibits the IRS from disclosing any names and addresses of organizations' substantial contributors to federal agencies for non-tax investigations, including campaign finance matters, except in narrowly prescribed circumstances. 6

With regard to coordination with the FEC, section 30111(f) of title 52 does not require the IRS to consult with the FEC on regulations issued by the IRS under the Code. Instead, section 30111 of title 52 authorizes the FEC to prescribe rules, regulations, and forms to carry out the provisions of the Federal Election Campaign Act and requires the FEC to consult with the IRS when “prescribing such rules under this section.” This final regulation is prescribed by the IRS, not by the FEC; and, it is prescribed under section 7805 of title 26, not section 30111 of title 52.

Finally, the Treasury Department and the IRS note that the change in reporting of the names and addresses of substantial contributors will have no effect on information currently available to the public. Sections 6103 and 6104 prohibit the IRS from publicly disclosing the names and addresses of contributors to tax-exempt organizations (other than private foundations). With respect to such tax-exempt organizations, any names and addresses of substantial contributors on Schedule B are not made public and disclosure restrictions generally prohibit making such information available for use by other agencies for their enforcement purposes. 7

Some commenters opposing the proposed changes discussed the impact on the state taxing and other authorities that may use Schedule B information shared by the IRS pursuant to sections 6103(d) or 6104(c). 8 In these comments, which included a comment from the attorneys general of nineteen states  9 and the District of Columbia, commenters discussed the states' use of Schedule B information for purposes related to state tax administration, enforcement of state-level campaign finance law, and enforcement of state-level consumer protection law. Commenters claimed that no longer receiving Schedule B information from the IRS would require a reorientation of processes that would cost the states time and money. A few commenters also referenced a history of cooperation between the IRS and state tax regulators in this area.

Other commenters in favor of the proposed changes asserted that states are not allowed to use Schedule B information for non-tax purposes and that states, in any event, did not need Schedule B information for the efficient administration of state tax laws. A comment from eleven state attorneys general  10 asserted that states would not be negatively impacted by the proposed rule because they do not rely on the Schedule B data for enforcement efforts and can receive the information through targeted examinations.

The Treasury Department and the IRS reiterate that the Code limits the purposes for which states may use returns or return information obtained from the IRS. When states receive returns or return information under section 6103(d), the use of that information is limited to the administration of state tax laws. When states receive returns or return information under section 6104(c), the use of that information is limited by statute to administering state laws relating to the solicitation or administration of charitable funds or charitable assets of such organizations. Use of returns or return information received from the IRS under these sections for purposes other than those listed above (for example, for the enforcement of campaign finance laws or consumer protection laws) is not consistent with states' authorized use under sections 6103(d) and 6104(c). While some states may use name and address information for those authorized purposes, the divergent comments from state attorneys general indicate that the desire to obtain such information, and the purpose for doing so, may differ from state to state. To the extent that any state determines that the burdens of collecting and maintaining such information are justified by its own needs, such a state is free to require reporting of such information to the state and to maintain the information at the state's own expense.

As explained in the preamble to the 2019 proposed regulations, in exercising the discretion to relieve tax-exempt organizations not described in section 501(c)(3) of the obligation to annually report the names and addresses of substantial contributors, the Treasury Department and the IRS seek to balance the IRS's need for the information for tax administration purposes against the burden and risks associated with reporting of the information.

The Treasury Department and the IRS have concluded that the IRS does not need the names and addresses of substantial contributors to tax-exempt organizations not described in section 501(c)(3) to be reported annually on Schedule B of Form 990 or Form 990-EZ in order to administer the internal revenue laws. In light of the risks and burden associated with requiring the annual reporting of such information, this Treasury Decision revises the regulations under section 6033 to remove the general requirement for tax-exempt organizations not described in sections 501(c)(3) or 527 to report annually the names and addresses of substantial contributors.

This Treasury Decision revises § 1.6033-2(a)(2)(ii)(F) to provide that organizations described in section 501(c)(3) generally are required to provide names and addresses of contributors of more than $5,000 on their Forms 990, 990-EZ, and 990-PF. Similarly, § 1.6033-2(a)(2)(iii)(D) is revised to remove the requirement to provide the names of contributors who contribute over $1,000 for a specific charitable purpose to organizations described in sections 501(c)(7), (8), and (10). Additionally, as discussed earlier in this preamble, section 527 organizations must continue to report the names and addresses of substantial contributors.

Tax-exempt organizations must continue to report the amounts of contributions from each substantial contributor as well as maintain the names and addresses of their substantial contributors in their books and records in accordance with section 6001 and § 1.6001-1(a) and (c) in order to permit the IRS to efficiently administer the internal revenue laws through examinations of specific taxpayers. The records retained will enable organizations to substantiate upon examination the number of certain contributors and the amounts of their contributions and, if needed, to address any concerns identified during the examination for which the identity of the substantial contributors would be relevant.

In the preamble to the 2019 proposed regulations, the Treasury Department and the IRS requested comments on any other grants of section 6033 reporting relief announced in past exercises of the Commissioner's discretion that should be incorporated into the regulations or any other clarifications to reflect statutory changes since the original promulgation of § 1.6033-2. In light of the 2006 amendment to section 6033(a)(3)(B), which proscribes the Commissioner's ability to exercise discretion to relieve from filing any organization described in section 509(a)(3), the Treasury Department and the IRS requested comments on the continued applicability of Rev. Proc. 96-10, 1996-1 C.B. 138, which relieves from a filing requirement under section 6033(a) certain organizations that are operated, controlled, or supervised by one or more churches, integrated auxiliaries, or conventions or associations of churches.

The Treasury Department and the IRS received five comments requesting that the filing exception contained in Rev. Proc. 96-10 be incorporated into the regulations or that the Treasury Department and the IRS simply refrain from obsoleting Rev. Proc. 96-10. One commenter suggested that certain organizations are described in Rev. Proc. 96-10 and continue to rely appropriately on the filing exception provided in that revenue procedure because they are not supporting organizations described in section 509(a)(3).

This Treasury Decision does not incorporate the provisions of Rev. Proc. 96-10 into the final regulations. The Treasury Department and the IRS continue to study the applicability of Rev. Proc. 96-10, which is not withdrawn with the issuance of this Treasury Decision. However, the Treasury Department and the IRS note that organizations for which public charity status is dependent on being described in section 509(a)(3) are not eligible to rely on the filing relief provided in Rev. Proc. 96-10.

The Treasury Department and the IRS also requested comments on Rev. Proc. 95-48, 1995-2 C.B. 418, which grants reporting relief for governmental units and affiliates of governmental units. The Treasury Department and the IRS received one comment asserting that reporting relief granted under Rev. Proc. 95-48 is inappropriate because a government affiliate's decision to seek the benefits of exemption under section 501(c)(3) calls for it accepting the burdens of that status as well. This Treasury Decision does not incorporate the provisions of Rev. Proc. 95-48 into the final regulations and the Treasury Department and the IRS continue to consider whether the reporting relief in this revenue procedure should be updated.

This Treasury Decision conforms the paragraph structure throughout § 1.6033-2 to the current Code of Federal Regulations paragraph level structure. Previously, the fourth level of the paragraph structure utilized a lower-case letter ( e.g., § 1.6033-2(a)(2)(ii)(a)). This Treasury Decision modifies all fourth level letters to be upper-case ( e.g., § 1.6033-2(a)(2)(ii)(A)). For consistency with these amendments, this Treasury Decision also modifies §§ 1.401-1, 56.4911-9, and 56.4911-10 to correct certain cross-references to § 1.6033-2.

Additionally, throughout § 1.6033-2, this Treasury Decision makes certain other non-substantive changes.

Consistent with the applicability dates in the 2019 proposed regulations, the final regulations apply as of May 28, 2020. Pursuant to section 7805(b)(7), an organization may choose to apply the paragraphs listed in § 1.6033-2(l)(2) to returns filed after September 6, 2019.

The following publication is obsolete as of May 28, 2020: Rev. Proc. 2018-38 (2018-31 I.R.B. 280).

This regulation is not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Department of the Treasury and the Office of Management and Budget regarding review of tax regulations.

The collection of information contained in these final regulations is reflected in the collection of information for Forms 990 and 990-EZ that have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507(c)) under control number 1545-0047. To the extent there is a decrease in burden as a result of this change, the decrease in burden will be reflected in the updated burden estimates for Forms 990 and 990-EZ included in this control number. The requirement to maintain records to substantiate information on the Form 990 or 990-EZ is already contained in the burden associated with the control number for those forms and remains unchanged.

The paperwork burden estimate for tax-exempt organizations is reported under OMB control number 1545-0047, which represents a total estimated burden time, including all other related forms and schedules for corporations, of 52 billion hours and total estimated monetized costs of $4.17 billion ($2017). The burden estimates provided in the OMB control number are aggregate amounts that relate to the entire package of forms associated with the OMB control number, and will in the future include, but not isolate, the estimated burden of these regulations. These numbers are therefore unrelated to the future calculations needed to assess the burden removed by adoption of these regulations. The Treasury Department and the IRS urge readers to recognize that these numbers are duplicates and to guard against overcounting the burden. No burden estimates specific to these regulations are currently available. The Treasury Department has not estimated the burden related to the requirements under these regulations. The current status of the Paperwork Reduction Act submissions related to these regulations is provided in the following table.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and return information are confidential, as required by 26 U.S.C. 6103.

It is hereby certified that these final regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these regulations reflect statutory requirements and reporting relief previously announced through forms, instructions to forms, or guidance published in the Internal Revenue Bulletin. The collection of information contained in these regulations instead maintains a current recordkeeping obligation while removing a filing burden. Accordingly, this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. chapter 6). Pursuant to section 7805(f), the proposed regulations preceding these final regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.

The principal authors of these regulations are personnel from the Office of the Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). However, other personnel from the Treasury Department and the IRS participated in their development.

IRS revenue procedures and other guidance cited in this document are published in the Internal Revenue Bulletin (or Cumulative Bulletin) and are available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at http://www.irs.gov.

Accordingly, 26 CFR parts 1 and 56 are amended as follows:

After considering public responses to a notice of proposed rulemaking (NPRM), including feedback from several public meetings, the Coast Guard is establishing a new commercial anchorage ground, Anchorage R, 1 approximately 3 nautical miles (NM) west of Cape Charles, VA, and is increasing the size and relocating the existing quarantine anchorage from there to a more secluded location in the lower Chesapeake Bay, approximately 6 NM southwest of Fishermans Island, VA. The Coast Guard initiated this rulemaking to address growth in both size and volume of vessels entering the Hampton Roads area, the subsequent need for additional deep draft anchorage space, and the growing trend of deep draft vessels anchoring in the waters of the Chesapeake Bay between York Spit Channel and the town of Cape Charles, VA.

On April 19, 2016, we published an advance notice of proposed rulemaking (ANPRM)  2 to solicit public comments on amending certain anchorage regulations in Hampton Roads for the possible creation of a new anchorage in the lower Chesapeake Bay near Cape Charles, VA. We received 35 written responses to the ANPRM. On June 27, 2016, we published a 45-day extension to the comment period and announced two public meetings. 3 On August 16, 2016, we announced one additional meeting and reopened the comment period. 4 We scheduled the meetings to receive comments on the ANRPM to allow for greater public involvement. The meetings were held in Norfolk, VA, on July 19, 2016; Melfa, VA, on July 20, 2016; and Cape Charles, VA, on August 17, 2016. We heard from 20 speakers at these meetings. On December 16, 2016, we issued a news release  5 to inform the public that a review of comments and an environmental study would be conducted. In November 2017, we completed an environmental review. 6 In January 2018, the Center for Disease Control, the U.S. Navy Fleet Forces Command, and the U.S. Army Corps of Engineers, North Atlantic provided comments  7 identifying and addressing adverse impacts from the proposed anchorage.

On June 22, 2018, after reviewing the oral and written comments in response to the ANPRM, the Coast Guard developed a proposed rule and published a notice of proposed rulemaking (NPRM). 8 The proposed anchorage in the NPRM modified the initially considered anchorage size, shape, and location to place the eastern border of the proposed anchorage further from the coast of Cape Charles and also proposed relocating the existing quarantine anchorage. As part of the NPRM, we announced three public meetings. One meeting was held in Norfolk, VA, on June 25, 2018 and two in Cape Charles, VA on July 10, 2018, one at 1 p.m. and the other at 6 p.m. At the three public meetings, 124 members of the community signed in and 72 members asked questions or stated their opinion of the proposal. The Captain of the Port (COTP), Coast Guard Sector Virginia (formerly named Coast Guard Sector Hampton Roads prior to February 6, 2020  9 ), as well as staff from the Fifth Coast Guard District were present to answer questions and solicit public comment for the rulemaking docket. A total of 84 individuals and organizations submitted comments to the docket.

The legal basis and authorities for this rulemaking are found in 33 U.S.C. 471; 33 CFR 1.05-1; and Department of Homeland Security (DHS) Delegation No. 0170.1, which collectively authorize the Coast Guard to propose, establish, and define regulatory anchorage grounds.

This section provides a detailed discussion of public comments received during the NPRM's comment period and public meetings. We received 84 written submissions to the docket in response to the NPRM. In addition, we hosted three public meetings to provide forums for obtaining public feedback on the NPRM. 10 We received no comments specifically addressing the relocation and increase in size of Anchorage Q, the quarantine anchorage. Therefore, we made no changes in the regulatory text to Anchorage Q. While some comments were supportive of new Anchorage R, the majority expressed concern with the Coast Guard's proposed action to establish it. The comments we received spanned a range of topics, including consideration of alternative anchorage locations; compliance with the National Environmental Policy Act (NEPA); compliance with the Coastal Zone Management Act (CZMA); risks of solid waste, coal residue, oil, and air pollution; requests for a no-discharge zone; risk of vessels dragging anchor; view from the shore; vessel congestion; negative impact on fisheries; risks of light pollution; risks of sewage discharge, risks of noise pollution; risks from ballast water discharges; security concerns; requests that vessels delay arrival or remain at sea; and requests for the Coast Guard to develop an anchoring management plan.

Vessels may anchor at any location absent specific restrictions. Many commenters opposed Anchorage R's proximity to Cape Charles, VA, and suggested the Coast Guard review other locations in the Hampton Roads area as alternatives, whether elsewhere in the Chesapeake Bay or offshore in the Atlantic Ocean.

A review of historical automatic identification system (AIS) data shows that vessels have been anchoring in the location of Anchorage R for years. The quarantine anchorage for the Hampton Roads area prior to this final rule, previous Anchorage Q, was located in waters that make up a portion of new Anchorage R. The quarantine anchorage, described in the current 33 CFR 110.168(a)(6) and visible on the 2019 version of U.S. Nautical Chart 12224, 11 was sited immediately east of the northern entrance to York Spit Channel and approximately 3.5 NM west of Cape Charles. We established it in 2005 because the previous quarantine anchorage did not provide adequate depth for visiting ships.

The “Background and Purpose” section of that final rule  12 identified anchorage berth K-3 in the Middle Ground waters off Newport News as the previous Hampton Roads quarantine anchorage, explaining that it was discontinued because the U.S. Army Corps of Engineers no longer maintained it. Historical versions of U.S. Nautical Chart 12245 from 2004  13 and earlier show charted depths in anchorage K-3 of less than 25 feet, which is too shallow for use by visiting deep draft vessels. The 2005 final rule further explained that we established the new quarantine anchorage in “naturally deep water with charted depths in excess of 60 feet.” This decision to locate the quarantine anchorage so far from its previous location (an approximately 43 NM channel transit) demonstrates that this area was the next best location, given the lack of maintained deep draft anchorages closer to the port, for meeting the port's concerns regarding navigational safety.

Additionally, we reviewed AIS data from 2011 through 2017  14 to identify historical anchoring practices of cargo ships visiting the Hampton Roads area. The data show that deep draft vessels were anchoring outside the maintained federal channel in the vicinity of Anchorage R throughout those years, which contributed to the Coast Guard proposing the anchorage. The AIS data show that deep draft vessels also anchored in designated anchorages closer to port facilities, including Anchorages A and B (in Lynnhaven Roads) which are controlled by the U.S. Navy. 15 The only other area not designated for anchorage where deep draft vessels were shown to anchor was the area of Lynnhaven Roads between Cape Henry Channel and Thimble Shoals Channel, immediately east of Tail of the Horseshoe Lighted Buoy 2T (Light List Number 7065) and approximately 2 NM north of Cape Henry, in the Naval Restricted Area described in 33 CFR 334.320. Beginning in 2015, increased Department of Defense and U.S. Navy use of Anchorages A and B and the finding of unexploded ordnance in the Naval Restricted Area, posing hazards to vessels should unexploded ordnance become fouled in anchors, displaced the vessels anchoring in those locations. This, in addition to growth in both size and volume of vessel traffic entering the Hampton Roads area, resulted in a growing number of vessels needing deep water anchorage grounds. As previously discussed, the best available deep water anchoring location in the Hampton Roads area were the waters east of York Spit Channel. AIS data show the growth of vessels anchoring there from 2011 through 2017. 16 The data also show the reduction of commercial cargo vessels anchoring in the Lynnhaven Roads area beginning in 2015  17 and declining so that no commercial cargo vessels are shown to anchor there in 2017.

It is apparent that deep draft vessels bound for Hampton Roads ports have chosen this area as the best available safe anchorage and will continue anchoring in the waters adjacent to York Spit Channel. Given the additional safety, security, and environmental protections provided by officially designating the waters as anchorage grounds, we are establishing Anchorage R with this rule.

Some commenters recommended we identify offshore anchoring options. We considered establishing an additional offshore quarantine anchorage prior to publishing the NPRM. 18 This notional anchorage was sited approximately 11 NM east of Virginia Beach, VA, immediately northeast of the entrance to the southern traffic separation scheme approaching Chesapeake Bay. We considered this location because it provided suitably deep water, was outside restricted zones, and was still within our geographic authority to establish anchorage grounds. However, the U.S. Army Corps of Engineers noted  19 that the National Oceanic and Atmospheric Administration warned of unexploded ordnance in the area per note B of U.S. Nautical Chart 12221. 20 This could pose dangers to vessels anchoring there. Additionally, U.S. Fleet Forces Command recommended against establishing the offshore anchorage  21 because it would interfere with critical U.S. Navy training activities. Therefore, we determined no viable offshore location is available to meet the anchorage needs of visiting deep draft vessels.

Other commenters requested we clarify why we chose this particular location to establish an anchorage. As explained above, we considered the loss of traditional anchorage areas in the Hampton Roads area, historical anchorage data and practices, the possibility of offshore anchorages, and the concerns for the safety and security of commercial and naval vessels when establishing this anchorage ground. We believe this rule provides additional controls over vessels anchoring there, and provides an additional level of safety and environmental oversight.

One commenter suggested that due to AIS carriage requirements, only large commercial vessels were considered when determining the location of the anchorage grounds. Among other categories, 33 CFR 164.46(b)(1) specifies that AIS is required for all commercial vessels 65 feet or more in length, and towing vessels of 26 feet or longer and that have more than 600 horsepower. The Coast Guard examined the tracks of pleasure craft, sailing vessels, passenger and other vessels transiting the waters in and near Anchorage R including shallow draft vessels that call on Cape Charles. While AIS carriage is voluntary for many vessels, we believe sufficient data exists, and the location and size of Anchorage R accommodates the needs of large commercial vessels and safeguards routes used by smaller vessels. The southernmost boundary of Anchorage R established by this rule is intended to keep large commercial ships from anchoring within routes used predominately by smaller vessels to navigate to and from Cape Charles Harbor, such as Cherry Stone Channel Inlet. The Coast Guard maintains that applying Hampton Roads anchorage regulations to these waters improves navigation safety.

One comment stated “[t]here have been six closures of the Cape Charles Beach since the Coast Guard established this vessel anchorage just off the shore of the town of Cape Charles.” This comment incorrectly characterizes both the Coast Guard regulation and the timeline for establishing the anchorage. As mentioned above, data show vessels have been anchoring in the waters between York Spit Channel and the town of Cape Charles for years without Coast Guard direction or influence. Although this anchorage was suggested in our 2016 ANPRM and proposed in our 2018 NPRM, it will be “Coast Guard established” when it becomes effective 30 days after this final rule is published in the Federal Register .

A number of comments suggested the Coast Guard is not meeting NEPA requirements by addressing the action using a categorical exclusion and not providing an environmental impact statement. The Coast Guard disagrees. In the above paragraphs, we document the practice of vessels anchoring in and around Anchorage R. This practice is not due to Coast Guard implemented plans or actions; rather, it is the result of larger and deeper draft vessels calling on the Port of Virginia and the loss of available deep draft anchorage areas due to naval operations and the potential for unexploded ordinance. Regulations establishing or increasing the size of anchorage grounds generally do not individually or cumulatively have a significant effect on the human environment, and as such, are normally categorically excluded from further review. This is further discussed in Section V.F below. We continue to view the categorical exclusion as appropriate and are making no changes to the rule from the NPRM based on these comments.

Two Commonwealth of Virginia agencies, the Virginia Department of Environmental Quality (VADEQ)  22 and the Marine Resources Commission, 23 responded separately with the presumption that the Coast Guard would conduct a CZMA consistency review with the Commonwealth of Virginia for establishing the anchorage grounds. The VADEQ cited the federal regulations  24 that implement CZMA, 15 CFR 930.31, stating that they viewed this rulemaking as reasonably and foreseeably altering the uses of the coastal zone and should therefore be subject to a federal consistency determination.

Establishing the anchorage grounds does not create the practice of anchoring at Anchorage R, as vessels have been anchoring in the waters between York Spit Channel and the town of Cape Charles, VA for years. This practice will continue regardless of the Coast Guard's action. Any effects associated with this activity are already occurring and will continue to occur. The Coast Guard's ability to limit or preclude this activity is derived from its navigational safety authority. By imposing this rule, we are attempting to increase navigational safety of the existing users by extending existing regulations that govern anchoring practices in the Hampton Roads area to waters currently being used for anchoring by deep draft commercial vessels. Thus, the Coast Guard provided a no effects determination under 15 CFR 930.35, and we sent a letter  25 notifying the VADEQ of our negative determination on November 7, 2019.

Our letter prompted discussions with VADEQ, which included VADEQ forwarding to the Coast Guard via email a letter from the Marine Resources Commission dated December 5, 2019, 26 and a conference call regarding the Coast Guard's negative determination on January 6, 2020. 27 The VADEQ formally objected to our negative determination in a letter  28 dated January 16, 2020, and maintained that insufficient information was supplied to determine if the Coast Guard's action is consistent with the Commonwealth's Fisheries Management and Subaqueous Land Management enforceable policies. We reviewed these policies and did not find any applicable to the Coast Guard's action. Subsequent conversations with the VADEQ yielded no specific examples of inconsistent enforceable policies. It is our assessment that the VADEQ is focused on potential effects rather than on whether or not the Coast Guard's action could be the cause of those effects. 29 We maintain that this administrative safety regulation does not cause any effects on the coastal zone, and that our rule is consistent to the maximum extent practicable with the CZMA enforceable policies promulgated by the Commonwealth of Virginia.

Currently, vessels anchor in the areas surrounding existing Anchorage Q between York Spit Channel and Cape Charles, VA, with no limitation to how many vessels may anchor in the area or how close to shore they may anchor. Numerous concerns submitted in the comments regarding the environment appear to address this current condition. We share these concerns, and by establishing Anchorage R, we are addressing environmental concerns in three ways.

First, creating this anchorage as part of 33 CFR 110.168 means that we are applying to these waters the anchorage regulations applicable to all other anchorage grounds in the Hampton Roads area, found in 33 CFR 110.168(c), “General regulations.” These regulations address port coordination and congestion, time limits, and vessel seaworthiness and readiness while also providing the COTP discretion in prescribing conditions and anchoring locations for vessels. The suite of regulations improves the overall safety of the port and vessels anchoring in it. This reduces risks of collisions, groundings, and other incidents, which, in turn, reduces the overall environmental risk in those locations. Second, we are creating two additional requirements for vessels using Anchorage R, which we discuss in further detail in Section III.E below and have published in the regulatory text at the end of this document in § 110.168(e)(10). Third, by establishing the anchorage, we are establishing boundaries for the vessels using those waters, limiting the number of vessels anchoring in the vicinity of Cape Charles to around 30 depending on vessel size, and locating vessels so that they anchor approximately no closer than 3 nautical miles from shore. Thus, we conclude this administrative action positively impacts the environment.

A number of comments mentioned concerns regarding pollution from anchoring ships and requested the Coast Guard implement programs to monitor and reduce pollution potential. In the preamble to the NPRM, 30 we described the suite of international and federal treaties, laws, and regulations that protect navigable waters of the United States from pollution discharge from vessels. While those protections remain in place, we are further addressing pollution risks by adding requirements specifically for Anchorage R that were not proposed in the NPRM. New § 110.168(e)(10), “Anchorage R,” adds two requirements in addition to the general regulations for vessels using the anchorage. First, no vessel may transfer oil or chemicals in bulk to any other vessel without permission of the COTP. This provides the COTP the ability to control the conditions of lightering or transfer operations. Second, a non-self-propelled vessel (like a barge) must be tended by a towing vessel unless otherwise given permission by the COTP. This reduces the risk of vessels without the means of propulsion of breaking away or dragging anchor and then causing harm to themselves or other vessels by grounding or collision.

One commenter noted that, with winds out of the west, an oil spill from one of the vessels would arrive at the shore (approximately 7 hours) long before the vessel's contracted oil spill response organization is required to show up (24 hours), and suggested the Coast Guard pre-stage additional spill response resources on Virginia's Eastern Shore. Section 311(j) of the Federal Water Pollution Control Act (FWPCA), amended by Section 4202, requires the preparation and submission of response plans by the owners or operators of certain vessels. 31 Plan holders, through their response plans, must address the extremely complex system for assembling, mobilizing, and controlling response resources to maintain statutory compliance as well as being prepared to oil spills within their area of operation. Plan holders are required to submit a response plan to the Coast Guard that identifies and ensures, by contract or other approved means, the availability of response resources (personnel and equipment) necessary to remove, to the maximum extent practicable, a worst case discharge, including a discharge resulting from fire or explosion, and to mitigate or prevent a substantial threat of such a discharge. We believe the additional restrictions placed on anchored vessels by this rule intended to significantly decrease the likelihood of an oil spill, combined with existing laws and regulations in place to prevent, mitigate, and respond to oil spills from vessels, are enough. Thus, we made no changes from the proposed rule to address local oil spill response capability.

Twenty-three written comments and additional oral comments from public meetings expressed concern about the discharge of sewage into Chesapeake Bay in the area of the proposed anchorage. Regulations allow vessels to discharge treated effluent from Type I or II Marine Sanitation Devices in most parts of Chesapeake Bay. Untreated sewage may not be discharged. Sewage requirements are outlined in Section 312 of the Federal Water Pollution Control Act (33 U.S.C. 1322), with further regulations issued by the Coast Guard and the EPA found in 33 CFR 159.7 and 40 CFR part 140, respectively. 32 Given the suite of laws and regulations already in place to address sewage from ships, we are making no changes to address sewage concerns.

Fifteen comments expressed concern regarding either incomplete or ineffective treatment of sewage, or of the nutrient levels contained in properly treated effluent, and stated that no sewage discharges should take place at all within the proposed anchorage area. Many of these called for the creation of a no-discharge zone concurrently with the anchorage. The creation of a no-discharge zone is beyond the scope of this rulemaking. The EPA may establish a no-discharge zone for certain geographic areas when requested by a state. 33

One comment recommended the Coast Guard ensure Regional Response Team III  34 was aware of the recommendations to create a no-discharge zone and to ask the Team to consider creating a no-discharge zone throughout the Chesapeake Bay. The Coast Guard sees that notification to the state, and not the Regional Response Team, is the more appropriate notification to ensure appropriate authorities are aware of the requests. Because Anchorage R is entirely within Commonwealth of Virginia waters, we sent a letter  35 dated November 7, 2019 to the Virginia Department of Environmental Quality, 36 notifying them of this rulemaking and the comments received requesting consideration of a no-discharge zone. Due to the concerns regarding navigation safety and vessel proximity to shore, we are not delaying publication of this rule while other authorities consider the requests for a no-discharge zone.

Some comments expressed concerns with risks of ships dragging anchor. In the preamble to the NPRM, 37 we described existing regulations intended to minimize the chances of vessels dragging anchor. Some of these regulations apply to all deep draft vessels operating in U.S. waters, but some are specific to the regulations for vessels using Hampton Roads, VA, anchorages, including § 110.168(c)(8), (9), (10), and (15). Additionally, we created a new requirement specific to Anchorage R, § 110.168(e)(10)(ii) found in the regulatory text at the end of this document which requires that a non-self-propelled vessel (like a barge) must be tended by a towing vessel unless otherwise given permission by the COTP. This reduces the risk of vessels without the means of propulsion of breaking away or dragging anchor and causing harm to themselves or other vessels by grounding or collision.

One comment expressed concern regarding a cargo vessel grounding of April 15, 2014, where a vessel dragged anchor under gale force winds and grounded off the shore of Virginia Beach, VA. By creating Anchorage R, we are requiring that vessels otherwise anchoring near the town of Cape Charles have a higher state of readiness to prepare for and respond to environmental conditions that could cause them to drag anchor, like the sudden onset of gale force winds, and thus reduce the chances of groundings, collisions, and pollution spills.

We received numerous comments opposing anchorage R due to the negative impacts of view from the shore, including potential decreased property values and diminished tourism appeal. As we note above, vessels have been anchoring in the deep waters between York Spit Channel and Cape Charles of their own volition and without anchorage boundaries to guide them. In the NPRM, 38 we explained how we changed the boundaries of the anchorage described in the ANPRM in an effort to propose an anchorage with boundaries that would keep vessels from anchoring as close to shore as they had been (as close as 1.5 NM, or, 3,000 yards). The eastern boundary of the anchorage is designed to anchor vessels no closer than approximately 2.8 NM from shore. Considering the maximum number of vessels that visited those waters at any one time in 2017 and 2018, we view the design of the anchorage as a balanced fit between view concerns, available water for anchoring, and peak usage. Therefore, we are not changing the boundary of the anchorage from that proposed in the NPRM.

Many comments noted concern about vessel congestion, suggesting that the port complex should not be extending northward into the Chesapeake Bay. The number of vessels calling on the Hampton Roads area is beyond the Coast Guard's control, and denying vessels calling on the port access to safe anchoring grounds is counter to safety and environmental stewardship. We are establishing Anchorage R to provide controls over those vessels choosing to anchor in the naturally deep water near Cape Charles.

Other comments noted concerns that vessel stays within the anchorage should be limited and specified various lengths. The general regulations for Hampton Roads anchorages (33 CFR 110.168(c)(2)) state that except as otherwise provided, a vessel may not occupy an anchorage for more than 30 days, unless the vessel obtains permission from the COTP. Since no such time limit previously existed for vessels anchoring in the area of Anchorage R (except those within the limits of old Anchorage Q), vessels were able to remain anchored indefinitely. We find that the 30-day limit is sufficient to address anchoring duration.

Many comments raised general concerns about impacts to fisheries. We contend that these comments are not applicable to the Coast Guard's action of establishing the anchorage grounds for the same reasons described in the discussions above regarding compliance with the NEPA and the CZMA. The comments pertain to the presence and number of vessels already anchoring in the area, not about the Coast Guard's administrative controls this anchorage will provide. We find that the action of establishing Anchorage R has no adverse effect; the risks to fisheries from anchored vessels in the waters of Anchorage R pre-exist the Coast Guard's designation of the anchorage. We are making no changes based on these comments.

A number of comments discussed concerns with potential interference to migrating birds, light trespass, and non-conformance with Northampton County requirements for dark sky-type lighting. Like other pollution or water use concerns, we find the action of establishing Anchorage R has no adverse effect; the existence of the lights from anchored vessels in the waters of Anchorage R pre-exists the Coast Guard's designation of the anchorage. We are making no changes based on light pollution-related comments.

One commenter cited a study concluding that artificial light at night may have a negative effect on nocturnally migrating birds and suggested the Coast Guard incorporate light pollution measures during bird migration periods. We are not able to incorporate such measures with this rulemaking. Vessels operating on U.S. waters are required to follow the Inland Navigation Rules which govern the behavior of vessels underway, at anchor, and in other conditions, including prescribing the lights which vessels must exhibit. These rules  39 require vessels greater than 100 meters (328 feet) in length at anchor to illuminate their decks and exhibit the fore and aft all-around lights required for smaller vessels. Because the Inland Rules are both designed to be in harmony with International Regulations for Preventing Collisions at Sea and put specific responsibility on masters and crew to comply with them, 40 this rulemaking may not counter or interfere with the Inland Rules. The Coast Guard may establish special anchorage areas, which allow anchored vessels to be unlighted, 41 but this type of anchorage is not applicable for use at Anchorage R for two reasons. First, unlighted vessels in these anchorage areas must be 65 feet or less in length; the majority of vessels anchoring in the waters of Anchorage R exceed this length. Second, such areas should be located where general navigation will not be endangered by unlit vessels. The waters of Anchorage R are located adjacent to York Spit Channel, the primary north-south thoroughfare for deep draft vessels transiting the lower Chesapeake Bay. Also, the anchorage ground itself is intended to be navigated by vessels arriving and departing at night, where unlighted vessels would increase navigation risk.

Regarding light trespass and Northampton County lighting requirements, Anchorage R requires vessels to anchor further from the Northampton shoreline and is an improvement over the Coast Guard taking no action. One comment requested the Coast Guard consider adding lighting rules specific to Anchorage R that would be compatible with the Northampton County Zoning Ordinance  42 requirements. As discussed above, this rulemaking may not counter lighting requirements of the Inland Navigation Rules.

Many comments noted concerns of hearing noises made by ships, adding to the nuisance of the vessels anchoring offshore Cape Charles. We find that the action of establishing Anchorage R has no adverse effect; the existence of the noise produced by anchored vessels in the waters of Anchorage R pre-exists the Coast Guard's designation of Anchorage R as an anchorage ground.

A number of comments expressed concerns regarding the negative impact on the environment caused by discharge of ballast water in Anchorage R. One specifically warned that the proximity of the anchorage to aquaculture sites increased those sites' exposure to potential nonindigenous shellfish pathogens which could be introduced by ships at anchor discharging ballast water. We find that the action of establishing Anchorage R has no adverse effect; the risks posed by vessels anchoring in the area existed before our designation of the anchorage.

Vessels carry ballast water to add weight in specific locations, allowing the ship to control or maintain trim, draught, stability, or hull stresses it encounters due to adverse sea conditions or changes in cargo weight, fuel and water. We are committed to protecting U.S. waters from invasive species and work closely with the international community to find solutions that minimize ballast water risks while maintaining maritime trade. 43 Commercial vessels such as those that anchor near Cape Charles, VA, as well as those that transit, anchor, moor, or otherwise use waters in the Hampton Roads area must meet federal requirements  44 for ballast water management. These stipulate that ballast water obtained in overseas coastal areas that might contain invasive species be exchanged with ocean water 200 miles from shore or treated with onboard systems to prevent the discharge of viable living organisms.

Some comments asked whether having unattended foreign ships anchored in the Chesapeake Bay is a security concern. Vessel security is of vital importance, which is why the United States enacted the Maritime Transportation Security Act and the Coast Guard issued supporting regulations, 45 and continues to work closely with the international community in the implementation and enforcement of the International Ship and Port Facility Security Code. 46 Together, these requirements ensure seagoing vessels and their operating companies have rigorous security requirements for training, security planning, physical and operational security measures, and record keeping. Furthermore, federal requirements mandate that U.S. vessels in commercial service and foreign vessels entering port must provide an advance notice of arrival  47 to the Coast Guard. The vessel's notice of arrival is vetted by numerous federal agencies to ensure compliance with applicable safety and security laws prior to the vessel and its crews entering U.S. waters. Regarding foreign crewmembers, U.S. Customs and Border Protection (CBP) screen and provide escort protocol for those individuals who are seeking to go ashore. All crewmembers must remain onboard the vessel unless clearance from CBP has been obtained. As noted previously, we view the action of creating Anchorage R as having no adverse effects; security requirements for anchored vessels remain unchanged whether the anchorage exists or not.

Five comments recommended the Coast Guard consider requiring ships to remain offshore or otherwise delay their arrival. In Section III.A above, we explained that vessels have been anchoring in the vicinity of Anchorage R with no restrictions and will continue to do so; the logistical, safety, and economic factors that vessels consider when determining whether to delay arrival are outside the scope of this rulemaking. We have protocols for barring or delaying vessels from port entry based on safety, security, and environmental compliance factors. Every arriving vessel, whether destined for a pier or an anchorage, is individually vetted against these factors. However, we do not bar a vessel from port entry based on its intended destination alone.

We received supporting comments describing the importance of having safe, protected anchorage space for conducting maintenance and other activities that would otherwise be too unsafe to conduct in offshore conditions, noting the area of Anchorage R as the best location for such activities in the Hampton Roads area. We made no changes based on these comments.

Five comments recommended the Coast Guard develop an anchor management plan, some of which proposed specific provisions for the Coast Guard to consider. We agree with the following two proposed provisions and have amended the language of the regulation in this final rule to meet the intent of the proposals:

First, “[n]o lightering, bunkering, or lube oil transfers shall take place at Cape Charles Anchorage without the permission of the USCG COTP.” We agree and have included provisions about the transfer of oil in new paragraph (e)(10)(i) of the regulatory text at the end of this document.

Second, “[t]ugs with barges shall be in attendance of their tows or barges. Any towing vessel that is departing the anchorage but leaving its tow at anchor within the anchorage shall inform the USCG COTP of the estimated time of returning to the barge, continuously monitor VHF Channels 13 and 16, and by any means appropriate monitor the position and status of the tow.” We agree with the intent of the proposal, and generally believe that no unattended barges should be left at Anchorage R. We have added paragraph (e)(10)(ii) of the regulatory text at the end of this document to address potential dangers presented by unattended barges.

We agree with the intent of the following proposed provisions we have quoted below but, as indicated, we believe that they are already fully addressed by existing, applicable regulations:

“Restrict vessel operation, in a hazardous area or under hazardous conditions, to vessels which have particular operating characteristics or capabilities which are considered necessary for safe operation under the circumstances” and “restrict entering or departing the anchorage in severe weather conditions.” Existing regulations require vessels bound for or departing from ports or places within the navigable waters of the United States to notify the Coast Guard of hazardous conditions either on board the vessel or caused by the vessel or its operation. These regulations further provide the COTP the authority to issue special orders to vessels when justified in the interest of safety by reason of weather, visibility, sea conditions, temporary port congestion, other temporary hazardous circumstances, or the condition of the vessel. 48 These regulations are sufficient to insure the safety of the vessels during hazardous conditions, and fully address the intent on the proposed provisions.

“Vessels shall display the appropriate anchoring lights at nights and during periods of low visibility while at anchor.” This is already required by Rule 30 of the Inland Navigation Rules. 49

“Vessels required to carry and use Automatic Identification System  50 should operate their AIS while at anchor.” This is already required by 33 CFR 164.46(d)(2)(v), which mandates “the continual operation of AIS and its associated devices ( e.g., positioning system, gyro, converters, displays) at all times while the vessel is underway or at anchor. . .”

“A vessel must maintain an anchor watch and must have procedures to detect a dragging anchor” and “No vessel may anchor in a `dead ship' state (propulsion or control unavailable for normal operations) without the prior approval of the USCG COTP and must have propulsion available within 30 minutes in case of anchor dragging or other situation.” This is generally already addressed in navigation safety regulations. 51 Coast Guard Sector Virginia receives requests from vessel operators that desire to go into a “dead ship” state and depending on current and expected environmental conditions, the request may be denied or an assist tug may be required to be on site during the dead ship period in order to ensure compliance with that regulation.

“Whenever it is detected that a vessel's anchor is dragging, the person in charge of the vessel shall immediately notify the COTP.” Any situation where a vessel drags anchor and is unable to make immediate effective corrective action would be considered a hazardous condition, which is required to be reported immediately to the Coast Guard. 52 Also, see the discussion in Section III.G above.

“Prohibiting anchorage of any vessel that has machinery or hull damage that poses a threat to the safety of the port.” A vessel operator is already required to notify the Coast Guard immediately of any marine casualty or hazardous condition. Existing COTP authority gives the Coast Guard the authority to direct the movement of a vessel in such circumstances, and existing anchorage regulations in § 110.168(c)(3) cover this case.

“Be prepared to get underway as directed by the USCG COTP.” This is already generally addressed in § 110.168(c)(9) of the Hampton Roads Anchorage regulations.

We do not agree with proposed provisions that would make any requirement that a vessel must notify COTP for routine operations because Coast Guard Sector Virginia does not currently have a Vessel Traffic Service capability as found in some other parts of the country where such routine tracking of vessels would take place through mandatory vessel check-ins.

We do not agree with a proposed provision to implement additional ballast water discharge restrictions. The Coast Guard has established a standard for allowable concentration of living organisms in ships' ballast water discharged into waters of the United States, and we believe this standard is sufficient. 53

Some comments requested an extended comment period. Given the attention focused on this issue by our publication of the ANPRM and public meetings on the ANRPM, the Coast Guard believes that the opportunities provided by the NPRM comment period and accompanying public meetings were sufficient for public comment.

Seven comments supported a new, deep-water anchorage due to the growing maritime infrastructure in the Hampton Roads area. With limited availability of a deep draft anchorage in the existing naval anchorages, we believe this rule enhances navigation safety and more safely and effectively supports commercial vessel anchoring needs in the lower Chesapeake Bay. Five comments were generally supportive of the anchorage. One written comment suggested the anchorage would have a positive impact on fisheries.

The Coast Guard is establishing a new Anchorage R and relocating and increasing the size of the existing Quarantine Anchorage Q. This reflects our consideration of all comments received on the NPRM and our preliminary Record of Environmental Consideration, which we developed after issuing an ANPRM. This rule will more effectively establish a new deep-water anchorage ground for commercial vessels to support the new and projected growth in vessel traffic throughout the Hampton Roads area. Anchorage R will be located in naturally deep water with charted depths between 25 and 101 feet. Depths in the northern portions of the anchorage range from 45 to 101 feet. Depths in the southern portion range from 25 to 45 feet.

The 7.9 NM long eastern boundary of Anchorage R is located generally 3 NM west of Cape Charles, VA. The southernmost boundary is 3.9 NM long and runs parallel with and 500 yards north of the existing Regulated Navigation Area. 54 The western boundary of the anchorage grounds runs parallel along, and no less than 500 yards east of York Spit Channel for 13.9 NM, including an 11.2 NM length between Lighted Buoys 24 and 38 and then continuing northeast for 2.7 NM beyond Lighted Buoy 38. The anchorage is 0.6 NM long at its northern boundary.

The Coast Guard is moving the existing Quarantine Anchorage (Anchorage Q), from the current location 3.5 NM to the west of Cape Charles, VA, and east of York Spit Channel between Lighted Buoys 36 to 38, relocating it 6 NM southwest of Fishermans Point, VA. The new location runs 625 yards west of York Spit Channel between buoys 16 and 18. The eastern boundary of Anchorage Q runs parallel to York Spit Channel for 2.2 NM. The southernmost boundary is 1.3 NM from the emergency restricted area outside the Chesapeake Bay Bridge Tunnel. The westernmost boundary is 2.2 NM. The northernmost boundary is 450 yards southwest of York River Entrance Channel and runs for 1.3 NM. Its size is increasing from approximately 1.1 to 1.7 square miles

We made five changes to the regulatory text from that published in the NPRM. The first two are rules specific to Anchorage R. We added paragraphs (e)(10)(i) and (ii) in response to comments submitted to the docket and reiterated in public meetings addressing environmental vulnerabilities unique to the characteristics of the Cape Charles area, explained in the “Discussion of Comments” section above. They restrict bulk transfers of oil and hazardous material and require non-self-propelled vessels to be attended by towing vessels. The other three changes to the regulatory text address that the coordinates for anchorages (Q) and (R) are based on the World Geodetic System (WGS84). In our introductory text of § 110.168(a) “Anchorages Grounds” we added “Unless otherwise stated, . . .” to the beginning of the sentence. The sentence now reads “Unless otherwise stated, all coordinates in this section for anchorage grounds are based on North American Datum of 1983 (NAD 83).” We added the following clarification to both sentences of paragraphs (a)(6) and (7) “. . ., which are based on the World Geodetic System (WGS84) . . .” Both sentences now read “The waters bound by a line connecting the following points, which are based on the World Geodetic System (WGS84):”

The regulatory text, including the coordinates mention above, appears at the end of this document. You may find an illustration of the anchorage grounds in the “Anchorage Boundary Development” document in the docket.

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

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

This regulatory action determination is based on the size, location, and historical vessel traffic data pertaining to the anchorage locations. The regulation would ensure approximately 18 square miles of new anchorage grounds are designated, applying existing regulations for anchorages in the Hampton Roads area to vessels anchoring between York Spit Channel and the town of Cape Charles, VA, and would ensure approximately 1.7 square miles of anchorage grounds are available for vessels that requires an examination by public health, customs, or immigration authorities. This regulatory action provides for needed commercial deep draft anchorage while enhancing the navigational safety and environmental stewardship of large naval and commercial vessels transiting the lower Chesapeake Bay.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to use the anchorage may be small entities, for the reasons stated in section IV.A above, this rule would not have a significant economic impact on any vessel owner or operator. The towns and communities along the west coast of Eastern Shore of Virginia have an economy based on tourism and numerous small entities and businesses. The addition of Anchorage R will regulate and move vessels that are currently anchoring in the general vicinity away from the shore and beaches, lessening impacts these small entities may currently experience. Two comments were received claiming significant impact to small entities, citing the small business and municipalities in the Cape Charles area. The Coast Guard disagrees that this regulation would have a negative effect compared to the alternative that the no action would have to small entities; vessels are already anchoring in this area.

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

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

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

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

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves amending the regulations for Hampton Roads and adjacent water anchorages by establishing an anchorage, Anchorage R, approximately 3 NM west of Cape Charles, VA and increasing the size of and relocating the existing Quarantine Anchorage, Anchorage Q, to a more secluded position that is 6 NM southwest of Fishermans Point, VA. It is categorically excluded from further review under paragraph L59(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 110 as follows:

This rule codifies internal policies and procedures on developing, reviewing, and clearing guidance documents, which ensure that all guidance documents receive appropriate review before we issue them. This rule also responds to Executive Order 13891, Promoting the Rule of Law Through Improved Agency Guidance Documents (October 9, 2019), which requires Federal agencies to issue final regulations, or amend existing regulations as necessary, to set forth processes and procedures for issuing guidance documents. As a result, this rule incorporates requirements from the E.O. that were not otherwise in our internal procedures, primarily a requirement for a centralized guidance portal on our website and a requirement that the comment period for significant guidance documents be at least 30 days, except when the agency for good cause finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.

The procedures contained in this rule apply to all guidance documents. We define guidance documents as established by OMB and the E.O.: Any statement we make of agency policy or interpretation concerning a statute, regulation, or technical matter within our jurisdiction that we intend to have general applicability and future effect on the behavior of regulated parties, but which we do not intend to have the force or effect of law in its own right on non-Governmental regulated parties, and for which a statute does not otherwise require us to follow the rulemaking procedures of the Administrative Procedure Act.

We review guidance documents before we issue them so they are written in plain language and do not impose any substantive requirements above and beyond statute, regulation, or other authority (such as an executive order). Although we have in the past complied with the requirements of the Administrative Procedure Act with regard to the content of our guidance documents and required procedures, we are now incorporating additional steps to show this compliance, as required by the E.O. and OMB's implementing memorandum (OMB M-20-02). This includes labeling each guidance document with a clear and prominent statement that the contents of the guidance document do not have the force and effect of law on the public and are not meant to bind the public beyond what is already required in a law, regulation, or other authority. This regulation also addresses significant guidance documents and their potential to, in some cases, have an economic impact on the public. We conduct a good faith cost assessment to determine economic impact on the public where possible, and submit significant guidance to OMB for review before providing informal notice-and-comment opportunity for the public.

Under the Administrative Procedure Act, an agency may waive the normal notice and comment procedures if the action is a rule of agency organization, procedure, or practice. See 5 U.S.C. 553(b)(3)(A). Since this rule incorporates internal procedures about our administrative procedures into the Code of Federal Regulations, notice and comment are not necessary.

The Office of Management and Budget (OMB) has reviewed this rulemaking and determined it is not “significant” under section 3(f) of Executive Order 12866. It is not significant because it is a rule of agency procedure and practice, describing our procedures for promulgating and processing guidance documents, and we do not anticipate it having an economic impact on the public. It will help ensure transparency, robust public participation, and the quality and fairness of administrative actions.

This requirement does not apply if the agency certifies that the rulemaking will not, if promulgated, have a significant economic impact on a substantial number of small entities (5 U.S.C. 603). We certify, after review and analysis, that this rulemaking will not have a significant adverse economic impact on small entities.

The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq. ) requires that agencies consider the impact of paperwork and other information collection burdens imposed on the public and, under the provisions of PRA section 3507(d), obtain approval from OMB for each collection of information we conduct, sponsor, or require through regulations. There are no information collection requirements associated with this rule.

Executive Order 13132 requires agencies to ensure state and local officials have the opportunity for meaningful and timely input when developing regulatory policies that may have a substantial, direct effect on the states, on the relationship between the Federal Government and the states, or on the distribution of power and responsibilities among the various levels of government. If the effects of the rule on state and local governments are sufficiently substantial, the agency must prepare a Federal assessment to assist senior policy makers. This rulemaking will not have any effects on state and local governments within the meaning of the E.O. Therefore, no Federalism assessment is required.

Review under E.O. 13771 seeks to reduce Federal regulations that impose private expenditures in order to comply with them, and to control those costs in any such regulations. OMB has reviewed this rulemaking and determined that it is exempt from E.O. 13771 requirements. This rulemaking is exempt because it is not significant under E.O. 12866 and because it is a rule of agency procedure and practice.

The Unfunded Mandates Reform Act requires that agencies determine whether any Federal mandate in the rulemaking may result in state, local, and tribal governments, in the aggregate, or the private sector, expending $100 million in any one year. This rule does not contain a Federal mandate that may result in such an expenditure.

The U.S. Copyright Office has established a group registration option that allows a newsletter publisher to register an entire month of issues with one application and one filing fee. A publisher may use this option if each issue is “an all-new issue or an all-new collective work that has not been previously published.”  1 In addition, the newsletter “must usually” be published “at least two days each week.”  2 The word “usually” was added to the regulation “to account for occasional situations where the newsletter suspends publication ( e.g., for a holiday).”  3

On February 24, 2020, the Office issued a notice of proposed rulemaking (the “NPRM”) requesting public comment on an amendment that would extend this option to a broader range of publishers. 4 The NPRM noted that it had come to the Office's attention that many newsletters are published just once a week. 5 The requirement that publication must usually occur at least twice a week renders these newsletters ineligible for this group registration option. Some newsletter publishers may be able to use the group registration option for serials (which is specifically intended for publications that are distributed at intervals of a week or longer), but to do so each issue “must be an all-new collective work.”  6 Thus, if a newsletter is published once a week, and if the issues in the group do not qualify as all-new collective works, the publisher may not qualify for either the group registration option for newsletters or the group registration option for serials. For these types of newsletters, the publisher must submit a separate application and filing fee for each issue.

To address this issue, the NPRM proposed to eliminate the requirement that newsletters must be published at least two days a week to qualify for the group registration option for newsletters. 7 During the comment period, the Office received no comments concerning the NPRM. 8 Therefore, the Office is proceeding to issue a final rule that is identical to the proposed rule.

Under the final rule, newsletter publishers will still be required to complete and submit an online application and upload a digital deposit to seek a group registration. 9 The online application is labeled “Daily Newsletters,” but to be clear, this form may be used to register any newsletter, even if it is not published on a daily basis, as long as all of the issues are published within the same month.

Likewise, newsletter publishers will still be required to comply with the mandatory deposit requirement if the newsletter is published in the United States in a physical form. 10 To satisfy this requirement, the publisher must provide the Library of Congress with up to two complimentary subscriptions to the newsletter. 11 To facilitate this process, the final rule updates the mailing address where complimentary subscription copies of newsletters and other serials should be sent.

For the reasons set forth in the preamble, the Copyright Office amends 37 CFR parts 201 and 202 as follows:

In a document published in the Federal Register on December 13, 2019, VA adopted as final, with changes, an interim final rule providing for reimbursement of qualifying adoption expenses incurred by certain veterans (84 FR 68046). The Paperwork Reduction Act of 1995 (44 U.S.C. 3507) requires that VA consider the impact of paperwork and other information collection burdens imposed on the public. Under 44 U.S.C. 3507(a), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid Office of Management and Budget (OMB) control number. See also 5 CFR 1320.8(b)(3)(vi). As required by 44 U.S.C. 3507(d), VA submitted the information collection associated with § 17.390 to OMB for its review. OMB approved the new information collection requirements associated with the interim final rule under a 6-month emergency clearance and assigned OMB control number 2900-0860, although the control number did not appear in § 17.390 as revised by the final rule because the OMB control number 2900-0860 expired on March 31, 2019. VA applied to OMB for a renewal of this information collection under a separate document and OMB approved the renewal of this information collection requirement associated with the final rule on March 10, 2020. This document revises § 17.390 by adding the approved OMB control number.

For the reasons set forth in the preamble, VA amends 38 CFR part 17 as follows:

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Publishing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2019-0250 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before July 27, 2020. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2019-0250, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html.

Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of August 2, 2019 (84 FR 37818) (FRL-9996-78), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 9E8743) by IR-4, Rutgers, The State University of New Jersey, 500 College Road East, Suite 201 W, Princeton, NJ 08540. The petition requested that 40 CFR 180.613 be amended by increasing the existing tolerance for residues of the insecticide flonicamid, including its metabolites and degradates, to be determined by measuring only the sum of flonicamid, N- (cyanomethyl)-4-(trifluoromethyl)-3-pyridinecarboxamide, and its metabolites, TFNA (4-trifluoromethylnicotinic acid), TFNA-AM (4-trifluoromethylnicotinamide), and TFNG, N -(4-trifluoromethylnicotinoyl)glycine, calculated as the stoichiometric equivalent of flonicamid, in or on Leafy greens subgroup 4-16A, except spinach, from 4.0 parts per million (ppm) to 8.0 ppm. That document referenced a summary of the petition prepared by ISK Biosciences Corporation, the registrant, for IR-4 which is available in the docket, http://www.regulations.gov. One comment was received on the notice of filing. EPA's response to this comment is discussed in Unit IV.C.

EPA is establishing the tolerance at 8 ppm rather than 8.0 ppm to be consistent with the Organization for Economic Cooperation and Development (OECD) Rounding Class Practice.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for flonicamid including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with flonicamid follows.

On April 8, 2019, EPA published in the Federal Register a final rule establishing tolerances for residues of flonicamid on sunflower subgroup 20B based on the Agency's conclusion that aggregate exposure to flonicamid is safe for the general population, including infants and children. See 84 FR 13805 (FRL-9990-52). That document contains a short discussion of the toxicological profile, assumptions for exposure assessment, cumulative risk, and Agency's determination regarding the children's safety factor, which have not changed. In addition, the April 8, 2019 final rule referred to a summary of the toxicological profile and the toxicological endpoints and the points of departure for flonicamid used for human risk assessment in Unit III.B. of the final rule published in the Federal Register of July 23, 2018 (83 FR 34775) (FRL-9977-82). Those discussions are also incorporated here, as they have not changed since those documents were published.

EPA's exposure assessments have been updated to include the additional exposure from use of flonicamid in greenhouses on commodities in the Leafy greens subgroup 4-16A, except spinach. EPA relied on tolerance-level residues and an assumption of 100 percent crop treated for all commodities. EPA's aggregate exposure assessment incorporated this additional dietary exposure, as well as exposure in drinking water, although the drinking water exposures are not impacted by this new greenhouse use and thus have not changed since the last assessment. Flonicamid is not registered for any specific use patterns that would result in residential exposure. Further information about EPA's risk assessment and determination of safety supporting the tolerances established in the April 8, 2019 Federal Register action, as well as the new flonicamid tolerance can be found at http://www.regulations.gov in “Flonicamid. Human Health Risk Assessment for the Establishment of Permanent Tolerances in or on Sunflower Subgroup 20B,” dated December 6, 2018 in docket ID number EPA-HQ-OPP-2018-0273 and the document titled, “Flonicamid. Human Health Risk Assessment for a Petition to Increase the Tolerance for Leafy Greens, Except Spinach (Subgroup 4-16A) to Support Use on Greenhouse-Grown Commodities,” dated April 28, 2020 in docket ID number EPA-HQ-OPP-2019-0250.

No adverse effects resulting from a single oral exposure was identified and no acute dietary endpoint was selected; therefore, an acute dietary assessment was not conducted. Chronic dietary risks are below the Agency's level of concern: 62% of the chronic population-adjusted dose (cPAD) for children 1 to 2 years old, the group with the highest exposure. Flonicamid is not registered for any use patterns that would result in short- or intermediate-term residential exposures. EPA has concluded that the cPAD is protective of possible cancer effects from flonicamid. Because aggregate exposure to flonicamid is below the cPAD, EPA concludes that there is not an aggregate cancer risk from exposures to flonicamid.

Therefore, based on these risk assessments and information described above, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to flonicamid residues. More detailed information on the subject action to revise the tolerance in or on the Leafy greens subgroup 4-16A, except spinach, can be found in the document entitled, “Flonicamid. Human Health Risk Assessment for a Petition to Increase the Tolerance for Leafy Greens, Except Spinach (Subgroup 4-16A) to Support Use on Greenhouse-Grown Commodities” by going to http://www.regulations.gov. The referenced document is available in the docket established by this action, which is described under ADDRESSES . Locate and click on the hyperlink for docket ID number EPA-HQ-OPP-2019-0250.

Adequate enforcement methodology is available to enforce the tolerance expression. FMC Method No. P-3561M, a liquid chromatography-tandem mass spectrometry (LC/MS/MS) method, is an acceptable enforcement method for flonicamid and its metabolites in plant commodities.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

The Codex has established MRLs for flonicamid in or on leaf lettuce at 8.0 ppm and head lettuce at 1.5 ppm. No other Codex MRLs are established for the crops within this subgroup. While the tolerance expression for U.S. flonicamid tolerances is different than the expression for the Codex flonicamid MRLs, the level of the new U.S. tolerance for Leafy greens subgroup 4-16A, except spinach, is harmonized with the Codex MRL for leaf lettuce. Because the U.S. tolerance is for a crop subgroup, it not possible to harmonize with the Codex MRL for head lettuce, which is another commodity in the Leafy greens subgroup 4-16A.

One commenter opposed approval of this tolerance claiming it could have detrimental effects on beneficial insects. Whether a pesticide has detrimental effects on beneficial insects, however, is a question outside the scope of analysis under the FFDCA because it is not relevant to whether tolerances are safe. The existing legal framework provided by section 408 of the FFDCA states that tolerances may be set when persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by that statute. This comment provides no information relevant the Agency's safety determination. Concerns about environmental impacts of a pesticide are more appropriately raised in actions related to pesticides being registered under the Federal Insecticide, Fungicide and Rodenticide Act.

Therefore, the existing tolerance for residues of flonicamid, including its metabolites and degradates, in or on Leafy greens subgroup 4-16A, except spinach, is modified to be 8 ppm, rather than 4.0 ppm.

This action modifies tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it considered a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), do not apply.

This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the National Government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq. ).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule 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 . 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:

You may be potentially affected by this action if you manufacture (defined by statute at 15 U.S.C. 2602(9) to include import) chemical substances, including byproduct chemical substances, and are subject to either of the following: (1) Reporting under the TSCA Chemical Data Reporting (CDR) requirements at 40 CFR part 711 or (2) TSCA reporting and recordkeeping requirements at 40 CFR part 704 or other TSCA reporting requirements which reference the small manufacturer standards at 40 CFR 704.3. Any use of the term “manufacture” in this document will encompass “import” and the term “manufacturer” will encompass “importer” unless otherwise stated.

The potentially regulated community consists of entities that produce domestically or import into the United States chemical substances listed on the TSCA Inventory. The Agency's previous experience with TSCA section 8(a) data collections has shown that most respondents affected by this collection activity are from the following North American Industrial Classification System (NAICS) code categories:

• Chemical manufacturing or processing (NAICS code 325); and

• Petroleum and coal products manufacturing (NAICS code 324).

The NAICS codes have been provided to assist you and others in determining whether this action might apply to certain entities. To determine whether you or your business may be affected by this action, you should carefully examine the applicable provisions at 40 CFR 711.8. If you have any questions regarding the applicability of this action to a particular entity, consult the technical contact person listed under FOR FURTHER INFORMATION CONTACT .

TSCA section 8(a)(1) authorizes EPA to promulgate rules under which manufacturers and processors of chemical substances must maintain such records and submit such reports as EPA may reasonably require (15 U.S.C. 2607(a)(1)). TSCA section 8(a) generally excludes small manufacturers and processors of chemical substances from the reporting (reporting and recordkeeping) requirements established in TSCA section 8(a). However, EPA is authorized by TSCA section 8(a)(3)(A)(ii) to require TSCA section 8(a) reporting and recordkeeping from small manufacturers and processors with respect to any chemical substance that is the subject of a rule proposed or promulgated under TSCA sections 4, 5(b)(4), or 6; that is the subject of an order in effect under TSCA section 4 or 5(e); that is subject to a consent agreement under TSCA section 4; or that is the subject of relief granted pursuant to a civil action under TSCA section 5 or 7.

TSCA section 8(a)(3)(B) requires EPA, after consultation with the Administrator of the Small Business Administration (SBA), to prescribe by rule the standards for determining the manufacturers and processors which qualify as small manufacturers and processors. In 1988, EPA established the general TSCA section 8(a) small manufacturer definition for use in other rules issued under TSCA section 8(a), which are codified at 40 CFR 704.3. TSCA section 8(a)(3)(C) requires EPA, after consultation with the SBA Administrator and no later than 180 days after June 22, 2016, to review the adequacy of those standards and, after providing public notice and an opportunity for comment, make a determination as to whether revision of the standards is warranted. Pursuant to TSCA section 8(a)(3)(C), in the Federal Register of November 30, 2017, EPA announced that it determined that revision of these standards is warranted (82 FR 56824) (FRL-9968-41).

TSCA section 8(a)(5) requires EPA, to the extent feasible when carrying out TSCA section 8, to not require unnecessary or duplicative reporting and to minimize the cost of compliance for small manufacturers and processors.

EPA is finalizing an amendment to update the size standards definition for small manufacturers for reporting and recordkeeping requirements under TSCA section 8(a). In addition to updating the definition for small manufacturers, EPA is finalizing a definition for small governments as proposed. EPA is also finalizing as proposed a technical correction to the small manufacturer reference at 40 CFR 704.104 for Hexafluoropropylene oxide, which only includes a rule-specific small processor definition and not a small manufacturer definition. When reviewing the small manufacturer size standards, EPA found this to be an inadvertent error. As originally promulgated, 40 CFR 704.104 included the small manufacturer standard via the cross reference in 40 CFR 704.104(c)(2) to the exemption provisions in 40 CFR 704.5, which was lost when the exemptions at 40 CFR 704.5 were amended and the necessary corresponding change was not made at 40 CFR 704.104(c)(2) (52 FR 41297, October 27, 1987 (FRL-3280) and 53 FR 51717, December 22, 1988 (FRL-3368-1)). Lastly, EPA is finalizing the proposed update to the current small manufacturer definition in the Preliminary Assessment Information Rule (PAIR) rule at 40 CFR 712.25 to align it with the updated small manufacturer definition at 40 CFR 704.3. Further details of these amendments are in Unit II.

Because the small manufacturer size standard under TSCA section 8(a) impacts the CDR rule more than other TSCA section 8(a) reporting rules at this time, EPA included amendments to the small manufacturer definition and revisions to CDR as one proposed rule (84 FR 17692; April 25, 2019 (FRL-9982-16)). However, as stated in the proposed rule, EPA recognizes that the changes to the small manufacturer definition will also apply to 8(a) rules other than CDR and EPA is now finalizing these amendments as two separate actions.

EPA previously determined that revision of the TSCA section 8(a) size standards for small manufacturers is warranted (82 FR 56824, November 30, 2017 (FRL-9968-41)). TSCA section 8(a)(3)(C), which was amended in 2016, requires EPA, after consultation with the Administrator of the SBA, to review the adequacy of the standards for determining which manufacturers and processors qualify as small manufacturers and processors for purposes of TSCA sections 8(a)(1) and 8(a)(3). EPA's determination, supporting documents, and comments received can be found at http://www.regulations.gov under docket ID No. EPA-HQ-OPPT-2016-0675. In response to the determination, EPA proposed an update to the small manufacturer definition as part of the proposed rule entitled “TSCA Chemical Data Reporting Revisions and Small Manufacturer Definition Update for Reporting and Recordkeeping Requirements Under TSCA Section 8(a),” issued in the Federal Register on April 25, 2019 (84 FR 17692 (FRL-9982-16)).

In reviewing the TSCA section 8(a) size standards for small manufacturers, EPA also decided to add a definition for small governments in order to reduce report burden for governments reporting under CDR. Additionally, when reviewing the small manufacturer size standards, EPA found an inadvertent error in the small manufacturer reference at 40 CFR 704.104 for Hexafluoropropylene oxide and is taking the opportunity to correct that error. Lastly, EPA is updating to the current small manufacturer definition in the PAIR rule at 40 CFR 712.25, which has not been updated since it was established in 1982, in order to align it with the definition at § 704.3.

EPA evaluated the costs and benefits of modifying standards for small manufacturers with regard to CDR and other TSCA section 8(a) reporting. This analysis, which is available in the docket, is discussed in Unit II. and is briefly summarized here (Ref. 1).

The modified standards for small manufacturers affect some TSCA section 8(a) rules, including CDR. These rules use the TSCA section 8(a) small manufacturer definition to identify the entities exempted from reporting or subject to other reduced reporting requirements. The amendments are expected to have the greatest impact on CDR and could affect the need to submit, or the number of chemicals reported in, a CDR report for a given site. As discussed in the proposed rule, there is no measurable impact to other current TSCA section 8(a) rules either because EPA has not received any chemical reports for the rule for an extended period of time or because the rule uses a different definition that is not being changed by this amendment (see Unit IV.A. of the proposed rule for a more detailed discussion (84 FR 17692; April 25, 2019)). The amendments, discussed in detail in Unit II., result in a cost savings.

1. Impact of amendments to the small manufacturer definition. The final amendment is estimated to eliminate CDR reporting entirely for 127 industry sites and reduce reporting by eliminating the need to report at least one chemical for additional 173 industry sites (Ref. 1). The final amendment is an update of the current two-standard definition (see Unit II.A.). For sites that are considered small under the first standard ($120 million and 100,000 lbs), it is possible to be considered small for chemical substances with production volumes below 100,000 lbs and not small for chemical substances with production volumes above 100,000 lbs, even when the site's total annual sales are less than $120 million. Such sites will continue to report the chemical substances with production volumes over 100,000 pounds. For sites considered small under the second standard ($12 million) and sites considered small for all of their chemical substances under the first standard, such sites will be eliminated entirely from reporting. This reduction in reporting is in addition to the sites already not reporting because they meet the current small manufacturer definition.

Under the amended definition, incremental future CDR reporting cycle burden reductions and cost savings are estimated at 92,000 hours and $7.0 million, respectively, over a four-year CDR reporting cycle (Ref. 1). On an annualized basis, using a 3 percent and 7 percent discount rate over a 10-year period yields net annualized incremental cost savings of $1.7 million and $1.7 million per year, respectively (rounding to two significant figures results in the same number) (Ref. 1).

2. Impact of adding a small government definition. The following government entities reported under CDR during the 2016 reporting period: One site owned by the U.S. Federal Government, four foreign government-owned sites, seven municipalities, one county-level public utility district, and one tribal entity. In total, for the 2016 CDR reporting period, EPA identified 14 government entities who reported to CDR. Under this final amendment to add a small government definition and based on information from the 2016 CDR submission period, four of these government entities would be exempt from the need to report. The burden and cost savings associated with the exempted entities, in future reporting cycles, are included in the estimates for the final definition with incremental future CDR reporting cycle burden reduction and cost savings estimated at 440 hours and $34,000 respectively, over a four-year CDR reporting cycle (Ref. 1). On an annualized basis, using a 3 percent and 7 percent discount rate over a 10-year period yields net annualized incremental cost savings of $8,000 and $7,900 per year, respectively (Ref. 1).

EPA is finalizing modifications to the TSCA section 8(a) small manufacturer size standards, following EPA's determination on November 30, 2017 that revision to the current size standards is warranted (82 FR 56824). These final standards apply to TSCA section 8(a) rules unless a different standard is identified in the regulatory text of a particular rule. The current chemical-specific TSCA section 8(a) rules that use the small manufacturer definition listed in 40 CFR 704.3 are: §§  704.25 (11-Aminoundecanoic acid); 704.33 (P-tert-butylbenzoic acid (P-TBBA), p-tert-butyltoluene (P-TBT) and p-tert-butylbenzaldehyde (P-TBB)); 704.45 (Chlorinated terphenyl); 704.95 (Phosphonic acid, [1,2-ethanediyl-bis[nitrilobis-(methylene)]]tetrakis- (EDTMPA) and its salts); and 704.175 (4,4′-methylenebis(2-chloroaniline) (MBOCA)). As proposed on April 25, 2019 (84 FR 17692), EPA is also finalizing a TSCA section 8(a) definition for small government entities, finalizing a technical correction to the small manufacturer reference at 40 CFR 704.104 for hexafluoropropylene oxide, and finalizing an update to the current small manufacturer definition in the PAIR rule at 40 CFR 712.25, in order to align it with the definition at § 704.3.

For the TSCA section 8(a) small manufacturer definition update, EPA is finalizing an update to the current definition based on inflation. This definition applies to chemical manufacturers (including importers), but not to chemical processors. Because the amended definition predominantly impacts the CDR, in which reporting is required by manufacturers and not processors, EPA believes it is not necessary to develop a definition of “small processor” for purposes of TSCA section 8(a) at this time and that it is best to continue the past practice of developing definitions for small processors on a rule-by-rule basis, as applicable.

All data in this preamble correspond to impacts to the manufacturing portion of the chemical industry, as evaluated for the CDR. The final definition is as follows:

Small manufacturer definition. When EPA proposed the update to the current small manufacturer definition (84 FR 17692; April 25, 2019), EPA inflated the current definition based on 2017$. EPA is now finalizing the definition based on 2018$, to ensure that the definition is as up-to-date as possible at the time of finalization. EPA applied the same economic analysis for updating the definition with 2018$ that is used in the proposal (84 FR 17692; April 25, 2019). EPA is basing the update of the current two-standard definition at 40 CFR 704.3 on inflation by adjusting the sales standard level for the first part from $40 million to $120 million (originally proposed as $110 million) and for the second part from $4 million to $12 million (originally proposed as $11 million). The impacts of this option are provided in Unit I.E.2. The final definition is set out in the regulatory text below.

Under CDR, sites that meet the small manufacturer definition are exempted from reporting either for the full site (based on the second standard) or for particular chemical substances (based on the first standard), unless the chemical substance the site is manufacturing (including importing) is the subject of one of certain TSCA actions: A rule proposed or promulgated under TSCA section 4, 5(b)(4), or 6, or an order in effect under TSCA section 5(e), or relief that has been granted under a civil action under TSCA section 5 or 7. As part of this rule, EPA is finalizing as proposed the amendment to add TSCA section 4 orders to the list of certain TSCA actions. The authority to issue section 4 orders was added to TSCA when the statute was amended in 2016.

Relative to the 2016 reporting period, EPA estimates that the updated definition will eliminate reporting entirely for 127 industry sites that reported under the 2016 CDR and will reduce reporting by eliminating the need to report at least one chemical for an additional 173 industry sites that reported under the 2016 CDR (Ref. 1). Overall, 1,248 chemical reports from industry sites will no longer be submitted to CDR. In sum, the use of the inflation adjustment definition results in a reduction of two percent of sites, an overall reduction of three percent of chemical reports, and a reduction of 0.09 percent of total volume reported (Ref. 1).

Inflation index. The current small manufacturer definition at 40 CFR 704.3 specifies that EPA will use an inflation index for purposes of determining the need to update the two standards comprising the definition. On April 25, 2019, EPA proposed an amendment to use the Gross Domestic Product (GDP) deflator, or implicit price deflator, instead of the Producer Price Index (PPI) for Chemical and Allied Products, when determining the need to adjust the total annual sales values. As discussed in the proposal, the GDP deflator is less volatile and is broader than the PPI for Chemicals and Allied Products, and therefore EPA believed it would be a better measure for considering future updates to the revenue size standards. After considering comments on this proposed amendment, however, EPA will not be finalizing the change to GDP as an inflation index. While GDP is less volatile, EPA now recognizes that PPI for Chemicals and Allied Products is a better overall accounting of chemical manufacturers that would be subject to reporting under TSCA section 8(a) because it directly reflects the chemical manufacturing sector as opposed to the U.S. economy as a whole. Instead of using the GDP deflator as proposed, EPA will amend the small manufacturer definition at 40 CFR 704.3 to use a five-year average for the PPI for Chemicals and Allied Products when determining if the small manufacturer definition warrants adjustment. This change will better protect against volatility while continuing to be representative of the chemical manufacturers that fall under the small manufacturer definition. The regulated community had an opportunity to comment on EPA's desire to change to an indicator that was less volatile. Commenters did not comment that changing to a less voltile indicator would be unfavorable but rather commented on which indicator would be best suited for determining if an update was warranted. EPA believes that the change to a 5-year average PPI will be beneficial to the regulated community. In any given year PPI could change drastically. By taking a 5-year average of PPI, EPA could ensure that uncharacteristic market swings do not unduly influence EPA's decision to update the small manufacturer definition. Further discussion of this change can be found in the Response to Public Comment in Unit III.

Small government definition. EPA is also finalizing as proposed a definition for small government. EPA is adding a small government definition to reduce the reporting burden for governments that may lack necessary resources. EPA will use the same definition for small government as the Regulatory Flexibility Act (5 U.S.C. 601(5)): A small governmental jurisdiction is the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000. State and tribal governments are not considered small governments.

EPA estimates 33 government sites report under CDR in a four-year cycle. Under the added definition of small government, reporting will be eliminated entirely for four government sites with an associated six chemical reports.

Application of standards. The size standards in this final rule will apply to all manufacturers of chemical substances subject to TSCA section 8(a) reporting and recordkeeping rules, unless a different standard is identified in the regulatory text of a particular TSCA section 8(a) rule. TSCA section 8(a) rules with different definitions than the current small manufacturer definition at 40 CFR 704.3 are: The nanoscale rule at 40 CFR 704.20; certain chemical-specific rules at 40 CFR 704.43 (chlorinated naphthalenes) and 40 CFR 704.102 (hexachloronorbornadiene); and the Preliminary Assessment Information Rule (PAIR) at 40 CFR part 712. EPA is finalizing an amendment to the current small manufacturer definition in the PAIR rule at 40 CFR 712.25 to use the updated small manufacturing definition at § 704.3. As explained in the proposal (84 FR 17692; April 25, 2019), the other TSCA section 8(a) rules noted previously will retain small manufacturer definitions different than the small manufacturer definition at 40 CFR 704.3. Additionally, because of an inadvertent error, there is currently no applicable definition of “small manufacturer” in 40 CFR 704.104 (hexafluoropropylene oxide); EPA is finalizing a correction to cross reference the small manufacturer definition at 40 CFR 704.3, as discussed in the proposal, to correct this error.

Compliance with TSCA section 8(a) reporting and recordkeeping requirements involves the expenditure of time, money, and personnel resources. These costs have particular impact on entities that have limited financial and personnel resources, such as smaller manufacturers. These smaller manufacturers tend to have fewer administrative personnel and less capability for data compilation and recordkeeping than larger manufacturers.

The information collection authority of TSCA section 8(a) reflects Congressional recognition of EPA's need for sufficient data from the chemical industry to enable the Agency to effectively carry out its TSCA obligations. EPA has concluded that if a manufacturer produces a subject chemical in substantial quantities, it is inappropriate to exempt that company from TSCA section 8(a) reporting requirements. Production data is valuable to EPA as an indicator of potential for chemical exposure and high-volume chemical production reflects a greater potential for environmental release. For this reason, EPA is maintaining the annual production or importation volume modifier of 100,000 lb at any individual site owned or controlled by the manufacturer or importer for the first part of the updated small manufacturer definition.

The standards should not prevent TSCA section 8(a) reporting of information that is representative of manufacturers of different sizes. Manufacturers of different sizes have varying amounts of capital available, and therefore may utilize different production processes, techniques, and equipment. Different methods of production may cause the potential for chemical exposure to vary among manufacturers of different sizes. It is important for the Agency to be able to monitor these differences. To ensure that EPA will receive information from a representative portion of manufacturers regulated under TSCA section 8(a), the structure of the definition and levels of the size standards have been designed to allow the Agency to obtain production, use, and exposure data from a variety of manufacturers.

A final objective for the standards is that they be easily applied by both industry and the Agency. The updated small manufacturer definition uses readily available data. These data enable identification of companies which are small manufacturers. The standards can also be easily enforced because the selected criteria for the small manufacturer definition will enable EPA to monitor compliance with the exemption. For further discussion of EPA's methodology and considerations for developing the size standards in this final rule, see Unit IV. of the proposed rule (84 FR 17692; April 25, 2019) and Unit III. of this action.

The Agency reviewed and considered all comments received on the proposed rule. EPA received ten public comments pertinent to the small manufacturer definition update, which included comments from chemical manufacturers, chemical distributors, electric utilities, scrap metal recyclers, petroleum industry representatives, biotechnology companies, and environmental organizations. Copies of all comments are available in the docket for this action (EPA-HQ-OPPT-2018-0321). A discussion of the comments germane to this rulemaking and the Agency's responses follows.

1. Comment. Two commenters supported the proposed update to the current two-standard definition at 40 CFR 704.3. (Docket IDs: EPA-HQ-OPPT-2018-0321-0089, EPA-HQ-OPPT-2018-0321-0102.)

Response. EPA acknowledges the comment.

2. Comment. Four commenters requested that EPA implement a variable employment-based size standard for CDR and TSCA section 8(a) that uses different industry specific standards defined by NAICS codes, similar to the final rule for Fees for the Administration of the Toxic Substances Control Act (fees rule) (83 FR 52694, October 17, 2018 (FRL-9984-41)), which is based on the SBA definition for small business, as opposed to the current two-standard revenue-based definition. One commenter further stated that EPA should finalize an employment-based size standard for CDR reporting with the addition of a 100,000 lb volume modifier. Commenters stated that using a definition similar to that in the fees rule would provide consistency and “more accurately reflect the business size of companies in the chemical industry.” Another commenter noted that the EPA's economic analysis for the proposed rule (Ref. 2) shows that the “SBA Only” definition would provide the least regulatory burden. The same commenter requested to know why a “definition that is variable and maintained by another agency would be unwieldy.” (Comment IDs: EPA-HQ-OPPT-2018-0321-0091, EPA-HQ-OPPT-2018-0321-0096, EPA-HQ-OPPT-2018-0321-0097, EPA-HQ-OPPT-2018-0321-0104.)

Response. Using a variable employment-based size standard similar to the fees rule leads to a reduction of information that would hamper EPA's ability to carry out the Agency's obligation under TSCA. As discussed in the proposal, EPA examined the utility of several criteria for “small” including a definition based on SBA's definition for small businesses. EPA's decision to finalize the update to the small manufacturer definition as proposed (using 2018$ rather than 2017$) is a result of EPA balancing Agency data needs under TSCA section 8(a) for implementing TSCA against the burden imposed on the regulated community. EPA also considered comments on the 2017 determination and the 2019 proposed rule, held multiple meetings with SBA to obtain input, and developed new analyses to understand the impact of the updated definition on the CDR requirements.

The economic analysis for the proposed rule (Ref. 2) evaluated an unmodified SBA-based definition (“SBA Only”) in addition to SBA-based definitions that included production volume modifiers of 100,000 lb, 50,000 lb, and 25,000 lb (SBA+100k, SBA+50k, SBA+25k). The purpose of the production volume modifier was similar to its purpose in the existing definition: To balance the need to minimize the reporting and recordkeeping burden on small manufacturers with EPA's need for exposure-related information that will be reported under TSCA section 8(a). EPA's analysis found that using SBA standards in isolation results in a large loss of information, approximately 20% of chemical reports and 24% of sites, in addition to those already not reported to CDR as a result of the current definition (“Baseline”) (See Ref. 2, Table ES-1). While this option provides the least regulatory burden, it also creates the greatest loss of data to the Agency. EPA determined that losing such a large amount of information would hamper EPA's ability to effectively carry out and implement the requirements of TSCA.

EPA calculated the loss of reports for chemicals on the TSCA Work Plan for Chemical Assessments to be 23% for SBA Only, 7% for SBA+100k, and 3% for the inflation definition. The TSCA Work Plan, originally released in 2012 and updated in 2014, identified a work plan of chemicals for further assessment under TSCA. 2016 amendments to TSCA require that at least 50 percent of all chemical substances undergoing risk evaluation come from the 2014 update to the Work Plan, until the Work Plan chemical list is exhausted. Disproportionate losses of reporting on TSCA Work Plan chemicals constitute a potential loss of information necessary for key Agency decisions. Again, EPA determined that losing an additional 23% or 8% of information on TSCA Work Plan chemicals would hamper EPA's ability to effectively carry out and implement the requirements of TSCA.

Prior to finalizing this final rule, EPA updated its analysis of the reporting impact of the updated small manufacturer definition, as well as the potential reporting impacts of alternative small manufacturer definitions. In the updated analysis, EPA compared the final rule's inflation adjusted small manufacturer definition to the TSCA fees rule's small manufacturer definition with a series of production volume modifiers. The calculated impacts remained largely unchanged from the proposed to final rule. (See the supporting document, Economic Analysis for the Final Rule on the TSCA Section 8(a) Small Manufacturer Definition Update for a more in-depth analysis (Ref. 1)). These impacts of the various alternative small manufacturer definitions were part of the basis for deciding to finalize the updated definition as proposed (updated with 2018$ rather than 2017$).

In deciding to finalize the updated definition as proposed (updated with 2018$ rather than 2017$), EPA considered the practicality of implementing any potential definition. SBA's variable definition is developed and managed by SBA, and EPA cannot simply cite SBA's definition. As was done with the TSCA fees rule, EPA would need to finalize an SBA-based definition in part or in whole as part of its own regulations. While EPA adopted parts of the SBA definition for the fees rule, CDR and the fees rule operate differently for small manufacturers. Under the fees rule, small manufacturers pay a reduced fee but are still subject to the same requirements as large manufacturers. Under the CDR rule, however, small manufacturers are completely exempt from reporting. Given the differences in impact that a small manufacturer definition has for the fees rule and CDR, EPA carefully considered the balance between a reduction in burden and the loss of data from small manufacturer reporters when updating the TSCA section 8(a) small manufacturer definition.

As stated, under the fees rule, small manufacturers pay a reduced fee ( i.e., a reduction of burden) while for CDR small manufacturers are completely exempt from reporting ( i.e., an elimination of burden). While both the fees rule and CDR are implemented under TSCA, they have different purposes. The purpose of the fees rule size standards is for apportionment of fees between small and large entities in the context of the implementation of new provisions for TSCA sections 4, 5, and 6. This purpose does not include any data quality and data availability consequences, which are part of CDR considerations. EPA uses CDR data to support risk screening, risk assessment, chemical prioritization, risk evaluation, and risk management activities, among other activities. This information allows EPA to develop an understanding of the types, amount, end uses, and possible exposure to chemicals in commerce.

Additionally, the SBA definition is used to define the largest size a business can be to participate in government contracting programs and compete for contracts reserved or set aside for small businesses. Applications for these programs are reviewed on a case-by-case basis and a determination is made if a business qualifies. For the CDR rule, however, the small manufacturer definition is self-implementing. EPA does not make a determination on whether a company is exempted as a small manufacturer or is required to report to CDR, prior to CDR reporting. For CDR, it is up to the manufacturer to determine if the small manufacturer definition applies. A small manufacturer definition differentiated by NAICS codes could be difficult to apply for reporters because CDR imposes site-based reporting requirements and multiple NAICS codes could apply to a given site. To apply a small manufacturer definition differentiated by NAICS codes, the reporter would have to select a single NAICS code. For importers and domestic manufacturing sites with multiple activities to which multiple NAICS codes could apply, this can pose a problem for the reporter and EPA. If the manufacturer chooses an incorrect code that results in no reporting of chemical data, then EPA would not be aware that the company is involved in chemical manufacturing. EPA would have difficulty determining if an appropriate NAICS code was selected for a given site that has multiple applicable NAICS codes, and, consequently, would have difficulty determining if a site is appropriately exempted from reporting due to qualification as a small manufacturer based on the choice of NAICS code. EPA believes the current revenue and production volume approach is more amenable to compliance monitoring and believes that it would be more difficult to determine the appropriate NAICS classification for a company because often multiple NAICS apply to a site.

For these reasons, EPA has decided to finalize the updated small manufacturer definition as proposed (updated with 2018$ rather than 2017$), instead of finalizing an employee-based size standard.

3. Comment. In addition to broadly updating the small manufacturer definition to an employment-based size standard for all manufacturers subject to reporting under TSCA section 8(a), two commenters specifically asked that EPA use the SBA size standard for the utility sector. One commenter went on to state that “EPA should incorporate the SBA size standard of 750 employees as the definition of `small manufacturer' for NAICS 221112, fossil fuel electric power generation; or define `total sales' for NAICS 221112 as only including sale of electricity from coal-fired generation.” (Comment IDs: EPA-HQ-OPPT-2018-0321-0105, EPA-HQ-OPPT-2018-0321-0104.)

Response. EPA is finalizing a standardized two-part revenue-based small manufacturer definition that applies to all chemical substance manufacturers. Given the difficulties that EPA has already described in implementing a small manufacturer standard defined by industry sector, EPA does not believe that the Agency should adopt industry-specific standards. If EPA made specific standards for one industry, it would need to consider additional standards for other industries that requested a standard different from those in the general TSCA section 8(a) small manufacturer definition, which would result in a complex and unworkable definition. That being said, EPA did conduct an analysis of the CDR submitters from utilities sites (government and industry) and also considered the public commenters' recommendation to use the SBA size standard for NAICS code 221112, fossil fuel electric power generation. From this analysis, EPA found that CDR reporters represent a variety of utilities, one of which is electricity generation. NAICS code 221112 does not have high representation in CDR and is not the most often used electricity NAICS.

EPA disagrees with the concept of relying only on sales associated with a subset of the production of the reportable chemical substance. As described in Unit II.B., the purpose of the small manufacturer exemption is to reduce (or eliminate) the burden of compliance for those entities that have limited financial and personnel resources. Reducing the sales of a company to only a subset of its revenue does not identify the companies that have such limited resources.

4. Comment. One commenter requested that EPA implement a third standard, in addition to the proposed two-part revenue-based standard, for the small manufacturer definition under TSCA section 8(a). The commenter asked that this third standard be an employee-based size standard combined with a production limit, specifically “a small manufacturer definition of 500 or fewer employees, as defined by the U.S. Small Business Administration Office of Advocacy, if annual production (including import) volume of the particular substance does not exceed 100,000 lbs. at any individual site.” (Comment ID: EPA-HQ-OPPT-2018-0321-0102)

Response. EPA disagrees with the comment. Adding a third standard using a different metric than the first two standards would unduly complicate the definition because companies would not only have to identify their company sales volume, but would also have to determine the number of employees. If EPA added a standard of 500 or fewer employees to the proposed SMD definition, another 34 sites (1%) and 829 reports (2%) would be eliminated. The additional loss of information incurred as a result of adding this third standard would hamper EPA's ability to effectively carry out and implement the requirements of TSCA. Due to the need to balance the reduction of the reporting and recordkeeping burden on small manufacturers with EPA's need for exposure-related data, EPA would need to adjust the third standard in such a way that it would not result in additional losses of information. Thus, adding a third standard would introduce additional complexity but without further reducing burden or information received by EPA. See the response to Comment 2 for further discussion.

5. Comment. Two commenters recommended that EPA retain the use of the PPI for Chemicals and Allied Products in future updates of the size standard threshold instead of changing to GDP when determining if an update to the TSCA section 8(a) small manufacturer size standards is warranted. (Comment IDs: EPA-HQ-OPPT-2018-0321-0096, EPA-HQ-OPPT-2018-0321-0102.)

Response. After reviewing the comments received, EPA decided that it will not finalize the change to Gross Domestic Product (GDP) as an inflation index. Instead, EPA will amend the small manufacturer definition at 40 CFR 704.3 to use a five-year average of the PPI for Chemicals and Allied Products when determining if the small manufacturer definition warrants adjustment. EPA proposed the change to GDP because a GDP deflator is less volatile and is broader than the PPI for Chemicals and Allied Products, and therefore EPA believed it to be a better measure when considering an update to the revenue size standards in the proposed definition. While GDP is less volatile, EPA now recognizes that PPI for Chemicals and Allied Products is a better overall accounting of chemical manufacturers that would be subject to reporting under TSCA section 8(a) because it directly reflects the chemical manufacturing sector as opposed to the U.S. economy as a whole. By using a five-year average of PPI for Chemicals and Allied Products, EPA will be able to protect against volatility while continuing to account for the chemical manufacturers that fall under the small manufacturer definition.

6. Comment. Three commenters requested that EPA change the production volume modifier. Two commenters requested that EPA remove or raise the 100,000 lb production volume modifier used as part of the first standard for TSCA section 8(a) small manufacturer definition. Another commenter asked that EPA evaluate the impacts of decreasing the 100,000 lb production volume modifier. One commenter asked that EPA show “why 100,000 lbs. is an appropriate modifier and consult with the SBA on this threshold.” Additionally, the commenter asked that the Agency “consider a volume modifier with an employee-based standard.” One commenter stated that, with no change in the existing 100,000 lb modifier, the proposed increases of annual company sales thresholds are unlikely to provide regulatory relief from reporting for small scrap metal recyclers. The commenter further stated that while the 100,000 lb limit made sense when inorganic chemical substances were exempt from reporting (before 2003), the threshold has not made sense since inorganic chemical manufacturers became subject to reporting under IUR/CDR because inorganic chemicals are denser than organic chemicals and the production volume threshold is quickly reached. To support their public comments, the commenter provided excerpts from industry testimonies made during the 1975 Senate hearings on pending TSCA legislation. (Comment IDs: EPA-HQ-OPPT-2018-0321-0097, EPA-HQ-OPPT-2018-0321-0100, EPA-HQ-OPPT-2018-0321-0111).

Response. EPA disagrees that the production volume modifier should be changed (either raised or lowered) or that industry-specific modifiers should be developed. EPA has updated the revenue thresholds for the small manufacturer definition based on changes to the value of the U.S. dollar as a result of inflation. There is, however, no corresponding basis for adjusting the production volume modifier. In developing the initial small manufacturer standard, EPA included a production volume modifier to ensure that chemical substances manufactured or imported at high volumes were reported to EPA. The commenters have provided no support to indicate that the 100,000 lb threshold requires updating as a result of changes to the chemical manufacturing sector.

Regarding industry-specific modifiers, such as for the scrap metal industry, EPA believes that it would be difficult and resource intensive for EPA to establish, administer, and update industry- or chemical-specific modifiers that align with the 100,000 lb threshold. As stated in EPA's response to Comment 2, EPA does not feel it is appropriate to have small manufacturer standards that are differentiated by industry. Please see EPA's full response to Comment 2 for further discussion.

7. Comment. One commenter asked that EPA justify why EPA chose to “to round its inflation adjustment of the threshold by two significant figures—from $112 million to $110 million for the first standard and $11.2 to $11 million for the second standard.” (Comment ID: EPA-HQ-OPPT-2018-0321-0096.)

Response. EPA used two significant figures instead of three significant figures for the levels of the revenue standards. EPA does not consider the additional precision to be merited based on the type of information being used to make the inflation adjustment. The underlying data used for inflating the revenue standard does not support the use of more than two significant figures. Since proposing the updated small manufacturer definition, however, EPA has decided to use 2018$ as the basis for inflation rather than 2017$, to ensure that the definition is as up-to-date as possible at the time of finalization. EPA is basing the update of the current two-standard definition at 40 CFR 704.3 on inflation by adjusting the sales standard level for the first part from $40 million to $120 million (originally proposed as $110 million) and for the second part from $4 million to $12 million (originally proposed as $11 million).

8. Comment. EPA received one comment on statutory and executive order reviews. The commenter emphasized that tribal consultation under Executive Order 13175, and EPA's 1984 Indian Policy, should have been carried out by this rulemaking. (Comment ID: EPA-HQ-OPPT-2018-0321-0092)

Response. EPA disagrees that a tribal consultation was necessary for this rule. EPA stated in Unit VII.G of the proposed rule that this rule would not have tribal implications because it is not expected to 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 as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). EPA concluded that the impacts of the rule would not significantly nor uniquely affect the communities of tribal governments. Thus, EPA determined that Executive Order 13175 did not apply to this rule.

Even though EPA determined that Executive Order 13175 did not apply, EPA conducted tribal outreach on the TSCA Chemical Data Reporting Revisions and Small Manufacturer Definition Update for Reporting and Recordkeeping Requirements Under TSCA Section 8(a) from May 2019 through August 2019 to provide information to tribes on the proposed rule and to obtain feedback. Two nationwide outreach sessions were also conducted, and tribal comments were accepted through August 30, 2019. In addition, EPA developed supplemental background information to further explain the proposed actions to tribes. EPA previously responded to this comment in the Response to Public Comments for the TSCA Chemical Data Reporting Revisions for Reporting and Recordkeeping Requirements under TSCA Section 8(a) (Ref. 4).

9. Comment. One commenter requested that EPA “commit to updating the size standard threshold every time the inflation index has risen by 20% or more from the last adjustment.” The commenter points out that the proposed rule does not obligate EPA to update the small manufacturer definition. The commenter asks that EPA make future updates to the small manufacturer definition automatic. (Comment ID: EPA-HQ-OPPT-2018-0321-0096)

Response. EPA appreciates the comment but does not feel that such a commitment is necessary. While the updated small manufacturer definition at 40 CFR 704.3 does not establish a timeline or obligation for updating the small manufacturer definition in the future, the 2016 Amendments to TSCA require that EPA review the adequacy of the size standards no less than once every 10 years. The requirements under TSCA will lead to routine reevaluation of the small manufacturer definition under section 8(a). Committing to an automatic update, as requested, would bind EPA to making the adjustment when PPI changed 20% and would disallow any future flexibility. Instead, future updates to the small manufacture definition will follow the requirement at TSCA section 8(a)(3)(C), which require EPA to review the standards every ten years, in addition to changes in PPI. Other factors that EPA may consider include changes in SBA's definition, inflation, and other economic or global factors that may have impacted chemical manufactures. The factors EPA considers are made on a case-by-case basis. As required by TSCA, EPA will consult with SBA when updating the definition.

10. Comment. One commenter stated that with respect to the 93 fewer reporting sites, EPA did not show which part of the modified revenue definition applied. The commenter stated that “if all or the majority of the sites are now exempt due to the first standard of $11 million, the purpose of having a second prong is unclear.” (Comment ID: EPA-HQ-OPPT-2018-0321-0097).

Response. As stated in the economic analysis, the structure of the definition was designed for effective targeting of small manufacturers (Ref. 1). Note that the information from baseline conditions for this question is unmeasured ( i.e., CDR does not receive reports from these manufacturers). Nonetheless, not all sites that are exempted are expected to meet the conditions of the Second Standard of annual sales less than $12 million. EPA considered the increment of the changes in the proposed rule via the 93 fewer reporting sites (now calculated to be 127 using an updated analysis); EPA found that although a larger portion of sites incur exemption via the Second Standard compared to the First Standard, there is a non-trivial portion of sites that incur exemption via the First Standard (Refs. 3 and 4).

11. Comment. Two commenters specified that EPA needs to better determine the information loss resulting from a revised small manufacturer definition. One commenter stated that the “definition update would result in less data collected by EPA and thus less information available to the public on the chemical substances in their environment.” Another commenter said that EPA was not required to base the update to the small manufacturer definition on inflation but had the discretion to update the standards to best meet the goals of TSCA. Additionally, the commenter believes that “EPA has failed to evaluate whether and how the proposed standards will affect its ability to implement the law effectively, contrary to its Section 8 mandate.” Lastly, the commenter pointed out that updating the definition will have minimal economic benefits. (Comment IDs: EPA-HQ-OPPT-2018-0321-0092, EPA-HQ-OPPT-2018-0321-0100)

Response. EPA appreciates the comment but disagrees that EPA has not adequately evaluated the impacts of the updated small manufacturer definition. EPA, however, does agree that EPA was not required to base the update to the small manufacturer definition on inflation, yet EPA believes the decision to do so best meets the goals of TSCA. As shown in the Economic Analysis for the proposed rule (Ref. 2), EPA considered the impact the updated small manufacturer definition would have on the number of companies reporting, number of sites reporting, number of chemical reports received, number of chemicals in chemical reports, total volume of all chemicals in chemical reports, number of full reports, number of chemical reports received covering chemicals that are intended for products used by children, and the number of chemical reports received covering chemicals on the 2014 update to the TSCA Work Plan. EPA selected the last two parameters in particular as important data for effective implementation of TSCA.

Under CDR, manufacturers of chemicals with consumer uses must further identify whether a chemical is present in or on any product intended for use by children. EPA uses this information to inform its analysis of chemicals that are of concern due to their potential impact on children's health. The loss of such reporting would decrease the amount of information EPA has regarding chemicals used in children's products, which EPA has worked to retain while balancing relief to small manufacturers. Further, the 2014 update to the TSCA Work Plan plays an important role in the new prioritization and risk evaluation processes under TSCA (Ref. 5). TSCA requires that 50 percent of all chemical substances on which risk evaluations are conducted be drawn from the 2014 update to the TSCA Work Plan, meaning that EPA will need to draw at least 50 percent of High-Priority Substance candidates from that list. By operation of this statutory directive, all TSCA Work Plan chemicals will eventually be prioritized (82 FR 33753, July 20, 2017, FRL-9964-24). Information on manufacture, processing, and use of these chemicals through TSCA section 8(a) reporting will support prioritization and EPA's evaluations of these chemicals. The loss of chemical reports on Work Plan chemicals may affect the timeliness and quality of EPA's risk evaluations.

Lastly, EPA considered several approaches, including approaches by SBA and others, when amending the small manufacturer definition. The discussion is further documented in Appendix B of the Economic Analysis (Ref. 1). EPA considered alternative small business definitions used by U.S. Federal Government agencies, including other small business definitions used by EPA, with a focus on the purpose of the small business size standards and the approach used to establish them.

12. Comment. One commenter asked that the updated small manufacturer definition not apply to mercury reporting under CDR. This request was made because the mercury reporting rule promulgated by EPA on June 27, 2018 includes certain exemptions for persons who already report for mercury and mercury-added products to CDR (83 FR 30054). The commenter points out that EPA included this exemption because comparable data would be provided to EPA under the CDR rule. The commenter then states that this assumption may no longer be correct if EPA modifies the small manufacturer standards as proposed.

Response. EPA appreciates the comment. The first reporting cycle for the mercury inventory closed on July 1, 2019. The Agency is currently assessing data received in preparation for the statutory deadline for publishing the mercury inventory not later than April 1, 2020. The Agency is amenable to suggestions of ways to improve the reporting requirements related to mercury supply, use, and trade in the United States, and will take all comments under consideration for future program refinement.

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 included 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 https://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review under Executive Order 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011). Any changes made in response to OMB recommendations have been documented in the docket for this action as required by section 6(a)(3)(E) of Executive Order 12866.

EPA prepared an economic analysis of the potential costs, cost savings, and benefits associated with this action. A copy of the economic analysis, entitled Economic Analysis for Final Rule on the TSCA Section 8(a) Small Manufacturer Definition Update (Ref. 1), is available in the docket and is briefly summarized in Unit I.E.

This action is considered an Executive Order 13771 deregulatory action. Details on the estimated cost savings on this final rule can be found in the Economic Analysis.

This final rule does not impose a new or revised information collection activities, but the changes in the definitions impact the burden estimates associated with existing reporting and recordkeeping rules because the respondent universe changes. EPA has therefore submitted an addendum to the existing Information Collection Request (ICR) for approval to OMB under the PRA, 44 U.S.C. 3501 et seq. (Ref. 6). The existing ICR is identified under EPA ICR No. 1884.11 and approved under OMB Control No. 2070-0162. The ICR Addendum is identified under EPA ICR No. 1884.12, a copy of the ICR Addendum in the docket for this rule, and is briefly summarized here.

Respondents/affected entities: Entities potentially affected by this ICR include companies manufacturing (including importing) chemical substances listed on the TSCA Inventory and regulated under TSCA section 8.

Respondent's obligation to respond: Mandatory.

Estimated number of respondents: 5,660.

Frequency of response: Reporting under CDR occurs every four years. The next CDR collection will occur in 2020.

Total estimated burden: A reduction of 23,014 hours per year from the total burden currently approved. Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: A reduction of $1,760,578 per year, includes $0 annualized capital or operation and maintenance costs.

For TSCA section 8(a) reporting outside of CDR, including the TSCA section 8(a) Preliminary Assessment Information Rule (PAIR) (OMB control number 2070-0054) or any of the existing chemical specific TSCA section 8(a) rules, EPA did not estimate incremental burden and cost either because EPA has not received any chemical reports under those rules for an extended period of time, or because the rule uses a rule specific definition that is not being changed by this final rule. For these reasons, no change is expected in the impacted universe of respondents, respondent burden or respondent cost for the PAIR or other chemical specific TSCA section 8(a) rules and no ICR addendums in these cases are needed. The technical correction for hexafluoropropylene oxide also did not change the respondent universe, burden or cost that would need to be captured in an ICR addendum.

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. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9. When OMB approves this ICR addendum, the Agency will announce that approval in the Federal Register .

Pursuant to section 605(b) of the RFA, 5 U.S.C. 601 et seq., I certify that this action will not have a significant economic impact on a substantial number of small entities. The small entities subject to the requirements of this action are manufacturers and importers of chemical substances, including byproduct chemical substances, and are subject to either of the following: (1) Reporting under the TSCA Chemical Data Reporting (CDR) requirements at 40 CFR part 711 or (2) TSCA reporting and recordkeeping requirements at 40 CFR part 704 or other TSCA reporting requirements which reference the small manufacturer standards at 40 CFR 704.3. The Agency has determined that no currently exempt small manufacturers will become newly subject to any current TSCA section 8(a) rules under the new TSCA section 8(a) small manufacturer definition, because all manufacturers that are currently exempt will remain exempt under the final definition. Moreover, the updated definition allows exemptions for certain current reporters, thereby eliminating their reporting burden. EPA also notes that there are no adverse small entity impacts to small government entities because under the final rule, all entities defined as small for purposes of small government assessment are the same entities that are newly eligible to take the small government exemption and eliminate their CDR reporting burden entirely. A small amount of incremental burden will be incurred for rule familiarization and is less than 1% of revenues for each small parent company. Details of this analysis are presented in the Economic Analyses (Ref. 1).

This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and will not significantly or uniquely affect small governments. According to the information derived using the 2016 CDR, there are government entities that report to CDR, including: Seven municipalities, one county-level public utility district, and one tribal entity. However, under the changes finalized by this action, four of the municipalities will be exempt, with the remaining entities incurring a minimal average incremental burden and cost per site at about 0.1 hours and $8 per year, respectively. Consequently, impacts will not exceed $100 million for all governments.

In sum, the final rule is not expected to result in expenditures by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (when adjusted annually for inflation) in any one year. Accordingly, this final rule is not subject to the requirements of sections 202, 203, or 205 of UMRA.

This action will not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). Thus, Executive Order 13132 does not apply to this action.

This action will not have tribal implications because it is not expected to 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 as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). According to the information presented in the economic analysis for the TSCA section 8(a) small manufacturer definition update (Ref. 1), one tribal entity reported during the 2016 CDR collection. Under the final rule, this entity is estimated to incur a minimal average incremental burden and cost per site at about 0.5 hour and $36 per year, respectively. Consequently, EPA has concluded that the impacts of the final rule will not significantly or uniquely affect the communities of tribal governments. Thus, Executive Order 13175 does not apply to this final rule.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997), as applying to those regulatory actions that concern environmental health and safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.

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

Because 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 will not have high and adverse human health or environmental effects on minority populations, low-income populations, and/or indigenous peoples as specified in Executive Order 12898 (59 FR 7629, February 16, 1994).

The final rule is directed at manufacturers (including importers) of chemical substances. All consumers of these chemical products and all workers who come into contact with these chemical substances could benefit if data regarding the chemical substances' health and environmental effects were developed. Therefore, it does not appear that the costs and the benefits of the final rule will be disproportionately distributed across different geographic regions or among different categories of individuals.

Pursuant to the CRA (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule 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 . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I, subchapter R, is amended as follows:

NMFS manages the groundfish fishery in the BSAI according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2020 Alaska plaice ITAC in the BSAI is 14,450 metric tons (mt) as established by the final 2020 and 2021 harvest specifications for groundfish in the BSAI (85 FR 13553, March 9, 2020). In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2020 Alaska plaice ITAC in the BSAI has been reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 14,400 mt, and is setting aside the remaining 50 mt as incidental catch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Alaska plaice in the BSAI.

While this closure is effective the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of Alaska plaice to directed fishing in the BSAI. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of May 21, 2020.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.