Animal and Plant Health Inspection Service
Food and Nutrition Service
Census Bureau
Industry and Security Bureau
International Trade Administration
National Oceanic and Atmospheric Administration
Army Department
Engineers Corps
Federal Energy Regulatory Commission
Agency for Healthcare Research and Quality
Centers for Disease Control and Prevention
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Coast Guard
U.S. Customs and Border Protection
Fish and Wildlife Service
Indian Affairs Bureau
National Park Service
Alcohol, Tobacco, Firearms, and Explosives Bureau
Employment and Training Administration
Federal Aviation Administration
Federal Motor Carrier Safety Administration
Pipeline and Hazardous Materials Safety Administration
Bureau of the Fiscal Service
Comptroller of the Currency
Foreign Assets Control Office
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes seven new high altitude area navigation (RNAV) routes (Q-routes), and modifies one existing Q-route, in support of the Northeast Corridor Atlantic Coast Route (NEC ACR) Project. This action improves the efficiency of the National Airspace System (NAS) by expanding the availability of RNAV routing and reducing the dependency on ground-based navigational systems.
Effective date 0901 UTC, September 10, 2020. The Director of the Federal Register approves this incorporation by reference action under Title 1 Code of Federal Regulations part 51, subject to the annual revision of FAA, Order 7400.11 and publication of conforming amendments.
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Paul Gallant, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it supports the air traffic service route structure in the eastern United States to maintain the efficient flow of air traffic.
The FAA published a notice of proposed rulemaking for Docket No. FAA-2020-0236 in the
As the NPRM was published, the United States was undergoing the effects of the world-wide COVID-19 pandemic. The restrictions imposed to confront the pandemic impacted the ability of air traffic control facilities to conduct the required air traffic controller training to implement these routes, including required classroom and simulator training. The FAA determined that training to implement all 32 routes addressed in the NPRM could not be accomplished in the near-term.
As a result, the FAA is limiting the scope of this rule to establishing the following seven Q-routes: Q-119, Q-127, Q-129, Q-220, Q-430, Q-439, and Q-450; and amending the existing route: Q-480. The descriptions of these routes are the same as proposed in the NPRM. The remaining routes contained in the NPRM are removed from this rule and will be addressed by separate rulemaking action at a later date.
Area navigation routes are published in paragraph 2006, of FAA Order 7400.11D dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The area navigation routes listed in this document will be subsequently published in the Order.
This document amends FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
The FAA is amending Title 14, Code of Federal Regulations (14 CFR) part 71 by establishing seven new Q-routes, and amending one existing Q-route, in the eastern United States to support the Northeast Corridor Atlantic Coast Route project. The new routes are designated: Q-119, Q-127, Q-129, Q-220, Q-430, Q-439, and Q-450. In addition, amendments are made to the description of Q-480.
The new Q-routes are described as follows:
The amended Q route is described as follows:
Full route descriptions of the proposed new and amended routes are listed in “The Amendment” section of this rule.
The new and amended routes expand the availability of high altitude RNAV routing along the eastern seaboard of the U.S. The project is designed to increase airspace capacity and reduce complexity in high volume areas through the use of optimized routes through congested airspace.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action of establishing seven high altitude RNAV routes (Q routes), and amending one Q route qualifies for a categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F—Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to cause any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, this action has been reviewed for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis, and it is determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Federal Aviation Administration (FAA), DOT.
Final rule.
This amendment adopts miscellaneous amendments to the required IFR (instrument flight rules) altitudes and changeover points for certain Federal airways, jet routes, or direct routes for which a minimum or maximum en route authorized IFR altitude is prescribed. This regulatory action is needed because of changes occurring in the National Airspace System. These changes are designed to provide for the safe and efficient use of the navigable airspace under instrument conditions in the affected areas.
Effective 0901 UTC, July 16, 2020.
Thomas J. Nichols, Flight Procedures and Airspace Group, Flight Technologies and Procedures Division, Flight Standards Service, Federal Aviation Administration. Mailing Address: FAA Mike Monroney Aeronautical Center, Flight Procedures and Airspace Group, 6500 South MacArthur Blvd., Registry Bldg. 29, Room 104, Oklahoma City, OK 73125. Telephone: (405) 954-4164.
This amendment to part 95 of the Federal Aviation Regulations (14 CFR part 95) amends, suspends, or revokes IFR altitudes governing the operation of all aircraft in flight over a specified route or any portion of that route, as well as the changeover points (COPs) for Federal airways, jet routes, or direct routes as prescribed in part 95.
The specified IFR altitudes, when used in conjunction with the prescribed changeover points for those routes, ensure navigation aid coverage that is adequate for safe flight operations and free of frequency interference. The reasons and circumstances that create the need for this amendment involve matters of flight safety and operational efficiency in the National Airspace System, are related to published aeronautical charts that are essential to the user, and provide for the safe and efficient use of the navigable airspace. In addition, those various reasons or circumstances require making this amendment effective before the next scheduled charting and publication date of the flight information to assure its timely availability to the user. The effective date of this amendment reflects those considerations. In view of the close and immediate relationship between these regulatory changes and safety in air commerce, I find that notice and public procedure before adopting this amendment are impracticable and contrary to the public interest and that good cause exists for making the amendment effective in less than 30 days.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Airspace, Navigation (air).
Issued in Washington, DC, on June 12, 2020.
Accordingly, pursuant to the authority delegated to me by the Administrator, part 95 of the Federal Aviation Regulations (14 CFR part 95) is amended as follows effective at 0901 UTC, July 16, 2020.
49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44719, 44721.
Consumer Product Safety Commission.
Final rule.
Pursuant to the Consumer Product Safety Improvement Act of 2008 (CPSIA), the U.S. Consumer Product Safety Commission (CPSC) is issuing this final rule establishing a safety standard for gates and enclosures that are intended to confine a child. The CPSC is also amending its regulations regarding third party conformity assessment bodies to include the safety standard for gates and enclosures in the list of notices of requirements (NORs).
This rule will become effective July 6, 2021. The incorporation by reference of the publication listed in this rule is approved by the Director of the Federal Register as of July 6, 2021.
Justin Jirgl, Compliance Officer, U.S. Consumer Product Safety Commission, 4330 East West Highway, Bethesda, MD 20814; telephone: 301-504-7814; email:
Section 104(b) of the CPSIA, part of the Danny Keysar Child Product Safety Notification Act, requires the Commission to: (1) Examine and assess the effectiveness of voluntary consumer product safety standards for durable infant or toddler products, in consultation with representatives of consumer groups, juvenile product manufacturers, and independent child product engineers and experts; and (2) promulgate consumer product safety standards for durable infant and toddler products. Standards issued under section 104 of the CPSIA are to be “substantially the same as” the applicable voluntary standards or more stringent than the voluntary standard, if the Commission determines that more stringent requirements would further reduce the risk of injury associated with the product.
The term “durable infant or toddler product” is defined in section 104(f)(1) of the CPSIA as “a durable product intended for use, or that may be reasonably expected to be used, by children under the age of 5 years,” and the statute specifies 12 categories of products that are included in the definition. Section 104(f)(2)(E) of the CPSIA specifically identifies “gates and other enclosures for confining a child” as a durable infant or toddler product. Additionally, the Commission's regulation requiring product registration cards defines “gates and other enclosures for confining a child” as a durable infant or toddler product subject to the registration card rule. 74 FR 68668 (Dec. 29, 2009); 16 CFR 1130.2(a)(5).
As required by section 104(b)(1)(A) of the CPSIA, the Commission consulted with manufacturers, retailers, trade organizations, laboratories, consumer advocacy groups, consultants, and the public to develop this rule, largely through ASTM's standard development process. On July 8, 2019, the Commission issued a notice of proposed rulemaking (NPR) for gates and enclosures.
Since publication of the NPR, CPSC staff has continued to work with the ASTM subcommittee on gates and enclosures on visual side-pressure indicators and a separate warning label, as outlined in the NPR. Although the ASTM standard has not yet been updated, the ASTM subcommittee is moving forward to include a separate warning label (for pressure-mounted gates that rely on the use of wall cups to meet the 30-pound push-out force test), and has started moving forward to include visual side-pressure indicators (for pressure-mounted gates that do not use wall cups to meet the 30-pound push-out force test) to improve correct installation of pressure-mounted gates. Accordingly, for the final rule setting a safety standard for gates and enclosures, the Commission incorporates by reference ASTM F1004-19, with the following additional requirements, depending on the design of a pressure-mounted gate, to further reduce the risk of injury associated with incorrectly installed pressure-mounted gates:
(1) For pressure-mounted gates that include wall cups with the product to meet the 30-pound push-out force test,
(2) For pressure-mounted gates that do not use wall cups to meet the 30-pound push-out force test, the gates must use visual side-pressure indicators to provide consumers feedback as to whether the gate is correctly installed.
Under section 14 of the CPSA, the Commission promulgated 16 CFR part 1112 to establish requirements for accreditation of third party conformity assessment bodies (or testing laboratories) to test for conformity with a children's product safety rule. The final rule amends the list of notices of requirements (NORs) issued by the Commission in 16 CFR part 1112 to include the safety standard for gates and enclosures.
CPSC staff's briefing package supporting this rule (Staff's Final Rule Briefing Package), is available at:
ASTM F1004-19 defines an “expansion gate” as a “barrier intended
Although the title of the ASTM F1004-19 standard and its definitions include the word “expansion” and “expandable” before the words “gate” and “enclosure,” respectively, the scope of the ASTM F1004-19 standard includes all children's gates and enclosures, whether they expand or not. ASTM F1004-19 covers: “[p]roducts known as expansion gates and expandable enclosures,
CPSC staff's review of enclosures shows that all enclosures are expandable. Staff's review of gates showed that there are some non-expandable, fixed-sized gates available for sale.
This final rule addresses all children's gates and enclosures intended for confining a child, including non-expandable, fixed-sized gates and enclosures. The scope of the rule includes all products within ASTM F1004-19.
Gates and enclosures may be made of a wide range of materials: Plastic, metal, wood, cloth, mesh, or combinations of several materials. Gates typically have a means of egress that allows adults to pass through them, but some enclosures also have a means of egress (
Approximately 127 firms supply gates and enclosures to the U.S. market. The majority of suppliers to the U.S. market are domestic, including domestic importers of gates manufactured elsewhere. About 80 very small, home-based domestic gate manufacturers exist, as well as 37 domestic entities that are considered small based on the U.S. Small Business Administration (SBA) guidelines. The remaining 10 suppliers that are not small domestic businesses include four large domestic firms and six foreign firms. In 2013, approximately 11.1 million gates/enclosures were in use in U.S. households with children under the age of 6, according to the CPSC's 2013 Durable Nursery Product Exposure Survey (DNPES).
Gates and enclosures vary widely in price. Consumers can purchase simple plastic or wooden pressure-mounted gates for as little as $10, while hardware-mounted gates with multiple extensions, and gates intended for daycare use, can cost as much as $700. Most gates retail for $25 to $200. Retail prices for enclosures and modular products that can operate as an enclosure or a gate range from $60 to $550. Fabric gates made by home-based manufacturers typically cost under $50, while custom-made wooden gates by home-based manufacturers can run more than $500 for gates with solid hardwood panels and decorative metal elements. Pressure-mounted gates, particularly hard plastic-molded gates, tend to be the least expensive gates and are sometimes marketed as travel gates. Hardware-mounted gates tend to be slightly more expensive than pressure-mounted gates, although there are many hardware-mounted gates available for less than $40.
The least expensive pressure-mounted gates are a popular choice with consumers, but price may not be the predominant criterion for many customers. Out of several hundred models of gates available on the site of one prominent internet retailer in January 2020, the 10 best-selling baby safety gates ranged in price from $12 to $85. On another major big box store website, the top 10 best-selling gates ranged in price from $17 to $100. In both cases, the best-selling gates included hardware-mounted gates and pressure-mounted gates. All of the best-selling gates were from suppliers that currently claim both ASTM compliance and JPMA certification.
CPSC staff reviewed incident data associated with children's gates and enclosures as reported through the Consumer Product Safety Risk Management System (CPSRMS).
Staff also reviewed national injury estimates, discussed below in III.B of this preamble.
The NPR stated that the Commission was aware of 436 incidents in the CPSRMS data, including 108 reported injuries and 19 reported fatalities
The Commission is aware of 22 deaths that occurred between January 1, 2008 and January 7, 2020. The NPR discussed 19 deaths, stating that 17 of the deaths were associated with the use of a gate, while two were associated with an enclosure. Fifteen of the 19 decedents discussed in the NPR drowned, 13 in a backyard pool, one in a backyard hot tub, and one in a 5-gallon bucket of water inside the house. In these incidents, the decedents managed to get past the gate/enclosure when it was left open or somehow was opened without the caregiver's knowledge (10 incidents); the gate/enclosure was knocked down or pushed out by the decedent because of incorrect or unsecured installation (4 incidents); or the decedent climbed over the gate/enclosure (1 incident). The decedents ranged in age from 9 months to 3 years. 84 FR at 32347.
CPSC staff identified three additional fatal incidents since the NPR, reported to have occurred during the period November 1, 2018 to January 7, 2020. All three incidents involved a gate. The new fatalities include: A 2-year-old who drowned after climbing out of a crib, knocking over a baby gate, pushing open a living room door, and gaining access to an in-ground pool; a 23-month-old who suffocated in a gate opening while attempting to climb out of a crib after a baby gate was placed over the crib; and a 2-year-old who suffered asphyxiation after her neck was caught between a baby gate, fabric sheet, and door frame.
The NPR described 417 nonfatal incidents, and CPSC is aware of an additional 39 nonfatal incidents since the NPR, for a total of 456 nonfatal incidents that reportedly occurred between January 1, 2008 and January 7, 2020. Of the total 456 nonfatal incidents reported, 134 incidents described an injury to a child younger than 5 years of age.
The NPR stated that three of the nonfatal injuries reportedly required hospitalization and two additional injuries needed overnight observation at a hospital. Among the hospitalized were a 2-year-old and an 18-month-old, who each suffered a near-drowning episode, and another 2-year-old ended up in a coma following a fall when she pushed through a safety gate at the top of stairs. Of the two children who were held at a hospital for overnight observation, one fell down stairs when a safety gate collapsed, and the other swallowed a bolt or screw that liberated from a gate. 84 FR at 32347-48. Since the NPR, CPSC is not aware of any additional hospitalizations associated with the use of gates or enclosures.
The NPR stated that 15 additional children were reported to have been treated and released from a hospital emergency department (ED). Their injuries included: (a) Finger fractures, amputations, and/or lacerations usually from a finger getting caught at the hinge; and (b) near-drowning, poison ingestion, arm fracture, thermal burn, head injury, or contusions.
Among the remaining injury reports described in the NPR, some specifically mentioned the type of injury, while others only mentioned an injury, but no specifics about the injury. Head injuries, concussions, teeth avulsions, sprains, abrasions, contusions, and lacerations were some of the common injuries reported at the time of the NPR.
The remaining 344 nonfatal incidents associated with gates and enclosures that occurred from January 1, 2008 through January 7, 2020, reported that no injury had occurred to a child younger than 5 years of age, or provided no information about any injury. However, staff found that many of the incident descriptions indicated potential injury or death resulting from sharp edges, pinching, falls, entrapments, and choking.
CPSC staff also reviewed injury estimates from the National Electronic Injury Surveillance System (NEISS), a statistically valid injury surveillance system.
Staff found no recorded fatalities in NEISS. Ninety-five percent of children who went to a hospital ED were treated and released. The breakdown by age in the NEISS data indicates: 18 percent of all children were under 1 year old; 40 percent were at least 1 year old, but less than 2 years old; and 42 percent were more than 2 years old, but less than 5 years old. Due to the limited information from NEISS injury descriptions, which are brief and injury-focused, staff could not feasibly characterize hazard patterns similar to the characterization provided in section IV of this preamble for CPSRMS incident data. Based on the limited information provided, staff found the most frequent NEISS injury characteristics:
•
○ When a child attempted to climb over or get through a barrier;
○ when a child managed to unlatch a gate/enclosure;
○ when a gate failed to stay upright and locked;
○ when a child-carrying-adult tripped over a gate/enclosure; or
○ when a child pulled on a gate/enclosure.
•
•
In the NPR briefing package, staff reviewed the CPSRMS data and identified hazard patterns for the 436 reported incidents (19 fatal and 417 nonfatal) associated with the use of safety gates and enclosures. For the final rule, staff reviewed and incorporated the additional 42 incidents found in the CPSRMS data since the NPR, for a total of 478 reported incidents (22 fatal and 456 nonfatal, including 112 reported injuries) associated with the use of gates and enclosures that occurred from January 1, 2008 to January 7, 2020. Staff found that the hazard patterns largely followed those described in the NPR, except no new incidents were identified in the following categories:
•
○ Lock/latch hardware (
○ hinge hardware (mostly breaking and causing the gate to fall off);
○ mounting hardware (mostly breaking and causing gate to fall off); or
○ other hardware, such as a slide guide, or a swing-control clip, breaking or coming loose, or a suction cup coming loose.
These hardware failures were associated with 39 injuries, including bruises, contusions, lacerations, head injuries, and two fractures; five of the injuries were treated in a hospital ED, and one needed overnight observation at a hospital.
•
•
•
○ Opening sizes between slats or enclosure panels that allowed, or could allow, entrapment of a child's limb or head;
○ pinch-points created near an L-shaped clasp on a gate, and during the sliding action of a door on a gate or enclosure;
○ a specific design, which created a foot-hold that a child could use to climb over the safety gate;
○ a specific design that posed a trip hazard when the gate was in the open position;
○ a gate's retraction system, where the gate fails to retract correctly after installation;
○ drilled holes used for connecting gates, which allowed plastic shavings to accumulate; or
○ a specific design involving rails at the bottom of a gate at several different heights, posing a trip hazard.
Staff identified 21 injuries and one death in this category. The injuries included swollen or pinched fingers from inserting them into openings of a gate; three fractures of the finger and one severed fingertip, all treated at a hospital ED. The death resulted from entrapment in a gate, fabric sheet, and door frame.
•
○ Unclear installation instructions;
○ mismatched dimensions between the safety gate and the doorway/hallway opening; or
○ unknown reasons; in these cases, the gate/enclosure was reported to have been installed, but was “pushed out,” “pulled down,” or “knocked down.”
Five drowning fatalities were reported in this category. In addition, staff identified four nonfatal injuries: One a hospitalization of a comatose child; another child treated and released from a hospital ED following a near-drowning episode; and the remaining two, relatively minor laceration/contusion injuries.
•
•
•
Twelve of the 478 incident reports (3%) described non-product-related issues, such as incorrect use of the product, or the child managing to bypass the barrier altogether. Specifically:
• Four incidents reported the child climbing over the gate/enclosure;
• Three incidents reported caregiver missteps allowing the gate/enclosure not to be secured in place;
• Four incidents reported misuse of gates in a hazardous manner; and
• One report involving a gate previously repaired/modified and structurally compromised.
Nine deaths are included in this category: Four due to drowning, four due to entrapments, and one due to a TV tip over. Among the three injuries, one required hospitalization following a near-drowning episode, and one fractured arm was treated at a hospital ED; the third injury was a forehead concussion.
For 13 of the 478 incident reports (3%), staff had insufficient information on the scenario-specific details to
For the NPR, CPSC staff reviewed recalls involving children's gates and enclosures from January 2008 to December 2018. 84 FR at 32349. During that period, CPSC announced five recalls involving baby gates and one recall involving an enclosure. More than 1 million units (1,318,180), associated with 215 incidents and 13 injuries were recalled for the following hazards to children: Fall, entrapments, tripping, and lacerations. No additional recalls involving gates or enclosures have occurred since December 2018.
The voluntary standard for gates and enclosures was first approved and published in 1986 (ASTM F1004-86,
Beginning in 2014, CPSC staff worked closely with ASTM to address identified hazards and to strengthen the voluntary standard and improve the safety of children's gates and enclosures in the U.S. market. ASTM made revisions through several versions of the standard (ASTM F1004-15, ASTM F004-15a, ASTM F1004-16, ASTM F1004-16a, ASTM F1004-16b, and ASTM F1004-18) to address hazards associated with bounded openings, slat breakage/slat connection failures, mounting/hinge hardware issues, latch/lock failures, pressure gate push-out forces, and warning labels and instructions.
ASTM F1004-19 includes the following key provisions: Scope (section 1), Terminology (section 3), General Requirements (section 5), Perfomance Requirements (section 6), Test Methods (section 7), Marking and Labeling (section 8), and Instructional Literature (section 9).
•
•
•
•
•
•
•
•
•
•
•
•
• All gates and enclosures must include warnings on the product about the risk of serious injury or death when a product is not installed securely, must warn the consumer to never use the gate with a child who is able to climb over or dislodge the gate, and to never use the gate to prevent access to a pool.
• Pressure-mounted gates with a single-action locking mechanism on one side of the gate must include the following warning: “Install with this side AWAY from child.”
• Enclosures with locking or latching mechanisms must include the following warnings: “Use only with the [locking/latching] mechanism securely engaged.”
• Gates that do not pass the push-out test requirements without the use of wall cups must include the following warning on the product: “You MUST install wall cups to keep gate in place. Without wall cups child can push out and escape.”
The NPR discussed CPSC staff's review of two international standards that address gates and enclosures (1) the European Standard, EN 1930:2011/A1 Child use and care articles—Safety barriers—Safety requirements and test methods; and (2) Canadian regulation, SOR/2016-179 Expansion Gates and Expandable Enclosures Regulations (the Canadian regulation refers to an outdated 1986 version of ASTM F1004 which has been superseded by recent versions). 84 FR at 32352. In comparing these two international standards to ASTM F1004-19, staff determined that ASTM F1004-19 is adequate, or more stringent than, the international standards in addressing the hazard patterns identified in the incident data associated with gates and enclosures.
For the NPR, the Commission stated that the current voluntary standard, ASTM F1004-19, adequately addresses many of the general hazards associated with the use of children's gates and enclosures, such as wood parts, sharp points, small parts, lead in paint, scissoring, shearing, pinching, openings, exposed coil springs, locking and latching, and protective components. 84 FR at 32350. Additionally, in the NPR, the Commission stated that the performance requirements and test methods in ASTM F1004-19 adequately address most of the primary hazard patterns identified in the incident data, except for consumer awareness of whether a pressure-mounted gate is installed correctly.
Installation problems are associated with 21 incidents (4%), including five drowning fatalities. The CPSC incident data show that incidents occurred when: A product included unclear instructions; mismatched dimensions between a gate and the opening it was
The Commission will finalize the rule with two alternative requirements, depending on whether wall cups are necessary to meet the 30-pound push-out force test, to address the hazards associated with incorrect installation of pressure-mounted gates. The two alternative requirements specify that: (1) For gates that use wall cups, a separate warning label in a conspicuous location on the top rail of the gate regarding correct installation using wall cups; or (2) for gates that do not use wall cups, visual side-pressure indicators to provide consumers feedback about whether the gate is installed correctly.
ASTM F1004-19 currently requires a warning statement about the hazard of installing gates without wall cups: “You MUST install wall cups to keep the gate in place. Without wall cups, child can push out and escape.” This warning statement is included within the general warning label, which can have as many as six different required messages in one location. However, the use of wall cups to meet the 30-pound push-out force test, and thus, to improve safety, relies on consumers actually installing the wall cups. To improve the likelihood that consumers will follow directions and heed the associated warning label, the location of the label is important. Installation-related incidents with pressure-mounted gates include deaths and serious injuries, and wall cups are critical features that are necessary for correct installation of some pressure-mounted gates. Accordingly, throughout the consultation process, CPSC staff consistently recommended that ASTM consider locating the pressure-gate/push-out warning as a separate and distinct warning positioned in a highly conspicuous location, such as along the top rail of the gate. A top-rail location would be within the caregiver's line of sight and oriented in a readable direction during normal use of the gate.
In the NPR, staff indicated that further collaboration with stakeholders at ASTM could result in moving the wall cup warning language from its current location. Currently, the wall cup warning language is mixed in with the other warning statements. Staff suggested moving the warning language to a place where the warning is highly conspicuous, separate, and distinct, such as a place along the top rail of the gate that is visible to a caregiver operating the gate. However, no task group or subcommittee meetings occurred between June 2019 and December 2019, nor did ASTM issue a ballot regarding the wall cap warning language. In December 2019, CPSC staff sent a letter
To further reduce the risk of injury associated with incorrectly installed pressure-mounted gates, the final rule requires that pressure-mounted gates that rely on wall cups to meet the 30-pound push-out force requirement, must also place a warning regarding installation of wall cups along the top rail of the gate, separate and distinct from other warnings. The wording of this requirement in the final rule harmonizes with the ASTM ballot F15 (20-04), Item 6.
Before the NPR, CPSC staff presented a series of recommendations to the F15.16 subcommittee to improve the installation of pressure-mounted gates, including improvements to the push-out test, and potentially using visual indicators to inform caregivers when a pressure-mounted gate is installed securely. Leading up to the NPR, the subcommittee made the recommended improvements in the standard to the push-out test, in addition to requiring that all gates (including pressure-mounted gates) meet 30 pounds of push-out resistance. Although some pressure-mounted gates are capable of meeting 30 pounds of push-out resistance without wall cups when they are installed correctly, most pressure-mounted gates likely will use wall cups. CPSC staff testing found that ASTM F1004-19 requires gates that use wall cups to come with the wall cups and other mounting hardware. As stated above in IV.A, the final rule will also require these gates to place a warning label along the top rail regarding the importance of installing wall cups.
However, for pressure-mounted gates that do not rely on wall cups to meet the 30-pound push-out force test, ASTM F1004-19 contains no requirement to provide feedback to the end consumer to indicate whether the gate is installed correctly. Instructions for pressure-mounted gates without wall cups provide little or no clear direction to help consumers know when the gate is installed correctly, or that it stays in place after several uses. For example, gates currently on the market may instruct the consumer to adjust until secure, or to push the gate to
Staff testing and analysis, discussed in detail in Staff's NPR Briefing Package, Tab C, and Staff's Final Rule Briefing Package, Tab B, suggest that visual
In a letter dated December 11, 2019,
On March 10, 2020, the task group met to discuss the draft ballot proposal. Task group discussion centered on the testability of the visual side-pressure indicator performance requirement for pressure-mounted gates. The task group meeting concluded with the task group chair agreeing to revise the proposed ballot language to address member concerns and to resend the proposed ballot language to the task group for review. On April 2, 2020, CPSC staff received a draft proposal from the task group chair. On April 22, 2020, the task group chair recirculated the same draft. On April 23, 2020, the task group chair indicated his intention to ballot the proposal, unless there were significant comments from the task group necessitating another meeting. CPSC staff is unaware of any further comment.
After reviewing the revised ballot language for visual side-pressure indicators, CPSC staff concluded that the proposed language adequately addresses staff's concerns and provides a visual indicator of whether a pressure-mounted gate that does not use wall cups to meet the 30-pound push-out force test is installed securely. The Commission agrees, and anticipates that ASTM will ballot this requirement within the next few months to incorporate into ASTM F1004. Accordingly, to further reduce the risk of injury associated with incorrect installation of pressure-mounted gates, the draft final rule requires that pressure-mounted gates that do not use wall cups, to meet the 30-pound push-out force test, must include visual side-pressure indicators to inform caregivers that the gate is installed securely. The language for this requirement in the final rule harmonizes with the ASTM task group draft language circulated April 22, 2020.
CPSC received three comments on the NPR.
The Commission concludes that ASTM F1004-19 adequately addresses the hazards associated with gates and enclosures, except for consumer awareness about whether pressure-mounted gates are installed correctly. Thus, for the final rule on safety standards for gates and enclosures, the Commission incorporates by reference ASTM F1004-19, with the addition of the following two alternative requirements to provide consumers with additional information about correct installation of pressure-mounted gates, to further reduce the risk of injury associated with the use of pressure-mounted gates:
(1) For pressure-mounted gates that include wall cups with the product to meet the 30-pound push-out force test, the gates must include a separate warning label in a conspicuous location on the top rail of the gate regarding correct installation using wall cups; or
(2) For pressure-mounted gates that do not use wall cups to meet the 30-pound push-out force test, the gates must use visual side-pressure indicators to provide consumers with feedback on whether the gate is installed correctly.
Section 1239.2(a) of the final rule provides that each gate and enclosure must comply with applicable sections of ASTM F1004-19. The Office of the Federal Register (OFR) has regulations concerning incorporation by reference. 1 CFR part 51. For a final rule, agencies must discuss in the preamble to the rule the way in which materials that the agency incorporates by reference are reasonably available to interested persons, and how interested parties can obtain the materials. Additionally, the preamble to the rule must summarize the material. 1 CFR 51.5(b).
In accordance with the OFR's requirements, section V.B of this preamble summarizes the provisions of ASTM F1004-19 that the Commission is incorporating by reference. ASTM F1004-19 is copyrighted. Before the effective date of this rule, you may view a copy of ASTM F1004-19 at:
The Administrative Procedure Act (APA) generally requires that the effective date of a rule be at least 30 days after publication of the final rule. 5 U.S.C. 553(d). CPSC generally considers 6 months to be sufficient time for suppliers of durable infant and toddler products to come into compliance with a new standard under section 104 of the CPSIA. Six months is also the period that the Juvenile Products Manufacturers Association (JPMA) typically allows for products in
We received one comment from a trade association asking for a 12-month effective date, stating that many of its members would require “significant design changes” and need time to make these changes. The 30-pound push-out force test was added to the ASTM standard in June 2019, and CPSC's NPR published in July 2019. Therefore, manufacturers of gates and enclosures have already had almost 12 months to address the push-out force requirements in ASTM F1004-19. However, the final rule also includes two alternative requirements to provide consumers with information or feedback on the correct installation of pressure-mounted gates. Additionally, staff advises that most of the companies selling gates and enclosures are small businesses that may need more time to redesign and test their gates to address the push-out force requirement, or work with their suppliers to purchase compliant products. For these reasons, the Commission will set a 12-month effective date for the final rule.
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires that agencies review a proposed rule and a final rule for the rule's potential economic impact on small entities, including small businesses. Section 604 of the RFA generally requires that agencies prepare a final regulatory flexibility analysis (FRFA) when promulgating final rules, unless the head of the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Staff prepared a FRFA that is available at Tab D of Staff's Final Rule Briefing Package.
Based on staff's analysis, the Commission concludes that there would not be a significant economic impact on the 23 small suppliers of compliant gates and enclosures. The Commission also expects that the impact on noncompliant suppliers will not be significant for the nine firms that have a diversified product line, or whose gates and enclosures already meet most of the requirements of the standard. However, the Commission concludes that there could be a significant economic impact on five suppliers of noncompliant gates and enclosures. Additionally, staff concludes that it is likely that all 80 of the very small, home-based suppliers will be significantly impacted, and compliance with the mandatory standard will require them to stop selling gates altogether. We provide a summary of the FRFA below.
Section II.B of this preamble describes the market, including a summary of retail prices, for gates and enclosures. The Durable Nursery Products Exposure Survey (DNPES) found that a slight majority (52%) of U.S. households with children under age 6 have a gate or enclosure in their home, with many households owning more than one gate, and about 11.1 million baby gates and enclosures in use in 2013.
Staff identified 127 firms supplying gates and enclosures to the U.S. market. The majority of suppliers to the U.S. market are domestic, including domestic importers of gates manufactured elsewhere. About 80 very small, home-based domestic manufacturers sell gates.
Approximately 80 very small, home-based manufacturers supply gates to the U.S. market. Most, if not all, of these gates would probably require substantial modifications to comply with the final rule; and staff expects that these firms will stop selling gates. These firms typically sell fewer than 100 items per year, including products other than gates. About 10 home-based manufacturers sell more than 500 items per year, including, but not limited to, gates. About six manufacturers sell fabric gates; the rest sell wooden or wooden and metal gates. Because of the cost of redesigning gates, and/or testing for compliance with the final rule, staff assumes that most of these sellers will stop selling gates when the rule becomes effective.
Staff states that small, home-based manufacturers could re-label their gates as pet gates, thus, reducing the economic impact of this rule. Online reviews of pet gates and child gates show that some parents are already purchasing pet gates for child use, while pet owners are buying child gates for pet use. However, because customers seeking to purchase baby gates will not necessarily consider buying a pet gate instead of a child gate, staff concludes that the impact would likely still be economically significant.
Currently, 14 of the small domestic manufacturers produce gates or enclosures that comply with the previous version of the standard, ASTM F1004-18.
Moreover, the final rule's change in warning label location, for gates that use wall cups to meet the 30-pound push-out force test, and the requirement for visual side-pressure indicators for gates that do not use wall cups to comply with the 30-pound push-out force test, only apply to pressure-mounted gates. Some manufacturers only supply hardware-mounted gates, or have hardware gates as most of their product line. Other manufacturers sell pressure-mounted gates with wall cups supplied, so these manufacturers would only need to change the label. Some manufacturers already sell gates with visual side-pressure indicators.
Four small domestic manufacturers produce gates and enclosures that do not comply with the ASTM standard. Staff does not expect the costs of any product changes to comply with requirements for instruction manuals and labeling to be significant for any of these firms, because they already have instruction manuals and warning labels. All four of these manufacturers appear to be familiar with at least some aspects of safety requirements for durable nursery goods, including testing for compliance. Two manufacturers were compliant with earlier versions of the ASTM standard for gates and enclosures; one manufacturer claims compliance to CPSIA section 101 and 108; and one firm manufactures other products that comply with relevant ASTM standards for durable nursery products.
For the two manufacturers of noncompliant enclosures, staff does not expect that third party testing costs will exceed 1 percent of revenue, because these two manufacturers have millions of dollars in revenue; they already certify compliance with other ASTM standards; and they have few gate or enclosure models in their product lines. For the other two small domestic manufacturers of noncompliant gates and enclosures, the impact may be significant. One of the small manufacturers makes only pressure-mounted gates, although the option for wall cups could make it relatively inexpensive for that firm to achieve compliance without significant redesign. The other manufacturer sells noncompliant gates and enclosures as most of their product line, sells both hardware-mounted and pressure-mounted gates, and some of the gates and enclosures appear to require redesign to meet the standard. If this manufacturer redesigns their product, the cost could be significant.
Staff identified nine gate/enclosure importers currently in compliance with ASTM F1004-18. Staff expects these firms, like small manufacturers of compliant gates and enclosures, to be in compliance with ASTM F1004-19 before the draft final rule becomes effective. Therefore, staff does not expect the economic impact to be significant for any of the importers with compliant gates or enclosures. Any third party testing costs for importers of compliant gates and enclosures would be limited to the incremental costs associated with third party testing over their current testing regime.
Staff identified 10 small importers of noncompliant gates and enclosures. Seven of these firms sell many other products. Thus, dropping gates and enclosures from their product line or finding a new supplier could have a relatively minor impact on their total revenue. Most of the noncompliant gates and enclosures already have some warning labels and instruction manuals; and some claim to be tested for lead, phthalates, and BPA. Therefore, staff concludes that the costs of third party testing to demonstrate compliance could be minimal as a percentage of sales. Staff also finds that it may be possible for these importers to find new suppliers of compliant gates and enclosures.
Several importers of noncompliant gates sell gates with multiple extensions. The ASTM standard requires that gates with extension panels must be compliant in any of the manufacturer's recommended use positions. Staff acknowledges that this could increase testing costs. Accordingly, staff believes it likely that these firms will stop selling gates with more than two extensions. Gates for these importers appear to be very similar to other compliant hardware-mounted gates; therefore, these importers may be able to achieve compliance cost-effectively by importing gates with fewer extensions.
For three of the noncompliant importers, staff believes that a significant economic impact could occur. One small importer of noncompliant enclosures appears to sell enclosures only. Finding an alternative supplier might pose significant costs for this firm. Perhaps this firm could find another compliant supplier relatively easily, given that many different brands of imported enclosures appear very similar; some, in fact, comply with a previous version of the ASTM standard.
The other two small importers of noncompliant gates that could be impacted significantly have gates as a large part of their product line. One of the two small importers sells hardware-mounted gates only; while the other importer already includes wall cups with their pressure-mounted gates. Therefore, staff believes their products could be compliant without significant redesign. However, third party testing to demonstrate compliance may well represent more than 1 percent of revenue for these importers. This could represent a significant impact, unless their supplier absorbs the costs.
The final rule requires suppliers of gates and enclosures to comply with the requirements of the safety standard for gates and enclosures, or stop selling noncompliant gates and enclosures. Accordingly, compliance with the final rule could impact the price and selection of gates and enclosures available to consumers. Compliance with the mandatory standard could also impact suppliers of wall cups, by increasing demand for their products.
Compliance with the standard could raise the retail price of pressure-mounted gates by $5 to $10. We do not believe, however, that this will significantly decrease sales of gates. The price of hardware-mounted gates is unlikely to increase; most of the bestselling gates already cost more than $25. Additionally, many suppliers contract with foreign manufacturers, and some of the companies sell in multiple markets, including Europe, Asia, and Canada. Having a U.S. standard that is more stringent than, or different from, standards in those regions could force companies to develop different gates for different markets, or cause them to develop a more costly gate that meets all the standards.
Some manufacturers may market their noncompliant gates as pet gates. We can see from online reviews of pet gates and child gates that some parents already purchase pet gates for use with children, and likewise, pet owners buy child gates
Based on staff's recommendation and a comment on the NPR, the final rule has a 12-month effective date. A later effective date could reduce the economic impact on firms in two ways. Firms would be less likely to experience a lapse in production/importation, which could result if they are unable to comply and obtain third-party testing within the required timeframe, or find a new supplier. Firms could also spread costs over a longer time period. Suppliers interviewed for the NPR indicated that 12 to 18 months might be necessary, if a complete product redesign were required. Unless suppliers choose to add visual side-pressure indicators to a gate that does not currently have them, or the gate/enclosure of any type does not meet multiple requirements in the ASTM standard, a complete redesign should not be necessary.
Additionally, the final rule provides suppliers of pressure-mounted gates with two alternatives to meet the requirement in the final rule to improve consumer feedback regarding installation of pressure-mounted gates. Firms can either: (1) Include wall cups with the gate and place a separate warning label regarding the importance of installation of the wall cups on the top rail of the gate, or (2) use visual side-pressure indicators to demonstrate that the gate is installed correctly. The wall cups option will not require a redesign for gates that can meet the 30-pound push-out test with wall cups; this option only requires a new label on the top rail of the gate. Suppliers that already include effective visual side-pressure indicators on their gates will likely also be able to meet the standard without a redesign. If CPSC did not provide two options to meet the new requirement, nearly all pressure gate manufacturers would have been required to redesign their gates or would have had to include wall cups in the packaging. Providing two alternative requirements for pressure gate suppliers to meet the standard reduces the impact on small entities.
The Commission's regulations address whether the agency is required to prepare an environmental assessment or an environmental impact statement. Under these regulations, certain categories of CPSC actions normally have “little or no potential for affecting the human environment,” and therefore, they do not require an environmental assessment or an environmental impact statement. Safety standards providing requirements for products come under this categorical exclusion. 16 CFR 1021.5(c)(1). The final rule for gates and enclosures falls within the categorical exemption.
The final rule contains information collection requirements that are subject to public comment and review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA; 44 U.S.C. 3501-3521). Under 44 U.S.C. 3507(a)(1)(D), an agency must publish the following information:
• A title for the collection of information;
• a summary of the collection of information;
• a brief description of the need for the information and the proposed use of the information;
• a description of the likely respondents and proposed frequency of response to the collection of information;
• an estimate of the burden that shall result from the collection of information; and
• notice that comments may be submitted to the OMB.
The preamble to the proposed rule (84 FR 32354-55) discussed the information collection burden of the proposed rule and specifically requested comments on the accuracy of our estimates. OMB assigned control number 3041-0182 for this information collection. We did not receive any comment regarding the information collection burden of the proposal. For the final rule, CPSC adjusts the number of small home-based manufacturers from 83 to 80, and the number of other suppliers from 30 to 47. In accordance with PRA requirements, the CPSC provides the following information:
Our estimate is based on the following:
Two groups of firms that supply gates and enclosures to the U.S. market may need to modify their existing warning labels. The first are very small, home-
The second group of firms supplying gates and enclosures to the U.S. market that may need to make some modifications to their existing warning labels are non-home-based manufacturers and importers (47). These are also mostly small domestic firms, but they are not home-based firms, and they do not operate at the low production volume of the home-based firms. For this second group, all with existing warning labels on their products, and who are used to working with warning labels on a variety of other products, we estimate that the time required to make any modifications now or in the future would be about 1 hour per model. Based on an evaluation of supplier product lines, each entity supplies an average of 8 models of gates and/or enclosures; therefore, the estimated burden associated with labels is 1 hour per model × 47 entities × 8 models per entity = 376 hours.
The total burden hours attributable to warning labels is the sum of the burden hours for both groups of entities: Very small, home-based manufacturers (1,120 burden hours) + non-home-based manufacturers and importers (376 burden hours) = 1,496 burden hours. We estimate the hourly compensation for the time required to create and update labels is $34.26 (U.S. Bureau of Labor Statistics, “Employer Costs for Employee Compensation,” March 2020, Supplementary Table 9, total employer costs for employees in private industry:
ASTM F1004-19 also requires instructions to be supplied with the product. Under the OMB's regulations (5 CFR 1320.3(b)(2)), the time, effort, and financial resources necessary to comply with a collection of information that would be incurred by persons in the “normal course of their activities” are excluded from a burden estimate, where an agency demonstrates that the disclosure activities required to comply are “usual and customary.” As with the warning labels, the reporting burden of this requirement differs for the two groups.
Many of the home-based gate manufacturers supplying on a very small scale may provide either no instructions or only limited instructions with their products as part of their “normal course of activities.” CPSC staff estimates that each home-based entity supplying gates and/or enclosures might require 50 hours to develop an instruction manual to accompany their products. Although the number of home-based suppliers of gates and/or enclosures is likely, over time, to vary substantially, based on CPSC staff's review of the marketplace, currently, there are approximately 80 home-based suppliers of gates and/or enclosures operating in the U.S. market. These firms, on average, typically supply two gates. Therefore, the costs for these firms of designing an instruction manual for their products could be as high as $274,080 (50 hours per model × 80 entities × 2 models per entity = 8,000 hours × $34.26 per hour = $274,080). Not all firms would incur these costs every year, but new firms that enter the market would, and this may be a highly fluctuating market.
The non-home-based manufacturers and importers are already likely providing user instruction manuals with their products, under the normal course of their activities. Therefore, for these entities, there are no burden hours associated with providing instructions.
Based on this analysis, the proposed standard for gates and enclosures would impose an estimated total burden to industry of 9,496 hours at a cost of $325,333 annually. In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we have submitted the information collection requirements of this final rule to OMB.
Section 26(a) of the CPSA, 15 U.S.C. 2075(a), provides that when a consumer product safety standard is in effect and applies to a product, no state or political subdivision of a state may either establish or continue in effect a requirement dealing with the same risk of injury unless the state requirement is identical to the federal standard. Section 26(c) of the CPSA also provides that states or political subdivisions of states may apply to the Commission for an exemption from this preemption under certain circumstances. Section 104(b) of the CPSIA refers to the rules to be issued under that section as “consumer product safety standards.” Therefore, the preemption provision of section 26(a) of the CPSA applies to this final rule issued under section 104.
The CPSA establishes certain requirements for product certification and testing. Products subject to a consumer product safety rule under the CPSA, or to a similar rule, ban, standard or regulation under any other act enforced by the Commission, must be certified as complying with all applicable CPSC-enforced requirements. 15 U.S.C. 2063(a). Certification of children's products subject to a children's product safety rule must be based on testing conducted by a CPSC-accepted third party conformity assessment body. 15 U.S.C. 2063(a)(2). The Commission must publish an NOR for the accreditation of third party conformity assessment bodies to assess conformity with a children's product safety rule to which a children's product is subject. 15 U.S.C. 2063(a)(3). The final rule for gates and enclosures, to be codified at 16 CFR part 1239, is a children's product safety rule that requires the issuance of an NOR.
The Commission published a final rule,
Laboratories applying for acceptance as a CPSC-accepted third-party conformity assessment body to test to the new standard are required to meet the third party conformity assessment body accreditation requirements in part 1112. When a laboratory meets the requirements as a CPSC-accepted third party conformity assessment body, the laboratory can apply to the CPSC to have 16 CFR part 1239,
The Commission certified in the NPR that the proposed NOR for gates and enclosures would not have a significant impact on a substantial number of small laboratories. 84 FR 32356. No substantive factual changes have occurred since the NPR was published, and CPSC did not receive any comments regarding the NOR. Therefore, for the final rule, the Commission continues to certify that amending part 1112 to include the NOR for the gates and enclosures final rule will not have a significant impact on a substantial number of small laboratories.
The Congressional Review Act (CRA; 5 U.S.C. 801-808) states that, before a rule may take effect, the agency issuing the rule must submit the rule, and certain related information, to each House of Congress and the Comptroller General. 5 U.S.C. 801(a)(1). The submission must indicate whether the rule is a “major rule.” The CRA states that the Office of Information and Regulatory Affairs (OIRA) determines whether a rule qualifies as a “major rule.” Pursuant to the CRA, this rule does not qualify as a “major rule,” as defined in 5 U.S.C. 804(2). To comply with the CRA, the Office of the General Counsel will submit the required information to each House of Congress and the Comptroller General.
Administrative practice and procedure, Audit, Consumer protection, Reporting and recordkeeping requirements, Third party conformity assessment body.
Consumer protection, Imports, Incorporation by reference, Infants and children, Labeling, Law enforcement, and Toys.
For the reasons discussed in the preamble, the Commission amends Title 16 of the Code of Federal Regulations as follows:
15 U.S.C. 2063; Pub. L. 110-314, section 3, 122 Stat. 3016, 3017 (2008).
(b) * * *
(49) 16 CFR part 1239, Safety Standard for Gates and Enclosures.
Sec. 104, Pub. L. 110-314, 122 Stat. 3016 (15 U.S.C. 2056a).
This part establishes a consumer product safety standard for gates and enclosures.
(a) Except as provided in paragraph (b) of this section, each gate and enclosure must comply with all applicable provisions of ASTM F1004-19, Standard Consumer Safety Specification for Expansion Gates and Expandable Enclosures, approved on June 1, 2019 (ASTM F1004-19). The Director of the Federal Register approves this incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may obtain a copy from ASTM International, 100 Bar Harbor Drive, P.O. Box 0700, West Conshohocken, PA 19428;
(b) Comply with ASTM F1004-19 with the following additions or exclusions:
(1) Instead of complying with section 3.1.3 of ASTM F1004-19, comply with the following:
(i) 3.1.3
(ii) [Reserved]
(2) Add the following to paragraphs to section 3.1 of ASTM F1004-19:
(i) 3.1.16
(ii) 3.1.17
(3) Add the following paragraphs to section 6 of ASTM F1004-19:
(i) 6.8
(ii) 6.8.1 Visual Side-Pressure Indicators shall be conspicuous and readily identifiable to a person installing and standing near the gate.
(iii) 6.8.2 Visual Side-Pressure Indicators shall monitor pressure for each point of contact with the mounting surface utilizing one or more of the following three options. Such indicators, when the gate is tested in accordance with 7.9, shall indicate when the required side pressure has been attained upon installation of the gate, and continue to display the side pressure status while the gate is in a manufacturer's recommend use position.
(iv) 6.8.2.1 A single visual side-pressure indicator for each individual contact point.
(v) 6.8.2.2 A single visual side-pressure indicator for each individual rail (top and bottom), so the opposing horizontal contact points are addressed.
(vi) 6.8.2.3 A single visual side-pressure indicator for the entire gate.
(4) Instead of complying with section 7.9.1.2 of ASTM F1004-19, comply with the following:
(i) 7.9.1.2 Follow the manufacturer's installation instructions when installing the gate in the center of the test opening. For pressure-mounted gates with visual side-pressure indicators, ensure the visual side-pressure indicators are displaying the proper status per manufacturer's instructions.
(ii) [Reserved]
(5) Instead of complying with NOTE 11 of ASTM F1004-19, comply with the following:
(i) Note 11—Address means that verbiage other than what is shown can be used as long as the meaning is the same or information that is product specific is presented. Brackets indicate that optional wording may be used at the manufacturer's discretion if another identifier is more appropriate.
(ii) [Reserved]
(6) Do not comply with section 8.5.3 of ASTM F1004-19.
(7) Add the following paragraphs to section 8.5 of ASTM F1004-19:
(i) 8.5.8 Pressure-mounted gates that provide wall cups or other mounting hardware to meet the requirements of section 6.3 shall have the following warning in the location specified:
(ii) 8.5.8.1 This warning shall be separate from all other warnings required on the product and shall not include any additional language.
(iii) 8.5.8.2 This warning shall be on the top rail.
(iv) 8.5.8.3 This warning shall be as close as possible to the side of the product where the locking mechanism is located. If the locking mechanism is in the center of the product, then this warning shall be adjacent to the mechanism on either side of it.
(8) Add the following paragraph to section 9 of ASTM F1004-19:
(i) 9.5. For pressure-mounted gates with visual side-pressure indicators, the instructions shall describe the function, use, and importance of the visual side-pressure indicators and shall describe how to make adjustments to meet the side-pressure requirements. Instructions shall include a reminder to routinely check the status of the side pressure indicators during ongoing use of gate.
(ii) [Reserved]
(9) Add the following paragraph to section X1.2.5 of ASTM F1004-19:
(i) X1.2.5.4 The visual side-pressure indicators requirement in 6.8 is to address incidents with pressure-mounted gates, where consumers had difficulty properly installing the gate or uncertainty in the security of the gate, which may lead to the gate being “pushed out,” “pulled down,” or “knocked over” by children.
(ii) [Reserved]
Federal Energy Regulatory Commission, Department of Energy.
Final rule.
The Federal Energy Regulatory Commission (Commission) issues this final rule to amend its regulations to preclude the issuance of authorizations to proceed with construction activities with respect to natural gas facilities authorized by order issued pursuant to section 3 or section 7 of the Natural Gas Act until either the time for filing a request for rehearing of such order has passed with no rehearing request being filed or the Commission has acted on the merits of any rehearing request.
This rule is effective August 5, 2020.
1. By this final rule, the Federal Energy Regulatory Commission (Commission or agency) is revising its regulations to preclude the issuance of authorizations to proceed with construction activities with respect to a Natural Gas Act (NGA) section 3 authorization or section 7(c) certificate order until the Commission acts on the merits of any timely-filed request for rehearing or the time for filing such a request has passed. This rule ensures that construction of an approved natural gas project will not commence until the Commission has acted upon the merits of any request for rehearing. The rule imposes no new obligations on the public.
2. The NGA vests the Commission with jurisdiction over the transportation and wholesale sale of natural gas in interstate commerce.
3. Before a company can construct a natural gas pipeline, it must obtain approval from the Commission under NGA section 7(e), which provides that the Commission “shall” issue a certificate if it determines that a proposed pipeline “is or will be required by the present or future public convenience and necessity.”
4. If the Commission grants a certificate of public convenience and necessity, the NGA authorizes the certificate holder to exercise eminent domain authority if it “cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas[.]”
5. Separately, NGA section 3 prohibits the import or export of natural gas between the United States and a foreign nation without “first having secured an order of the Commission authorizing it to do so.”
6. Pursuant to the NGA, the Commission can approve a proposed
7. In recent years, the Commission's NGA sections 3 and 7 proceedings have seen increased interest and participation by stakeholders, such as landowners, community members, non-governmental organizations, property rights advocates, and governmental entities, who have raised concerns about proposed projects. The Commission's order granting an authorization under section 3 and/or section 7 fully considers all stakeholder concerns raised during the proceeding.
8. If a party is dissatisfied with the Commission's NGA section 3 authorization or section 7 certificate determination, it may apply for rehearing.
9. The rehearing process serves as a mechanism for the Commission to carefully consider the arguments presented, in order to resolve disputes or bring its expertise to bear on complex, technical matters before they are potentially presented to the courts. The Commission balances the interests of numerous stakeholders and renders decisions that address challenging technical, economic, and environmental matters, as well as complex legal issues. This takes time. Only after resolving these “difficult problems”
10. Once the Commission issues an order on the merits of a rehearing request, a party may seek judicial review of the Commission's order. An application for agency rehearing is a prerequisite to judicial review, and only those objections raised on rehearing may be presented to the court of appeals.
11. In order to balance our commitment to expeditiously respond to parties' concerns in comprehensive orders on rehearing and the serious concerns posed by the possibility of construction proceeding prior to the completion of Commission review, we are exercising our discretion to adopt a new regulation that precludes the issuance of authorizations to proceed with construction of projects authorized under NGA sections 3 and 7 while rehearing of the initial orders is pending. This rule ensures that construction of an approved natural gas project will not commence until the Commission has acted upon the merits of any request for rehearing, regardless of land ownership.
12. This final rule adds to our regulations new § 157.23, which provides that:
With respect to orders issued pursuant to 15 U.S.C. 717b or 15 U.S.C. 717f(c) authorizing the construction of new natural gas transportation, export, or import facilities, no authorization to proceed with construction activities will be issued:
(a) Until the time for the filing of a request for rehearing under 15 U.S.C. 717r(a) has expired with no such request being filed, or
(b) if a timely request for rehearing is filed, until the Commission has acted upon the merits of that request.
13. In addition, we are revising § 153.4 of our regulations to incorporate a cross-reference to new § 157.23.
14. The Paperwork Reduction Act
15. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant effect on the human environment.
16. The Regulatory Flexibility Act of 1980 (RFA)
17. In addition to publishing the full text of this document in the
18. From FERC's Home Page on the internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.
19. User assistance is available for eLibrary and the FERC's website during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
20. The Commission is issuing this rule as a final rule without a period for public comment. Public notice and comment, otherwise required by 5 U.S.C. 553, do not apply to “rules of agency organization, procedure, or practice.”
21. This rule is effective August 5, 2020. As a matter of policy, however, the Commission will not authorize construction to proceed pending rehearing during the period before this rule becomes effective.
Exports, Natural gas, Reporting and recordkeeping requirements.
Administrative practice and procedure, Natural gas, Reporting and recordkeeping requirements.
By the Commission. Commissioner Glick is concurring in part and dissenting in part with a separate statement attached.
In consideration of the foregoing, the Commission is amending parts 153 and 157, chapter I, title 18,
15 U.S.C. 717b, 717o; E.O. 10485; 3 CFR, 1949-1953 Comp., p. 970, as amended by E.O. 12038, 3 CFR, 1978 Comp., p. 136, DOE Delegation Order No. 0204-112, 49 FR 6684 (February 22, 1984).
The procedures in §§ 157.5, 157.6, 157.8, 157.9, 157.10, 157.11, 157.12, and 157.23 of this chapter are applicable to the applications described in this subpart.
15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
With respect to orders issued pursuant to 15 U.S.C. 717b or 15 U.S.C. 717f(c) authorizing the construction of new natural gas transportation, export, or import facilities, no authorization to proceed with construction activities will be issued:
(a) Until the time for the filing of a request for rehearing under 15 U.S.C. 717r(a) has expired with no such request being filed, or
(b) If a timely request for rehearing is filed, until the Commission has acted upon the merits of that request.
1. It is readily apparent that today's final rule attempts to address
2. Nevertheless, I dissent in part from this final rule because it does nothing to address the concern, articulated clearly in Judge Millett's concurrence, that a pipeline developer should not be able to begin the process of condemning private land before the owners of that land can go to court to challenge the certificate. Eminent domain is among the most significant actions that a government may take with regard to an individual's private property.
3. That concern was central to Judge Millett's concurrence in
4. And yet this final rule deals only with construction without making any effort to address the exercise of eminent domain during that period when the courthouse doors are closed to landowners seeking to challenge the certificate. That is a shame. And the failure to do anything in that regard is a striking contrast to the Commission's supposed concern for landowners. Rather than remaining silent on this situation, we ought to do everything in our power to address it and ensure that certificate holders are not permitted to go to court before landowners.
5. To that end, I believe that we should adopt a practice of presumptively staying § 7 certificates
6. During my time at the Commission, I have had the opportunity to meet with many landowners who lost their property rights through eminent domain proceedings authorized by the NGA. It is heartbreaking to hear their stories of watching their land be condemned while the Commission sat on rehearing requests, leaving them helpless to challenge the certificate, even as it was used to seize their land. We should be doing everything in our power to prevent such a patently unfair result.
For these reasons, I respectfully concur in part and dissent in part.
Defense Intelligence Agency, DoD.
Final rule.
This final rule removes DoD's regulation concerning the Defense Intelligence Agency (DIA) Privacy Program. On April 11, 2019, the Department of Defense published a revised DoD-level Privacy Program rule, which contains the necessary information for an agency-wide privacy program regulation under the Privacy
This rule is effective on July 6, 2020.
James Schmidli, 202-231-6895.
DoD now has a single DoD-level Privacy Program rule at 32 CFR part 310 (84 FR 14728) that contains all the codified information required for the Department. The DIA Privacy Act Program regulation at 32 CFR part 319, last updated on November 20, 2013 (78 FR 69551), is no longer required and can be removed.
It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest because it is based on the removal of policies and procedures that are either now reflected in another CFR part, 32 CFR 310, or are publicly available on the Department's website. To the extent that DIA internal guidance concerning the implementation of the Privacy Act within DIA is necessary, it will continue to be published in Defense Intelligence Agency Instruction 5400.001, Privacy and Civil Liberties Program,
This rule is one of 20 separate component Privacy rules. With the finalization of the DoD-level Privacy rule at 32 CFR part 310, the Department eliminated the need for this component Privacy rule, thereby reducing costs to the public as explained in the preamble of the DoD-level Privacy rule published on April 11, 2019, at 84 FR 14728-14811.
This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review.” Therefore, E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” does not apply.
Privacy.
Accordingly, by the authority of 5 U.S.C. 301, 32 CFR part 319 is removed.
National Geospatial-Intelligence Agency, DoD.
Final rule.
This final rule removes DoD's regulation concerning the National Geospatial-Intelligence Agency (NGA) Privacy Program. On April 11, 2019, the Department of Defense published a revised DoD-level Privacy Program rule, which contains the necessary information for an agency-wide privacy program regulation under the Privacy Act and now serves as the single Privacy Program rule for the Department. That revised Privacy Program rule also includes all DoD component exemption rules. Therefore, this part is now unnecessary and may be removed from the CFR.
This rule is effective on July 6, 2020.
Terrance Reeves, 571-558-7641.
DoD now has a single DoD-level Privacy Program rule at 32 CFR part 310 (84 FR 14728) that contains all the codified information required for the Department. NGA Program regulation at 32 CFR part 320, last updated on January 14, 2004 (69 FR 2066), is no longer required and can be removed.
It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest because it is based on the removal of policies and procedures that are either now reflected in another CFR part, 32 CFR 310, or are publicly available on the Department's website. To the extent that NGA internal guidance concerning the implementation of the Privacy Act within the National Geospatial-Intelligence Agency is necessary, it will be issued in an internal document.
This rule is one of 20 separate component Privacy rules. With the finalization of the DoD-level Privacy rule at 32 CFR part 310, the Department is eliminating the need for this separate component Privacy rules and reducing costs to the public as explained in the preamble of the DoD-level Privacy rule published at 84 FR 14728.
This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review.” Therefore, E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” does not apply.
Privacy.
National Security Agency/Central Security Services, DoD.
Final rule.
This final rule removes the Department of Defense (DoD) regulation concerning the National Security Agency/Central Security Services (NSA/CSS) Privacy Program. On April 11, 2019, the DoD published a revised DoD-level Privacy Program rule, which contains the necessary information for an agency-wide privacy program regulation under the Privacy Act and now serves as the single Privacy Program rule for the Department. That revised Privacy Program rule also includes all DoD component exemption rules. Therefore, this part is now unnecessary and may be removed from the Code of Federal Regulations (CFR).
This rule is effective on July 6, 2020.
Mrs. Deneen Farrell, 301-688-6311.
DoD has issued a single consolidated DoD-level Privacy Program rule at 32 CFR part 310 (84 FR 14728) that contains all the codified information required for the Department. The NSA/CSS Privacy Act Program regulation at 32 CFR part 322, last updated on March 30, 2012 (77 FR 19095), is no longer required and can be removed.
It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest since it is based on the removal of policies and procedures that are either now reflected in another CFR part, 32 CFR part 310, or are publicly available on the Department's website. To the extent that the NSA/CSS's internal guidance concerning the implementation of the Privacy Act within the NSA/CSS is required, a supplemental internal document to the DoD Privacy regulation will be posted to
This rule is one of 20 separate DoD component Privacy rules that are being rescinded as part of the finalization of the DoD-level Privacy rule at 32 CFR part 310, the Department is eliminating the need for this separate component Privacy rule and reducing costs to the public as explained in the preamble of the DoD-level Privacy rule published on April 11, 2019 (84 FR 14728-14811).
This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review.” Therefore, E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” does not apply. This removal supports a recommendation of the DoD Regulatory Reform Task Force.
Privacy.
National Reconnaissance Office, DoD.
Final rule.
This final rule removes DoD's regulation concerning the National Reconnaissance Office Privacy Program. On April 11, 2019, the Department of Defense published a revised DoD-level Privacy Program rule, which contains the necessary information for an agency-wide privacy program regulation under the Privacy Act and now serves as the single Privacy Program rule for the Department. That revised Privacy Program rule also includes all DoD component exemption rules. Therefore, this part is now unnecessary and may be removed from the CFR.
This rule is effective on July 6, 2020.
Michael Lavergne at 703-227-9022.
DoD now has a single DoD-level Privacy Program rule at 32 CFR part 310 (84 FR 14728) that contains all the codified information required for the Department. The National Reconnaissance Office Privacy Program regulation at 32 CFR part 326, last updated on October 29, 2009 (74 FR 55784) is no longer required and can be removed.
It has been determined that publication of this CFR part removal for public comment is impracticable, unnecessary, and contrary to public interest since it is based on the removal of policies and procedures that are either now reflected in another CFR part, 32 CFR 310, or are publicly available on the Department's website. To the extent that National Reconnaissance Office internal guidance concerning the implementation of the Privacy Act within the National Reconnaissance Office is necessary, it will be issued in an internal document.
This rule is one of 20 separate component Privacy rules. With the finalization of the DoD-level Privacy rule at 32 CFR part 310, the Department is eliminating the need for this separate component Privacy rules and reducing costs to the public as explained in the preamble of the DoD-level Privacy rule published on April 11, 2019, at 84 FR 14728-14811.
This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review.” Therefore, E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” does not apply.
Privacy.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of oxathiapiprolin in or on multiple commodities which are identified and discussed later in this document. The Interregional Project Number 4 (IR-4) and the registrant, Syngenta Crop Protection requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective July 6, 2020. Objections and requests for hearings must be received on or before September 4, 2020 and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2019-0128, is available at
Please note that due to the public health emergency, the EPA Docket Center (EPA/DC) and Reading Room was closed to public visitors on March 31, 2020. Our EPA/DC staff will continue to provide customer service via email, phone, and webform. For further information on EPA/DC services, docket contact information and the current status of the EPA/DC and Reading Room, please visit
Michael Goodis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Publishing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2019-0128 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 September 4, 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-2019-0128, by one of the following methods:
•
•
•
In the
In the
These documents referenced a summary of the petition prepared by Syngenta Crop Protection, LLC, the registrant, which is available in the docket,
Based upon review of the data supporting the petition, EPA is correcting many of the commodity definitions. The reasons for these changes are explained in Unit IV.D.
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 oxathiapiprolin including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with oxathiapiprolin follows.
As indicated in the
Therefore, based on the lack of toxicity at anticipated human exposure levels, EPA concludes there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to oxathiapiprolin residues. More detailed information on the subject action to establish tolerances in or on the range of commodities can be found in the document entitled, “Oxathiapiprolin. Human Health Risk Assessment to Support the Registration for Use on Bushberry Crop Subgroup 13-07B (Except Lowbush Blueberry), Hops, Low Growing Berry Crop Subgroup 13-07G (Except Cranberry), Tree Nut Crop Group 14-12, and Tropical and Subtropical Medium to Large Fruit with Smooth Inedible Peel Crop Subgroup 24B, as well as Tolerance Translations” dated May 15, 2020 by going to
Analytical method DuPont-30422, Supplement 1 is a high performance liquid chromatography with tandem mass spectrometry (HPLC-MS/MS) method available for the quantitation of oxathiapiprolin residues in plant matrices. Analytical method DuPont-31138 is an HPLC-MS/MS method available for the analytical enforcement of oxathiapiprolin residues in livestock commodities.
The methods 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:
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 oxathiapiprolin in/on peas (pods and succulent-immature seeds) at 1 ppm and in/on peas, shelled (succulent seeds) at 0.05 ppm. The U.S. tolerances for the corresponding commodities are harmonized with these Codex MRLs. The Codex has not established MRLs for oxathiapiprolin on any of the other requested crops or crop groups.
One relevant comment was received from a private citizen who opposed approval of this active ingredient due to combination with other chemicals and not testing toxic pollutants. 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 appears to be directed at the underlying statute and not EPA's implementation of it; the comments provide no information relevant the Agency's safety determination.
The Agency corrected the commodity definitions for: Almond, hulls; Bushberry subgroup 13-07B, except lowbush blueberry; Nut, tree, group 14-12; Pea, dwarf, edible podded; Pea, edible podded; Pea, English, succulent shelled; Pea, garden, succulent shelled; Pea, grass, edible podded; Pea, green, edible podded; Pea, green, succulent shelled; Pea, pigeon, edible podded; Pea, pigeon, succulent shelled; Pea, snap, edible podded; Pea, snow, edible podded; and Pea, sugar snap, edible podded.
Therefore, tolerances are established for residues of oxathiapiprolin, 1-[4-[4-[5-(2,6-difluorophenyl)-4,5-dihydro-3-isoxazolyl]-2-thiazolyl]-1-piperidinyl]-2-[5-methyl-3-(trifluoromethyl)-1
The removal of the “pea, edible-podded” and “pea, succulent shelled” tolerances as part of this rulemaking will not result in any adulterated pea commodities. The individual pea tolerances being established in this rulemaking cover all the edible-podded and succulent-shelled versions of pea as defined in 40 CFR 180.1, which includes “Cajanus cajan (includes pigeon pea); Cicer spp. (includes chickpea and garbanzo bean); Lens culinaris (lentil); Pisum spp. (includes dwarf pea, garden pea, green pea, English pea, field pea, and edible pod pea).” To avoid confusion about the coverage of residues in or on pea commodities as a result of this rulemaking, EPA is clarifying the status of two commodities listed in section 180.1 for which an individual tolerance is not being established in this rulemaking: Garbanzo bean and field pea. Garbanzo bean is the same commodity as chickpea, so residues on garbanzo bean are covered by chickpea tolerances. Field pea is not sold as an edible-podded or succulent shelled pea and thus is not covered by the existing tolerances for “pea, edible-podded” and pea, succulent shelled”; removing those tolerances does not change the status of tolerance coverage for field pea and an individual tolerance is not necessary.
This action establishes tolerances under FFDCA section 408(d) in response to petitions submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it considered a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the 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
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal Governments, on the relationship between the National Government and the States or Tribal Governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian Tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, for the reasons stated in the preamble, EPA amends 40 CFR chapter I as follows:
21 U.S.C. 321(q), 346a and 371.
The additions read as follows:
(a) * * *
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt; when used as an inert ingredient in a pesticide chemical formulation. Lamberti USA, Incorporated submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt on food or feed commodities.
This regulation is effective July 6, 2020. Objections and requests for hearings must be received on or before September 4, 2020, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2019-0610, is available at
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
Michael Goodis, Registration Division (7505P), Office of Pesticide Programs,
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Government Publishing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2019-0610 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 September 4, 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-2019-0610, by one of the following methods.
•
•
•
In the
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(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 use 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 an exemption from the requirement of 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 . . . ” and specifies factors EPA is to consider in establishing an exemption.
EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be shown that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.
Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. In the case of certain chemical substances that are defined as polymers, the Agency has established a set of criteria to identify categories of polymers expected to present minimal or no risk. The definition of a polymer is given in 40 CFR 723.250(b) and the exclusion criteria for identifying these low-risk polymers are described in 40 CFR 723.250(d). 2-Propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt conforms to the definition of a polymer given in 40 CFR 723.250(b) and meets the following criteria that are used to identify low-risk polymers.
1. The polymer is not a cationic polymer nor is it reasonably anticipated
2. The polymer does contain as an integral part of its composition at least two of the atomic elements carbon, hydrogen, nitrogen, oxygen, silicon, and sulfur.
3. The polymer does not contain as an integral part of its composition, except as impurities, any element other than those listed in 40 CFR 723.250(d)(2)(ii).
4. The polymer is neither designed nor can it be reasonably anticipated to substantially degrade, decompose, or depolymerize.
5. The polymer is manufactured or imported from monomers and/or reactants that are already included on the TSCA Chemical Substance Inventory or manufactured under an applicable TSCA section 5 exemption.
6. The polymer is not a water absorbing polymer with a number average molecular weight (MW) greater than or equal to 10,000 daltons.
7. The polymer does not contain certain perfluoroalkyl moieties consisting of a CF3- or longer chain length as listed in 40 CFR 723.250(d)(6).
Additionally, the polymer also meets as required the following exemption criteria specified in 40 CFR 723.250(e).
The polymer's number average MW of 4,700 daltons is greater than 1,000 and less than 10,000 daltons. The polymer contains less than 10% oligomeric material below MW 500 and less than 25% oligomeric material below MW 1,000.
Thus, 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt meets the criteria for a polymer to be considered low risk under 40 CFR 723.250. Based on its conformance to the criteria in this unit, no mammalian toxicity is anticipated from dietary, inhalation, or dermal exposure to 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt.
For the purposes of assessing potential exposure under this exemption, EPA considered that 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt could be present in all raw and processed agricultural commodities and drinking water, and that non-occupational non-dietary exposure was possible. The number average MW of 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt is 4,700 daltons. Generally, a polymer of this size would be poorly absorbed through the intact gastrointestinal tract or through intact human skin. Since 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt conform to the criteria that identify a low-risk polymer, there are no concerns for risks associated with any potential exposure scenarios that are reasonably foreseeable. The Agency has determined that a tolerance is not necessary to protect the public health.
Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”
EPA has not found 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt to share a common mechanism of toxicity with any other substances, and 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at
Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA concludes that a different margin of safety will be safe for infants and children. Due to the expected low toxicity of 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt, EPA has not used a safety factor analysis to assess the risk. For the same reasons the additional tenfold safety factor is unnecessary.
Based on the conformance to the criteria used to identify a low-risk polymer, EPA concludes that there is a reasonable certainty of no harm to the U.S. population, including infants and children, from aggregate exposure to residues of 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt.
An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.
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 not established a MRL for 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt.
Accordingly, EPA finds that exempting residues of 2-propenoic acid, homopolymer, ester with α-methyl-ω-hydroxypoly(oxy-1,2-ethanediyl) and α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), graft, sodium salt from the requirement of a tolerance will be safe.
This action establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal Governments, on the relationship between the National Government and the States or Tribal Governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian Tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes a temporary exemption from the requirement of a tolerance for residues of 1-aminocyclopropane-1-carboxylic acid (ACC) in or on apples and stone fruits when used in accordance with the terms of the Experimental Use Permit (EUP) under EPA Number 73049-EUP-12. Valent BioSciences, LLC., submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting a temporary exemption from the requirement of a tolerance for the use of ACC for a period of three years. This regulation eliminates the need to establish a maximum permissible level for residues of ACC resulting from use in accordance with the EUP No. 73049-EUP-12 under FFDCA. The temporary exemption from the requirement of a tolerance expires on July 6, 2023.
This regulation is effective July 6, 2020. Objections and requests for hearings must be received on or before September 4, 2020 and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2019-0367, is available at
Please note that due to the public health emergency the EPA Docket Center (EPA/DC) and Reading Room was closed to public visitors on March 31, 2020. Our EPA/DC staff will continue to provide customer service via email, phone, and webform. For further information on EPA/DC services, docket contact information and the current status of the EPA/DC and Reading Room, please visit
Robert McNally, Biopesticides and Pollution Prevention Division (7511P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a(g), 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-2019-0367 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 September 4, 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-2019-0367, by one of the following methods:
•
•
•
In the
Section 408(r) of the FFDCA allows EPA to establish a temporary exemption from the requirement of a tolerance for uses covered by an experimental use permit. Under Section 408(c)(2)(A)(i), EPA may establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(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. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C) and (D), which require EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance or tolerance exemption, 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 . . . .” Additionally, FFDCA section 408(b)(2)(D) requires that EPA consider “available information concerning the cumulative effects of a particular pesticide's residues and other substances that have a common mechanism of toxicity.”
EPA evaluated the available toxicity and exposure data on 1-aminocyclopropane-1-carboxylic acid (ACC) and considered its validity, completeness, and reliability, as well as the relationship of this information to human risk. EPA also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.
ACC is a naturally occuring non-protein amino acid found in all plants. It acts as a plant growth regulator (PGR), pre-cursing ethylene, a plant hormone regulating a wide variety of vegetative and developmental processes. The only conversion of ACC for residues should be into ethylene, which would not be measurable as ethylene is a quickly dissipating gas. Ethylene has been reviewed by EPA and is exempt from tolerance (40 CFR 180.1016).
As a biochemical pesticide, ACC is intended for use on apples and stone fruits for fruit thinning and enhanced return bloom and is foliarly applied with an orchard air blast sprayer. ACC's mode of action is as a signaling molecule in plants to regulate fruit ripening, thinning, and enhanced return bloom. No direct application to food is expected as applications are made pre-fruiting, but it is possible that some trace amounts of the active ingredient may be taken up into the plant.
Overall, ACC is considered to be of low toxicity. Toxicological data demonstrate that ACC is of low toxicity relative to all routes of exposure. Additionally, humans have a history of safe natural exposure to ACC as it is present in all fruits and vegetables and is a regular part of the human diet. With specific regard to human oral toxicity, the Agency notes that the human digestive system has evolved to accommodate ACC in its digestive processes. Moreover, it is noted that dietary exposures to the residues of ACC are not anticipated to exceed the naturally occurring background levels as exogenously applied ACC is highly biodegradable. It has a half-life of less than 8.5 days on the plant and is even more biodegradable in aqueous soil conditions.
With regard to the acute toxicological profile of the active ingredient ACC, the active ingredient is of low acute oral, dermal and inhalation toxicity; it is only mildly irritating to the eye and the skin; and it is not a dermal sensitizer.
With regard to the subchronic toxicity, developmental toxicity, reproductive toxicity and mutagenicity data requirements for the active ingredient ACC, all data requirements were satisfied by guideline studies. There were no adverse subchronic effects for any route of exposure. The active ingredient was determined to be non-mutagenic. Finally, no adverse effects were identified relative to either developmental toxicity or reproductive toxicity. Based on this toxicological profile, EPA did not identify any toxicological endpoints of concern for assessing risk.
As part of its qualitative risk assessment for ACC, the Agency also considered the potential for exposure to residues of ACC, including dietary and non-occupational exposures. EPA concludes that dietary exposures are likely to be negligible, due to the short half-life and biodegradable nature of the pesticide. Residential exposures are not expected under the conditions of the association EUP.
Based on ACC's low toxicity, anticipated minimal dietary exposure, and history of safe consumption in foods, no risks of concern have been identified from aggregate exposure to ACC. Similarly, no risks of concern were identified for cumulative exposures to ACC since no common mechanism of toxicity was identified for either ACC or its metabolites. Therefore, based on the lack of toxicity and expected negligible exposures, EPA has determined that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to ACC.
A full explanation of the data upon which EPA relied and its risk assessment based on those data can be found within the April 16, 2020, document entitled, “Federal Food, Drug, and Cosmetic Act (FFDCA) Considerations for 1-aminocyclopropane-1-carboxylic acid (ACC).” This document, as well as other relevant information, is available in the docket for this action as described under
Based on its safety determination, EPA is establishing a temporary exemption from the requirement of a tolerance for residues of the plant growth regulator 1-aminocyclopropane-1-carboxylic acid (ACC) in or on apples and stone fruits when used in accordance with the terms of the Experimental Use Permit (EUP) under EPA Number 73049-EUP-12. This temporary exemption from the requirement of a tolerance will expire on July 6, 2023.
The analytical method for the residues of ACC can be evaluated by Ultra High-Performance Liquid Chromatography-Tandem Mass Spectrometry and is available to EPA for the detection and measurement of these pesticide residues.
This action establishes a temporary exemption from the requirement of a tolerance under FFDCA section 408(d) in response to a petition submitted to EPA. 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
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the temporary tolerance exemption in this action, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes. As a result, this action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, EPA 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, EPA has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require EPA's consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, for the reasons stated in the preamble, EPA amends 40 CFR chapter I as follows:
21 U.S.C. 321(q), 346a and 371.
A temporary exemption from the requirement of a tolerance is established for residues of the plant growth regulator, 1-Aminocyclopropane-1-carboxylic acid (ACC) in or on apples and stone fruits when used in accordance with the terms of the Experimental Use Permit (EUP) under EPA Number 73049-EUP-12. This temporary exemption expires on July 6, 2023.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of S-metolachlor in or on multiple commodities which are identified and discussed later in this document. The Interregional Project Number 4 (IR-4) and Syngenta Crop Protection, LLC requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective July 6, 2020. Objections and requests for hearings must be received on or before September 4, 2020, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The dockets for this action, identified by docket identification (ID) numbers EPA-HQ-OPP-2019-0652 and EPA-HQ-OPP-2020-0047, are available at
Please note that due to the public health emergency, the EPA Docket Center (EPA/DC) and Reading Room was closed to public visitors on March 31, 2020. Our EPA/DC staff will continue to provide customer service via email, phone, and webform. For further information on EPA/DC services, docket contact information and the current status of the EPA/DC and Reading Room, please visit
Michael Goodis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document
• 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
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 numbers EPA-HQ-OPP-2019-0652 and EPA-HQ-OPP-2020-0047 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 September 4, 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 numbers EPA-HQ-OPP-2019-0652 and EPA-HQ-OPP-2020-0047, by one of the following methods:
•
•
•
In the
In the
Based upon review of the data supporting the petition, EPA is establishing several tolerances at different levels than petitioned-for tolerances and revised the commodity definitions for grain, aspirated fractions and soybean, seed. The reasons for these changes are explained in Unit IV.D.
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 S-metolachlor including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with S-metolachlor follows.
On March 11, 2019, EPA published in the
EPA's dietary (food and drinking water) exposure assessments have been updated to include the additional exposure from the new uses of S-metolachlor on dill and rosemary and the revised use on soybean. EPA conducted an unrefined chronic dietary (food and drinking water) exposure and risk assessment that incorporates tolerance-level residue values, 100% crop treated, and EPA's 2018 default processing factors.
The estimated drinking water concentrations (EDWCs) of S-metolachlor and its metabolites for chronic exposures have also been updated; the new value used for the chronic assessment to assess the contribution to drinking water is 830 parts per billion (ppb), which is lower than the previous value of 978 ppb.
An acute dietary endpoint (
There are no proposed new residential uses for S-metolachlor, although commercial use in residential areas may result in the following short-term residential exposures that were used in the Agency's aggregate risk assessment: Post-application dermal exposures to youth (11 to less than 16 years old) from treated turf, to children (6 to less than 11 years old) from treated gardens, and to children (1 to less than 2 years old) from treated turf and post-application incidental oral exposure to children (1 to less than 2 years old) from treated turf.
For aggregate risk assessment, exposures to S-metolachlor in food and drinking water are combined with residential exposures for the relevant exposure duration period. Because acute, intermediate-term, or long-term residential exposures are not expected, aggregate acute and chronic risk is equivalent to the dietary risks, which are below EPA's level of concern. Moreover, based on the chronic exposure assessment, which accounts for potential carcinogenicity, EPA does not expect S-metolachlor to pose a cancer risk. Short-term aggregate risk, which combines chronic (background) exposures with the expected short-term post-application exposures mentioned above, yields margins of exposure (MOEs) ranging from 110 to 1370, which are not of concern because they exceed EPA's level of concern (MOEs less than or equal to 100).
Therefore, EPA concludes there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to S-metolachlor residues. More detailed information can be found in the document entitled, “S-Metolachlor: Human Health Risk Assessment for Petition for the Establishment of Tolerances and Registration for Use in/on Rosemary and Dill (PP#9E8800) and Amended Use in/on Soybean (PP# 9F8764),” in docket IDs EPA-HQ-OPP-2019-0652 and EPA-HQ-2020-0047.
Adequate enforcement methodologies are available in the Pesticide Analytical Manual (PAM) Vol. II for enforcement of S-metolachlor crop and livestock tolerances. Pesticide regulation section 180.368, lists a gas chromatography with nitrogen-phosphorus detector (GC/NPD) method (Method I) for determining residues in/on crop commodities and a gas chromatography with mass selective detector (GC/MSD) method (Method II) for determining residues in livestock commodities. These methods determine residues of metolachlor and its metabolites as either CGA-37913 or CGA-49751 following acid hydrolysis.
The methods 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:
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.
No maximum residue limits (MRLs) for S-metolachlor have been established or proposed by Codex.
There was one comment received on the notice of filing. The comment stated that IR-4 is trying to get this chemical through during a pandemic and without public notice. The commenter also stated that this chemical should not be used on any food products that American's eat. In response, EPA notes 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 appears to be directed at the underlying statute and not EPA's implementation of it; the comment provides no information relevant the Agency's safety determination.
The Agency is establishing the tolerances for grain, aspirated fractions and soybean, seed at different levels than the petitioner requested. For grain, aspirated fractions, EPA calculated the tolerance level using the highest average field trial (HAFT) residues in combination with the median processing factor from the submitted soybean data. This results in a tolerance of 4 ppm rather than the proposed tolerance of 2.0 ppm. EPA calculated the tolerance level for soybean, seed using the HAFT residue values from the submitted soybean data in the Organization for Economic Cooperation and Development (OECD) MRL calculator. This results in a tolerance of 0.9 ppm rather than the proposed tolerance of 1.0 ppm. In addition, the commodity definitions were revised for grain, aspirated fractions and soybean, seed. Finally, a tolerance for residues in/on soybean, meal at 1.5 ppm has been added by the Agency based on the submitted soybean data, because the HAFT residues in combination with the median processing factor from the submitted data result in a value higher than the tolerance level for soybean, seed.
Therefore, tolerances are established for residues of S-metolachlor, S-2-chloro-N-(2-ethyl-6-methylphenyl)-N-(2-methoxy-1-methylethyl)acetamide, its R-enantiomer, and its metabolites, determined as the derivatives, 2-(2-ethyl-6-methylphenyl)amino-1-propanol and 4-(2-ethyl-6-methylphenyl)-2-hydroxy-5-methyl-3-morpholinone, calculated as the stoichiometric equivalent of S-metolachlor in or on dill, seed at 15 ppm; dillweed at 5 ppm; dillweed, dried leaves at 9 ppm; rosemary, dried leaves at 2 ppm; rosemary, fresh leaves at 1.5 ppm; and soybean, meal at 1.5 ppm. In addition, the Agency is increasing the tolerances for residues of S-metolachlor in or on grain, aspirated fractions to be 4 ppm and soybean, seed to be 0.9 ppm.
This action establishes tolerances under FFDCA section 408(d) in response to petitions submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it considered a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the 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
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal Governments, on the relationship between the National Government and the States or Tribal Governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian Tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
The additions and revisions read as follows:
(a) * * *
(2) * * *
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Final rule; petition for reconsideration.
This document responds to a joint Petition for Reconsideration (Petition) that was submitted on October 31, 2019, by the American Gas Association, the American Petroleum Institute, the American Public Gas Association, and the Interstate Natural Gas Association of America (the Associations). In the Petition, the Associations requested that PHMSA amend the final rule titled “Safety of Gas Transmission Pipelines: MAOP Reconfirmation, Expansion of Assessment Requirements, and Other Related Amendments” (Gas Transmission Final Rule) published in the
The effective date of this rule is July 1, 2020.
For technical questions, contact Steve Nanney, Project Manager, by telephone at 713-272-2855 or by email at
On October 1, 2019, (84 FR 52180) PHMSA published a final rule titled, “Safety of Gas Transmission Pipelines: MAOP Reconfirmation, Expansion of Assessment Requirements, and Other Related Amendments,” (Gas Transmission Final Rule) that amended the Pipeline Safety Regulations (PSR) at 49 CFR part 192 to improve the safety of onshore gas transmission pipelines. The Gas Transmission Final Rule addressed integrity management requirements and other requirements.
The Gas Transmission Final Rule focused on the actions an operator must take to reconfirm the maximum allowable operating pressure (MAOP) of previously untested natural gas transmission pipelines and pipelines lacking certain material or operational records. It also required operators to reconfirm the MAOP of those segments and gather any necessary material property records they might need to do so, where the records needed to substantiate the MAOP are not traceable, verifiable, and complete. Examples of the records necessary to confirm MAOP include pressure test records or material property records (mechanical properties) that verify the MAOP is appropriate for the class location.
On October 31, 2019, the American Public Gas Association, the American Gas Association, the Interstate Natural Gas Association, and the American Petroleum Institute (the Associations) submitted a Petition for Reconsideration of the Gas Transmission Final Rule in accordance with 49 CFR 190.335. In the Petition, the Associations requested that PHMSA (1) clarify that the recordkeeping requirement in § 192.5(d) only applies to transmission pipelines, and (2) limit the applicability of the MAOP reconfirmation requirements in § 192.624(a)(1) to those pipeline segments that do not have a traceable, verifiable, and complete pressure test record under § 192.619(a)(2). PHMSA granted the Petition and responded with a letter dated December 20, 2019, in accordance with 49 CFR 190.337(b).
In the Gas Transmission Final Rule published on October 1, 2019, PHMSA added § 192.5(d) to require an operator to have and maintain records that document the current class location of each pipeline segment. In the preamble, PHMSA stated that this recordkeeping requirement applies to each operator of a gas transmission pipeline; however, PHMSA inadvertently omitted language in the rule's regulatory text that would have made clear that the recordkeeping requirements of that section applied only to gas transmission pipelines. In their Petition, the Associations requested that PHMSA clarify that the recordkeeping requirements in § 192.5(d) only apply to gas transmission pipelines. This request aligns with the final rule's original intent.
After reviewing the Petition, the language in the Gas Transmission Final Rule, and the Pipeline Safety Regulations, PHMSA granted the Associations' request to clarify that the recordkeeping requirements in § 192.5(d) only apply to gas transmission pipelines. The recordkeeping requirements of that section apply to records that document current class location determinations and records that demonstrate how an operator arrived at such a determination for each class location. PHMSA has concluded that the change requested in the Petition is appropriate, is consistent with the original intent of the final rule, and does not compromise safety.
In the Gas Transmission Final Rule, PHMSA defined a set of pipeline segments for which operators must reconfirm the MAOP. Specifically, § 192.624(a)(1) requires operators of certain gas transmission pipelines to reconfirm MAOP if, among other things, the “records necessary to establish the MAOP in accordance with § 192.619(a) . . . are not traceable, verifiable, and complete” (TVC). In the Petition, the Associations requested that PHMSA revise § 192.624(a)(1) to clarify that it does not apply where an operator already has records necessary to establish MAOP under § 192.619(a)(2) (
PHMSA granted the Associations' Petition to limit the applicability of the MAOP reconfirmation requirements of § 192.624(a)(1) to those pipeline segments that do not have TVC pressure test records under § 192.619(a)(2).
As already specified in the Gas Transmission Rule, if operators are missing any material properties during anomaly evaluations and repairs, operators must confirm those material properties under §§ 192.607 and 192.712(e) through (g).
These amendments are made pursuant to the Federal Pipeline Safety Statutes (49 U.S.C. 60101
Executive Order 12866 (“Regulatory Planning and Review”
This document amends the Gas Transmission Final Rule and imposes no incremental changes or costs to the regulated industry, except that the amendments may provide relief to the extent the changes reduce confusion by improving the clarity of the regulations. Therefore, this is a non-significant action and was not reviewed by OMB.
The Regulatory Flexibility Act, as amended by the Small Business Regulatory Flexibility Fairness Act of 1996 (5 U.S.C. 601
These amendments impose no new requirements for the recordkeeping and reporting contained in the October 1, 2019, Gas Transmission Final Rule.
These amendments to the Gas Transmission Final Rule do not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501
PHMSA prepared an analysis of the UMRA considerations in the final regulatory impact analysis for the Gas Transmission Final Rule, which is available in the docket for the rulemaking. These amendments to the Gas Transmission Final Rule have no substantial effect on that analysis. Therefore, PHMSA determines that these amendments imposes no unfunded mandates.
PHMSA had analyzed the Gas Transmission Final Rule in accordance with the National Environmental Policy Act (NEPA) (42 U.S.C. 4321
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to
PHMSA analyzed these amendments to the Gas Transmission Final Rule in accordance with Executive Order 13132 (“Federalism”
PHMSA analyzed the Gas Transmission Final Rule and determined that the consultation and funding requirements of Executive Order 13132 do not apply. These amendments to Gas Transmission Final Rule have no substantial effect on that analysis. These amendments to the Gas Transmission Final Rule do not have a substantial direct effect on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. These amendments do not impose any substantial direct compliance costs on State and local governments.
PHMSA analyzed the Gas Transmission Final Rule and determined that the requirements of Executive Order 13211 (“Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use”)
This document was analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”)
Under Executive Order 13609 (“Promoting International Regulatory Cooperation”
A regulation identifier number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.
Incorporation by reference, Integrity assessments, Material properties verification, MAOP reconfirmation, Pipeline safety, Predicted failure pressure, Recordkeeping, Risk assessment, Safety devices.
In consideration of the foregoing, PHMSA is amending 49 CFR part 192 as follows:
30 U.S.C. 185(w)(3), 49 U.S.C. 5103, 60101
(d) An operator must have records that document the current class location of each gas transmission pipeline segment and that demonstrate how the operator determined each current class location in accordance with this section.
(a) * * *
(1) Records necessary to establish the MAOP in accordance with § 192.619(a)(2), including records required by § 192.517(a), are not traceable, verifiable, and complete and the pipeline is located in one of the following locations:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS is implementing annual harvest specifications and management measures for the northern subpopulation of Pacific sardine (hereafter, Pacific sardine), for the fishing year from July 1, 2020, through June 30, 2021. This final rule will prohibit most directed commercial fishing for Pacific sardine off the coasts of Washington, Oregon, and California. Pacific sardine harvest will be allowed only in the live bait fishery, minor directed fisheries, as incidental catch in other fisheries, or as authorized under exempted fishing permits. The incidental harvest of Pacific sardine will be limited to 20 percent by weight of all fish per trip when caught with other stocks managed under the Coastal Pelagic Species Fishery Management Plan or up to 2 metric tons per trip when caught with non-Coastal Pelagic Species stocks. The annual catch limit for the 2020-2021 Pacific sardine fishing year is 4,288 metric tons. This final rule is intended to conserve and manage the Pacific sardine stock off the U.S. West Coast.
Effective July 1, 2020.
A copy of the report “Assessment of Pacific Sardine Resource in 2020 for U.S.A. Management in 2020-2021” is available at:
Lynn Massey, West Coast Region, NMFS, (562) 436-2462,
NMFS manages the Pacific sardine fishery in the U.S. exclusive economic zone (EEZ) off the West Coast (California, Oregon, and Washington) in accordance with the Coastal Pelagic Species (CPS) Fishery Management Plan (FMP). The FMP and its implementing regulations require NMFS to set annual catch levels for the Pacific sardine fishery based on the annual specification framework and control rules in the FMP. These control rules include the harvest guideline (HG) control rule, which, in conjunction with the overfishing limit (OFL) and acceptable biological catch (ABC) rules in the FMP, are used to manage harvest levels for Pacific sardine, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801
This final rule implements the annual catch levels and reference points for the 2020-2021 fishing year. The final rule adopts, without changes, the catch levels and restrictions that NMFS proposed in the rule published on May 27, 2020 (85 FR 31733), including the OFL and ABC that take into consideration uncertainty surrounding OFL, including uncertainty in the current estimate of biomass for Pacific sardine in the U.S. EEZ off the U.S. West Coast. The proposed rule for this action included additional background on the specifications and details of how the Pacific Fishery Management Council (Council) derived its recommended specifications for Pacific sardine. Those details are not repeated here. For additional information on this action, please refer to the proposed rule (85 FR 31733).
This final rule implements an OFL of 5,525 mt and an ABC and an annual catch limit (ACL) of 4,288 mt. These reference points are based on the control rules and management framework in the CPS FMP and on an estimate of Pacific sardine biomass of 28,276 mt from a stock assessment completed by NMFS Southwest Fishery Science Center. The Council and NMFS determined this stock assessment to be the best scientific information available for setting Pacific sardine harvest specifications for the 2020-2021 fishing year.
Additionally, this rule implements an annual catch target (ACT) of 4,000 mt, as well as restrictions on the incidental catch of Pacific sardine by other fisheries and a trip limit that could be imposed on directed fishing for sardine as live bait (see below list of management and accountability measures). The annual harvest limits and management measures were developed in the context of the fact that NMFS declared the Pacific sardine stock overfished in July 2019. Since the biomass remains below its minimum stock size threshold (MSST) of 50,000 mt, the FMP requires that incidental catch of Pacific sardine in other CPS fisheries be limited to an incidental allowance of no more than 20 percent by weight (instead of a maximum of 40 percent allowed when below the CUTOFF (
The final specifications include the following management measures and inseason accountability measures for commercial sardine harvest during the 2020-2021 fishing year:
(1) If landings in the live bait fishery reach 2,500 mt, then a 1-mt per trip limit of sardine will apply to the live bait fishery.
(2) A 20-percent incidental per landing by weight catch allowance will apply to other CPS primary directed fisheries (
(3) If the ACT of 4,000 mt is attained, then a 1-mt per trip limit of sardine will apply to all CPS fisheries (
(4) An incidental per landing allowance of 2 mt of sardine in non-CPS fisheries.
All sources of catch including any EFP set-asides, the live bait fishery, and other minimal sources of harvest, such as incidental catch in CPS and non-CPS fisheries, and minor directed fishing, will be accounted for against the ACT and ACL.
The NMFS West Coast Regional Administrator will publish a notice in the
At the April 2020 Council meeting, although formal review and approval was removed from the Council's agenda, they expressed support for three EFP proposals requesting an exemption from the prohibition to directly harvest sardine during their discussion of sardine management measures. This action accounts for NMFS' potential approval of up to 1,145 mt of the ACL to be harvested under EFPs.
On May 27, 2020, NMFS published a proposed rule for this action and solicited public comments (85 FR 31733) through June 11, 2020. NMFS received two public comments relevant to the proposed rule—one from the CPS industry group California Wetfish Producers Association (CWPA) and one from the environmental group Oceana. The CWPA supported the proposed rule in its entirety. After considering the public comments, no changes were made from the proposed rule. NMFS summarizes and responds to the comment letter from Oceana below.
Much of Oceana's commentary about ESA analysis address concerns beyond the scope of the proposed action, and also appear to conflate species listed under the ESA with species not listed, particularly marine predators. Relevant to this action, Oceana did not introduce any new scientific information that would require NMFS to reinitiate consultation under the ESA. NMFS notes that it determined that the 2020-2021 harvest specifications fall well within the scope of impacts to listed species, including listed marine predators, considered under prior consultations for the fishery, and that fishing activities pursuant to this rule are not likely to jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS or result in the destruction or adverse modification of critical habitat of any such species.
As it relates to the comment that NMFS should set a lower ACL and further reduce catch in smaller scale fishery sectors, NMFS disagrees that setting a lower ACL is necessary. The ACL should be viewed in the context of the OFL for the northern subpopulation of Pacific sardine of 5,525 mt and the ABC of 4,288 mt that takes into account scientific uncertainty surrounding the OFL. These reference points were recommended by the Council based on the control rules in the FMP and were endorsed by the Council's SSC as the best scientific information available for preventing overfishing. In addition, the management measures adopted by the Council, including an ACT that was set even lower than the ACL (4,000 mt), are more than adequate to ensure catch does not exceed the ACL/ABC and OFL and therefore prevent overfishing.
The assertion in Oceana's comment that NMFS and the Council have set higher catch levels as Pacific sardine has declined is incorrect. Each year that the stock has declined the Council has recommended and NMFS has implemented catch levels commensurate with any decline in the stock. In fact, for this 2020-2021 fishing year the estimated biomass has actually increased from the previous fishing year, however the catch limit has been reduced, which is the opposite of increasing harvest.
Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this final rule is consistent with the CPS FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.
There is good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness of these final harvest specifications for the 2020-2021 Pacific sardine fishing season. In accordance with the FMP, this rule was recommended by the Council at its meeting in April 2020. The contents of this rule are based on the best scientific information available on the population status of Pacific sardine. Making these final specifications effective on July 1, the first day of the fishing season, is necessary for the conservation and management of the Pacific sardine resource because last year's restrictions on harvest are not effective after June 30. The FMP requires a prohibition on directed fishing for Pacific sardine for the 2020-2021 fishing year because the sardine biomass has dropped below the 150,000-mt threshold for a primary directed commercial fishery. The purpose of this threshold in the FMP, and for prohibiting directed fishing when the biomass drops below this level, is to protect the stock when
Delaying the effective date of this rule beyond July 1 would be contrary to the public interest because it would jeopardize the sustainability of the Pacific sardine stock. Furthermore, most affected fishermen are aware that the Council recommended that primary directed fishing be prohibited for the 2020-2021 fishing year and are fully prepared to comply with the prohibition.
This final rule is exempt from the procedures of Executive Order 12866 because this action is an annual fishery management specification under the Magnuson-Stevens Act.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities for purposes of the Regulatory Flexibility Act. The factual basis for the certification was published in the proposed rule and is not repeated here. As a result, a regulatory flexibility analysis was not required and none was prepared.
Pursuant to Executive Order 13175, this final rule was developed after meaningful consultation and collaboration with the tribal representative on the Council who has agreed with the provisions that apply to tribal vessels.
This action does not contain a collection-of-information requirement for purposes of the Paperwork Reduction Act.
16 U.S.C. 1801
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend Class D airspace at Eastern Oregon Regional at Pendleton Airport. This action also proposes to amend Class E airspace, designated as a surface area. Additionally, this action proposes to establish Class E airspace, designated as an extension to a Class D or Class E surface area. Further, this action proposes to amend Class E airspace, extending upward from 700 feet above the surface, and remove the Class E airspace extending upward from 1,200 feet above the surface. This action also proposes to remove the Pendleton VORTAC from the airspace legal descriptions. Lastly, this action proposes administrative corrections to the airspaces legal descriptions. This action would ensure the safety and management of IFR operations at the airport.
Comments must be received on or before August 20, 2020.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1-800-647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2020-0604; Airspace Docket No. 19-ANM-33, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Matthew Van Der Wal, Federal Aviation Administration, Western Service Center, Operations Support Group, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-3695.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority, as it would amend the Class D and Class E airspace at Eastern Oregon Regional at Pendleton Airport, Pendleton, OR, to support instrument flight rules (IFR) operations at the airport.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2020-0604; Airspace Docket No. 19-ANM-33”. The postcard will be date/time stamped and returned to the commenter.
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) Part 71 by amending the Class D airspace at Eastern Oregon Regional at Pendleton Airport, Pendleton, OR. The proposal would reduce the circular radius of the Class D and remove the extension to the west of the airport. The airspace area would be described as follows: That airspace extending upward from the surface to and including 4,000 feet MSL within a 4.1-mile radius of Eastern Oregon Regional at Pendleton Airport. This surface area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
This action also proposes to amend Class E airspace, designated as a surface area, to be coincident with the new Class D dimensions. The airspace area would be described as follows: That airspace extending upward from the surface within a 4.1-mile radius of Eastern Oregon Regional at Pendleton Airport. This surface area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
Additionally, this action proposes to establish Class E airspace, designated as an extension to a Class D or Class E surface area. The proposed area is designed to contain IFR aircraft descending below 1,000 feet above the surface when arriving from the southeast of the airport. This airspace area would be described as follows: That airspace extending upward from the surface within 1 mile each side of the 129° bearing from the airport, extending from the 4.1-mile radius to 7.3 miles southeast of Eastern Oregon Regional at Pendleton Airport.
Further, this action proposes to amend Class E airspace extending upward from 700 feet above the surface. The action proposes to properly size the airspace to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. This airspace area would be described as follows: That airspace extending upward from 700 feet above the surface within a 6.6-mile radius of the airport, and within 3.5 miles each side of the 090° bearing from the airport extending from the 6.6-mile radius to 14.8 miles east of the airport, and within 3.4 miles each side of the 129° bearing from the airport extending from the 6.6-mile radius to 14.3 miles southeast of the airport, and within 4 miles south and 8 miles north of the 270° bearing from the airport, extending from 4 miles west of the airport to 20 miles west of Eastern Oregon Regional at Pendleton Airport. The proposed description removes the airspace extending over Hermiston Municipal Airport. To contain IFR operations at Hermiston Municipal Airport, a separate NPRM action (FAA-2020-0605) proposes to establish Class E airspace, extending upward from 700 feet above the surface, at Hermiston, OR.
This action also proposes to remove Class E airspace extending upward from 1,200 feet above the surface. This area is designed to contain IFR aircraft transitioning to/from the terminal and en route environments. This area is wholly contained within Class E en route airspace which overlies the entire Pendleton area, duplication is not necessary.
The action proposes to remove the Pendleton VORTAC and all references to the VORTAC from the Class D, E2, and E5 legal descriptions. The navigational aid is not needed to define the airspace. Removal of the navigational aid allows the airspace to be defined from a single reference point which simplifies how the airspace is described.
Lastly, this action proposes administrative corrections to the airspaces legal descriptions. The airport name on the second line of the text header does not match the FAA database and should be updated to “Eastern Oregon Regional at Pendleton Airport”. The airport's geographic coordinates do not match the FAA database and should be updated to “lat. 45°41′41″ N, long. 118°50′35″ W” The last sentence in the Class D and Class E surface area legal descriptions contain the term “Airport/Facilities Directory” the term should be updated to “Chart Supplement”.
Class D, E2, E4, and E5 airspace designations are published in paragraphs 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial, and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from the surface to and including 4,000 feet MSL within a 4.1-mile radius of Eastern Oregon
That airspace extending upward from the surface within a 4.1-mile radius of Eastern Oregon Regional at Pendleton Airport. This surface area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
That airspace extending upward from the surface within 1 mile each side of the 129° bearing from the airport, extending from the 4.1-mile radius to 7.3 miles southeast of Eastern Oregon Regional at Pendleton Airport.
That airspace extending upward from 700 feet above the surface within a 6.6-mile radius of the airport, and within 3.5 miles each side of the 090° bearing from the airport extending from the 6.6-mile radius to 14.8 miles east of the airport, and within 3.4 miles each side of the 129° bearing from the airport extending from the 6.6-mile radius to 14.3 miles southeast of the airport, and within 4 miles south and 8 miles north of the 270° bearing from the airport, extending from 4 miles west of the airport to 20 miles west of Eastern Oregon Regional at Pendleton Airport.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend Class D airspace at Yakima Air Terminal/McAllister Field Airport. This action also proposes to amend Class E airspace, designated as a surface area. Additionally, this action proposes to remove Class E airspace, designated as an extension to a Class D or Class E surface area. Further, this action proposes to amend Class E airspace, extending upward from 700 feet above the surface, and remove the Class E airspace extending upward from 1,200 feet above the surface. This action also proposes to remove the Yakima VOR from the Class E5 airspace legal description. Lastly, this action proposes administrative corrections to the airspaces legal descriptions. This action would ensure the safety and management of IFR operations at the airport.
Comments must be received on or before August 20, 2020.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1-800-647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2020-0606; Airspace Docket No. 19-ANM-100, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Matthew Van Der Wal, Federal Aviation Administration, Western Service Center, Operations Support Group, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-3695.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority, as it would amend the Class D and Class E airspace at Yakima Air Terminal/McAllister Field Airport, Yakima, WA, to support instrument flight rules (IFR) operations at the airport.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2020-0606; Airspace Docket No. 19-ANM-100”. The postcard will be date/time stamped and returned to the commenter.
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) Part 71 by amending the Class D airspace at Yakima Air Terminal/McAllister Field Airport. To properly contain IFR departures flying toward or over rising terrain, two extensions should be added to the airspace area. One extension would be east of the airport and the other extension would be west of the airport. The airspace area would be described as follows: That airspace extending upward from the surface to and including 3,600 feet MSL within a 4.2-mile radius of the airport, and within 2.6 miles each side of the 103° bearing from the airport, extending from the 4.2-mile radius to 8.8 miles east of the airport, and within 2.3 miles each side of the 289° bearing from the airport, extending from the 4.2-mile radius to 6.9 miles west of Yakima Air Terminal/McAllister Field Airport. This surface area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
This action also proposes to amend Class E airspace, designated as a surface area, to be coincident with the new Class D dimensions. The airspace area would be described as follows: That airspace extending upward from the surface within a 4.2-mile radius of the airport, and within 2.6 miles each side of the 103° bearing from the airport, extending from the 4.2-mile radius to 8.8 miles east of the airport, and within 2.3 miles each side of the 289° bearing from the airport, extending from the 4.2-mile radius to 6.9 miles west of Yakima Air Terminal/McAllister Field Airport. This Class D airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
Additionally, this action proposes to remove Class E airspace, designated as an extension to a Class D or Class E surface area. This area is not required based on the instrument procedures published for the airport.
Further, this action proposes to amend Class E airspace extending upward from 700 feet above the surface. To properly size the area, it should be significantly reduced. This area is designed to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. This airspace area would be described as follows: That airspace extending upward from 700 feet above the surface within a 4.2-mile radius of the airport, and within 3.4 miles each side of the 107° bearing from the airport, extending from the 4.2-mile radius to 11.3 miles east of the airport, and within 3.6 miles each side of the 290° bearing from the airport, extending from the 4.2-mile radius to 11.6 miles west of Yakima Air Terminal/McAllister Field Airport.
This action also proposes to remove Class E airspace extending upward from 1,200 feet above the surface. This area is designed to contain IFR aircraft transitioning to/from the terminal and en route environments. This area is wholly contained within Class E en route airspace which overlies the entire Yakima area, duplication is not necessary.
The action proposes to remove the Yakima VOR and all references to the VOR from the Class E5 legal description. The navigational aid is not needed to define the airspace. Removal of the navigational aid allows the airspace to be defined from a single reference point, which simplifies how the airspace is described.
Lastly, this action proposes administrative corrections to the airspaces legal descriptions. The airport name on the second line of the text header does not match the FAA database and should be updated to “Yakima Air Terminal/McAllister Field Airport”. The airport's geographic coordinates do not match the FAA database and should be updated to “lat. 46°34′05″ N, long. 120°32′39″ W” The last two sentences in the Class D and Class E surface area legal descriptions contain incorrect verbiage, the sentences should be updated to “This Class D (or E, as appropriate) airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.”
Class D, E2, E4, and E5 airspace designations are published in paragraphs 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial, and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from the surface to and including 3,600 feet MSL within a 4.2-mile radius of the airport, and within 2.6 miles each side of the 103° bearing from the airport, extending from the 4.2-mile radius to 8.8 miles east of the airport, and within 2.3 miles each side of the 289° bearing from the airport, extending from the 4.2-mile radius to 6.9 miles west of Yakima Air Terminal/McAllister Field Airport. This Class D airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
That airspace extending upward from the surface within a 4.2-mile radius of the airport, and within 2.6 miles each side of the 103° bearing from the airport, extending from the 4.2-mile radius to 8.8 miles east of the airport, and within 2.3 miles each side of the 289° bearing from the airport, extending from the 4.2-mile radius to 6.9 miles west of Yakima Air Terminal/McAllister Field Airport. This Class E airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
That airspace extending upward from 700 feet above the surface within a 4.2-mile radius of the airport, and within 3.4 miles each side of the 107° bearing from the airport, extending from the 4.2-mile radius to 11.3 miles east of the airport, and within 3.6 miles each side of the 290° bearing from the airport, extending from the 4.2-mile radius to 11.6 miles west of Yakima Air Terminal/McAllister Field Airport.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to establish Class E airspace, extending upward from 700 feet above the surface, at Hermiston Municipal Airport. This action would ensure the safety and management of IFR operations at the airport.
Comments must be received on or before August 20, 2020.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1-800-647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2020-0605; Airspace Docket No. 19-ANM-34, at the beginning of your comments. You may also submit comments through the internet at
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Matthew Van Der Wal, Federal Aviation Administration, Western Service Center, Operations Support Group, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-3695.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority, as it would establish Class E airspace at Hermiston Municipal Airport, Hermiston, OR, to support instrument flight rules (IFR) operations at the airport.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) Part 71 by establishing Class E airspace, extending upward from 700 feet above the surface, at Hermiston Municipal Airport. This area is designed to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. This airspace area would be described as follows: That airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Hermiston Municipal Airport.
Class E5 airspace designations are published in paragraph 6005 of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial, and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Hermiston Municipal Airport.
Office of National Marine Sanctuaries (ONMS), National Ocean Service (NOS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Proposed rule; withdrawal of notice of intent to prepare an environmental impact statement; notice of availability of a draft management plan and draft environmental assessment.
The National Oceanic and Atmospheric Administration (NOAA) is proposing revised regulations, a revised management plan, and a draft environmental assessment for Monterey Bay National Marine Sanctuary (MBNMS or sanctuary). The proposed rule includes four modifications to existing MBNMS regulations, the modification of an appendix to the MBNMS regulations that describes sanctuary zone boundaries, and the addition of one new definition to the MBNMS regulations. A draft environmental assessment (EA) has been prepared for this proposed action. NOAA is soliciting public comments on the proposed rule, draft revised management plan, and draft EA.
NOAA will consider all comments received by September 4, 2020. NOAA will hold a virtual public meeting at the following date and time: Thursday, July 23, 2020, 6:00 p.m.-8:00 p.m. PT. In addition, NOAA will accept public comments on this proposed rule during the Monterey Bay National Marine Sanctuary virtual advisory council meeting on Friday, August 21, 2020 at 12:30 p.m. PT and at the Greater Farallones National Marine Sanctuary virtual advisory council meeting on Monday, August 24, 2020 at 11:00 a.m. PT.
You may submit comments on the proposed rule, the draft management plan, and/or the draft EA, identified by NOAA-NOS-2020-0094, by any of the following methods:
•
•
To participate in the virtual public meetings, online registration is requested in advance via the following links. When joining the session, if possible, select the option to use your computer's audio. If you cannot use computer audio it is possible to select the phone audio option upon joining the event. In GoToWebinar, The phone number and audio PIN will show up in the audio pane when you select phone audio.
If you would like to comment during the virtual public meetings, please sign up in advance by selecting “yes” during the online registration. The order of comments will be based on your date and time of registration. If you will be participating by phone, send an email to
For more details on the virtual public meetings, visit
Copies of the proposed rule, draft management plan and draft EA can be downloaded or viewed on the internet at
Paul Michel, Monterey Bay National Marine Sanctuary Superintendent, at
NOAA's Office of National Marine Sanctuaries (ONMS) serves as the trustee for a network of underwater parks encompassing more than 600,000 square miles of marine and Great Lakes waters from Washington state to the Florida Keys, and from Lake Huron to American Samoa. The network includes a system of 14 national marine sanctuaries and Papahānaumokuākea and Rose Atoll marine national monuments.
NOAA established MBNMS in 1992 for the purposes of protecting and managing the conservation, ecological, recreational, research, educational, historical, and aesthetic resources and qualities of the area, including the submarine Monterey Canyon and, subsequently, Davidson Seamount. MBNMS is located offshore of California's central coast, encompassing a shoreline length of approximately 276 statute miles (240 nmi) between Rocky Point (Marin County) and Cambria (San Luis Obispo County). With the inclusion of the Davidson Seamount Management Zone (DSMZ) in 2008, the sanctuary spans approximately 6,094 square statute miles (4,602 square nautical miles) of ocean and coastal waters, and the submerged lands thereunder, extending an average distance of 30 statute miles (26 nmi) from shore. Supporting some of the world's most diverse and productive marine ecosystems, it is home to numerous mammals, seabirds, fishes, invertebrates, sea turtles and plants.
The primary purpose of the proposed action is to fulfill section 304(e) of the National Marine Sanctuaries Act (16
The management plan review process includes, among other things, an assessment of existing sanctuary regulations to determine if any regulatory changes are needed to support management plan objectives. NOAA is proposing to make four modifications to existing MBNMS regulations, to modify Appendix E to the MBNMS regulations, and to add one new definition to the MBNMS regulations. These changes will support more efficient and effective program management and enhanced stewardship of the sanctuary's natural resources. The need for each individual regulatory action is described in greater detail in section II (Summary of the Proposed Changes to MBNMS Regulations) below.
In accordance with the National Environmental Policy Act (NEPA), on August 27, 2015, NOAA published a notice of intent to prepare an Environmental Impact Statement (EIS) in order to identify and analyze potential impacts associated with a review of the 2008 management plan for MBNMS (80 FR 51973). Preliminary analysis of this revised management plan and the proposed regulatory changes indicates no significant impacts are expected. Accordingly, NOAA determined the preparation of an EIS would not be necessary, and instead prepared an EA, which is available for public review. NOAA is therefore withdrawing the portion of the
NOAA has conducted an analysis of the revised management plan and the regulatory changes in compliance with the National Environmental Policy Act (NEPA) of 1969, as amended (42 U.S.C. 4321
The process for this action is composed of four major stages: (1) Information collection and characterization via development and issuance of a sanctuary condition report that describes the status and trends of driving forces and pressures on the ecosystem and natural and archaeological resource conditions in MBNMS, and public scoping to further identify issues associated with revising the management plan (scoping was completed on October 30, 2015); (2) preparation and release of a proposed rule, draft revised management plan, and draft EA in accordance with NEPA; (3) public review and comment on the proposed rule, draft management plan, and draft EA; and (4) preparation and release of a final management plan and final EA, and any final amendments to the MBNMS regulations, if appropriate. With the publication of this proposed rule, NOAA completes the second phase of this process and enters the third phase.
Together with this proposed rule, NOAA is releasing the draft management plan and draft EA. The draft management plan describes proposed strategies and action plans for future conservation and management of the sanctuary, and the draft EA contains more detailed information on the considerations of this proposal, including an assessment of alternatives, analysis of potential environmental impacts, and references. The draft management plan and draft EA can be found through the website listed in the
NOAA proposes to add a new definition for “beneficial use of dredged material” at 15 CFR 922.131 and to amend 15 CFR 922.132(f) to clarify that
This action would amend 15 CFR 922.131 by adding a definition for “beneficial use of dredged material.” The new definition would clarify that the existing prohibition against permitting the disposal of dredged material in MBNMS does not apply to habitat restoration projects using clean dredged material, because such beneficial use of dredged material would not be considered “disposal.” In addition, this definition would apply only to dredged material removed from any of the four public harbors immediately adjacent to the sanctuary (Pillar Point, Santa Cruz, Moss Landing, or Monterey). This action would also amend 15 CFR 922.132(f) to clarify that the disposal of dredged material does not include the beneficial use of dredged material. Together, these regulatory changes would clarify that the language in the terms of designation and MBNMS regulations that prohibit permitting the disposal of dredged material within the sanctuary other than at sites authorized by the U.S. Environmental Protection Agency prior to the effective date of designation (Article V of the MBNMS Terms of Designation, 73 FR 70477, 70494 (Nov. 20, 2008): 15 CFR 922.132(f)), do not preclude NOAA from authorizing the beneficial use of clean dredged material within sanctuary boundaries when suitable for habitat restoration purposes.
In the current MBNMS Management Plan (November 2008
First, there are several examples in which NOAA has accommodated requests for beneficial use of sediment for beach nourishment in locations adjacent to the sanctuary where the bathymetry and topography allow space for sediment placement above the MHW line. Beach replenishment projects currently occur at Del Monte beach in Monterey and Twin Lakes beach in Santa Cruz. The City of Monterey has an MBNMS authorization for the annual placement of clean dredged material from Monterey Harbor at two onshore
NOAA anticipates that the employment of additional habitat restoration sites—namely, the placement of clean dredged material
Absent clarification in past and current MBNMS regulations that
The beneficial use of clean dredged material for habitat restoration purposes would provide an additional effective and sustainable option to address sites in MBNMS where shoreline habitat and resources are increasingly impacted by erosion due to shoreline structures, coastal armoring, sea level rise, and documented, increased storm activity.
The beneficial use of dredged material at sites within the sanctuary, such as Surfer's Beach, would require: A sanctuary permit or authorization; additional rigorous testing and screening of the material to ensure that the material is both clean and suitable for habitat restoration; additional review of the proposed project under NEPA and other applicable statutes; and permitting, as applicable, by other federal, state and local regulatory authorities with jurisdiction over the proposed beneficial use project. Furthermore, a proposed project involving use of dredged material would only be eligible for approval by NOAA if the project demonstrated a sanctuary habitat restoration purpose under the proposed new definition of
Clean dredged materials from harbors immediately adjacent to the sanctuary would be considered an eligible source of material for restoring (or partially restoring) habitats degraded by interruption of local sediment transport cells by harbor infrastructure (
This proposed action, which would clarify the ability of NOAA to authorize beneficial use of clean and suitable dredged material originating from any of the four adjacent public harbors for habitat restoration purposes within the sanctuary, would be consistent with the regulatory framework for dredge, fill, and disposal projects as outlined by the Clean Water Act (33 U.S.C. 1251
Finally, pursuing this proposed action would also be consistent with current state and federal coastal management practices that favor softscape approaches to restoring and protecting beaches and shorelines over hardscape methods (
For all of the above reasons, NOAA anticipates that the placement of clean locally-dredged material in the sanctuary for habitat restoration purposes would be appropriate and consistent with the existing regulatory framework for dredge, fill, and disposal projects. Accordingly, NOAA proposes this regulatory change to clarify the ability of NOAA to authorize the beneficial use of clean and suitable dredged material for habitat restoration purposes within MBNMS, because such proposed use would not be “disposal of dredged material” within the meaning of the MBNMS terms of designation and regulations.
With this proposed rule, NOAA would amend MBNMS regulations to reduce the sea state condition required for motorized personal watercraft (MPWC) access to the Mavericks seasonal-conditional MPWC zone at Half Moon Bay. NOAA would change the current High Surf Warning (HSW) requirement to a less stringent High Surf Advisory (HSA) requirement. The seasonal-conditional MPWC zone was created in 2009 primarily to allow MPWC to support big-wave surfing at Mavericks during winter months when wildlife activity is significantly reduced in this area. Currently, MPWC can freely access the Mavericks seasonal-conditional zone only when HSW conditions (predicted breaking waves at the shoreline of 20 feet or greater) are in effect, as announced by the National Weather Service for San Mateo County during the months of December, January, and February. However, due to unique bathymetric features at Mavericks, waves can exceed 20 feet well before HSW conditions are announced county-wide. Allowing MPWC access to Mavericks during HSA conditions (predicted breaking waves at the shoreline of 15 feet or greater) would allow MPWC presence at the break 3-5 more days per year to provide safety assistance to surfers operating in a highly energized surf zone.
Surfers have developed new techniques for paddling onto larger and larger waves, so paddle surfers now routinely surf extremely large waves at Mavericks during winter HSA conditions when MPWC access to the zone is currently prohibited. In February 2017, an MBNMS Advisory Council subcommittee recommended lowering the current conditional threshold for MPWC access to Mavericks from a HSW to a HSA during the months of December, January, and February to allow expanded use of MPWC for safety assistance to surfers recreating in extreme sea conditions. The MBNMS Advisory Council voted unanimously to support the subcommittee recommendation on February 17, 2017. NOAA agrees with the Advisory Council recommendations and believes it would benefit public safety, while posing no significant added threat of disturbance to protected wildlife in the area due to minimal wildlife activity there during winter extreme high-surf events.
With this proposed rule, NOAA would amend MBNMS regulations by modifying 15 CFR 922.132(c)(1) to correct an error. The current regulatory text at 15 CFR 922.132(c)(1) states, in part, that a list of exempted Department of Defense (DOD) activities at the Davidson Seamount Management Zone (DSMZ) is published in the 2008 MBNMS Management Plan Final Environmental Impact Statement (FEIS). However, due to an administrative error, the list of exempted activities (identified in a December 18, 2006, letter to NOAA from the U.S. Air Force 30th Space Wing and subsequently affirmed by NOAA), was never included in the 2008 FEIS. The MBNMS Superintendent confirmed in a January 5, 2009, letter to the U.S. Air Force 30th Space Wing that NOAA acknowledged the list of exempted activities as valid from the effective date of inclusion of the DSMZ within MBNMS (March 9, 2009) and that NOAA would correct the administrative record and regulations to properly document the exempted DOD activities within the DSMZ. Accordingly, NOAA proposes to modify 15 CFR 922.132(c)(1) by replacing “2008 Final Environmental Impact Statement” with “2020 Final Environmental Assessment for the MBNMS Management Plan Review.”
An appendix in the 2020 draft EA serves as the published list of exempted DOD activities within the DSMZ referenced and confirmed by the January 5, 2009, letter to the U.S. Air Force 30th Space Wing from the MBNMS Superintendent. NOAA herein affirms that the exemptions requested by the Air Force in 2006 and confirmed by NOAA in 2009 have been valid since the effective date of the DSMZ's addition to MBNMS (March 9, 2009).
With this proposed rule, NOAA would amend MBNMS regulations to modify boundaries of four year-round MPWC riding zones in a manner that maintains NOAA's original intent to provide recreational opportunities for MPWC within the sanctuary, while safeguarding sensitive sanctuary resources and habitats from unique threats of disturbance by these watercraft.
Specifically, the proposed modifications would reduce the number of deployed boundary buoys and associated navigational hazards, aesthetic impacts, and mooring failures that create public safety issues, marine debris, seafloor impacts, and excessive maintenance effort. The zones were established in 1992 to provide recreational use areas for MPWC while safeguarding marine wildlife and habitats from the unique capability of MPWC to sharply maneuver at high speeds in the ocean environment and freely access remote and sensitive marine habitat areas, unlike any other type of motorized vessel (57 FR 43310).
The four MPWC riding zones were established near each of the four harbors in the sanctuary where MPWC operators typically launch. The boundaries were delineated without any consideration of practical matters such as buoy station integrity or sustainability. For example, buoys deployed off rocky points have experienced repeated mooring failures due to heavy wave diffraction/reflection, abrasive and mobile rocky substrate affecting mooring tackle, and lack of soft sediments for secure anchor set. Buoys deployed in deep water have repeatedly failed due to suspected interactions with vessels and commercial fishing gear. Mooring failures cause deposition of chain and anchors on the seafloor and pose a hazard to mariners and the public from drifting buoys. Even when buoys hold station, they could present navigation obstacles. Reducing the number of boundary buoys by utilizing more existing marks and geographical features (
Anecdotal observations of MPWC zone use over time by harbor officials, marine enforcement officers, ocean
Reconfiguring zones to be smaller and closer to shore would provide improved MPWC access and operator safety, and would also aid zone monitoring, enforcement, and planned systematic surveys of zone use described in the new MBNMS management plan. Relocation of marker buoys to shallower mooring depths would improve station-keeping, inspection, and maintenance of boundary buoy moorings. Reconfiguration of zones would achieve a 40% reduction in the overall number of deployed MPWC boundary buoys from 15 to 9. It would eliminate six existing buoy mooring stations entirely; replace four existing mooring stations with four new shallower mooring stations; and leave five previous mooring stations unchanged. This would result in the permanent removal of anchors and chain from the seafloor at 10 sites and installation of anchors and chain at four new sites—a 40% net reduction in the number of MPWC boundary buoy mooring sites. As previously stated, the four new mooring stations would be in shallower water and deliberately sited in mud/sand substrate to avoid rocky reef habitat—a purposeful reduction of negative environmental impacts. Zone reconfigurations would result in a 59% reduction of total areal coverage of the four year-round zones, resulting in an equal reduction of surface area subject to direct MPWC interactions with specially protected marine wildlife, such as migratory birds, whales, dolphins, porpoise, turtles, sea lions, and sea otters.
The reconfigured MPWC zones would still provide considerable area adjacent to all four harbors for general use of MPWC, fulfilling the original goal for the zones when established in 1992. The four reconfigured year-round access zones would offer 0.96 square miles (614 acres) of riding area south of Pillar Point Harbor, 2.63 square miles (1,683 acres) off Santa Cruz Harbor, 2.29 square miles (1,466 acres) off Moss Landing Harbor, and 3.10 square miles (1,984 acres) off Monterey Harbor. Maps depicting proposed MPWC zone boundary changes can be found in the draft EA.
The proposed zone reconfigurations would shorten the length of the MPWC access corridors to the Santa Cruz and Monterey zones by 66% and 23% respectively, allowing MPWC operators easier and quicker access to both riding areas. The shorter access corridors would reduce the period of restricted maneuverability for transiting MPWC and thus lower the potential for negative interaction with marine traffic and wildlife as MPWC approach/depart harbor entrances. Planned rotation of the access corridor at Monterey away from the predominant marine traffic pattern to/from the harbor will also reduce the potential for negative interaction with other vessels there. The reconfigured zone boundaries at Santa Cruz would shift that zone closer to shore, improving safety for MPWC operators should they need emergency assistance. A shortened access corridor and zone shift closer to shore at Santa Cruz have been requested by MPWC users in the past.
Each existing MPWC zone would remain at its current general geographical location, with the following changes:
1. Modify the year-round Half Moon Bay MPWC zone by using existing Coast Guard red bell buoy “2” and existing Coast Guard green gong buoy “1S” as boundary points instead of current MBNMS buoys PP2 and PP3; this would enable permanent removal of two buoys from the ocean. By re-shaping the current zone from a parallelogram to a concave pentagon, the zone's general position south of Pillar Point Harbor would be maintained, the zone area would increase by 9% (from .87 sq mi to .96 sq mi), and two buoys would be permanently removed from the waterway, reducing navigational obstructions, risk of mooring failure, and buoy and tackle loss.
2. Modify the year-round Santa Cruz MPWC zone by using existing Coast Guard red/white whistle buoy “SC” as a boundary point, instead of current MBNMS buoy SC7; this would enable permanent removal of one MBNMS buoy from this zone. By re-shaping the current zone from a rectangle to a parallelogram, the zone position would rotate 45° clockwise to the NE, and the zone area would be reduced by 59% (from 6.36 sq mi to 2.63 sq mi). One MBNMS buoy would be permanently removed from the waterway, one buoy would remain on station, and two buoys would be redeployed to shallower depths. The redistributed buoys would be positioned within better visible range of one another, in softer seafloor sediments, and away from rocky points, thus reducing navigational obstructions, risk of mooring failure, and buoy and tackle loss.
The reconfigured zone boundaries at Santa Cruz would shift the zone closer to shore, providing MPWC operators easier and quicker access to the riding area and improved safety, should an MPWC operator need emergency assistance. The transit route to the zone from the entrance of the Santa Cruz Small Craft Harbor would be reduced from 1.35 miles to 0.5 miles, providing a 66% shorter route and transit time for MPWC operators. As noted above, these specific zone modifications have been requested by MPWC users in the past. Since the prescribed 100-yard wide MPWC transit corridor for accessing the zone from the small craft harbor would be shorter, MPWC would be in the transit corridor for less time, resulting in a shorter period of restricted maneuverability and lowered potential for negative interaction with marine traffic and wildlife when approaching/departing the harbor entrance.
3. Modify the year-round Moss Landing MPWC zone by eliminating current MBNMS buoys ML4 and ML5; this would enable permanent removal of two buoys from the ocean. By re-shaping the current zone from an irregular hexagon to a trapezoid, the eastern portion of the zone would remain in its current position, the zone area would be reduced by 72% (from 8.10 sq mi to 2.29 sq mi), and two MBNMS buoys would be permanently removed from the waterway, reducing navigational obstructions, risk of deep-water mooring failures, and buoy and tackle loss.
4. Modify the year-round Monterey MPWC zone by using existing Coast Guard red bell buoy “4” as a boundary point instead of MBNMS buoy MY3; this would enable permanent removal of one MBNMS buoy from this zone. By re-shaping the current zone from a trapezoid to a parallelogram, the zone position would rotate 90° clockwise to the NE, and the zone area would be reduced by 51% (from 6.36 sq mi to 3.10 sq mi). One MBNMS buoy would be permanently removed from the waterway, one buoy would remain on station, and two buoys would be redeployed to shallower depths. The redistributed buoys would be positioned within better visible range of one another, in softer seafloor sediments, and away from rocky points and popular commercial squid fishing grounds, thus reducing navigational obstructions, risk of deep-water mooring failure, risk of disruption to commercial fisheries, and buoy and tackle loss.
The length of the prescribed zone transit route from Monterey Harbor would decrease from 1.00 mile to 0.77 mile, reducing the length of the transit corridor by 23% and facilitating more immediate access to and from the harbor by MPWC operators and reduced risk of wildlife disturbance. In addition, the
In summary, revising locations of MPWC zone boundaries represents essential adaptive management practice as envisioned in the National Marine Sanctuaries Act and the required management plan review process. The adjustments maintain 9 square miles (5,760 acres) of the sanctuary for operating MPWC off all four harbors in areas with decreased likelihood of wildlife disturbance, which were goals for the original creation of the zones in 1992. Observations by NOAA staff, volunteers, and partner agencies indicate these areas are not highly used. Nevertheless, coupled with the increased operating days at the Mavericks MPWC zone proposed in this draft rule, NOAA's original intent to facilitate MPWC recreational opportunities will be maintained.
The reconfigured boundaries will also improve access to the MPWC zones by shifting them closer to shore and harbor launch points. Reducing the number of necessary MPWC boundary buoys also reduces impacts to benthic habitats, risk of wildlife entanglements, and risk of maritime collisions. Relocating buoys will make them more resistant to storm damage and buoy anchor/chain failure, thereby reducing risks to mariners from drifting buoys and marine debris from unnecessary deposition of chain and anchors on the seafloor. Utilizing mooring locations over soft seafloor sediments can reduce scarring and damage to hard-substrate benthic habitat and organisms from mooring chain. Maps depicting the proposed MPWC zone boundary changes can be found in the draft EA.
NOAA has prepared a draft environmental assessment (EA) to evaluate the potential impacts on the human environment of this proposed rulemaking (the preferred regulatory action analyzed in the draft EA), as well as several alternative actions. No significant impacts to resources and the human environment are expected to result from this proposed action, and accordingly, under NEPA (42 U.S.C. 4321
This rule has been determined to be not significant for purposes of Executive Order 12866.
This proposed rule is not an Executive Order 13771 regulatory action because it is not a significant regulatory action under Executive Order 12866.
NOAA has concluded this regulatory action does not have federalism implications sufficient to warrant preparation of a federalism assessment under Executive Order 13132.
The Regulatory Flexibility Act (RFA), as amended and codified at 5 U.S.C. 601
The analysis below seeks to fulfill the requirements of Executive Order 12866 and the Regulatory Flexibility Act. The Small Business Administration has established thresholds on the designation of businesses as “small entities.” A finfish fishing business is considered a small business if it has annual receipts of less than $20.5 million. Scenic and Sightseeing and Recreational industries are considered small businesses if they have annual receipts not in excess of $7.5 million. According to these limits, each of the businesses potentially affected by this proposed rule would most likely be small businesses. However, as further discussed below, these regulations will not have a significant economic impact on the affected small entities, and the Chief Counsel for Regulation for the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this rule will not have significant economic impact on a substantial number of small entities. Thus, NOAA is not required to prepare and has not prepared an initial regulatory flexibility analysis.
(1) Add a new definition for the phrase “beneficial use of dredged material” at 15 CFR 922.131, and clarify that the existing prohibition on the disposal of dredged material in MBNMS does not apply to habitat restoration projects using clean dredged material.
Clarifying the authorized uses of clean dredged material from local harbors for habitat restoration in the sanctuary may create additional opportunities for entities such as state and local agencies to propose beneficial use of such dredged materials, which, in turn, may trickle down to opportunities for businesses. The costs would be negligible to non-existent because the regulatory clarification of authorized uses of clean dredged material may facilitate appropriate entities to propose these authorized uses. There may be negligible to moderate benefits to shoreline restoration businesses and negligible to moderate benefits to businesses that clean dredge material due to the additional business opportunities facilitated by this regulatory clarification. There may be negligible to moderate benefits to shoreline recreation businesses such as surf shops, since at least the possible use of clean dredged material at Pillar Point could help improve a prominent surf spot and increase general beach use.
(2) Allow MPWC access to MPWC Zone 5 (Mavericks surf break) during High Surf Advisory conditions rather than High Surf Warning conditions.
With this proposed rule, NOAA would amend MBNMS regulations to increase access to an MPWC zone by reducing the sea state condition required for motorized personal watercraft (MPWC) access to the Mavericks seasonal-condition zone (Zone 5). NOAA would change the current High Surf Warning (HSW) requirement to a less stringent High Surf Advisory (HSA) requirement. Allowing MPWC access to Mavericks during HSA conditions (predicted breaking waves at the shoreline of 15 feet or greater) would allow MPWC presence at the break 3-5 more days per year to provide safety assistance to surfers operating in a highly energized surf zone.
Additional days of MPWC access may result in increased recreational opportunities. This means that businesses that rent MPWC or offer MPWC tours may have additional days when they could rent equipment or offer tours. However, the sea state conditions tend to favor experienced MPWC users (who likely own their MPWC) rather than casual, recreational MPWC users who would be more likely to rent or participate in a tour with an operator. The costs are expected to be non-existent, and the benefits would be negligible.
(3) Rectify an oversight in the 2009 MBNMS rulemaking regarding Exempted Department of Defense activities in the Davidson Seamount Management Zone (DSMZ).
NOAA's proposal to modify 15 CFR 922.132(c)(1) by replacing “2008 Final Environmental Impact Statement” with “2020 Final Environmental Assessment for Monterey Bay National Marine Sanctuary Management Plan Review” would publish the list of exempted DOD activities in the Davidson Seamount Management Zone that were originally intended for inclusion in the 2008 Final Environmental Impact Statement. There is no expected impact as a result of addressing the oversight from 2008. The changes are superficial in nature and do not result in changes to activities that are or are not prohibited.
(4) Reconfigure motorized personal watercraft (MPWC) zone boundaries.
The regulations allowing the use of MPWC in the zones would not change, but the shape and size of the zones would be altered.
The table below shows the size of the current and reconfigured year-round zones where MPWC are allowed. One zone would increase in size; three zones would decrease in size. The overall size of the year-round zones would decrease by 59%. The size of the Mavericks seasonal-conditional zone would remain unchanged. Observations showed little MPWC use in the areas selected; therefore, NOAA expects a minimal impact on the use of the zones by MPWC. MPWC rental businesses may experience a negligible impact, as MPWC operation would still be allowed in the areas, just in smaller zones. The reduced number of deployed buoys and reduced risk of drifting buoys that have parted from their moorings would produce negligible benefits to boaters (such as commercial fishers) and other water users by reducing risk of collision/allision.
The table below summarizes the findings for each proposed regulatory action described above and includes a column for passive use. “Nonuse” or “passive use” economic values encompass what economists refer to as option value, existence value and other nonuse values. All nonuse economic values are based on the fact that people are willing to pay some dollar amount for a good or service they currently do not use or consume directly. In the case of an ecological reserve, they are not current visitors (users), but derive some benefit from the knowledge that the reserve exists in a certain state and are willing to pay some dollar amount to ensure that the resources are maintained and/or improved.
This proposed rule does not create any new information collection requirement, nor does it revise the information collection requirement that was approved by the Office of Management and Budget (OMB Control Number 0648-0141) under the Paperwork Reduction Act of 1980, 44 U.S.C. 3501
In fulfilling its responsibility under the National Historic Preservation Act (NHPA) (54 U.S.C. 300101
The Endangered Species Act (ESA) of 1973 as amended (16 U.S.C. 1531,
The Marine Mammal Protection Act (MMPA) of 1972 (16 U.S.C. 1361
The principal objectives of the Coastal Zone Management Act (CZMA) are to encourage and assist states in developing coastal management programs, to coordinate State activities, and to preserve, protect, develop and, where possible, restore or enhance the resources of the nation's coastal zone. Section 307(c) of the CZMA requires federal activity affecting the land or water uses or natural resources of a state's coastal zone to be consistent with that state's approved coastal management program to the maximum extent practicable. NOAA will provide a copy of this proposed rule, the draft EA, and a consistency determination to the California Coastal Commission (Commission) upon publication. NOAA will wait for concurrence from the Commission prior to publication of the final rule.
NOAA requests comments on this proposed rule, the draft management plan, and the draft EA. The comment period will remain open until September 4, 2020.
Administrative practice and procedure, Coastal zone, Fishing gear, Marine resources, Natural resources, Penalties, Recreation and recreation areas, Wildlife.
For the reasons set forth above, NOAA proposes amending part 922, title 15 of the Code of Federal Regulations as follows:
16 U.S.C. 1431
The revisions and addition read as follows
(a) * * *
(7) Operating motorized personal watercraft within the Sanctuary except within the four designated zones and access routes within the Sanctuary described in appendix E to this subpart. Zone Five (at Pillar Point) exists only when a High Surf Advisory has been issued by the National Weather Service and is in effect for San Mateo County, and only during December, January, and February.
(c) * * *
(1) All Department of Defense activities must be carried out in a manner that avoids to the maximum extent practicable any adverse impacts on Sanctuary resources and qualities. The prohibitions in paragraphs (a)(2) through (12) of this section do not apply to existing military activities carried out by the Department of Defense, as specifically identified in the Final Environmental Impact Statement and Management Plan for the Proposed Monterey Bay National Marine Sanctuary (NOAA, 1992). For purposes of the Davidson Seamount Management Zone, these activities are listed in the 2020 Final Environmental Assessment for Monterey Bay National Marine Sanctuary Management Plan Review. New activities may be exempted from the prohibitions in paragraphs (a)(2) through (12) of this section by the Director after consultation between the Director and the Department of Defense.
(f) * * * For the purposes of this Subpart, the disposal of dredged material does not include the beneficial use of dredged material as defined by 15 CFR 922.131. * * *
The four zones and access routes are:
(1) The 0.96 mi
(2) The 2.63 mi
(3) The 2.29 mi
(4) The 3.10 mi
(5) The .13 mi
Coast Guard, DHS.
Supplemental notice of proposed rulemaking.
The Coast Guard is proposing to establish a dedicated offshore anchorage approximately seven nautical miles northeast of the St. Johns River inlet, Florida. This action is necessary to ensure the safety and efficiency of navigation for all vessels transiting in and out of the Port of Jacksonville. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before September 4, 2020.
You may submit comments identified by docket number USCG-2019-0964 using the Federal eRulemaking Portal at
If you have questions about this proposed rulemaking, call or email LT Emily Sysko, Sector Jacksonville Waterways Management Division Chief, U.S. Coast Guard; telephone 904-714-7616, email
The project to establish an offshore anchorage just outside of the St. Johns River and offshore of Jacksonville was initiated in 2013. From 2013 through 2017, certain port stakeholders (St. Johns Bar Pilots Association (SJBPA), Jacksonville Marine Transportation Exchange (JMTX), National Oceanic and Atmospheric Administration (NOAA), and United States Coast Guard (USCG)) worked to determine a suitable location for the anchorage, with consideration given to, among other things, environmental factors and Seasonal Management Areas. However, a location was not determined during this timeframe. The U.S. Coast Guard conducted a Waterways Analysis and Management System (WAMS) survey for this proposed project and did not receive any comments of concern from the entities previously mentioned.
In 2016, the stakeholders re-engaged the USCG in an attempt to complete the offshore anchorage project. A Notice of Proposed Rulemaking was published on May 4, 2017 (82 FR 20859). Informal National Environmental Protection Act (NEPA) consultations were disseminated requesting feedback on the proposed anchorage location. National Marine Fisheries (NMFS) and NOAA responded with significant concerns regarding the location. The aforementioned agencies requested an environmental study be completed to analyze potential hard bottom locations within the selected anchorage ground and the effects of vessels anchoring in these environmentally sensitive areas. The stakeholders involved at this time were unable to financially support the requested study. Due to these concerns, no further action was taken after the NPRM was published in 2017.
In 2018, the USCG met with the stakeholders again to determine a way forward with the proposed anchorage. Stakeholders concluded that three circular anchorages would meet the needs of an offshore anchorage, while allowing flexibility to avoid hard bottom areas. In 2019, USCG Sector Jacksonville sent out an informal consultation via email to federal, state, and local government and private stakeholders to solicit for feedback on the proposed, new anchorage construct. NMFS agreed with the construct, allowing USCG to move forward with formal NEPA consultation. Towards the end of 2019, USCG sent out formal consultation to approximately 20 different organizations and agencies regarding the anchorage. At this time, NMFS expressed some minor concerns. At the beginning of 2020, stakeholders and NMFS came to an agreement that addressed the minor concerns raised. The USCG is currently moving forward with the rulemaking and public comment period for the proposed anchorage location.
The purpose of this proposed rulemaking is to improve the navigational safety, traffic management
Currently, there is no dedicated deep draft offshore anchorage for commercial ocean-going vessels arriving at the Port of Jacksonville. Vessels have routinely been anchoring 1.5 nautical miles northeast of the “STJ” entrance buoy. Without a designated charted anchorage area, vessels end up drifting or anchoring in the common approaches to the St. Johns River, creating a potential hazardous condition for vessels transiting in and out of the Port of Jacksonville. These conditions have worsened in recent years with the introduction of Liquefied Natural Gas (LNG) vessels transiting the Port of Jacksonville. Additional growth is forecasted to occur because of deepening the channel. There will likely be an increase in the number of large vessels calling on Jacksonville in the near future.
The Coast Guard is proposing this rulemaking under authority in 33 U.S.C. 471.
The Captain of the Port is proposing to establish an offshore anchorage area approximately seven nautical miles northeast of the St. Johns River inlet, Florida. There is not currently a dedicated deep draft offshore anchorage for commercial ocean-going vessels arriving at the Port of Jacksonville. This action is necessary to ensure the safety and efficiency of navigation for vessels transiting in and out of the Port of Jacksonville. The anchorage areas consist of three circles each with a radius of 1,400 feet.The anchorage boundaries are described, using precise coordinates, in the proposed regulatory text at the end of this document.
We developed this proposed 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 SNPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the SNPRM 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 fact that there will be minimal impact to routine navigation because the proposed anchorage area would not restrict traffic. The anchorage is located well outside of the established navigation channel. Vessels would still be able to maneuver in, around, and through the anchorage.
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 certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the anchorage may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
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 proposed 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 call or email the person listed in the
This proposed rule would 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 proposed 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 proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed 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 made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves establishing offshore anchorage grounds, which would be comprised of three circles, each with a 1,400-foot radius. The anchorage
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this SNPRM as being available in the docket, and all public comments, will be in our online docket at
Anchorage grounds.
For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 110 as follows:
33 U.S.C. 471, 2071; 46 U.S.C. 70034; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 0170.1.
(a)
(1) Anchorage Ground 1 with a center point in position 30°26″48.6′ N, 81°17″14.9′ W.
(2) Anchorage Ground 2 with a center point in position 30°26″20.5′ N, 81°17″30.8′ W; and
(3) Anchorage Ground 3 with a center point in position 30°26″20.2′ N, 81°16″57.8′ W.
(b)
(2) All vessels within the designated anchorage area must maintain a 24-hour bridge watch by a licensed or credentialed deck officer proficient in English, monitoring VHF-FM channel 16. This individual must confirm that the ship's crew performs frequent checks of the vessel's position to ensure the vessel is not dragging anchor.
(3) Vessels may anchor anywhere within the designated anchorage area, provided that: Such anchoring does not interfere with the operations of any other vessels currently at anchorage; and all anchor and chain or cable is positioned in such a manner to preclude dragging.
(4) No vessel may anchor in a “dead ship” status (that is, propulsion or control unavailable for normal operations) without the prior approval of the COTP. Vessels which are planning to perform main propulsion engine repairs or maintenance, must immediately notify the COTP on VHF-FM Channel 22A. Vessels must also report marine casualties in accordance with 46 CFR 4.05-1.
(5) No vessel may anchor within the designated anchorage for more than 72 hours without the prior approval of the COTP. To obtain this approval, contact the COTP on VHF-FM Channel 22A.
(6) The COTP may close the anchorage area and direct vessels to depart the anchorage during periods of adverse weather or at other times as deemed necessary in the interest of port safety or security.
(7) Commercial vessels anchoring under emergency circumstances outside the anchorage area must shift to new positions within the anchorage area immediately after the emergency ceases.
Coast Guard, Homeland Security (DHS).
Notification of reopening of commend period.
The United States Coast Guard is reopening the comment period for the notice of study and request for comments for the Port Access Route Study: Alaskan Arctic Coast that we published on December 21, 2018. This action will provide the public with additional time and opportunity to provide the Coast Guard with information regarding the Port Access Route Study: Alaskan Arctic Coast. The comment period is extended until September 30, 2021.
The comment period for the document that published on December 21, 2018 (83 FR 65701), which was extended on September 4, 2019 (84 FR 46501), and January 13, 2020 (85 FR 1793), is reopened. Comments and related material must be received by the Coast Guard on or before September 30, 2021.
You may submit comments identified by docket number USCG-2018-1058 using the Federal eRulemaking Portal at
If you have questions about this document, please contact LCDR Michael Newell, Seventeenth Coast Guard
On December 21, 2018, the Coast Guard published a notice of study and request for comments for the Port Access Route Study: Alaskan Artic Coast (83 FR 65701). The comment period in that document closed September 1, 2019. On September 4, 2019, the Coast Guard published a notification to extend the public comment period until January 30, 2020 (84 FR 46501). On January 13, 2020, the Coast Guard published a notification to extend the public comment period until June 30, 2020 (85 FR 1793). In this action, the Coast Guard is providing notice that the public comment period is reopened until September 30, 2021. The Coast Guard has reopened the comment period to provide adequate opportunity for public meetings in impacted Arctic communities, given recent COVID-19 impacts to travel. These discussions are vital to the Port Access Route Study and necessary to creating a well-informed proposal. The Port Access Route Study remains a high priority for the Coast Guard, critical to maintaining waterway safety in the Arctic. Documents mentioned in this document, and all public comments, are in our online docket at
This document is issued under authority of 33 U.S.C. 1223(c) and 5 U.S.C. 552.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve revisions to the Butte County Air Quality Management District (BCAQMD), El Dorado County Air Quality Management District (EDCAQMD), Mojave Desert Air Quality Management District (MDAQMD), San Diego County Air Pollution Control District (SDCAPCD) and Ventura County Air Pollution Control District (VCAPCD) portions of the California State Implementation Plan (SIP). These revisions concern rules that include definitions for certain terms that are necessary for the implementation of local rules that regulate sources of air pollution. We are proposing to approve the definitions rules under the Clean Air Act (CAA or the Act). We are taking comments on this proposal and plan to follow with a final action.
Comments must be received on or before August 5, 2020.
Submit your comments, identified by Docket ID No. EPA-R09-OAR-2020-0122 at
Arnold Lazarus, EPA Region IX, 75 Hawthorne St., San Francisco, CA 94105. By phone: (415) 972-2304 or by email at
Throughout this document, “we,” “us” and “our” refer to the EPA.
Table 1 lists the rules addressed by this proposal with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board (CARB) to the EPA.
Under CAA section 110(k)(1), the EPA must determine whether a SIP submittal meets the minimum completeness criteria established in 40 CFR part 51, appendix V for an official SIP submittal on which the EPA is obligated to take action. If the EPA does not make an affirmative determination of completeness or incompleteness within six months of receipt of a SIP submittal, the submittal is deemed to be complete by operation of law. The submitted rules listed in Table 1 were deemed complete by operation of law on the following dates: February 9, 2018 (EDCAQMD Rule 101), May 13, 2018 (SDCAPCD Rule 2), November 23, 2018 (BCAQMD Rule 101 and rescission of BCAQMD Rule 102), and February 19, 2020 (MDAQMD Rule 102 and VCAPCD Rule 2).
We approved an earlier version of BCAQMD Rule 101 into the SIP on June 11, 2015 (80 FR 33195).
We approved an earlier version of EDCAQMD Rule 101 into the SIP on October 10, 2001 (66 FR 51578). The EDCAQMD adopted revisions to the SIP-approved version on June 20, 2017, and CARB submitted them to us on August 9, 2017.
We approved an earlier version of MDAQMD Rule 102 into the SIP on July 2, 2019 (84 FR 31682). The MDAQMD adopted revisions to the SIP-approved version on January 28, 2019, and CARB submitted them to us on August 19, 2019.
We approved an earlier version of SDCAPCD Rule 2 into the SIP on June 21, 2017 (82 FR 28240). The SDCAPCD adopted revisions to the SIP-approved version on July 11, 2017, and CARB submitted them to us on November 13, 2017.
We approved an earlier version of VCAPCD Rule 2 into the SIP on December 7, 2012 (77 FR 72968). The VCAPCD adopted revisions to the SIP-approved version on April 9, 2019, and CARB submitted them to us on August 19, 2019.
The purpose of these submitted rule revisions is to clarify and update definitions in the districts' rules. Revisions include the following, but a more complete list and discussion can be found in the technical support documents (TSDs) and submitted district staff reports and rules for this rulemaking:
• BCAQMD Rule 101 revisions include removal of Global Warming Potentials table, updating the Exempt Compounds table to be consistent with the definition of “volatile organic compounds” (VOC) in 40 CFR 51.100(s), removing greenhouse gases (GHG) and carbon dioxide equivalent emissions from the major source definition and adding definitions for “Submerged Fill Pipe” and “Vapor Recovery System.” In its submittal letter to CARB, BCAQMD also requests that BCAQMD Rule 102 be rescinded from the SIP,
• EDCAQMD Rule 101 revisions include updating the district's title (previously known as El Dorado Air Pollution Control District), updating the exempt compounds list and adding or revising definitions for “Global Warming Potential,” Greenhouse Gases”, “Owner or Operator,” “PM
• MDAQMD Rule 102 revisions include the addition of definitions that had been included in other MDAQMD rules, the renumbering of the definitions, and the addition of certain definitions associated with CARB's Airborne Toxic Control Measure to reduce emissions of hexavalent chromium and nickel from thermal spraying. Definitions added include “Agricultural Facility”, “Confined Animal Facility”, “Detonation Gun Spraying”, “Flame Spraying”, “High-Velocity Oxy-Fuel Spraying”, “Plasma Spraying”, “Thermal Spraying Operation”, “Twin-Wire Electric Arc Spraying”, and “Volatile Organic Compound”. In its submittal letter to CARB, MDAQMD also requests that CARB submit amended Rule 102 to replace the SIP versions of the rule that are in effect in the San Bernardino County and the Blythe/Palo Verde Valley portions of the District.
• SDCAPCD Rule 2 revisions include adding the Chemical Abstract Service (CAS) Registry Number to each of the compounds in the table of “exempt compounds” at the end of Rule 2. “Exempt compounds” are excluded from the definition of “volatile organic compounds.”
• VCAPCD Rule 2 revisions include the addition of nine compounds to the list of “exempt organic compounds,” as defined in Rule 2. The revisions also include the addition of CAS Registry Numbers to various compounds included in the list of “exempt organic compounds,” and the removal of the Global Warming Potential Table at the end of Rule.
Rules in the SIP must be enforceable (see CAA section 110(a)(2)), must not
Guidance and policy documents that we used to evaluate enforceability, revision/relaxation and rule stringency requirements for the applicable criteria pollutants include the following:
1. “State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990,” 57 FR 13498 (April 16, 1992); 57 FR 18070 (April 28, 1992).
2 “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook, revised January 11, 1990).
3. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).
These rules are consistent with CAA requirements and relevant guidance regarding enforceability. More specifically, the revisions to the definitions rules with respect to the list of “exempt compounds” that are exluded from the districts' definitions of “volatile organic compounds” are consistent with the definition of “volatile organic compounds” in 40 CFR 51.100(s). The deletions of certain GHG-related provisions from certain definitions rules are acceptable in light of recent court decisions involving GHG permitting. With respect to the rescission request for BCAQMD Rule 102, we find that the May 23, 2018 SIP submittal does not include sufficient public process documentation to approve the request; however, approval of amended BCAQMD Rule 101, which we propose herein, will have the effect of superseding BCAQMD Rule 102 in the applicable SIP because the two remaining definitions from Rule 102 will be incorporated into Rule 101 if we finalize the action as proposed. The TSDs have more information on our evaluation.
The TSDs include recommendations for the next time the local agencies modify their rules.
Pursuant to section 110(k)(3) of the Act, the EPA proposes to fully approve the submitted rules because they fulfill all relevant requirements. We will accept comments from the public on this proposal until August 5, 2020. If we take final action to approve the submitted rules, our final action will incorporate these rules into the federally enforceable SIP.
In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference the BCAQMD's, the EDAQMD's, the MDAQMD's, the SDCAPCD's and the VCAPCD's rules described in Table 1 of this preamble. The EPA has made, and will continue to make, these materials available through
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this proposed action merely proposes to approve state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide the EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve a SIP revision to the Jefferson County portion of the Kentucky State Implementation Plan (SIP), submitted by the Commonwealth of Kentucky (Commonwealth), through the Energy and Environment Cabinet (Cabinet) on September 5, 2019. The revision was submitted by the Cabinet on behalf of the Louisville Metro Air Pollution Control District (LMAPCD) and makes changes to the definition of “volatile organic compound” (VOC). EPA is proposing to approve the changes amending the definition of VOC because the Commonwealth has demonstrated that the changes are consistent with the Clean Air Act (CAA or Act).
Comments must be received on or before August 5, 2020.
Submit your comments, identified by Docket ID No. EPA-R04-OAR-2020-0095
Tiereny Bell, Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. Ms. Bell can be reached by phone at (404) 562-9088 or via electronic mail at
Tropospheric ozone, commonly known as smog, occurs when VOC and nitrogen oxides react in the atmosphere in the presence of sunlight. Because of the harmful health effects of ozone, EPA and state governments implement rules to limit the amount of certain VOC and NOx that can be released into the atmosphere. VOC are those compounds of carbon (excluding carbon monoxide, carbon dioxide, carbonic acid, metallic carbides or carbonates, and ammonium carbonate) that form ozone through atmospheric photochemical reactions. VOC have different levels of reactivity; they do not react at the same speed or form ozone to the same extent.
Section 302(s) of the CAA specifies that EPA has the authority to define the meaning of “VOC,” and hence, what compounds shall be treated as VOC for regulatory purposes. It is EPA's policy that compounds of carbon with negligible reactivity need not be regulated to reduce ozone and should be excluded from the regulatory definition of VOC.
EPA is proposing to approve the Commonwealth's SIP revision which amends the definition of “Volatile organic compound (VOC)” at Section 1.84 in LMAPCD Regulation 1.02,
This incorporation by reference has the effect of adding the following compounds to the list of negligibly reactive compounds: trans-1,3,3,3-tetrafluoropropene; HCF
In this document, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference LMAPCD Regulation 1.02,
EPA is proposing to approve the Commonwealth's September 5, 2019 SIP revision that revises the definition of “Volatile organic compound (VOC)” at LMAPCD Regulation 1.02,
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
The SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve a state implementation plan (SIP) revision submitted by the State of West Virginia. This revision pertains to the West Virginia Department of Environmental Protection's (WVDEP) plan for maintaining the 1997 8-hour ozone national ambient air quality standards (NAAQS) for the West Virginia portion of the Parkersburg-Marietta, WV-OH area (Parkersburg Area), comprising Wood County. This action is being taken under the Clean Air Act (CAA).
Written comments must be received on or before August 5, 2020.
Submit your comments, identified by Docket ID No. EPA-R03-OAR-2020-0197 at
Gregory Becoat, Planning & Implementation Branch (3AD30), Air & Radiation Division, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. The telephone number is (215) 814-2036. Mr. Becoat can also be reached via electronic mail at
On December 10, 2019, WVDEP submitted a revision to the West Virginia SIP to incorporate a plan for maintaining the 1997 ozone NAAQS through June 7, 2027, in accordance with CAA section 175A.
In 1979, under section 109 of the CAA, EPA established primary and secondary NAAQS for ozone at 0.12 parts per million (ppm), averaged over a 1-hour period. 44 FR 8202 (February 8, 1979). On July 18, 1997 (62 FR 38856),
Once a nonattainment area has three years of complete and certified air quality data that has been determined to attain the NAAQS, and the area has met the other criteria outlined in CAA section 107(d)(3)(E),
On May 8, 2007 (72 FR 25967 effective June 7, 2007), EPA approved a redesignation request (and maintenance plan) from WVDEP for the Parkersburg Area. In accordance with section 175A(b), at the end of the eighth year after the effective date of the redesignation, the state must also submit a second maintenance plan to ensure ongoing maintenance of the standard for an additional 10 years.
EPA's final implementation rule for the 2008 ozone NAAQS revoked the 1997 ozone NAAQS and provided that one consequence of revocation was that areas that had been redesignated to attainment (
As previously discussed, CAA section 175A sets forth the criteria for adequate maintenance plans. In addition, EPA has published longstanding guidance that provides further insight on the content of an approvable maintenance plan, explaining that a maintenance plan should address five elements: (1) An attainment emissions inventory; (2) a maintenance demonstration; (3) a commitment for continued air quality monitoring; (4) a process for verification of continued attainment; and (5) a contingency plan. The Calcagni memo
WVDEP's December 10, 2019 SIP submittal outlines a plan for continued maintenance of the 1997 ozone NAAQS which addresses the criteria set forth in the Calcagni Memo as follows.
A state should develop a comprehensive and accurate inventory of actual emissions for an attainment year which identifies the level of emissions in the area which is sufficient to maintain the NAAQS. The inventory should be developed consistent with EPA's most recent guidance. For ozone, the inventory should be based on typical summer day's emissions of oxides of nitrogen (NOx) and volatile organic compounds (VOC), the precursors to ozone formation. In the first maintenance plan for the Parkersburg Area, WVDEP used 2004 for the attainment year inventory, because 2004 was one of the years in the 2002-2004 three-year period when the area first attained the 1997 8-hour ozone NAAQS. The Parkersburg Area continued to monitor attainment of the 1997 8-hour ozone NAAQS in 2014. Therefore, the emissions inventory from 2014 represents emissions levels conducive to continued attainment (
The 2014
The fire emissions sector includes emissions from agricultural burning, prescribed fires, wildfires, and other types of fires. The nonpoint emissions sector includes emissions from equipment, operations, and activities that are numerous and in total have significant emissions. Examples include emissions from commercial and consumer products, portable fuel containers, home heating, repair and refinishing operations, and crematories. The non-road emissions sector includes emissions from engines that are not primarily used to propel transportation equipment, such as generators, forklifts, and marine pleasure craft. The on-road emissions sector includes emissions from engines used primarily to propel equipment on highways and other roads, including passenger vehicles, motorcycles, and heavy-duty diesel trucks. The point source sector includes large industrial operations that are relatively few in number but have large emissions, such as kraft mills, electrical generating units, and pharmaceutical factories. On-road mobile emissions are modelled by WVDEP using EPA's Motor Vehicle Emission Simulator (MOVES). WVDEP generates nonroad mobile source emissions data through the use of EPA's NONROAD2014a model. EPA reviewed the supporting documentation submitted by WVDEP
In order to attain the 1997 ozone NAAQS, the three-year average of the fourth-highest daily average ozone concentrations (design value, DV) at each monitor within an area must not exceed 0.08 ppm. Based on the rounding convention described in 40 CFR part 50, appendix I, the standard is attained if the DV is 0.084 or below. CAA section 175A requires a demonstration that the area will continue to maintain the NAAQS throughout the duration of the requisite maintenance period. Consistent with the prior guidance documents discussed previously in this document, EPA believes that if the most recent DV for the area is well below the NAAQS (
For the purposes of demonstrating a stable or improving air quality trend, West Virginia used a weighted design value of the most recent five design values. The five most recent design values available cover the 2012-2018 ambient air monitoring data. This includes 3-year design values for 2012-2014, 2013-2015, 2014-2016, 2015-2017, and 2016-2018. Data from 2014, 2015, and 2016 was included in three out of five design values. Table 2 of this document shows the most recent five years of ambient ozone air quality 3-year design values. These design values are from EPA's Air Quality System (AQS). The 7th column is a calculated 5-year weighted design value calculated by West Virginia. This 5-year weighted design value was calculated by averaging all the 4th Max Ozone values from the years 2012-2018. The 8th column is the 5-year design value average calculated by EPA. The 5-year design value average is calculated by averaging the design values for 2012-2014, 2013-2015, 2014-2016, 2015-2017, and 2016-2018. Both the 5-year weighted design value calculated by West Virginia, and the 5-year design value calculated by EPA, for Parkersburg area, were calculated to be
For the 2023 projections shown in Table 2, EPA used a 2011-based air quality modeling platform, which includes emissions, meteorology, and other inputs for 2011 as the base year and emissions for 2023 as the future analytic year base case. Specifically, the modeling platform included a variety of data that contained information pertaining to the modeling domain and
simulation period. These include gridded, hourly emissions estimates and meteorological
data, and boundary concentrations. Separate emissions inventories were prepared for the
2011 base year and the 2023 base case. All other inputs (
concentrations, and boundary concentrations) were specified for the 2011 base year model
application and remained unchanged for the future-year model simulations. The 2011
modeling platform and projected 2023 emissions were used to drive the 2011 base year and
2023 future case air quality model simulations. The 2023 projected DV for the Parkersburg Area is 0.060 ppm, well below the level of the 1997 8-hour ozone NAAQS, 0.08 ppm. Therefore, EPA proposes to determine that that future violations of the NAAQS in this area are unlikely.
Once an area has been redesignated to attainment, the state remains obligated to maintain an air quality network in accordance with 40 CFR part 58, in order to verify the area's attainment status. In the December 10, 2019 submittal, West Virginia committed to maintaining an appropriate air quality monitoring network, in accordance with 40 CFR part 58. West Virginia will continue to conduct ambient ozone air quality monitoring in the area throughout the term of the maintenance plan to verify continued attainment with the 1997 8-hour ozone NAAQS and to protect any applicable PSD increments. WVDEP states that air quality measurements will be performed in accordance with appropriate regulations and guidance documents along with EPA quality assurance requirements, and monitoring procedures will be determined in accordance with 40 CFR part 58. WVDEP commits to submitting quality-assured ozone data to EPA through the AQS and ultimately certified by the WVDEP. EPA has analyzed the commitments in the plan and determined that they meet the requirements.
The contingency plan provisions are designed to promptly correct or prevent a violation of the NAAQS that might occur after redesignation of an area to attainment. Section 175A of the CAA requires that a maintenance plan include such contingency measures as EPA deems necessary to assure that the state will promptly correct a violation of the NAAQS that occurs after redesignation. The maintenance plan should identify the contingency measures to be adopted, a schedule and procedure for adoption and implementation of the contingency measures, and a time limit for action by the state. The state should also identify specific indicators to be used to determine when the contingency measures need to be adopted and implemented. The maintenance plan must include a requirement that the state will implement all pollution control measures that were contained in the SIP before redesignation of the area to attainment. See section 175A(d) of the CAA. WVDEP's December 10, 2019 submittal outlines its adopted permanent and Federally enforceable control measures in order to regulate emission growth. The Parkersburg Area's control measures include the permitting regulations and PSD measures, which will remain in effect through the maintenance plan period. Air permits issued will incorporate applicable PSD, New Source Performance Standard, and National Emission Standards for Hazardous Air Pollutant requirements.
WVDEP's December 10, 2019 submittal included the required contingency plan, to be implemented in the event of NAAQS violations in the future. WVDEP has committed to adopting and implementing one or more of the following control measures within three months after verification of a monitored ozone standard violation in the Parkersburg Area: (1) Extend the applicability of the VOC reasonably available control technology (RACT) rule to include source categories previously excluded (
If there is indeed a violation and the DV exceeds the NAAQS, the contingency plan will be “triggered,” based on the following schedule: (1) quality assurance procedures must confirm the monitored violation within 45 days of occurrence; (2) a draft rule would be developed by the WVDEP for any regulation chosen, (3) WVDEP will adopt the selected control measure(s) as emergency rule(s) which will be implemented within six (6) months after adoption and will file the rule(s) as legislative rule(s) for permanent authorization by the legislature; and (4) for each voluntary measure selected, the WVDEP will initiate program development with local governments within the area by the start of the following ozone season.
Furthermore, if the triennial inventories indicate emissions growth in excess of 10% of the 2011 base-year inventory or if a monitored ozone air quality exceedance pattern indicates that an ozone NAAQS violation may be imminent, WVDEP will evaluate existing control measures to ascertain if additional regulatory revisions are necessary to maintain the ozone standards.
EPA finds that West Virginia's contingency measures, as well as the commitment to continue implementing any SIP requirements, satisfy the pertinent requirements of section 175A. Importantly, while EPA notes that West Virginia's contingency measures option six (increasing public understanding) and seven (voluntary local control measures), are not enforceable measures that standing alone are likely to lead to reductions in emissions that could promptly correct a violation of the NAAQS, their inclusion among other measures that meet that criterion, is overall SIP-strengthening, and their inclusion does not alter EPA's proposal to find the LMP is fully approvable.
Transportation conformity is required by section 176(c) of the CAA. Conformity to a SIP means that transportation activities will not produce new air quality violations, worsen existing violations, or delay timely attainment of the NAAQS (CAA 176(c)(1)(B)). EPA's conformity rule at 40 CFR part 93 requires that transportation plans, programs and projects conform to SIPs and establish the criteria and procedures for determining whether or not they conform. The conformity rule generally requires a demonstration that emissions from the Regional Transportation Plan (RTP) and the Transportation Improvement Program (TIP) are consistent with the motor vehicle emissions budget (MVEB) contained in the control strategy SIP revision or maintenance plan (40 CFR 93.101, 93.118, and 93.124). An MVEB is defined as “that portion of the total allowable emissions defined in the submitted or approved control strategy implementation plan revision or maintenance plan for a certain date for the purpose of meeting reasonable further progress milestones or demonstrating attainment or maintenance of the NAAQS, for any criteria pollutant or its precursors, allocated to highway and transit vehicle use and emissions (40 CFR 93.101).”
Under the conformity rule, LMP areas may demonstrate conformity without a regional emission analysis (40 CFR 93.109(e)). However, because LMP areas are still maintenance areas, certain aspects of transportation conformity determinations still will be required for transportation plans, programs and projects. Specifically, for such determinations, RTPs, TIPs and transportation projects still will have to demonstrate that they are fiscally constrained (40 CFR 93.108), meet the criteria for consultation (40 CFR 93.105 and 93.112) and Transportation Control Measure implementation in the conformity rule provisions (40 CFR 93.113). Additionally, conformity determinations for RTPs and TIPs must be determined no less frequently than every four years, and conformity of plan and TIP amendments and transportation projects is demonstrated in accordance with the timing requirements specified in 40 CFR 93.104. In addition, for projects to be approved they must come from a currently conforming RTP and TIP (40 CFR 93.114 and 93.115). The Parkersburg Area remains under the obligation to meet the applicable conformity requirements for the 1997 8-hour ozone NAAQS.
EPA's review of WVDEP's December 10, 2019 submittal indicates it meets CAA section 175A and all applicable CAA requirements. EPA is proposing to approve the LMP for the 1997 8-hour ozone NAAQS for the Parkersburg Area (comprising Wood County), as a revision to the West Virginia SIP. EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866.
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this proposed rule, pertaining to West Virginia's second maintenance plan for Wood County, does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.
Environmental protection, Air pollution control, Incorporation by reference, Nitrogen dioxide, Ozone, Volatile organic compounds.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve portions of the Kentucky infrastructure State Implementation Plan (SIP) submission for the 2015 8-hour ozone National Ambient Air Quality Standards (NAAQS) submitted to EPA on January 11, 2019. Whenever EPA promulgates a new or revised NAAQS, the Clean Air Act (CAA or Act) requires that states adopt and submit a SIP submission to establish that the state's implementation plan meets infrastructure requirements for the implementation, maintenance, and enforcement of each such NAAQS. Specifically, EPA is proposing to approve portions of the Kentucky infrastructure SIP submission that address the prevention of significant deterioration (PSD) and modeling requirements for the 2015 8-hour ozone NAAQS. EPA is proposing to approve these portions of the submission as they are consistent with the CAA.
Comments must be received on or before July 27, 2020.
Submit your comments, identified by Docket ID No. EPA-R04-OAR-2019-0217, at
Andres Febres, Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. The telephone number is (404) 562-8966. Mr. Febres can also be reached via electronic mail at
On October 1, 2015, EPA promulgated a revised primary and secondary NAAQS for ozone, revising the 8-hour ozone standards from 0.075 parts per million (ppm) to a new more protective level of 0.070 ppm.
EPA is proposing to approve the portions of Kentucky's January 11, 2019,
As discussed in section I, whenever EPA promulgates a new or revised NAAQS, CAA section 110(a)(1) requires states to submit infrastructure SIP submissions that meet the various requirements of CAA section 110(a)(2), as applicable. Due to ambiguity in some of the language of CAA section 110(a)(2), EPA believes that it is appropriate to interpret these provisions in the specific context of acting on infrastructure SIP submissions. EPA has previously provided comprehensive guidance on the application of these provisions through a guidance document for infrastructure SIP submissions and through regional actions on infrastructure submissions.
Detailed explanations of the specific infrastructure requirements addressed by this proposed rulemaking are provided in the following discussion. As mentioned, this proposed action only addresses the PSD and modeling infrastructure requirements for the 2015 8-hour ozone NAAQS. All other infrastructure requirements for
Section 110(a)(2)(C) of the Act has three components that must be addressed in infrastructure SIP submissions: enforcement, state-wide regulation of new and modified minor sources and minor modifications of major sources, and PSD permitting of new major sources and major modifications in areas designated attainment or unclassifiable for the subject NAAQS as required by the CAA title I part C (
Section 110(a)(2)(D)(i) of the Act has two components: 110(a)(2)(D)(i)(I) and 110(a)(2)(D)(i)(II). Each of these components have two subparts resulting in four distinct components, commonly referred to as “prongs,” that states must address in infrastructure SIP submissions. The first two prongs, which are codified in section 110(a)(2)(D)(i)(I), are provisions that prohibit any source or other type of emissions activity in one state from contributing significantly to nonattainment of the NAAQS in another state (“prong 1”), or interfering with maintenance of the NAAQS in another state (“prong 2”). The third and fourth prongs, which are codified in section 110(a)(2)(D)(i)(II), are provisions that prohibit emissions activity in one state from interfering with measures required to prevent significant deterioration of air quality in another state (“prong 3”), or to protect visibility in another state (“prong 4”).
Section 110(a)(2)(J) of the Act has four components related to: (1) Consultation with government officials, (2) public notification, (3) PSD, and (4) visibility protection.
This proposed rulemaking addresses the PSD-related requirements of sections 110(a)(2)(C), 110(a)(2)(D)(i)(II) (prong 3), and 110(a)(2)(J). With respect to the PSD elements of 110(a)(2)(C) and (J), EPA interprets the CAA to require each state to make, for each new or revised NAAQS, an infrastructure SIP submission that demonstrates that the air agency has a complete PSD permitting program meeting the current requirements for all regulated new source review (NSR) pollutants. The requirements of element 110(D)(i)(II) (prong 3) may also be satisfied when the state's submission demonstrates that the air agency has a complete PSD permitting program addressing all regulated NSR pollutants. More information on these requirements and EPA's rationale for this proposal that Kentucky is meeting these requirements for purposes of the 2015 8-hour ozone NAAQS is provided in sections IV and V of this preamble.
Section 110(a)(2)(K) of the CAA requires that SIPs provide for the performance of air quality modeling as prescribed by the EPA so that air quality effects from emissions of NAAQS pollutants and their precursors can be predicted, and for submission of such data to EPA. More information on this requirement and EPA's rationale for this proposal that Kentucky is meeting this requirement for purposes of the 2015 8-hour ozone NAAQS is provided in sections IV and V of this preamble.
On January 17, 2017, EPA promulgated a final rule entitled
For all regulatory applications covered under the Guideline, except for transportation conformity, the changes to the appendix A preferred models and revisions to the requirements and recommendations of the Guideline must be integrated into the regulatory processes of respective reviewing authorities and followed by applicants by no later than January 17, 2018.
The most direct way for states to meet this requirement is to integrate the 2017
EPA's analysis of Kentucky's January 11, 2019, infrastructure SIP submission, as further clarified in a February 4, 2020, letter, related to the PSD and modeling elements for the 2015 8-hour ozone NAAQS is provided in this section.
As discussed, this proposed rulemaking relates to the PSD-related requirements of sections 110(a)(2)(C), 110(a)(2)(D)(i)(II) (prong 3), and 110(a)(2)(J). In this section, EPA provides its analysis of these three sub-elements.
For the PSD program sub-element of section 110(a)(2)(C), EPA interprets the CAA to require that a state's infrastructure SIP submission for a particular NAAQS demonstrate that the state has a complete PSD permitting program in place meeting applicable PSD requirements for all regulated NSR pollutants. As detailed in EPA's September 2013 infrastructure SIP guidance, a state's PSD permitting program is complete for this sub-element (and prong 3 of D(i)(II), and J related to PSD) if EPA has already approved or is simultaneously approving the state's implementation
Kentucky's infrastructure SIP submission cites several SIP-approved
regulations under Chapters 50 and 51, including the following: 401 KAR 51:010,
As discussed, EPA's PSD regulations at 40 CFR 51.166(l) require states to conduct modeling in accordance with the
The Kentucky SIP at 401 KAR 51:017 establishes the Commonwealth's PSD program and requires that modeling follow the EPA's
On February 4, 2020, KY DAQ provided to EPA a letter related to the use of EPA's
As we have explained, states with references to earlier versions of the
With regard to prong 3 of CAA section 110(a)(2)(D)(i)(II), a state may meet this requirement by a confirmation in its infrastructure SIP submission that new major sources and major modifications in the state are subject to a PSD program meeting current structural requirements of part C and a nonattainment NSR (NNSR) program, if the state contains a nonattainment area that has the potential to impact PSD in another state. To meet the requirements of prong 3 of CAA section 110(a)(2)(D)(i)(II), Kentucky cites to its PSD program found in the Kentucky SIP at 401 KAR 51:017,
With regard to the PSD element of CAA section 110(a)(2)(J), this requirement is met by a state's confirmation in an infrastructure SIP submission that the state has a SIP-approved PSD program meeting all the current requirements of part C of title I of the CAA for all regulated NSR pollutants. To meet element J, Kentucky's infrastructure SIP submission cites to a number of SIP-approved regulations including 401 KAR 51:017,
Section 110(a)(2)(K) of the CAA requires that SIPs provide for the performance of air quality modeling as prescribed by the EPA so that air quality effects of emissions of NAAQS pollutants and their precursors can be predicted, and for submission of such data to EPA. KY DAQ conducts air quality modeling as set forth in Kentucky's regulation, 40 KAR 50:040,
Additionally, the Commonwealth supports a regional effort to coordinate the development of emissions inventories and conduct regional modeling for several NAAQS, including the 2015 8-hour ozone NAAQS, for the Southeastern states. Taken as a whole, the Commonwealth's air quality regulations and practices demonstrate that KY DAQ has the authority to provide relevant data through the performance of modeling as prescribed by EPA for the purpose of predicting the effect on ambient air quality of any emissions of any pollutant for which a NAAQS has been promulgated, and to provide such information to EPA's Administrator upon request. EPA is proposing to approve Kentucky's infrastructure SIP submission with respect to CAA section 110(a)(2)(K).
EPA is proposing to approve the portions of Kentucky's January 11, 2019, 2015 8-hour ozone infrastructure SIP submission that address the PSD-related requirements of CAA sections 110(a)(2)(C), 110(a)(2)(D)(i)(II) (prong 3), and 110(a)(2)(J), and modeling requirements related to CAA section 110(a)(2)(K). All other applicable infrastructure requirements for the 2015 ozone NAAQS have been or will be addressed in separate rulemakings.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations.
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because this action is not significant regulatory action under Executive Order 12866;
• Does not impose information collection burdens under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandates or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
The SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.
42 U.S.C. 7401
Federal Communications Commission.
Proposed rule.
In this document, the Commission seeks comment to explore innovative new uses of the 71-76 GHz, 81-86 GHz, 92-94 GHz, and 94.1-95 GHz bands (collectively, the “70/80/90 GHz bands”). In particular, the Commission seeks comment on potential rule changes for non-Federal users to facilitate the provision of wireless backhaul for 5G, as well as the deployment of broadband services to aircraft and ships, while protecting incumbent operations in the 70/80/90 GHz bands. The Commission seeks to
Comments are due on or before August 5, 2020. Reply comments on or before September 4, 2020.
You may submit comments, identified by WT Docket Nos. 20-133 and 10-153, by any of the following methods:
•
•
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.
• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19. See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 2020).
• During the time the Commission's building is closed to the general public and until further notice, if more than one docket or rulemaking number appears in the caption of a proceeding, paper filers need not submit two additional copies for each additional docket or rulemaking number; an original and one copy are sufficient.
Anthony Patrone, Broadband Division, Wireless Telecommunications Bureau, (202) 418-2428,
This is a summary of the Commission's
1.
2. In addition, the 94-94.1 GHz segment of the band is allocated for Federal use for Earth Exploration Satellite, Radiolocation, and Space Research and for non-Federal use for Radiolocation. In the 71-76 GHz band (the “70 GHz band”) and 81-86 GHz band (the “80 GHz band”), Fixed, Mobile, and Broadcasting services must not cause harmful interference to, nor claim protection from, Federal Fixed-Satellite Service operations located at 28 military installations. In addition, in the 80 GHz band, and in the 92-94 GHz and 94.1-95 GHz bands (collectively, the “90 GHz band”), licensees proposing to register links located near 18 radio astronomy observatories must coordinate their proposed links with those observatories. Finally, the adjacent 86-92 GHz band is allocated for Earth Exploration-Satellite (passive), Space Research (passive), and Radio Astronomy services. Given that the allocations for these bands include Federal and non-Federal use, the Commission will follow established practices in coordinating with NTIA prior to adopting any new or revised rules in this proceeding that would affect Federal users.
3. The Commission periodically has reviewed the service rules governing the 70/80/90 GHz bands. For example, in 2005, the Commission modified several of its technical rules, including interference protection criteria, antenna characteristics, band segmentation, and power spectral density.
4. Use of spectrum in the 70/80/90 GHz bands is primarily concentrated along a few routes, with minimal use in large parts of the United States. As of March 23, 2020, there were 658 active non-exclusive nationwide licensees in the 70/80/90 bands. Based upon information available from the third-party database managers responsible for registering links in those bands, as of March 23, 2020, there were 18,770 registered fixed links
5.
6. In 2019, Aeronet Global Communications, Inc. (Aeronet) filed petitions for rulemaking that sought to permit the use of “Scheduled Dynamic Datalinks” (SDDLs) to provide broadband service to aircraft or ships in motion in the 70/80/90 GHz bands. Aeronet indicates that its technology would configure and maintain, in real time, multiple networks involving a variety of point-to-point links between nodes, including ground stations, relay nodes, ships, and aircraft. Aeronet asserts that it would use ground or shore stations to transmit narrow beams towards known flight paths or ship routes without causing interference to existing point-to-point links authorized in the bands. The initial connected aircraft or ship also could serve as a conduit through which broadband service could reach other aircraft or ships within a specified area through a sub-mesh network. As Comsearch notes, Aeronet's links for aviation would operate between ground stations and aircraft, and between aircraft; Aeronet's links for maritime would operate between shore stations and ships, between shore stations and aerostats, between aerostats and ships, and between ships. In its 2019 petitions for rulemaking, Aeronet contends that its operations could “further mitigate any risk of interference” to not only mobile and terrestrial users of the spectrum for 5G backhaul but also to “Federal FSS operations located at the 28 military bases” and the 18 Federal radio astronomy observatories. Aeronet requests that the Commission modify its part 101 rules to authorize SDDLs as a “fixed service” that can operate in the 70/80/90 GHz bands and to increase the transmitter power limits that would apply to these operations.
7. In response to the Commission's
8. The Commission proposes targeted changes to its rules to promote additional wireless backhaul for 5G, in furtherance of the Commission's goals of expanding access to broadband and fostering the efficient use of millimeter-wave spectrum in the public interest. Specifically, the Commission proposes changes to the antenna standards applicable to the 70 GHz and 80 GHz bands and seeks comment on whether similar changes are necessary in the 90 GHz band. The Commission seeks comment on whether the Commission should make changes to its current link registration rules for the 70/80/90 GHz bands to eliminate never-constructed links from the database. The Commission also proposes to authorize point-to-point links to endpoints in motion in the 70 GHz and 80 GHz bands and to classify those links as a “mobile” service. The Commission seeks comment on any technical and operational rules that would be needed to allow these new service offerings in the 70 GHz and 80 GHz bands and to mitigate interference to incumbents and other proposed users of these bands and in adjacent bands. Finally, the Commission seeks comment on whether the Commission should adopt a channelization plan in the 70 GHz and 80 GHz bands.
9.
10. The Commission's rules currently apply a single category of antenna standards to the 70 GHz band and the 80 GHz band. The Commission proposes to increase the maximum beamwidth by 3 dB points, from 1.2 degrees to 2.2 degrees. Additionally, the Commission proposes to reduce minimum antenna gain from 43 dBi to 38 dBi and to retain the proportional EIRP reduction requirement. The Commission seeks comment on these proposals. Both FWCC and the 5G Wireless Backhaul Advocates argue that these proposed changes are critical to deploying nationwide 5G wireless backhaul and fostering network densification. The Commission notes that adoption of these changes would harmonize its rules with Canada's rules, which could facilitate economies of scale in equipment deployment in North America.
11. The Commission also proposes reducing the co-polar and cross-polar discrimination requirement applicable to 70 GHz and 80 GHz antennas.
12. In addition, the Commission seeks comment on FWCC's recommendation that it allows +/− 45 degree polarization (also known as slant polarization) in the 70 GHz and 80 GHz bands. Section 101.117 of the Commission's rules generally limits licensees to horizontal or vertical polarization. The Commission seeks comment on FWCC's contention that flat plate antennas generally have cleaner azimuth/elevation radiation pattern envelopes when used in slanted polarization. Would slant polarization aid coordination at congested points in the 70 GHz and 80 GHz bands? Should the Commission consider slant polarization in the 90 GHz band? The Commission seeks comment on any disadvantages of allowing slant polarization. The Commission asks commenters to provide data on the benefits and costs of any proposed changes.
13. Some commenters have suggested that adopting a second category of antenna standards would promote flexibility in the 70 GHz and 80 GHz bands. The Commission's rules for many other services regulated under part 101 allow for two categories of antennas, Category A and Category B; Category A performance standards are more stringent than Category B. The Commission seeks comment on whether to adopt an additional antenna standard—Category B—applicable to the 70 GHz and 80 GHz bands, which could permit less restrictive use under certain circumstances than the Commission's proposed modified antenna standards (which would be the accompanying Category A standards). The Commission seeks comment on the advantages and disadvantages of adopting Category A and Category B standards in the 70 GHz and 80 GHz bands. Should the new Category B standards permit use of even smaller, wider beamwidth antennas, or other less restrictive uses?
14. With respect to the Commission's proposed modifications to the antenna standards for the 70 GHz and 80 GHz bands, or any alternate proposals by commenters, the Commission seeks
15. The Commission notes that the Commission's antenna standards for the 90 GHz band are considerably different from those that apply to the 70 GHz and 80 GHz bands.
16. Finally, the Commission seeks comment on how the proposed changes to the antenna standards for the 70 GHz and 80 GHz bands, as well as any changes to the antenna standards for the 90 GHz band, would affect existing Federal operations in these shared bands, including the Radiolocation service. The Commission also seeks comment on how changes to the antenna standards would impact the system for coordination between Federal and non-Federal users. In addition, the Commission seeks comment on how changing the antenna standards may affect future uses of these bands, including for Fixed-Satellite Service.
17.
18. Do commenters agree that certain licensees submit multiple registrations at various locations and heights for a single transmit site? If so, does the Commission need to adopt rule revisions to require that each registration satisfies the interference-protection requirements of section 101.1523(b)(2)—including as to the licensee's other current or pending registrations? Do commenters agree that there are registrations in the database that are not operational and likely never will be? If so, how common are such inaccurate registrations? The Commission note that failure to begin operations in a timely manner pursuant to a part 101 authorization results in the automatic cancelation of the authorization. Nevertheless, because the Commission currently does not require licensees to file a construction certification, such cancellations are not automatically reflected in ULS or the third-party database, and the Commission therefore does not have a ready mechanism for accurately tracking them.
19. If the Commission does adopt a construction certification requirement, how should the Commission manage the certification process? The Commission seeks comment on FWCC's suggestion that certificates be managed through ULS or by a third party. Should the Commission accept construction certifications through one of its systems (
20. FWCC also proposes that the Commission allow registrants to amend their registrations under certain circumstances without losing their first-in-time priority rights. The Commission seeks comment on whether licensees should be allowed to amend their registered links without losing first-in-time status. What amendments, if any, should be allowed without losing first-in-time status?
21.
22.
23. Different systems or services operating at different altitudes or unique locations could create opportunities for expanded use (or reuse) of spectrum frequencies as between traditional terrestrial locations and unique altitudes and locations. Stated another way, “3D” spectrum management techniques could allow for the deployment of new broadband products and services while helping to alleviate growing demands for spectrum resources. Innovative products and services are being developed specifically to improve broadband access on-board airplanes, ships, and other methods of transport. A 3D model of spectrum management, however, presents not only potential opportunities but also potential challenges, as managing potential harmful interference between systems becomes more complicated.
24. The 70/80/90 GHz bands could provide a unique spectrum resource for the provisioning of broadband services to airplanes, ships, and other antennas in motion. In general, atmospheric attenuation tends to increase the higher the signal goes in the radio spectrum frequency range, limiting the potential length of transmission paths. The 70/80/90 GHz bands, however, experience less attenuation than frequencies lower down in the 50-60 GHz range.
25. The Commission notes that, in response to Aeronet's petitions, several commenters have raised concerns specific to proposed systems that would operate in the 90 GHz band. Sierra Nevada, for example, opposes use of the 90 GHz band for the types of operations proposed by Aeronet. Sierra Nevada believes these systems will interfere with the Enhanced Flight Visions Systems (EFVS) for which Sierra Nevada seeks to establish rules in this segment of the band. In addition, the Commission proposed to permit use of the 92-95.5 GHz band for EFVS, including amending the Table of Allocations to add a Radionavigation Service allocation in this segment of the band. Moog opposes Aeronet's use of the 90 GHz band because it may interfere with Moog's proposed Foreign Object Debris (FOD) Detection System. The Commission note that the 92-100 GHz band is also recognized worldwide for FOD radar use. Aeronet has acknowledged that the 90 GHz band may pose unique coordination problems for the services it intends to deploy. Because the deployment of links to endpoints in motion in the 90 GHz band may present some unique coordination problems—particularly to EFVS systems that the Commission has already proposed to allow in the 92-95.5 GHz band—the Commission propose to authorize these links to or from (or between) endpoints in motion only in the 70 GHz and 80 GHz bands. The Commission seeks comment on this proposal.
26. The Commission seeks to develop a record on the balance of benefits and costs of permitting new uses of the 70 GHz and 80 GHz bands for communications to points in motion. The Commission seeks comment on the types of benefits to consumers of the services to aircraft and ships proposed by Aeronet. For example, the Commission seeks comment on the value of enhanced competition in the aeronautical and maritime broadband markets that could result from authorizing Aeronet's operations and similar types of services in the 70 GHz and 80 GHz bands. Should the Commission adopt rules to promote competition and prevent licensees from filing multiple registrations that result in a bevy of first-in-time registrations that potentially foreclose use of the band from competitors?
27. How would the introduction of these new types of services in the 70 GHz and 80 GHz bands affect existing point-to-point microwave services or the potential for deployment of other non-Federal and Federal services in the bands? Would aeronautical or maritime deployments, such as the ones proposed by Aeronet and other parties in this proceeding be compatible with more robust use of the band for small cell backhaul, as proposed by FWCC, Ericsson, Nokia, and others? If particular non-Federal use cases are not compatible, then how should the Commission weigh the various public interest considerations in allowing, prohibiting, or prioritizing among such uses? Would aeronautical or maritime deployments in these bands inhibit use of this spectrum by Fixed-Satellite Service systems?
28. The Commission also notes that there are both Federal and non-Federal space-service frequency allocations in the bands discussed here; fixed satellite, mobile satellite, broadcasting satellite, Earth Exploration-Satellite (passive) and radio astronomy. In addition, there are primary Federal allocations in adjacent bands for earth exploration-satellite (passive), space research (passive), and radio astronomy services in the 86-92 GHz band. The Commission seeks comment on any possible impact that the proposals discussed in this
29.
30. Aeronet's proposed service classification appears to be inconsistent with the language of the Communications Act and the Commission's rules. While the Communications Act does not define “fixed stations” or “fixed service,” the Commission rules provide that “fixed stations” are stations in the fixed service, which is defined in its rules as a “radiocommunication service between specified
31. The Commission tentatively conclude that the definitions of “mobile station” in the Communications Act and its rules and of “aeronautical mobile service” and “maritime mobile station” in its rules are consistent with Aeronet's descriptions of its service. Aeronet's antennas on-board aircraft appear to fit most closely within the definition of aircraft stations operating in the aeronautical mobile service, while the ground stations in its system appear to fit the definition of aeronautical stations. Antennas operating on ships appear to fit the description of ship stations operating in the maritime mobile service, while the ground stations and aerostats meet the definition of coast stations. The Commission seek comment on these tentative conclusions.
32. The Commission notes that it's revisiting the Commission's decision in the
33. The Commission additionally seeks comment on whether any changes to Aeronet's proposed definitions would be necessary to accommodate a classification of these services as mobile, and whether any changes would be necessary to create a provider- and technology-neutral framework for the provision of air- and sea-based links or links between antennas in motion.
34.
35. In that regard, the Commission proposes to require coordination and registration of all air- and sea-based links/links between antennas in motion, and the Commission seeks comment on this proposal. Aeronet asserts that its links involving ground or shore stations can be registered using the existing coordination framework for the 70/80/90 GHz bands, with minor modifications to the registration databases to represent multi-dimensional polygons and polyhedrons, as well as narrow beam-width antennas that operate within a wider-beamwidth cone. Aeronet further represents that links that do not involve a ground or shore station—links between aircraft, links between ships, and links between relay nodes and ships—do not need to be registered at all if Aeronet adopts reasonable limitations on its operations to manage exposures to Fixed Service receivers. The Commission tentatively concludes that coordination and registration should include not only links involving ground or shore stations, but also links between aircraft, links between ships, and links between relay nodes and ships. Requiring appropriate coordination and registration of all links would facilitate protection of Federal and non-Federal operations under the coprimary allocation and allow for future coordination among similar deployments, if additional entrants seek to offer competing services in the 70/80/90 GHz bands. Further, appropriate coordination and registration requirements would potentially allow NTIA and the Commission to track and evaluate the construction and use of all links in the event of interference issues, to the extent the Commission adopts the construction certification requirements proposed in this
36. The Commission seeks comment on how these links could be coordinated and registered to represent multi-dimensional areas or polyhedrons, which would involve a significant transformation of NTIA's and the Commission's current systems that coordinate and register two-dimensional point-to-point links. For example, should the coordination and registration requirements for aircraft-to-aircraft links differ depending on the altitude of one or both of the respective aircrafts? How wide should the beams be represented
37. Even if aircraft-to-aircraft or ship-to-ship links do not require an interference analysis of traditional Fixed Service links, how would coordination and registration work in the event the 70/80/90 GHz bands are used by multiple air-based or ship-based systems? Should first-in-time priority be afforded to multidimensional areas, and if so, what effect would that have on competing uses of the bands? Is the existing, static third-party database system sufficient to accommodate links to endpoints in motion, or would a more robust coordination and registration mechanism be needed to accommodate services like those Aeronet seeks to deploy? How would coordination and registration mechanisms accommodate Aeronet's proposed operations, which would involve the transmission of signals towards known flight paths or ship routes according to a specified schedule? What are the additional costs and benefits of modifying the coordination and registration framework and associated systems as necessary in light of Aeronet's proposal?
38. In light of the importance of a modified coordination and registration framework to the successful expansion of use of the 70 GHz and 80 GHz bands, the Commission proposes to require FCC review and approval of third-party database managers with the capability of accepting coordination data for air- and sea-based links/links between antennas in motion as a condition precedent to deployment. Currently, two companies (Comsearch and Micronet Communications) serve as third-party database administrators for registering 70/80/90 GHz band links. When the Commission designated database administrators in 2004, it required administrators to monitor and implement FCC rules and policies (including any changes) pertaining to the 70/80/90 GHz bands. Would the undertakings included in the
39. Further, the Commission seeks comment on how to continue to protect co-primary and adjacent Federal operations if the Commission authorize links to endpoints in motion. What changes would be needed to NTIA's “green light”/“yellow light” coordination system to accommodate deployment of air- or sea-based links, or links between antennas in motion? How would the system effectively manage coordination of commercial aircraft-to-aircraft and aircraft-to-ground links with Federal operations, including the Earth Exploration-Satellite (passive), Space Research (passive), and Radio Astronomy Services?
40. In addition, the Commission notes that certain commenters, while expressing support for Aeronet's proposal, assert that changes to the part 101 rules should be flexible enough to permit other new uses of the 70/80/90 GHz bands. The Commission seeks comment on whether changes to its 70/80/90 GHz rules, including any new definitions, should encompass a broader array of new services. The Commission also seek comment on whether any alternate licensing frameworks would be more effective in facilitating expanded use of these bands.
41.
42. In addition, the Commission seeks comment on whether the interference mitigation measures proposed by Aeronet and Comsearch would be sufficient to protect co-primary Federal services and, if so, whether they should be required by its part 101 rules. For Aeronet's proposed aviation system, Aeronet would employ ground stations located “away from urban and suburban areas where part 101 fixed service use of the 70/80/90 GHz bands is concentrated” and would use a minimum elevation angle of five degrees at the ground stations. Comsearch indicates that Aeronet's ground stations may require coordination zones of up to 35 kilometers. Aeronet also would use aircraft-to-aircraft links that, according to the Comsearch Report, would pose little interference risk to fixed links when operating near horizontally because they can only intersect the main-beam of FS receivers “at very low or negative elevation angles and at large distances.”
43. For Aeronet's maritime system, the Comsearch Report proposes a coordination zone for ship-to-shore communications of up to 30 kilometers to alleviate the risk of interference, and it recommends frequency planning to avoid “co-channel operation.” The Comsearch Report indicates that there is little risk of interference to fixed links from links from shore station-to-
44. The Commission seeks comment on whether the mitigation measures Comsearch advocates would be necessary or sufficient to protect fixed point-to-point users. The Commission also seeks comment on what additional interference mitigation measures, if any, would be necessary to protect other operations, including vehicular radars, passive services, and the Radio Astronomy Service. Should the Commission amend its part 101 rules to require such measures if SDDLs or other links to endpoints in motion are deployed in these bands? What restrictions or unique operating parameters, if any, should the Commission adopt to mitigate the risk of harmful interference? How far away from traditional fixed stations would ground stations need to be located to avoid interference? What degree of elevation angle would be sufficient to prevent interference? What mitigation measures would be effective to address the risk of harmful interference potentially caused by aircraft-to-aircraft links between aircraft operating at significantly different altitudes? Would other entities be able to operate similar systems without receiving interference from or causing interference to Aeronet's system? In considering these issues, the Commission seeks comment on what assumptions should be made about the number of airports and seaports where SDDLs or similar services would be deployed.
45.
46. Commenters should also address whether authorizing links to endpoints in motion requires the Commission to adopt a formal channel plan for the 70/80/90 GHz bands. For example, should the Commission limit SDDL operations to receive (uplink) operations in the 80 GHz band to protect Radio Astronomy Service systems?
47. If the Commission was to adopt a channel plan, then what channel plan should it use? Should the Commission allow for multiple operators to transmit or receive signals in opposite directions (
48.
49. In addition, the Commission notes that § 101.1(b) describes the purpose of the rules in part 101 as “prescrib[ing] the manner in which portions of the radio spectrum may be made available for private operational, common carrier, 24 GHz Service and Local Multipoint Distribution Service fixed, microwave operations
50. Are any other rule changes necessary to accommodate other potential uses of the 70/80/90 GHz bands? For example, Loon is developing a High-Altitude Platform Station (HAPS) service that may use the 70/80/90 GHz
51. In addition, the Commission proposes that any mobile operations be authorized on a non-interference basis to fixed operations in Canada and Mexico and subject to future international agreements. The Commission seeks comment on the international coordination implications of the services proposed in this
52. The Commission notes that any systems for the provision of broadband that it authorize in this proceeding must not create hazards to air navigation, whether near airports, over water, or in any other area. The Commission seeks comment on any necessary rule changes to promote public safety. For example, should any Commission rules, such as those on tower lighting, apply to relay stations, including aerostats or drones?
53.
54. Generally, the Commission may waive any rule for good cause shown. Waiver is appropriate if special circumstances warrant a deviation from the general rule, such deviation will serve the public interest, and the waiver does not undermine validity of the general rule. More specifically, § 1.925(b)(3) of the Commission's rules requires parties seeking a waiver of wireless radio services licensing rules to demonstrate that: (i) The underlying purpose of the rule(s) would not be served or would be frustrated by application to the instant case, and that a grant of the requested waiver would be in the public interest; or (ii) in view of unique or unusual factual circumstances of the instant case, application of the rule(s) would be inequitable, unduly burdensome or contrary to the public interest, or the applicant has no reasonable alternative.
55. Aviat and Fastback have not met the first prong of § 1.925(b)(3) because they have not shown that the requested waivers would be in the public interest. Specifically, as discussed in this
56.
57. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the
58.
59. The 70/80/90 GHz bands are high millimeter-wave bands allocated for co-primary Federal and non-Federal uses in the FS, FSS (70/80 GHz only), Mobile (70/80/90 GHz), Radio Astronomy (80/90 GHz only) and Radiolocation (90 GHz only) services under part 101 of the Commission's Rules. Spectrum use in the 70/80/90 GHz bands is primarily concentrated along a few popular routes, with minimal use in large parts of the United States. These bands are presently used primarily for fixed point-to-point and satellite services via non-exclusive registered links in a third-party registration database. As of March 23, 2020, there were 658 active non-exclusive nationwide licensees in the 70/80/90 bands. Based upon information available from the third-party database managers responsible for registering links in those bands, as of March 23, 2020, there were 18,770 registered fixed links in the 70 GHz and 80 GHz bands. To further the Commission's goals of expanding access to broadband and fostering the efficient use of millimeter wave spectrum, the Commission proposes targeted changes to its rules to facilitate the provision of wireless backhaul for 5G and seek comment. Included in the Commission's discussion of potential rule changes and requests for comments in
60. Specifically, the Commission proposes changes to the antenna standards applicable to the 70 GHz and 80 GHz bands and seeks comment on whether similar changes are necessary in the 90 GHz band. The Commission also proposes to continue licensing use of the 70 GHz and 80 GHz bands on a non-exclusive, nationwide basis, to the extent the Commission authorizes links to endpoints in motion in these bands and seek comment on this proposal. The Commission further proposes to require registration of all air and sea-based links/links between antennas in motion, and the Commission seeks comment on this proposal. In addition, the Commission seeks comment on whether the Commission should make changes to its current link registration rules for the 70/80/90 GHz bands to prevent the registration of never-constructed links. The Commission also proposes to authorize point-to-point links to endpoints in motion in the 70 GHz and 80 GHz bands and to classify those links as a “mobile” service. The Commission seeks comment on technical and operational rules necessary to facilitate these new service offerings in the 70 GHz and 80 GHz bands and mitigate interference to incumbents and other proposed users of these bands. Finally, the Commission seeks comment on whether the Commission should adopt a channelization plan in the 70 GHz and 80 GHz bands.
61. By modifying the Commission's rules and implementing policies designed to provide for more flexible use of new technologies in the 70/80/90 GHz band, the Commission hopes to ensure that this spectrum is efficiently utilized and will foster the development of new and innovative technologies and services, as well as encourage the growth and development of a wide variety of services, ultimately leading to greater benefits to consumers.
62.
63.
64.
65. Next, the type of small entity described as a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 or less to delineate its annual electronic filing requirements for small exempt organizations. Nationwide, for tax year 2018, there were approximately 571,709 small exempt organizations in the U.S. reporting revenues of $50,000 or less according to the registration and tax data for exempt organizations available from the IRS.
66. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” U.S. Census Bureau data from the 2017 Census of Governments indicate that there were 90,056 local governmental jurisdictions consisting of general-purpose governments and special purpose governments in the United States. Of this number there were 36,931 general purpose governments (county, municipal and town or township) with populations of less than 50,000 and 12,040 special purpose governments—independent school districts with enrollment populations of less than 50,000. Accordingly, based on the 2017 U.S. Census of Governments data, the Commission estimate that at least 48,971 entities fall into the category of “small governmental jurisdictions.”
67.
68.
69. The Commission does not have data specifying the number of these licensees that have more than 1,500 employees, and thus is unable at this time to estimate with greater precision the number of fixed microwave service licensees that would qualify as small business concerns under the SBA's small business size standard. Consequently, the Commission estimates that there are up to 36,708 common carrier fixed licensees and up to 59,291 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services that may be small and may be affected by the rules and policies adopted herein. The Commission note, however, that the microwave fixed licensee category includes some large entities.
70.
71.
71.
72.
73. In the
74. The record in this proceeding contains assertions that the innovative aeronautical and maritime services proposed by Aeronet have lower interference potential and therefore could avoid the need to engage in the proposed registration process described above. If this becomes the Commission's approach, it would lower the recordkeeping burden on small entities and other licensees. However, to the extent such links would also be coordinated though the current registration system, the recordkeeping burden associated with such new services would presumably remain the same as the burden on legacy systems in the 70/80/90 GHz bands. There are various methods of interference mitigation that could be applicable to the newly proposed services, such as the use of coordination zones or frequency planning which may also place a greater recordkeeping burden on licensees operating these services. However, if new services are able to operate without causing interference to competitors' systems, and existing mitigation techniques remain effective, then related compliance costs may not increase. In the
75. When the Commission first reduced the minimum antenna standard, the Commission did so as a matter of public policy to expand potential use in the bands to more business locations. In the past, the cost of the 70 GHz and 80 GHz antennas were specifically noted as major factors limiting deployment in the 70/80/90 GHz band. As mentioned in the
76. The
77. At this time, Commission is not currently in a position to determine whether, if adopted, the proposed rules and associated requirements raised in the
78.
79. To assist with the Commission's evaluation of the economic impact on small entities, and to better evaluate options and alternatives should there be a significant economic impact on small entities as a result of the proposals in this
80. In light of FWCC's proposed changes to the 70 GHz and 80 GHz antenna standards, the Commission seeks comments and alternatives for changing the antenna standards in 70/80/90 GHz bands. The Commission believe that reducing the minimum antenna size will facilitate access to spectrum by a wide variety of small entities at a cost that is substantially less than the antennas currently mandated for the 70/80/90 GHz bands. The Commission seeks detailed quantitative data on the benefits and costs of relaxing antenna standards for the 70/80 GHz bands which may allow the Commission to analyze the impact on small entities. This includes any cost savings from the changes and any cost increases that may result from increased interference. In the
81. The Commission expects to more fully consider the economic impact and alternatives for small entities following the review of comments and costs and benefits analyses filed in response to the
82.
83.
84. Accordingly,
85.
86.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS proposes to implement management measures described in Amendment 51 to the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico (Gulf)(FMP), as prepared by the Gulf of Mexico Fishery Management Council (Council) (Amendment 51). This proposed rule would establish and modify status determination criteria and harvest levels for the gray snapper stock. The purposes of this proposed rule are to end overfishing of gray snapper and achieve optimum yield (OY).
Written comments must be received by August 5, 2020.
You may submit comments on the proposed rule identified by “NOAA-NMFS-2019-0116” by either of the following methods:
•
•
Electronic copies of Amendment 51, which includes an environmental assessment, a fishery impact statement, a Regulatory Flexibility Act analysis, and a regulatory impact review, may be obtained from the Southeast Regional Office website at
Peter Hood, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
NMFS and the Council manage the Gulf reef fish fishery, which includes gray snapper, under the FMP. The Council prepared the FMP and NMFS implements the FMP through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
The Magnuson-Stevens Act requires NMFS and regional fishery management councils to prevent overfishing and achieve, on a continuing basis, the OY from federally managed fish stocks. These mandates are intended to ensure fishery resources are managed for the greatest overall benefit to the nation, particularly with respect to providing food production and recreational opportunities, and protecting marine ecosystems.
Unless otherwise noted, all weights in this proposed rule are in round weight.
Gray snapper in the Gulf exclusive economic zone (EEZ) are managed as a
In 2018, the stock status of gray snapper was evaluated for the first time through a Southeast Data, Assessment, and Review benchmark stock assessment (SEDAR 51). The Council's Scientific and Statistical Committee (SSC) reviewed SEDAR 51 and accepted the assessment as the best scientific information available. The SSC determined that the stock is undergoing overfishing as of 2015, which was the last year of data included in the assessment, because the fishing mortality rate (F) exceeded the current maximum fishing mortality threshold (MFMT). The SSC was not able to determine whether the stock is overfished, because the maximum sustainable yield (MSY) and minimum stock size threshold (MSST) for gray snapper are not specified in the FMP.
SEDAR 51 could not estimate the actual MSY with the best scientific information available. Therefore, the Council considered alternatives for an MSY proxy that uses the spawning potential ratio (SPR). The SPR is the ratio of the average number of eggs per fish over its lifetime when the stock is fished compared to the same value when the stock is not fished. The SPR assumes that a certain amount of fish must survive and spawn in order to replenish the stock. Analyses of stocks with various life histories suggest that, in general, the MSY is most commonly associated with the yield when fishing at an F that corresponds to an SPR between 30 and 40 percent.
After reviewing the SEDAR 51 assessment, the SSC recommended that the MSY proxy be set at the yield when fishing at an F corresponding to a 30 percent SPR (F
As a result of the increasing uncertainty with long-range projections, the SSC only provided overfishing limit (OFL) and acceptable biological catch (ABC) recommendations for the gray snapper stock through 2021. From SEDAR 51, the OFLs associated with the MSY proxy selected by the Council are 2.58 million lb (1.17 million kg) for 2020, and 2.57 million lb (1.17 million kg) for 2021, and the ABCs recommended by the SSC are 2.51 million lb (1.14 million kg) for 2020 and subsequent years.
If implemented, this proposed rule would revise the ACL for the Gulf gray snapper stock, and remove the ACT.
The current ACL for gray snapper is 2.42 million lb (1.1 million kg) and was established based on average landings from 1999 through 2008. The current ACT is set 14 percent below the ACL, at 2.08 million lb.
To determine the new ACLs, the Council used its ACL/ACT control rule to determine whether to apply a buffer to the ABC recommendations to account for management uncertainty. The results indicated that an 11 percent buffer is appropriate. When applied to the 2020-2021 ABC recommendations, the resulting gray snapper stock ACLs in this proposed rule would be 2.24 million lb (1.02 million kg) for the 2020 fishing year. For 2021 and subsequent fishing years, the ACL would be set at 2.23 million lb (1.01 million kg). The Council decided to remove the ACT for gray snapper because it has not been used for management since its implementation in 2012.
Amendment 51 would modify the OFL and ABC for the gray snapper stock as previously explained. Amendment 51 would also modify the MFMT and specify the MSY, MSST, and OY for the stock. NMFS uses the MSST and MFMT to determine whether a stock is overfished or undergoing overfishing, respectively. If the stock biomass falls below the MSST, then the stock is considered overfished and the Council would then need to develop a rebuilding plan capable of returning the stock to a level that allows the stock to achieve MSY on a continuing basis. In years when there is a stock assessment, if fishing mortality exceeds the MFMT, a stock is considered to be undergoing overfishing, because this level of fishing mortality, if continued, would reduce the stock biomass to an overfished condition. In years in which there is no assessment, overfishing occurs if landings exceed the OFL.
Amendment 51 would set the MSY proxy as the yield when fishing at F
Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the FMP, the Magnuson-Stevens Act, and other applicable laws, subject to further consideration after public comment.
This rule has been determined to be not significant for purposes of Executive Order 12866. This rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on
A description of the action, why it is being considered, and the objectives of and legal basis for this action are contained in the
The Magnuson-Stevens Act provides the statutory basis for this proposed rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting or recordkeeping compliance requirements are introduced in this proposed rule.
The proposed rule concerns recreational and commercial fishing for gray snapper in Federal waters of the Gulf. It directly affects both anglers (recreational fishers) and commercial fishing businesses that harvest gray snapper in the Gulf EEZ.
Anglers are not considered small entities as that term is defined in 5 U.S.C. 601(6), whether fishing from for-hire fishing, private or leased vessels. Therefore, neither estimates of the number of anglers nor the impacts on them are required or provided in this analysis.
Any business that operates a commercial fishing vessel that harvests gray snapper in the Gulf EEZ must have a valid Federal Gulf reef fish permit attached to that vessel. From 2013 through 2017, an annual average of 387 permitted vessels reported landing gray snapper. An estimated 295 businesses operate that average number of vessels that land gray snapper annually. All of these businesses are expected to operate primarily in the Gulf commercial fishing industry (NAICS code 11411).
For Regulatory Flexibility Act purposes, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily involved in commercial fishing (NAICS 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and its combined annual receipts are not in excess of $11 million for all of its affiliated operations worldwide.
From 2013 through 2017, federally-permitted vessels that reported landing gray snapper received an average of $1,018 (2017 dollars) annually from gray snapper landings and $127,707 (2017 dollars) annually from all landings. Based on those revenues, NMFS has determined that all of the businesses directly affected by the proposed action are small.
This proposed rule would reduce the current gray snapper stock ACL from a constant 2.42 million lb (1.10 million kg) to 2.24 million lb (1.02 million kg) in 2020 and 2.23 million lb (1.01 million kg) in 2021 and subsequent years. That is a decrease of 0.18 to 0.19 million lb (0.82 to 0.86 million kg), which is a reduction of the stock ACL by 7.44 percent to 7.85 percent.
Between 2013 and 2017, the commercial sector accounted for an average of 7.5 percent of the total gray snapper landings in the Gulf, and an average of 83.0 percent of commercial sector landings were made by federally-permitted vessels. NMFS used those average percentages to estimate that the 180,000 lb (81,647 kg) reduction in the stock ACL in 2020 could result in a 13,500 lb (6,124 kg) decrease in commercial landings in 2020, and the 190,000 lb (86,183 kg) reduction in the stock ACL in 2021 and thereafter could reduce commercial landings by 14,250 lb (6,464 kg). Moreover, because permitted vessels report their gray snapper landings in pounds gutted weight, those possible reductions would be equivalent to 10,186 lb (4,620 kg) gutted weight in 2020 and 10,828 lb (4,911 kg) gutted weight in years thereafter. However, any actual decrease in commercial landings would require a closure of the commercial season before the end of the fishing year. A closure would occur if the sum of commercial and recreational landings exceeded the stock ACL during the previous year, and if the sum of commercial and recreational landings reached or was projected to reach the stock ACL in the current year. There have been no closures of the commercial season in recent years. Landings data for 2018 and preliminary data for 2019 indicate combined landings for those years were under the current and proposed stock ACLs, which suggests there would be no closures.
If there were a closure as a result of the reduction in the stock ACL, there would be a reduction of federally-permitted vessels' collective dockside revenues that ranges from $28,419 to $30,001 (2017 dollars), assuming an average dockside price of gray snapper of $2.79 per lb (2017 dollars), gutted weight. Each of the 387 vessels would lose from $73 to $78 in the year of the closure, on average, which represents a 0.06 percent reduction of the average total income ($127,707). The average impact on the 295 small businesses would be $96 to $102 (2017 dollars).
The information provided supports a determination that this proposed rule would not have a significant economic impact on the average annual 295 commercial fishing businesses and their combined 387 federally permitted fishing vessels that harvest gray snapper from the Gulf. As a result, an initial regulatory flexibility analysis is not required and none has been prepared.
Annual catch limit, Fisheries, Fishing, Gray snapper, Gulf, Reef fish.
For the reasons set out in the preamble, 50 CFR part 622 is proposed to be amended as follows:
16 U.S.C. 1801
(l)
Animal and Plant Health Inspection Service, Agriculture (USDA).
Notice and request for comments.
In accordance with Executive Order 13892, Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication, the Animal and Plant Health Inspection Service (APHIS) is soliciting public comments on a proposal wherein APHIS would only approve radio frequency identification tags as official eartags for use in interstate movement of cattle and bison that are covered under certain regulations.
We will consider all comments that we receive on or before October 5, 2020.
You may submit comments by either of the following methods:
•
•
Supporting documents and any comments we receive on this docket may be viewed at
Dr. Aaron Scott, Director, National Animal Disease Traceability and Veterinary Accreditation Center, Strategy & Policy, Veterinary Services, APHIS, 2150 Centre Ave, Fort Collins, CO 80526; (970) 494-7249.
The Animal Plant Health Inspection Service's (APHIS') Animal Disease Traceability framework was established to improve the ability to trace animals back from slaughter and forward from premises where animals are officially identified in addition to tracing animals' interstate movements. Although 9 CFR part 86 (referred to below as “the regulations”) provides requirements for official identification and movement documentation for multiple species, the scope of this notice is limited to official eartags for cattle and bison. Knowing where diseased and at-risk exposed animals are, as well as where they have been and when, is indispensable to emergency response and ongoing disease control and eradication programs. The ability to accurately and rapidly trace animals does not prevent disease epidemics but does allow State and Federal veterinarians to contain potentially devastating disease outbreaks early before they can do substantial damage to the U.S. cattle industry.
APHIS has primary regulatory responsibility to control and eradicate communicable diseases of livestock and to prevent the introduction and dissemination of any pest or disease of livestock into the United States. The regulations provide the requirements for identification and documentation for certain classes of cattle and bison to move interstate. These regulations establish minimum national official identification and documentation requirements for the traceability of livestock moving interstate. The species covered in the regulations include cattle and bison (sexually intact and 18 months of age or older, all female dairy cattle of any age and male dairy animals born after March 11, 2013, cattle and bison of any age used for rodeo or recreational events, and cattle or bison of any age used for shows or exhibitions), sheep and goats, swine, horses and other equines, captive cervids (
Official identification devices or methods are determined by the APHIS Administrator. An “official identification device or method” is defined in § 86.1 of the regulations as “[a] means approved by the Administrator of applying an official identification number to an animal of a specific species or associating an official identification number with an animal or group of animals of a specific species or otherwise officially identifying an animal or group of animals.”
One of the approved identification methods for cattle and bison covered by part 86 is an official eartag. An “official eartag” is defined in § 86.1 of the regulations as “[a]n identification tag approved by APHIS that bears an official identification number for individual animals. . .. The design, size, shape, color, and other characteristics of the official eartag will depend on the needs of the users, subject to the approval of the Administrator. The official eartag must be tamper-resistant and have a high retention rate in the animal.”
As of the publication of this notice, APHIS has used visual (metal) tags for animal identification in disease programs for many decades and has approved both visual and radio frequency identification (RFID) tags for use as official identification devices in cattle and bison since the implementation of the regulations in part 86 in 2013.
A comprehensive animal disease traceability system is the best protection against a devastating disease outbreak. The U.S. Department of Agriculture (USDA) is committed to a modern disease traceability system that tracks animals from birth to slaughter using affordable technology that allows for quick tracing of sick and exposed animals to stop disease spread. In September 2018, USDA established four overarching goals to increase traceability. These goals are: (1) Advance the electronic sharing of data among Federal and State animal health officials, veterinarians, and industry; including sharing basic animal disease traceability data with the Federal animal health events repository; (2) use
Effective animal traceability is important for slow-moving diseases of cattle, such as bovine tuberculosis. Failure to correctly identify the infected animal can result in prolonged exposure to the disease within a herd, increasing the likelihood of spread. Conversely, incorrect identification can lead to incomplete trace backs or trace forwards with resulting costs to both government and livestock producers for quarantines and testing of animals to find the ones actually exposed.
For fast-moving diseases with short incubation periods, the time to trace animals and contain an outbreak is essential to protect the economic viability and competitive advantage of the U.S. cattle industry. For diseases such as foot-and-mouth disease that could devastate the U.S. cattle industry, emergency response exercises demonstrate that every hour counts towards the successful containment of an outbreak.
While APHIS focuses on interstate movements of livestock, States and Tribal Nations remain responsible for the traceability of livestock within their jurisdictions. APHIS partners with State veterinary officials each year to test the performance of States' animal disease traceability systems. Results of these test exercises currently show that when State veterinary officials are provided an identification number from an animal that has been identified with an official identification tag, either metal or RFID, that has been entered accurately into a data system, over half of States can trace animals through any one of four types of movements in less than 1 hour (these four types of movements are: Finding the State where an animal was tagged, the location in-State where an animal was tagged, the State from which an animal was shipped out of, and the location in-State that an animal was shipped out-of-State from). However, lengthy times in the trace test exercises resulted when numbers from visual (metal) tags were transcribed inaccurately, movement records were not readily available, or information was only retrievable from labor-intensive paper filing systems. RFID tags and electronic record systems provide significant advantage over metal tags to rapidly and accurately read and record tag numbers and retrieve traceability information.
In support of greater efficiency in traceability and in furtherance of the above-listed program goals, in 2020, APHIS started taking steps to enhance capability to rapidly trace and contain diseased and exposed cattle. We have done so by providing RFID ear tags as a no-cost alternative to the metal clip tags currently available from APHIS free of charge to States and accredited veterinarians. The RFID tags are intended for application in replacement heifers that are vaccinated for brucellosis, as well as those in States and herds that do not vaccinate for brucellosis. We believe the increased use of RFID tags is an important step to support the efforts of the cattle industry and State and Federal veterinarians to more accurately and rapidly trace potentially infected and exposed animals.
Executive Order 13892 provides that, in order to avoid unfair surprise, or lack of warning about what a legal standard administered by an Agency requires, Agencies shall publicly state the standards of conduct expected by regulated parties in advance of the enforcement of those standards. In accordance with this Executive Order, and in furtherance of the stated program goals and pursuant to part 86, APHIS is seeking comment from the public on a proposal wherein APHIS would only approve RFID tags as the official eartag for use in interstate movement of cattle and bison that are covered under part 86.
We recognize that, in addition to whether to transition to RFID identification devices, the timeline for such a transition is also important. Accordingly, we also request specific public comment on the following timeline, if, based on the comments received, USDA were to engage in such a transition:
• Beginning January 1, 2022, USDA would no longer approve vendors to use the official USDA shield in production of metal ear tags or other ear tags that do not have RFID components.
• On January 1, 2023, RFID tags would become the only identification devices approved as an official eartag for cattle and bison pursuant to § 86.4(a)(1)(i).
• For cattle and bison that have official USDA metal clip tags in place before January 1, 2023, APHIS would recognize the metal tag as an official identification device for the life of the animal.
This proposed change in what is considered an official eartag would not alter the current regulations in part 86 and would not amend the classes of cattle required to have official identification under the regulations. Likewise, this notice does not change part 86; for example, the State veterinary officials in States sending and receiving cattle could agree to accept alternate forms of identification such as registered brands, tattoos and other identification methods acceptable to breed associations in lieu of an official eartag. The policy for approving tags as official identification would continue to require that tags meet safety, quality, and retention criteria. However, all approved tags applied on or after January 1, 2023 would require an RFID component for the number that could be read visually as well as electronically.
This change would allow rapid and accurate reading and electronic transcription of identification numbers used for interstate health certificates or testing for regulated diseases such as tuberculosis or brucellosis. Implementing RFID as the official eartag in cattle would enhance the ability of State, Federal, and private veterinarians as well as livestock producers to quickly respond to high-impact diseases currently existing in the United States, as well as foreign animal diseases that threaten the viability of the U.S. cattle industry.
We will publish a follow-up notice in the
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
Food and Nutrition Service (FNS), USDA.
Notice.
In accordance with the Paperwork Reduction Act of 1995, this notice invites the general public and other public agencies to comment on the proposed collection. This is a revision of a currently approved collection in the Supplemental Nutrition Assistance Program and concerns Retail Store Applications (Forms FNS-252; FNS-252-C, FNS-252-E; FNS-252-FE; FNS-252-R and FNS-252-2).
Written comments must be received on or before September 4, 2020.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall 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.
All written comments will be open for public inspection at the FNS office located at 1320 Braddock Place, Room 5042, Alexandria, Virginia 22314, during regular business hours (8:30 a.m. to 5 p.m. Monday through Friday).
All responses to this notice will be summarized and included in the request for Office of Management and Budget approval. All comments will be a matter of public record.
Requests for additional information or copies of this information collection should be directed to Linda Sung-Lee at
FNS is also responsible for requiring updates to application information and reviewing retail food store applications at least once every five years to ensure that each firm is under the same ownership and continues to meet eligibility requirements. The Act specifies that only those applicants whose participation will “effectuate the purposes of the program” should be authorized.
There are six forms associated with this approved Office of Management and Budget (OMB) information collection number 0584-0008—the Supplemental Nutrition Assistance Program Application for Stores, Forms FNS-252 (English and Spanish) and FNS-252-E (paper and online version respectively); Farmer's Market Application, Form FNS-252-FE; Meal Service Application, Form FNS-252-2; Reauthorization Application, Form FNS-252-R; and the Corporation Supplemental Application, Form FNS-252-C used for individual (chain) stores under a corporation. For new authorizations, the majority of applicants use form FNS-252 or FNS-252-E (paper or online, respectively). For reauthorization, form FNS-252-R is used. In addition to these forms, during new authorization or reauthorization, FNS may conduct an on-site store visit of the firm. The store visit of the firm helps FNS confirm that the information provided on an application is correct. An FNS representative or store visit contractor obtains permission to complete the store visit checklist, photograph the store and asks the store owner or manager about the continued ownership of the store.
Applicants using form FNS-252-E or FNS-252-FE must self-register for a Level 1 access account through the USDA eAuthentication system prior to starting an online application. USDA eAuthentication facilitates the electronic authentication of an individual.
The Agricultural Act of 2014 (2014 Farm Bill) amended the Food and Nutrition Act of 2008 (the Act) and the Supplemental Nutrition Assistance Program (SNAP) revised all retailer application forms (paper and electronic) in January, 2018, as a result of regulatory changes required by the Act and amended by the 2014 Farm Bill.
FNS seeks to renew the current information collection, and where appropriate, revise the information collection for all SNAP application forms (paper and electronic) to clarify questions, instructions and examples concerning stocking units of staple food varieties on a continuous basis and to add Individual Taxpayer Identification Number (ITIN) as an alternative form of documentation that respondents may submit to FNS in lieu of a Social Security Number. Such changes would include (1) replacing “each variety” with “at least three varieties”; (2) adding one additional inventory stock example in each staple food category; (3) updating assistance materials such as General and Specific Instruction sections and on-line help screens; (4) inserting “ITIN” in the third, fourth, and seventh bullet of the Use and Disclosure—Routine Uses section; and (5) deleting the last two sentences in the last bullet of the Certification and Signature Statement regarding the General Service Administration's (GSA) System for Award Management (SAM). Upon advice of counsel, FNS no longer follows this business practice. FNS also intends to make minor grammatical changes for clarity along with design changes by adding spacing and horizontal lines separating Questions 21-26 and revise FNS' address listed in the Privacy Act and Paperwork Reduction Notice section. Due to recent SNAP website updates, FNS is also updating three website links within the application instructions. The links are: How to Apply; Contacting the RSC; and Retailer Training. Additionally, where applicable, the changes listed above will also be made to the following
FNS estimates that the hourly burden time per response associated with this information collection for respondents remains unchanged from our previous submission. The revisions to the application(s) are due to program adjustments and the update to Question 20a-d, the revision to the Privacy Act, Use and Disclosure—Routine Uses section, and the Certification and Signature Statement.
FNS used FY 2019 data in our calculation of burden estimates associated with this information collection as this was the most complete data available to us at this time. Table A below clarifies the burden of this information collection.
As currently approved by OMB, the hourly burden rate per response varies by the type of application used and the response time per respondent varies from 1 minute to 19 minutes. We estimate the new burden, on average, to be 9.13 minutes per respondent. There is no recordkeeping burden associated with these forms.
Food and Nutrition Service (FNS), USDA.
Notice.
In accordance with the Paperwork Reduction Act of 1995, this notice invites the general public and other public agencies to comment on this proposed information collection. This collection is a new collection for (1) describing States' approaches to SNAP E&T case management, (2) providing a comprehensive picture of States' approaches to SNAP E&T participant assessment, (3) documenting States' approaches to offering participant reimbursements and other supports, and (4) describing States' responses to the new case management requirement.
Written comments must be received on or before September 4, 2020.
Comments may be sent to: Kristen Corey, USDA Food and Nutrition Service, Office of Policy Support, 1320 Braddock Place, Alexandria, VA 22314. Comments may also be submitted via email to Kristen Corey at
All responses to this notice will be summarized and included in the request for Office of Management and Budget approval. All comments will be a matter of public record.
Requests for additional information or copies of this information collection should be directed to Kristen Corey at 703-305-2517.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall 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 that were 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 use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
By surveying all 53 State SNAP E&T directors and conducting in-depth case studies of four States, this study will provide FNS a comprehensive picture of case management in SNAP E&T, including how States assess (and reassess) individuals' needs for specific E&T services and supports, and how States provide participant reimbursements and other support services to mitigate barriers to participating in SNAP E&T activities and seeking and maintaining employment. Findings from the study will inform the development of best practices and lessons learned that FNS can share with all State agencies. This information will be particularly important as FNS continues to work with States to implement high quality SNAP E&T programs and fulfill the new case management program requirement by documenting best practices to inform program guidance.
Respondent groups identified for the survey and case studies include the following:
• State Government or territory SNAP director (53 survey respondents, 0 survey nonrespondents, 4 State case study recruitment respondents, 4 State case study recruitment nonrespondents, 4 case study interview respondents, and 0 case study nonrespondents)
• State Government or territory SNAP E&T director (53 survey respondents, 4 State case study interview respondents, and 0 survey or State case study interview nonrespondents)
• State Government or territory SNAP policy staff (53 survey respondents, 8 State case study interview respondents, and 0 survey or State case study interview nonrespondents)
• State Government or territory SNAP financial staff (53 survey respondents, 4 State case study interview respondents, and 0 survey or State case study interview nonrespondents).
• Local SNAP office administrator (10 case study respondents and 0 case study interview nonrespondents).
• Local SNAP office supervisor (10 case study respondents and 0 case study interview nonrespondents).
• Local SNAP office frontline staff (30 case study interview respondents, 0 case study interview nonrespondents, 6 case study one-on-one observation participants, 0 case study observation nonrespondents, 4 case study group observation participants, and 0 case study group observation nonrespondents).
• Business—SNAP E&T provider administrators from not for profit agencies (5 case study interview respondents and 0 case study interview nonrespondents).
• Business—SNAP E&T provider supervisors from not for profit agencies (5 case study interview respondents and 0 case study interview nonrespondents).
• Business—SNAP E&T provider frontline staff from not for profit agencies (15 case study interview respondents, 0 case study interview nonrespondents, 9 case study one-on-one observation participants, 0 case study one-on-one observation nonrespondents, 8 case study group observation participants, and 0 case study group observation nonrespondents).
• Business—SNAP E&T provider administrators from business or other for profit agencies (5 case study interview respondents and 0 case study interview nonrespondents).
• Business—SNAP E&T provider supervisors from business or other for profit agencies (5 case study interview respondents and 0 case study interview nonrespondents).
• Business—SNAP E&T provider frontline staff from business or other for profit agencies (15 case study interview respondents, 0 case study interview nonrespondents, 9 case study one-on-one observation participants, and 0 case study one-on-one observation nonrespondents, 8 case study group observation participants, and 0 case study group observation nonrespondents).
• Individual/household—SNAP E&T program participants (40 case study one-on-one observation participants, 8 case study one-on-one observation non-respondents, 200 case study group observation participants, and 0 case study group observation nonrespondents).
• 53 State or territory SNAP directors will be asked to complete the survey (100 percent of whom will complete the survey instrument) and 8 of whom will participate in a case study recruitment call (50 percent of whom will then participate in a semi-structured interview).
• 53 State or territory SNAP E&T directors will be asked to complete the survey (100 percent of whom will complete the survey instrument; 4 of whom will participate in a semi-structured interview).
• 53 State or territory SNAP policy staff will be asked to complete the survey (100 percent of whom will complete the survey instrument; 8 of whom will participate in a semi-structured interview).
• 53 State or territory SNAP financial staff will be asked to complete the survey (100 percent of whom will complete the survey instrument; 4 of whom will participate in a semi-structured interview).
• 10 local SNAP office administrators will participate in a semi-structured interview.
• 10 local SNAP office supervisors will participate in a semi-structured interview.
• 30 local SNAP office frontline staff will participate in a semi-structured interview (6 of whom will participate in one-on-one observations and four of whom will participate in group observations).
• 5 SNAP E&T provider administrators from business not for profit agencies will participate in a semi-structured interview (FNS anticipates 100 percent participation from all business for or not for profit).
• 5 SNAP E&T provider supervisors from business not for profit agencies will participate in a semi-structured interview.
• 15 SNAP E&T provider frontline staff from business not for profit agencies will participate in a semi-structured interview (9 of whom will participate in one-on-one observations and eight of whom will participate in group observations).
• 5 SNAP E&T provider administrators from business or other for profit agencies will participate in a semi-structured interview.
• 5 SNAP E&T provider supervisors from business or other for profit agencies will participate in a semi-structured interview.
• 15 SNAP E&T provider frontline staff from business or other for profit agencies will participate in a semi-structured interview (9 of whom will participate in one-on-one observations and eight of whom will participate in group observations).
• 48 SNAP E&T participants (Individuals/households) will be asked to participate in a one-on-one observation (approximately 40 will go on to participate, that is about 83 percent of whom will agree to participate) and 8 will not go on to fully participate. In addition, 200 SNAP E&T participants will be asked to participate in a group observation. FNS expects 100 percent will go on to participate.
Each respondent completing a survey section will do so only once. State SNAP directors recruited for the case studies will each participate in one recruitment phone call. Each case study interview respondent will participate in one semi-structured interview. Staff participating in observations will participate in up to two observations each. SNAP E&T participants participating in observations will participate in one observation each.
The estimated time of response varies from 0.13 to 1.00 hours (8 to 60 minutes) depending on respondent group and activity, as shown in the table below, with an average estimated time of 0.62 hours (37.4 minutes) for all responses. The average estimated time is calculated by dividing the 538.20 estimated total hours for responses in the table below by the 864 total estimated responses. The estimated average time for the non-respondent is 0.47 for all non-responses. The average estimated time is calculated by dividing the 5.60 estimated total hours for non-respondents in the table below by the 12 total estimated non-responses.
U.S. Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission) and the Federal Advisory Committee Act (FACA) that the Texas Advisory Committee (Committee) will hold a series of meetings via teleconference on Friday, July 24, 2020 at 1:00 p.m. and on Thursday, August 20, 2020 at 3:00 p.m. Central Time. The purpose of the meeting is for the Committee to discuss its project proposal on the “Civil Rights Implications of FEMA's Response to Hurricane Harvey.”
The meetings will be held on:
• Friday, July 24, 2020 at 1:00 p.m. CDT
• Thursday, August 20, 2020 at 3:00 p.m. CDT
Brooke Peery, Designated Federal Officer (DFO) at
This meeting is available to the public through the following toll-free call-in number: 800-367-2403, conference ID number: 6602335. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1-800-877-8339 and providing the Service with the conference call number and conference ID number.
Members of the public are entitled to make comments during the open period at the end of the meeting. Members of the public may also submit written comments; the comments must be received in the Regional Programs Unit within 30 days following the meeting. Written comments may be mailed to the Western Regional Office, U.S. Commission on Civil Rights, 300 North Los Angeles Street, Suite 2010, Los Angeles, CA 90012 or may be emailed to Brooke Peery (DFO) at
Records and documents discussed during the meeting will be available for public viewing prior to and after the meeting at
Please click on the “Meeting Details” and “Documents” links. Records generated from this meeting may also be inspected and reproduced at the Regional Programs Unit, as they become available, both before and after the meeting. Persons interested in the work of this Committee are directed to the Commission's website,
U.S. Census Bureau, Commerce.
Notice of information collection, request for comment.
The Department of Commerce, in accordance with the Paperwork Reduction Act (PRA) of 1995, invites the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. The purpose of this notice is to allow for 60 days of public comment on the proposed extension and revision to the Annual Business Survey and extension of the supplemental questions to the Annual Business Survey to capture a baseline of remote work options at businesses in 2019, prior to the submission of these information collection requests (ICRs) to OMB for approval.
To ensure consideration, comments regarding this proposed information collection must be received on or before September 4, 2020.
Interested persons are invited to submit written comments by email to
Requests for additional information or specific questions related to collection activities should be directed to Patrice Hall, Branch Chief, Business Owners Branch, 301-763-7198,
In an effort to improve the measurement of business dynamics in the United States, the Census Bureau is conducting the Annual Business Survey (ABS). The ABS combines Census Bureau firm-level data collections to reduce respondent burden, increase data quality, reduce operational costs, and operate more efficiently. The ABS replaced the Survey of Business Owners (SBO) for employer businesses, the Annual Survey of Entrepreneurs (ASE), and the Business Research and Development (R&D) and Innovation for Microbusinesses (BRDI-M) surveys. The ABS provides information on select economic and demographic characteristics for businesses and business owners by sex, ethnicity, race, and veteran status. Further, the survey measures research and development for microbusinesses, business topics such
The ABS includes all nonfarm employer businesses filing Internal Revenue Service (IRS) tax forms as individual proprietorships, partnerships, or any other type of corporation, with receipts of $1,000 or more. Every five years, the ABS samples approximately 850,000 employer businesses. The large sample size provides a benchmark and is needed to produce detailed comprehensive estimates for women-, minority-, and veteran-owned businesses at the 2-6-digit NAICS, U.S., state, metropolitan statistical area (MSA), county, and economic place levels. The 2018 ABS sampled approximately 850,000 employer businesses. The sample size is reduced annually to minimize the burden on survey respondents. Starting with the 2019 ABS, the sample was reduced to approximately 300,000 employer businesses. The smaller sample size will yield summary-level estimates for women-, minority-, and veteran-owned businesses at the 2-digit NAICS, U.S., state, and MSA levels. The Census Bureau uses administrative data to estimate the probability that a firm is minority- or women-owned. Each firm is then placed in one of nine frames for sampling. The sampling frames are: American Indian or Alaskan Native, Asian, Black or African American, Hispanic, Non-Hispanic White Men, Native Hawaiian and Other Pacific Islander, Other, Publicly Owned, and Women. The sample is stratified by state, industry, and frame. The Census Bureau selects some companies with certainty based on volume of sales, payroll, and number of paid employees or NAICS. All certainty cases are sure to be selected and represent only themselves.
The Census Bureau plans to request a revision to the currently approved ABS collection to approve substantive changes, including updated content and the expansion to collect R&D data from tax-exempt businesses (otherwise known as nonprofit organizations) who are required to complete IRS form 990, in order to compile national estimates of R&D performance within this sector. The ABS is designed to allow for incorporating new content each year based on topics of relevance. Each year new questions are submitted to the OMB for approval.
The Census Bureau also plans to request an extension to a currently approved emergency clearance to add supplemental questions about remote work to the 2020 ABS. The additional questions are designed to measure the impact of the Coronavirus pandemic on business operations and will provide a baseline of businesses' remote work activity. The emergency clearance is approved under OMB number 0607-1015 and expires November 30, 2020. The current emergency clearance will not cover the entire 2020 ABS collection period. Therefore, the Census Bureau requests an extension of the emergency approval through January 31, 2021. Similar questions will be included on future ABS collections as part of the proposed content and will be submitted to OMB for review annually.
The ABS collects the following information from employer businesses and nonprofit organizations:
• Owner characteristics, including sex, ethnicity, race, and veteran status from the principal owner(s) of the business.
• Company information including, worldwide sales, domestic sales, number of employees, and business ownership from all businesses in the sample.
• Business characteristics from all businesses in the sample.
• Research and development from businesses with between 1-9 employees.
• Research and development from nonprofit organizations.
Additional topics on business owners may include military service, owner acquisition, job functions, number of hours worked, primary income, prior business ownership, age of owner, education and field of degree, citizenship and place of birth, disability, and owner's reason for owning the business. Additional topics on the businesses may include number of owners and percent ownership, family owned and operated, business aspirations, funding sources, profitability, types of customers, types of workers, employee benefits, franchise operations, work from home practices, and business activity. Potential module topics for the ABS may cover innovation, technology and internet usage; management and business practices; exporting practices; domestic and foreign transactions; design; worker training; and financing.
The ABS primary collection method is via an electronic instrument. Those selected for the survey receive an initial letter informing the respondents of their requirement to complete the survey as well as instructions on accessing the survey. Responses will be due approximately 30 days from initial mailing. Respondents will also receive a due date reminder approximately one week before responses are due. The Census Bureau plans to conduct two follow-up mailings and an optional third follow-up if deemed necessary based on check-in. Nonrespondents may receive a certified mailing for the second and third follow-up mailings. The Census Bureau may also plan to conduct an email follow-up to select nonrespondents reminding them to submit their report in the electronic instrument. Follow-up operations may also include a paper questionnaire to assist with collecting data from select nonrespondents. Response data will be processed as they are received. Upon the close of the collection period, data processing will continue and records will be edited, reviewed, tabulated, and released publicly.
We are soliciting public comments to permit the Department/Bureau to: (a) Evaluate whether the proposed information collection is necessary for the proper functions of the Department, including whether the information will have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include, or summarize, each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
U.S. Census Bureau, Commerce.
Notice of information collection, request for comment.
The Department of Commerce, in accordance with the Paperwork Reduction Act (PRA) of 1995, invites the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. The purpose of this notice is to allow for 60 days of public comment on the proposed new information collection of the 2020 Public Use Microdata Areas Program, prior to the submission of the information collection request (ICR) to OMB for approval.
To ensure consideration, comments regarding this proposed information collection must be received on or before September 4, 2020.
Interested persons are invited to submit written comments by email to
Requests for additional information or specific questions related to collection activities should be directed to Robin A. Pennington, Decennial Census Management Division, Program Management Office, by phone at 301-763-8132 or by email to
Public Use Microdata Areas, or PUMAs, are nonoverlapping, statistical geographic areas that partition each state or equivalent entity into geographic areas containing no fewer than 100,000 people each. They cover the entirety of the United States, Puerto Rico, Guam, and the U.S. Virgin Islands. The Census Bureau defines PUMAs for the tabulation and dissemination of Public Use Microdata Sample (PUMS) data. Additionally, the American Community Survey and Puerto Rico Community Survey use them to disseminate their respective period estimates.
The Census Bureau invites State Data Centers from each state, the District of Columbia, and Puerto Rico to delineate PUMAs. States or equivalent entities with less than 200,000 people (
The Census Bureau asks State Data Centers to involve interested data users, such as those in tribal, state, and local (
The Census Bureau will provide an overview of the 2020 PUMA and will present the proposed criteria and guidelines of PUMAs to the State Data Centers during the Census Advisory Committee meeting scheduled for the fall of 2020. The proposal will be available on the PUMA website by the end of the calendar year. The State Data Centers and the public may provide comments on the proposal through February 2021. The Census Bureau will resolve and respond to comments received on the proposal prior to posting the final 2020 PUMA criteria and guidelines on the PUMA website later in the spring of 2021. To prepare suitable delineations, State Data Centers must ensure the final criteria and guidelines are implemented.
After the Census Advisory Committee meeting, the Census Bureau will contact the State Data Centers by phone to establish a 2020 PUMA point of contact and gather their contact information (
The Census Bureau will produce a detailed set of instructions for using GUPS and provide other historical and resource reference materials on the PUMA website. Once the program is underway, the Census Bureau plans to conduct two online webinar trainings and an in-person training to support PUMA delineation.
The State Data Centers (and other interested data users, if applicable) will download GUPS from the PUMA website and install the software locally on their computers to perform their work. No other method of collection for PUMA delineation is available.
State Data Centers will use the Census Bureau's Secure Web Incoming Module (SWIM) to submit their PUMAs to the Census Bureau for processing once they complete their delineation in GUPS. Verification, or creation, of a SWIM account occurs during the phone follow-up made to the point of contact after the program notification email. Other than to converse by phone or email regarding issues with the submission, there are no plans for formal feedback to State Data Centers.
Final 2020 PUMAs and their associated PUMS data will be available online for use beginning in summer of 2022.
We are soliciting public comments to permit the Department/Bureau to: (a) Evaluate whether the proposed information collection is necessary for the proper functions of the Department, including whether the information will have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include, or summarize, each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
U.S. Census Bureau, Commerce.
Notice of information collection, request for comment.
The Department of Commerce, in accordance with the Paperwork Reduction Act (PRA) of 1995, invites the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. The purpose of this notice is to allow for 60 days of public comment on the proposed revision of the Annual Retail Trade Survey, prior to the submission of the information collection request (ICR) to OMB for approval.
To ensure consideration, comments regarding this proposed information collection must be received on or before September 4, 2020.
Interested persons are invited to submit written comments by email to
Requests for additional information or specific questions related to collection activities should be directed to Chris Savage, Chief, Retail Trade Branch, Economy-Wide Statistics Division, U.S. Census Bureau, 4600 Silver Hill Road, Washington, DC 20233; (301) 763-4834; or
The Annual Retail Trade Survey (ARTS) covers employer firms with establishments located in the United States and classified in the retail trade sector, as defined by the North American Industry Classification System (NAICS).
Firms are selected for this survey using a stratified random sample where strata are defined by industry and annual sales size. The sample consisting of businesses classified in the Retail Trade sector as defined by the 2012
The data items requested in the ARTS include annual sales, annual e-commerce sales, year-end inventories, sales taxes, total operating expenses, detailed operating expenses in reference years ending in 2 and 7, purchases, accounts receivables, and, for selected industries, sales by merchandise line. These data are used to satisfy a variety of public and business needs such as economic market analysis, company performance, and forecasting future demands.
Data are collected electronically using the Census Bureau's secure online reporting instrument (Centurion). This electronic system of reporting is designed to allow respondents easier access, convenience and flexibility. Data are automatically stored and results are available immediately. In rare cases where the company has no access to the internet, the Census Bureau can arrange for the company to provide data to an analyst via telephone.
From survey year 2016 through survey year 2019, there were eight electronic form types (SA-44, SA-44A, SA-44C, SA-44D, SA-44E, SA-44N SA-44S and SA-44T). Starting with survey year 2020 (which will be collected in 2021), there will only be four electronic form types (SA-44C, SA-44D, SA44-S and SA44-T). Forms SA-44A, SA-44E and SA-44N are being removed to streamline data collection operations.
Government agencies, private businesses, and researchers often use the estimates generated from the ARTS. For example, the ARTS serves as a benchmark for the estimates produced from the Census Bureau's Monthly Retail Trade Survey (MRTS). The BEA utilizes the data when developing its gross domestic product (GDP) estimates and the national accounts' input-output tables. The Bureau of Labor Statistics (BLS) uses the data as an input to its producer price indices and in developing productivity measurements. Furthermore, business and industry groups utilize the data to forecast future demand.
Estimates generated from the ARTS are released to the public approximately 13 months after the reference year has concluded. These national-level estimates are published (for the various items collected) by NAICS code and type of operation. Currently, the data are disseminated through the ARTS website. In the future, however, the data will be released via the Census Bureau's dissemination platform,
The Census Bureau primarily collects this information via the internet. In the rare situation where a respondent does not have access to the internet, the data are collected by telephone.
201 minutes (2022 survey year—additional items collected).
57,945 hours (2022 survey year—additional items collected).
We are soliciting public comments to permit the Department/Bureau to: (a) Evaluate whether the proposed information collection is necessary for the proper functions of the Department, including whether the information will have practical utility; (b) Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used; (c) Evaluate ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include, or summarize, each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize
The MOPS-HP will provide a deeper understanding of the business processes which impact an increasingly important sector of the economy; total national health expenditures represented almost 18 percent of U.S. gross domestic product in 2017 (National Center for Health Statistics). The MOPS-HP will provide a nationally representative sample, enabling stakeholders to understand the role of structured management practices in financial and clinical outcomes in U.S. hospitals. In much the same way that the MOPS allowed for the measurement of the importance of these structured management practices for productivity and growth in the manufacturing sector,
The current pandemic highlights the relevance of hospital management practices, especially as they relate to hospitals' ability to respond to shocks to their organization and the health care system. The Census Bureau has included two questions in the MOPS-HP content to help improve measurement of hospital preparedness. These questions will provide information on two elements of responsiveness, hospitals' coordinated deployment of frontline clinical workers and hospitals' ability to quickly respond to needed changes in standardized clinical protocols. In an effort to limit respondent burden while adding this content, adjustments were made to keep the total number of questions and estimated burden per response unchanged. Because the content changes were developed in response to the current pandemic, they were made after the pre-submission notice for the MOPS-HP was published in the
The MOPS-HP will be a supplement to the Service Annual Survey (SAS) and will utilize a subset of its mail-out sample. Its sample will consist of hospital locations for enterprises classified under General Medical and Surgical Hospitals (NAICS 6221) and sampled in the SAS. The survey will be mailed separately from the 2019 SAS and collected electronically through the Census Bureau's Centurion online reporting system. Respondents will be sent an initial letter with instructions detailing how to log into the instrument and report their information. These letters will be addressed to the location's Chief Nursing Officer (CNO). Collection is scheduled to begin in November 2020 and end in June 2021. Due to the nature of the respondents, this schedule may be impacted by the effects of the Coronavirus (COVID-19). The Census Bureau is monitoring the ongoing situation and will adjust dates as necessary as the collection start date approaches as we do not want to add burden to an overly burdened sector of the economy.
The Census Bureau will produce a publicly-available press release to describe the survey and discuss the results. The Census Bureau will also write at least one research paper describing the MOPS-HP collection, processing, and data findings. Conditional on quality, the Census Bureau will construct and publish in a research paper indices of management practices, which can be used in tabulations and empirical analyses for potential use by the public, clinicians, hospitals, and researchers. These indices as well as microdata will be available to approved Federal Statistical Research Data Centers (FSRDC) users and will provide benefits to other Federal agencies and the public.
Examining factors that impact clinical and financial outcomes is essential to understanding the health care industry, which makes up a large portion of the U.S. economy. The MOPS-HP will provide unique national-level estimates on management and organizational practices in hospitals that could
• The Centers for Medicare and Medicaid Services' Hospital Compare data or the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey could be used in conjunction with the MOPS-HP to determine whether hospitals with more structured management practices have higher overall patient ratings and are more likely to be recommended.
• The National Hospital Care Survey from the National Center for Health Statistics could be used in combination with the MOPS-HP's index to evaluate how management practices relate to hospital utilization and patient care.
• Data from the Surveys on Patient Safety Culture-Hospital Survey from the Agency for Healthcare Research and Quality could be used to study whether hospitals with more structured management practices have fewer patient safety events.
• Policymakers could use the data to understand how management and organizational practices are evolving in hospitals, which can help understand changes in the industry.
The Census Bureau plans to use the data collected from the MOPS-HP's questions on medical record documentation to consruct an index measuring the management of multiple objectives—clinical and financial—that would perform policymakers concerned with both aspects of hospital performance. By examining any links between the survey's measures of management practices and clinical outcomes, the survey may help to inform policymakers and to encourage practices that are beneficial to patients and our population as a whole.
• Hospital administrators could utilize planned public indices to benchmark their own practices, and subsequently make decisions or set policies to improve their financial and clinical outcomes.
• The MOPS-HP data could be used in combination with the Census Bureau's collected data on hospital finances, including revenues and expenses, to improve our understanding on how management practices may impact financial performance.
• In a letter of support, the Bureau of Economic Analysis expressed their interest in the MOPS-HP and noted that it will help aid their mission to promote “ ‘. . . a better understanding of the U.S. economy . . .’ ” The letter states that the MOPS-HP will “fill a critical gap in our current understanding of how management systems affect patient health outcomes and healthcare expenditures.”
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
Bureau of Industry and Security, Commerce.
Publication of a report.
The Bureau of Industry and Security (BIS) in this notice is publishing a report that summarizes the findings of an investigation conducted by the U.S. Department of Commerce (the “Department”) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”), into the effect of imports of steel mill products (“steel”) on the national security of the United States. This report was completed on January 11, 2018 and posted on the BIS website on February 16, 2018. BIS has not published the appendices to the report in this notification of report findings, but they are available online at the BIS website, along with the rest of the report (
The report was completed on January 11, 2018. The report was posted on the BIS website on February 16, 2018.
The full report, including the appendices to the report, are available online at
For further information about this report contact Erika Maynard, Special Projects Manager, (202) 482-5572; and David Boylan-Kolchin, Trade and Industry Analyst, (202) 482-7816. For more information about the Office of Technology Evaluation and the Section 232 Investigations, please visit:
This report summarizes the findings of an investigation conducted by the U.S. Department of Commerce (the “Department”) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862 (“Section 232”)), into the effect of imports of steel mill products (“steel”) on the national security of the United States.
In conducting this investigation, the Secretary of Commerce (the “Secretary”) noted the Department's prior investigations under Section 232. This report incorporates the statutory analysis from the Department's 2001 Report
As required under Section 232, the Secretary examined the effect of imports on national security requirements, including: domestic production needed for projected national defense requirements; the capacity of domestic industries to meet such requirements; existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense; the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth; and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries; and the capacity of the United States to meet national security requirements.
The Secretary also recognized the close relation of the economic welfare of the United States to its national security; the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills, or any other serious effects resulting from the displacement of any domestic products by excessive imports, without excluding other factors, in determining whether a weakening of the U.S. economy by such imports may impair national security. In particular, this report assesses whether steel is being imported “in such quantities” and “under such circumstances” as to “threaten to impair the national security.”
In conducting the investigation, the Secretary found:
1. National security includes projected national defense requirements for the U.S. Department of Defense.
2. National security also encompasses U.S. critical infrastructure sectors including transportation systems, the
3. Domestic steel production is essential for national security applications. Statutory provisions illustrate that Congress believes domestic production capability is essential for defense requirements and critical infrastructure needs, and ultimately to the national security of the United States.
4. Domestic steel production depends on a healthy and competitive U.S. industry. The principal types of mills that produce steel are integrated mills with basic oxygen furnaces (BOFs); mini-mills using electric arc furnaces (EAFs); re-roller/converter; and metal coater facilities. Basic oxygen furnaces convert raw materials into steel, and remain critical for continued innovation in steel technology. Covered in this report are five categories of steel products that are used for national security applications: flat, long, semi-finished, pipe and tube, and stainless.
5. The Department found that demand for steel in critical industries has increased since the Department's last investigation in 2001. The 2001 Report determined that there was 33.68 million tons of finished steel consumed in critical industries per year in the United States based on 1997 data.
1. The United States is the world's largest steel importer. In the first ten months of 2017 steel imports have increased at a double-digit rate over 2016, accounting for more than 30 percent of U.S. consumption. Notwithstanding numerous anti-dumping and countervailing duty orders, which are limited in scope, imports of most types of steel continue to increase.
2. Import penetration levels for flat, semi-finished, stainless, long, and pipe and tube products continue on an upward trend above 30 percent of domestic consumption.
3. Imports are nearly four times U.S. exports.
4. Imports are priced substantially lower than U.S. produced steel.
5. Excessive steel imports have adversely impacted the steel industry. Numerous U.S. steel mill closures, a substantial decline in employment, lost domestic sales and market share, and marginal annual net income for U.S.-based steel companies illustrate the decline of the U.S. steel industry.
1. As steel imports have increased, U.S. steel production capacity has been stagnant and production has decreased.
2. Since 2000, foreign competition and the displacement of domestic steel by excessive imports have resulted in the closure of six basic oxygen furnace facilities and the idling of four more (which is more than a 50 percent reduction in the number of such facilities), a 35 percent decrease in employment in the steel industry, and caused the domestic steel industry as a whole to operate on average with negative net income since 2009.
3. The declining steel capacity utilization rate is not economically sustainable. Utilization rates of 80 percent or greater are necessary to sustain adequate profitability and continued capital investment, research and development, and workforce enhancement in the steel sector.
1. In the steel sector, free markets globally are adversely affected by substantial chronic global excess steel production led by China. The world's nominal crude steelmaking capacity reached about 2.4 billion metric tons in 2016, an increase of 127 percent compared to the capacity level in 2000, while steel demand grew at a much smaller rate. In 2016 there was a 737 million metric ton global gap between steelmaking capacity and steel crude demand, which means there is unlikely to be any market-driven reduction in steel exports to the United States in the near future.
2. While U.S. steel production capacity has remained flat since 2001, other steel producing nations have increased their production capacity, with China alone able to produce as much steel as the rest of the world combined. This overhang of excess capacity means that U.S. steel producers, for the foreseeable future, will face increasing competition from imported steel as other countries export more steel to the United States to bolster their own economic objectives and offset loss of markets to Chinese steel exports.
Based on these findings, the Secretary of Commerce concludes that the present quantities and circumstance of steel imports are “weakening our internal economy” and threaten to impair the national security as defined in Section 232. The Secretary considered the Department's narrower investigation of iron ore and semi- finished steel imports in 2001, which recommended no action be taken, and finds that several important factors—the broader scope of the investigation, the level of global excess capacity, the level of imports, the reduction in basic oxygen furnace facilities since 2001, and the potential impact of further plant closures on capacity needed in a national emergency, support recommending action under Section 232. In light of this conclusion, the Secretary has determined that the only effective means of removing the threat of impairment is to reduce imports to a level that should, in combination with good management, enable U.S. steel mills to operate at 80 percent or more of their rated production capacity.
Prior significant actions to address steel imports using quotas and/or tariffs were taken under various statutory authorities by President George W. Bush, President William J. Clinton (three times), President George H.W.
Due to the threat, as defined in Section 232, to national security from steel imports, the Secretary recommends that the President take immediate action by adjusting the level of these imports through quotas or tariffs. The quotas or tariffs imposed should be sufficient, even after any exceptions (if granted), to enable U.S. steel producers to operate at an 80 percent or better average capacity utilization rate based on available capacity in 2017 (
The Secretary recommends that the President impose a quota or tariff on all steel products covered in this investigation imported into the United States to remove the threatened impairment to national security.
Impose quotas on all imported steel products at a specified percent of the 2017 import level, applied on a country and steel product basis.
According to the Global Trade Analysis Project (GTAP) Model,
Apply a tariff rate on all imported steel products, in addition to any antidumping or countervailing duty collections applicable to any imported steel product.
According to the Global Trade Analysis Project (GTAP) Model, produced by Purdue University, a 24 percent tariff on all steel imports would be expected to reduce imports by 37 percent (
Apply a tariff rate on all imported steel products from Brazil, South Korea, Russia, Turkey, India, Vietnam, China, Thailand, South Africa, Egypt, Malaysia and Costa Rica, in addition to any antidumping or countervailing duty collections applicable to any steel products from those countries. All other countries would be limited to 100 percent of their 2017 import level.
According to the Global Trade Analysis Project (GTAP) Model, produced by Purdue University, a 53 percent tariff on all steel imports from this subset of countries would be expected to reduce imports by 13.3 million metric tons from 2017 import levels from the targeted countries. This action would enable an increase in domestic production to achieve an 80 percent capacity utilization rate at 2017 demand levels (including exports). The countries identified are projected to account for less than 4 percent of U.S. steel exports in 2017.
In selecting an alternative, the President could determine that specific countries should be exempted from the proposed 63 percent quota or 24 percent tariff by granting those specific countries 100 percent of their prior imports in 2017, based on an overriding economic or security interest of the United States. The Secretary recommends that any such determination should be made at the
It is possible to provide exemptions from either the quota or tariff and still meet the necessary objective of increasing U.S. steel capacity utilization to a financially viable target of 80 percent. However, to do so would require a reduction in the quota or increase in the tariff applied to the remaining countries to offset the effect of the exempted import tonnage.
The Secretary recommends an appeal process by which affected U.S. parties could seek an exclusion from the tariff or quota imposed. The Secretary would grant exclusions based on a demonstrated: (1) lack of sufficient U.S. production capacity of comparable products; or (2) specific national security based considerations. This appeal process would include a public comment period on each exclusion request, and in general, would be completed within 90 days of a completed application being filed with the Secretary.
An exclusion may be granted for a period to be determined by the Secretary and may be terminated if the conditions that gave rise to the exclusion change. The
U.S. Department of Commerce will lead the appeal process in coordination with the Department of Defense and other agencies as appropriate. Should exclusions be granted the Secretary would consider at the time whether the quota or tariff for the remaining products needs to be adjusted to increase U.S. steel capacity utilization to a financially viable target of 80 percent.
Section 232 provides the Secretary with the authority to conduct investigations to determine the effect on the national security of the United States of imports of any article. It authorizes the Secretary to conduct an investigation if requested by the head of any department or agency, upon application of an interested party, or upon his own motion.
Section 232 directs the Secretary to submit to the President a report with recommendations for “action or inaction under this section” and requires the Secretary to advise the President if any article “is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.”
Section 232(d) directs the Secretary and the President to, in light of the requirements of national security and without excluding other relevant factors, give consideration to the domestic production needed for projected national defense requirements and the capacity of the United States to meet national security requirements.
Section 232(d) also directs the Secretary and the President to “recognize the close relation of the economic welfare of the Nation to our national security, and. . .take into consideration the impact of foreign competition on the economic welfare of individual domestic industries” by examining whether any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports, or other factors, result in a “weakening of our internal economy” that may impair the national security.
Once an investigation has been initiated, Section 232 mandates that the Secretary provide notice to the Secretary of Defense that such an investigation has been initiated. Section 232 also requires the Secretary to do the following:
(1) “Consult with the Secretary of Defense regarding the methodological and policy questions raised in [the] investigation;”
(2) “Seek information and advice from, and consult with, appropriate officers of the United States;” and
(3) “If it is appropriate and after reasonable notice, hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to such investigation.”
As detailed in Parts III and V of this report, each of the legal requirements set forth above has been satisfied.
In conducting the investigation, Section 232 permits the Secretary to request that the Secretary of Defense provide an assessment of the defense requirements of the article that is the subject of the investigation.
Upon completion of a Section 232 investigation, the Secretary is required to submit a report to the President no later than 270 days after the date on which the investigation was initiated.
(1) Set forth “the findings of such investigation with respect to the effect of the importation of such article in such quantities or under such circumstances upon the national security;”
(2) Set forth, “based on such findings, the recommendations of the Secretary for action or inaction under this section;” and
(3) “If the Secretary finds that such article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security . . . so advise the President.”
All unclassified and non-proprietary portions of the report submitted by the Secretary to the President must be published.
Within 90 days after receiving a report in which the Secretary finds that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the President shall:
(1) “Determine whether the President concurs with the finding of the Secretary;” and
(2) “If the President concurs, determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.”
While Section 232 does not contain a definition of “national security”, both Section 232, and its implementing regulations at 15 CFR part 705, contain non- exclusive lists of factors that Commerce must consider in evaluating the effect of imports on the national
The Department also concluded in 2001 that “in addition to the satisfaction of national defense requirements, the term “national security” can be interpreted more broadly to include the general security and welfare of certain industries, beyond those necessary to satisfy national defense requirements that are critical to the minimum operations of the economy and government.” The Department called these “critical industries.”
Section 232 directs the Secretary to determine whether imports of any article are being made “in such quantities or under such circumstances” that those imports “threaten to impair the national security.”
The statute does not define a threshold for when “such quantities” of imports are sufficient to threaten to impair the national security, nor does it define the “circumstances” that might qualify.
Likewise, the statute does not require a finding that the quantities or circumstances are impairing the national security. Instead, the threshold question under Section 232 is whether those quantities or circumstances “threaten to impair the national security.”
Section 232(d) contains a considerable list of factors for the Secretary to consider in determining if imports “threaten to impair the national security”
Two of the factors listed in the second sentence of Section 232(d) are most relevant in this investigation. Both are directed at how “such quantities” of imports threaten to impair national security.
Another factor, not on the list, that the Secretary finds to be a relevant is the presence of massive excess capacity for producing steel. This excess capacity results in steel imports occurring “under such circumstances” that they threaten to impair the national security.
It is these three factors—displacement of domestic steel by excessive imports and the consequent adverse impact on the economic welfare of the domestic steel industry, along with global excess
The Secretary also considered whether the source of the imports affects the analysis under Section 232. In the 2001 Report, “the Department found that iron ore and semi-finished steel are imported from reliable foreign sources” and concluded that “even if the United States were dependent on imports of iron ore and semi- finished steel, imports would not threaten to impair national security.” 2001 Report at 27. However, because Congress in Section 232 chose to explicitly direct the Secretary to consider whether the “impact of foreign competition” and “the displacement of any domestic products by excessive imports” are “weakening our internal economy” but made no reference to an assessment of the sources of imports, it appears likely that Congress recognized adverse impacts might be caused by imports from allies or other reliable sources.
After careful examination of the facts in this investigation, the Secretary has concluded that excessive imports of steel in the present circumstances do threaten to impair national security under Section 232. Several important factors—the broader scope of the investigation,
On April 19, 2017, U.S. Secretary of Commerce Wilbur Ross initiated an investigation to determine the effect of imported steel on national security under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862).
Pursuant to Section 232(b)(1)(B), the Department notified the U.S. Department of Defense with an April 19, 2017 letter from Secretary Ross to Secretary James Mattis.
On April 20, 2017, President Donald Trump signed a Presidential Memorandum directing Secretary Ross to proceed expeditiously in conducting his investigation and submit a report on his findings to the President.
On April 21, 2017, the Department published in the
The Department held a public hearing to elicit further information concerning this investigation in Washington, DC, on May 24, 2017. The Department heard testimony from 37 witnesses at the hearing. A full list of witnesses and copies of their testimony are included in Appendices E and F.
On April 21, 2017, the Department invited interested parties to submit written comments, opinions, data, information, or advice relevant to the criteria listed in § 705.4 of the National Security Industrial Base Regulations (15 CFR 705.4) as they affect the requirements of national security, including the following:
(a) Quantity of the articles subject to the investigation and other circumstances related to the importation of such articles; (b) Domestic production capacity needed for these articles to meet projected national defense requirements; (c) The capacity of domestic industries to meet projected national defense requirements; (d) Existing and anticipated availability of human resources, products, raw materials, production equipment, facilities, and other supplies and services essential to the national defense; (e) Growth requirements of domestic industries needed to meet national defense requirements and the supplies and services including the investment, exploration and development necessary to assure such growth; (f) The impact of foreign competition on the economic welfare of any domestic industry essential to our national security; (g) The displacement of any domestic products causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects; (h) Relevant factors that are causing or will cause a weakening of our national economy; and (i) Any other relevant factors.
The public comment period ended on May 31, 2017. The Department received 201 written public comment submissions concerning this investigation. All public comments were carefully reviewed and factored into the investigation process. For a listing of all public comments,
In addition to the required notification provided by the April 19, 2017 letter from Secretary Ross to Secretary Mattis, Department staff carried out the consultations required under Section 232(b)(2).
Discussions were also held with “appropriate officers of the United States,” including the Department of State, Department of the Treasury, Department of the Interior/U.S. Geological Survey, the Department of Homeland Security/U.S. Customs and Border Protection, the International Trade Commission, and the Office of the United States Trade Representative.
For this report, the product scope covers steel mill products (“steel”) which are defined at the Harmonized System (“HS”) 6-digit level as: 720610 through 721650, 721699 through 730110, 730210, 730240 through 730290, and 730410 through 730690, including any subsequent revisions to these HS codes. The following discontinued HS codes have been included for purposes of reporting historical data (prior to 2007): 722520, 722693, 722694, 722910, 730410, 730421, 730610, 730620, and 730660.
These steel products are all produced by U.S. steel companies and support various applications across the defense, critical infrastructure, and commercial sectors. Generally, these products fall into one of the following five product categories (including but not limited to):
(1) Carbon and Alloy Flat Product (Flat Products): Produced by rolling semi- finished steel through varying sets of rolls. Includes sheets, strips, and plates.
Flat products are covered under the following 6-digit HS codes: 720810, 720825, 720826, 720827, 720836, 720837, 720838, 720839, 720840, 720851, 720852, 720853, 720854, 720890, 720915, 720916, 720917, 720918, 720925, 720926, 720927, 720928, 720990, 721011, 721012, 721020, 721030, 721041, 721049, 721050, 721061, 721069, 721070, 721090, 721113, 721114, 721119, 721123, 721129, 721190, 721210, 721220, 721230, 721240, 721250, 721260, 722511, 722519, 722530, 722540, 722550, 722591, 722592, 722599, 722611, 722619, 722691, 722692, 722693, 722694, 722699
(2) Carbon and Alloy Long Products (Long Products): Steel products that fall outside the flat products category. Includes bars, rails, rods, and beams.
Long products are covered under the following 6-digit HS codes: 721310, 721320, 721391, 721399, 721410, 721420, 721430, 721491, 721499, 721510, 721550,721590, 721610, 721621, 721622, 721631, 721632, 721633, 721640, 721650, 721699, 721710, 721720, 721730, 721790, 722520, 722620,722710, 722720, 722790, 722810, 722820, 722830, 722840, 722850, 722860, 722870, 722880, 722910,722920, 722990, 730110, 730210, 730240, 730290
(3) Carbon and Alloy Pipe and Tube Products (Pipe and Tube Products): Either seamless or welded pipe and tube products. Some of these products may include stainless as well as alloy other than stainless.
Pipe and Tube products are covered under the following 6-digit HS codes: 730410, 730419, 730421, 730423, 730429, 730431, 730439, 730451, 730459, 730490, 730511, 730512, 730519, 730520, 730531, 730539, 730590, 730610, 730619, 730620, 730629, 730630, 730650, 730660, 730661, 730669, 730690
(4) Carbon and Alloy Semi-finished Products (Semi-finished Products): The initial, intermediate solid forms of molten steel, to be re-heated and further forged, rolled, shaped, or otherwise worked into finished steel products. Includes blooms, billets, slabs, ingots, and steel for castings.
Semi-finished products are covered under the following 6-digit HS codes: 720610, 720690, 720711, 720712, 720719, 720720, 722410, 722490
(5) Stainless Products: Steel products, in flat-rolled, long, pipe and tube, and semi-finished forms, containing at minimum 10.5 percent chromium and, by weight, 1.2 percent or less of carbon, offering better corrosion resistance than other steel.
Stainless steel products are covered under the following 6-digit HS codes: 721810, 721891, 721899, 721911, 721912, 721913, 721914, 721921, 721922, 721923, 721924, 721931, 721932, 721933, 721934, 721935, 721990, 722011, 722012, 722020, 722090, 722100, 722211, 722219, 722220, 722230, 722240, 722300, 730411, 730422, 730424, 730441, 730449, 730611, 730621, 730640
As discussed in Part II, “national security” under Section 232 includes both
(1) national defense, and (2) critical infrastructure needs.
Steel articles are critical to the nation's overall defense objectives.
The free market system in the United States requires commercially viable steel producers to meet defense needs. No company could afford to construct and operate a modern steel mill solely to supply defense needs because those needs are too diverse. In order to supply those diverse national defense needs, U.S. steel mills must attract sufficient commercial (
Steel also is needed to satisfy requirements for “those industries that the U.S. Government has determined are critical to minimum operations of the economy and government.”
Pursuant to PPD-21, there are 16 designated critical infrastructure sectors in the United States, many of which use
Increased quantities of steel will be needed for various critical infrastructure applications in the coming years. The American Society of Civil Engineers estimates that the United States needs to invest $4.5 trillion in infrastructure by 2025, and a substantial portion of these projects require steel content.
Domestic steel production is essential for national security. Congress, in Section 232(d), directed the Secretary of Commerce and the President to consider domestic production and the economic welfare of the United States in determining whether imports threaten to impair national security.
In the case of steel, the history of U.S. Government actions to ensure the continued viability of the U.S. steel industry demonstrates that, across decades and Administrations, there has been consensus that domestic steel production is vital to national security.
Prior significant actions under various statutory authorities to address steel imports using quotas or tariffs were taken by President George W. Bush, President William J. Clinton (three times), President George H. W. Bush, President Ronald W. Reagan (three times), President James E. Carter (twice), and President Richard M. Nixon, all at lower levels of import penetration than at present. In the 1970s, action was taken to limit import penetration to approximately 19 percent. In the 1980s, import penetration had reached 21 percent and the U.S. Government enacted correcting measures. In the 1990s and 2000s import penetration again reached up to 23 percent, which prompted the U.S. Government to take additional actions.
U.S. steel producers would be unable to survive purely on defense or critical infrastructure steel needs. In the steel industry, it is commercial and industrial customer sales that generate the relatively steady production needed for manufacturing efficiency, and the revenue volume needed to sustain the business. Sales for critical infrastructure and defense applications are often less predictable, cyclical, and limited in volume.
Steel manufacturers operating in the United States, however, have seen their commercial and industrial business steadily eroded by a growing influx of lower- priced imported product from countries where steel manufacturing often is subsidized, directly or indirectly. The Department of Commerce currently has 164 antidumping and countervailing duty determinations in effect, and has 20 additional cases under investigation, to address specific cases.
In this investigation, the issue before the Department is whether steel imports “threaten to impair” national security.
In a free market system, the ability of the domestic steel industry to continue meeting national security needs depends on the continued capability of the U.S. steel industry to compete fairly in the commercial marketplace and maintain a financially viable domestic manufacturing capability. This includes the need to have an adequately skilled workforce for manufacturing as well as to conduct research and development for future products.
The Department in 2001 determined that the “critical industries” sector, which is analogous to the more robust critical infrastructure sectors identified pursuant to PPD-21, would require “no more than 33.68 million tons of finished steel per year,”
The updated analysis in Appendix I shows that 49.1 percent of domestic steel consumption in 2007 was used in critical industries. Domestic production in 2007 was 110 million metric tons. The 49.1 percent of domestic consumption used in critical industries equals 54 million metric tons, compared to 30.56 million metric tons (or 33.68 million short tons) used in critical industries in 1997. Thus in 10 years the demand for steel in critical industries increased by 63 percent.
In the steel sector, foreign competition is characterized by substantial and sustained global overcapacity and production in excess of foreign domestic demand.
The United States is the world's largest steel importer. The top 20 sources of U.S. imports of steel products accounted for approximately 91 percent of the roughly 36 million metric tons of steel the United States is expected to import in 2017 (
Total U.S. imports rose from 25.9 million metric tons in 2011, peaking at 40.2 million metric tons in 2014 at the height of the shale hydrocarbon drilling
As shown in Appendix K, antidumping and countervailing duty actions can address specific instances of unfairly traded steel products. However, given the large number of countries from which the United States imports steel and the myriad of different products involved, it could take years to identify and investigate every instance of unfairly traded steel, or attempts to transship or evade remedial duties.
Moreover, U.S. industry has already spent hundreds of millions of dollars in recent years on AD/CVD cases, with seemingly no end in sight to their outlays. Smaller steel manufacturers are financially unable to afford these type of cases, or are hesitant to file cases in light of possible market entry retaliation in foreign markets for finished steel products.
In contrast to the situation in the 2001 Report, where imports of semi-finished steel represented approximately 7 percent of domestic consumption,
U.S. imports of steel products, which displace demand for domestic steel and lower production at U.S. plants, reached nearly four times the level of exports of U.S. steel products in 2016 (
The same is true in the line pipe sector. The United States exports a minimal amount of line pipe. Exports of line pipe reached a recent peak of 525 thousand metric tons in 2013 before declining significantly. Exports totaled just 60 thousand metric tons in 2016, a decrease of 89 percent from 2013, and were less than one-twentieth of the size of line pipe imports. Canada represents the largest destination for U.S. line pipe exports, with 39 percent of 2016 exports going to Canada, followed by Mexico with 13 percent.
Hot-rolled coil prices are a benchmark price indicator for a common type of steel (
U.S. prices for hot-rolled steel coil have been higher than in other countries since 2010. U.S. domestic benchmark prices for this product class dipped especially low in 2015 at $505.65/metric ton before recovering in 2016 to $575.68/metric ton. In 2016, the price of freight-on-board stowed China port steel hot-rolled coil was 14 percent lower than U.S. domestic hot-rolled coil. In the case of ASEAN nations, import prices for hot-rolled coil were 33 percent lower and North Europe domestic hot-rolled coil was 21 percent lower. Each region saw a price decline in 2015 (
In 2015, steel prices fell globally. As the OECD noted, the combined effect of weakening global steel demand, including in the United States, growing exports in many economies, and decreases in steelmaking costs led to a very sharp decline in steel prices in 2015. Notwithstanding these effects, prices for steel in the U.S. remained substantially higher than in any other area. However, relative to prices between 2010 and 2013, prices are still relatively depressed.
Global excess steel production weakens the pricing power of U.S. steel producers. U.S. steel producers' costs are higher than the costs for producers in other regions due to higher taxes, healthcare, environmental, and other regulatory expenses. Higher U.S. steel prices incentivize importing lower-cost foreign steel. Moreover, excess production and lower prices in regions proximate to state subsidized enterprises displace purchases from market based steel exporters and add pressure on those market based suppliers to export to the U.S. The effect of global excess steel production on U.S. steel prices and import levels is discussed in greater detail in Appendix L.
U.S. steel mill closures continue eroding overall U.S. steel mill capacity and employment. Many U.S. steel mills have been driven out of business due to declining steel prices, global overcapacity, and unfairly traded steel. Since 2000, the United States has lost over 25 percent of its basic oxygen furnace facilities with the closure of six facilities: RG Steel in Sparrows Point, Maryland; RG Steel in Steubenville, Ohio; RG Steel in Warren, Ohio; ArcelorMittal in East Chicago, Indiana; ArcelorMittal in Weirton, West Virginia; and U.S. Steel in Fairfield, Alabama.
In addition, four electric arc furnace steel facilities have closed: Evraz in Claymont, Delaware; ArcelorMittal in Georgetown, South Carolina; Gerdau in Sand Springs, Oklahoma; and Republic Steel in Lorain, Ohio. Most recently, ArcelorMittal has announced the closure of its plate rolling mill in Conshohocken, Pennsylvania, because of sagging commercial sales attributed to surging imports of low-cost steel product and flat defense demand.
The closures of these facilities have had a significant impact on the U.S. industrial workforce and local economies. RG Steel suffered three closures: Sparrows Point, Maryland; Steubenville, Ohio; and Warren, Ohio. After filing for bankruptcy in 2012, more than 2,000 employees were displaced in Maryland alone and another 2,000 in the Midwest. The
Closures of smaller steel mills have had equally devastating impacts on employment. Gerdau Sand Springs in Oklahoma lost 300 employees after closing in 2009 because of a long-term drop in demand for steel.
In 2013, at least 345 employees were laid off in response to the closure of the Claymont steel mill in Delaware. The Governor of Delaware, Jack Markell, attributed the financial difficulties of the facility to “subdued market demand and the high volume of imports.”
Similar difficulties were cited by the ArcelorMittal's Georgetown, South Carolina facility and U.S. Steel's location in Fairfield, Alabama, both of which closed in 2015. Layoffs for these two corporations totaled 226 and more than 1,100 employees, respectively. Both companies attributed the layoffs to financial losses and ultimately, to facility closures due to the rise in competition from inexpensive imports.
Even temporary idling of steel plants threatens the U.S. steel industry as there are significant financial costs with re-opening a steel mill. Multiple U.S. facilities remain idled: there are four idled basic oxygen furnace facilities, two each in Kentucky and Illinois, representing almost one third of the remaining basic oxygen furnace facilities in United States.
In addition, when a steel mill closes at a given location, the workers find other occupations, move to other steel mills, or remain indefinitely unemployed. After a significant period of unemployment, much of the specialized skill required by steel mill workers is forgotten. Furthermore, it is typically not easy to find and recruit displaced workers who may live hundreds or thousands of miles away.
U.S. steel industry employment has declined 35 percent (216,400 in 1998 to 139,800 in January 2016—December 2016), including 14,100 lost jobs between 2015 and 2016. While employment numbers increased slightly in certain years, the trend is dramatically downward (
The loss of skilled workers is especially detrimental to the long-term health and competitiveness of the industry. The unstable and declining employment outlook for the industry also dissuades younger workers from wanting to participate in the future U.S. steel industry. The inability to rapidly add skilled workers to the industry negatively affects current manufacturing capabilities. This is especially problematic in the event of a major production surge or mobilization.
The number of U.S. antidumping and countervailing duty measures in effect illustrates the scope of the problem confronting the U.S. steel industry. In 1998, at the height of that periods steel crisis, there were just over 100 antidumping and countervailing duty cases against finished steel products.
Despite efforts to level the playing field through AD/CVD orders, there are numerous examples of U.S. steel producers being unable to fairly compete with foreign suppliers, including the lack of ability to bid on some critical U.S. infrastructure projects. Due to unfair competition, particularly from foreign state-owned enterprises, U.S. steel producers have lost out on U.S. business opportunities. Some examples include Chinese companies providing steel for the eastern span of the San Francisco-Oakland Bay Bridge as well as the Alexander Hamilton Bridge over the Harlem River in New York.
The Alliance for American Manufacturing's statement before the Congressional Steel Caucus (March 2017) identified three other recent infrastructure projects in New York that have used or will use heavily subsidized or possibly dumped foreign steel: the Verrazano-Narrows Bridge, LaGuardia Airport, and the Holland Tunnel. Two major U.S. cities—Boston and Chicago—have contracted with Chinese companies to build new subway cars, primarily constructed with imported steel, for their respective transportation systems.
Rising levels of imports of steel continue to weaken the U.S. steel industry's financial health. Years of running on low-profit margins or at a loss have weakened an industry that continues to face an ever-increasing wave of steel imports. The U.S. industry, as a whole, has operated on average with negative net income from 2009- 2016. Net income for U.S.-owned steel companies has averaged only $162 million annually since 2010, challenging the financial viability of this vital industry (
The Stern School of Business at New York University calculates that U.S. steel industry participants in the last five years experienced negative net income of 17.8 percent. Compounded growth in revenue for the past five years in the steel industry has been a negative 7 percent.
Not only have earnings before interest, taxes, depreciation, and amortization (EBITDA) been shallow for steel producers in the United States, many of them are burdened with high levels of debt, as much as 11.9 times of earnings for one major producer (
No capital intensive industry can survive with such poor margins over the longer term. The extensive leverage in the industry shown in Figure 9 adds to the likelihood of further closures if the present high level of imports continues to force U.S. steel mills to operate well below profitable capacity utilization rates.
The ability of U.S. manufacturers of iron and steel products to fund capital expenditures for new production plants as well as facility modernization and advanced manufacturing equipment has been limited by falling revenue and reduced profits. As shown in Figure 10, annual capital expenditures for companies making iron and steel ingot, bars, rods, plate and other semi-finished products wavered from $5.7 billion to $5.1 billion for 2010-2012, before ramping to $7.1 billion in 2013.
Confronted with receding orders for products and declines in income in 2013, iron and steel companies operating production facilities in the United States started curtailing capital investments. Total capital spending dropped to $3.87 billion in 2014 and slid further to $3.11 billion in 2015—32 percent below 2010 levels of $5.66 billion.
The decline in capital expenditures reflected similar drops in net sales, which plummeted from $129.6 billion in 2014 to $102 billion in 2015. Income after taxes for U.S. iron and steel manufacturers fell from $2.48 billion in the same two-year period to a massive loss of $3.5 billion in 2015.
According to the OECD, U.S. steel production capacity has remained stagnant at an average of approximately 114.3 million metric tons for more than a decade from 2006-2016 (
The present situation with respect to basic oxygen furnace production is significantly worse than the situation assessed by the Department in the 2001 Report. As shown in Figure 13 below, the number of basic oxygen furnace facilities and units has declined precipitously since 1995. In 2000, there were 105 companies that produced raw steel at 144 locations,
Most importantly, in 2000 thirteen companies “operated integrated steel mills, with an average of 35 blast furnaces in continuous operation during the year”
As noted earlier, since 2000 there has been over a 25 percent reduction in the number of basic oxygen furnaces operating in the United States, and 33 percent of the remaining basic oxygen furnaces are currently idled. In the Secretary's view, a further reduction in basic oxygen furnace capacity, which is especially important to the ability of domestic industry to meet national security needs, is inevitable if the present imports continue or increase.
[TEXT REDACTED] This would be a serious “weakening of our internal economy” and place the United States in a position where it is unable to be certain it could meet demands for national defense and critical industries in a national emergency.
In contrast to the situation in the United States, the leading global producers of steel (Brazil, South Korea, Japan, Russia, Germany, and especially China) primarily rely on basic oxygen furnace capacity rather than electric arc furnace capacity (
A further reduction in domestic basic oxygen furnace capacity would put the United States at serious risk of becoming dependent on foreign steel to support its critical industries and defense needs. Allowing this decline to continue represents a “weakening of our internal economy that may impair national security” which the Congress has directed the Secretary to advise the President of under the Section 232.
This is not a hypothetical situation. The Department of Defense already finds itself without domestic suppliers for some particular types of steel used in defense products, including tire rod steel used in military vehicles and trucks.
In the case of critical infrastructure, the United States is down to only one remaining producer of electrical steel in the United States (AK Steel—which is highly leveraged). Electrical steel is necessary for power distribution transformers for all types of energy—including solar, nuclear, wind, coal, and natural gas—across the country. If domestic electrical steel production, as well as transformer and generator production, is not maintained in the U.S., the U.S. will become entirely dependent on foreign producers to supply these critical materials and products.
Demand for steel products in the United States (
For the six-year period, U.S. domestic steel production supplied only 70
Overall, steel mill production capacity utilization has declined from 87 percent in 1998, to 81.4 percent in 2008, to 69.4 percent in 2016 (
Industry analysts note that utilization of 80 percent or more is typically necessary for sustained profitability, among other factors.
When steel factory utilization falls, costs per unit of steel product rises, reducing profit margins and product pricing flexibility. Higher capacity utilization usually results in lower per-unit product costs and higher overall profit.
The U.S. steel industry uses 80 percent as a benchmark for minimum operational efficiency. Moreover, the steel industry is capable of reaching and sustaining 80 percent capacity utilization or higher. During the 2002-2008 period, U.S. steel companies operated at an average 87.4 percent level.
These industry assessments are consistent with a 1983 report on “Critical Materials Requirements in the U.S. Steel Industry” in which the Department explained that “[c]apability utilization or capacity use, which in effect describes the efficiency of an industry's use of capital, is a prime determinant of profitability. Domestic steel producers were operating at about 55 percent capability for the first half of 1982. The comparable rate for the first half of 1981 was 85 percent. This current rate is probably well below a breakeven point for most producers, whereas 1981 was profitable for nearly all producers.”
The number of steel production facilities located in the U.S. continues to decline. As shown earlier in Figure 13, from 1975 to 2016 the number of basic oxygen furnace facilities decreased from 38 to 13. Similarly, from 1990 to 2016, the number of electric arc furnace facilities decreased from 127 to 98.
Due to this decline in facilities, domestic steel producers have a shrinking ability to meet national security production requirements in a national emergency. The U.S. Department of Commerce, Census Bureau regularly surveys plant capacity, and has found that steel producers are quickly shedding production capacity that could be used in a national emergency. The Census Bureau defines national emergency production as the “greatest level of production an establishment can expect to sustain for one year or more under national emergency conditions.”
The ability to increase steel production during a national emergency continues to diminish as the number of steel production facilities continues to decline. If the U.S. requires a similar increase in steel production as it did during previous national emergencies, domestic steel production capacity may be insufficient to satisfy national security needs. If a national emergency were to occur at present utilization levels, domestic steel producers would be able to increase production by 146 percent.
For comparison, from 1938 through 1946 the U.S. increased the production of pig iron and ferro-alloys by 217 percent and increased the production of steel ingots and castings by 210 percent to meet the demands of fighting a global war.
Increasing steel production capacity once a large-scale national emergency has arisen would take a significant amount of time. According to the American Iron and Steel Institute, the replacement of a basic oxygen furnace facility takes more than a year to complete. Therefore, the lack of spare domestic steel production capacity and the possible inability to sufficiently increase production during a national emergency may impair the national security of the United States.
Numerous studies, reports, and investigations have documented the global excess steel capacity, with China having the largest installed capability (
The vast size of the capacity/demand gap means that steel demand alone cannot increase enough to balance the global overcapacity problem, which is particularly prevalent in China. Chinese excess capacity, estimated at more than 300 million metric tons, dwarfs total U.S. production capacity (
The effect of global overcapacity and excess steel production on U.S. steel prices and import levels is discussed in greater detail in Appendix L. While U.S. steel production capacity has remained flat since 2001, other steel producing nations have increased their production capacity, with China alone able to produce as much steel as the rest of the world combined.
Several countries (India, Iran, and Indonesia) in addition to China continue to add production capacity despite slack global demand. According to the OECD Steel Committee Chair's statement from March 2017, “New data suggest that nearly 40 million metric tons of gross capacity additions are currently underway and could come on stream during the three-year period of 2017-19, while an additional 53.6 million metric tons of capacity additions are in the planning stages for possible start- up during the same time period.”
These additions to worldwide steelmaking capacity will only exacerbate the situation because they will further lower global operating utilization rates, including in the United States. Growth in foreign government-subsidized steel production is progressively weakening the financial health of the U.S. steel industry as other steel producing countries export more steel to the U.S. to in part to offset the loss of regional markets to Chinese steel (
The U.S. share of global production continues to steadily decline. In the year 2000, when President Clinton signed into a law a statute granting China permanent normal trade relations status,
If even half of the planned additional global capacity identified by the OECD Steel Committee is built, and the related new production finds its way into the U.S., it will drive the operating rate of U.S. steel mills to less than 50 percent of capacity. This will cause a substantial and unsustainable negative cash situation that will ultimately result in multiple corporate bankruptcies due to heavy debt loads and related declines in steel production capacity and employment levels.
The Secretary has determined that the displacement of domestic steel by excessive imports and the consequent adverse impact of those quantities of steel imports on the economic welfare of the domestic steel industry, along with the circumstance of global excess capacity in steel, are “weakening our internal economy” and therefore “threaten to impair” the national security as defined in Section 232.
The continued rising levels of imports of foreign steel threaten to impair the national security by placing the U.S. steel industry at substantial risk of displacing the basic oxygen furnace and other steelmaking capacity, and the related supply chain needed to produce steel for critical infrastructure and national defense.
In considering “the impact of foreign competition on the economic welfare of individual domestic [steel] industries” and other factors Congress expressly outlined in Section 232, the Secretary has determined that the continued decline and concentration in steel production capacity is “weakening of our internal economy and may impair national security.”
Global excess steel capacity is a circumstance that contributes to the “weakening of our internal economy” that “threaten[s] to impair” the national security as defined in Section 232. Free markets globally are adversely affected by substantial chronic global excess steel production led by China. While U.S. steel production capacity has remained flat since 2001, other steel producing nations have increased their production capacity, with China alone able to produce as much steel as the rest of the world combined. This overhang of excess capacity means that U.S. steel producers, for the foreseeable future, will face increasing competition from imported steel as other countries export more steel to the United States to bolster their own economic objectives.
Since defense and critical infrastructure requirements alone are not sufficient to support a robust steel industry, U.S. steel producers must be financially viable and competitive in the commercial market to be available to produce the needed steel output in a timely and cost efficient manner. In fact, it is the ability to quickly shift production capacity used for commercial products to defense and critical infrastructure production that provides the United States a surge capability that is vital to national security, especially in an unexpected or extended conflict or national emergency. It is that capability which is now at serious risk; as imports continue to take business away from domestic producers, these producers are in danger of falling below minimum viable scale and are at risk of having to exit the market and substantially close down production capacity, often permanently.
Steel producers in the United States are facing widespread harm from mounting imports. Growing global steel capacity, flat or declining world demand, the openness of the U.S. steel market, and the price differential between U.S. market prices and global market prices (often caused by foreign government steel intervention) ensures that the U.S. will remain an attractive market for foreign steel absent quotas or tariffs. Excessive imports of steel, now consistently above 30 percent of domestic demand, have displaced domestic steel production, the related skilled workforce, and threaten the ability of this critical industry to maintain economic viability.
A U.S. steel industry that is not financially viable to invest in the latest technologies, facilities, and long-term research and development, nor retain skilled workers while attracting a next-generation workforce, will be unable to meet the current and projected needs of the U.S. military and critical infrastructure sectors. Moreover, the market environment for U.S. steel producers has deteriorated dramatically since the 2001 Report, when the Department concluded that imports of iron ore and semi-finished steel do not “fundamentally threaten” the ability of U.S. industry to meet national security needs.
The Department's investigation indicates that the domestic steel industry has declined to a point where further closures and consolidation of basic oxygen furnace facilities represents a “weakening of our internal economy” as defined in Section 232. The more than 50 percent reduction in the number of basic oxygen furnace facilities—either through closures or idling of facilities due to import competition—increases the chance of further closures that place the United States at serious risk of being unable to increase production to the levels needed in past national emergencies. The displacement of domestic product by excessive imports is having the serious effect of causing the domestic industry to operate at unsustainable levels, reducing employment, diminishing research and development, inhibiting capital expenditures, and causing a loss of vital skills and know-how. The present capacity operating rates for those remaining plants continue to be below those needed for financial sustainability. These conditions have been further exacerbated by the 22 percent surge in imports thus far in 2017 compared with 2016. Imports are now consistently above 30 percent of U.S. domestic demand.
It is evident that the U.S. steel industry is being substantially impacted by the current levels of imported steel. The displacement of domestic steel by imports has the serious effect of placing the United States at risk of being unable meet national security requirements. The Secretary has determined that the “displacement of domestic [steel] products by excessive imports” of steel is having the “serious effect” of causing the “weakening of our internal economy.”
Prior significant actions to address steel imports (quotas and/or tariffs) were taken under various statutory authorities by President George W. Bush, President William J. Clinton (three times), President George H. W. Bush, President Ronald W. Reagan (three times), President James E. Carter (twice), and President Richard M. Nixon, all at lower levels of import penetration than the present level, which is above 30 percent.
Due to the threat of steel imports to the national security, as defined in Section 232, the Secretary recommends that the President take immediate action by adjusting the level of imports through quotas or tariffs on steel imported into the United States, as well as direct additional actions to keep the U.S. steel industry financially viable and able to meet U.S. national security needs. The quota or tariff imposed should be sufficient, after accounting for any exclusions, to enable the U.S. steel producers to be able to operate at about an 80 percent or better of the industry's capacity utilization rate based on available capacity in 2017.
In 2016, U.S. steel production was 78.6 million metric tons and U.S. capacity was 113.3 million metric tons, which represents a 69.4 percent capacity utilization rate. If current import trends for 2017 continue, continued imports without any action are projected to be 36.0 million metric tons, an increase over 2016 of 6.0 million metric tons. Even with U.S. demand projected to increase to 107.3 from 99.8 million metric tons, increased imports mean U.S. capacity utilization is forecast to rise only to 72.3 percent, a non-financially viable and unsustainable level of operation.
By reducing import penetration rates to approximately 21 percent, U.S. industry would be able to operate at 80 percent of their capacity utilization. Achieving this level of capacity utilization based on the projected 2017 import levels will require reducing imports from 36 million metric tons to about 23 million metric tons. If a reduction in imports can be combined with an increase in domestic steel demand, as can be reasonably expected rising economic growth rates combined with the increased military spending and infrastructure proposals that the Trump Administration has planned, then U.S. steel mills can be expected to reach a capacity utilization level of 80 percent or greater. This increase in U.S. capacity utilization will enable U.S. steel mills to increase operations significantly in the short-term and
Impose a Quota or Tariff on all steel products covered in this investigation imported into the United States to remove the threatened impairment to national security. The Secretary recommends adjusting the level of imports through a quota or tariff on steel imported into the United States.
Impose quotas on all imported steel products at a specified percent of the 2017 import level, applied on a country and steel product basis.
According to the Global Trade Analysis Project (GTAP) Model, produced by Purdue University, a 63 percent quota would be expected to reduce steel imports by 37 percent (13.3 million metric tons) from 2017 levels. Based on imports from January to October, import levels for 2017 are projected to reach 36.0 million metric tons. The quotas, adjusted as necessary, would result in imports equaling about 22.7 million metric tons, which will enable an 80 percent capacity utilization rate at 2017 demand levels (including exports). Application of an annual quota will reduce the impact of the surge in steel imports that has occurred since the beginning of 2017.
Apply a tariff rate on all imported steel products, in addition to any antidumping or countervailing duty collections applicable to any imported steel product.
Similar to what is anticipated under a quota, according to the Global Trade Analysis Project (GTAP) Model, produced by Purdue University, a 24 percent tariff on all steel imports would be expected to reduce imports by 37 percent (
Apply a tariff rate on all imported steel products from Brazil, South Korea, Russia, Turkey, India, Vietnam, China, Thailand, South Africa, Egypt, Malaysia and Costa Rica, in addition to any antidumping or countervailing duty collections applicable to any steel products from those countries. All other countries would be limited to 100 percent of their 2017 import level.
According to the Global Trade Analysis Project (GTAP) Model, produced by Purdue University, a 53 percent tariff on all steel imports from this subset of countries would be expected to reduce imports by 13.3 million metric tons from 2017 import levels from the targeted countries. This action would enable an increase in domestic production to achieve an 80 percent capacity utilization rate at 2017 demand levels (including exports). The countries identified are projected to account for less than 4 percent of U.S. steel exports in 2017.
In selecting an alternative, the President could determine that specific countries should be exempted from the proposed 63 percent quota or 24 percent tariff by granting those specific countries 100 percent of their prior imports in 2017, based on an overriding economic or security interest of the United States. The Secretary recommends that any such determination should be made at the outset and a corresponding adjustment be made to the final quota or tariff imposed on the remaining countries. This would ensure that overall imports of steel to the United States remain at or below the level needed to enable the domestic steel industry to operate as a whole at an 80 percent or greater capacity utilization rate. The limitation to 100 percent of each exempted country's 2017 imports is necessary to prevent exempted countries from producing additional steel for export to the United States or encouraging other countries to seek to trans-ship steel to the United States through the exempted countries.
It is possible to provide exemptions from either the quota or tariff and still meet the necessary objective of increasing U.S. steel capacity utilization to a financially viable target of 80 percent. However, to do so would require a reduction in the quota or increase in the tariff applied to the remaining countries to offset the effect of the exempted import tonnage.
The Secretary recommends an appeal process by which affected U.S. parties could seek an exclusion from the tariff or quota imposed. The Secretary would grant exclusions based on a demonstrated: (1) Lack of sufficient U.S. production capacity of comparable products; or (2) specific national security based considerations. This appeal process would include a public comment period on each exclusion request, and in general, would be completed within 90 days of a completed application being filed with the Secretary.
An exclusion may be granted for a period to be determined by the Secretary and may be terminated if the conditions that gave rise to the exclusion change. The U.S. Department of Commerce will lead the appeal process in coordination with the Department of Defense and other agencies as appropriate. Should exclusions be granted the Secretary would consider at the time whether the quota or tariff for the remaining products needs to be adjusted to increase U.S. steel capacity utilization to a financially viable target of 80 percent.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that imports of utility scale wind towers (wind towers) from the Socialist Republic of Vietnam
Applicable July 6, 2020.
Joshua A. DeMoss, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3362.
On July 9, 2019, the Wind Tower Trade Coalition (the petitioner) filed the antidumping duty Petition on wind towers from Vietnam.
On August 5, 2019, Commerce published the Initiation Notice in this investigation of wind towers from Vietnam.
On February 27, 2020, Commerce postponed the deadline for the final determination until June 29, 2020.
In the
Because nothing on the record indicates that the status of the entities in the CS Wind Group have changed, and as indicated in the Petition,
The product covered by this investigation is wind towers from Vietnam. For a full description of the scope of this investigation,
Commerce did not receive any scope comments and has not updated the scope of the investigation since the
Because the mandatory respondent in this investigation did not provide necessary information requested by Commerce, we did not conduct verification.
Commerce has made no changes to the
All issues raised in the case and rebuttal briefs submitted by parties in this investigation are addressed in the Issues and Decision Memorandum accompanying this notice. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice as Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
In accordance with section 733(e)(1) of the Act and 19 CFR 351.206, we preliminarily determined that critical circumstances did exist with respect to imports of wind towers from Vietnam because the factors under section 773(e)(1)(A) of the Act were met. Our final determination remains unchanged. Accordingly, pursuant to section 735(a)(3) of the Act, we find that critical circumstances do exist with respect to imports of wind towers from Vietnam. For a full description of the methodology and results of Commerce's critical circumstances analysis,
The final estimated weighted-average dumping margins are as follows:
In accordance with section 735(c)(4)(A) of the Act, because we continue to find that critical circumstances exist, we will direct CBP to continue to suspend liquidation of all entries of wind towers, as described in Appendix I of this notice, which are entered, or withdrawn from warehouse, for consumption on or after November 16, 2019, which is 90 days prior to the date of publication in the
This investigation covers a single producer and exporter combination that is excluded from the
To determine the cash deposit rate, Commerce normally adjusts the estimated weighted-average dumping margin by the amount of export subsidies determined in a companion CVD proceeding when CVD provisional measures are in effect. Accordingly, where Commerce makes an affirmative determination for export subsidies, Commerce offsets the calculated estimated weighted-average dumping margin by the appropriate rate(s). In this case, we have found export subsidies for certain respondents. However, suspension of liquidation for provisional measures in the companion CVD case has been discontinued; therefore, we are not instructing CBP to collect cash deposits based upon the estimated weighted-average dumping margin adjusted for export subsidies at this time.
In accordance with section 735(d) of the Act, we will notify the International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because Commerce's final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports, or sales (or the likelihood of sales) for importation of wind towers from Vietnam no later than 45 days after this final determination. If the ITC determines that such injury does not exist, this proceeding will be terminated, and all cash deposits will be refunded. If the ITC determines that such injury does exist, Commerce will issue an antidumping duty order directing CBP to assess, upon further instruction by Commerce, antidumping duties on all imports of the subject
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published pursuant to sections 735(d) and 777(i)(1) of the Act, and 19 CFR 351.210(c).
The merchandise covered by this investigation consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components (
Wind towers and sections thereof are included within the scope whether or not they are joined with nonsubject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Merchandise covered by this investigation is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that countervailable subsidies are being provided to producers and exporters of utility scale wind towers (wind towers) from the Socialist Republic of Vietnam (Vietnam).
Applicable July 6, 2020.
Davina Friedmann, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0698.
On December 13, 2020, Commerce published the
A summary of the events that occurred since Commerce published the
The period of investigation is January 1, 2018 through December 31, 2018.
The merchandise covered by this investigation is utility scale wind towers from Vietnam. For a complete
As stated in the
The subsidy programs under investigation and the issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised is attached to this notice as Appendix II.
Commerce conducted this investigation in accordance with section 701 of the Tariff Act of 1930, as amended (the Act). For each of the subsidy programs found countervailable, Commerce determines that there is a subsidy,
benefit; and section 771(5A) of the Act regarding specificity.
As provided in section 782(i) of the Act, in February 2020, we conducted verification of the information reported by the mandatory respondent, CS Wind Vietnam Co. Ltd. (CS Wind), for use in Commerce's final determination. We used standard verification procedures, including examination of relevant accounting records, and original source documents provided by CS Wind.
Based on our review and analysis of the comments received from parties and the results of verification, we made certain changes to the subsidy rate calculations for CS Wind. For a discussion of these changes,
In accordance with section 703(e)(1) of the Act and 19 CFR 351.206, Commerce preliminarily determined that critical circumstances did not exist with respect to imports of wind towers from Vietnam because section 703(e)(1)(B) of the Act was not met (
We continue to assign the countervailable subsidy rate calculated for CS Wind as the all-others rate applicable to all exporters and/or producers not individually examined.
In accordance with section 705(c)(1)(B)(i) of the Act, we calculated an individual rate for CS Wind. We determine the total estimated net countervailable subsidy rate to be:
We intend to disclose to parties in this proceeding the calculations performed for this final determination within five days of the date of public announcement of our final determination, in accordance with 19 CFR 351.224(b).
As a result of our
If the U.S. International Trade Commission (the ITC) issues a final affirmative injury determination, we will issue a CVD order, reinstate the suspension of liquidation under section 706(a) of the Act, and require a cash deposit of estimated countervailing duties for such entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. Because the final determination in this proceeding is affirmative, in accordance with section 705(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of wind towers from Vietnam no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that material injury or threat of material injury does exist, Commerce will issue a CVD order directing CBP to assess, upon further instruction by Commerce, countervailing duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
In the event the ITC issues a final negative injury determination, this notice serves as the only reminder to parties subject to an APO of their responsibility concerning the
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.210(c).
The merchandise covered by this investigation consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components (
Wind towers and sections thereof are included within the scope whether or not they are joined with nonsubject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Further, excluded from the scope of the antidumping duty investigations are any products covered by the existing antidumping duty order on utility scale wind towers from the Socialist Republic of Vietnam.
Merchandise covered by this investigation is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that imports of utility scale wind towers (wind towers) from Indonesia are being, or are likely to be, sold in the United States at less than fair value (LTFV) for the period of investigation July 1, 2018 through June 30, 2019.
Applicable July 6, 2020.
Brittany Bauer or Benjamin Luberda, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3860 or (202) 482-2185, respectively.
On February 14, 2020, Commerce published in the
The product covered by this investigation is wind towers from Indonesia. For a full description of the scope of this investigation,
All issues raised in the case and rebuttal briefs submitted by parties in this investigation are addressed in the Issues and Decision Memorandum. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice as Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in February and March 2020, we conducted verification of the sales and cost information submitted by PT Kenertec Power System (Kenertec) for use in our final determination. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by Kenertec.
Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for the respondent. For a discussion of these changes,
Section 735(c)(5)(A) of the Act provides that the estimated weighted-average dumping margin for all other producers and exporters not individually investigated shall be equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding rates that are zero,
In accordance with section 733(e)(1) of the Act and 19 CFR 351.206, we preliminarily determined that critical circumstances did not exist with respect to imports of wind towers from Indonesia because neither of the factors under section 773(e)(1)(A) of the Act were met. Our final determination remains unchanged. Accordingly, pursuant to section 735(a)(3) of the Act, we find that critical circumstances do not exist with respect to imports of wind towers from Indonesia. For a full description of the methodology and results of Commerce's critical circumstances analysis,
The final estimated weighted-average dumping margins are as follows:
We intend to disclose the calculations performed in this final determination within five days of the date of publication of this notice to parties in this proceeding, in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, for this final determination, we will direct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of wind towers, as described in Appendix I of this notice, which are entered, or withdrawn from warehouse, for consumption on or after February 14, 2020, the date of publication in the
Pursuant to section 735(c)(1)(B)(ii) of the Act and 19 CFR 351.210(d), we will instruct CBP to require a cash deposit for such entries of merchandise equal to the estimated weighted-average dumping margin as follows: (1) The cash deposit rate for the company listed in the table above will be equal to the company-specific estimated weighted-average dumping margin identified for that company in the table; (2) if the exporter is not a company identified above, but the producer is, then the cash deposit rate will be equal to the company-specific estimated weighted-average dumping margin established for that producer of the subject merchandise; and (3) the cash deposit rate for all other producers and exporters will be equal to the all-others estimated weighted-average dumping margin. These suspension of liquidation instructions will remain in effect until further notice.
To determine the cash deposit rate, Commerce normally adjusts the estimated weighted-average dumping margin by the amount of export subsidies determined in a companion CVD proceeding when CVD provisional measures are in effect. Accordingly, where Commerce makes an affirmative determination for export subsidies, Commerce offsets the calculated estimated weighted-average dumping margin by the appropriate rate(s). In the CVD investigation, we have found export subsidies for all producers and exporters of subject merchandise. However, suspension of liquidation for provisional measures in the companion CVD case has been discontinued; therefore, we are not instructing CBP to collect cash deposits based upon the estimated weighted-average dumping margin adjusted for export subsidies at this time.
In accordance with section 735(d) of the Act, we will notify the International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because Commerce's final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports, or sales (or the likelihood of sales) for importation of wind towers from Indonesia no later than 45 days after
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published pursuant to sections 735(d) and 777(i)(1) of the Act, and 19 CFR 351.210(c).
The merchandise covered by this investigation consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components (
Wind towers and sections thereof are included within the scope whether or not they are joined with nonsubject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Merchandise covered by this investigation is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (
International Trade Administration, U.S. Department of Commerce.
Notice of Renewal of the Renewable Energy and Energy Efficiency Advisory Committee and Solicitation of Nominations for Membership.
Pursuant to provisions of the Federal Advisory Committee Act, 5 U.S.C. App., the Department of Commerce announces the renewal of the Renewable Energy and Energy Efficiency Advisory Committee (the Committee). The Committee shall advise the Secretary of Commerce regarding the development and administration of programs and policies to expand the competitiveness of U.S. exports of renewable energy and energy efficiency goods and services. The Committee's work on energy efficiency will focus on technologies, services, and platforms that provide system-level energy efficiency to electricity generation, transmission, and distribution. These include smart grid technologies and services, as well as equipment and systems that increase the resiliency of power infrastructure such as energy storage. For the purposes of this Committee, covered goods and services will not include vehicles, feedstock for biofuels, or energy efficiency as it relates to consumer goods. Non-fossil fuels that are considered renewable fuels (
Applications or nominations for members must be received on or before 5:00 p.m. Eastern Daylight Time (EDT) on Friday July 31, 2020.
Applications or nominations may be emailed to
Cora Dickson, Designated Federal Officer, Renewable Energy and Energy Efficiency Advisory Committee, Office of Energy & Environmental Industries, U.S. Department of Commerce; phone 202-482-6083; email
The Committee shall consist of
Members serve at the pleasure of the Secretary from the date of appointment to the Committee to the date on which the Committee's charter terminates. Members serve in a representative capacity presenting the views and interests of a U.S. entity or U.S. organization, as well as their particular subsector; they are, therefore, not Special Government Employees.
Members of the Committee must not be registered as foreign agents under the Foreign Agents Registration Act. No member may represent a company that is majority owned or controlled by a foreign government entity (or foreign government entities). Members of the Committee will not be compensated for their services or reimbursed for their travel expenses.
If you are interested in applying or nominating someone else to become a member of the Committee, please provide the following information:
(1) Sponsor letter on the company's, trade association's or organization's letterhead containing the name, title, and relevant contact information (including phone, fax, and email address) of the individual who is applying or being nominated;
(2) An affirmative statement that the nominee will be able to meet the expected time commitments of Committee work. Committee work includes (1) attending in-person committee meetings roughly four times per year (lasting one day each), (2) undertaking additional work outside of full committee meetings including subcommittee conference calls or meetings as needed, and (3) frequently drafting, preparing, or commenting on proposed recommendations to be evaluated at Committee meetings;
(3) Short biography of nominee, including credentials;
(4) Brief description of the company, trade association, or organization to be represented and its business activities, company size (number of employees and annual sales), and export markets served;
(5) An affirmative statement that the nominee meets all Committee eligibility requirements.
Please do not send company, trade association, or organization brochures or any other information.
See the
Nominees selected for appointment to the Committee will be notified by mail.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that imports of utility scale wind towers (wind towers) from Canada are being, or are likely to be, sold in the United States at less than fair value (LTFV) for the period of investigation July 1, 2018 through June 30, 2019.
Applicable July 6, 2020.
Michael J. Heaney, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4475.
On February 14, 2020, Commerce published in the
The product covered by this investigation is wind towers from Canada. For a full description of the scope of this investigation,
All issues raised in the case and rebuttal briefs submitted by parties in this investigation are addressed in the Issues and Decision Memorandum. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice as Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), Commerce normally verifies information relied upon in making its final determination; however, we were unable to conduct verification in this investigation.
Based on our analysis of the comments received, we have made certain changes to the margin calculation for the respondent. For a discussion of these changes,
Section 735(c)(5)(A) of the Act provides that the estimated weighted-average dumping margin for all other producers and exporters not individually investigated shall be equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding rates that are zero,
In accordance with section 733(e)(1) of the Act and 19 CFR 351.206, we preliminarily determined that critical circumstances did not exist with respect to imports of wind towers from Canada because section 773(e)(1)(B) of the Act was not met (
The final estimated weighted-average dumping margins are as follows:
We intend to disclose the calculations performed in this final determination within five days of the date of publication of this notice to parties in this proceeding, in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, for this final determination, we will direct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of wind towers, as described in Appendix I of this notice, which are entered, or withdrawn from warehouse, for consumption on or after February 14, 2020, the date of publication in the
Pursuant to section 735(c)(1)(B)(ii) of the Act and 19 CFR 351.210(d), we will instruct CBP to require a cash deposit for such entries of merchandise equal to the estimated weighted-average dumping margin as follows: (1) The cash deposit rate for the company listed in the table above will be equal to the company-specific estimated weighted-average dumping margin identified for that company in the table; (2) if the exporter is not a company identified above, but the producer is, then the cash deposit rate will be equal to the company-specific estimated weighted-average dumping margin established for that producer of the subject merchandise; and (3) the cash deposit rate for all other producers and exporters will be equal to the all-others estimated weighted-average dumping margin. These suspension of liquidation instructions will remain in effect until further notice.
To determine the cash deposit rate, Commerce normally adjusts the estimated weighted-average dumping margin by the amount of export subsidies determined in a companion CVD proceeding when CVD provisional measures are in effect. Accordingly, where Commerce makes an affirmative determination for export subsidies, Commerce offsets the calculated estimated weighted-average dumping margin by the appropriate rate(s). In this case, we have not found export subsidies for any respondents. Therefore, we are not instructing CBP to collect cash deposits based upon the estimated weighted-average dumping margin adjusted for export subsidies.
In accordance with section 735(d) of the Act, we will notify the International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because Commerce's final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports, or sales (or the likelihood of sales) for importation of wind towers from Canada no later than 45 days after this final determination. If the ITC determines that such injury does not exist, this proceeding will be terminated, and all cash deposits will be refunded. If the ITC determines that such injury does exist, Commerce will issue an antidumping duty order directing CBP to assess, upon further instruction by Commerce, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published pursuant to sections 735(d) and 777(i)(1) of the Act, and 19 CFR 351.210(c).
The merchandise covered by this investigation consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components (
Wind towers and sections thereof are included within the scope whether or not they are joined with nonsubject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Merchandise covered by this investigation is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS)
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that countervailable subsidies are being provided to producers and exporters of utility scale wind towers (wind towers) from Indonesia. The period of investigation is January 1, 2018 through December 31, 2018.
Applicable July 6, 2020.
Alex Wood or Melissa Kinter, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1959 or (202) 482-1413, respectively.
On December 13, 2019, Commerce published the
A summary of the events that occurred since Commerce published the
The product covered by this investigation is wind towers from Indonesia. For a complete description of the scope of the investigation,
In accordance with the preamble to Commerce's regulations,
The subsidy programs under investigation and the issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised is attached to this notice as Appendix II.
Commerce conducted this investigation in accordance with section 701 of the Tariff Act of 1930, as amended (the Act). For each of the subsidy programs found countervailable, Commerce determines that there is a subsidy,
Commerce normally verifies information relied upon in making its final determination, as provided in section 782(i) of the Act. In March 2020, we conducted verification of the information submitted by the Government of Indonesia and the mandatory respondent, PT Kenertec Power System (Kenertec), for use in Commerce's final determination. We used standard verification procedures, including an examination of relevant accounting records and original source documents provided by the respondents.
Pursuant to section 776(a)(2)(D) of the Act, in situations where information has been provided but the information has cannot be verified in accordance with
Further, pursuant to section 776(a)(1) of the Act, where necessary information is not available on the record, Commerce may rely on facts otherwise available on the record in reaching the applicable determination. Accordingly, in certain circumstances in this final determination where necessary information is missing from the record, we have relied on the information submitted to the record as facts otherwise available, pursuant to section 776(a)(1) of the Act.
Based on our review and analysis of the comments received from parties and our verification findings, we made certain changes to the subsidy rate calculations for Kenertec. For a discussion of these changes,
In accordance with section 703(e)(1)(B) of the Act, Commerce preliminarily determined that critical circumstances existed for all imports of utility scale wind towers from Indonesia.
In accordance with section 705(c)(5)(A) of the Act, we continue to assign the countervailable subsidy rate calculated for Kenertec as the all-others rate applicable to all exporters and/or producers not individually examined.
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we calculated an individual estimated subsidy rate for Kenertec. We determine that the following total estimated net countervailable subsidy rates exist:
We intend to disclose to interested parties the calculations and analysis performed in this final determination within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
As a result of our
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we will issue a CVD order, reinstate the suspension of liquidation under section 706(a) of the Act, and require a cash deposit of estimated countervailing duties for such entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated, and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. Because the final determination in this proceeding is affirmative, in accordance with section 705(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of wind towers from Indonesia no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated, and all cash deposits will be refunded. If the ITC determines that material injury or threat of material injury does exist, Commerce will issue a CVD order directing CBP to assess, upon further instruction by Commerce, countervailing duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
In the event the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.210(c).
The merchandise covered by this investigation consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components
Wind towers and sections thereof are included within the scope whether or not they are joined with non-subject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Merchandise covered by this investigation is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that imports of utility scale wind towers (wind towers) from the Republic of Korea (Korea) are being, or are likely to be, sold in the United States at less than fair value (LTFV) for the period of investigation July 1, 2018 through June 30, 2019.
Applicable July 6, 2020.
Adam Simons or David Goldberger, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-6172 or (202) 482-4136, respectively.
On February 14, 2020, Commerce published in the
The product covered by this investigation is wind towers from Korea. For a full description of the scope of this investigation,
All issues raised in the case and rebuttal briefs submitted by parties in this investigation are addressed in the Issues and Decision Memorandum accompanying this notice. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice as Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at
As provided in section 782(i) of the Tariff Act of 1930, as amended, (the Act) in February 2020, we conducted verification of the cost information submitted by Dongkuk S&C Co., Ltd. (Dongkuk) for use in our final determination. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by Dongkuk.
Based on our analysis of the comments received and our findings at
Section 735(c)(5)(A) of the Act provides that the estimated weighted-average dumping margin for all-other producers and exporters not individually investigated shall be equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding rates that are zero,
For the
The final estimated weighted-average dumping margins are as follows:
We intend to disclose the calculations performed in this final determination within five days of the date of publication of this notice to parties in this proceeding, in accordance with 19 CFR 351.224(b).
For this final determination, for entries made by Dongkuk and the companies covered by the all-others rate, in accordance with section 735(c)(4)(A) of the Act, because we continue to find that critical circumstances exist, we will direct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of subject merchandise, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after November 16, 2019, which is 90 days prior to the date of publication of the preliminary determination of this investigation in the
Pursuant to section 735(c)(1)(B)(ii) of the Act and 19 CFR 351.210(d), we will instruct CBP to require a cash deposit for such entries of merchandise equal to the estimated weighted-average dumping margin as follows: (1) The cash deposit rate for the company listed in the table above will be equal to the company-specific estimated weighted-average dumping margin identified for that company in the table; (2) if the exporter is not a company identified above, but the producer is, then the cash deposit rate will be equal to the company-specific estimated weighted-average dumping margin established for that producer of the subject merchandise; and (3) the cash deposit rate for all other producers and exporters will be equal to the all-others estimated weighted-average dumping margin. These suspension of liquidation instructions will remain in effect until further notice.
In accordance with section 735(d) of the Act, we will notify the International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because Commerce's final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports, or sales (or the likelihood of sales) for importation of wind towers from Korea no later than 45 days after this final determination. If the ITC determines that such injury does not exist, this proceeding will be terminated, and all cash deposits will be refunded. If the ITC determines that such injury does exist, Commerce will issue an antidumping duty order directing CBP to assess, upon further instruction by Commerce, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published pursuant to sections 735(d) and 777(i)(1) of the Act, and 19 CFR 351.210(c).
The merchandise covered by this investigation consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components (
Wind towers and sections thereof are included within the scope whether or not they are joined with nonsubject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Merchandise covered by this investigation is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that countervailable subsidies are being provided to producers and exporters of utility scale wind towers (wind towers) from Canada.
Applicable July 6, 2020.
Tyler Weinhold or Moses Song, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1121 or (202) 482-7885, respectively.
On December 13, 2019, Commerce published the
A summary of the events that occurred since Commerce published the
The period of investigation is January 1, 2018 through December 31, 2018.
The products covered by this investigation are wind towers from Canada. For a complete description of the scope of this investigation,
During the course of this investigation, and the concurrent AD and CVD investigations of wind towers from Canada, Indonesia, the Republic of Korea, and the Socialist Republic of Vietnam, Commerce did not receive scope comments from interested parties. Accordingly, Commerce preliminarily did not modify the scope language as it appeared in the
The subsidy programs under investigation and the issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised is attached to this notice as Appendix II.
Commerce conducted this investigation in accordance with section 701 of the Tariff Act of 1930, as amended (the Act). For each of the subsidy programs found countervailable, Commerce determines that there is a subsidy,
As provided in section 782(i) of the Act, in February 2020, we conducted verification of the information submitted by the mandatory respondent, Marmen Inc. and Marmen Énergie Inc., and cross-owned affiliate Gestion Marmen (collectively, Marmen), for use in Commerce's final determination. We used standard verification procedures, including an examination of relevant accounting records and original source documents provided by the respondents.
Based on our review and analysis of the comments received from parties and our verification findings, we made certain changes to the subsidy rate calculations for Marmen. For a discussion of these changes,
On February 11, Commerce published a preliminary negative determination of critical circumstances with respect to imports of wind towers from Canada.
We continue to assign the countervailable subsidy rate calculated for Marmen as the all-others rate applicable to all exporters and/or producers not individually examined.
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we calculated an individual estimated subsidy rate for Marmen. We determine the total estimated net countervailable subsidy rate to be:
We intend to disclose to interested parties the calculations and analysis performed in this final determination within five days of the date of the publication of this notice in accordance with 19 CFR 351.224(b).
As a result of our
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we will issue a CVD order, reinstate the suspension of liquidation under section 706(a) of the Act, and will require a cash deposit of estimated countervailing duties for such entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. Because the final determination in this proceeding is affirmative, in accordance with section 705(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of wind towers from Canada no later than 45 days after our final determination. In addition, we are making available to the ITC all non-privileged and nonproprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Enforcement and Compliance.
In the event the ITC issues a final negative injury determination, this notice serves as the only reminder to parties subject to an APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.210(c).
The merchandise covered by these investigations consists of certain wind towers, whether or not tapered, and sections thereof. Certain wind towers support the nacelle and rotor blades in a wind turbine with a minimum rated electrical power generation capacity in excess of 100 kilowatts and with a minimum height of 50 meters measured from the base of the tower to the bottom of the nacelle (
A wind tower section consists of, at a minimum, multiple steel plates rolled into cylindrical or conical shapes and welded together (or otherwise attached) to form a steel shell, regardless of coating, end-finish, painting, treatment, or method of manufacture, and with or without flanges, doors, or internal or external components (
Wind towers and sections thereof are included within the scope whether or not they are joined with non-subject merchandise, such as nacelles or rotor blades, and whether or not they have internal or external components attached to the subject merchandise.
Specifically excluded from the scope are nacelles and rotor blades, regardless of whether they are attached to the wind tower. Also excluded are any internal or external components which are not attached to the wind towers or sections thereof, unless those components are shipped with the tower sections.
Further, excluded from the scope of the antidumping duty investigations are any products covered by the existing antidumping duty order on utility scale wind towers from the Socialist Republic of Vietnam.
Merchandise covered by these investigations is currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On May 26, 2020, the Court of International Trade (CIT) sustained the final remand results pertaining to the administrative review of the antidumping duty order on large power transformers (LPTs) from the Republic of Korea (Korea) covering the period August 1, 2013 through July 31, 2014. The Department of Commerce (Commerce) is notifying the public that the final judgment in this case is not in harmony with the final results and notice of amended final results of the administrative review and that Commerce is amending the amended final results with respect to the dumping margins assigned to Hyundai Heavy Industries Co., Ltd. and Hyundai Corporation USA, and the non-selected respondent companies ILJIN, ILJIN Electric Co., Ltd., and LSIS Co., Ltd.
Applicable June 5, 2020.
John K. Drury, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0195.
On March 16, 2016, Commerce issued the
On October 10, 2017, the CIT remanded various aspects of the
Pursuant to the
On November 13, 2018, the CIT sustained Commerce's Final Redetermination with respect to commissions, but remanded the issue of service-related revenues to Commerce a second time.
Pursuant to the second
On February 19, 2020, the CIT sustained Commerce's Second Remand Results with respect to the revised capping of certain of Hyundai's transactions, but remanded the issue of the COS adjustment.
In its decision in
Because there is now a final court decision, Commerce is amending the
In the event that the CIT's rulings are not appealed or, if appealed, are upheld by a final and conclusive court decision, Commerce will instruct U.S. Customs and Border Protection to assess antidumping duties on unliquidated entries of subject merchandise based on the revised dumping margins listed above.
Since the
This notice is issued and published in accordance with sections 516A(e)(1), 751(a)(1), and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
As a result of the determinations by the Department of Commerce (Commerce) and the International Trade Commission (ITC) that revocation of the antidumping duty (AD) and countervailing duty (CVD) orders on lightweight thermal paper (LWTP) from the People's Republic of China (China) would likely lead to continuation or recurrence of dumping, countervailable subsidies, and material injury to an industry in the United States, Commerce is publishing a notice of continuation of the AD and CVD orders.
Applicable July 6, 2020.
Kyle Clahane at (202) 482-5449 (AD) and Dusten Hom or Mary Kolberg at (202) 482-5075 or (202) 482-1785, respectively (CVD); AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5449.
On, November 24, 2008 Commerce published the AD and CVD orders on LWTP from China.
On December 2, 2019, Commerce published the notice of initiation of the second sunset reviews of the
As a result of its reviews, Commerce determined, pursuant to sections 751(c)(1) and 752(b) and (c) of the Act, that revocation of the
The products covered by these orders include certain lightweight thermal paper, which is thermal paper with a basis weight of 70 grams per square meter (g/m
As a result of the determinations by Commerce and the ITC that revocation of the
U.S. Customs and Border Protection will continue to collect AD and CVD cash deposits at the rates in effect at the time of entry for all imports of subject merchandise. The effective date of the continuation of the
These five-year sunset reviews and this notice are in accordance with section 751(c) of the Act and published pursuant to section 777(i)(1) of the Act and 19 CFR 351.218(f)(4).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of incidental harassment authorizations.
Pursuant to the Marine Mammal Protection Act (MMPA), NMFS has hereby issued an incidental harassment authorization (IHA) to Rio Grande LNG LLC (Rio Grande) and, separately, Annova LNG Common Infrastructure (Annova), authorizing the take of small numbers of marine mammals incidental to the construction of two liquefied natural gas (LNG) terminals in the Brownsville Ship Channel (BSC), Texas.
The Rio Grande IHA is effective July 1, 2020 through June 31, 2021. The Annova IHA is effective March 1, 2021 through February 28, 2022.
Electronic copies of the application, IHAs, and supporting documents, as well as a list of the references cited in this document, may be obtained online at:
Jaclyn Daly, Office of Protected Resources, NMFS, (301) 427-8401.
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the mitigation, monitoring and reporting of the takings are set forth. The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.
On August 20, 2019, NMFS received a request from Rio Grande for an IHA to take marine mammals incidental to pile driving associated with the construction of a LNG terminal in the BSC. Rio Grande submitted a revised application on November 21, 2019 that was deemed adequate and complete on December 19, 2019. Rio Grande's request is for take of a small number of three species of marine mammals, by Level B harassment only. Neither Rio Grande nor NMFS expects serious injury or mortality to result from these activities and NMFS has not authorized it.
Separately, on June 27, 2019, NMFS received a request from Annova for an IHA to take marine mammals incidental to pile driving associated with the construction of a LNG terminal in the BSC. Annova submitted a revised application on February 28, 2020 that was deemed adequate and complete on March 2, 2020. Annova's request is for take of a small number of three species of marine mammals, by Level B harassment only. Neither Annova nor NMFS expects serious injury or mortality to result from this activity and NMFS has not authorized it.
Rio Grande and Annova are each planning to construct an LNG terminal in the BSC, Texas. The purpose of each project is to construct and operate an LNG terminal for purposes of international export. The LNG terminals would be located across from each other on opposite banks of the BSC. Both projects require pile driving and
Rio Grande's IHA is effective July 1, 2020 through June 30, 2021. Pile driving would be limited to daylight hours; however, other project-related activities may occur at any time. Pile driving and removal would occur for no more than 8 days.
Annova's IHA is effective March 1, 2021 through February 28, 2022. Pile driving would be limited to daylight hours; however, other project-related activities may occur at any time. Pile driving and removal would occur for no more than 16 days.
The projects would be constructed with the BSC which is located in the southernmost portion of the Lower Laguna Madre system. We provided a complete description of Laguna Madre and the BSC in our notice of proposed IHA. Please see that notice for details of the specific geographic region and maps.
Rio Grande plans to construct a natural gas liquefaction facility and liquefied natural gas (LNG) export terminal (Terminal) in Cameron County, Texas, along the north embankment of the Brownsville Ship Channel (BSC) (Figure 1). The purpose of the project is to develop, own, operate, and maintain a natural gas pipeline system to access natural gas from the Agua Dulce Hub and an LNG export facility in south Texas to export 24.5 million metric tons (27 million U.S. tons) per annum of natural gas that provides an additional source of firm, long-term, and competitively priced LNG to the global market.
The terminal would be located on approximately 3.04 square kilometers (km
The terminal site includes the following major facilities: Six liquefaction trains; four full-containment LNG storage tanks; docking facilities for two LNG vessels, turning basin, and material offloading facility (MOF); LNG truck loading facilities with four loading bays; and Pipeline System's Compressor Station 3, a metering site, and the interconnection to the Pipeline System. In-water pile driving associated with construction of the LNG Loading and Vessel Berthing Area, turning basin, MOF, and Tug Berth have the potential to harass marine mammals. Rio Grande would also remove existing navigation markers. We describe these construction activities below.
Two LNG vessel loading berths would be constructed along the south-central boundary of the Terminal to accommodate simultaneous loading of two LNG vessels (see Figure 2). The berths would be recessed into the Terminal property so that loading LNG vessels, separated by 76 m (250 ft), would not encroach on the navigable channel boundaries of the BSC. Construction of the loading berths would require dredging to a depth of up to −14 m (43 ft plus 2 ft allowable overdepth) mean lower low water (MLLW) (−13-m [43 ft] plus −0.6 m [2 ft] of allowable overdepth). No pile driving in-water is associated with this part of the project.
A 457.2-m (1,500-foot) diameter turning basin would be constructed to the east of the LNG vessel loading berths to accommodate turning maneuvers of the LNG vessels calling on the Terminal. LNG vessels would be escorted into the BSC and turning basin via tug boats, rotated in the turning basin, and then placed adjacent to a loading berth with the bow facing downstream (
Rio Grande would construct a MOF along the western extent of the Terminal site, adjacent to the BSC. The MOF would primarily be used during construction for marine delivery of bulk materials and larger or prefabricated equipment as an alternative to road transportation; however, it would be maintained for the life of the terminal for periodic delivery of bulk materials. The MOF, which would require a dredged depth of up to −7.6 m (−25 ft) MLLW plus 0.6 m (2 ft) advanced maintenance allowance, would be constructed of a steel sheet pile bulkhead on land. Fencing would be placed around the MOF to control access and separate it from the adjacent wetlands on the west side of the terminal site; access would be through the western LNG terminal entrance. The MOF would be capable of berthing two barges simultaneously. Rio Grande anticipates that 880 barges would deliver materials to the MOF during the first 5 years of construction, although deliveries would continue as needed for the remainder of construction and into operations. Bulk materials delivered to the MOF would include the crushed sand or stone necessary for concrete fabrication. Ten 42-in piles would be installed in-water at the tug berth to support construction.
Rio Grande plans to relocate one of the USCG fixed navigation aids in the BSC waterway. Pile driving would include in-water removal of five 12-in-diameter timber piles at the existing navigation aid location using a vibratory hammer. A double bubble curtain would be deployed during all vibratory hammer operations to reduce noise generated by the hammer. The new navigation aid would be installed on land near the shoreline. All five piles would be removed on the same day at a rate of one pile removed every 20 minutes.
In total, Rio Grande would install 12 piles associated with the marine facilities and remove five existing 12-in timber, navigation piles. (Table 1).
East of the MOF, channel embankments and the top slope of the shoreline (to a depth of −0.6 m [−2 ft] MLLW) would be graded to a 1:3 slope, stabilized with bedding stone overlain by geotextile fabric, and then covered with riprap (
Rio Grande would dredge the berthing areas and turning basin to a depth of −13.1 m (−43 ft) MLLW, with a −0.6 m (−2 foot) allowable over-dredge. The sides of the berthing areas and turning basin would be contoured at a 1:3 slope. The MOF would be excavated and dredged to a depth of −7.6 m (−25 ft) MLLW plus 0.6 m (2 ft) advanced maintenance allowance), to allow barges and shallow-draft vessels to directly offload bulk materials at the Terminal site. Rio Grande would install rock armoring to provide scour protection from propeller wash on the slope parallel to the shoreline. About 476,317.7 m
Annova plans to site, construct, and operate facilities necessary to liquefy and export natural gas along the south bank of the BSC (Figure 2). The purpose of the Project is to operate a mid-scale natural gas liquefaction facility along the South Texas Gulf Coast for exporting LNG to international markets via LNG carriers through United States and international waters. The terminal will include a new LNG export facility with a nameplate capacity of 6.0 million metric tons per annum (6.6 million U.S. tons) and a maximum output at optimal operating conditions of 6.95 million metric tons (7.66 million U.S. tons) per year of LNG for export. The project site is located on a 2.96 km
Natural gas will be delivered to the facility via a third-party intrastate pipeline. The natural gas delivered to the site via the feed gas pipeline will be treated, liquefied, and stored on-site in two single-containment LNG storage tanks, each with a net capacity of approximately 160,000 m
The facilities for the Project include the following major components: Gas pretreatment facilities; liquefaction facilities (six liquefaction trains and six approximately 72,000-horsepower electric motor-driven compressors); two LNG storage tanks; boil-off gas handling system; flare system; marine facilities; control, administration, and support buildings; an access road; fencing and barrier wall; and utilities (power, water, and communication). Similar to Rio Grande, in-water work with the potential to cause harassment to marine mammals includes construction of the marine facilities.
The marine facilities will include a 457 m (1,500-ft) diameter turning basin and widened channel approach areas to the turning basin (see Figure 2). LNG carriers will dock on the loading platform at the south side of the turning basin. The marine facilities include the following components: Loading platform and berth for one LNG carrier, including turning basin and access areas along the BSC; cryogenic pipelines and vapor return lines; aids to navigation; MOF, mooring and breasting dolphins; and tug berth area.
The project involves installation and removal of 16 temporary 24-in diameter steel piles and installation of four 96-in diameter steel breasting dolphin piles (see Table 2). The 16 temporary steel piles will provide support during installation of the breasting dolphins (four temporary piles for each breasting dolphin). Each temporary pile will be installed using a vibratory and impact hammer. Installation of the temporary piles will occur in stages, initially with a vibratory hammer followed by an impact hammer. Once installation of the breasting dolphin piles is complete, all temporary piles will be removed using a vibratory hammer.
Annova will dredge the marine berth using a hydraulic cutter dredge. The berth will be dredged to the final design depth of −13.7 m (−45 ft) mean lower low water, plus 0.9 m (3 ft) for advance maintenance and over depth, with side slopes at a ratio of 3:1 where sheet piling is not used. Material removed by land-based excavation will be used for on-site fill where possible or placed on the Project site to support landscaping and final grading. Annova plans to use the existing Dredged Material Placement Area (DMPA) 5A or 5B, located just west of the Project site, to dispose of dredged material not used as fill on-site. Dredged material will be moved to the DMPA through an approximately 2.6 km (1.6-mi)-long, floating dredged material pipeline that will be temporarily anchored along the south shore of the BSC. The dredged material pipeline will be marked with navigation lights and reflective signs and monitored to ensure the safety of area traffic. Dredging for the marine berth is estimated to occur in two, 10-hour shifts, six days per week. Noise from dredging is not anticipated to harass marine mammals and the dredge material pipeline will not cross the BSC, avoiding potential impacts (
The required mitigation, monitoring, and reporting measures for Rio Grande and Annova are described in detail later in this document (please see Mitigation and Monitoring and Reporting) and the IHAs which are posted online at:
A notice of NMFS' proposal to issue the IHAs was published in the
There were no changes between the proposed IHAs and final IHAs: The description of specified activities, amount and type of authorized take, by species, and all mitigation, monitoring and reporting measures contained within the proposed IHAs were carried forward to the final IHAs. We made some adjustments to information contained within the analysis based on comments from the Commission; however, as described in the Comments and Responses section above, these changes did not result in any changes to the IHAs.
A detailed description of the species likely to be affected by Rio Grande and Annova's proposed projects, including brief introductions to the species and relevant stocks as well as available information regarding population trends and threats, and information regarding local occurrence, were provided in the
We provided discussion of the potential effects of the specified activity on marine mammals and their habitat in our
This section provides the means by which the number of incidental takes authorized in the IHAs were derived, for authorization through these IHAs, which will inform both NMFS' consideration of “small numbers” and the negligible impact determination.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes would be by Level B harassment only, in the form of disruption of behavioral patterns for individual marine mammals resulting from exposure to pile driving and removal. Based on the nature of the activity and the anticipated effectiveness of the mitigation measures (
Generally speaking, we estimate take by considering: (1) Acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and, (4) and the number of days of activities. We note that while these basic factors can contribute to a basic calculation to provide an initial prediction of takes, additional information that can qualitatively inform take estimates is also sometimes available (
Using the best available science, NMFS has developed acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur PTS of some degree (equated to Level A harassment).
Both Rio Grande and Annova's activities include the use of continuous (vibratory pile driving and removal) and intermittent (impact pile driving) sound sources; therefore, the 120 and 160 dB re: 1 μPa (rms) are applicable.
Level A harassment for non-explosive sources—NMFS' Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing (Version 2.0) (Technical Guidance, 2018) identifies dual criteria to assess auditory injury (Level A harassment) to five different marine mammal groups (based on hearing sensitivity) as a result of exposure to noise from two different types of sources (impulsive or non-impulsive). Both Rio Grande and Annova's activities include the use of impulsive (impact pile driving) and non-impulsive (vibratory pile driving and removal) sources.
These thresholds are provided in the Table 5. The references, analysis, and methodology used in the development of the thresholds are described in NMFS 2018 Technical Guidance, which may be accessed at
Here, we describe operational and environmental parameters of the activity that will feed into identifying the area ensonified above the acoustic thresholds, which include source levels and transmission loss coefficient.
When the NMFS Technical Guidance (2016) was published, in recognition of the fact that ensonified area/volume could be more technically challenging to predict because of the duration component in the new thresholds, we developed a User Spreadsheet that includes tools to help predict a simple isopleth that can be used in conjunction with marine mammal density or occurrence to help predict takes. We note that because of some of the assumptions included in the methods used for these tools, we anticipate that isopleths produced are typically going to be overestimates of some degree, which may result in some degree of overestimate of Level A harassment take. However, these tools offer the best way to predict appropriate isopleths when more sophisticated 3D modeling methods are not available, and NMFS continues to develop ways to quantitatively refine these tools, and will qualitatively address the output where appropriate. For stationary sources such as pile driving, NMFS User Spreadsheet predicts the distance at which, if a marine mammal remained at that distance the whole duration of the activity, it would incur PTS. Inputs used in the User Spreadsheet to calculate Level A harassment threshold isopleths for impact and vibratory pile driving are presented in Table 5 and 6, respectively.
The results of the User Spreadsheet are presented in Table 7. These distances represent the distance at which a dolphin would have to remain for the entire duration considered in the calculation and may be unrealistic (
To estimate the area ensonified to the Level B harassment thresholds, a basic calculation that incorporated the source levels provided in Table 8 and a practical spreading loss model was used to estimate distances to the respective intermittent (160 dB rms) and continuous (120 dB rms) thresholds. However, the width of the BSC is relatively narrow (approximately 300 m wide); therefore, the Level B harassment areas were clipped to account for land. Table 8 provides the calculated Level B harassment isopleths and area accounting for land.
The abundance, distribution and density of marine mammals in Laguna Madre is poorly understood. Therefore, while the harassment areas described above are important for planning mitigation (
For bottlenose dolphins, both applicants first estimated density in the Laguna Madre using the number of individuals reported in Piwetz and Whitehead (2019), which was 109 dolphins. We note this is not an abundance estimate of the Laguna Madre stock as Piwetz and Whitehead (2019) conducted the surveys in a limited area of the lower Laguna Madre and the authors note the non-asymptotic nature of the photo-identification discovery curve (accumulation curve) indicates that the sampling effort has not yet identified all, or even most, of the individuals that use this region. Regardless, both applicants used habitat data layers from Finkbeiner
When considering a density-based approach to calculate potential take, NMFS typically recommends the following equation: density × area × pile driving days. Using this equation and the NMFS-derived survey area of 140 km
While these calculations would be appropriate for more open water areas, the results are not realistic for the context of these projects. First, dolphins travel up and down the BSC therefore the potential for them to be exposed to pile driving noise is somewhat independent of the harassment zone sizes as all zones cross the entire width of the channel they are likely to travel into these zones on any given day (
To derive a more realistic take estimate, NMFS considered the Piwetz and Whitehead (2019) data and the amount of pile driving proposed by each applicant. Piwetz and Whitehead (2019) observed 109 dolphins over 26.72 hours of survey effort, resulting in an average of 4.1 dolphins/hour. Rio Grande anticipates installing 12 piles and removing 5 piles over approximately 11.3 hours. Given the number of dolphins/hour, this results in a total take estimate of 46 (4.1 dolphins per hour × 11.3 hours). Annova anticipates installing 20 piles and removing 16 of those 20 piles over approximately 15 hours. Given the number of dolphins/hour, this results in a total take estimate of 62 takes (4.1 dolphins per hour × 15 hours). This amount of take more closely reflects the potential for both applicants to harass animals and allows for an adequate amount of take when considering another important parameter- group size. The average expected group size of dolphins in the BSC is 4.5 dolphins (Piwetz and Whitehead, 2019). The amount of bottlenose dolphin take authorized for Rio Grande and Annova is presented in Table 9 and 10, respectively.
It is unlikely that rough-toothed dolphins or Atlantic spotted dolphins will occur in the BSC as these species typically inhabit coastal and offshore waters. We note that neither of these species were observed during opportunistic and planned surveys in 2016 through 2019 (Ronje
In order to issue an IHA under Section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity or other means of effecting the least practicable adverse impact upon the affected species or stocks and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, we carefully consider two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned), and;
(2) The practicability of the measures for applicant implementation, which may consider such things as cost, impact on operations, and, in the case of a military readiness activity, personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity.
Both Rio Grande and Annova are required to enact similar mitigation measures to ensure the least practicable adverse impact on marine mammals. Because dolphins are present within the Laguna Madre year-round, we are not proposing any in-water work windows.
Each IHA would contain the following mitigation measures:
For in-water construction, heavy machinery activities other than pile driving, if a marine mammal comes within 10 m, Rio Grande and Annova must cease operations and reduce vessel speed to the minimum level required to maintain steerage and safe working conditions. This measure is designed to prevent physical injury from in-water equipment.
Rio Grande and Annova are required to conduct briefings for construction supervisors and crews, the monitoring team, and staff prior to the start of all pile driving activity, and when new personnel join the work, in order to explain responsibilities, communication procedures, the marine mammal monitoring protocol, and operational procedures.
Two PSOs must be stationed on land, barge, boat, or dock with full view of the shutdown zones (Table 11) and with direct view of the opposite shoreline to observe for marine mammals within the Level B harassment zone. If a marine mammal is observed within or approaching the shutdown zone, the PSOs will call for a shutdown.
Marine mammal monitoring must take place from 30 minutes prior to initiation of pile driving activity through 30 minutes post-completion of pile driving activity. Pile driving may commence when observers have declared the shutdown zone clear of marine mammals. In the event of a delay or shutdown of activity resulting from marine mammals in the shutdown zone (Table 11), their behavior must be monitored and documented until they leave of their own volition, at which point the activity may begin or they have not been re-sighted within 15 minutes.
If a marine mammal is entering or is observed within an established shutdown zone (Table 11), pile driving must be halted or delayed. Pile driving may not commence or resume until either the animal has voluntarily left and been visually confirmed beyond the shutdown zone or 15 minutes have passed without subsequent detections.
Should environmental conditions deteriorate such that marine mammals within the entire shutdown zone would not be visible (
Rio Grande and Annova must use soft start techniques when impact pile driving. Soft start requires contractors to provide an initial set of strikes at reduced energy, followed by a 30-second waiting period, then two subsequent reduced energy strike sets. A soft start must be implemented at the start of each day's impact pile driving and at any time following cessation of impact pile driving for a period of 30 minutes or longer.
Rio Grande and Annova have stated that they will conduct all pile driving during daylight hours, and both applicants are required to employ a double bubble curtain during all impact pile driving and operate it in a manner consistent with the following performance standards: The bubble curtain must distribute air bubbles around 100 percent of the piling perimeter for the full depth of the water column; the lowest bubble ring must be in contact with the mudline for the full circumference of the ring, and the weights attached to the bottom ring shall ensure 100 percent mudline contact. No parts of the ring or other objects shall prevent full mudline contact; and air flow to the bubblers must be balanced around the circumference of the pile. Rio Grande will operate a double bubble curtain during all vibratory pile driving and removal and we have accounted for its use in our analysis. Therefore, Rio Grande must also operate this double bubble curtain during vibratory driving and removal.
If a species for which authorization has not been granted, or a species for which authorization has been granted but the authorized takes are met, is observed approaching or within the monitoring zone (Table 8), pile driving and removal activities must shut down immediately using delay and shut-down procedures. Activities must not resume until the animal has been confirmed to have left the area or 15 minutes has elapsed without a subsequent sighting.
In the case that 75 percent of the authorized take is met and two or more piles are left to be installed to complete the project, Rio Grande and Annova would implement additional monitoring and mitigation to ensure the authorized take is not exceeded. If this trigger is met, an additional PSO would be positioned at the western edge of the Level B harassment zone.
Based on our evaluation of the measures proposed by the applicants and contained within the IHAs, NMFS has determined that the measures provide the means effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, Section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the proposed action area. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Marine mammal monitoring before, during, and after pile driving and removal must be conducted by NMFS-approved PSOs who are independent and have a degree in biological sciences or related training/field experience. NMFS considers the following qualifications when reviewing potential PSO's curriculum vitae: Ability to conduct field observations and collect data according to assigned protocols, experience or training in the field identification of marine mammals, including the identification of behaviors, sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations, writing skills sufficient to prepare a report of observations including but not limited to the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates, times, and reason for implementation of mitigation (or why mitigation was not implemented when required); and marine mammal behavior, and ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary. Rio Grande and Annova must submit each PSO's curriculum vitae for approval by NMFS prior to the onset of pile driving.
Each IHA holder must submit a draft report on all marine mammal monitoring conducted under their IHA within 90 calendar days of the completion of marine mammal monitoring. A final report must be prepared and submitted within 30 days following resolution of comments on the draft report from NMFS.
The marine mammal report must contain information related to construction activities, weather conditions, the number of marine mammals observed, by species, relative to the pile location (
In the event that personnel involved in the construction activities discover an injured or dead marine mammal, the IHA-holder must immediately cease the specified activities and report the incident to NMFS and the Southeast Marine Mammal Stranding Network. If the death or injury was clearly caused by the specified activity, the IHA-holder must immediately cease the specified activities until NMFS is able to review the circumstances of the incident and determine what, if any, additional measures are appropriate to ensure compliance with the terms of the IHA. The IHA-holder must not resume their activities until notified by NMFS. Reporting information must include information about the event, species, animal condition and behavior, and if possible, photographs.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
To avoid repetition, our analysis below applies to the issuance of an IHA to Rio Grande and, separately, issuance of an IHA to Annova, as both projects include construction of an LNG terminal in the same area of the BSC.
Pile driving activities associated with both projects, as outlined previously, have the potential to disturb or displace marine mammals. Specifically, the specified activities may result in take, in the form of Level B harassment (behavioral disturbance) incidental to underwater sounds generated from pile driving. Harassment could occur if dolphins are present in relatively close proximity (1-5 km
No Level A harassment, serious injury or mortality is anticipated given the nature of the activities and measures designed to avoid the potential of injury (
The activities by Rio Grande and Annova are localized and of relatively short duration (8 and 16 days, respectively). The project area is also very limited in scope spatially (confined to a small area of the BSC). Localized (confined to the BSC) and short-term noise exposures produced by project activities may cause short-term behavioral modifications in dolphins. Surveys in the lower Laguna Madre indicate dolphin behavior is generally dominated by socializing, traveling (often in the direction of tidal movement), and foraging (Ronje
Another Texas waterway similar to the BSC, the Galveston Ship Channel, has been a hot spot for dolphin research in Texas. Dolphins regularly use the GSC to forage (57 percent of observed behavioral states) and socialize (27 percent), and or traveling (5 percent) (Piwetz, 2019). The author found when boats were present, the proportion of time dolphins spent socializing and foraging was significantly less than expected by chance. Swimming speeds increased significantly in the presence of small recreational boats, dolphin-watching tour boats, shrimp trawlers, and when tour boats and shrimp trawlers were both present. We would expect animals in the BSC to respond similarly (
In general, effects on individuals that are taken by Level B harassment will likely be limited to temporary reactions such as avoidance, increased swimming speeds, and decreased socializing and foraging behaviors. We would anticipate swim speeds would increase as dolphins move closer to the pile driving location (similar to how they react to vessels); however, this would move them quickly past the terminal and pre-pile driving exposure behavior would likely return quickly. Foraging and socializing behaviors may cease; however, these behaviors would also resume shortly thereafter. Level B harassment will be reduced to the level of least practicable adverse impact through use of mitigation measures described herein.
The project also is not expected to have significant adverse effects on affected marine mammal habitat. Marine mammal habitat quality within the BSC varies. There is little development along the shoreline until the Brownsville Fishing Harbor, located approximately 8 km west of the project sites, when the BCS becomes commercial/industrial. Dolphin habitat in the BSC would be temporarily, indirectly impacted during the brief duration of pile driving for
In summary and as described above, the following factors primarily support our determination that the impacts resulting from the proposed activities are not expected to adversely affect the species or stock through effects on annual rates of recruitment or survival:
• No Level A harassment, mortality is anticipated or authorized;
• The anticipated incidents of Level B harassment consist of, at worst, temporary modifications in behavior that would not result in fitness impacts to individuals;
• The specified activity and ensonification area is very small (1-5 km
• The presumed efficacy of the mitigation measures in reducing the effects of the specified activity to the level of least practicable adverse impact; and
• The impacts to marine mammal habitat would be temporary in nature, primarily increased turbidity and noise.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the monitoring and mitigation measures, NMFS finds that the total marine mammal take from Rio Grande's specified activities and, separately, Annova's specified activities, will have a negligible impact on all affected marine mammal species or stocks.
As noted above, only small numbers of incidental take may be authorized under Sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. When the predicted number of individuals to be taken is fewer than one third of the species or stock abundance, the take is considered to be of small numbers. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
For coastal stocks (bottlenose, Atlantic spotted, and rough-toothed dolphins) the amount of authorized take is less than one percent of the population. There is no population estimate available for the Laguna Madre stock of bottlenose dolphins. Two studies investigating dolphins in Lower Laguna Madre yielded approximately 60 in 2016 (Ronje
To estimate potential abundance, we looked for comparative ecosystems to estimate potential population size and trends in abundance estimates for other Gulf of Mexico BSE stocks. The Indian River Lagoon (IRL) in Florida is similar in configuration and length to Laguna Madre but is approximately half the size (539 km
Finally, dolphins within the BSC have been documented as following the tides and shrimp trawls making their way back to the fleet docks which are located west of the terminal sites (Ronje
In summary, surveys in Laguna Madre have been limited to lower Laguna Madre and the authors acknowledge the limitations of their studies for purposes of estimating stock size, the IRL (a lagoon similar in configuration and proximity to ocean waters as the BSC but approximately half the surface water area) supports hundreds to over 1,000 animals, and trends of older stock estimates compared to more recent data for other Gulf of Mexico BSE stocks. For these reasons, it is likely the Laguna Madre stock estimate is, at minimum, several hundred animals. Further, the number of individuals taken may be less than the amount of take authorized. Therefore, for the Laguna Madre stock of bottlenose dolphins, we find that the total taking may reasonably be expected to represent less than one-third of the total likely population abundance.
Based on the analysis contained herein of the proposed activity (including the required mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS finds that small numbers of marine mammals relative to the population size of the affected species or stocks may be taken incidental to Rio Grande's proposed activities and, separately, incidental to Annova's proposed activities.
Incidental take of ESA-listed species from the specified activities is not expected or authorized. Therefore, NMFS determined that formal consultation under section 7 of the ESA is not required for this action.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
These actions are consistent with categories of activities identified in Categorical Exclusion B4 (IHAs with no anticipated serious injury or mortality) of the Companion Manual for NOAA Administrative Order 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, the issuance of the IHAs has been categorically excluded from further NEPA review.
As a result of these determinations, NMFS has issued IHAs to both Rio Grande and Annova authorizing the take, by Level B harassment only, of small numbers of marine mammals provided the mitigation, monitoring, and reporting requirements included in those IHAs are adhered to.
The IHAs can be found at
Commodity Futures Trading Commission.
Notice of meeting.
The Commodity Futures Trading Commission (CFTC) announces that on July 21, 2020, from 9:30 a.m. to 1:30 p.m. (Eastern Daylight Time), the Market Risk Advisory Committee (MRAC) will hold a public meeting via teleconference. At this meeting, the MRAC will receive status reports from its subcommittees: Climate-related Market Risk, CCP Risk and Governance, Market Structure, and Interest Rate Benchmark Reform. The meeting will also include a discussion regarding market activity during the early months of the COVID-19 pandemic.
The meeting will be held on July 21, 2020, from 9:30 a.m. to 1:30 p.m. (Eastern Daylight Time). Please note that the teleconference may end early if the MRAC has completed its business. Members of the public who wish to submit written statements in connection with the meeting should submit them by July 28, 2020.
The meeting will be held via teleconference. You may submit public comments, identified by “Market Risk Advisory Committee,” through the CFTC website at
Any statements submitted in connection with the committee meeting will be made available to the public, including publication on the CFTC website,
Alicia L. Lewis, MRAC Designated Federal Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581; (202) 418-5862.
The meeting will be open to the public. Members of the public may listen to the meeting by telephone by calling a domestic toll-free telephone or international toll or toll-free number to connect to a live, listen-only audio feed. Call-in participants should be prepared to provide their first name, last name, and affiliation.
The meeting agenda may change to accommodate other MRAC priorities. For agenda updates, please visit the MRAC committee site at:
All written submissions provided to the CFTC in any form will also be published on the CFTC's website. Persons requiring special accommodations to attend the meeting because of a disability should notify the contact person above.
Corporation for National and Community Service (CNCS).
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, CNCS is proposing to renew an information collection.
Written comments must be submitted to the individual and office listed in the
You may submit comments, identified by the title of the information collection activity, by any of the following methods:
(1)
(2) By hand delivery or by courier to the CNCS mailroom at the mail address given in paragraph (1) above, between 9:00 a.m. and 4:00 p.m. Eastern Time, Monday through Friday, except federal holidays.
(3) Electronically through
Comments submitted in response to this notice may be made available to the public through
Arminda Pappas, 202-606-6659, or by email at
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; to develop, acquire, install and utilize technology and systems for the purpose of collecting, validating and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information, to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information. All written comments will be available for public inspection on
Department of the Army, DoD.
Notice of open committee meeting.
The Department of the Army is publishing this notice to announce the following virtual Federal advisory committee meeting of the Advisory Committee on Arlington National Cemetery (ACANC), and the Remember and Explore Subcommittee. These meetings are open to the public. For more information, please visit:http://www.arlingtoncemetery.mil/About/Advisory-Committee-on-Arlington-National-Cemetery/ACANC-Meetings.
The Remember and Explore Subcommittee will meet virtually on Wednesday, July 29, 2020 from 9:00 a.m. to 12:00 p.m., Eastern Standard Time. The full Advisory Committee on Arlington National Cemetery (ACANC) will meet virtually on Wednesday, July 29, 2020 from 2:00 p.m. to 6:00 p.m., Eastern Standard Time.
Mr. Matthew Davis; Alternate Designated Federal Officer for the Committee, in writing at Arlington National Cemetery, Arlington VA 22211, or by email at
This meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Sunshine in the Government Act of 1976 (U.S.C. 552b, as amended) and 41 Code of the Federal Regulations (CFR 102-3.150).
The Advisory Committee on Arlington National Cemetery is an independent Federal advisory committee chartered to provide the Secretary of the Army independent advice and recommendations on Arlington National Cemetery, including, but not limited to, cemetery administration, the erection of memorials at the cemetery, and master planning for the cemetery. The Secretary of the Army may act on the Committee's advice and recommendations.
The Committee will receive an update briefing on the Southern expansion project; receive an update on the status of the Revised Eligibility Draft Federal Rule; consider a recommendation for placement of above mentioned Commemorative monuments; and review reports from subcommittee meetings.
For additional information about public access procedures, contact Mr. Matthew Davis, the subcommittee's Alternate Designated Federal Officer, at the email address or telephone number listed in the
order in which their requests were received by the Designated Federal Officer. The appropriate Chair may allot a specific amount of time for comments.
National Reconnaissance Office (NRO), Department of Defense (DoD).
Rescindment of a System of Records Notice (SORN).
The NRO is rescinding a System of Records, Health and Fitness Evaluation Records, QNRO-01. The purpose of this System of Records was to provide fitness assessments and design individual wellness programs. The NRO Health and Fitness Evaluation Program was discontinued and the supporting information system was decommissioned. The system records were destroyed in accordance with the record retention and disposal policy as specified in the SORN.
This System of Records rescindment is effective upon publication.
Mr. Mike Lavergne, NRO, Advanced Systems and Technology Directorate, 14675 Lee Road, Chantilly, VA 20151-1715 or by phone at (703) 227-9022 or email,
The NRO Health and Fitness Program was decommissioned and all records were destroyed in accordance with the records retention and disposal policies in the published SORN.
The DoD notices for Systems of Records subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
The proposed system reports, as required by the Privacy Act, as amended, were submitted on June 12, 2020, to the House Committee on Oversight and Reform, the Senate Committee on Homeland Security and Governmental Affairs, and the Office of Management and Budget (OMB) pursuant to Section 6 of OMB Circular No. A-108, “Federal Agency Responsibilities for Review, Reporting, and Publication under the Privacy Act,” revised December 23, 2016 (December 23, 2016, 81 FR 94424).
Health and Fitness Evaluation Records, QNRO-01.
April 4, 2006, 71 FR 16768; August 22, 2000, 65 FR 50969.
Department of the Army, U.S. Army Corps of Engineers, DoD.
Notice of revised dates for open committee meetings and request for comments.
The Department of Defense (DoD) published a notice on April 17, 2020 that announced the third meeting of the Table Rock Lake Oversight Committee, which was to take place on Wednesday, May 6, 2020 from 8:00 a.m. to 5:00 p.m., had been cancelled due to concerns with COVID-19/State of Missouri “Stay-at-Home” order. The notice stated the meeting would be re-scheduled at a later date, along with
The meeting will be held on: Meeting 3: Thursday, July 16, 2020, 8 a.m. to 5 p.m. This meeting will be held virtually.
U.S. Army Corps of Engineers, Little Rock District, ATTN: Table Rock Lake Oversight Committee (Operations Division), P.O. Box 867, Little Rock, Arkansas, 72203-0867.
Ms. Rebecca Shortt, Alternate Designated Federal Officer (ADFO) for the Committee, in writing at U.S. Army Corps of Engineers, Little Rock District, Operations Division, P.O. Box 867 Little Rock, Arkansas, 72203-0867, or by email at
These meetings are being held pursuant to the implementation of Section 1185(c) of the Water Resources Development Act of 2016 (130 Stat. 1680) and under the provisions of the Federal Advisory Committee Act (FACA) (Pub. L. 92-463, 86 Stat. 770.), the Sunshine in the Government Act of 1976 (U.S.C. 552b, as amended) and 41 Code of the Federal Regulations (CFR 102- 3.150).
Due to circumstances beyond the control of the Department of Defense and the Designated Federal Officer for the Table Rock Lake Oversight Council, the Table Rock Lake Oversight Council was unable to provide public notification required by 41 CFR 102-3.150(a) concerning its meeting on July 16, 2020. Accordingly, the Advisory Committee Management Officer for the Department of Defense, pursuant to 41 CFR 102-3.150(b), waives the 15-calendar day notification requirement.
Pursuant to 41 CFR 102-3.140d, the Committee is not obligated to allow a member of the public to speak or otherwise address the Committee during the meeting. Members of the public will be permitted to make verbal comments during the Committee meeting only at the time and in the manner described below. A three (3) hour period will be provided near the beginning of Meeting 3 for virtual verbal comments. In the interest of time and for allowing everyone to be heard, individuals will be given a maximum of two (2) minutes to address their comments to the TRLOC. Individuals will not be allowed to transfer time to other individuals. A court reporter will be in attendance to record the TRLOC meetings.
Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is requesting the Office of Management and Budget (OMB) to conduct an emergency review of a new information collection.
Approval by the OMB has been requested by June 30, 2020. A regular clearance process is also hereby being initiated. Interested persons are invited to submit comments on or before September 4, 2020.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Donald Watson, 202-453-6166.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Pursuant to the Office of Management and Budget (OMB) procedures established at 5 CFR 1320, ED requests that the following collection of information, HBCU Capital Financing Program Deferment Applications, be processed in accordance with section 1320.13 Emergency Processing. ED has determined that this information must be collected prior to the expiration of time periods established under Part 1320, and that this information is essential to the ED's ability to effectively implement the CARES Act, Public Law 116-136 (March 27, 2020) and address the economic disruption posed by the Novel (new) Coronavirus (“2019-nCoV”).
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of final determination.
This notice announces a final determination classifying North Carolina Advanced Energy Corporation as a nationally recognized certification program under United States Department of Energy (“DOE”) regulations regarding federal recognition of certification programs for electric motors and small electric motors.
This final determination is effective July 6, 2020.
The docket for this activity, which includes
The docket web page can be found at
Mr. Jeremy Dommu, U.S. Department of Energy, Building Technologies Program, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-9870. Email:
Mr. Michael Kido, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0103. Telephone: (202) 586-8145. Email:
For further information on how to submit a comment, review other public comments and the docket, or to request a public meeting, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:
Part C of Title III of the Energy Policy and Conservation Act, as amended (“EPCA”) contains energy conservation requirements for, among other things, electric motors and small electric motors, including test procedures, energy efficiency standards, and compliance certification requirements. 42 U.S.C. 6311-6316.
For a certification program to be classified by DOE as being nationally recognized in the United States for the testing and certification of electric motors and small electric motors, the organization operating the program must submit a petition to the Department requesting such classification, in accordance with the aforementioned sections.
For the Department to grant such a petition, the petitioner's certification program must:
(1) Have satisfactory standards and procedures for conducting and administering a certification system, and for granting a certificate of conformity;
(2) Be independent of electric motor and small electric motor manufacturers (as applicable), importers, distributors, private labelers or vendors;
(3) Be qualified to operate a certification system in a highly competent manner; and
(4) Be expert in the following test procedures and methodologies:
(a) For electric motors, it must be expert in the content and application of the test procedures and methodologies in IEEE Std 112-2004 Test Method B or CSA C390-10. It must have satisfactory criteria and procedures for the selection and sampling of electric motors tested for energy efficiency. (10 CFR 431.20(b)); and
(b) For small electric motors, it must be expert in the content and application of the test procedures and methodologies in IEEE Std 112-2004 Test Methods A and B, IEEE Std 114-2010, CSA C390-10, and CSA C747, or similar procedures and methodologies for determining the energy efficiency of small electric motors. It must have satisfactory criteria and procedures for the selection and sampling of electric motors tested for energy efficiency. (10 CFR 431.447(b))
The petition requesting classification as a nationally recognized certification program must contain a narrative statement explaining why the organization meets the above criteria, be accompanied by documentation that supports the narrative statement, and be signed by an authorized representative. (10 CFR 431.20(c), and 10 CFR 431.447(c)).
Pursuant to 10 CFR 431.20—10 CFR 431.21 and 10 CFR 431.447—10 CFR 431.448, on February 11, 2019, North Carolina Advanced Energy Corporation Efficiency Verification Services (“Advanced Energy”) submitted to DOE a Petition for Recognition related to the group's motor efficiency verification services. That petition, titled, “Energy Efficiency Evaluation of Electric Motors and Small Electric Motors to US Department of Energy Regulations as stipulated in 10 CFR part 431, subpart B and Subpart X” (“Petition” or “Advanced Energy Petition”), was accompanied by a cover letter from Advanced Energy to the Department containing four separate sections, including individual narrative statements: (1) Standards and Procedures; (2) Independent Status; (3) Qualification of Advanced Energy to Operate a Certification System; and (4) Expertise in Electric Motor Test Procedures. The petition included supporting documentation on these subjects. The Department is required to publish in the
As required by 10 CFR 431.21(d) and 10 CFR 431.448(d), DOE subsequently published a notification of interim determination regarding Advanced Energy's petition and solicited comments. 85 FR 70520 (December 23, 2019). In the notification of interim determination, DOE noted that, after reviewing submitted materials and having received no comments, that it found no specific cause to reject the petition. It tentatively determined that Advanced Energy meets the requirements at 10 CFR 431.20 and 10 CFR 431.21 for electric motors and at 10 CFR 431.447 and 10 CFR 431.448 for small electric motors because they (1) have satisfactory standards and procedures for conducting and administering a certification system, (2) are independent of electric motor and small electric motor manufacturers, and (3) have expertise with both the electric motors and small electric motors test procedures.
In response to the notice of interim determination, GE Industrial Motors, a manufacturer, submitted a comment to DOE on January 22, 2020. GE Industrial Motors (“GE”) expressed concerns regarding Advanced Energy's procedures to ensure (1) no other manufacturers would be present during testing of a competitor's motor; (2) the test data is kept confidential; and (3) Advanced Energy would not analyze and compare test data from various manufacturers. (GE, No. 10 at p. 1) Advanced Energy submitted a response to DOE regarding GE's comment. (Advanced Energy, No. 11.1 at p. 1) Advanced Energy stated that it requires all clients to review, sign and return appropriate documentation to ensure confidentiality. These documents include: (1) ISO-IEC 17065 Operations Manual; (2) Standard Operating Procedure; (3) Certification Scheme; (4) Mutual Non-Disclosure Agreement and Hold Harmless; and (5) Client Agreement and Terms of Service. Specifically, Advanced Energy cited section 4.5 of the ISO-IEC 17065 Operations Manual, which covers confidentiality. Advanced Energy provided copies of all five documents as
In reviewing the comment and response, DOE finds no specific cause to reject Advanced Energy's request for recognition as a nationally recognized certification program for electric motors and small electric motors. Therefore, the Department hereby announces its final determination pursuant to 10 CFR 431.21(d) and 10 CFR 431.448(d) that Advanced Energy is classified as a nationally recognized certification program for electric motors and small electric motors.
This document of the Department of Energy was signed on June 26, 2020, by Alexander N. Fitzsimmons, Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of petition for waiver and grant of an interim waiver; request for comments.
This notice announces receipt of and publishes a petition for waiver and interim waiver from LG Electronics U.S.A., Inc. (“LGE”), which seeks a waiver from the U.S. Department of Energy (“DOE”) test procedure used for determining the efficiency of specified central air conditioner (“CAC”) and heat pump (“HP”) basic models. DOE also gives notice of an Interim Waiver Order that requires LGE to test and rate specified CAC and HP basic models in accordance with the alternate test procedure set forth in the Interim Waiver Order. DOE solicits comments, data, and information concerning LGE's petition and its suggested alternate test procedure so as to inform DOE's final decision on LGE's waiver request.
The Interim Waiver Order is effective on July 6, 2020. Written comments and information will be accepted on or before August 5, 2020.
Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at
•
•
•
•
No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional information on this process, see the
The docket web page can be found
Ms. Lucy deButts, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Email:
Mr. Pete Cochran, U.S. Department of Energy, Office of the General Counsel, Mail Stop GC-33, Forrestal Building, 1000 Independence Avenue SW, Washington, DC 20585-0103. Telephone: (202) 586-9496. Email:
DOE is publishing LGE's petition for waiver in its entirety, pursuant to 10 CFR 430.27(b)(1)(iv), absent any confidential business information. DOE invites all interested parties to submit in writing by August 5, 2020, comments and information on all aspects of the petition, including the alternate test procedure. Pursuant to 10 CFR 430.27(d), any person submitting written comments to DOE must also send a copy of such comments to the petitioner. The contact information for the petitioner is Jean-Cyril Walker,
However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
Do not submit to
DOE processes submissions made through
Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via postal mail or hand delivery/courier, please provide all items on a CD, if feasible. It is not necessary to submit printed copies. No facsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, written in English and free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
This document of the Department of Energy was signed on June 26, 2020, by Alexander N. Fitzsimmons, Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE
The Energy Policy and Conservation Act, as amended (“EPCA”),
Under EPCA, DOE's energy conservation program consists essentially of four parts: (1) Testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA include definitions (42 U.S.C. 6291), energy conservation standards (42 U.S.C. 6295), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).
The Federal testing requirements consist of test procedures that manufacturers of covered products must use as the basis for: (1) Certifying to DOE that their products comply with the applicable energy conservation
Under 42 U.S.C. 6293, EPCA sets forth the criteria and procedures DOE is required to follow when prescribing or amending test procedures for covered products. EPCA requires that any test procedures prescribed or amended under this section must be reasonably designed to produce test results which reflect the energy efficiency, energy use or estimated annual operating cost of a covered product during a representative average use cycle or period of use and requires that test procedures not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3)) The test procedure for CACs and HPs is contained in the Code of Federal Regulations (“CFR”) at 10 CFR part 430, subpart B, appendix M,
Under 10 CFR 430.27, any interested person may submit a petition for waiver from DOE's test procedure requirements. DOE will grant a waiver from the test procedure requirements if DOE determines either that the basic model for which the waiver was requested contains a design characteristic that prevents testing of the basic model according to the prescribed test procedures, or that the prescribed test procedures evaluate the basic model in a manner so unrepresentative of its true energy consumption characteristics as to provide materially inaccurate comparative data.
As soon as practicable after the granting of any waiver, DOE will publish in the
The waiver process also provides that DOE may grant an interim waiver if it appears likely that the underlying petition for waiver will be granted and/or if DOE determines that it would be desirable for public policy reasons to grant immediate relief pending a determination on the underlying petition for waiver.
When DOE amends the test procedure to address the issues presented in a waiver, the waiver will automatically terminate on the date on which use of that test procedure is required to demonstrate compliance.
On September 5, 2019, LGE filed a petition for waiver and interim waiver from the test procedure for CACs and HPs set forth at appendix M. According to LGE, appendix M does not include provisions for determining cooling intermediate air volume rate, cooling minimum air volume rate, and heating intermediate air volume rate for the variable-speed coil-only single-split systems specified in its petition. LGE asserts that although the CAC and HP test procedure at appendix M provides for testing of variable-speed systems, it does not contemplate the variation presented by systems comprised of LGE's variable-speed coil-only single-split systems. LGE notes that DOE previously granted waivers to GD Midea Heating & Ventilating Equipment Co., Ltd. (“GD Midea”) and TCL air conditioner (zhongshan) Co. Ltd. (“TCL AC”), for systems that contain variable-speed outdoor units that are non-communicative systems for which compressor speed varies based only on controls located on the outdoor unit that is paired with an indoor unit that maintains a constant indoor blower fan speed. 83 FR 56065 and 84 FR 11941. LGE asserts that testing the variable-speed coil-only single-split systems specified in its petition pursuant to the current appendix M procedure does not yield results that are representative of the systems' true energy consumption characteristics.
LGE also requests an interim waiver from the existing DOE test procedure for the same reasons set forth by GD Midea and TCL AC. DOE will grant an interim waiver if it appears likely that the petition for waiver will be granted, and/or if DOE determines that it would be desirable for public policy reasons to grant immediate relief pending a determination of the petition for waiver.
EPCA requires that manufacturers use DOE test procedures when making representations about the energy consumption and energy consumption costs of covered products. (42 U.S.C. 6293(c)) Consistent representations are important when making representations about the energy efficiency of products, including when demonstrating compliance with applicable DOE energy conservation standards. Pursuant to its regulations at 10 CFR 430.27, and after consideration of public comments on the petition, DOE may establish in a subsequent Decision and Order an alternate test procedure for the basic models addressed by the interim waiver.
As noted, DOE has granted to GD Midea and TCL AC waivers from the DOE CAC and HP test procedure for variable-speed coil-only single-split systems, subject to use of an alternate test procedure. 84 FR 11941 and 83 FR 56065. In its petition, LGE requests that it be allowed to use the same alternate test procedure as that granted to GD Midea and TCL AC. That is, LGE requests that the specified basic models listed in the petition be tested according to the test procedure for CACs and HPs prescribed by DOE at appendix M, except that, as described below, the cooling full-load air volume rate would also be used as the cooling intermediate and cooling minimum air volume rates, and the heating full-load air volume rate would also be used as the heating intermediate air volume rate.
DOE has reviewed LGE's application for an interim waiver, the alternate test procedure requested by LGE, and the additional materials LGE provided in support of its petition. Based on this review, the alternate test procedure appears to allow for the accurate measurement of the of efficiency of the products specified in LGE's petition, while alleviating the testing problems associated with the six basic models specified in its petition. Consequently, it appears likely that LGE's petition for waiver will be granted. Furthermore, DOE has determined that it is desirable for public policy reasons to grant LGE immediate relief pending a determination of the petition for waiver.
For the reasons stated, it is
(1) LGE must test and rate the central air conditioner and heat pump (“CAC and HP”) basic models LUU189HV, LUU249HV, LUU369HV, LUU429HV, LUU488HV, and LUU489HV, which are comprised of the individual combinations listed below,
(2) The alternate test procedure for the LGE basic models identified in paragraph (1) of this Interim Waiver Order is the test procedure for CACs and HPs prescribed by DOE at 10 CFR part 430, subpart B, appendix M (“appendix M”), except that as described below, for coil-only combinations: the cooling full-load air volume rate as determined in section 3.1.4.1.1.c of appendix M shall also be used as the cooling intermediate and cooling minimum air volume rates, and the heating full-load air volume rate as determined in section 3.1.4.4.1.a of appendix M shall also be used as the heating intermediate air volume rate. All other requirements of appendix M and DOE's regulations remain applicable.
In 3.1.4.2,
f. For ducted variable-speed compressor systems tested with a coil-only indoor unit, the cooling minimum air volume rate is the same as the cooling full-load air volume rate determined in section 3.1.4.1.1.c.
In 3.1.4.3,
d. For ducted variable-speed compressor systems tested with a coil-only indoor unit, the cooling intermediate air volume rate is the same as the cooling full-load air volume rate determined in section 3.1.4.1.1.c.
In 3.1.4.6,
d. For ducted variable-speed compressor systems tested with a coil-only indoor unit, the heating intermediate air volume rate is the same
(3)
(4) This Interim Waiver Order shall remain in effect according to the provisions of 10 CFR 430.27.
(5) This Interim Waiver Order is issued on the condition that the statements, representations, test data, and documentary materials provided by LGE are valid. If LGE makes any modifications to the controls or configurations of these basic models, the Interim Waiver Order will no longer be valid and LGE will either be required to use the current Federal test method or submit a new application for a test procedure interim waiver. DOE may rescind or modify this Interim Waiver Order at any time if it determines the factual basis underlying the petition for Interim Waiver Order is incorrect, or the results from the alternate test procedure are unrepresentative of a basic models' true energy consumption characteristics.
(6) Issuance of this Interim Waiver Order does not release LGE from the certification requirements set forth at 10 CFR part 429.
DOE makes decisions on waivers and interim waivers for only those basic models specifically set out in the petition, not future models that may be manufactured by the petitioner. LGE may submit a new or amended petition for waiver and request for grant of interim waiver, as appropriate, for additional basic models of CACs and HPs. Alternatively, if appropriate, LGE may request that DOE extend the scope of a waiver or an interim waiver to include additional basic models employing the same technology as the basic model(s) set forth in the original petition consistent with 10 CFR 430.27(g).
Signed in Washington, DC, on June 26, 2020.
Take notice that on June 17, 2020, Enable Gas Transmission, LLC. (EGT), 910 Louisiana Street, Suite 48040, Houston, Texas 77002, filed in Docket No. CP20-482-000 a prior notice request pursuant to sections 157.205, 157.208, 157.210, and 157.216 of the Commission's regulations under the Natural Gas Act (NGA), and EGT's blanket certificate issued in Docket Nos. CP82-384-000 and CP82-384-001, to: (i) install a new 1.5-mile pipeline that will provide transportation service from EGT's existing Delhi Compressor Station to a tap on EGT's existing Line CP; (ii) modify the existing Delhi Compressor Station including abandonment of existing compressor units and installation of a new compressor unit package; (iii) permanently remove and relocate an existing compressor unit from EGT's White River Compressor Station to its existing Byars Lake Compressor Station; (iv) install auxiliary facilities at EGT's existing FM-63 and FM-65 receiver site; (v) install auxiliary facilities at EGT's existing Amber Junction Compressor Station; and (vi) install auxiliary facilities at EGT's existing Beirne Compressor Station.
All project work will be conducted within Clark and Jackson Counties,
The filing may also be viewed on the web at
Any questions concerning this application may be directed to Lisa Yoho, Senior Director, Regulatory & FERC Compliance, Enable Gas Transmission, LLC, 910 Louisiana Street, Suite 48040, Houston, Texas 77002, by telephone at (346) 701-2539, or by email at
Any person or the Commission's staff may, within 60 days after issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention and pursuant to section 157.205 of the regulations under the NGA (18 CFR 157.205), a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for filing a protest. If a protest is filed and not withdrawn within 30 days after the allowed time for filing a protest, the instant request shall be treated as an application for authorization pursuant to section 7 of the NGA.
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding, or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, and will be notified of any meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters, will not receive copies of all documents filed by other parties or issued by the Commission and will not have the right to seek court review of the Commission's final order.
In addition to publishing the full text of this document in the
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the eFiling link at
Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
Federal Energy Regulatory Commission.
Notice of information collection and request for emergency processing.
In compliance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the Federal Energy Regulatory Commission (Commission or FERC) is submitting an emergency request for the information collection, FERC-6(PL) (One-time Re-filing Under Docket PL19-4 of Page 700 of Form No. 6 (Annual Report of Oil Pipeline Companies)), to the Office of Management and Budget (OMB) for approval.
Ellen Brown may be reached by email at
On May 21, 2020, the Commission issued a Policy Statement on Determining Return on Equity for Natural Gas and Oil Pipelines (ROE Policy Statement), in which the Commission adopted a revised methodology for determining return on equity (ROE) used to calculate oil pipelines' Annual Cost of Service on page 700 of FERC Form No. 6.
The Commission received five comments in response to the ROE Policy Statement, one of which addressed the information collection for oil pipelines. On June 11, 2020, Liquids Shippers Group filed a motion for reconsideration of the ROE Policy Statement and a request for expedited action (Motion). The Motion asserts that the voluntary information collection improperly gives pipelines discretion to file ROEs that are higher, which would increase the index level, while refraining from filing ROEs that are lower, which would decrease the index level. Thus, the Motion states that the information collection will bias the record in the five-year review proceeding.
The Commission will address the Motion in due course. However, the Motion should not affect the Commission's request for OMB's emergency processing and approval of the FERC-6(PL). First, the Motion does not reference the PRA or the burdens the information collection would impose. Second, the Motion addresses the information collection from the perspective of shippers, rather than pipelines that will be subject to the information collection. Third, the Motion seeks to convert this voluntary information collection into a mandatory one and implementing a mandatory collection at this time would likely delay the five-year review. Fourth, the Commission will address the merits of Liquids Shippers Group's claims regarding the calculation of the index level in the five-year review proceeding itself, where the Commission has requested comments on this very issue.
Accordingly, the Commission requests that OMB review and approve FERC-6(PL) [the request to have pipelines voluntarily refile, on a one-time basis, page 700 of their 2019 FERC Form No. 6] in order to reflect the ROE Policy Statement. The Commission requests emergency processing of this information collection because this collection is essential to the mission of the Commission and public harm is reasonably likely to occur if normal clearance procedures are followed.
FERC submitted a formal request to OMB on June 29, 2020 for emergency approval of the one-time FERC-6(PL).
In accordance with the National Environmental Policy Act of 1969 (NEPA) and the Federal Energy Regulatory Commission's (Commission or FERC) regulations, 18 CFR part 380, the Office of Energy Projects has reviewed the application for a new license for the Kimberly Hydroelectric Project (project), located on the Lower Fox River near the Village of Kimberly in Outagamie County, Wisconsin.
The environmental assessment (EA) analyzes the potential environmental effects of continuing to operate the project, and concludes that issuing a new license for the project, with appropriate environmental measures, would not constitute a major federal action significantly affecting the quality of the human environment.
A copy of the EA is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's website at
Any comments should be filed within 30 days from the date of this notice. The Commission strongly encourages electronic filing. Please file comments using the Commission's eFiling system at
For further information, please contact Colleen Corballis by phone at (202) 502-8598, or by email at
On May 21, 2020, Northern Natural Gas Company (Northern) filed an application in Docket No. CP20-460-000 requesting abandonment authorization and a Certificate of Public Convenience and Necessity pursuant to Section 7(b) and 7(c) of the Natural Gas Act to abandon, construct, and operate certain natural gas pipeline facilities. The proposed project is known as the Clifton to Palmyra A-Line Abandonment Project (Project), and Northern states it would enhance the safety, security, and operational efficiency of its pipeline system.
On May 28, 2020, the Federal Energy Regulatory Commission (Commission or FERC) issued its Notice of Application for the Project. Among other things, that notice alerted agencies issuing federal authorizations of the requirement to complete all necessary reviews and to reach a final decision on a request for a federal authorization within 90 days of the date of issuance of the Commission staff's Environmental Assessment (EA) for the Project. This instant notice identifies the FERC staff's planned schedule for the completion of the EA for the Project.
If a schedule change becomes necessary, additional notice will be provided so that the relevant agencies are kept informed of the Project's progress.
Northern proposes to abandon in-place a total of approximately 115.9 miles of its M600A and M590A 24-inch-diameter pipeline and M600J 20-inch-diameter pipeline (collectively referred to as the A-line) from Clifton, Kansas to Palmyra, Nebraska. The Project is located in Clay and Washington Counties, Kansas, and Gage, Jefferson, Lancaster, and Otoe Counties, Nebraska. Northern also would increase compression capacity at its existing Beatrice Compressor Station in Gage County, Nebraska, to replace the lost capacity from the proposed abandonment.
On June 9, 2020, the Commission issued a
In order to receive notification of the issuance of the EA and to keep track of all formal issuances and submittals in specific dockets, the Commission offers a free service called eSubscription. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
Additional information about the Project is available from the Commission's Office of External Affairs at (866) 208-FERC or on the FERC website (
Environmental Protection Agency (EPA).
Notice of action denying petition for reconsideration.
The Environmental Protection Agency (EPA) is providing notice that it has responded to a petition for partial reconsideration of a final rule under the Clean Air Act (CAA) published in the
Corey A. Mocka, U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Air Quality Policy Division, 109 T.W. Alexander Drive, Mail Code C539-04, Research Triangle Park, N.C. 27711; phone number: (919) 541-5142; email address:
This
All documents in the docket are listed in the index at
Out of an abundance of caution for members of the public and our staff, the EPA is temporarily suspending the Docket Center and Reading Room for public visitors to reduce the risk of transmitting COVID-19. Our Docket Center staff will continue to provide remote customer service via email, phone, and webform. For further information and updates on EPA Docket Center services, please visit us online at
In addition, the EPA has established a website for visibility and regional haze rulemakings at:
Section 307(b)(1) of the CAA indicates which Federal Courts of Appeal have venue for petitions of review of final actions by the EPA. This section provides, in part, that petitions for review must be filed in the Court of Appeals for the District of Columbia Circuit: (i) When the agency action consists of “nationally applicable regulations promulgated, or final actions taken, by the Administrator,” or (ii) when such action is locally or regionally applicable, if “such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.”
This action is a denial of an administrative petition requesting reconsideration of an aspect of a final rule, “Interstate Transport of Fine Particulate Matter: Revision of Federal Implementation Plan Requirements for Texas,” 82 FR 45481 (September 29, 2017). That rule is nationally applicable; in addition, to the extent that rule may be found to be locally or regionally applicable, the EPA found in that rule that it is based on a determination of “nationwide scope or effect” within the meaning of CAA section 307(b)(1).
Environmental Protection Agency.
Notice; request for public comment.
In accordance with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”), notice is hereby given by the U.S. Environmental Protection Agency (“EPA”), Region 2, of a proposed cost recovery settlement agreement pursuant to CERCLA with Johnson & Hoffman, LLC, Ansaco Properties One, LLC, and Ansaco, LLC (“Settling Parties”) for the Old Roosevelt Field Contaminated Groundwater Area Superfund Site (“Site”), Town of Hempstead, Nassau County, New York.
Comments must be submitted on or before August 5, 2020.
Comments can be sent via email to Elizabeth Leilani Davis at
The proposed settlement is available for public inspection at this weblink:
Elizabeth Leilani Davis, Attorney, Office of Regional Counsel, New York/Caribbean Superfund Branch, U.S. Environmental Protection Agency. Email:
Under the settlement, EPA will receive from the Settling Parties $207,000.00 in past response costs with respect to the Site. The settlement provides, in exchange for the above payment, a covenant not to sue by EPA or to take administrative action against the Settling Parties pursuant to sections 106 and 107(a) of CERCLA, 42 U.S.C. 9606 and 9607(a), with regard to the Site. For thirty (30) days following the date of publication of this document, EPA will receive written comments relating to the settlement. EPA will consider all comments received and may modify or withdraw its consent to the settlement if comments received disclose facts or considerations that indicate that the proposed settlement is inappropriate, improper, or inadequate. EPA's response to any comments received will be available for public inspection online and/or at EPA Region 2, 290 Broadway, New York, NY 10007-1866.
Environmental Protect ion Agency (EPA).
Notice of meeting.
Pursuant to the provisions of the Federal Advisory Committee Act, notice is hereby given that the next meeting of the Children's Health Protection Advisory Committee (CHPAC) will be held virtually July 24 and 27, 2020. The CHPAC advises the Environmental Protection Agency (EPA) on science, regulations and other issues relating to children's environmental health.
July 24, 2020 from 1 p.m. to 6 p.m. and July 27, 2020 from 1 p.m. to 6 p.m.
The meeting will take place virtually. If you want to listen to the meeting or provide comments, please email
Nica Louie, Office of Children's Health Protection, U.S. EPA, MC 1107T, 1200 Pennsylvania Avenue NW, Washington, DC 20460, (202) 564-7633 or
The meetings of the CHPAC are open to the public. An agenda will be posted to
Federal Communications Commission.
Notice of availability; request for comments.
In this document, the Consumer and Governmental Affairs Bureau (the Bureau) announces the availability of the FCC Public Notice seeking comment on whether certain docketed Commission proceedings should be terminated as dormant.
Comments are due on or before August 5, 2020, and reply comments are due on or before August 20, 2020.
Zac Champ, Consumer and Governmental Affairs Bureau at: (202) 418-1495 or email
This is a summary of the Commission's document, CG Docket No. 20-158; DA 20-581, released on June 2, 2020. The full text of this document, including instructions on how to file comments; the spreadsheet associated with document DA 20-581 listing the proceedings proposed for termination; and copies of any subsequently filed documents in this matter will be available for public inspection and copying via ECFS at:
Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19.
To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to
Federal Communications Commission.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act of 1995 (PRA), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before September 4, 2020. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Nicole Ongele, FCC, via
For additional information about the information collection, contact Nicole Ongele, (202) 418-2991.
Federal Communications Commission.
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may submit comments, relevant information, or documents regarding the agreements to the Secretary by email at
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington DC 20551-0001, not later than August 5, 2020.
A. Federal Reserve Bank of Richmond (Adam M. Drimer, Assistant Vice President) 701 East Byrd Street, Richmond, Virginia 23219. Comments can also be sent electronically to
1.
The notificants listed below have applied under the Change in Bank Control Act (Act) (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the applications are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington, DC 20551-0001, not later than July 21, 2020.
A. Federal Reserve Bank of Chicago (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, Chicago, Illinois 60690-1414:
1.
B. Federal Reserve Bank of San Francisco (Sebastian Astrada, Director, Applications) 101 Market Street, San Francisco, California 94105-1579:
1.
Agency for Healthcare Research and Quality (AHRQ), Health and Human Services (HHS).
Notice of public meeting.
This notice announces a meeting of the National Advisory Council for Healthcare Research and Quality.
The meeting will be held on Tuesday, July 14, 2020, from 10:00 a.m. to 1:15 p.m.
The meeting will be held virtually.
Jaime Zimmerman, Designated Management Official, at the Agency for Healthcare Research and Quality, 5600 Fishers Lane, Mail Stop 06E37A, Rockville, Maryland 20857, (301) 427-1456. For press-related information, please contact Bruce Seeman at (301) 427-1998 or
Closed captioning will be provided during the meeting. If another reasonable accommodation for a disability is needed, please contact the Food and Drug Administration (FDA) Office of Equal Employment Opportunity and Diversity Management on (301) 827-4840, no later than Monday, July 6, 2020. The agenda, roster, and minutes will be available from Ms. Heather Phelps, Committee Management Officer, Agency for Healthcare Research and Quality, 5600 Fishers Lane, Rockville, Maryland 20857. Ms. Phelps' phone number is (301) 427-1128.
In accordance with section 10(a) of the Federal Advisory Committee Act, 5 U.S.C. App., this notice announces a meeting of the National Advisory Council for Healthcare Research and Quality (the Council). The Council is authorized by Section 941 of the Public Health Service Act, 42 U.S.C. 299c. In accordance with its statutory mandate, the Council is to advise the Secretary of the Department of Health and Human Services and the Director of AHRQ on matters related to AHRQ's conduct of its mission including providing guidance on (A) priorities for health care research, (B) the field of health care research including training needs and information dissemination on health care quality and (C) the role of the Agency in light of private sector activity and opportunities for public private partnerships. The Council is composed of members of the public, appointed by the Secretary, and Federal ex-officio members specified in the authorizing legislation.
On Tuesday, July 14, 2020, the Council meeting will convene at 10:00
The final agenda will be available on the AHRQ website no later than Tuesday, July 7, 2020.
Notice is hereby given of a change in the meeting of the Board of Scientific Counselors, National Center for Injury Prevention and Control, (BSC, NCIPC); July 22, 2020, from 10:00 a.m. to 01:00 p.m., EDT (OPEN) and July 22, 2020, from 01:45 p.m. to 04:15 p.m., EDT (CLOSED), Teleconference 1-800-369-3110; Participant Code 7563795, which was published in the
The meeting is being amended to extend the oral public comment period during the open session, change the time of the closed session, and request written comments by email submission; and should read as follows:
In accordance with the Federal Advisory Committee Act, the CDC announces the following meeting for the Board of Scientific Counselors, National Center for Injury Prevention and Control (BSC, NCIPC). This meeting is partially open and partially closed to the public. The open session is limited only by the ports available. There will be 2,000 telephone ports available. There will also be 55 minutes allotted for oral public comments at the end of the open session from 12:20 p.m. to 1:15 p.m., EDT on July 22, 2020. In addition, written comments may also be submitted for the meeting record. Written comments should be emailed to
The public is encouraged to register to participate by telephone and/or provide oral public comment using the registration form available at the link provided:
Individuals registered to provide oral public comment will be called upon to speak based on the order of registration. After persons who have registered have spoken, any remaining time in the oral public comment period will be used for members of the public who have not registered to speak but wish to offer comment. Individuals making oral public comment during the meeting will have a 2-minute speaking limit to allow for as many comments as possible.
The meeting will be held on July 22, 2020, 10:00 a.m. to 1:15 p.m., EDT (OPEN) and July 22, 2020, 2:00 p.m. to 4:30 p.m., EDT (CLOSED).
Gwendolyn H. Cattledge, Ph.D., M.S.E.H., Deputy Associate Director for Science, NCIPC, CDC, 4770 Buford Highway, NE, Mailstop S106-9, Atlanta, GA 30341, Telephone (770) 488-3953, Email address:
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice.
On May 15, 2020, the Centers for Disease Control and Prevention (CDC), located within the Department of Health and Human Services (HHS) published a notice in the
Written comments must be received on or before September 14, 2020.
You may submit comments, identified by Docket No. CDC-2020-0051 by any of the following methods only. CDC does not accept comment by email.
All relevant comments received will be posted publicly without change, including any personal or proprietary information provided. To download an electronic version of the plan, please access
Heather Stang, MS, MT, Center for Surveillance, Epidemiology and Laboratory Services, Centers for Disease Control and Prevention, 1600 Clifton Road NE, Mailstop V24-3, Atlanta, GA 30329, telephone (800) 232-4636; email:
Interested persons or organizations are invited to participate by submitting written views, recommendations, and data about topics related to personnel performing informatics activities, as well as data storage and retention practices related to the use of next generation sequencing (NGS) technology. In addition, CDC invites comments specifically on the following questions:
(1) What are the roles and responsibilities for all personnel performing bioinformatics or pathology/laboratory informatics activities? What training is considered essential for each of the roles? What competencies are considered essential for each of the roles? What minimum educational requirements (degrees or courses) are required for each of the roles?
(2) What are the challenges for recruitment and retention of bioinformatics or pathology/laboratory informatics personnel?
(3) What are examples of how NGS data files are used in addition to generating a clinical test result?
(4) What NGS data files should be retained for quality assurance, repeat analyses, or subsequent analyses? How long should these NGS data files be retained?
(5) What are the challenges and approaches for laboratories to maintain and utilize previous versions of sequence analysis software?
Please note that comments received, including attachments and other supporting materials, are part of the public record and are subject to public disclosure.
Comments will be posted on
identifies you in the body of your comments, that information will be on public display. Do not submit public comments by email. CDC will review all submissions and may choose to redact, or withhold, submissions containing private or proprietary information such as Social Security numbers, medical information, inappropriate language, or duplicate/near duplicate examples of a mass-mail campaign.
Clinical laboratory testing technology has advanced significantly since the CLIA regulations were first implemented approximately 30 years ago. Next generation sequencing (NGS) technologies provide the high-throughput capability to rapidly and cost-effectively sequence large regions and mixed populations of DNA and RNA, when compared to traditional sequencing methods. This technology results in a significant increase in data that requires specialized analysis to derive a clinically meaningful result. NGS has led to improvements in diagnoses and patient care in many areas of medicine that include medical genetics, pediatrics, oncology, and microbiology. In some instances, NGS has led to life-saving diagnoses and treatment pathways, not achievable using other testing modalities. One element that differentiates NGS from most laboratory methodologies is its significant reliance on informatics to achieve a meaningful and reportable result. As a consequence, clinical laboratories require personnel knowledgeable in bioinformatics or pathology/laboratory informatics to design and manage the bioinformatics analysis.
While CLIA regulations apply to clinical NGS testing, there is a lack of clarity regarding how the general CLIA quality system and personnel requirements should be specifically implemented for the NGS bioinformatics components. In April 2019, CLIAC made eight recommendations regarding CLIA's application to NGS-based technologies. This request for information is soliciting comments from the public for more information on topic areas mentioned in two of the recommendations, specifically, the qualifications of personnel performing bioinformatics activities; storage and retention of NGS data files; and maintenance of sequence analysis software. The April 2019 CLIAC summary is available in the docket under the Supporting Materials tab and at
The qualifications and responsibilities of personnel performing the informatics component of the testing process are not addressed in the CLIA regulations. For the purpose of this request for information, the informatics component of NGS includes the analysis of NGS machine-generated data and subsequent computational processes. Therefore, CDC is asking the public to describe different responsibilities of personnel providing bioinformatics or pathology/laboratory informatics expertise such as validating and assuring that the informatics pipeline meets documented performance specifications.
CDC is also interested in learning the skills, training, and education of personnel who will fill bioinformatics or pathology/laboratory informatics positions, and how clinical and public health laboratories can recruit and retain personnel with these identified skills.
Lastly, the NGS testing process generates large amounts of data and requires multiple file types. CLIA regulations specify at 42 CFR 493.1105(a)(3) that all
analytic systems records must be kept for at least two years, but the regulations do not specify the types of data to be captured or the retention time for a given data type. The regulations do not address the capability to access and reanalyze the data after the test is performed. This capability may require retention of the version of software used in the original analysis. CDC requests comment from the public on this topic.
HHS/CDC has posted all related materials to the docket on
In accordance with the Paperwork Reduction Act of 1995, the Centers for Disease Control and Prevention (CDC) has submitted the information collection request titled Validated Follow-up Interview of Clinicians on Outpatient Antibiotic Stewardship Interventions to the Office of Management and Budget (OMB) for review and approval. CDC previously published a “Proposed Data Collection Submitted for Public Comment and Recommendations” notice on February 10, 2020 to obtain comments from the public and affected agencies. CDC did not receive comments related to the previous notice. This notice serves to allow an additional 30 days for public and affected agency comments.
CDC will accept all comments for this proposed information collection project. The Office of Management and Budget is particularly interested in comments that:
(a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(c) Enhance the quality, utility, and clarity of the information to be collected;
(d) 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,
(e) Assess information collection costs.
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570. Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Validated Follow-up Interview of Clinicians on Outpatient Antibiotic Stewardship Interventions—New—National Center for Emerging and Zoonotic Infectious Diseases (NCEZID), Centers for Disease Control and Prevention (CDC).
The Code of Federal Regulations under subsections C and D of section 247d-5 authorizes education of medical and health services personnel in antimicrobial resistance and appropriate use of antibiotics and the funding of eligible entities to increase capacity to detect, monitor, and combat antimicrobial resistance. Through the Centers for Disease Control and Prevention's (CDC) SHEPheRD funding mechanism, the University of Utah has been awarded a contract to perform such work as stated above within a research framework in the urgent care setting, with interventions based on the Core Elements of Outpatient Antibiotic Stewardship. Intermountain Healthcare is the subcontractor for this work, and operates the clinics participating in the intervention arm of this research study.
The proposed request for data collection will allow Intermountain Healthcare to explore knowledge, attitudes, and practices among clinicians to identify barriers and facilitators after the implementation of the antibiotic stewardship program in the urgent care setting of participating clinics. CDC requests approval for 207 estimated annualized burden hours. There is no cost to respondents other than their time.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or we) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Submit written comments (including recommendations) on the collection of information by August 5, 2020.
To ensure that comments on the information collection are received, OMB recommends that written comments be submitted to
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
Section 1701(a)(4) of the Public Health Service Act (42 U.S.C. 300u(a)(4)) authorizes FDA to conduct research relating to health information. Section 1003(d)(2)(C) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 393(d)(2)(C)) authorizes FDA to conduct research relating to drugs and other FDA regulated products in carrying out the provisions of the FD&C Act.
The proposed collection of information will investigate healthcare providers' (HCPs') awareness, perceptions, and beliefs about the benefits and risks of an FDA-approved product that carries a boxed warning. The prescribing information for an FDA-approved drug or biologic (sometimes
Boxed warnings are an important and frequently used communication tool. A review of literature has suggested that the addition or modification of boxed warning information in the postmarket setting (after a drug has been approved) has had varying effects on HCPs' practices regarding prescribing, dosing, and patient monitoring (Ref. 1). However, this review and others have identified several gaps in the existing literature, including the limited number of drugs or drug classes studied (Ref. 2). Further, little research has focused on understanding
To address this research gap, we propose conducting a web-based survey of HCPs. The proposed collection of information will strengthen FDA's understanding of how HCPs may receive, process, and use boxed warning and other safety labeling information. This survey will be conducted as part of a mixed methods research approach to explore HCPs' beliefs (or “mental models”) about the benefits and risks of a drug that carries a boxed warning and how the drug's boxed warning information may influence their communication with patients, their treatment decisions and related decisions such as prescreening for risk factors or monitoring for adverse events (Ref. 3). This survey research will build upon preliminary qualitative research FDA has conducted, under OMB control number 0910-0695, with HCPs in this target population, through indepth individual interviews.
The general research questions in this data collection are as follows:
In order to explore a range of potential perceptions and uses of boxed warning information that may exist under different contexts, this survey research will evaluate two medical product scenarios involving an FDA-approved medication or class of medications that include boxed warning information. The scenarios will include pertinent prescribing information from the FDA-approved labeling for these medications. We plan to conduct one pretest survey with 50 voluntary participants and one main survey with 1,156 voluntary participants. The survey will be conducted online. Survey response is estimated to take no longer than 20 minutes.
Participants in the pretest survey and main survey will be recruited online through a web-based HCP survey research panel. Participants will be HCPs with prescribing authority who prescribe medications to treat one of medical conditions in the medical product scenarios. Participants will include primary care providers (including internal medicine, family medicine, and general medicine, as well as nurse practitioners, and physician assistants) and relevant medical specialists. Participants will be screened for their current amount of time spent in direct patient care, prescribing volume, and experience treating the relevant medical condition. Demographic soft quotas will be used to help ensure that the survey population is generally reflective of the demographic composition of physicians in the United States, according to the American Medical Association.
The pretest and main studies will have the same design and will follow the same procedure. In advance of the pretest survey, we will conduct cognitive testing of the survey questionnaire to refine the survey instruments. The main survey will be refined as necessary following the pretest survey.
In the
(Comment 1) The first public comment “agrees with the data collection,” but finds the intent of the data collection unclear and expresses concern that “the data will be collecting in the survey will be used adversarially [sic] [against providers]”. The commenter described experiences “as a healthcare provider, [battling] daily with both ends of the spectrum,” including patients who want a “brand new drug” even though it will likely provide little therapeutic benefit, as well as patients who would benefit from a product but “adamantly refuse based on a [boxed warning].” The commenter further stated that “As a provider, I can present the information I have at hand, but how do I combat new information that is identified specifically, a [boxed warning] post prescribing a new medication?”
(Response 1) FDA appreciates the commenter's experience, which is relevant to the research question that the proposed data collection is intended to inform: how HCPs consider boxed warning information when making treatment decisions and how they communicate boxed warning information to their patients. As described in Section A.2, the intent of the data collection to better understand the range of HCPs' experiences and informational needs regarding boxed warning information.
(Comment 2) The second public comment expressed concern regarding how “[a] voluntary commitment to participating in a professional assessment survey demonstrates some level engagement and awareness [and therefore this] survey will assess an already engaged section of providers, potentially skewing the data.”
(Response 2) In accordance with the requirements set forth by institutional review boards and OMB, any research must involve voluntary participation of research participants. FDA acknowledges there may be a coverage
(Comment 3) The third public comment comprised 2 overarching comments (3a and 3b below) and 13 additional (3c to 3p) comments on individual items on the questionnaire, to which we have responded below.
(Comment 3a) We recommend considering two different “archetypes” for the medical product scenarios to gain insight on different situations. Consideration should be given to a drug/class with specific risk factors identified in a BW [boxed warning], a drug/class launched with a BW, or drug/class with a BW that was established post approval.
(Response 3a) FDA agrees with the importance of capturing different archetypes (
(Comment 3b): We also recommend that FDA consider additional study designs such as retrospective analysis on prescribing habits. Data could be collected on prescribing habits of medications before and after inclusion of a BW in labeling. This study could be used as a complementary evaluation on the understanding the impact of BW.
(Response 3b): FDA agrees that there is value in complementary research approaches using the same scenarios and appreciate the suggestion. We will explore the feasibility of undertaking a related outcomes-focused study looking at prescribing behaviors in future studies.
(Comment 3c): In an effort to streamline the questionnaire, [we] recommend considering the removal of [Question 1] and relying on Questions 2 to 6 to assess the level of experience.
(Response 3c): FDA appreciates feedback suggesting opportunities to streamline the questionnaire, and we have considered appropriate ways to streamline. Q1 elicits a self-assessment of their level of experience treating the scenario condition, which provides very important context for understanding HCPs' perceptions. This concept is distinct from concepts elicited in Q2 to 6. For example, a self-assessment of experience with a condition may not be associated with the number of patients the HCP currently sees.
(Comment 3d): [We] recommend consolidating Q5 and Q6 into a single question. . . [and] including the drug of interest in the list of options [and] adjusting the [choice] selections so that they become mutually exclusive. [We] would further recommend screening out physicians from taking remainder of the survey that do not prescribe drugs with BW based on their responses to Q4 to 6.
(Response 3d): In the questionnaire draft that the commenter reviewed, Q5 asks respondents how often they prescribe the scenario drug and Q6 ask how often they prescribe a number of other types of products that FDA believes providers may be using to treat the condition. In the revised questionnaire (now Q4 and Q5), we keep the two questions as separate, but we have greatly simplified the latter (now Q5) so that it does not elicit prescribing rates, but rather asks respondents to indicate which treatments they have used in a typical month. The elicitation of the frequency (“a few times per month, a few times a year, etc.”) is important with respect to the scenario drug. We have modified the response items to be mutually exclusive.
Potential participants are screened based on their experience with treating each of the medical conditions, but not based on their prescribing behavior regarding any the particular product. For the purposes of this research, exclusion due to not prescribing the specific product with the boxed warning is not appropriate, as long as the healthcare provide meets the other criteria. If, for example, a provider chooses categorically not to prescribe a particular product that has a boxed warning, it could be driven in part by his or her perception of the boxed warning information. We are still interested in this prescriber's perception of the benefits and risks of the scenario product.
(Comment 3e): There may be a need to differentiate HCPs who initiate vs. those that refill, therefore [we] recommend including a question to ask what % of prescriptions are initiated vs. refill.
(Response 3e): FDA agrees that there may be a need to differentiate HCPs who initiate vs. those who only prescribe refills for the scenario drug. The revised questionnaire (question 4a) now allows differentiation between HCPs who initiate prescriptions versus HCPs who have only prescribed a refill for the scenario drug.
(Comment 3f): The description of patient and condition will likely influence the responses and the physicians' consideration of the BW. [We] recommend taking into consideration where the patient is in the treatment journey and where the drug with the BW is in the treatment algorithm. The instructions also imply that this treatment must only be prescribed to females. If the treatment is not limited to females [we] recommend modifying the instructions to be more general neutral.
(Response 3f): Where the patient is in the treatment journey and where the treatment is within the treatment algorithm are important concepts. The descriptions of the patient and condition in the revised questionnaire [preceding Q6] identify where the patient is in the journey, and the scenarios were constructed such that the scenario drug with the BW would be considered a commonly considered treatment option for patients who fit the patient description. One of the scenarios [estrogens to treat VVA] is only applicable to females. The patient description in the HCV scenario questionnaire has been modified to be gender neutral and to apply to patients in general that the responder sees, not a specific patient.
(Comment 3g): [We] recommend asking an additional question after Q7 and 8 to assess reasoning by respondent. This approach can provide an initial indicator of unaided awareness and impact of BW for HCPs. For example, [we] propose: “what are your safety concerns when considering [drug] for patients [open end].”
(Response 3g): FDA agrees that eliciting this type of information from respondents is very important. The questionnaire includes a very similar open-ended question [Q11 in the revised questionnaire] to elicit the potential rare but serious side effects that the respondent discusses with patients. In an attempt to minimize respondent burden, we therefore did not add the suggested questions because it would be redundant.
(Comment 3h): A physician's response may be dependent on the
(Response 3h): In the questionnaire draft that the commenter reviewed included two descriptions. The first description referenced an individual patient with specific characteristics of relevance to the prescribing scenario. With the second description, respondents were asked to think about a broader patient population. Based on the commenter's feedback as well as the results of the cognitive interviewing, we have revised the scenario description to have a single prototypical description of a population of patients of relevance to the prescribing scenario. For example, the scenario used for the VVA questionnaire states: “For the next few questions, we would like you to consider your patients who are postmenopausal women complaining of symptoms such as vaginal itching and discomfort or pain during intercourse. They have previously tried over-the-counter ointments with little success.”
(Comment 3i): [Regarding Q12] Because risk/benefit considerations will likely be a key factor in deciding whether to prescribe the drug, [we] recommend including risk/benefit as a possible selection. Relevant for inclusion of the selection “This patient's preference about mode of administration” will be depending on the available treatment options for condition selected. [We] recommend adding an option in Q12 of “other (specify)” instead of including Q12OTH as a separate question. This approach will enable respondents to rank another option.
(Response 3i): FDA agrees that risk/benefit is a critical assessment and factor into HCPs' decisions whether to prescribe a drug, and there are multiple questions in the questionnaire designed to get at this overarching judgment of the respondent. In the questionnaire draft that the commenter reviewed, Q12 (Question 11 in the revised questionnaire) asks respondents to indicate the specific factors that play the most important role when deciding whether or not to prescribe the scenario drug. These factors include separate considerations on both the risks and benefits, such as “patient's understanding of and comfort with the risks of this medication” and medical history as part of “patient's medical and health context.” We did not include a risk/benefit as an option because that would be redundant. We did, however, address the commenter's recommendation about Q12OTH (a question to allow for the respondent to identify other factors). Question 11 in the revised questionnaire now includes an option: “other (please specify)”, rather than asking it as a separate question. Should the survey respondent feel that we left out risk/benefit assessment as a separate factor, they may input this in the “other (specify)” field.
(Comment 3j): [Regarding Q12l] [We] recommend inclusion of a description of the specific risks in BW instead of the proposed option “risks outlined in the boxed warning.”
(Response 3j): FDA believes the commenter meant to reference Question 15l. In the questionnaire draft that the commenter reviewed, question 15l asks respondents to indicate specific risks (multiple choice) they discuss with the patient about the product. In the revised question, we modified this to an open-ended question, intentionally designed to elicit spontaneous response about the rare but serious side effects that they discus. Further on in the survey is a specific recall question asking respondents to identify the risks (multiple choice) they recall being discussed in the boxed warning for the specific product.
(Comment 3k): [We] recommend moving Question 17 and 18 to the end of the survey, as they seem less important than the following questions 19-22.
(Response 3k): In the questionnaire draft that the commenter reviewed, Q17 and Q18 ask respondents to indicate where they typically look for information about the scenario drug or other similar products (medical journals, search engines, etc.). In the revised draft, we have simplified Q17 and Q18 into a single question (now Q15). In light of this comment, we considered other placements for this question. We believe placement of this question is justified as the last question respondents' answer regarding their overall perceptions regarding the scenario drug before they move to focusing their attention on the boxed warning information specifically. We could not determine a better place later in the questionnaire to include this question because it would require the respondent to go back to thinking broadly about information sources.
(Comment 3l): Consider moving this general perception question 19 about BW earlier in the survey.
(Response 3l): The placement of this question is deliberate. In the questionnaire draft that the commenter reviewed, Q19 ask respondents their opinion of the primary role of a boxed warning (
(Comment 3m): Assuming the drug with the BW referenced in the rest of the survey is the BW explicitly shown at this point in the survey, [we] recommend not allowing respondents to go back to “correct” previous answers.
(Response 3m): FDA agrees with the commenter's suggestion, and we have set the programming language of the web-based questionnaire to not allow respondents to go back and change their answers.
(Comment 3n): Please provide rationale for the relevance of asking Question 28_H.
(Response 3n): In the questionnaire draft that the commenter reviewed, Q28_H asks respondents to provide their estimate of how many prescription drugs they think carry a boxed warning. The question has less relevance compared to other questions in the questionnaire, and it did not add value in the cognitive interviews. Therefore, to address this comment, we excluded the question in the revised questionnaire.
(Comment 3o): Assessing “favorability” of a BW is an awkward question. Recommend revising Q29 to an agreement statement. For example, “BW provides important information to me.” If Question 29 is revised, then recommend removing Q30.
(Response 3o): In the questionnaire draft that the commenter reviewed, Q29 asks the respondent to rate how favorable their opinion is of boxed warnings in general. This question is intended to provide an overall assessment of boxed warnings. The question was not confusing to participants in the cognitive interviews. In addition, another question (Q23 in
(Comment 3p): [We] recommend adding an option “I'm not sure/I don't know/I'm not familiar” to Questions 2, 3, 4, 7, 8, 12, 14, 15, 23, 24, 25, 28, 29.
(Response 3p): FDA reviewed the survey and added an Unsure/Don't know option where we deemed appropriate: Qs 2, 3, 4, 28, 29. Questions 8 and 25 were removed. Q23 has an “Other (specify)” option where participants can elaborate if they are unable to choose an answer. For certain key questions that elicits respondents' opinions (Qs 7, 12, 14, 15, 24), we did not add Unsure/Don't know in order to encourage them to thoughtfully pick an answer. However, participants can proceed through the questions without providing an answer, if they wish.
FDA estimates the burden of this collection of information as follows:
The following references are on display with the Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are not available electronically at
Food and Drug Administration, Health and Human Services (HHS).
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by September 4, 2020.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before September 4, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
Under the PRA (44 U.S.C. 3501-3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Section 1701(a)(4) of the Public Health Service Act (42 U.S.C. 300u(a)(4)) authorizes the FDA to conduct research relating to health information. Section 1003(d)(2)(C) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 393(d)(2)(C)) authorizes FDA to conduct research relating to drugs and other FDA regulated products in carrying out the provisions of the FD&C Act.
The Office of Prescription Drug Promotion's (OPDP) mission is to protect the public health, in part, by helping to ensure that prescription drug promotional material is truthful, balanced, and accurately communicated, so that patients and health care providers can make informed decisions about treatment options. OPDP's research program provides scientific evidence to help ensure that our policies related to prescription drug promotion will have the greatest benefit to public health.
Toward that end, we have consistently conducted research to evaluate the aspects of prescription drug promotion that are most central to our mission, focusing in particular on three main topic areas: advertising features, including content and format; target populations; and research quality. Through the evaluation of advertising features, we assess how elements such as graphics, format, and disease and product characteristics impact the communication and understanding of prescription drug risks and benefits. Focusing on target populations allows us to evaluate how understanding of prescription drug risks and benefits may vary as a function of audience, and our focus on research quality aims at maximizing the quality of research data through analytical methodology development and investigation of sampling and response issues. This study will inform the first topic area, advertising features, including content and format.
Because we recognize the strength of data and the confidence in the robust nature of the findings is improved through the results of multiple converging studies, we continue to develop evidence to inform our thinking. We evaluate the results from our studies within the broader context of research and findings from other sources, and this larger body of knowledge collectively informs our policies as well as our research program. Our research is documented on our
A number of prescription drugs are approved for multiple indications. These indications can be similar in certain respects (
When more than one indication is presented, the similarity or dissimilarity of the indications may affect participants' ability to remember and understand the indications. If this is the case, it is not clear whether similarity would have a positive or negative effect in the multimodal context of a television ad (
This study will provide preliminary information on whether consumers face challenges when multiple indications are promoted in a single television ad. The study also will explore whether similarity of the indications affects participants' likelihood to recall and understand the indications, and whether its effect would be positive or negative.
We propose to test three types of fictional DTC television ads—one that promotes a single indication, one that promotes an indication plus a similar indication, and one that promotes an indication plus a dissimilar indication—in two different medical conditions (Table 1).
We plan to conduct two pretests (one for each main study) and two main studies not longer than 20 minutes, administered via internet panel, to test the experimental manipulations and pilot the main study procedures. Participants will be randomly assigned to view one study ad and then complete a questionnaire that assesses recall and comprehension of the drug's benefits and risks, benefit and risk perceptions, attitudes, and behavioral intentions. We will also measure covariates such as demographics and health literacy. Taking into account prior research, it is our hypothesis that participants will be more likely to correctly recall and understand the first indication when it is presented alone, compared with when it is presented with a second (similar or dissimilar) indication. We will explore whether similarity of the indications affects participants' likelihood to recall and understand the indications. We will also explore the effects of the indication presentation on benefit and risk perceptions, attitudes toward the drug and the indication information, and intentions to look for more information and ask a doctor about the drug.
For all phases of this research, we will recruit adult volunteers 18 years of age or older. For Pretest 1 and Study 1, we will recruit participants who self-report being diagnosed with diabetes (N = 60 in Pretest 1 and N = 402 in Study 1). For Pretest 2 and Study 2, we will recruit participants who self-report being diagnosed with rheumatoid arthritis (N = 60 in Pretest 2 and N = 402 in Study 2). We will exclude individuals who work for the Department of Health and Human Services or work in the healthcare, marketing, or pharmaceutical industries. We will also exclude pretest participants from the main studies, and participants will not be able to participate in both Studies 1 and 2. With these sample sizes, we will have sufficient power to detect small-sized effects in Studies 1 and 2. For the burden estimate, we include an additional 10% over our target number of valid completes to account for some overage. FDA estimates the burden of this collection of information as follows:
The following references are on display with the Dockets Management Staff (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995 (PRA).
Submit written comments (including recommendations) on the collection of information by August 5, 2020.
To ensure that comments on the information collection are received, OMB recommends that written comments be submitted
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
This notice announces the FDA information collection request from the OMB for a generic clearance that will allow FDA to use qualitative social/behavioral science data collection techniques (
FDA will only submit a collection for approval under this generic clearance if it meets the following conditions:
• The collections are voluntary;
• the collections are low burden for participants (based on considerations of total burden hours, total number of participants, or burden hours per participant) and are low cost for both the participants and the Federal Government;
• the collections are noncontroversial;
• personally identifiable information (PII) is collected only to the extent necessary
• information gathered will not be used for the purpose of substantially informing influential policy decisions;
• information gathered will yield qualitative information; the collections will not be designed or expected to yield statistical data or used as though the results are generalizable to the population of study.
If these conditions are not met, FDA will submit an information collection request to OMB for approval through the normal PRA process.
To obtain approval for a collection that meets the conditions of this generic clearance, an abbreviated supporting statement will be submitted to OMB along with supporting documentation (
FDA will submit individual qualitative collections under this generic clearance to the OMB. Individual qualitative collections will also undergo review by FDA's institutional review board, senior leadership in the Center for Food Safety and Applied Nutrition, and PRA specialists.
In the
FDA estimates the burden of this collection of information as follows:
The total estimated annual burden is 7,394 hours and 20,464 responses. Current estimates are based on both historical numbers of participants from past projects as well as estimates for projects to be conducted in the next 3 years. The number of participants to be included in each new collection will vary, depending on the nature of the compliance efforts and the target audience.
The estimated burden hours for focus groups for this collection of information have been increased from the burden published in the
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by September 4, 2020.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before September 4, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
Under the PRA (44 U.S.C. 3501-3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Section 1701(a)(4) of the Public Health Service Act (42 U.S.C. 300u(a)(4)) authorizes FDA to conduct research relating to health information. Section 1003(d)(2)(C) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 393(d)(2)(C)) authorizes FDA to conduct research relating to drugs and other FDA regulated products in carrying out the provisions of the FD&C Act.
The Office of Prescription Drug Promotion's (OPDP) mission is to protect the public health by helping to ensure that prescription drug promotional material is truthful, balanced, and accurately communicated, so that patients and health care providers can make informed decisions about treatment options. OPDP's research program provides scientific evidence to help ensure that our policies related to prescription drug promotion will have the greatest benefit to public health. Toward that end, we have consistently conducted research to evaluate the aspects of prescription drug promotion that are most central to our mission. Our research focuses in particular on three main topic areas: Advertising features, including content and format; target populations; and research quality. Through the evaluation of advertising features, we assess how elements such as graphics, format, and disease and product characteristics impact the communication and understanding of prescription drug risks and benefits; focusing on target populations allows us to evaluate how understanding of prescription drug risks and benefits may vary as a function of audience; and our focus on research quality aims at maximizing the quality of our research data through analytical methodology development and investigation of sampling and response issues. This study will inform the first two topic areas.
Because we recognize that the strength of data and the confidence in the robust nature of the findings is improved by utilizing the results of multiple converging studies, we continue to develop evidence to inform our thinking. We evaluate the results from our studies within the broader context of research and findings from other sources, and this larger body of knowledge collectively informs our policies as well as our research program. Our research is documented on our homepage, which can be found at:
The revised draft guidance entitled “Distributing Scientific and Medical Publications on Unapproved New Uses—Recommended Practices” (2014),
Pharmaceutical firms sometimes choose to disseminate publications to health care professionals (HCPs) that include data that appear to support an unapproved use of an approved product. At the same time, published data that are not supportive of that unapproved use may also exist. For example, unsupportive published information could describe an increased risk of negative outcomes (
These research questions will be examined in two medical conditions.
We plan to conduct one pretest with 180 voluntary adult participants and one main study with 1,600 voluntary adult participants. Participants in the main study will be 510 oncologists in the oncology medical condition and 1,090 primary care physicians in the diabetes medical condition. All participants will be physicians who engage in patient care at least 50 percent of the time and do not work for a pharmaceutical company, marketing firm, or the Department of Health and Human Services. The gender, race/ethnicity, and ages of the participating HCPs will be self-identified by participants. We will aim to include a mix of demographic segments to ensure a diversity of viewpoints and backgrounds. Power analyses were conducted to ensure adequate sample sizes to detect small to medium effects.
The studies will be conducted online. The pretest and main studies will have the same design and will follow the same procedure. The base stimulus in both the pretest and main studies will consist of a sample publication supporting an unapproved use of an approved drug product. Within each medical condition, participants will be randomly assigned to one of five test conditions (see Figure 1). Following exposure to the stimuli, they will be asked to complete a questionnaire that assesses comprehension, perceptions, prescribing intentions, and demographics. In the pretest, participants will also answer questions about the study design and questionnaire.
FDA estimates the burden of this collection of information as follows:
Health Resources and Services Administration (HRSA), Department of Health and Human Services.
Notice.
Pursuant to its authority under Federal regulations for the National Practitioner Data Bank (NPDB), HRSA's Division of Practitioner Data Bank announces a continuation of its temporary waiver of user fees for NPDB queries from March 1, 2020, through September 30, 2020, to support our eligible entities in making credentialing, hiring, privileging, and licensing decisions in combatting the COVID-19 pandemic. The waiver includes all one-time queries and continuous queries during the waiver time period. Fees for self-queries will not be waived. The NPDB is a confidential information clearinghouse created by Congress and is intended to facilitate a comprehensive review of the professional credentials of health care practitioners, entities, providers, and suppliers. In response to President Trump's declaration of a national emergency and associated emergency declarations by all states, the Federal Government, state governments, and many health care entities have taken unprecedented steps regarding licensure portability and the deployment of health workforce resources, including the expansion of telemedicine and granting of disaster privileges. HRSA's NPDB is in a unique position to temporarily waive fees, granting NPDB access to the nation's hospitals, health centers, health plans, state licensing boards, Federal agencies, and other eligible health care entities in support of their efforts to mobilize and appropriately deploy health workforce professionals.
The NPDB waiver announcement published on April 17, 2020 (85 FR 21447), was effective retroactively from March 1, 2020, through May 31, 2020. This update continues the waiver through September 30, 2020.
David Loewenstein, Director, Division of Practitioner Data Bank, Bureau of Health Workforce, HRSA, (301) 443-2300,
The NPDB will waive fees retroactively from March 1, 2020, through September 30, 2020, for eligible entity queries (one-time query and continuous query). The NPDB will not refund the cost of queries performed prior to the announcement of the waiver, but will issue query credits to reimburse entities for one-time and continuous queries performed and paid for during the waiver period. Regulations regarding the NPDB are codified at 45 CFR part 60.
Office of the Assistant Secretary for Health, Office of the Secretary, Department of Health and Human Services.
Notice.
Pursuant to Section 10(a) of the Federal Advisory Committee Act, notice is hereby given that the Secretary's Advisory Committee on Human Research Protections (SACHRP) will hold a meeting that will be open to the public. Information about SACHRP, the full meeting agenda, and instructions for linking to public access will be posted on the SACHRP website at
The meeting will be held on Wednesday, July 22, 2020, from 11:00 a.m. until 4:30 p.m., and Thursday, July 23, 2020, from 11:00 a.m. until 4:30 p.m. (times are tentative and subject to change). The confirmed times and agenda will be posted at on the SACHRP website when this information becomes available.
This meeting will be held via webcast. Members of the public may also attend the meeting via webcast. Instructions for attending via webcast will be posted one week prior to the meeting at
Julia Gorey, J.D., Executive Director, SACHRP; U.S. Department of Health and Human Services, 1101 Wootton Parkway, Suite 200, Rockville, Maryland 20852; telephone: 240-453-8141; fax: 240-453-6909; email address
Under the authority of 42 U.S.C. 217a, Section 222 of the Public Health Service Act, as amended, SACHRP was established to provide expert advice and recommendations to the Secretary of Health and Human Services, through the Assistant Secretary for Health, on issues and topics pertaining to or associated with the protection of human research subjects.
The Subpart A Subcommittee (SAS) was established by SACHRP in October 2006 and is charged with developing recommendations for consideration by SACHRP regarding the application of subpart A of 45 CFR part 46 in the current research environment.
The Subcommittee on Harmonization (SOH) was established by SACHRP at its July 2009 meeting and charged with identifying and prioritizing areas in which regulations and/or guidelines for human subjects research adopted by various agencies or offices within HHS would benefit from harmonization, consistency, clarity, simplification and/or coordination.
The SACHRP meeting will open to the public at 11:00 a.m., on Wednesday, July 22, 2020, followed by opening remarks from Dr. Jerry Menikoff, Director of OHRP and Dr. Stephen Rosenfeld, SACHRP Chair. The meeting will begin with presentation of recommendations on the NIH Draft Data Management and Sharing Policy. This will be followed by a review of the Deceased Organ Intervention Research recommendations, and edits discussed at the March SACHRP meeting. The remainder of the meeting will be devoted to a new topic, the interpretation of Public Health Surveillance, 45 CFR 46.102(l)(2) and 46.102(k). The second day, July 23rd, will again host discussion of Public Health Surveillance, 45 CFR 46.102(l)(2) and 46.102(k), as well as consideration of a second new topic, Risks to Non-subjects in Human Subjects Research. For the full and updated meeting agenda, see
The public will have an opportunity to comment to the SACHRP during the meeting's public comment session or by submitting written public comment. Persons who wish to provide public comment should review instructions at
Time will be allotted for public comment on both days. Note that public comment must be relevant to topics currently being addressed by the SACHRP.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Institute of Biomedical Imaging and Bioengineering Special Emphasis Panel.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Scientific Review Officer, Review Branch, Division of Extramural Activities, NIDDK, National Institutes of Health, Room 7009, 6707 Democracy Boulevard, Bethesda, MD 20892-5452, (301) 594-4721,
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
U.S. Customs and Border Protection (CBP), Department of Homeland Security.
60-Day notice and request for comments; extension of an existing collection of information.
The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the
Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0050 in the subject line and the agency name. To avoid duplicate submissions, please use only
(1)
(2)
Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email
CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Each person who is required by law or regulation to post a bond in order to secure a Customs transaction must submit the bond on CBP Form 301 which is available at:
Surety bonds are usually executed by an agent of the surety. The surety company grants authority to the agent
Office of Partnership and Engagement (OPE), Department of Homeland Security (DHS).
Notice of new Federal Advisory Committee; correction.
The Department of Homeland Security (DHS) is correcting a notice published on June 29, 2020. In error, this notice previously stated that a less than 15 day good cause justification was obtained. Instead, this notice should reflect its publishing will comply fully with the 15 day notice requirement.
The 15-day period described in 41 CFR 102-3.65(b) terminates 15 calendar days after the date of publication.
Traci Silas at
In the
Office of the Chief Information Officer, Housing and Urban Development (HUD).
Notice.
HUD has submitted the proposed information collection requirement described below to the Office of Management and Budget (OMB) for review, in accordance with the Paperwork Reduction Act. The purpose of this notice is to allow for an additional 30 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email Colette Pollard at
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD has submitted to OMB a request for approval of the information collection described in Section A. The
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
(5) ways to minimize the burden of the collection of information on those who are to respond, including the use of automated collection techniques or other forms of information technology.
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507.
Fish and Wildlife Service, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Fish and Wildlife Service (Service), are proposing to renew an information collection with revisions.
Interested persons are invited to submit comments on or before September 4, 2020.
Send your comments on the information collection request by mail to the Service Information Collection Clearance Officer, U.S. Fish and Wildlife Service, MS: PRB (JAO/3W), 5275 Leesburg Pike, Falls Church, VA 22041-3803 (mail); or by email to
Madonna L. Baucum, Service Information Collection Clearance Officer, by email at
In accordance with the PRA and its implementing regulations at 5 CFR 1320.8(d)(1), all information collections require approval under the PRA. We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number.
As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other Federal agencies to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency 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,
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
Our regulations implementing the ESA are in chapter I, subchapter B of title 50 of the Code of Federal Regulations (CFR) (50 CFR 13 and 50 CFR 17). The regulations stipulate general and specific requirements that, when met, allow us to issue permits to authorize activities that are otherwise prohibited. Upon receipt of a complete application, the Director may issue a permit authorizing any activity otherwise prohibited by § 17.21, in accordance with the issuance criteria of this section, for scientific purposes, for enhancing the propagation or survival, or for the incidental taking of endangered wildlife. Such permits may authorize a single transaction, a series of transactions, or a number of activities over a specific period of time. (See § 17.32 for permits for threatened species.)
We collect information associated with application forms to determine the eligibility of applicants for permits requested in accordance with the criteria in section 10 of the ESA. The Service uses the following permit application forms for activities associated with native endangered and threatened species:
• Form 3-200-54,
• Form 3-200-55,
• Form 3-200-56,
Based on which permits are issued, we also require reports to monitor activities associated with permitted activities in accordance with their permits issued based on 50 CFR 17. Annual reports associated with permits are tailored to a specific activity based on the requirements for specific types of permits. In some cases, we developed specific information collection forms to facilitate and standardize the reporting and review, and to facilitate development of electronic forms and electronic reporting and retrieval of that information.
Annual reporting of the results subsequent to the activity authorized by the permit is required in most cases (under the authority of section 10(a)(1)(A) of the ESA and its implementing regulations at 50 CFR 17). These reports allow us to evaluate the success of the project, formulate further research, and develop and adjust management and recovery plans for the species. We use the following reports specific to particular species (and regions, where appropriate):
Additionally, we require the following notifications be made to the Service:
• Private landowners who have an Enhancement of Survival Permit (and accompanying Safe Harbor Agreement or Candidate Conservation Agreement with Assurances) must notify us if their land management activities incidentally take a listed or candidate species covered under their permit.
• We issue Enhancement of Survival Permits to landowners, and their name is printed on the permit. If ownership of the land changes, this permit does not automatically transfer to the new landowner. Therefore, we ask the permittee to notify us if there is a change in land ownership so that we may update the permit; and
• If a recovery or interstate commerce permit authorizes activities that include keeping wildlife in captivity, we ask the permittee to notify us if any of the captive wildlife escape.
The Service is proposing to revise this collection to request OMB approval of the following seven new forms:
Annual reporting of the results subsequent to the activity authorized by the permit is required in most cases (under the authority of section 10(a)(1)(A) of the ESA and its implementing regulations at 50 CFR 17). The Service designed the forms to facilitate the electronic reporting specifically for each species. The Service will use the reported data to evaluate the success of the permitted project, formulate further research, and develop and adjust management and recovery plans for the species. The data will also inform 5-year reviews and Species Status Assessments conducted under the ESA.
The Service is proposing to separate the existing approved FWS Form 3-200-55 into the following two separate forms:
In the existing Form 3-200-55, the applicant may have difficulty distinguishing which fields should be completed, and which are relevant to the other permit type. Modifying this form will enable permittees applying for these separate permit types to more efficiently complete the forms, reducing confusion by eliminating text and fields that are not relevant to the type of permit the applicant is seeking. The forms also have been slightly updated and revised to better incorporate and explain the fields necessary to each permit category. Completion of the information on the forms regarding the activity(ies) to be authorized by the permit is required in most cases (under the authority of section 10(a)(1)(A) of the ESA and its implementing regulations at 50 CFR 17).
The Service is proposing to revise and rename the following five forms associated with bat surveys:
• Form 3-202-55b,
The Service is proposing changes to these forms to address comments received from the respondents. These changes include adding columns to increase flexibility for user data entry, to increase accuracy of Global Positioning System data, and to add three fields specifically requested by State natural resource agencies in order to unify their State databases with that of the Service. These additions eliminate the need for filing a separate reporting form with the State and reduce the overall reporting burden on the respondents. Completion of the information on the forms regarding the activity(ies) to be authorized by the permit is required in most cases (under the authority of section 10(a)(1)(A) of the ESA and its implementing regulations at 50 CFR 17).
The Service is proposing to revise and renew the following two forms associated with Habitat Conservation Plans, Safe Harbor Agreements, and Candidate Conservation Agreements with Assurances:
The Service is proposing to remove program contact information currently in these application forms, and instead link to a permanent website. This website will be frequently maintained and will provide the public with the most accurate contact information.
The Service's new ePermits initiative is an automated permit application system that will allow the agency to move towards a streamlined permitting process to reduce public burden. Public burden reduction is a priority for the Service; the Assistant Secretary for Fish,
Upon completion of the new e-permitting system, applicants applying for Recovery, Interstate Commerce, Habitat Conservation Plan Incidental Take Permits, Candidate Conservation Agreements with Assurances, and Safe Harbor Agreements Enhancement of Survival Permits will have the opportunity to apply directly online through a secure, web-based platform.
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 authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Indian Affairs, Interior.
Notice.
On June 25, 2020, the Bureau of Indian Affairs (BIA) approved the
Catawba Indian Nation's leasing regulations under the Helping Expedite and Advance Responsible Tribal Homeownership Act of 2012 (HEARTH Act). With this approval, the Tribe is authorized to enter into business leases without further BIA approval.
Ms. Sharlene Round Face, Bureau of Indian Affairs, Division of Real Estate Services,
The HEARTH Act makes a voluntary, alternative land leasing process available to Tribes, by amending the Indian Long-Term Leasing Act of 1955, 25 U.S.C. 415. The HEARTH Act authorizes Tribes to negotiate and enter into agricultural and business leases of Tribal trust lands with a primary term of 25 years, and up to two renewal terms of 25 years each, without the approval of the Secretary of the Interior (Secretary). The HEARTH Act also authorizes Tribes to enter into leases for residential, recreational, religious or educational purposes for a primary term of up to 75 years without the approval of the Secretary. Participating Tribes develop Tribal leasing regulations, including an environmental review process, and then must obtain the Secretary's approval of those regulations prior to entering into leases. The HEARTH Act requires the Secretary to approve Tribal regulations if the Tribal regulations are consistent with the Department of the Interior's (Department) leasing regulations at 25 CFR part 162 and provide for an environmental review process that meets requirements set forth in the HEARTH Act. This notice announces that the Secretary, through the Assistant Secretary—Indian Affairs,
has approved the Tribal regulations for the Catawba Indian Nation.
The Department's regulations governing the surface leasing of trust and restricted Indian lands specify that, subject to applicable Federal law, permanent improvements on leased land, leasehold or possessory interests, and activities under the lease are not subject to State and local taxation and may be subject to taxation by the Indian Tribe with jurisdiction. See 25 CFR 162.017. As explained further in the preamble to the final regulations, the Federal Government has a strong interest in promoting economic development, self-determination, and Tribal sovereignty. 77 FR 72440, 72447-48 (December 5, 2012). The principles supporting the Federal preemption of State law in the field of Indian leasing and the taxation of lease-related interests and activities applies with equal force to leases entered into under Tribal leasing regulations approved by the Federal Government pursuant to the HEARTH Act.
Section 5 of the Indian Reorganization Act, 25 U.S.C. 5108, preempts State and local taxation of permanent improvements on trust land.
The strong Federal and Tribal interests against State and local taxation of improvements, leaseholds, and activities on land leased under the Department's leasing regulations apply equally to improvements, leaseholds, and activities on land leased pursuant to Tribal leasing regulations approved under the HEARTH Act. Congress's overarching intent was to “allow Tribes to exercise greater control over their own land, support self-determination, and eliminate bureaucratic delays that stand in the way of homeownership and economic development in Tribal communities.” 158 Cong. Rec. H. 2682 (May 15, 2012). The HEARTH Act was intended to afford Tribes “flexibility to adapt lease terms to suit [their] business and cultural needs” and to “enable [Tribes] to approve leases quickly and efficiently.” H. Rep. 112-427 at 6 (2012).
Assessment of State and local taxes would obstruct these express Federal policies supporting Tribal economic development and self-determination, and also threaten substantial Tribal interests in effective Tribal government, economic self-sufficiency, and territorial autonomy.
Similar to BIA's surface leasing regulations, Tribal regulations under the HEARTH Act pervasively cover all aspects of leasing.
Accordingly, the Federal and Tribal interests weigh heavily in favor of preemption of State and local taxes on lease-related activities and interests, regardless of whether the lease is governed by Tribal leasing regulations or part 162. Improvements, activities, and leasehold or possessory interests may be subject to taxation by the Catawba Indian Nation.
National Park Service, Interior.
Notice; correction.
The U.S. Army Corps of Engineers, Nashville District (USACE), has corrected an inventory of human remains and associated funerary objects, published in a Notice of Inventory Completion in the
Dr. Valerie McCormack, Archeologist, Department of Defense, Nashville District, Corps of Engineers, U.S. Army Corps of Engineers, Nashville District, 110 9th Avenue South, Room A-405, Nashville, TN 37203, telephone (615) 736-7847, email
Notice is here given in accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), 25 U.S.C. 3003, of the correction of an inventory of human remains and associated funerary objects under the control of the U.S. Army Corps of Engineers, Nashville District, Nashville, TN. The human remains and associated funerary objects were removed from Stewart County, TN.
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA, 25 U.S.C. 3003(d)(3). The determinations in this notice are the sole responsibility of the museum, institution, or Federal agency that has control of the Native American human remains and associated funerary objects. The National Park Service is not responsible for the determinations in this notice.
This notice corrects the number of associated funerary objects published in a Notice of Inventory Completion in the
In the
The 11 associated funerary objects are limestone slabs from a stone box grave.
In the
Pursuant to 25 U.S.C. 3001(3)(A), the 142 objects described in this notice are reasonably believed to have been placed with or near individual human remains at the time of death or later as part of the death rite or ceremony.
For questions related to this notice, contact Dr. Valerie McCormack, Archeologist, Department of Defense, Nashville District, Corps of Engineers, U.S. Army Corps of Engineers, Nashville District, 110 9th Avenue South, Room A-405, Nashville, TN 37203, telephone (615) 736-7847, email
The U.S. Army Corps of Engineers, Nashville District, is responsible for notifying the Cherokee Nation, Eastern Band of the Cherokee Indians, and the United Keetoowah Band of the Cherokee Indians in Oklahoma that this notice has been published.
National Park Service, Interior.
Notice.
The California Department of Transportation and the Fowler Museum at the University of California Los Angeles (UCLA) have completed an inventory of human remains and associated funerary objects, in consultation with the appropriate Indian Tribes or Native Hawaiian organizations, and has determined that there is a cultural affiliation between the human remains and associated funerary objects and present-day Indian Tribes or Native Hawaiian organizations. Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to request transfer of control of these human remains and associated funerary objects should submit a written request to the California Department of Transportation. If no additional requestors come forward, transfer of control of the human remains and associated funerary objects to the lineal descendants, Indian Tribes, or Native Hawaiian organizations stated in this notice may proceed.
Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to request transfer of control of these human remains and associated funerary objects should submit a written request with information in support of the request to the California Department of Transportation at the address in this notice by August 5, 2020.
Sarah Allred, California Department of Transportation, P.O. Box 942874 MS 27, Sacramento, CA 94271-0001, telephone (916) 653-0013, email
Notice is here given in accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), 25 U.S.C. 3003, of the completion of an inventory of human remains and associated funerary objects under the control of the California Department of Transportation, Sacramento, CA, and in the physical custody of the Fowler Museum at the University of California Los Angeles, Los Angeles, CA. The human remains and associated funerary objects were removed from Batiquitos Lagoon, San Diego County, CA.
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA, 25 U.S.C. 3003(d)(3). The determinations in this notice are the sole responsibility of the museum, institution, or Federal agency that has control of the Native American human remains and associated funerary objects. The
A detailed assessment of the human remains was made on behalf of the California Department of Transportation by the Fowler Museum at UCLA professional staff in consultation with representatives of the Campo Band of Diegueno Mission Indians of the Campo Indian Reservation, California; Capitan Grande Band of Diegueno Mission Indians of California (Barona Group of Capitan Grande Band of Mission Indians of the Barona Reservation, California; Viejas (Baron Long) Group of Capitan Grande Band of Mission Indians of the Viejas Reservation, California); Ewiiaapaayp Band of Kumeyaay Indians, California; Iipay Nation of Santa Ysabel, California (previously listed as Santa Ysabel Band of Diegueno Mission Indians of the Santa Ysabel Reservation); Inaja Band of Diegueno Mission Indians of the Inaja and Cosmit Reservation, California; Jamul Indian Village of California; La Posta Band of Diegueno Mission Indians of the La Posta Indian Reservation, California; Manzanita Band of Diegueno Mission Indians of the Manzanita Reservation, California; Mesa Grande Band of Diegueno Mission Indians of the Mesa Grande Reservation, California; Pechanga Band of Luiseno Mission Indians of the Pechanga Reservation, California; Rincon Band of Luiseno Mission Indians of Rincon Reservation, California; San Pasqual Band of Diegueno Mission Indians of California; Sycuan Band of the Kumeyaay Nation; and the San Luis Rey Band of Luiseno Indians, a non-federally recognized Indian group (hereafter referred to as “The Consulted Tribes and Groups”).
In 1960 and 1961, human remains representing, at minimum, two individuals were removed from Batiquitos Lagoon in San Diego County, CA. They were excavated by R. H. Crabtree and Claude Warren as part of the UCLA Archaeological Survey under contract with the State Division of Beaches and Parks (now the Department of Parks and Recreation) for the Division of Highways (now the California Department of Transportation). The excavation site was in the proposed freeway (referred to at time of excavation as Highway 101, but now is Interstate 5) right-of-way. The collection was analyzed at UCLA and transferred to the Fowler Museum at UCLA for curation. Human remains consist of one sub-adult female individual and fragmentary human remains from a second individual (age/sex unknown). No known individuals were identified. The 14 associated funerary objects are 11 unmodified animal bones, one unmodified shell, one shell bead, and one soil sample. (Despite an exhaustive search by Fowler Museum staff, currently, eight additional unmodified animal bones among the associated funerary objects are absent.)
Radiocarbon dates between 5340 and 1940 B.C. obtained from two shell samples place the earliest occupation of the Batiquitos Lagoon site in the Early Holocene. That occupation was followed by a temporary abandonment of coastal sites due to strong environmental changes that resulted in the silting of the lagoon and the depletion of natural resources. Oral history of the Kumeyaay describes their oceanic origins and movements on the landscape. Over time, as environmental and social stresses occurred, coastal groups likely became interrelated with inland groups and relied upon each other. These relationships are reflected in their song cycles and sand paintings, as well as in the archeological record. The Kumeyaay locate Batiquitos within their traditional aboriginal territory. Moreover, geographical, oral traditional, archeological, ethnographic, and linguistic lines of evidence all support the existence of a cultural affiliation of the present-day Kumeyaay with the human remains listed in this notice.
Officials of the California Department of Transportation have determined that:
• Pursuant to 25 U.S.C. 3001(9), the human remains described in this notice represent the physical remains of two individuals of Native American ancestry.
• Pursuant to 25 U.S.C. 3001(3)(A), the 14 objects described in this notice are reasonably believed to have been placed with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• Pursuant to 25 U.S.C. 3001(2), there is a relationship of shared group identity that can be reasonably traced between the Native American human remains and associated funerary objects and the Campo Band of Diegueno Mission Indians of the Campo Indian Reservation, California; Capitan Grande Band of Diegueno Mission Indians of California (Barona Group of Capitan Grande Band of Mission Indians of the Barona Reservation, California; Viejas (Baron Long) Group of Capitan Grande Band of Mission Indians of the Viejas Reservation, California); Ewiiaapaayp Band of Kumeyaay Indians, California; Iipay Nation of Santa Ysabel, California (previously listed as Santa Ysabel Band of Diegueno Mission Indians of the Santa Ysabel Reservation); Inaja Band of Diegueno Mission Indians of the Inaja and Cosmit Reservation, California; Jamul Indian Village of California; La Posta Band of Diegueno Mission Indians of the La Posta Indian Reservation, California; Manzanita Band of Diegueno Mission Indians of the Manzanita Reservation, California; Mesa Grande Band of Diegueno Mission Indians of the Mesa Grande Reservation, California; San Pasqual Band of Diegueno Mission Indians of California; and the Sycuan Band of the Kumeyaay Nation (hereafter referred to as “The Tribes”).
Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to request transfer of control of these human remains and associated funerary objects should submit a written request with information in support of the request to Sarah Allred, California Department of Transportation, P.O. Box 942874 MS 27, Sacramento, CA 94271-0001, telephone (916) 653-0013, email
The California Department of Transportation is responsible for notifying The Consulted Tribes and Groups that this notice has been published.
National Park Service, Interior.
Notice.
The U.S. Department of the Interior, Bureau of Reclamation, Interior Region 10, California-Great Basin (Reclamation Region 10), has completed
Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to request transfer of control of these human remains and associated funerary objects should submit a written request with information in support of the request to the Reclamation Region 10 at the address in this notice by August 5, 2020.
Melanie Ryan, NAGPRA Specialist/Physical Anthropologist, Bureau of Reclamation, Interior Region 10, California-Great Basin, MP-153, 2800 Cottage Way, Sacramento, CA 95825, telephone (916) 978-5526, email
Notice is here given in accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), 25 U.S.C. 3003, of the completion of an inventory of human remains and associated funerary objects under the control of the U.S. Department of the Interior, Bureau of Reclamation, Interior Region 10, California-Great Basin, Sacramento, CA. The human remains and associated funerary objects were removed from lands in Ventura County, CA.
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA, 25 U.S.C. 3003(d)(3). The determinations in this notice are the sole responsibility of the museum, institution, or Federal agency that has control of the Native American human remains and associated funerary objects. The National Park Service is not responsible for the determinations in this notice.
A detailed assessment of the human remains and associated funerary objects was made by Reclamation Region 10 professional staff in consultation with representatives of the Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation, California.
In 1958 and 1959, the human remains of, at minimum, 15 individuals were removed from two sites in Ventura County, CA, owned by the Bureau of Reclamation—Las Casitas I (CA-VEN-48) and Las Casitas III (CA-VEN-115). The human remains were removed during excavations carried out by the University of Southern California under the direction of William Wallace ahead of Reclamation's Ventura River Project and construction of the Casitas Dam, Dike, and Reservoir.
In 1964, the collections from Las Casitas I and III were transferred from the University of Southern California to the University of California, Los Angeles (UCLA), where they remain in the custody of UCLA's Fowler Museum. In 2017, Reclamation Region 10 discovered that the collections from Las Casita I and III are under Reclamation's control and contain human remains and associated funerary objects.
The human remains from Las Casitas I (CA-VEN-48; UCLA Number 446) represent nine individuals—eight formal burials and 48 pieces of disarticulated, fragmentary remains. Evidence of rodent activity on the human remains might account for the disparate proveniences of the 48 bone fragments. Among the human remains are two older adult females; one young adult male; two adult males; one older adult male; and two adults of indeterminate sex. No known individuals were identified. The 95 associated funerary objects are 56 shell beads, 13 pieces of animal bone, 10 sandstone manos, three pieces of worked bone, four pieces of worked ochre, two pieces of chert debitage, one bone scraper, one chert scraper, one chert core, one chert projectile point, one quartzite core/hammerstone, one sandstone ground stone ball, and one stone fragment. (According to the Fowler Museum's records, there were originally 97 associated funerary objects, but one worked bone and one drilled cowrie shell were lost in a fire in 1970.)
The human remains from Las Casitas III (CA-VEN-115; UCLA Number 448) represent six individuals—five formal burials and 15 teeth recovered from a midden context. No known individuals were identified. The two associated funerary objects are shell beads. (According to the Fowler Museum's records, as of May 28, 1976, one chert scraper was apparently lost while on loan.)
The amount of wear on the dentition and the associated artifacts indicate that the human remains are Native American. In consultation with the Santa Ynez Band of Chumash Mission Indians, of the Santa Ynez Reservation, California, Reclamation Region 10 determined that the land from which these human remains and associated funerary objects were removed is within traditional territory of the Chumash, and that the associated funerary objects are consistent with those groups who are ancestral to present day Chumash.
Officials of the U.S. Department of the Interior, Bureau of Reclamation, Interior Region 10, California-Great Basin Office have determined that:
• Pursuant to 25 U.S.C. 3001(9), the human remains described in this notice represent the physical remains of 15 individuals of Native American ancestry.
• Pursuant to 25 U.S.C. 3001(3)(A), the 97 objects described in this notice are reasonably believed to have been placed with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• Pursuant to 25 U.S.C. 3001(2), there is a relationship of shared group identity that can be reasonably traced between the Native American human remains and associated funerary objects and the Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation, California.
Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to request transfer of control of these human remains and associated funerary objects should submit a written request with information in support of the request to Melanie Ryan, NAGPRA Specialist/Physical Anthropologist, Bureau of Reclamation, Interior Region 10, California-Great Basin, MP-153, 2800 Cottage Way, Sacramento, CA 95825, telephone (916) 978-5526, email
The U.S. Department of the Interior, Bureau of Reclamation, Interior Region
National Park Service, Interior.
Notice.
The Hudson Museum, in consultation with the appropriate Indian Tribes or Native Hawaiian organizations, has determined that the cultural items listed in this notice meet the definition of unassociated funerary objects. Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to claim these cultural items should submit a written request to the Hudson Museum, University of Maine. If no additional claimants come forward, transfer of control of the cultural items to the lineal descendants, Indian Tribes, or Native Hawaiian organizations stated in this notice may proceed.
Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to claim these cultural items should submit a written request with information in support of the claim to the Hudson Museum, University of Maine at the address in this notice by August 5, 2020.
Gretchen Faulkner, Director, Hudson Museum, University of Maine, 5746 Collins Center for the Arts, Orono, ME 04469, telephone (207) 581-1904, email
Notice is here given in accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), 25 U.S.C. 3005, of the intent to repatriate cultural items under the control of the Hudson Museum, University of Maine, Orono, ME, that meet the definition of unassociated funerary objects under 25 U.S.C. 3001.
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA, 25 U.S.C. 3003(d)(3). The determinations in this notice are the sole responsibility of the museum, institution, or Federal agency that has control of the Native American cultural items. The National Park Service is not responsible for the determinations in this notice.
The five items listed below were acquired by William P. Palmer III. In 1982, Palmer bequeathed the items to the University of Maine and they became part of the Hudson Museum's holdings.
HM5510, a Tlingit Shaman's pipe from Kake Village on Kupreanof Island, Alaska, was collected by George Thornton Emmons and accessioned by the Heye Foundation (catalog number 1/2922). On March 15, 1967, the Heye Foundation transferred this piece to Morton D. May. Subsequently, it was acquired by William P. Palmer III.
HM3222, a Tlingit Shaman's guardian figure, was formerly part of the Christian Rub Collection, Santa Barbara, California. It was acquired by William P. Palmer III from Proctor Stafford, Los Angeles, California.
HM5574, a Tlingit Shaman's mask representing the porpoise spirit, was collected by George Thornton Emmons and accessioned by the Heye Foundation (catalog number 11/1751). In June of 1949, the Heye Foundation transferred this piece to Julius Carlebach. Subsequently, Morton D. May acquired it from Carlebach. Later, it was acquired by William P. Palmer III.
HM5500 is a Tlingit Shaman's guardian figure. Records for this object appear to indicate that around 1968, this figure was acquired by William P. Palmer III from Walt Killiam, a dealer in Chester, Connecticut.
HM5460, is a Tlingit Raven grave totem. Records for this object indicate that it originally hung in the Elks Lodge, Juneau, Alaska. It was formerly in the collection of Axel Rasmussen, William Spratling, and Proctor Stafford. William P. Palmer III acquired it from Proctor Stafford.
In June 2018, a delegation from the Central Council of the Tlingit & Haida Indian Tribes came to the Hudson Museum, University of Maine to consult on these objects. The group included Harold Jacobs, Sarah Dybdahl, Stephanie Masterman, Herman Davis Sr., Herman Davis, Jr. and Neeka Cook. In conjunction with the Hudson Museum staff and Hudson Museum cooperating curators, it was determined that these objects are culturally affiliated with the Central Council of the Tlingit & Haida Indian Tribes.
Officials of the Hudson Museum, University of Maine have determined that:
• Pursuant to 25 U.S.C. 3001(3)(B), the five cultural items described above are reasonably believed to have been placed with or near individual human remains at the time of death or later as part of the death rite or ceremony and are believed, by a preponderance of the evidence, to have been removed from a specific burial site of a Native American individual.
• Pursuant to 25 U.S.C. 3001(2), there is a relationship of shared group identity that can be reasonably traced between the unassociated funerary objects and the Central Council of the Tlingit & Haida Indian Tribes.
Lineal descendants or representatives of any Indian Tribe or Native Hawaiian organization not identified in this notice that wish to claim these cultural items should submit a written request with information in support of the claim to Gretchen Faulkner, Director, Hudson Museum, University of Maine, 5746 Collins Center for the Arts, Orono, ME 04469, telephone (207) 581-1904, email
The Hudson Museum, University of Maine is responsible for notifying the Central Council of the Tlingit & Haida Indian Tribes that this notice has been published.
U.S. International Trade Commission.
Notice.
Notice is hereby given that, on June 26, 2020, the presiding administrative law judge (“ALJ”) issued an Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond in the above-captioned investigation. The Commission is soliciting comments on public interest issues raised by the recommended relief, should the Commission find a violation. This notice is soliciting public interest comments from the public only. Parties are to file public interest submissions pursuant to Commission rules.
Richard P. Hadorn, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-3179. Copies of non-confidential documents filed in connection with this investigation may be viewed on the Commission's electronic docket (EDIS) at
Section 337 of the Tariff Act of 1930 (“Section 337”) provides that if the Commission finds a violation it shall exclude the articles concerned from the United States unless the public interest factors listed in 19 U.S.C. 1337(d)(1) prevent such action.
The Commission is soliciting comments on public interest issues raised by the recommended relief should the Commission find a violation, specifically: A limited exclusion order (“LEO”) directed to certain light-emitting diode products, systems, and components thereof imported, sold for importation, and/or sold after importation by Cree, Inc. of Durham, North Carolina; Cree Hong Kong, Ltd. of Shatin, Hong Kong; Cree Huizhou Solid State Lighting Co. Ltd. of Guangdong, China; Lumileds Holding B.V. of Schipol, Netherlands; Lumileds LLC of San Jose, California; Nichia Corp. of Tokushima, Japan; Nichia America Corp. of Wixom, Michigan; OSRAM Licht AG and OSRAM GmbH, both of Munich, Germany; OSRAM Opto Semiconductors GmbH of Regensburg, Germany; OSRAM Opto Semiconductors, Inc. of Sunnyvale, California; Acuity Brands, Inc. of Atlanta, Georgia; Acuity Brands Lighting, Inc. of Conyers, Georgia; General Electric Company of Boston, Massachusetts; Consumer Lighting (U.S.), LLC (d/b/a GE Lighting, LLC) of Cleveland, Ohio; Current Lighting Solutions, LLC of Cleveland, Ohio; LEDVANCE LLC of Wilmington, Massachusetts; Leedarson Lighting Co., Ltd. of Xiamen, China; Leedarson America, Inc. of Smyrna, Georgia; Signify N.V. (f/k/a Phillips Lighting N.V.) of Eindhoven, Netherlands; and Signify North America Corporation of Somerset, New Jersey that infringe one or more of claims 1, 2, 3, 5, 6, and 21 of U.S. Patent No. 7,095,053; and claims l and 6 of U.S. Patent No. 7,528,421.
The Commission is interested in developing the record on the public interest in this investigation. Accordingly, parties are to file public interest submissions pursuant to 19 CFR 210.50(a)(4). In addition, members of the public are hereby invited to file submissions of no more than five (5) pages, inclusive of attachments, concerning the public interest in light of the ALJ's Recommended Determination on Remedy and Bond issued in this investigation on June 26, 2020. Comments should address whether issuance of the remedial orders in this investigation, should the Commission find a violation, would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) Explain how the articles potentially subject to the recommended LEO are used in the United States;
(ii) Identify any public health, safety, or welfare concerns in the United States relating to the recommended LEO;
(iii) Identify like or directly competitive articles that complainant, its licensees, and/or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) Indicate whether complainant, its licensees, and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to the recommended LEO within a commercially reasonable time; and
(v) Explain how the recommended LEO would impact consumers in the United States.
Written submissions from the public must be filed no later than by close of business on July 28, 2020.
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. The Commission's paper filing requirements in 19 CFR 210.4(f) are currently waived. 85
The authority for the Commission's determination is contained in Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in Part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the institution of investigations and commencement of preliminary phase countervailing duty investigation Nos. 701-TA-650-651 (Preliminary) pursuant to the Tariff Act of 1930 (“the Act”) to determine whether there is a reasonable indication that an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of phosphate fertilizers from Morocco and Russia, provided for in subheadings 3103.11.00, 3103.19.00, 3105.20.00, 3105.30.00, 3105.40.00, 3105.51.00, and 3105.59.00 of the Harmonized Tariff Schedule of the United States, that are alleged to be subsidized by the Governments of Morocco and Russia. Unless the Department of Commerce (“Commerce”) extends the time for initiation, the Commission must reach a preliminary determination in countervailing duty investigations in 45 days, or in this case by August 10, 2020. The Commission's views must be transmitted to Commerce within five business days thereafter, or by August 17, 2020.
Applicable June 26, 2020.
Calvin Chang ((202) 205-3062), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
For further information concerning the conduct of these investigations and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A and B (19 CFR part 207).
In accordance with §§ 201.16(c) and 207.3 of the rules, each document filed by a party to the investigations must be served on all other parties to the investigations (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
These investigations are being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to § 207.12 of the Commission's rules.
By order of the Commission.
Federal Firearms Licensee Firearms Inventory Theft/Loss Report—ATF Form 3310.11
Bureau of Alcohol, Tobacco, Firearms and Explosives, Department of Justice
30-day notice.
The Department of Justice (DOJ), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), will submit the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995.
Comments are encouraged and will be accepted for an additional 30 days until August 5, 2020.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
(1)
(2)
(3)
(4)
(5)
(6)
If additional information is required contact: Melody Braswell, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE, 3E.405A, Washington, DC 20530.
Employment and Training Administration, Labor.
Notice.
This notice announces a retroactive change in benefit period eligibility under the EB program for Ohio. The following changes have occurred since the publication of the last notice regarding the State's EB status:
Based on Ohio's State law, which provides for the temporary adoption of the optional TUR trigger during periods of 100 percent Federal financing, and data released by the Bureau of Labor Statistics on May 22, 2020, the seasonally-adjusted total unemployment rate for Ohio rose to meet the 8.0 percent threshold to trigger “on” to a high unemployment period in EB. The payable period for Ohio under the high unemployment period is retroactive to June 7, 2020, and eligibility for claimants has been extended from up to 13 weeks of potential duration to up to 20 weeks of potential duration in the EB program.
The trigger notice covering state eligibility for the EB program can be found at:
The duration of benefits payable in the EB program, and the terms and conditions on which they are payable, are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the
Persons who believe they may be entitled to EB, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, Room S-4524, Attn: Kevin Stapleton, 200 Constitution Avenue NW, Washington, DC 20210, telephone number (202)-693-3009 (this is not a toll-free number) or by email:
Signed in Washington, DC.
Employment and Training Administration, Labor.
Notice.
This notice announces a change in benefit payment status under the EB program for Arizona and Nebraska.
The following change has occurred since the publication of the last notice regarding each States' EB status:
The 13-week insured unemployment rates (IUR) for Arizona and Nebraska, for the week ending May 30, 2020, rose above 5.0 percent and exceeded 120 percent of the corresponding average rates in the two prior years. Therefore, beginning the week of June 14, 2020, eligible unemployed workers will be able to collect up to an additional 13 weeks of UI benefits.
The trigger notice covering state eligibility for the EB program can be found at:
The duration of benefits payable in the EB program and the terms and conditions on which they are payable are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the States by the U.S. Department of Labor. In the case of a state beginning an EB period, the State Workforce Agency will furnish a written notice of potential entitlement to each individual who has exhausted all rights to regular benefits and is potentially eligible for EB (20 CFR 615.13(c)(1)).
Persons who believe they may be entitled to EB, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance Room S-4524, Attn: Kevin Stapleton, 200 Constitution Avenue NW, Washington, DC. 20210, telephone number: (202)-693-3009 (this is not a toll-free number) or by email:
Signed in Washington, DC.
Employment and Training Administration, Labor.
Notice.
This notice announces a change in benefit payment status under the EB program for Wyoming. The following change has occurred since the publication of the last notice regarding the State's EB status:
The 13-week insured unemployment rate (IUR) for Wyoming, for the week ending June 6, 2020, rose above 5.0 percent and exceeded 120 percent of the corresponding average rates in the two prior years. Therefore, beginning the week of June 21, 2020, eligible unemployed workers will be able to collect up to an additional 13 weeks of UI benefits.
The trigger notice covering state eligibility for the EB program can be found at:
The duration of benefits payable in the EB program and the terms and conditions on which they are payable are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the States by the U.S. Department of Labor. In the case of a state beginning an EB period, the State Workforce Agency will furnish a written notice of potential entitlement to each individual who has exhausted all rights to regular benefits and is potentially eligible for EB (20 CFR 615.13(c)(1)).
Persons who believe they may be entitled to EB, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance Room S-4524, Attn: Kevin Stapleton, 200 Constitution Avenue NW, Washington, DC. 20210, telephone number: (202)-693-3009 (this is not a toll-free number) or by email:
Signed in Washington, DC.
Employment and Training Administration, Labor.
Notice.
This notice announces a change in benefit payment status under the EB program for Utah.
The following change has occurred since the publication of the last notice regarding each Utah's EB status:
The 13-week insured unemployment rate (IUR) for Utah, for the week ending June 13, 2020, rose above 5.0 percent and exceeded 120 percent of the corresponding average rate in the two prior years. Therefore, beginning the week of June 28, 2020, eligible unemployed workers will be able to collect up to an additional 13 weeks of UI benefits.
The trigger notice covering state eligibility for the EB program can be found at:
The duration of benefits payable in the EB program and the terms and conditions on which they are payable are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the States by the U.S. Department of Labor. In the case of a state beginning an EB period, the State Workforce Agency will furnish a written notice of potential entitlement to each individual who has exhausted all rights to regular benefits and is potentially eligible for EB (20 CFR 615.13 (c) (1)).
Persons who believe they may be entitled to EB, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance Room S-4524, Attn: Thomas Stengle, 200 Constitution Avenue NW, Washington, DC. 20210, telephone number: (202)-693-2991 (this is not a toll-free number) or by email:
Signed in Washington, DC.
Employment and Training Administration, Labor.
Notice.
This notice announces a change in benefit period eligibility under the EB program for Alaska, Kansas, North Carolina, New Hampshire, New Jersey, New York, Oregon, Texas, and Vermont.
The following changes have occurred since the publication of the last notice regarding the States' EB status:
Based on the data released by the Bureau of Labor Statistics on June 19, 2020, the seasonally-adjusted total unemployment rates for Alaska, Kansas, North Carolina, New Hampshire, New Jersey, New York, Oregon, Texas, and Vermont rose to meet the 8.0% threshold to trigger “on” to a high unemployment period in EB. The payable period for these states under the high unemployment period begins July 5, 2020, and eligibility for claimants has been extended from up to 13 weeks of potential duration to up to 20 weeks of potential duration in the EB program.
The trigger notice covering state eligibility for the EB program can be found at:
The duration of benefits payable in the EB program, and the terms and conditions on which they are payable, are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the states by the U.S. Department of Labor. In the case of a state beginning an EB period, the State Workforce Agency will furnish a written notice of potential entitlement to each individual who has exhausted all rights to regular benefits and is potentially eligible for EB (20 CFR 615.13 (c)(1)). Persons who believe they may be entitled to EB, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance Room S-4524, Attn: Thomas Stengle, 200 Constitution Avenue NW, Washington, DC 20210, telephone number (202) 693-2991 (this is not a toll-free number) or by email:
Employment and Training Administration, Labor.
Notice.
This notice announces a change in benefit period eligibility under the EB program for Rhode Island and Washington.
The following changes have occurred since the publication of the last notice regarding the States EB status:
Based on the data released by the Bureau of Labor Statistics on May 22, 2020, the seasonally-adjusted total unemployment rates for Rhode Island and Washington rose to meet the 8.0% threshold to trigger “on” to a high unemployment period in EB. The payable period for these states under the high unemployment period begins June 7, 2020, and eligibility for claimants has been extended from up to 13 weeks of potential duration to up to 20 weeks of potential duration in the EB program.
The trigger notice covering state eligibility for the EB program can be found at:
The duration of benefits payable in the EB program, and the terms and conditions on which they are payable, are governed by the Federal-State Extended Unemployment Compensation Act of 1970, as amended, and the operating instructions issued to the states by the U.S. Department of Labor. In the case of a state beginning an EB period, the State Workforce Agency will furnish a written notice of potential entitlement to each individual who has exhausted all rights to regular benefits and is potentially eligible for EB (20 CFR 615.13(c)(1)).
Persons who believe they may be entitled to EB, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance Room S-4524, Attn: Kevin Stapleton, 200 Constitution Avenue NW, Washington, DC 20210, telephone number (202)-693-3009 (this is not a toll-free number) or by email:
Signed in Washington, DC.
DATE AND TIME: The Legal Services Corporation's Finance Committee will meet telephonically on July 14, 2020. The meeting will commence at 3:00 p.m., EDT, and will continue until the conclusion of the Committee's agenda.
LOCATION: PUBLIC NOTICE OF VIRTUAL REMOTE MEETING Legal Services Corporation Headquarters
PUBLIC OBSERVATION: Unless otherwise noted herein, the Finance Committee meeting will be open to public observation. Members of the public who wish to participate remotely may do so by following the directions provided below.
DIRECTIONS FOR OPEN SESSION:
• To join the Zoom meeting by computer please click this link.
• Meeting ID: 893 8453 8011
• Password: Justice74
• To join the Zoom meeting with one touch from your mobile phone, click below:
+13126266799,89384538011#,1#,812073#
• To join the Zoom meeting by phone, use this information:
Dial by your location
+1 312 626 6799 US (Chicago)
+1 929 205 6099 US (New York)
+1 301 715 8592 US (Germantown)
+1 346 248 7799 US (Houston)
+1 669 900 6833 US (San Jose)
+1 253 215 8782 US (Tacoma)
• Meeting ID: 893 8453 8011
• Password: 812073
Find your local number:
• When connected to the call, please immediately “MUTE” your telephone.
Members of the public are asked to keep their telephones muted to eliminate background noises. To avoid disrupting the meeting, please refrain from placing the call on hold if doing so will trigger recorded music or other sound. From time to time, the Chair may solicit comments from the public.
Open.
1. Approval of agenda
2. Approval of minutes of the Committee's meeting of June 16, 2020
3. Public comment regarding Fiscal Year 2022 budget request
5. Public comment on other matters
6. Consider and act on other business
7. Consider and act on adjournment of meeting.
Karly Satkowiak, Special Counsel at (202) 295-1633 and Katherine Ward, Executive Assistant to the Vice President & General Counsel, at (202) 295-1500. Questions may be sent by electronic mail to
LSC complies with the Americans with Disabilities Act and Section 504 of the 1973 Rehabilitation Act. Upon request, meeting notices and materials will be made available in alternative formats to accommodate individuals with disabilities. Individuals needing other accommodations due to disability in order to attend the meeting in person or telephonically should contact Katherine Ward, at (202) 295-1500 or
If a request is made without advance notice, LSC will make every effort to accommodate the request but cannot guarantee that all requests can be fulfilled.
Nuclear Regulatory Commission.
License amendment application; opportunity to comment, request a hearing, and petition for leave to intervene.
The U.S. Nuclear Regulatory Commission (NRC) is considering issuance of amendments to the facility operating licenses for the following facilities operated by Exelon Generation Company, LLC: Dresden Nuclear Power Station (Dresden), Units 2 and 3; LaSalle County Station (LaSalle), Units 1 and 2; Limerick Generating Station (Limerick), Units 1 and 2; Nine Mile Point Nuclear Station (Nine Mile Point), Unit 2; Peach Bottom Atomic Power Station (Peach Bottom), Units 2 and 3; and Quad Cities Nuclear Power Station (Quad Cities), Units 1 and 2. The proposed amendments would revise technical specification (TS) requirements for certain physical parameters at each facility.
Submit comments by August 5, 2020. Requests for a hearing or petitions for leave to intervene must be filed by August 5, 2020.
You may submit comments by any of the following methods:
•
•
For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Blake A. Purnell, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-1380, email:
Please refer to Docket ID NRC-2020-0151 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
•
•
Please include Docket ID NRC-2020-0151 in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
The NRC is considering issuance of amendments to the facility operating licenses for the following boiling-water reactors (BWRs) operated by Exelon Generation Company, LLC: Dresden, Units 2 and 3, located in Grundy County, Illinois; LaSalle, Units 1 and 2, located in LaSalle County, Illinois; Limerick, Units 1 and 2, located in Montgomery County, Pennsylvania; Nine Mile Point, Unit 2, located in Oswego County, New York; Peach Bottom, Units 2 and 3, located in York and Lancaster Counties, Pennsylvania; and Quad Cities, Units 1 and 2, located in Rock Island County, Illinois.
The proposed amendments would revise certain TS requirements for the following physical parameters: (1) The drywell-to-suppression chamber differential pressure at Dresden and Quad Cities; (2) the primary containment oxygen concentration at Dresden, LaSalle, Nine Mile Point, Peach Bottom, and Quad Cities; and (3) the drywell and suppression chamber oxygen concentration at Limerick. The proposed changes are based, in part, on Technical Specifications Task Force (TSTF) traveler TSTF-568, Revision 2, “Revise Applicability of BWR/4 TS 3.6.2.5 and TS 3.6.3.2” (ADAMS Accession No. ML19141A122).
Before any issuance of the proposed license amendments, the NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended (the Act), and NRC's regulations.
The NRC has made a proposed determination that the license amendment request involves no significant hazards consideration. Under the NRC's regulations in § 50.92 of title 10 of the
1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated?
The proposed change revises certain TS requirements for the following physical parameters: (1) The drywell-to-suppression chamber differential pressure at Dresden and Quad Cities; (2) the primary containment oxygen concentration at Dresden, LaSalle, Nine Mile Point, Peach Bottom, and Quad Cities; and (3) the drywell and suppression chamber oxygen concentration at Limerick. Specifically, the proposed change revises the applicability of the limiting conditions for operation (LCOs) for these parameters and the remedial actions to be taken when these LCOs are not met. The TS limits on these parameters are not affected by the proposed change. These parameters are not initiators to any accident previously evaluated. As a result, the probability of any accident previously evaluated is not affected by the proposed change.
The mitigation of some accidents previously evaluated includes assumptions regarding these physical parameters. The applicability of the LCOs related to oxygen concentration is changed from Mode 1 (Operational Condition 1 for Limerick) when thermal power is greater than 15 percent to Modes 1 and 2 (Operational Conditions 1 and 2 for Limerick). This expands the applicability of the LCOs related to oxygen concentration for each facility and will not affect the consequences of an accident.
The existing exceptions in the applicability of the LCOs for the subject physical parameters are removed. For each subject parameter, if the LCO is not met, then the licensee must either restore the parameter to within the specified limit or be in a mode or condition where the LCO is not applicable. The proposed change includes increasing the completion times for these actions. The consequences of an event that could affect the subject parameters are no different during the proposed completion times than the consequences of the same event during the existing completion times. A note referencing LCO 3.0.4.c is added to the TS actions to permit entering a mode or condition where the LCOs for the subject parameters are applicable but not met. The addition of LCO 3.0.4.c has no effect on the consequences of an accident. The changes to the completion times and addition of LCO 3.0.4.c replace the existing applicability exceptions.
Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated?
The proposed change revises the TS requirements for the following physical parameters: (1) The drywell-to-suppression chamber differential pressure at Dresden and Quad Cities; (2) the primary containment oxygen concentration at Dresden, LaSalle, Nine Mile Point, Peach Bottom, and Quad Cities; and (3) the drywell and suppression chamber oxygen concentration at Limerick. Specifically, the proposed change revises the applicability of the LCOs for these parameters and the actions for when these LCOs are not met. The proposed change does not involve a physical alteration of these plants (
Therefore, the proposed change does not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed change involve a significant reduction in a margin of safety?
The proposed change revises the TS requirements for the following physical parameters: (1) The drywell-to-suppression chamber differential
Therefore, the proposed change does not involve a significant reduction in a margin of safety.
Based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the license amendment request involves no significant hazards consideration.
The NRC is seeking public comments on this proposed determination that the license amendment request involves no significant hazards consideration. Any comments received within 30 days after the date of publication of this notice will be considered in making any final determination.
Normally, the Commission will not issue the amendments until the expiration of 60 days after the date of publication of this notice. The Commission may issue the license amendments before expiration of the 60-day notice period if the Commission concludes the amendments involve no significant hazards consideration. In addition, the Commission may issue the amendments prior to the expiration of the 30-day comment period if circumstances change during the 30-day comment period such that failure to act in a timely way would result, for example, in derating or shutdown of the facility. If the Commission takes action prior to the expiration of either the comment period or the notice period, it will publish in the
Within 60 days after the date of publication of this notice, any persons (petitioner) whose interest may be affected by this action may file a request for a hearing and petition for leave to intervene (petition) with respect to the action. Petitions shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested persons should consult a current copy of 10 CFR 2.309. The NRC's regulations are accessible electronically from the NRC Library on the NRC's website at
As required by 10 CFR 2.309(d) the petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements for standing: (1) The name, address, and telephone number of the petitioner; (2) the nature of the petitioner's right to be made a party to the proceeding; (3) the nature and extent of the petitioner's property, financial, or other interest in the proceeding; and (4) the possible effect of any decision or order which may be entered in the proceeding on the petitioner's interest.
In accordance with 10 CFR 2.309(f), the petition must also set forth the specific contentions which the petitioner seeks to have litigated in the proceeding. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner must provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to the specific sources and documents on which the petitioner intends to rely to support its position on the issue. The petition must include sufficient information to show that a genuine dispute exists with the applicant or licensee on a material issue of law or fact. Contentions must be limited to matters within the scope of the proceeding. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner who fails to satisfy the requirements at 10 CFR 2.309(f) with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene. Parties have the opportunity to participate fully in the conduct of the hearing with respect to resolution of that party's admitted contentions, including the opportunity to present evidence, consistent with the NRC's regulations, policies, and procedures.
Petitions must be filed no later than 60 days from the date of publication of this notice. Petitions and motions for leave to file new or amended contentions that are filed after the deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i) through (iii). The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document.
If a hearing is requested, and the Commission has not made a final determination on the issue of no significant hazards consideration, the Commission will make a final determination on the issue of no significant hazards consideration. The final determination will serve to establish when the hearing is held. If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendments and make them immediately effective, notwithstanding the request for a hearing. Any hearing would take place after issuance of the amendments. If the final determination is that the amendment request involves a significant hazards consideration, then any hearing held would take place before the issuance of the amendments unless the Commission finds an imminent danger to the health or safety of the public, in which case it will issue an appropriate order or rule under 10 CFR part 2.
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h)(1). The petition should state the nature and extent of the petitioner's interest in the proceeding. The petition should be submitted to the Commission no later than 60 days from the date of publication of this notice. The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)”
If a hearing is granted, any person who is not a party to the proceeding and is not affiliated with or represented by a party may, at the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or written statement of his or her position on the issues but may not otherwise participate in the proceeding. A limited appearance may be made at any session of the hearing or at any prehearing conference, subject to the limits and conditions as may be imposed by the presiding officer. Details regarding the opportunity to make a limited appearance will be provided by the presiding officer if such sessions are scheduled.
All documents filed in NRC adjudicatory proceedings, including a request for hearing and petition for leave to intervene (petition), any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities that request to participate under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007, as amended at 77 FR 46562; August 3, 2012). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Detailed guidance on making electronic submissions may be found in the Guidance for Electronic Submissions to the NRC and on the NRC website at
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public website at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public website at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
For the Nuclear Regulatory Commission.
Office of Personnel Management.
Notice.
According to the provisions of section 10 of the Federal Advisory Committee Act, notice is hereby given that the July 16, 2020, meeting of the Federal Prevailing Rate Advisory Committee previously announced in the
The meeting announce in the
The meeting will convene virtually.
Madeline Gonzalez, 202-606-2858, or email
This meeting will be open to the public, with an audio option for listening. This notice sets forth the agenda for the meeting and the participation guidelines. This notice is published less than 15 days prior to the meeting due to administrative delays caused by the impact of the novel coronavirus SARS-CoV-2, which has required a rescheduling of the meeting from an in-person meeting to a virtual meeting.
• The definition of Monroe County, PA
• The definition of San Joaquin County, CA
• The definition of the Salinas-Monterey, CA, wage area
• The definition of the Puerto Rico wage area
• Special wage schedules for ship surveyors in Puerto Rico
• Amendments to 5 CFR 532.201, 532.207, 532.235, and 532.247
The following information must be provided when registering:
• Name.
• Agency and duty station.
• Email address.
• Your topic of interest.
A confirmation email will be sent upon receipt of the registration. Audio teleconference information for participation will be sent to registrants the morning of the virtual meeting.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning negotiated service agreements. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's website (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II.
1.
This Notice will be published in the
On December 23, 2019, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act” or “Exchange Act”)
On February 13, 2020, pursuant to Section 19(b)(2) of the Act,
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to add new NYSE Arca Rule 8.601-E for the purpose of permitting the listing and trading, or trading pursuant to unlisted trading privileges (“UTP”), of Active Proxy Portfolio Shares, which are securities issued by an actively managed open-end investment management company. The Exchange also proposes to list and trade shares (“Shares”) of the following under proposed NYSE Arca Rule 8.601-E: Natixis U.S. Equity Opportunities ETF (the “Fund”).
Proposed Rule 8.601-E (a) provides that the Exchange will consider for trading, whether by listing or pursuant to UTP, Active Proxy Portfolio Shares that meet the criteria of Rule 8.601-E.
Proposed Rule 8.601-E (b) provides that Rule 8.601-E is applicable only to Active Proxy Portfolio Shares and that, except to the extent inconsistent with Rule 8.601-E, or unless the context otherwise requires, the rules and procedures of the Exchange's Board of Directors shall be applicable to the trading on the Exchange of such securities. Proposed Rule 8.601-E (b) provides further that Active Proxy Portfolio Shares are included within the definition of “security” or “securities” as such terms are used in the Rules of the Exchange.
Proposed Rule 8.601-E(c)(1) defines the “Active Proxy Portfolio Share” as a security that (a) is issued by an investment company registered under the Investment Company Act of 1940 (“Investment Company”) organized as
Proposed Rule 8.601-E(c)(2) defines the term “Actual Portfolio” as the identities and quantities of the securities and other assets held by the Investment Company that shall form the basis for the Investment Company's calculation of NAV at the end of the business day.
Proposed Rule 8.601-E(c)(3) defines the term “Proxy Portfolio” as a specified portfolio of securities, other financial instruments and/or cash designed to track closely the daily performance of the Actual Portfolio of a series of Active Proxy Portfolio Shares as provided in the exemptive relief pursuant to the Investment Company Act of 1940 applicable to such series. The website for each series of Active Proxy Portfolio Shares shall disclose the information regarding the Proxy Portfolio as provided in the exemptive relief pursuant to the Investment Company Act of 1940 applicable to such series, including the following, to the extent applicable:
(i) Ticker symbol;
(ii) CUSIP or other identifier;
(iii) Description of holding;
(iv) Quantity of each security or other asset held; and
(v) Percentage weighting of the holding in the portfolio.
Proposed Rule 8.601-E(c)(4) defines the term “Reporting Authority” in respect of a particular series of Active Proxy Portfolio Shares as the Exchange, an institution, or a reporting service designated by the Exchange or by the exchange that lists a particular series of Active Proxy Portfolio Shares (if the Exchange is trading such series pursuant to unlisted trading privileges) as the official source for calculating and reporting information relating to such series, including, but not limited to, NAV, the Actual Portfolio, Proxy Portfolio, or other information relating to the issuance, redemption or trading of Active Proxy Portfolio Shares. A series of Active Proxy Portfolio Shares may have more than one Reporting Authority, each having different functions.
Proposed Rule 8.601-E(c)(5) defines the term “normal market conditions” as including, but not limited to, the absence of trading halts in the applicable financial markets generally; operational issues (
Proposed Rule 8.601-E (d) sets forth initial and continued listing criteria applicable to Active Proxy Portfolio Shares. Proposed Rule 8.601-E(d)(1) provides that each series of Active Proxy Portfolio Shares shall be listed and traded on the Exchange subject to application of the following initial listing criteria:
(A) For each series, the Exchange shall establish a minimum number of Active Proxy Portfolio Shares required to be outstanding at the time of commencement of trading on the Exchange.
(B) The Exchange shall obtain a representation from the issuer of each series of Active Proxy Portfolio Shares that the NAV per share for the series shall be calculated daily and that the NAV, the Proxy Portfolio, and the Actual Portfolio shall be made publicly available to all market participants at the same time.
(C) All Active Proxy Portfolio Shares shall have a stated investment objective, which shall be adhered to under normal market conditions.
Proposed Rule 8.601-E(d)(2) provides that each series of Active Proxy Portfolio Shares shall be listed and traded subject to application of the following continued listing criteria: the Actual Portfolio shall be publicly disseminated within at least 60 days following the end of every fiscal quarter and shall be made publicly available to all market participants at the same time (proposed Rule 8.601-E(d)(2)(A)(i)), and the Proxy Portfolio will be made publicly available on the website for each series of Active Proxy Portfolio Shares at least once daily and will be made available to all market participants at the same time (proposed Rule 8.601-E(d)(2)(B)(i)).
Proposed Rule 8.601-E(d)(2)(C) provides that the Exchange will consider the suspension of trading in, and will commence delisting proceedings under Rule 5.5-E(m) for, a series of Active Proxy Portfolio Shares under any of the following circumstances:
(i) if any of the continued listing requirements set forth in Rule 8.601-E are not continuously maintained;
(ii) if either the Proxy Portfolio or Actual Portfolio is not made available to all market participants at the same time;
(iii) if, following the initial twelve month period after commencement of trading on the Exchange of a series of Active Proxy Portfolio Shares, there are fewer than 50 beneficial holders of such series of Active Proxy Portfolio Shares;
(iv) if the Exchange is notified, or otherwise becomes aware, that the Investment Company has failed to file any filings required by the Commission or is not in compliance with the conditions of any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff to the Investment Company with respect to a series of Active Proxy Portfolio Shares;
(v) if any of the statements or representations regarding (a) the description of the portfolio, (b) limitations on portfolio holdings, or (c) the applicability of Exchange listing rules, specified in the Exchange's rule filing pursuant to Section 19(b) of the Act to permit the listing and trading of a series of Active Proxy Portfolio Shares, is not continuously maintained; or
(vi) if such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable.
Proposed Rule 8.601-E(d)(2)(D) (Trading Halt) provides that (i) The
Proposed Rule 8.601-E(d)(2)(E) provides that, upon termination of an Investment Company, the Exchange requires that Active Proxy Portfolio Shares issued in connection with such entity be removed from Exchange listing.
Proposed Rule 8.601-E(d)(2)(F) provides that voting rights shall be as set forth in the applicable Investment Company prospectus.
Proposed Rule 8.601-E(e) (Limitation of Exchange Liability) provides that neither the Exchange, the Reporting Authority, when the Exchange is acting in the capacity of a Reporting Authority, nor any agent of the Exchange shall have any liability for damages, claims, losses or expenses caused by any errors, omissions, or delays in calculating or disseminating any current portfolio value; the current value of the portfolio of securities required to be deposited to the Investment Company in connection with issuance of Active Proxy Portfolio Shares; the amount of any dividend equivalent payment or cash distribution to holders of Active Proxy Portfolio Shares; NAV; or other information relating to the purchase, redemption, or trading of Active Proxy Portfolio Shares, resulting from any negligent act or omission by the Exchange, the Reporting Authority, when the Exchange is acting in the capacity of a Reporting Authority, or any agent of the Exchange, or any act, condition, or cause beyond the reasonable control of the Exchange, its agent, or the Reporting Authority, when the Exchange is acting in the capacity of a Reporting Authority, including, but not limited to, an act of God; fire; flood; extraordinary weather conditions; war; insurrection; riot; strike; accident; action of government; communications or power failure; equipment or software malfunction; or any error, omission, or delay in the reports of transactions in one or more underlying securities.
Proposed Commentary .01 to Rule 8.601-E provides that the Exchange will file separate proposals under Section 19(b) of the Act before the listing and trading of a series of Active Proxy Portfolio Shares. All statements or representations contained in such rule filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings, or (c) the applicability of Exchange listing rules specified in such rule filing will constitute continued listing requirements. An issuer of such securities must notify the Exchange of any failure to comply with such continued listing requirements.
Proposed Commentary .02 provides that transactions in Active Proxy Portfolio Shares shall occur during the trading hours specified in NYSE Arca Rule 7.34-E(a).
Proposed Commentary .03 provides that the Exchange will implement and maintain written surveillance procedures for Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company's investment adviser will upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily Actual Portfolio holdings of each series of Active Proxy Portfolio Shares.
Proposed Commentary.04 provides that, if the investment adviser to the Investment Company issuing Active Proxy Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such Investment Company's Actual Portfolio and/or Proxy Portfolio. Any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company's Actual Portfolio and/or Proxy Portfolio or has access to non-public information regarding the Investment Company's Actual Portfolio and/or the Proxy Portfolio or changes thereto must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Actual Portfolio and/or the Proxy Portfolio or changes thereto.
Proposed Commentary .05 provides that any person or entity, including a custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company's Actual Portfolio or the Proxy Portfolio or changes thereto, must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company Actual Portfolio or the Proxy Portfolio or changes thereto. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity will erect and maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company Actual Portfolio or Proxy Portfolio.
The Exchange also proposes non-substantive amendments to include Active Proxy Portfolio Shares in other Exchange rules. Specifically, the Exchange proposes to amend current Rule 5.3-E to include Active Proxy Portfolio Shares listed pursuant to proposed Rule 8.601-E among the derivative or special purpose securities that are subject to a limited set of corporate governance and disclosure policies. Similarly, the Exchange proposes to amend Rule 5.3-E(e) to include Active Proxy Portfolio Shares listed pursuant to proposed Rule 8.601-E among the derivative or special purpose securities to which the requirements concerning shareholder/annual meetings do not apply.
While funds issuing Active Proxy Portfolio Shares will be actively-managed and, to that extent, will be similar to Managed Fund Shares, Active Proxy Portfolio Shares differ from Managed Fund Shares in the following important respects. First, in contrast to Managed Fund Shares, which are actively-managed funds listed and traded under NYSE Arca Rule 8.600-E
The Exchange, after consulting with various Lead Market Makers (“LMMs”)
The Fund will be a series of Natixis ETF Trust II (“Trust”), which will be registered with the Commission as an open-end management investment company.
Natixis Advisors, L.P. (“Adviser”) will be the investment adviser to the Fund. Harris Associates L.P and Loomis, Sayles & Company are sub-advisers (“Sub-Advisers”) for the Fund. ALPS Distributors, Inc. will act as the distributor and principal underwriter (“Distributor”) for the Fund.
As noted above, proposed Commentary.04 provides that, if the investment adviser to the Investment Company issuing Active Proxy Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such Investment Company's Actual Portfolio and/or Proxy Portfolio. Any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company's Actual Portfolio and/or Proxy Portfolio or has access to non-public information regarding the Investment Company's Actual Portfolio and/or Proxy Portfolio or changes thereto must be subject to procedures reasonably designed to prevent the use and dissemination of
In addition, proposed Commentary.05 provides that any person or entity, including a custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company's Actual Portfolio or the Proxy Portfolio or changes thereto, must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company Actual Portfolio or the Proxy Portfolio or changes thereto. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity will erect and maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company Actual Portfolio or Proxy Portfolio.
The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer. The Adviser has implemented and will maintain a “fire wall” with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio. Harris Associates L.P. and Loomis, Sayles & Company are not registered as a broker-dealer but are affiliated with a broker-dealer. Each of the Sub-Advisers has implemented and will maintain a “fire wall” with respect to its respective broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio.
In the event (a) the Adviser or a Sub-Adviser becomes registered as a broker-dealer or becomes newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer, or becomes affiliated with a broker-dealer, it will implement and maintain a fire wall with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the Fund's Actual Portfolio and/or Proxy Portfolio or changes thereto. Any person related to the Adviser, each Sub-Adviser or the Fund who makes decisions pertaining to the Fund's Actual Portfolio or the Proxy Portfolio or has access to non-public information regarding the Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto are subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto.
In addition, any person or entity, including any service provider for the Fund, who has access to non-public information regarding the Fund's Actual Portfolio or the Proxy Portfolio or changes thereto, will be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity has erected and will maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio.
According to the Application, the Adviser believes the Fund would allow for efficient trading of Shares through an effective Fund portfolio transparency substitute and publication of related information metrics, while still shielding the identity of the full Fund portfolio contents to protect the Fund's performance-seeking strategies. Even though the Fund would not publish its full portfolio contents daily, the Adviser believes that the NYSE Proxy Portfolio Methodology would allow market participants to assess the intraday value and associated risk of the Fund's Actual Portfolio. As a result, the Adviser believes that investors would be able to purchase and sell Shares in the secondary market at prices that are close to their NAV.
In this regard, the Fund will utilize a proxy portfolio methodology— the “NYSE Proxy Portfolio Methodology”— that would allow market participants to assess the intraday value and associated risk of the Fund's Actual Portfolio and thereby facilitate the purchase and sale of Shares by investors in the secondary market at prices that do not vary materially from their NAV.
The Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
According to the Registration Statement, the Fund's investment objective is to seek long-term growth of capital. The Fund, under normal market conditions,
According to the Registration Statement, the Trust will offer, issue and sell Shares of the Fund to investors only in specified minimum size “Creation Units” through the Distributor on a continuous basis at the NAV per Share next determined after an order in proper form is received. The NAV of the Fund is expected to be determined as of 4:00 p.m. E.T. on each Business Day. The Trust will sell and redeem Creation Units of the Fund only on a Business Day. Creation Units of the Fund may be purchased and/or redeemed entirely for cash, as permissible under the procedures described below.
The “Creation Basket” (as defined below) for the Fund's Shares will be based on the Fund's Proxy Portfolio, which is designed to approximate the value and performance of the Actual Portfolio. All Creation Basket instruments will be valued in the same manner as they are valued for purposes of calculating the Fund's NAV, and such valuation will be made in the same manner regardless of the identity of the purchaser or redeemer. Further, the total consideration paid for the purchase or redemption of a Creation Unit of Shares will be based on the NAV of the Fund, as calculated in accordance with the policies and procedures set forth in the Registration Statement.
According to the Application, Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. Accordingly, except where the purchase or redemption will include cash under the circumstances specified below, purchasers will be required to purchase Creation Units by making an in-kind deposit of specified instruments (“Deposit Instruments”), and shareholders redeeming their Shares will receive an in-kind transfer of specified instruments (“Redemption Instruments”). The names and quantities of the instruments that constitute the Deposit Instruments and the Redemption Instruments for the Fund (collectively, the “Creation Basket”) will be the same as the Fund's Proxy Portfolio, except to the extent purchases and redemptions are made entirely or in part on a cash basis.
If there is a difference between the NAV attributable to a Creation Unit and the aggregate market value of the Creation Basket exchanged for the Creation Unit, the party conveying instruments with the lower value will also pay to the other an amount in cash equal to that difference (the “Cash Amount”).
While the Fund normally will issue and redeem Shares in kind, the Fund may require purchases and redemptions to be made entirely or in part on a cash basis. In such an instance, the Fund will announce, before the open of trading in the Core Trading Session (normally, 9:30 a.m. to 4:00 p.m. E.T.) on a given Business Day, that all purchases, all redemptions, or all purchases and redemptions on that day will be made wholly or partly in cash. The Fund may also determine, upon receiving a purchase or redemption order from an Authorized Participant, to have the purchase or redemption, as applicable, be made entirely or in part in cash.
All orders to purchase Creation Units must be placed with the Distributor by or through an Authorized Participant, which is either: (1) A “participating party” (
All orders to purchase (or redeem) Creation Units, whether using the NSCC Process or the DTC Process, must be received by the Distributor no later than the NAV calculation time (“NAV Calculation Time”), generally 4:00 p.m. E.T. on the date the order is placed (“Transmittal Date”) in order for the purchaser (or redeemer) to receive the NAV determined on the Transmittal Date.
With respect to the Fund, the following information will comprise the “Proxy Portfolio Disclosures” and, pursuant to the Application and Exemptive Order, will be publicly available on the Fund's website before the commencement of trading in Shares on each Business Day:
• The Proxy Portfolio holdings (including the identity and quantity of investments in the Proxy Portfolio) will be publicly available on the Fund's website before the commencement of trading in Shares on each Business Day.
• The historical “Tracking Error” between the Fund's last published NAV per share and the value, on a per Share basis, of the Fund's Proxy Portfolio calculated as of the close of trading on the prior Business Day will be publicly available on the Fund's website before the commencement of trading in Shares each Business Day.
• The “Proxy Overlap” will be publicly available on the Fund's website before the commencement of trading in Shares on each Business Day. The Proxy Overlap is the percentage weight overlap between the Proxy Portfolio's holdings compared to the Actual Portfolio's holdings that formed the basis for the Fund's calculation of NAV
The Fund's website (
The Proxy Portfolio holdings (including the identity and quantity of investments in the Proxy Portfolio) will be publicly available on the Fund's website before the commencement of trading in Shares on each Business Day.
Typical mutual fund-style annual, semi-annual and quarterly disclosures contained in the Fund's Commission filings will be provided on the Fund's website on a current basis.
Investors can also obtain the Fund's SAI, Shareholder Reports, Form N-CSR, N-PORT and Form N-CEN. The prospectus, SAI and Shareholder Reports are available free upon request from the Trust, and those documents and the Form N-CSR, N-PORT, and Form N-CEN may be viewed on-screen or downloaded from the Commission's website. The Exchange also notes that pursuant to its Exemptive Order, the Fund must comply with Regulation Fair Disclosure, which prohibits selective disclosure of any material non-public information.
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. Information regarding the previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares, equity securities and ETFs will be available via the Consolidated Tape Association (“CTA”) high-speed line or from the exchange on which such securities trade. Intraday pricing information for all constituents of the Proxy Portfolio that are exchange-traded, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they are traded and through subscription services. Intraday pricing information for cash equivalents will be available through subscription services and/or pricing services.
The Shares of the Fund will conform to the initial and continued listing criteria under proposed Rule 8.601-E. The Fund's holdings will be limited to and consistent with permissible holdings as described in the Application and all requirements in the Application and Exemptive Order.
The Fund's investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, the Fund's investments will not be used to seek performance that is the multiple or inverse multiple (
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund.
Specifically, proposed Rule 8.601-E(d)(2)(D) provides that the Exchange may consider all relevant factors in exercising its discretion to halt trading in a series of Active Proxy Portfolio Shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the series of Active Proxy Portfolio Shares inadvisable. These may include: (a) The extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Portfolio and/or Actual Portfolio; or (b) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. If a series of Active Proxy Portfolio Shares is trading on the Exchange pursuant to unlisted trading privileges, the Exchange shall halt trading in that series as specified in Rule 7.18-E(d)(1). If the Exchange becomes aware that the NAV, Proxy Portfolio or Actual Portfolio with respect to a series of Active Proxy Portfolio Shares is not disseminated to all market participants at the same time, the Exchange shall halt trading in such series until such time as the NAV, Proxy Portfolio or Actual Portfolio is available to all market participants at the same time.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace in all trading sessions in accordance with NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under proposed NYSE Arca Rule 8.601-E. The Exchange has appropriate rules to facilitate trading in the Shares during all trading sessions.
A minimum of 100,000 Shares for the Fund will be outstanding at the commencement of trading on the Exchange. In addition, pursuant to proposed Rule 8.601-E(d)(1)(B), the Exchange, prior to commencement of
With respect to Active Proxy Portfolio Shares, all of the Exchange member obligations relating to product description and prospectus delivery requirements will continue to apply in accordance with Exchange rules and federal securities laws, and the Exchange and the Financial Industry Regulatory Authority, Inc. (“FINRA”) will continue to monitor Exchange members for compliance with such requirements.
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading such securities and exchange-traded instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in such securities and exchange-traded instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
The Adviser will make available daily to FINRA and the Exchange the Actual Portfolio of the Fund, upon request, in order to facilitate the performance of the surveillances referred to above.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
As noted above, proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange will implement and maintain written surveillance procedures for Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company's investment adviser will upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily Actual Portfolio holdings of each series of Active Proxy Portfolio Shares. The Exchange believes that the ability to access the information on an as needed basis will provide it with sufficient information to perform the necessary regulatory functions associated with listing and trading series of Active Proxy Portfolio Shares on the Exchange, including the ability to monitor compliance with the initial and continued listing requirements as well as the ability to surveil for manipulation of Active Proxy Portfolio Shares.
The Exchange will utilize its existing procedures to monitor issuer compliance with the requirements of proposed Rule 8.601-E. For example, the Exchange will continue to use intraday alerts that will notify Exchange personnel of trading activity throughout the day that may indicate that unusual conditions or circumstances are present that could be detrimental to the maintenance of a fair and orderly market. The Exchange will require from the issuer of Active Proxy Portfolio Shares, upon initial listing and periodically thereafter, a representation that it is in compliance with Rule 8.601-E. The Exchange notes that proposed Commentary .01 to Rule 8.601-E would require an issuer of Active Proxy Portfolio Shares to notify the Exchange of any failure to comply with the continued listing requirements of Rule 8.601-E. In addition, the Exchange will require issuers to represent that they will notify the Exchange of any failure to comply with the terms of applicable exemptive and no-action relief. As part of its surveillance procedures, the Exchange will rely on the foregoing procedures to become aware of any non-compliance with the requirements of Rule 8.601-E.
With respect to the Fund, all statements and representations made in this filing regarding (a) the description of the portfolio or reference asset, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares on the Exchange. The Adviser has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5-E(m).
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that proposed Rule 8.601-E is designed to prevent fraudulent and manipulative acts and practices in that the proposed rules relating to listing and trading of Active Proxy Portfolio Shares provide specific initial and continued listing criteria required to be met by such securities.
Proposed Rule 8.601-E (d) sets forth initial and continued listing criteria applicable to Active Proxy Portfolio Shares. Proposed Rule 8.601-E(d)(1)(A) provides that, for each series of Active Proxy Portfolio Shares, the Exchange will establish a minimum number of Active Proxy Portfolio Shares required to be outstanding at the time of commencement of trading on the Exchange. In addition, proposed Rule 8.601-E(d)(1)(B) provides, and the Exchange represents, that the Exchange will obtain a representation from the
Proposed Rule 8.601-E(d)(2)(D)(i) provides that the Exchange may consider all relevant factors in exercising its discretion to halt trading in a series of Active Proxy Portfolio Shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the series of Active Proxy Portfolio Shares inadvisable. These may include: (a) The extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Portfolio and/or Actual Portfolio; or (b) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Proposed Rule 8.601-E(d)(2)(D)(iii) provides that, if the Exchange becomes aware that the NAV, Proxy Portfolio or Actual Portfolio with respect to a series of Active Proxy Portfolio Shares is not made available to all market participants at the same time, the Exchange shall halt trading in such series until such time as the NAV, Proxy Portfolio or Actual Portfolio is available to all market participants at the same time, as applicable. The Exchange believes that these proposed halt procedures will help ensure that market participants have fair and uniform access to information regarding a fund's NAV, Proxy Portfolio or Actual Portfolio and, therefore, reduce the potential for manipulation and help ensure a fair and orderly market in trading of Active Proxy Portfolio Shares.
Proposed Commentary .01 to NYSE Arca Rule 8.601-E provides that the Exchange will file separate proposals under Section 19(b) of the Act before the listing and trading of Active Proxy Portfolio Shares. All statements or representations contained in such rule filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings, or (c) the applicability of Exchange listing rules specified in such rule filing will constitute continued listing requirements. An issuer of such securities must notify the Exchange of any failure to comply with such continued listing requirements.
Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange will implement and maintain written surveillance procedures for Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company's investment adviser will, upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily Actual Portfolio holdings of each series of Active Proxy Portfolio Shares.
Proposed Commentary .04 provides that, if the investment adviser to the Investment Company issuing Active Proxy Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such Investment Company's Actual Portfolio and/or Proxy Portfolio. Any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Company's Actual Portfolio and/or Actual Portfolio or has access to non-public information regarding the Investment Company's Actual Portfolio and/or the Proxy Portfolio or changes thereto must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Actual Portfolio or to the Proxy Portfolio and/or changes thereto.
Proposed Commentary .05 provides that any person or entity, including a custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company's Actual Portfolio or the Proxy Portfolio or changes thereto, must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company Actual Portfolio or the Proxy Portfolio or changes thereto. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity will erect and maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to such Investment Company Actual Portfolio or Proxy Portfolio.
The Exchange believes proposed Commentary .04 and proposed Commentary .05 will act as a safeguard against any misuse and improper dissemination of non-public information related to the Fund's Actual Portfolio or Proxy Portfolio or changes thereto. The requirement that any person or entity implement procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Actual Portfolio or Proxy Portfolio will act to prevent any individual or entity from sharing such information externally and the internal “fire wall” requirements applicable where an entity is a registered broker-dealer or affiliated with a broker-dealer will act to make sure that no entity will be able to misuse the data for their own purpose. As such, the Exchange believes that this proposal is designed to prevent fraudulent and manipulative acts and practices.
The proposed addition of Active Proxy Portfolio Shares to the enumerated derivative and special purpose securities that are subject to the provisions of Rule 5.3-E (Corporate Governance and Disclosure Policies) and Rule 5.3-E (e) (Shareholder/Annual Meetings) would subject Active Proxy Portfolio Shares to the same requirements currently applicable to other 1940 Act-registered investment company securities (
With respect to the proposed listing and trading of Shares of the Fund, the Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Rule 8.601-E. The Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading such securities and exchange-traded instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in such securities and exchange-traded instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
The Exchange, after consulting with various LMMs that trade ETFs on the Exchange, believes that market makers will be able to make efficient and liquid markets priced near the ETF's intraday value, and market makers employ market making techniques such as “statistical arbitrage,” including correlation hedging, beta hedging, and dispersion trading, which is currently used throughout the financial services industry, to make efficient markets in exchange-traded products.
The daily dissemination of the identity and quantity of Proxy Portfolio component investments, together with the right of Authorized Participants to create and redeem each day at the NAV, will be sufficient for market participants to value and trade shares in a manner that will not lead to significant deviations between the Bid/Ask Price and NAV of shares of a series of Active Proxy Portfolio Shares.
The pricing efficiency with respect to trading a series of Active Proxy Portfolio Shares will generally rest on the ability of market participants to arbitrage between the shares and a fund's portfolio, in addition to the ability of market participants to assess a fund's underlying value accurately enough throughout the trading day in order to hedge positions in shares effectively. Professional traders can buy shares that they perceive to be trading at a price less than that which will be available at a subsequent time and sell shares they perceive to be trading at a price higher than that which will be available at a subsequent time. It is expected that, as part of their normal day-to-day trading activity, market makers assigned to shares by the Exchange, off-exchange market makers, firms that specialize in electronic trading, hedge funds and other professionals specializing in short-term, non-fundamental trading strategies will assume the risk of being “long” or “short” shares through such trading and will hedge such risk wholly or partly by simultaneously taking positions in correlated assets
The Exchange believes that the Fund and Active Proxy Portfolio Shares generally, will provide investors with a greater choice of active portfolio managers and active strategies through which they can manage their assets in an ETF structure. This greater choice of active asset management is expected to be similar to the diversity of active managers and strategies available to mutual fund investors. Unlike mutual fund investors, investors in Active Proxy Portfolio Shares would also accrue the benefits derived from the ETF structure, such as lower fund costs, tax efficiencies, intraday liquidity, and pricing that reflects current market conditions rather than end-of-day pricing.
The Adviser represents that, unlike ETFs that publish their portfolios on a daily basis, the Fund, as Active Proxy Portfolio Shares, proposes to allow for efficient trading of Shares through an effective Fund portfolio transparency substitute—Proxy Portfolio transparency. The Adviser believes that this approach will provide an important benefit to investors by protecting the Fund from the potential for front-running of portfolio transactions and the potential for free-riding on the Fund's portfolio strategies, each of which could adversely impact the performance of the Fund.
The Fund will utilize the NYSE Proxy Portfolio Methodology, allowing market participants to assess the intraday value and associated risk of the Fund's Actual Portfolio and thereby facilitate the purchase and sale of Shares by investors in the secondary market at prices that do not vary materially from their NAV.
The Exchange believes that Active Proxy Portfolio Shares will provide the platform for many more asset managers to launch ETFs, increasing the investment choices for consumers of actively managed funds, which should lead to a greater competitive landscape that can help to reduce the overall costs of active investment management for retail investors. Unlike mutual funds, Active Proxy Portfolio Shares would be able to use the efficient share settlement system in place for ETFs today, translating into a lower cost of maintaining shareholder accounts and processing transactions.
The Fund's investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, the Fund's investments will not be used to seek performance that is the multiple or inverse multiple (
The Adviser represents that investors will also benefit because the Fund's operating costs, such as transfer agency costs, are generally lower in ETFs than in mutual funds. The Fund will have access to the identical clearing and settlement procedures now used by U.S. domiciled ETFs, and therefore, should experience many of the operational and
The Adviser represents further that in-kind Share creation/redemption orders will allow the Fund to enjoy overall transaction costs lower than those experienced by mutual funds. The Fund's in-kind Share creation and redemption process will facilitate and enhance active management strategies by generally limiting the portfolio manager's need to transact in a large volume of trades in order to maintain desired investment exposures. In addition, the Adviser represents that the Fund will receive tax efficiency benefits of the ETF structure because of in-kind Share creation and redemption activity.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of a series of Active Proxy Portfolio Shares that the NAV per share of a fund will be calculated daily and that the NAV, Proxy Portfolio and Actual Portfolio will be made available to all market participants at the same time. With respect to the Fund, investors can also obtain the Fund's SAI, shareholder reports, and its Form N-CSR, Form N-PORT and Form N-CEN. The Fund's SAI and shareholder reports will be available free upon request from the Fund, and those documents and the Form N-CSR, Form N-PORT and Form N-CEN may be viewed on-screen or downloaded from the Commission's website. In addition, with respect to the Fund, a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Quotation and last sale information for the Shares will be available via the CTA high-speed line. The website for the Fund will include a form of the prospectus for the Fund that may be downloaded, and additional data relating to NAV and other applicable quantitative information, updated on a daily basis. The Proxy Portfolio holdings (including the identity and quantity of investments in the Proxy Portfolio) will be publicly available on the Fund's website before the commencement of trading in Shares on each Business Day.
Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Trading in the Shares will be subject to NYSE Arca Rule 8.601-E (d)(2)(D), which sets forth circumstances under which Shares of the Fund will be halted. In addition, as noted above, investors will have ready access to quotation and last sale information for the Shares. The Shares will conform to the initial and continued listing criteria under proposed Rule 8.601-E.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding quotation and last sale information for the Shares.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed rule change would permit listing and trading of another type of actively-managed ETF that has characteristics different from existing actively-managed and index ETFs and would introduce additional competition among various ETF products to the benefit of investors.
No written comments were solicited or received with respect to the proposed rule change.
After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 6, is consistent with the Act and rules and regulations thereunder applicable to a national securities exchange.
Pursuant to the Exemptive Order,
The Commission finds that the Exchange's proposal contains adequate rules and procedures to govern the listing and trading of Active Proxy Portfolio Shares on the Exchange. The Commission notes that the proposed listing and trading rules for Active Proxy Portfolio Shares, where appropriate, are similar to existing Exchange rules relating to exchange-traded funds, in particular, Managed Fund Shares and Managed Portfolio Shares.
For the initial listing of each series of Active Proxy Portfolio Shares under proposed NYSE Arca Rule 8.601-E, the Exchange must establish a minimum number of Active Proxy Portfolio Shares required to be outstanding at the commencement of trading. In addition, the Exchange must obtain a representation from the issuer of each series of Active Proxy Portfolio Shares that the NAV per share for the series will be calculated daily and that the NAV, Proxy Portfolio, and Actual Portfolio will be made publicly available to all market participants at the same time. Moreover, all Active Proxy Portfolio Shares must have a stated investment objective, which must be adhered to under normal market conditions.
Although the actual portfolio holdings of the Active Proxy Portfolio Shares are not publicly disclosed on a daily basis, the Commission believes that the proposed listing standards under proposed NYSE Arca Rule 8.601-E, along with the required dissemination of the Proxy Portfolio, are adequate to ensure transparency of key information regarding the Active Proxy Portfolio Shares and that such information is made available to market participants at the same time. Namely, the Proxy Portfolio would be made publicly available on the website for each series of Active Proxy Portfolio Shares at least once daily and would be made available to all market participants at the same time.
The Commission also finds that the Exchange's rules with respect to trading halts and suspensions under proposed NYSE Arca Rule 8.601-E are designed to help maintain a fair and orderly market. According to the proposal, the Exchange may consider all relevant factors in exercising its discretion to halt trading in a series of Active Proxy Portfolio Shares. Further, trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the series of Active Proxy Portfolio Shares inadvisable. These may include the extent to which trading is not occurring in the securities and/or the financial instruments comprising the Proxy Portfolio and/or Actual Portfolio, or whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present.
Other provisions of the Exchange's rule pertaining to suspension are substantially consistent with provisions that currently exist for Managed Fund Shares and Managed Portfolio Shares. Those provisions state that the Exchange will consider the suspension of trading in, and will commence delisting proceedings under NYSE Arca Rule 5.5-E(m) for, a series of Active Proxy Portfolio Shares if: (1) Any of the continued listing requirements set forth in NYSE Arca Rule 8.601-E are not continuously maintained; (2) following the initial twelve-month period after commencement of trading on the Exchange of a series of Active Proxy Portfolio Shares, there are fewer than 50 beneficial holders of the series of Active Proxy Portfolio Shares; (3) the Exchange is notified, or otherwise becomes aware, that the Investment Company has failed to file any filings required by the Commission or is not in compliance with the conditions of any currently applicable exemptive order or no-action relief granted by the Commission or Commission staff to the Investment Company with respect to the series of Active Proxy Portfolio Shares; (4) any of the statements or representations regarding the description of the portfolio, limitations on portfolio holdings, or the applicability of Exchange listing rules, specified in the Exchange's rule filing pursuant to Section 19(b) of the Act to permit the listing and trading of a series of Active Proxy Portfolio Shares, is not continuously maintained; or (5) such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings of the Active Proxy Portfolio Shares on the Exchange inadvisable.
Finally, the Commission believes that the requirements of proposed NYSE Arca Rule 8.601-E are consistent with the Act and, more specifically, are reasonably designed to help prevent fraudulent and manipulative acts and practices. The Commission notes that, because Actual Proxy Portfolio Shares would not publicly disclose on a daily basis information about the holdings of the Actual Portfolio, it is vital that such information be kept confidential and not be subject to misuse. Accordingly, to help ensure that the portfolio information be kept confidential and the shares not be susceptible to fraud or manipulation, proposed NYSE Arca Rule 8.601-E, Commentary .04 requires that, if the investment adviser to the Investment Company issuing Active Proxy Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser must erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition of and/or changes to such Investment Company's Actual Portfolio and/or Proxy Portfolio. Further, proposed Commentary .04 also requires that any person related to the
For the reasons discussed above, the Commission finds that proposed NYSE Arca Rule 8.601-E for Active Proxy Portfolio Shares is consistent with Section 6(b)(5) of the Act.
Further, the Commission finds that the proposed amendments to NYSE Arca Rule 5.3-E and NYSE Arca Rule 5.3-E(e) to include Active Proxy Portfolio Shares among the list of derivative or special purpose securities that are subject to a limited set of corporate governance and disclosure policies, and among the derivative or special purpose securities to which the requirements concerning shareholder annual meetings do not apply, are consistent with Section 6(b)(5) of the Act because these amendments will provide that Active Proxy Portfolio Shares will be treated in a manner consistent with other derivative securities listed and traded on the Exchange.
The Commission believes that the proposal is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading in the Shares when a reasonable degree of certain pricing transparency cannot be assured. As such, the Commission believes the proposal is reasonably designed to maintain a fair and orderly market for trading the Shares. The Commission also finds that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, which sets forth Congress's finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities.
Specifically, the Commission notes that the Exchange, prior to commencement of trading in the Shares, will obtain a representation from the issuer of the Shares that the NAV per Share of the Fund will be calculated daily and that the NAV, Proxy Portfolio, and Actual Portfolio of the Fund will be made available to all market participants at the same time.
In addition, the Exchange states that intraday pricing information for all constituents of the Proxy Portfolio that are exchange-traded, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they are traded and through subscription services, and that intraday pricing information for cash equivalents will be available through subscription services and/or pricing services.
The Commission also believes that the proposal is reasonably designed to help prevent fraudulent and manipulative acts and practices. Specifically, the Exchange provides that:
• The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer and has implemented and will maintain a “fire wall” with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio;
• The Fund's Sub-Advisers are not registered as a broker-dealer but are affiliated with a broker-dealer, and each Sub-Adviser has implemented and will maintain a “fire wall” with respect to its respective broker-dealer affiliate regarding access to information concerning the composition of and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio;
• Any person related to the Adviser, each Sub-Adviser, or the Fund who makes decisions pertaining to the Fund's Actual Portfolio or Proxy Portfolio or who has access to non-public information regarding the Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto are subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto;
• In the event (a) the Adviser or a Sub-Adviser becomes registered as a broker-dealer or becomes newly affiliated with a broker-dealer or (b) any new adviser or sub-adviser is a registered broker-dealer, or becomes affiliated with a broker-dealer, it will implement and maintain a fire wall with respect to its relevant personnel or its
• Any person or entity, including any service provider for the Fund, who has access to non-public information regarding the Fund's Actual Portfolio or the Proxy Portfolio or changes thereto will be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto, and if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity has erected and will maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition of and/or changes to the Fund's Actual Portfolio and/or Proxy Portfolio.
Finally, the Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange,
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities.
In support of this proposal, the Exchange represents that:
(1) The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.601-E.
(2) A minimum of 100,000 Shares for the Fund will be outstanding at the commencement of trading on the Exchange.
(3) The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed, and may obtain information, regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the ISG. In addition, the Exchange may obtain information regarding trading in such securities and exchange-traded instruments from markets and other entities with which the Exchange has in place a comprehensive surveillance sharing agreement. Any foreign common stocks held by the Fund will be traded on an exchange that is a member of the ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
(4) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions.
(5) For initial and continued listing, the Fund will be in compliance with Rule 10A-3 under the Act.
(6) The Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements set forth in the Application and Exemptive Order. The Fund's investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage).
(7) With respect to Active Proxy Portfolio Shares, all of the Exchange member obligations relating to product description and prospectus delivery requirements will continue to apply in accordance with Exchange rules and federal securities laws, and the Exchange and FINRA will continue to monitor Exchange members for compliance with such requirements.
The Exchange also represents that all statements and representations made in the filing regarding: (1) The description of the portfolio or reference assets; (2) limitations on portfolio holdings or reference assets; or (3) the applicability of Exchange listing rules specified in the filing constitute continued listing requirements for listing the Shares on the Exchange. In addition, the Exchange represents that the Adviser will advise the Exchange of any failure by the Fund to comply with the continued listing requirements and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor
Interested persons are invited to submit written data, views, and arguments concerning whether the proposed rule change, as modified by Amendment No. 6, is consistent with the Exchange Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2019-95. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (
The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 6, prior to the thirtieth day after the date of publication of notice of the filing of Amendment No. 6 in the
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend the Fee Schedule on the BOX Options Market LLC (“BOX”) facility. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's internet website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the Fee Schedule on BOX facility to make non-substantive, clerical changes in order to conform the Fee Schedule with the Exchange's adoption of the new Penny Interval Program.
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,
The Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, protect investors and the public interest because the proposed conforming non-substantive changes would add clarity, transparency and consistency to the Exchange's Fee
The Exchange's Penny Interval Program
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not designed to address any competitive issue but rather to make non-substantive changes to the BOX Fee Schedule, thereby reducing confusion and making the Exchange's Fee Schedule easier to understand. The Exchange believes that the proposed rule change will serve to promote clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. As such, the Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to 19(b)(3)(A) of the Act
The Exchange has proposed to implement the Penny Interval Program on July 1, 2020 and has asked the Commission to waive the 30-day operative delay for this filing, so that the proposed changes will become operative on the same date that the Penny Interval Program becomes operative.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2020-25. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (
Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BOX-2020-25 and should be submitted on or before July 28, 2020.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) proposes to amend its fees schedule. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to adopt new Footnote 24 of the Fees Schedule to govern pricing changes that apply for the duration of time the Exchange trading floor is being operated in a modified manner in connection with the COVID-19 pandemic.
The Exchange first proposes to amend how floor trading permit fees are assessed during the time the Exchange is operating in a modified state in connection with COVID-19. Pursuant to the Fees Schedule, in order to act as a Market-Maker on the floor, a Trading Permit Holder (“TPH”) must purchase a Market-Maker Floor Permit (“MM Floor Permit), and in order to act as a Floor Broker on the floor, a TPH must purchase a Floor Broker Permit (“FB Permit”). Fees for MM Floor Permits and FB Permits (collectively, “trading floor permits”) are assessed based on the Floor Trading Permit Sliding Scales. As noted above, in order to help protect the safety and welfare of individuals that may access the trading floor, upon reopening on June 15, 2020, the Exchange will regulate how many individuals, including TPH nominees, may access the trading floor. As such, the Exchange does not wish to assess floor trading permit fees for trading permits that the TPH may hold but cannot use to access the trading floor. The Exchange therefore proposes to instead assess floor trading permit fees based on the number of trading permits that are “used” (
The Exchange next proposes to include language in Footnote 24 of the Fees Schedule to provide that certain registration fees will not be assessed when the trading floor is operating in a modified manner. By way of background, every TPH organization must designate an individual nominee to represent the organization with respect to each Floor Broker Trading Permit or Market-Maker Floor Trading Permit in all matters relating to the Exchange.
The Exchange next proposes to amend the Floor Broker ADV Discount. Under this discount program, FB Trading Permit fees are eligible for rebates based on the average customer (“C”) open-outcry contracts executed per day over the course of a calendar month in all underlying symbols. As the trading floor was closed from June 1 through June 12, 2020 (and therefore there were no open-outcry contracts executed during this time), the Exchange proposes that for the month of June 2020, ADV will be based on June 15-June 30, 2020 volume.
The Exchange next proposes to increase the floor SPX/SPXW Market-Maker Tier Appointment fee from $3,000 per permit to $5,000 per permit when the Exchange is operating in a modified state. As noted above, Market-Maker Floor Tier Appointment Fees will continue to be assessed based on the number of trading permits “used” during a given month (
The Exchange also proposes to increase the Floor Brokerage fees for SPX and SPXW transactions. Specifically, the Exchange proposes to modestly increase the fee for non-crossed orders from $0.04 per contract to $0.05 per contract and the fee for crossed orders from $0.02 per contract to $0.03 per contract when the Exchange is operating in a modified state.
The Exchange next proposes to waive the following facilities fees for as long as the trading floor is operating in a modified manner as such services and products cannot be utilized during such time; provided however that such fees will be pro-rated based on the remaining trading days in the calendar month if the trading floor becomes fully operational mid-month:
Lastly, the Exchange proposes to eliminate an obsolete footnote reference in the Floor Brokerage Fees table. Particularly, the Exchange proposes to eliminate the reference to Footnote “(40)”. The Exchange notes that although it recently eliminated Footnote 40 in its entirety (which is now “reserved”), it inadvertently omitted eliminating the appended reference in the Floor Brokerage Fees table.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes the proposed rule change to assess fees to only those floor Trading Permits that are “used” to access the trading floor when the trading floor is operated in a modified manner is reasonable because TPHs will not be assessed fees for floor Trading Permits that cannot be used to use to access the trading floor. The Exchange believes the proposed formula is reasonable as it assesses fees based on the number of nominees that can, and do, access the trading floor and on the dates that such nominee is assigned to a Trading Permit. The Exchange believes using the number of days a nominee is assigned to a permit to calculate the floor trading permit fees is appropriate as there may be instances in which a TPH does not have a nominee available to occupy one of its assigned trading spaces (
The Exchange believes the proposal to waive the Inactive Nominee Status fee and Inactive Nominee Status Change fee is reasonable, equitable and not unfairly discriminatory as TPHs would not be subject to such fees and it would apply uniformly to all nominees and inactive nominees. Also as discussed above, the Exchange does not believe it's appropriate to apply such fees, as TPH organizations will not be purchasing additional floor Trading Permits while the trading floor is operating in a modified manner, and as the Exchange is regulating how many nominees may access the trading floor. Moreover, as noted above, the Exchange already waives both fees when the trading floor is fully inoperable.
The Exchange also believes its proposal to base the ADV thresholds for the Floor Broker ADV Discount program on volume from June 15 through June 30, 2020 is reasonable as such discount is based on open-outcry volume only and the Exchange floor was closed between June 1-June 12, 2020. The Exchange believes the proposed change is equitable and not unfairly discriminatory as it applies uniformly to all Floor Brokers.
The Exchange believes the proposal to increase the floor SPX/SPXW Market-Maker Tier Appointment fee is reasonable because floor Market-Makers trading SPX/SPXW will still be paying similar trading permit-related fees as compared to when the trading floor was fully operational. Particularly, the Exchange notes that because it intends to limit the amount of Market-Makers in SPX/SPXW allowed on the trading floor when the trading floor is operated in a modified manner, Market-Makers will be saving on trading permit fees it would otherwise incur if the trading floor were fully operational.
The Exchange similarly believes it's reasonable to increase the SPX/SPXW floor brokerage fees as it's a modest increase and as Floor Brokers in SPX are also expected to pay less in FB Permit fees when the Exchange is operating in a modified manner.
The Exchange believes the proposal to waive the identified facility fees is reasonable as market participants won't be subject to such fees. The listed facility fees each apply to a product or service that may only be utilized when the trading floor is operating at fully capacity and will not be available when the Exchange is operating in a modified manner. The Exchange believes it's therefore appropriate to waive such fees while the Exchange is operating in a modified manner. The Exchange also believes it's appropriate to pro-rate such fees if the trading floor reopens mid-month as market participants will have the benefit of using such services/products for the remainder of the month. The Exchange believes the proposed rule change is equitable and not unfairly discriminatory as it applies equally to all market participants.
The Exchange lastly believes the proposed deletion of an obsolete footnote reference maintains clarity in the Fees Schedule and alleviates potential confusion, thereby reducing impediments to, and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest.
The Exchange does not believe that the proposed rule changes will impose any burden on competition that are not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes the proposed changes relating to Footnote 24 are not intended to address any competitive issue, but rather to address fee changes it believes are reasonable because the trading floor is reopening, but must be operated in a modified manner in connection with COVID-19 in order to help protect the safety and welfare of individuals access the trading floor. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes apply equally to all
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to extend the temporary waiver of the co-location “Hot Hands” fee. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to extend of the temporary waiver of the co-location
The Exchange is an indirect subsidiary of Intercontinental Exchange, Inc. (“ICE”). Through its ICE Data Services (“IDS”) business, ICE operates the Data Center, from which the Exchange provides co-location services
ICE previously announced to Users that the Data Center would be closed to third parties starting on March 16, 2020, to help avoid the spread of COVID-19, which could negatively impact Data Center functions. Prior to the closure of the Data Center, the Chief Executive Officer of the Exchange took the actions required under NYSE Rule 7.1 to close the co-location facility of the Exchange to third parties. The closure period was extended twice, through June 30, 2020 (the “Initial Closure”).
ICE has announced to Users that, because the concerns that led to the Initial Closure still apply, the closure of the Data Center will be extended, with the date of the reopening announced through a customer notice.
If a User's equipment requires work while a Rule 7.1 closure is in effect, the User has to use the Hot Hands service and, absent a waiver, incurs Hot Hands fees for the work. Given that, the Exchange waived all Hot Hands fees for the duration of the Initial Closure.
The Exchange believes that there will be sufficient Data Center staff on-site to comply with User requests for Hot Hands service.
The proposed extension of the waiver would apply equally to all Users. The proposed extension of the fee waiver would not apply differently to distinct types or sizes of market participants. Rather, it would continue to apply uniformly to all Users.
The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed rule change is reasonable for the following reasons.
Given that the closure of the Data Center has been extended, the Exchange believes that it is reasonable to grant the proposed corresponding extension of the waiver of the Hot Hands Fee. While a Rule 7.1 closure is in effect, User representatives are not allowed access to the Data Center. If a User's equipment requires work during such period, the User has to use the Hot Hands service. Absent a waiver, the User would incur Hot Hands fees for the work.
The proposed extension of the waiver would allow a User to have work carried out on its equipment notwithstanding the closure of the Data Center without incurring Hot Hands fees.
The Exchange believes the proposed rule change is an equitable allocation of its fees and credits for the following reasons.
The proposed extension of the waiver would apply equally to all Users. The proposed extension would not apply differently to distinct types or sizes of market participants. Rather, it would apply uniformly to all Users.
The Exchange believes that the proposal is equitable because the extension of the waiver would mean that for the duration of the closure of the Data Center all similarly-situated Users would not be charged a fee to use the Hot Hands service.
The Exchange believes that the proposed change is not unfairly discriminatory for the following reasons.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period. For the reasons above, the proposed changes do not unfairly discriminate between or among market participants.
In addition, the Exchange believes that the proposed rule change would perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest because it would allow a User to have work carried out on its equipment notwithstanding a Rule 7.1 closure without incurring Hot Hands fees. Accordingly, the Exchange believes that the requested extension of the waiver is designed to perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest by facilitating the uninterrupted availability of Users' equipment.
For all of the above reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
The Exchange does not believe that the proposed change would place any burden on intramarket competition that is not necessary or appropriate.
The proposed extension of the waiver is not designed to affect competition, but rather to provide relief to Users that, while a Rule 7.1 closure is in effect, have no option but to use the Hot Hands service.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period.
The Exchange does not believe that the proposed change would impose any burden on intermarket competition that is not necessary or appropriate.
The Exchange believes that the proposed change would not affect the competitive landscape among the national securities exchanges, as the Hot Hands service is solely charged within co-location to existing Users, and would be temporary.
For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to extend the temporary waiver of the co-location “Hot Hands” fee. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to extend of the temporary waiver of the co-location
The Exchange is an indirect subsidiary of Intercontinental Exchange, Inc. (“ICE”). Through its ICE Data Services (“IDS”) business, ICE operates the Data Center, from which the Exchange provides co-location services to Users.
ICE previously announced to Users that the Data Center would be closed to third parties starting on March 16, 2020, to help avoid the spread of COVID-19, which could negatively impact Data Center functions. Prior to the closure of the Data Center, the Chief Executive Officer of the Exchange took the actions required under NYSE Arca Rules 7.1-E and 7.1-O to close the co-location facility of the Exchange to third parties. The closure period was extended twice, through June 30, 2020 (the “Initial Closure”).
ICE has announced to Users that, because the concerns that led to the Initial Closure still apply, the closure of the Data Center will be extended, with the date of the reopening announced through a customer notice.
If a User's equipment requires work while a Rules 7.1-E and 7.1-O closure is in effect, the User has to use the Hot Hands service and, absent a waiver, incurs Hot Hands fees for the work. Given that, the Exchange waived all Hot Hands fees for the duration of the Initial Closure.
The Exchange believes that there will be sufficient Data Center staff on-site to comply with User requests for Hot Hands service.
The proposed extension of the waiver would apply equally to all Users. The proposed extension of the fee waiver would not apply differently to distinct types or sizes of market participants. Rather, it would continue to apply uniformly to all Users.
The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed rule change is reasonable for the following reasons.
Given that the closure of the Data Center has been extended, the Exchange believes that it is reasonable to grant the proposed corresponding extension of the waiver of the Hot Hands Fee. While a Rules 7.1-E and 7.1-O closure is in effect, User representatives are not allowed access to the Data Center. If a User's equipment requires work during such period, the User has to use the Hot Hands service. Absent a waiver, the User would incur Hot Hands fees for the work.
The proposed extension of the waiver would allow a User to have work carried out on its equipment notwithstanding the closure of the Data Center without incurring Hot Hands fees.
The Exchange believes the proposed rule change is an equitable allocation of its fees and credits for the following reasons.
The proposed extension of the waiver would apply equally to all Users. The proposed extension would not apply differently to distinct types or sizes of
The Exchange believes that the proposal is equitable because the extension of the waiver would mean that for the duration of the closure of the Data Center all similarly-situated Users would not be charged a fee to use the Hot Hands service.
The Exchange believes that the proposed change is not unfairly discriminatory for the following reasons.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period. For the reasons above, the proposed changes do not unfairly discriminate between or among market participants.
In addition, the Exchange believes that the proposed rule change would perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest because it would allow a User to have work carried out on its equipment notwithstanding a Rules 7.1-E and 7.1-O closure without incurring Hot Hands fees. Accordingly, the Exchange believes that the requested extension of the waiver is designed to perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest by facilitating the uninterrupted availability of Users' equipment.
For all of the above reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
The Exchange does not believe that the proposed change would place any burden on intramarket competition that is not necessary or appropriate.
The proposed extension of the waiver is not designed to affect competition, but rather to provide relief to Users that, while a Rules 7.1-E and 7.1-O closure is in effect, have no option but to use the Hot Hands service.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period.
The Exchange does not believe that the proposed change would impose any burden on intermarket competition that is not necessary or appropriate.
The Exchange believes that the proposed change would not affect the competitive landscape among the national securities exchanges, as the Hot Hands service is solely charged within co-location to existing Users, and would be temporary.
For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to extend the temporary waiver of the co-location “Hot Hands” fee. The proposed change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to extend of the temporary waiver of the co-location
The Exchange is an indirect subsidiary of Intercontinental Exchange, Inc. (“ICE”). Through its ICE Data Services (“IDS”) business, ICE operates the Data Center, from which the Exchange provides co-location services to Users.
ICE previously announced to Users that the Data Center would be closed to third parties starting on March 16, 2020, to help avoid the spread of COVID-19, which could negatively impact Data Center functions. Prior to the closure of the Data Center, the Chief Executive Officer of the Exchange took the actions required under NYSE American Rules 7.1E and 901NY to close the co-location facility of the Exchange to third parties. The closure period was extended twice, through June 30, 2020 (the “Initial Closure”).
ICE has announced to Users that, because the concerns that led to the Initial Closure still apply, the closure of the Data Center will be extended, with the date of the reopening announced through a customer notice.
If a User's equipment requires work while a Rules 7.1E and 901NY closure is in effect, the User has to use the Hot Hands service and, absent a waiver, incurs Hot Hands fees for the work. Given that, the Exchange waived all Hot Hands fees for the duration of the Initial Closure.
The Exchange believes that there will be sufficient Data Center staff on-site to comply with User requests for Hot Hands service.
The proposed extension of the waiver would apply equally to all Users. The proposed extension of the fee waiver would not apply differently to distinct types or sizes of market participants. Rather, it would continue to apply uniformly to all Users.
The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed rule change is reasonable for the following reasons.
Given that the closure of the Data Center has been extended, the Exchange believes that it is reasonable to grant the proposed corresponding extension of the waiver of the Hot Hands Fee. While a Rules 7.1E and 901NY closure is in effect, User representatives are not allowed access to the Data Center. If a User's equipment requires work during such period, the User has to use the Hot Hands service. Absent a waiver, the User would incur Hot Hands fees for the work.
The proposed extension of the waiver would allow a User to have work carried out on its equipment notwithstanding the closure of the Data Center without incurring Hot Hands fees.
The Exchange believes the proposed rule change is an equitable allocation of its fees and credits for the following reasons.
The proposed extension of the waiver would apply equally to all Users. The proposed extension would not apply differently to distinct types or sizes of market participants. Rather, it would apply uniformly to all Users.
The Exchange believes that the proposal is equitable because the extension of the waiver would mean that for the duration of the closure of the Data Center all similarly-situated Users would not be charged a fee to use the Hot Hands service.PHD3>The Proposed Change is Not Unfairly Discriminatory and Would Protect Investors and the Public Interest
The Exchange believes that the proposed change is not unfairly discriminatory for the following reasons.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period. For the reasons above, the proposed changes do not unfairly discriminate between or among market participants.
In addition, the Exchange believes that the proposed rule change would perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest because it would allow a User to have work carried out on its equipment notwithstanding a Rules 7.1E and 901NY closure without incurring Hot Hands fees. Accordingly, the Exchange believes that the requested extension of the waiver is designed to perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest by facilitating the uninterrupted availability of Users' equipment.
For all of the above reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
The Exchange does not believe that the proposed change would place any burden on intramarket competition that is not necessary or appropriate.
The proposed extension of the waiver is not designed to affect competition, but rather to provide relief to Users that, while a Rules 7.1E and 901NY closure is in effect, have no option but to use the Hot Hands service.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period.
The Exchange does not believe that the proposed change would impose any burden on intermarket competition that is not necessary or appropriate.
The Exchange believes that the proposed change would not affect the competitive landscape among the national securities exchanges, as the Hot Hands service is solely charged within co-location to existing Users, and would be temporary.
For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to HYPERLINK “mailto:
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAMER-2020-46. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
2:00 p.m. on Wednesday, July 8, 2020.
The meeting will be held via remote means and/or at the Commission's headquarters, 100 F Street, NE, Washington, DC 20549.
This meeting will be closed to the public.
Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present.
In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission's website at
The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting.
The subject matter of the closed meeting will consist of the following topic:
Institution and settlement of injunctive actions;
Institution and settlement of administrative proceedings;
Resolution of litigation claims; and
Other matters relating to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters.
For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551-5400.
Pursuant to Section 19(b)(1)
The Exchange proposes to extend the temporary waiver of the co-location “Hot Hands” fee. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to extend of the temporary waiver of the co-location
The Exchange is an indirect subsidiary of Intercontinental Exchange,
ICE previously announced to Users that the Data Center would be closed to third parties starting on March 16, 2020, to help avoid the spread of COVID-19, which could negatively impact Data Center functions. Prior to the closure of the Data Center, the Chief Executive Officer of the Exchange took the actions required under NYSE National Rule 7.1 to close the co-location facility of the Exchange to third parties. The closure period was extended twice, through June 30, 2020 (the “Initial Closure”).
ICE has announced to Users that, because the concerns that led to the Initial Closure still apply, the closure of the Data Center will be extended, with the date of the reopening announced through a customer notice.
If a User's equipment requires work while a Rule 7.1 closure is in effect, the User has to use the Hot Hands service and, absent a waiver, incurs Hot Hands fees for the work. Given that, the Exchange waived all Hot Hands fees for the duration of the Initial Closure.
The Exchange believes that there will be sufficient Data Center staff on-site to comply with User requests for Hot Hands service.
The proposed extension of the waiver would apply equally to all Users. The proposed extension of the fee waiver would not apply differently to distinct types or sizes of market participants. Rather, it would continue to apply uniformly to all Users.
The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed rule change is reasonable for the following reasons.
Given that the closure of the Data Center has been extended, the Exchange believes that it is reasonable to grant the proposed corresponding extension of the waiver of the Hot Hands Fee. While a Rule 7.1 closure is in effect, User representatives are not allowed access to the Data Center. If a User's equipment requires work during such period, the User has to use the Hot Hands service. Absent a waiver, the User would incur Hot Hands fees for the work.
The proposed extension of the waiver would allow a User to have work carried out on its equipment notwithstanding the closure of the Data Center without incurring Hot Hands fees.
The Exchange believes the proposed rule change is an equitable allocation of its fees and credits for the following reasons.
The proposed extension of the waiver would apply equally to all Users. The proposed extension would not apply differently to distinct types or sizes of market participants. Rather, it would apply uniformly to all Users.
The Exchange believes that the proposal is equitable because the extension of the waiver would mean that for the duration of the closure of the Data Center all similarly-situated Users would not be charged a fee to use the Hot Hands service.
The Exchange believes that the proposed change is not unfairly discriminatory for the following reasons.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period. For the reasons above, the proposed changes do not unfairly discriminate between or among market participants.
In addition, the Exchange believes that the proposed rule change would perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest because it would allow a User to have work carried out on its equipment notwithstanding a Rule 7.1 closure without incurring Hot Hands fees. Accordingly, the Exchange believes that the requested extension of the waiver is designed to perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest by facilitating the uninterrupted availability of Users' equipment.
For all of the above reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
The Exchange does not believe that the proposed change would place any burden on intramarket competition that is not necessary or appropriate.
The proposed extension of the waiver is not designed to affect competition, but rather to provide relief to Users that, while a Rule 7.1 closure is in effect, have no option but to use the Hot Hands service.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period.
The Exchange does not believe that the proposed change would impose any burden on intermarket competition that is not necessary or appropriate.
The Exchange believes that the proposed change would not affect the competitive landscape among the national securities exchanges, as the Hot Hands service is solely charged within co-location to existing Users, and would be temporary.
For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Section 17(h) was added to the Securities Exchange Act of 1934 (“Exchange Act”) to address the concern that financial problems of a broker-dealer's affiliate could cause the broker-dealer to fail or experience significant financial difficulties.
Rule 17h-1T requires a broker-dealer that is not exempt under paragraph (d) of the Rule to maintain and preserve certain records, including: (1) An organizational chart that includes the broker-dealer and its affiliates; (2) policies, procedures, or systems concerning methods for monitoring and controlling financial and operational risks to the broker-dealer resulting from the activities of its affiliates; (3) a description of material pending legal and arbitration proceedings involving the broker-dealer or its affiliates; (4) consolidating and consolidated financial statements; and (5) the broker-dealer's securities and commodities position records. Rule 17h-2T requires a broker-dealer that is not exempt under paragraph (b) of the Rule to file Form 17-H with the Commission on a quarterly basis. The form elicits information concerning certain of the broker-dealer's affiliates.
Section 17(h)(4) of the Exchange Act provides that the Commission by rule or order may exempt any person or class of persons, under such terms and conditions and for such periods as the Commission shall provide in such rule or order, from the provisions of Section 17(h) of the Exchange Act, and the rules thereunder. The statute further provides that, in granting such exemptions, the Commission shall consider, among other factors:
• Whether information of the type required under section 17(h) of the Exchange Act is available from a supervisory agency (as defined in section 3401(6)of title 12), a State insurance commission or similar State agency, the Commodity Futures Trading Commission (“CFTC”), or a similar foreign regulator;
• The primary business of any associated person;
• The nature and extent of domestic or foreign regulation of the associated person's activities;
• The nature and extent of the registered person's securities activities; and
• With respect to the registered person and its associated persons, on a consolidated basis, the amount and proportion of assets devoted to, and revenues derived from, activities in the United States securities markets.
The Commission has administered the risk assessment program under Section 17(h) of the Exchange Act for 28 years. Based on this experience, the Commission believes it is appropriate to raise by order the threshold for the $20 million exemption to $50 million, provided the broker-dealer maintains less than $1 billion in total assets.
In adopting the $20 million exemption (rather than a $5 million exemption, which was proposed),
Exempting certain firms that maintain total assets of less than $1 billion and maintain capital, including subordinated debt, of greater than $20 million but less than $50 million from Rules 17h-1T and 17h-2T is intended to reduce the number of broker-dealers subject to the rules without materially increasing risk, given that firms continuing to be subject to the rules account for over 98% of the total capital of firms subject to the rules prior to the issuance of this Order and nearly 97% of the total capital of all broker-dealers. The Commission is setting the ceiling for this exemption at $50 million with this goal in mind. Moreover, limiting the availability of this exemption to firms with total assets of less than $1 billion will prevent highly leveraged firms with relatively small levels of capital from availing themselves of the exemption. A broker-dealer with a high level of leverage and a small level of capital can pose heightened risks because it has less capital to absorb losses and, therefore, poses greater credit risk to its customers, counterparties, and other creditors. Thus, the Commission's risk assessment program will continue to focus on those broker-dealers and affiliates that conduct a substantial securities business and thus are in a position to potentially pose significant risk to investors and to the orderly, fair, and efficient functioning of the markets.
In considering this Order, the Commission focused on the fourth factor in Section 17(h)(4) of the Exchange Act (
(A) whether information of the type required under this subsection is available from a supervisory HYPERLINK agency (as defined in section 3401(6) of title 12), a HYPERLINK State insurance HYPERLINK commission or similar HYPERLINK State agency, the Commodity Futures Trading Commission, or a similar foreign regulator;
(B) the primary business of any associated HYPERLINK person;
(C) the nature and extent of domestic or foreign regulation of the associated HYPERLINK person's activities;
(D) the nature and extent of the registered HYPERLINK person's HYPERLINK securities activities; and
(E) with respect to the registered HYPERLINK person and its associated HYPERLINK persons, on a consolidated basis, the amount and proportion of assets devoted to, and revenues derived from, activities in the United HYPERLINK States securities markets.
In light of changes in the financial services industry, including consolidation among financial services institutions, the Commission believes that this Order strikes an appropriate balance in terms of relieving certain broker-dealers—those that maintain total assets of less than $1 billion and maintain capital, including subordinated debt, of greater than $20 million but less than $50 million and that do not hold funds or securities for, or owe money or securities to, customers and do not carry customer accounts, or that are exempt from Rule 15c3-3 pursuant to paragraph (k)(2) of that rule —from the requirements of Rules 17h-1T and 17h-2T while continuing to subject to the rules those broker-dealers that pose greater risk to the financial markets, investors, and other market participants.
By the Commission.
On December 23, 2019, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On February 13, 2020, pursuant to Section 19(b)(2) of the Act,
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange has proposed to add new NYSE Arca Rule 8.601-E for the purpose of permitting the listing and trading, or trading pursuant to unlisted trading privileges (“UTP”), of Active Proxy Portfolio Shares, which are securities issued by an actively managed open-end investment management company.
While funds issuing Active Proxy Portfolio Shares will be actively-managed and, to that extent, will be similar to Managed Fund Shares, Active Proxy Portfolio Shares differ from Managed Fund Shares in the following important respects. First, in contrast to Managed Fund Shares, which are actively-managed funds listed and traded under NYSE Arca Rule 8.600-E
A series of Active Proxy Portfolio Shares will disclose the Proxy Portfolio on a daily basis, which, as described above, is designed to track closely the daily performance of the Actual Portfolio of a series of Active Proxy Portfolio Shares, instead of the actual holdings of the Investment Company, as provided by a series of Managed Fund Shares.
The Exchange, after consulting with various Lead Market Makers (“LMMs”) that trade exchange-traded funds (“ETFs”) on the Exchange,
The Shares of each Fund will be issued by T. Rowe Price Exchange-Traded Funds, Inc. (“Issuer”), a corporation organized under the laws of the State of Maryland, which may be comprised of multiple separate series, and registered with the Commission as an open-end management investment company.
Proposed Commentary.04 to Rule 8.601-E provides that, if the investment adviser to the Investment Company issuing Active Proxy Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a “fire wall” between the investment adviser and personnel of the broker-dealer or broker-dealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such Investment Company's Actual Portfolio and/or Proxy Portfolio.
In addition, proposed Commentary.05 to Rule 8.601-E provides that any person or entity, including a custodian, Reporting Authority, distributor, or administrator, who has access to non-public information regarding the Investment Company's Actual Portfolio or the Proxy Portfolio or changes thereto, must be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding the applicable Investment Company Actual Portfolio or the Proxy Portfolio or changes thereto.
The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer and has implemented and will maintain a “fire wall” with respect to such broker-dealer affiliate regarding access to information concerning the composition and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio.
In the event (a) the Adviser becomes registered as a broker-dealer or newly affiliated with a broker-dealer, or (b) any new adviser or any sub-adviser is a registered broker-dealer or becomes affiliated with a broker-dealer, it will implement and maintain a fire wall with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding a Fund's Actual Portfolio and/or Proxy Portfolio or changes thereto. Any person related to the Adviser or a Fund who makes decisions pertaining to a Fund's Actual Portfolio or Proxy Portfolio or has access to non-public information regarding a Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto is subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding a Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto.
In addition, any person or entity, including any service provider for a Fund, who has access to non-public information regarding a Fund's Actual Portfolio or the Proxy Portfolio or changes thereto, will be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding a Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto. Moreover, if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity has erected and will maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio.
According to the Application, for each Fund, the Adviser will identify its Proxy Portfolio, which could be a broad-based securities index (
In addition, on each Business Day, before commencement of trading of Shares, the “Portfolio Overlap” will be published on the Funds' website. The Portfolio Overlap will be the percentage weight overlap between the prior Business Day's Proxy Portfolio's holdings compared to the holdings of a Fund that formed the basis for that Fund's calculation of NAV at the end of the prior Business Day.
According to the Application and Exemptive Order, the Adviser expects that the Proxy Portfolio, the Portfolio Overlap, the Daily Deviations and related information will provide a set of high-quality proxy information that arbitrageurs will use to construct a hedging basket. The Portfolio Overlap, Daily Deviation, and Empirical Percentile data, which will be disclosed daily on the Funds' website, will help arbitrageurs by describing the market behavior of the Proxy Portfolio and how it relates to a Fund's portfolio holdings, and by providing historical valuation data and analysis.
The Proxy Portfolio will not include any asset that is ineligible to be in the Actual Portfolio of the applicable Fund.
The Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
The investment objective of the T. Rowe Price Blue Chip Growth ETF will be to seek to provide long-term capital growth. Income will be a secondary objective.
The Fund will normally invest at least 80% of its net assets in the common stocks of large and medium-sized blue-chip growth companies that are listed in the United States. These are companies that, in the Adviser's view, are well established in their industries and have the potential for above-average earnings growth. The Fund will primarily invest in U.S. exchange-traded securities, cash, and cash equivalents.
The Fund's holdings will conform to the permissible investments as set forth
The investment objective of the T. Rowe Price Dividend Growth ETF will be to seek dividend income and long-term capital growth.
The Fund normally will invest at least 65% of the Fund's total assets in stocks listed in the United States, with an emphasis on stocks that have a strong track record of paying dividends or that are expected to increase their dividends over time. The Fund will primarily invest in U.S. exchange-traded securities, cash, and cash equivalents.
The Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
The investment objective of the T. Rowe Price Growth Stock ETF will be to seek long-term capital growth.
The Fund will normally invest at least 80% of its net assets in the common stocks of a diversified group of growth companies. While it may invest in companies of any market capitalization, the Fund generally seeks investments in stocks of large-capitalization companies with one or more of the following characteristics: strong cash flow and an above-average rate of earnings growth; the ability to sustain earnings momentum during economic downturns; and occupation of a lucrative niche in the economy and the ability to expand even during times of slow economic growth. The Fund will primarily invest in U.S. exchange-traded securities, cash, and cash equivalents.
The Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
The investment objective of the T. Rowe Price Equity Income ETF will be to seek a high level of dividend income and long-term capital growth.
The Fund will normally invest at least 80% of its net assets in common stocks listed in the United States, with an emphasis on large-capitalization stocks that have a strong track record of paying dividends or that are believed to be undervalued. The Fund typically will employ a “value” approach in selecting investments. The Fund generally will invest in U.S. exchange-traded securities, cash, and cash equivalents.
The Shares of each Fund will conform to the initial and continued listing criteria under proposed Rule 8.601-E. Each Fund's holdings will be limited to and consistent with permissible holdings as described in the Application and all requirements in the Application and Exemptive Order.
Each Fund's investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, a Fund's investments will not be used to seek performance that is the multiple or inverse multiple (
The Issuer will offer, issue and sell Shares of each Fund to investors only in specified minimum size “Creation Units” through the Distributor on a continuous basis at the NAV per Share next determined after an order in proper form is received. The NAV of each Fund is expected to be determined as of 4:00 p.m. E.T. on each Business Day. The Issuer will sell and redeem Creation Units of each Fund only on a Business Day. A Creation Unit will consist of at least 5,000 Shares.
Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. Accordingly, except where the purchase or redemption will include cash under the circumstances specified below, purchasers will be required to purchase Creation Units by making an in-kind deposit of specified instruments (“Deposit Instruments”), and shareholders redeeming their Shares will receive an in-kind transfer of specified instruments (“Redemption Instruments”). The names and quantities of the instruments that constitute the Deposit Instruments and the Redemption Instruments for a Fund (collectively, the “Creation Basket”) will be the same as a Fund's designated Proxy Portfolio, except to the extent that a Fund requires purchases and redemptions to be made entirely or in part on a cash basis, as described below.
If there is a difference between the NAV attributable to a Creation Unit and the aggregate market value of the Creation Basket exchanged for the Creation Unit, the party conveying instruments with the lower value will also pay to the other an amount in cash equal to that difference (the “Cash Amount”).
Each Fund will adopt and implement policies and procedures regarding the composition of its Creation Baskets. The policies and procedures will set forth detailed parameters for the construction and acceptance of baskets that are in the best interests of a Fund, including the process for any revisions to or deviations from, those parameters.
A Fund that normally issues and redeems Creation Units in-kind may require purchases and redemptions to be made entirely or in part on a cash basis. In such an instance, a Fund will announce, before the open of trading in the Core Trading Session on a given Business Day, that all purchases, all redemptions or all purchases and redemptions on that day will be made wholly or partly in cash. A Fund may also determine, upon receiving a purchase or redemption order from an Authorized Participant (as defined below), to have the purchase or redemption, as applicable, be made entirely or in part in cash.
Each Business Day, before the open of trading on the Exchange, a Fund will cause to be published through the National Securities Clearing Corporation (“NSCC”) the names and quantities of the instruments comprising the Creation Basket, as well as the estimated Cash Amount (if any) for that day. The published Creation Basket will apply until a new Creation Basket is announced on the following Business Day, and there will be no intra-day changes to the Creation Basket except to correct errors in the published Creation Basket. The Proxy Portfolio will be published each Business Day regardless of whether a Fund decides to issue or
All orders to purchase Creation Units must be placed with the Distributor by or through an Authorized Participant, which is a member or participant of a clearing agency registered with the Commission, which has a written agreement with a Fund or one of its service providers that allows the Authorized Participant to place orders for the purchase and redemption of Creation Units. Except as otherwise permitted, no promoter, principal underwriter (
Validly submitted orders to purchase or redeem Creation Units on each Business Day will be accepted until the end of the Core Trading Session (the “Order Cut-Off Time”), generally 4:00 p.m. E.T., on the Business Day that the order is placed (the “Transmittal Date”). All Creation Unit orders must be received by the Distributor no later than the Order Cut-Off Time in order to receive the NAV determined on the Transmittal Date. When the Exchange closes earlier than normal, a Fund may require orders for Creation Units to be placed earlier in the Business Day.
The Funds' website (
(i) Ticker symbol;
(ii) CUSIP or other identifier;
(iii) Description of holding;
(iv) Quantity of each security or other asset held; and
(v) Percentage weighting of the holding in the portfolio.
The Proxy Portfolio holdings (including the identity and quantity of investments in the Proxy Portfolio) will be publicly available on the Funds' website before the commencement of trading in Shares on each Business Day.
The website also will include information relating to Portfolio Overlap, Daily Deviation, Empirical Percentile and Tracking Error for each Fund, as discussed above.
The Exchange notes that the Application provides that the Issuer will comply with Regulation Fair Disclosure, which prohibits selective disclosure of any material non-public information.
Typical mutual fund-style annual, semi-annual and quarterly disclosures contained in the Funds' Commission filings will be provided on the Funds' website on a current basis.
Investors interested in a particular Fund can also obtain its prospectus, statement of additional information (“SAI”), shareholder reports, Form N-CSR, Form N-PORT and Form N-CEN. Investors may access complete portfolio schedules for the Funds on Form N-CSR and Form N-PORT. The prospectus, SAI and shareholder reports will be available free upon request from the Funds, and those documents and the Form N-CSR, Form N-PORT and Form N-CEN may be viewed on-screen or downloaded from the Commission's website at
Information regarding the market price of Shares and trading volume in Shares, will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. The previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers.
Updated price information for U.S. exchange-listed equity securities is available through major market data vendors or securities exchanges trading such securities. Quotation and last sale information for the Shares, ETFs, ETNs, U.S. exchange-traded common stocks, preferred stocks and ADRs will be available via the Consolidated Tape Association (“CTA”) high-speed line or from the exchange on which such securities trade. Price information for futures, foreign stocks and cash equivalents is available through major market data vendors. Intraday pricing information for all constituents of the Proxy Portfolio that are exchange-traded, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they are traded and through subscription services. Intraday pricing information for cash equivalents will be available through subscription services and/or pricing services.
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of a Fund.
Specifically, proposed Rule 8.601-E(d)(2)(D) provides that the Exchange may consider all relevant factors in exercising its discretion to halt trading in a series of Active Proxy Portfolio Shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the series of Active Proxy Portfolio Shares inadvisable. These may include: (a) the extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Portfolio and/or Actual Portfolio; or (b) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present.
In addition, if the Exchange becomes aware that the NAV, Proxy Portfolio or Actual Portfolio with respect to a series
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace in all trading sessions in accordance with NYSE Arca Rule 7.34-E(a). As provided in NYSE Arca Rule 7.6-E, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under proposed NYSE Arca Rule 8.601-E. The Exchange has appropriate rules to facilitate trading in the Shares during all trading sessions.
A minimum of 100,000 Shares for each Fund will be outstanding at the commencement of trading on the Exchange. In addition, pursuant to proposed Rule 8.601-E(d)(1)(B), the Exchange, prior to commencement of trading in the Shares, will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV, Proxy Portfolio and the Actual Portfolio for each Fund will be made available to all market participants at the same time.
With respect to the Funds, all of the Exchange member obligations relating to product description and prospectus delivery requirements will continue to apply in accordance with Exchange rules and federal securities laws, and the Exchange and the Financial Industry Regulatory Authority, Inc. (“FINRA”) will continue to monitor Exchange members for compliance with such requirements.
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross market surveillances administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
FINRA, on behalf of the Exchange, or the Exchange or both will communicate as needed regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the Intermarket Surveillance Group (“ISG”), and FINRA, on behalf of the Exchange, or the Exchange or both may obtain trading information regarding trading such securities and exchange-traded instruments from such markets and other entities. In addition, the Exchange may obtain information regarding trading in such securities and exchange-traded instruments from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
The Adviser will make available daily to FINRA and the Exchange the Actual Portfolio of the Funds, upon request, in order to facilitate the performance of the surveillances referred to above.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange will implement and maintain written surveillance procedures for Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company's investment adviser will upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily Actual Portfolio holdings of each series of Active Proxy Portfolio Shares. The Exchange believes that the ability to access the information on an as needed basis will provide it with sufficient information to perform the necessary regulatory functions associated with listing and trading series of Active Proxy Portfolio Shares on the Exchange, including the ability to monitor compliance with the initial and continued listing requirements as well as the ability to surveil for manipulation of Active Proxy Portfolio Shares.
The Exchange will utilize its existing procedures to monitor a Fund's compliance with the requirements of proposed Rule 8.601-E. For example, the Exchange will continue to use intraday alerts that will notify Exchange personnel of trading activity throughout the day that may indicate that unusual conditions or circumstances are present that could be detrimental to the maintenance of a fair and orderly market. The Exchange will require from the issuer of Active Proxy Portfolio Shares, upon initial listing and periodically thereafter, a representation that it is in compliance with Rule 8.601-E. The Exchange notes that proposed Commentary .01 to Rule 8.601-E would require an issuer of Active Proxy Portfolio Shares to notify the Exchange of any failure to comply with the continued listing requirements of Rule 8.601-E. In addition, the Exchange will require issuers to represent that they will notify the Exchange of any failure to comply with the terms of applicable exemptive and no-action relief. As part of its surveillance procedures, the Exchange will rely on the foregoing procedures to become aware of any non-compliance with the requirements of proposed Rule 8.601-E.
With respect to the Funds, all statements and representations made in this filing regarding (a) the description of the portfolio or reference asset, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares on the Exchange. The Exchange will obtain a representation from the Adviser, prior to commencement of trading in the Shares of a Fund, that it will advise the Exchange of any failure by a Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5-E(m).
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
With respect to the proposed listing and trading of Shares of the Funds, the Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in proposed NYSE Arca Rule 8.601-E. One-hundred percent of the value of a Fund's Actual Portfolio (except for cash, cash equivalents and Treasury securities) at the time of purchase will be listed on U.S. or foreign securities exchanges (or, in the limited case of futures contracts, U.S. futures exchanges). The listing and trading of such securities is subject to rules of the exchanges on which they are listed and traded, as approved by the Commission.
With respect to the proposed listing and trading of Shares of a Fund, the Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Rule 8.601-E. Each Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
The Exchange, after consulting with various LMMs that trade ETFs on the Exchange, believes that market makers will be able to make efficient and liquid markets priced near the ETF's intraday value, and market makers employ market making techniques such as “statistical arbitrage,” including correlation hedging, beta hedging, and dispersion trading, which is currently used throughout the financial services industry, to make efficient markets in exchange-traded products.
The daily dissemination of the identity and quantity of Proxy Portfolio component investments, together with the right of Authorized Participants to create and redeem each day at the NAV, will be sufficient for market participants to value and trade shares in a manner that will not lead to significant deviations between the Bid/Ask Price and NAV of shares of a series of Active Proxy Portfolio Shares.
The pricing efficiency with respect to trading a series of Active Proxy Portfolio Shares will generally rest on the ability of market participants to arbitrage between the shares and a fund's portfolio, in addition to the ability of market participants to assess a fund's underlying value accurately enough throughout the trading day in order to hedge positions in shares effectively. Professional traders can buy shares that they perceive to be trading at a price less than that which will be available at a subsequent time and sell shares they perceive to be trading at a price higher than that which will be available at a subsequent time. It is expected that, as part of their normal day-to-day trading activity, market makers assigned to shares by the Exchange, off-exchange market makers, firms that specialize in electronic trading, hedge funds and other professionals specializing in short-term, non-fundamental trading strategies will assume the risk of being “long” or “short” shares through such trading and will hedge such risk wholly or partly by simultaneously taking positions in correlated assets
The Exchange believes that the Funds and Active Proxy Portfolio Shares generally, will provide investors with a greater choice of active portfolio managers and active strategies through which they can manage their assets in an ETF structure. This greater choice of active asset management is expected to be similar to the diversity of active managers and strategies available to mutual fund investors. Unlike mutual fund investors, investors in Active Proxy Portfolio Shares would also accrue the benefits derived from the ETF structure, such as lower fund costs, tax efficiencies, intraday liquidity, and pricing that reflects current market conditions rather than end-of-day pricing.
The Adviser represents that, unlike ETFs that publish their portfolios on a daily basis, the Funds, as Active Proxy Portfolio Shares, will allow for efficient trading of Shares through an effective Fund portfolio transparency substitute—Proxy Portfolio transparency. The Adviser believes that this approach will provide an important benefit to investors by protecting a Fund from the potential for front-running of portfolio transactions and the potential for free-riding on a Fund's portfolio strategies, each of which could adversely impact the performance of a Fund.
The Exchange believes that Active Proxy Portfolio Shares will provide the platform for many more asset managers to launch ETFs, increasing the investment choices for consumers of actively managed funds, which should lead to a greater competitive landscape that can help to reduce the overall costs of active investment management for retail investors. Unlike mutual funds, Active Proxy Portfolio Shares would be able to use the efficient share settlement system in place for ETFs today, translating into a lower cost of maintaining shareholder accounts and processing transactions.
Each Fund's investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage). That is, a Fund's investments will not be used to seek performance that is the multiple or inverse multiple (
With respect to the Funds, the proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the Issuer, prior to commencement of trading in the Shares, that the NAV per Share of a Fund will be calculated daily and that the NAV, Proxy Portfolio and Actual Portfolio will be made available to all market participants at the same time. Investors can also obtain a Fund's SAI, shareholder reports, and its Form N-CSR, Form N-PORT and Form N-CEN. A Fund's SAI and shareholder reports will be available free upon request from the applicable Fund, and those documents and the Form N-CSR, Form N-PORT and Form N-CEN may be viewed on-screen or downloaded from the Commission's website.
Proposed Commentary .03 to NYSE Arca Rule 8.601-E provides that the Exchange will implement and maintain written surveillance procedures for Active Proxy Portfolio Shares. As part of these surveillance procedures, the Investment Company's investment adviser will, upon request by the Exchange or FINRA, on behalf of the Exchange, make available to the Exchange or FINRA the daily portfolio holdings of each series of Active Proxy Portfolio Shares. The Exchange believes that the ability to access the information on an as needed basis will provide it with sufficient information to perform the necessary regulatory functions associated with listing and trading series of Active Proxy Portfolio Shares on the Exchange, including the ability to monitor compliance with the initial and continued listing requirements as well as the ability to surveil for manipulation of Active Proxy Portfolio Shares. With respect to the Funds, the Adviser will make available daily to FINRA and the Exchange the portfolio holdings of a Fund upon request in order to facilitate the performance of the surveillances referred to above.
The Exchange will utilize its existing procedures to monitor issuer compliance with the requirements of proposed Rule 8.601-E. For example, the Exchange will continue to use intraday alerts that will notify Exchange personnel of trading activity throughout the day that may indicate that unusual conditions or circumstances are present that could be detrimental to the maintenance of a fair and orderly market. The Exchange will require from the issuer of a series of Active Proxy Portfolio Shares, upon initial listing and periodically thereafter, a representation that it is in compliance with proposed Rule 8.601-E. The Exchange notes that proposed Commentary .01 to Rule 8.601-E would require an issuer of Active Proxy Portfolio Shares to notify the Exchange of any failure to comply with the continued listing requirements of proposed Rule 8.601-E. In addition, the Exchange will require issuers to represent that they will notify the Exchange of any failure to comply with the terms of applicable exemptive and no-action relief. The Exchange will rely on the foregoing procedures to become aware of any non-compliance with the requirements of proposed Rule 8.601-E.
In addition, with respect to the Funds, a large amount of information will be publicly available regarding the Funds and the Shares, thereby promoting market transparency. Quotation and last sale information for the Shares, ETFs, ETNs, U.S. exchange-traded common stocks, preferred stocks and ADRs will be available via the CTA high-speed line or from the exchange on which such securities trade. Price information for futures, foreign stocks and cash equivalents is available through major market data vendors. The website for the Funds will include a form of the prospectus for the Funds that may be downloaded, and additional data relating to NAV and other applicable quantitative information, updated on a daily basis. Trading in Shares of a Fund will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Trading in the Shares will be subject to proposed NYSE Arca Rule 8.601-E(d)(2)(D), which sets forth circumstances under which Shares of the Funds may be halted. In addition, as noted above, investors will have ready access to the Proxy Portfolio, and quotation and last sale information for the Shares. The Proxy Portfolio holdings (including the identity and quantity of investments in the Proxy Portfolio) will be publicly available on the Funds' website before the commencement of trading in Shares on each Business Day. The Shares will conform to the initial and continued listing criteria under proposed Rule 8.601-E.
Each Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements in the Application and Exemptive Order.
The components of a Fund's Actual Portfolio will (a) be listed on an exchange and the primary trading session of such exchange will trade synchronously with the Exchange's Core Trading Session, as defined in Rule 7.34-E(a); (b) with respect to exchange-traded futures, be listed on a U.S. futures exchange; or (c) consist of cash and cash equivalents.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. The Exchange will obtain a representation from the Adviser, prior to commencement of trading in the Shares of a Fund, that it will advise the Exchange of any failure
As noted above, with respect to the Funds, the Exchange has in place surveillance procedures relating to trading in the Funds' Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, with respect to the Funds, investors will have ready access to information regarding the Proxy Portfolio and quotation and last sale information for the Shares.
In accordance with Section 6(b)(8) of the Act,
No written comments were solicited or received with respect to the proposed rule change.
After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 3, is consistent with the Act and rules and regulations thereunder applicable to a national securities exchange.
The Commission believes that the proposal is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading in the Shares when a reasonable degree of certain pricing transparency cannot be assured. As such, the Commission believes the proposal is reasonably designed to maintain a fair and orderly market for trading the Shares. The Commission also finds that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, which sets forth Congress's finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities.
Specifically, the Commission notes that the Exchange, prior to commencement of trading in the Shares, will obtain a representation from the issuer of the Shares of each Fund that the NAV per Share will be calculated daily and that the NAV, Proxy Portfolio, and Actual Portfolio for each Fund will be made available to all market participants at the same time.
In addition, the Exchange states that intraday pricing information for all constituents of the Proxy Portfolio that are exchange-traded, which includes all eligible instruments except cash and cash equivalents, will be available on the exchanges on which they are traded and through subscription services, and that intraday pricing information for cash equivalents will be available through subscription services and/or pricing services.
The Commission also notes that the Exchange's rules regarding trading halts help to ensure the maintenance of fair and orderly markets for the Shares. Specifically, pursuant to its rules, the Exchange may consider all relevant factors in exercising its discretion to halt trading in the Shares and will halt trading in the Shares under the conditions specified in NYSE Arca Rule 7.12-E. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, including (1) the extent to which trading is not occurring in the securities and/or the financial instruments composing the Proxy Portfolio and/or Actual Portfolio; or (2) whether other unusual conditions
The Commission also believes that the proposal is reasonably designed to help prevent fraudulent and manipulative acts and practices. Specifically, the Exchange provides that:
• The Adviser is not registered as a broker-dealer but is affiliated with a broker-dealer and has implemented and will maintain a “fire wall” with respect to such broker-dealer affiliate regarding access to information concerning the composition of and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio;
• Any person related to the Adviser or a Fund who makes decisions pertaining to the Fund's Actual Portfolio or Proxy Portfolio or who has access to non-public information regarding a Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto are subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding a Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto;
• In the event (a) the Adviser becomes registered as a broker-dealer or newly affiliated with a broker-dealer or (b) any new adviser or sub-adviser is a registered broker-dealer, or becomes affiliated with a broker-dealer, it will implement and maintain a fire wall with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition of and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding a Fund's Actual Portfolio and/or Proxy Portfolio or changes thereto; and
• Any person or entity, including any service provider for a Fund, who has access to non-public information regarding a Fund's Actual Portfolio or the Proxy Portfolio or changes thereto will be subject to procedures reasonably designed to prevent the use and dissemination of material non-public information regarding a Fund's Actual Portfolio and/or the Proxy Portfolio or changes thereto, and if any such person or entity is registered as a broker-dealer or affiliated with a broker-dealer, such person or entity has erected and will maintain a “fire wall” between the person or entity and the broker-dealer with respect to access to information concerning the composition of and/or changes to a Fund's Actual Portfolio and/or Proxy Portfolio.
Finally, the Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange,
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities.
In support of this proposal, the Exchange represents that:
(1) The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.601-E.
(2) A minimum of 100,000 Shares for each Fund will be outstanding at the commencement of trading on the Exchange.
(3) FINRA, on behalf of the Exchange, or the Exchange, or both, will communicate as needed, and may obtain information, regarding trading in the Shares and underlying exchange-traded instruments with other markets and other entities that are members of the ISG. In addition, the Exchange may obtain information regarding trading in such securities and exchange-traded instruments from markets and other entities with which the Exchange has in place a comprehensive surveillance sharing agreement. Any foreign common stocks held by a Fund will be traded on an exchange that is a member of the ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
(4) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions.
(5) For initial and continued listing, the Funds will be in compliance with Rule 10A-3 under the Act.
(6) Each Fund's holdings will conform to the permissible investments as set forth in the Application and Exemptive Order and the holdings will be consistent with all requirements set forth in the Application and Exemptive Order. Each Fund's investments, including derivatives, will be consistent with its investment objective and will not be used to enhance leverage (although certain derivatives and other investments may result in leverage).
(7) With respect to the Funds, all of the Exchange member obligations relating to product description and prospectus delivery requirements will continue to apply in accordance with Exchange rules and federal securities laws, and the Exchange and FINRA will continue to monitor Exchange members for compliance with such requirements.
The Exchange also represents that all statements and representations made in the filing regarding: (1) the description of the portfolio or reference assets; (2) limitations on portfolio holdings or reference assets; or (3) the applicability of Exchange listing rules specified in the filing constitute continued listing requirements for listing the Shares on the Exchange. In addition, the Exchange represents that the Exchange will obtain a representation from the Adviser, prior to commencement of trading in the Shares of a Fund, that the Adviser will advise the Exchange of any failure by a Fund to comply with the continued listing requirements and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor
Interested persons are invited to submit written data, views, and arguments concerning whether the proposed rule change, as modified by Amendment No. 3, is consistent with the Exchange Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 3, prior to the thirtieth day after the date of publication of notice of the filing of Amendment No. 3 in the
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On May 12, 2020, ICE Clear Europe Limited (“ICE Clear Europe”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
As discussed below, the proposed rule change would amend the CDS Auction Terms and the Policy.
Currently, the CDS Auction Terms contain provisions that apply to Primary CDS Auctions (meaning initial auctions of CDS contracts) and Secondary CDS Auctions (meaning auctions conducted under part two of the CDS Auction Terms and in accordance with ICE Clear Europe Rule 905(d)(i)(B).
As described below, the proposed rule change would make changes primarily related to (i) updating and revising defined terms of the CDS Auction Terms; (ii) interpretation and application of the CDS Auction Terms; (iii) the operation of an Auction; (iv) Minimum Bid Requirements; (v) use of the Default Management System; (vi) introducing All or Nothing Bids; and (vii) adding provisions to cover the EU Market Abuse Regulation.
The proposed rule change would amend a number of the defined terms found in Section 1 of the CDS Auction Terms. First, the proposed rule change would update the names of certain defined terms to refer to an “Auction Lot” rather than a “Lot.” For example, the proposed rule change would re-title the term “Failed Lot” to “Failed Auction Lot.” ICE Clear Europe is making this change to be more specific and distinguish the term Auction Lot from the more general term Lot. Moreover, this change is consistent with ICE Clear Europe's current authority under the CDS Auction Terms, which permit ICE Clear Europe to divide a Clearing Member's portfolio into one or more Auction Lots and auction off each Auction Lot separately, as ICE Clear Europe considers appropriate.
Similarly, the proposed rule change would rename and amend certain defined terms to clarify that they apply to Primary CDS Auctions rather than Secondary CDS Auctions. The CDS Auction Terms contain one set of defined terms that contain definitions that are applicable to both Primary CDS Auctions and Secondary CDS Auctions. To clarify the terms applicable only to Primary CDS Auctions and better distinguish them from Secondary CDS Auctions, the proposed rule change would re-name the terms that currently only refer to a “CDS Auction” to specify that they apply to a Primary CDS Auction. For example, the proposed rule change would change the name of the terms “CDS Auction” and “CDS Auction Participant” to “Primary CDS Auction” and “Primary CDS Auction Participant.” With respect to Secondary CDS Auctions, no change is necessary because the CDS Auction Terms already contain terms specific to Secondary CDS Auctions. For example, the CDS Auction Terms already have a term called “Secondary CDS Auction Participant.”
The proposed rule change would also amend the defined term “Second CDS Auction.” A Second CDS Auction is a Primary CDS Auction that ICE Clear Europe may hold to sell an Auction Lot if it fails to sell all of the contracts in that Auction Lot via an initial Primary CDS Auction. A Second CDS Auction is an additional Primary CDS Auction, rather than a Secondary CDS Auction, as described above, and would therefore be subject to the rules for a Primary CDS Auction. To better clarify that point, the proposed rule change would rename the term “Second CDS Auction” to “Repeat CDS Auction.”
Moreover, the proposed rule change would revise the terms “Split Bidder” and “Subordinate Bidder” to note that they could apply to either a Primary CDS Auction Participant or a Secondary CDS Auction Participant, as applicable for the relevant auction. ICE Clear Europe represents that this amendment does not reflect a change in substance but would make the drafting consistent with the distinction between Primary and Secondary CDS Auctions discussed above.
Next, the proposed rule change would make changes to defined terms that affect the specifics of how ICE Clear Europe conducts an Auction. Specifically, the proposed rule change would change the name of the term “Closing Time” to “Bidding Close Time” to be more precise. The proposed rule change would not alter the substance of this definition, however.
Similarly, the proposed rule change would slightly revise the definitions of “Primary CDS Auction Priority AC Sequence”, “Secondary CDS Auction Priority AC Sequence”, “Primary CDS Auction Priority GF Sequence,” and “Secondary CDS Auction Priority GF Sequence”. These defined terms specify the order in which ICE Clear Europe would use non-defaulting Clearing Members' Guaranty Fund Contributions and Assessment Contributions if needed as additional financial resources to resolve the default of a Clearing Member under ICE Clear Europe Rule 908(i). Generally, under the current definitions, ICE Clear Europe would first apply the contributions of those Clearing Members whose bids in an Auction were the least competitive, starting with Non-Bidding CDS Clearing Members, and would then apply the contributions of those Clearing Members whose bids in an Auction were more competitive. The proposed rule change would not alter this order of priority. The proposed rule change would require, however, that ICE Clear Europe take each amount in the sequence pro rata for the relevant Auction Lot by applying the Auction Lot Guaranty Fund Weighting. The Auction Lot Guaranty Fund Weighting would be a percentage equal to the Initial Margin requirement associated with the contracts in the Auction Lot divided by the Initial Margin requirement associated with all of the contracts in all of the Auction Lots comprising the defaulting Clearing Member's portfolio. Thus, under this change, ICE Clear Europe would determine the amounts in the sequence by Auction Lot, taking into account the Initial Margin requirement associated with each Auction Lot versus all Auction Lots. ICE Clear Europe represents that this change is consistent with, and does not represent an alteration to, its current practices because the CDS Auction Terms already permit ICE Clear Europe to divide a Clearing Member's portfolio into one or more Auction Lots and auction off each Auction Lot separately, as ICE Clear Europe considers appropriate.
Finally, consistent with the changes described below, the proposed rule change would add new defined terms. For example, the proposed rule change would add the terms “All or Nothing Bid”, “DMS”, and “Standard Bid.” The definitions of those new terms are discussed further below as part of the discussion of the specific changes related to those terms.
The proposed rule change would add several paragraphs regarding interpretation and application of the CDS Auction Terms. For example, the proposed rule change would add paragraphs to define the governing law for the CDS Auction Terms, to identify which courts shall have jurisdiction over disputes, and to provide for submission of matters to arbitration. ICE Clear Europe represents that these provisions are substantially similar to existing provisions in the Rulebook and the other Procedures, and ICE Clear Europe is proposing to add them to the CDS Auction Terms for consistency across its documentation.
Similarly, the proposed rule change would clarify that nothing in the CDS Auction Terms would prevent ICE Clear Europe from administering a sale or entering into offsetting transactions without holding an Auction and that the CDS Auction Terms are subject to ICE Clear Europe's Rulebook. These changes reflect ICE Clear Europe's existing authority under its Rulebook, and ICE Clear Europe is adding these clarifications to avoid any potential
The proposed rule change would also clarify that references to CDS Contracts, for purposes of the CDS Auction Terms, include (i) CDS Contracts terminated via automatic early termination or notional amounts representing such terminated CDS Contracts and (ii) CDS Contracts that have arisen from hedging transactions executed by ICE Clear Europe. ICE Clear Europe is making these changes to clarify that it may auction such CDS Contracts to establish replacement contracts with non-defaulting Clearing Members and to determine a price for calculating ICE Clear Europe's loss from closing the defaulting Clearing Member's positions.
The proposed rule change would also make certain changes regarding the operation of an Auction, specifically relating to the Bidding Close Time for an Auction, the treatment of Bids, and participation of customers of Clearing Members in an Auction.
Currently, the CDS Auction Terms provide that Clearing Members may only submit Bids for an Auction prior to the Bidding Close Time for that Auction. The proposed rule change would not alter this provision, but it would further specify that ICE Clear Europe could postpone the Bidding Close Time for up to one hour by giving notice of such postponement to all participants and following consultation to the extent practicable with the CDS Default Committee. Similarly, the CDS Auction Terms permit ICE Clear Europe to withdraw an Auction Lot prior to the Bidding Close Time. The proposed rule change would expand this authority to permit ICE Clear Europe to withdraw an Auction Lot after the Bidding Close Time. ICE Clear Europe believes these changes would provide it additional flexibility to deal with any potential operational issues that could arise during an Auction.
The proposed rule change would update provisions related to the treatment of Bids in an Auction. First, the proposed rule change would revise the wording of a number of provisions to specify that in certain circumstances ICE Clear Europe would treat Clearing Members as having not made a Bid in Auction rather than not participating in an auction, as currently stated. This is not a substantive change because in either case, whether not participating in the Auction or not making a Bid in the Auction, the CDS Auction Terms as amended would treat the Clearing Member as a Non-Bidding CDS Clearing Member. This designation is important because under the CDS Auction Terms and ICE Clear Europe Rule 908(i), in the event that ICE Clear Europe needs to use non-defaulting Clearing Members' Guaranty Fund Contributions or Assessment Contributions to resolve the default of a Clearing Member, ICE Clear Europe would use Non-Bidding CDS Clearing Members' Contributions first. Thus, under the proposed rule change, the CDS Auction Terms would treat a Clearing Member that submits a referential Bid (meaning a Bid that is one Euro higher or lower than the highest or lowest bidder), an invalid Bid, a void Bid, a Bid after the Bidding Close Time, a Bid in breach of the CDS Auction Terms, position limits, or other risk policies of ICE Clear Europe, or that submits a Bid while a Defaulter, as having not made a Bid in an Auction and as a Non-Bidding Clearing Member. Although effectively this treatment is the same as under the current CDS Auction Terms (designation as a Non-Bidding CDS Clearing Member), ICE Clear Europe is making this change because its believes that it is more accurate to describe the Clearing Member as having not made a Bid rather than not participating.
Relatedly, the CDS Auction Terms currently permit ICE Clear Europe to exclude certain Bids for purposes of calculating the CDS Auction Clearing Price (as defined below). Specifically, the CDS Auction Terms permit ICE Clear Europe to exclude a Bid that is invalid because ICE Clear Europe reasonably believes that if it accepted such Bid, the Clearing Member would not clear the resulting CDS Contract. The proposed rule change would expand this provision to include Bids that are invalid for other reasons under the CDS Auction Terms, like Bids submitted below the minimum bid size, if any, Bids submitted after the Bidding Close Time, and Bids that do not comply with the requirements of the CDS Auction Terms.
In addition, under the current CDS Auction Terms, each Bid constitutes an offer from a CDS Clearing Member to ICE Clear Europe to enter into CDS Contracts. The proposed rule change would not change this provision. The proposed rule change would clarify, however, that the offer would be an offer to enter into CDS Contracts pursuant to a Transfer governed by ICE Clear Europe Rule 904(b) and Part 4 of the ICE Clear Europe Rulebook. This change would not alter the substance of this provision. Rather, ICE Clear Europe is making this change to provide additional specificity by referencing the existing process for entering into CDS Contracts under the ICE Clear Europe Rulebook.
Finally, the CDS Auction Terms currently permit customers of Clearing Members to participate in Auctions by becoming Direct Participating Customers. To become a Direct Participating Customer, a customer must meet certain requirements, including making a deposit and entering into an agreement with ICE Clear Europe regarding its participation. The proposed rule change would further require that that each Direct Participating Customer enter into a CDS Auction Participation Agreement with its CDS Clearing Member. ICE Clear Europe is making this change to establish a clearer and stronger basis for enforcement of the CDS Auction Terms against the Direct Participating Customer.
Currently, the CDS Auction Terms require each CDS Clearing Member to bid in every CDS Auction and for every lot in a CDS Auction unless its membership privileges permit it not to participate and it elects not to participate, with this obligation referred to as a CDS Clearing Member's Minimum Bid Requirement. The CDS Auction Terms provide further, however, that a Minimum Bid Requirement would not apply to the extent: (i) it would breach applicable law or the ICE Clear Europe Rulebook; (ii) it would result in a self-referencing CDS; or (iii) where ICE Clear Europe, after being notified in writing by the Clearing Member that it would be inappropriate, reasonably determines that the Minimum Bid Requirement does not apply. In that case, the Clearing Member must notify ICE Clear Europe promptly and in any event at least 12 hours prior to the opening of the relevant Auction.
The proposed rule change would make a number of amendments to these provisions. First, to acknowledge the fact there may be circumstances where a minimum Bid is not required, the proposed rule change would amend the requirement that each CDS Clearing Member bid in every CDS Auction for every lot in a CDS Auction to make it subject to a zero Minimum Bid Requirement being established under the conditions described further below.
Next, the proposed rule change would delete the qualification that the Minimum Bid Requirement does not apply to a CDS Clearing Member whose membership privileges permit it not to participate. ICE Clear Europe is deleting that particular provision because there are no Clearing Members whose
Moreover, with respect to the circumstances in which a Minimum Bid Requirement does not apply, the proposed rule change would amend the portion of the CDS Auction Terms regarding a Clearing Member's notification to ICE Clear Europe that the Minimum Bid Requirement should not apply. Under the proposed rule change, a Clearing Member would still be required to notify ICE Clear Europe, and ICE Clear Europe still would have to reasonably determine that the Minimum Bid Requirement would be inappropriate. The Clearing Member would be required to provide the notice, however, within one hour of ICE Clear Europe publishing details of the CDS Contracts comprising the relevant Auction Lot, and ICE Clear Europe would need to confirm that it agrees with the Clearing Member's assessment. ICE Clear Europe is making this particular change because ICE Clear Europe does not believe the current 12-hour period is feasible given that it may need to conduct an Auction with less than 12 hours' notice.
Finally, the CDS Auction Terms currently provide that a Clearing Member can satisfy its Minimum Bid Requirement by submitting multiple Bids with differing Bid prices and Bid sizes provided that, in the aggregate, its submitted Bids equal or exceed the Minimum Bid Requirement and any individual Bid is larger than any applicable minimum Bid size imposed for that particular Auction, consistent with the CDS Auction Terms. The proposed rule change would clarify this provision by providing that any individual Bid must be equal to or larger than any applicable minimum Bid size.
Additionally, the CDS Auction Terms currently allow affiliated Clearing Members to transfer, outsource, or aggregate their Minimum Bid Requirements to apply to a single one of them, subject to notifying ICE Clear Europe prior to a CDS Auction. The CDS Auction Terms further provide that a Clearing Member that transfers or outsources its Minimum Bid Requirement to an Affiliate remains liable for any breach by its Affiliate in respect of such Clearing Member's Minimum Bid Requirement (in addition to the liability on the part of its Affiliate for such breach) and is subject to the CDS Auction Priority as if such Bid were its own. Under the proposed rule change, the CDS Auction Terms would continue to allow a Clearing Member to transfer its Minimum Bid Requirement to an Affiliate but would further require that the Affiliate also be a Clearing Member and that both Clearing Members execute an agreement provided by ICE Clear Europe for this purpose. The proposed rule change also would allow Clearing Members to outsource the operational processing of any of their obligations under the CDS Auction Terms pursuant to ICE Clear Europe Rule 102(w), which permits Clearing Members to outsource the performance of their obligations under the ICE Clear Europe Rulebook. Thus, this change would expand a Clearing Member's ability to outsource the operational processing of any of its obligations under the CDS Auction Terms (not just the Minimum Bid Requirement) and would reference the applicable ICE Clear Europe Rule. Moreover, the proposed rule change, as under the current CDS Auction Terms, would provide that a Clearing Member that transfers its Minimum Bid Requirement to an Affiliate remains liable with respect to that Minimum Bid Requirement. The proposed rule change also would expand this liability to make a Clearing Member liable for any breach of the CDS Auction Terms by the person to whom the Clearing Member has outsourced its operational obligations, consistent with the expansion discussed above. Finally, the proposed rule change would further specify that a Clearing Member that transfers or outsources its Minimum Bid Requirement to an Affiliate would assume the same position as the Affiliate for the purposes of determining the order of application of non-defaulting Clearing Members' Guaranty Fund Contributions and Assessment Contributions under ICE Clear Europe Rule 908(i) and for designation as a Non-Bidding CDS Clearing Member. ICE Clear Europe is making this particular change to better specify the consequences of transfer of a CDS Clearing Member's obligations to an Affiliate.
Finally, to clarify the extent of the Minimum Bid Requirements, the proposed rule change would add a provision to state that only those Bids that count toward the Minimum Bid Requirement would be taken into account in determining the order of application of Guaranty Fund Contributions and Assessment Contributions under the Primary and Secondary CDS Auction Priority AC Sequence, Primary and Secondary CDS Auction Priority GF Sequence, and ICE Clear Europe Rule 908(i) (as discussed above). Thus, for example, a Clearing Member that submits a Bid despite having a Minimum Bid Requirement of zero (for one of the reasons discussed above), would not see that Bid considered in determining where the Clearing Member stands in the CDS Auction Priority GF Sequence.
As mentioned above, the proposed rule change would add a new defined term, “DMS.” The proposed rule change would define DMS as the Default Management System operated by ICE Clear Europe. The Default Management System would be the system used by ICE Clear Europe to communicate information to, and receive information from, CDS Clearing Members regarding Auctions. The proposed rule change would make changes to various aspects of the CDS Auction Terms to reflect use of this new defined term. With respect to the defined terms, the proposed rule change would make amendments to reflect the use of the DMS rather than the currently specified forms of communication, which usually require some form of manual delivery. For example, the proposed rule change would rename the term “Bid Form” to “Bid Submission” and revise the definition to reflect that it would refer to a Bid submitted via the DMS rather than a Bid submitted on a form prescribed by ICE Clear Europe. Similarly, the proposed rule change would amend the definitions for Primary and Secondary CDS Auction Announcement to reflect that ICE Clear Europe would send the announcement via the DMS rather than a circular.
Similarly, the proposed rule change would amend other parts of the CDS Auction Terms to reflect ICE Clear Europe's use of the DMS. Specifically, the proposed rule change would require that Minimum Bid Requirements be communicated via the DMS (or via such other means and in such format as is specified by ICE Clear Europe), rather than by the template notification currently set out in Annex B. Accordingly, the proposed rule change would delete Annex B from the CDS Auction Terms. The proposed rule change would also require that ICE Clear Europe send the particular specifications for an Auction Lot, like its minimum reserve price (the lowest price ICE Clear Europe would accept), via the DMS rather than by the template notification currently set out in Annex A. Accordingly, the proposed rule change would delete Annex A from the CDS Auction Terms. Finally, the
In addition, the proposed rule change would amend the CDS Auction Terms to reflect Clearing Members' use of the DMS. The proposed rule change would require Clearing Members to submit bids via the DMS. The proposed rule change would also specify that a Clearing Member could amend its Bid by resubmitting the entire bid through DMS.
To reflect the particular operations of the DMS, the proposed rule change would delete a provision from the CDS Auction Terms that currently states that Clearing Members may make an unlimited number of separate Bids. Operationally, the DMS does not accept an unlimited number of separate Bids from Clearing Members. Rather, the DMS would allow a Clearing Member to make separate Bids in respect of either its Customers for whom it acts as Clearing Member or its Sponsored Principals for whom it acts as Sponsor (in addition to any Bids for its Proprietary Accounts), in the same way as it may make a Bid for one of its Proprietary Accounts and subject to the same provisions of the CDS Auction Terms. Similarly, the proposed rule change would delete a statement that a Clearing Member who has made a mistaken or erroneous bid may withdraw the Bid and correct the mistake. The DMS would not permit Clearing Members to withdraw Bids. Instead, the Clearing Member would need to request that ICE Clear Europe invalidate the Bid, which, as under the current CDS Auction Terms, ICE Clear Europe could do at its own discretion if the Clearing Member has made a genuine mistake in the submission of a Bid.
Finally, the CDS Auction Terms currently allow ICE Clear Europe to set a minimum bid size for an Auction and provide that any bid below the minimum bid size will be null and void. The proposed rule change would leverage the DMS to automate these existing requirements by specifying that the DMS would be designed to automatically prevent Clearing Members from submitting bids below the minimum bid size and to render null and void any bid below the minimum bid size that the DMS accepted in error.
As mentioned above, the proposed rule change would add a new defined term, “All or Nothing Bid.” An All or Nothing Bid would be a Bid that stipulates that if the Bid is the winning Bid, the bidder would receive all of the contracts being auctioned in the lot, without any of the contracts being split among other Bids. To make an All or Nothing Bid, the bidder would need to mark the Bid as such in its submission. The proposed rule change would introduce a new defined term for Bids that are not All or Nothing Bids, calling them Standard Bids.
Clearing Members would not be required to make All or Nothing Bids pursuant to the proposed rule change. If a Clearing Member submits an All or Nothing Bid, however, then in the absence of other bids, the All or Nothing Bid would satisfy the Clearing Member's Minimum Bid Requirement (if any) at the same price but adjusted on a pro rata basis for the notional amount of contracts in the Auction Lot. If a Clearing Member makes an All or Nothing Bid, the Clearing Member still would be able to submit one or more Standard Bids for the same Auction Lot, whether for its account or the account of its customers, provided that all of the Bids are submitted in the same submission.
Under the CDS Auction Terms, ICE Clear Europe currently determines the price of an Auction by ordering Bids sequentially, starting with the highest price and ending with the lowest price. The price of the Bid at which, along with any equal or higher Bids, the sum of the notional amount of contracts being purchased equals or is greater than the notional amount of contracts that ICE Clear Europe is auctioning is the clearing price of the Auction (the “CDS Auction Clearing Price”). In other words, ICE Clear Europe proceeds down the list of Bids by price, starting with the highest priced Bid, and sets the CDS Auction Clearing Price at the Bid that, along with the other higher priced Bids before it, allows ICE Clear Europe to allocate 100% of the open CDS contracts in the Auction Lot.
The CDS Auction Terms currently require that, in the event there are multiple Bids at the CDS Auction Clearing Price and there is a shortfall of open CDS contracts, ICE Clear Europe must allocate the contracts
The proposed rule change would update two other provisions of the CDS Auction Terms to clarify how those provisions would apply in light of the presence of All or Nothing Bids. First, the CDS Auction Terms currently provide that ICE Clear Europe may, after a Primary Auction, in its discretion and after consultation with the CDS Default Committee, determine the CDS Auction Clearing Price to be less than 100% of the notional amount of the contracts and declare a Repeat Auction to auction off the remaining contracts. ICE Clear Europe may do so if, in its reasonable determination, awarding 100% of the notional amount of the contracts would have a material impact on the amounts payable or receivable by ICE Clear Europe. The proposed rule change would not alter this provision but would specify that, in such a situation, ICE Europe could disregard any All or Nothing Bids.
Second, the proposed rule change would revise the CDS Auction Terms to clarify how an All or Nothing Bid affects the calculation of a Clearing Member's Bid price for purposes of determining the competitiveness of a Clearing Member's Bid and satisfaction of a Clearing Member's Minimum Bid Requirement. The competitiveness of a Clearing Member's Bid and satisfaction of a Clearing Member's Minimum Bid Requirement are important because under the CDS Auction Terms and ICE Clear Europe Rule 908(i), in the event that ICE Clear Europe needs to use non-defaulting Clearing Members' Guaranty Fund Contributions or Assessment Contributions to resolve the default of a Clearing Member, ICE Clear Europe uses first the contributions attributable to Clearing Members that did not satisfy their Minimum Bid Requirement (Non-Bidding CDS Clearing Members), followed by those that submitted less competitive Bids. Currently, ICE Clear Europe uses the weighted average price of all valid Standard Bids made by the Clearing Member in the Auction (weighted by the portfolio size of each such Bid, and converted into Euro, if applicable) to determine Bid price and thus to determine the competitiveness
Under the CDS Auction Terms as revised by the proposed rule change, where a Clearing Member has submitted both an All or Nothing Bid and one or more Standard Bids, the Clearing Member's Bid price would be the (i) the weighted average price of all valid Standard Bids made by the Clearing Member in the Auction (weighted by the portfolio size of each such bid, and converted into Euro, if applicable) and (ii) the price of any valid All or Nothing Bid made by the Clearing Member in the Auction, in either case proportionately scaled to a portfolio size representing 100% of the relevant Auction Lot. Moreover, under the proposed rule change, if a Clearing Member's Standard Bids do not satisfy its Minimum Bid Requirement, the Clearing Member's Bid price would be the price of its All or Nothing Bid. Where a Clearing Member has submitted one or more Standard Bids (and has not submitted an All or Nothing Bid), and that Clearing Member's Standard Bids do not satisfy its Minimum Bid Requirement, the CDS Auction Terms would treat the Clearing Member as a Non-Bidding CDS Clearing Member, which, as noted above, has consequences under ICE Clear Europe Rule 908(i).
The proposed rule change would also amend the CDS Auction Terms to clarify and state explicitly certain obligations for auction participants in respect of information they may receive in connection with an Auction, including the contents of the portfolio and the outcome or timing of an Auction. Specifically, a participant in an Auction would be required to acknowledge that such information may constitute inside information for the purposes of the EU Market Abuse Regulation (Regulation (EU) No 596/2014) or any similar under applicable law in respect of any Contracts cleared by the ICE Clear Europe or in respect of securities of a defaulting Clearing Member. Under the proposed rule change, each participant in an Auction would be required to assess whether such information is inside information for purposes of the Market Abuse Regulation and, if so, to agree to: (i) Comply with applicable Market Abuse Laws; (ii) generally not disclose such information to persons outside of its organization; (iii) prevent persons engaged in client trading at such organization from possessing such information; (iv) prevent those in possession of such information from trading on such information until it ceases to be inside information; and (v) where such information constitutes inside information under Regulation (EU) No. 596/2014, maintain an insider list of persons with access to this information.
The proposed rule change would make a number of changes to the Policy in relation to the amendments to the CDS Auction Terms. First, as mentioned above, the proposed rule change would change the name from the CDS Default Management Framework to the CDS Default Management Policy. The proposed rule change would make amendments to that effect throughout the document.
Next, the proposed rule change would revise certain characterizations of the timeframe within which certain actions would occur under the Policy. The Policy currently provides that after the approval for the declaration of a default, ICE Clear Europe will immediately institute its default management process as outlined in the Policy. The proposed rule change would remove “immediately” from this provision. In addition, the proposed rule change would remove “immediately” from the provision that ICE Clear Europe cease clearing trades for the defaulting Clearing Member when that Clearing Member is declared in default. Although ICE Clear Europe expects that it would implement such actions in a timely manner under the circumstances, ICE Clear Europe does not believe it is necessary or feasible to specify that it would do take such actions immediately.
Similarly, with respect to assembling the Clearing Risk Team after a default, the Policy currently requires that the Head of Clearing Risk assemble the Clearing Risk Team as soon as a Clearing Member is deemed to have defaulted. The proposed rule change would amend this to require assembly once a Clearing Member is deemed to have defaulted. Again, ICE Clear Europe does not believe it is necessary or feasible to specify that assembly occur as soon as a Clearing Member is deemed to have defaulted. Finally, the Policy currently provides that when liquidating collateral assets of a default Clearing Member, ICE Clear Europe ensures that it can sell the collateral, subject to settlements terms, within a single working day, but the Head of Clearing Risk has discretion to postpone the collateral sale. The proposed rule change would delete this statement. ICE Clear Europe believes the statement is not needed to ensure timely sale of collateral and that it is unnecessary given that ICE Clear Europe relies on its existing and detailed collateral and liquidity policies to ensure it has sufficient access to liquidity in case of default.
The proposed rule change would also make a change with respect to the personnel authorized to take action regarding default management. The proposed rule change would remove a statement that in the event that the President/Chief Operating Officer is absent, the Head of Clearing Risk has the ability to overrule any other head of department (including Head of Treasury and Head of Operations) where necessary, on matters relating to default management. Thus, if the President/Chief Operating Officer is absent, the Head of Clearing Risk no longer has the ability to overrule any head of department. ICE Clear Europe is making this amendment to reflect a change in the Board's delegation of authority. Under the current delegation of authority, where the President/Chief Operating Officer is absent, the Executive Risk Committee has authority to make decisions, and thus override any head of department.
The proposed rule change would also amend the Policy regarding ICE Clear Europe's authority to convert a default Clearing Member's non-cash margin to cash. The Policy currently provides that to manage the risks related to a Clearing Member's default, ICE Clear Europe will internally isolate the Defaulting Clearing Member's positions and, if deemed appropriate, convert any non-cash portion of the Defaulting Member's margin and collateral securing their portion of the Guaranty Fund into cash. The proposed rule change would alter this slightly to provide that ICE Clear Europe “may” convert any non-cash portion of the Defaulting Member's margin and collateral securing their portion of the Guaranty Fund into cash. ICE Clear Europe is making this change to clarify the drafting of this provision, but it does not believe this change would substantively alter ICE Clear Europe's authority under this provision.
The proposed rule change would also amend the portion of the Policy related to the mechanics of bidding in an Auction to address the introduction of All or Nothing Bids, as discussed above. The proposed amendments would provide explanation regarding the meaning of an All or Nothing Bid and an example of how an All or Nothing Bid would work. The proposed amendments would also provide that ICE Clear Europe would publish further information on the bidding types utilized in any given Auction as part of the specifications for that Auction.
Finally, the proposed rule change would amend the Policy's provisions regarding review, breach management, and exception handling. With respect to reviewing and revising the Policy, the Policy currently provides that ICE Clear Europe will conduct a quarterly review of the Policy, to include an assessment of responsibilities, trading facilities, and equipment. The proposed rule change would delete this provision because ICE Clear Europe would review and revise the Policy as part of ICE Clear Europe's separate annual documentation review process rather than on a quarterly basis and, as discussed below, the document owner would be responsible for ensuring the Policy remains up-to-date. In its place, the proposed rule change would add a provision explaining that ICE Clear Europe, in coordination with its Clearing Members, would conduct an annual mock Clearing Member default test with the Clearing Risk Department, appropriate Clearing House management, and CDS Default Committee Members for each Clearing Member. The proposed rule change would also make the Policy's provisions for breach management and exception handling consistent with other ICE Clear Europe policies and governance processes.
Section 19(b)(2)(C) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization.
Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of ICE Clear Europe be designed to promote the prompt and accurate clearance and settlement of securities transactions and, to the extent applicable, derivative agreements, contracts, and transactions, as well as to assure the safeguarding of securities and funds which are in the custody or control of ICE Clear Europe or for which it is responsible.
Specifically, the Commission believes that the proposed rule change, in amending certain defined terms and adding defined terms needed for the other changes as discussed in Part II,A,i above, should reduce the possibility for confusion in the application of the CDS Auction Terms by clarifying the terminology in the CDS Auction Terms and by identifying and defining the terms needed to enact the other changes discussed above. In addition, amending the defined terms with respect to certain operations of an auction, including changing the term Closing Time to Bidding Close Time and revising the definitions of Primary and Secondary CDS Auction Priority AC Sequence and Primary and Secondary CDS Auction Priority GF Sequence, should help to clarify these operational aspects of Auctions and thereby improve the efficiency of Auctions.
Moreover, adding provisions to explain how ICE Clear Europe would interpret and apply the CDS Auction Terms, as discussed in Part II.A.ii above, including how the CDS Auctions Terms would relate to the ICE Clear Europe Rulebook, should help to reduce the possibility for confusion when interpreting and applying the CDS Auction Terms alongside the ICE Clear Europe Rulebook. Similarly, the additional provisions to explain that the CDS Contracts part of an Auction would include certain terminated CDS Contracts and hedging CDS Contracts should allow ICE Clear Europe to replace such contracts and establish a price to calculate its loss with respect to such contracts, thereby further improving the efficacy of Auctions.
Further, giving ICE Clear Europe the ability to postpone the Bidding Close Time and withdraw a lot after the Bidding Close Time, as discussed in Part II.A.iii above, should afford ICE Clear Europe flexibility to respond to changing conditions as Auctions are being conducted and therefore to respond as needed to conduct a successful Auction. Clearing Members should also benefit from additional clarity with respect to the consequences of making Bids in an Auction as a result of the proposed rule change specifying the circumstances in which a Clearing Member is treated as having not made a Bid, in which ICE Clear Europe could exclude certain bids for purposes of calculating the CDS Auction Clearing Price, and in which a Bid would constitute an offer governed by ICE Clear Europe Rule 904(b) and Part 4 of the ICE Clear Europe Rulebook. Finally, the additional requirement that each Direct Participating Customer enter into a CDS Auction Participation Agreement with its CDS Clearing Member should provide an additional assurance that Customers participating in an Auction would comply with the requirements of the CDS Auction Terms.
As it relates to Minimum Bid Requirements discussed in Part II.A.iv above, the Commission believes that the proposed rule change could increase participation in Auctions by reducing the potential for avoidance of Minimum Bid Requirements, thereby leading to more successful Auctions. Three particular aspects of the proposed rule change should help to reduce the possibility that a Clearing Member elects not to participate in an Auction or avoids the Minimum Bid Requirement: (i) Removal of the possibility that a Clearing Member could elect not to participate in an Auction; (ii) shortening the time by which a Clearing Member must provide notice to ICE Clear Europe that a Minimum Bid Requirement should not apply; and (iii) requiring ICE Clear Europe to confirm that it agrees to the Clearing Member's assessment
At the same time, the proposed rule change should increase the flexibility with which Clearing Members may address Minimum Bid Requirements by allowing Clearing Members to outsource the operational processing of their obligations under the CDS Auction Terms; continuing to allow Clearing Members to transfer their Minimum Bid Requirements to Affiliates (subject to both being Clearing Members and entering into an agreement); making explicit that a Clearing Member can satisfy its Minimum Bid Requirement with multiple Bids provided that any individual Bid is equal to or larger than the applicable minimum Bid size; and adding a provision to state that only those Bids that count toward the Minimum Bid Requirement would be taken into account under the Primary and Secondary CDS Auction Priority AC Sequence, Primary and Secondary CDS Auction Priority GF Sequence, and ICE Clear Europe Rule 908(i). Similarly, the additional clarity provided regarding the continued liability of a Clearing Member that transfers its Minimum Bid Requirement or outsources other operational obligations would allow Clearing Members to better understand the consequences of transferring or outsourcing a Minimum Bid Requirement. The Commission believes that this additional flexibility and information should generally help to ensure Clearing Members comply with Minimum Bid Requirements, which, in turn, should help to increase the likelihood of a successful Auction.
As discussed in part II.A.v above, the proposed rule change would make a number of changes reflecting the role and operations of the DMS in the context of an Auction. These changes would replace manual communications with electronic ones and therefore should improve the efficiency and accuracy of communications regarding Auctions, which may help to avoid delays or miscommunications that could delay the successful completion of an Auction. Thus, requiring use of the DMS and amending the CDS Auction Terms to reflect the operation of the DMS should help to promote the smooth conduct and successful completion of Auctions.
The proposed rule change would also add All or Nothing Bids, and make related changes, to the CDS Auction Terms, as discussed in Part II.A.vi above. Because an All or Nothing Bid provides a means for a single bidder to take all of the contracts in an Auction and requires that ICE Clear Europe allocate such contracts to that bidder if the All or Nothing Bid meets the Auction Clearing Price, All or Nothing Bidding should increase the likelihood that ICE Clear Europe successfully sells all of a defaulting Clearing Member's contracts by an Auction. Thus, the Commission believes that the changes discussed regarding All or Nothing Bids, including how an All or Nothing Bid would affect Minimum Bid Requirements and the calculation of bid price, should help to increase the likelihood of a successful Auction.
Moreover, adding provisions for the EU Market Abuse Regulations as discussed in Part II.A.vii above should ensure compliance with applicable EU law in the conduct of Auctions and should protect sensitive information shared as part of an Auction. The Commission believes this should, in turn, increase participants' confidence in the security of information shared as part of an Auction and therefore increase participation in an Auction.
Finally, the Commission believes that the changes to the Policy discussed in Part II.B above should improve ICE Clear Europe's ability to use the processes outlined in the Policy to respond to a Clearing Member's default and increase the clarity regarding the operation of the Policy, including when ICE Clear Europe may take certain actions and its authority for doing so. These changes include: (i) Renaming the Policy; (ii) revising the timing requirements for certain actions; and (iii) specifying that ICE Clear Europe may convert the defaulting Clearing Member's non-cash Margin and Guaranty Fund Contributions into cash. Similarly, removing a statement that in the event that the President/Chief Operating Officer being absent, the Head of Clearing Risk has the ability to overrule any other head of department (including Head of Treasury and Head of Operations) to reflect a change in the Board's delegation of authority, should reduce the possibility for confusion or mistakes in taking action under the Policy. Amending the mechanics of bidding in an Auction to address the introduction of All or Nothing Bids should further help to implement All or Nothing Bidding, which, as discussed above, should increase the likelihood for a successful Auction. Deleting the requirement that ICE Clear Europe conduct a quarterly review and instead making the document owner responsible for ensuring that the Policy is up-to-date and for reporting breaches, consistent with other ICE Clear Europe policies and governance processes, should establish a means for ensuring that ICE Clear Europe maintains and adheres to the Policy. For these reasons, the Commission believes the changes to the Policy should generally improve ICE Clear Europe's conduct of Auctions.
Through Auctions, ICE Clear Europe sells the open CDS contracts of a defaulting Clearing Member. Thus, in improving the efficiency of such Auctions, the Commission believes the proposed rule change should promote the prompt and accurate clearance and settlement of the CDS transactions resulting from such Auctions. Moreover, the Commission believes that the default of a Clearing Member, if not promptly resolved, could cause losses for ICE Clear Europe. The Commission believes the proposed rule change should help to avoid these losses by promoting the prompt resolution of Auctions, and therefore the prompt resolution of a Clearing Member's default. Because losses resulting from the default of a Clearing Member could disrupt ICE Clear Europe's ability to operate and therefore threaten ICE Clear Europe's ability to clear and settle transactions and access securities and funds, the Commission believes the proposed rule change also should help to promote the prompt and accurate clearance and settlement of transactions and assure the safeguarding of securities and funds in ICE Clear Europe's custody and control.
Therefore, the Commission finds that the proposed rule change should promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds in ICE Clear Europe's custody and control, consistent with the Section 17A(b)(3)(F) of the Act.
Rule 17Ad-22(e)(2)(v) requires that ICE Clear Europe establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for governance arrangements that, among other things, specify clear and direct lines of responsibility.
Rule 17Ad-22(e)(13) requires that ICE Clear Europe establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure ICE Clear Europe has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations by, at a minimum, requiring its Clearing Members and, when practicable, other stakeholders to participate in the testing and review of its default procedures, including any close-out procedures, at least annually and following material changes thereto.
As discussed above, the Commission believes the proposed rule change should generally improve the clarity and operation of the CDS Auction Terms and, therefore, ICE Clear Europe's ability to conduct a successful Auction via the CDS Auction Terms. Because ICE Clear Europe uses Auctions to close out a defaulting Clearing Member's contracts and contain the losses and liquidity demands stemming from a Clearing Member's default, the Commission believes the proposed rule change, in improving ICE Clear Europe's ability to conduct a successful Auction via the CDS Auction Terms, should help to ensure ICE Clear Europe has the authority and operational capacity to take timely action to contain losses and liquidity demands. Moreover, as discussed in Part II.B above, the proposed rule change would amend the Policy to add a provision explaining that ICE Clear Europe, in coordination with its Clearing Members, would conduct an annual mock Clearing Member default test with the Clearing Risk Department, appropriate ICE Clear Europe management, and CDS Default Committee Members for each Clearing Member. The Commission believes this particular change should help to ensure that ICE Clear Europe requires its Clearing Members to participate in the testing and review of its default procedures.
For these reasons, the Commission finds that the proposed rule change is consistent with Rule 17Ad-22(e)(13).
On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act, and in particular, with the requirements of Section 17A(b)(3)(F) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to extend the temporary waiver of the co-location “Hot Hands” fee. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to extend of the temporary waiver of the co-location
The Exchange is an indirect subsidiary of Intercontinental Exchange, Inc. (“ICE”). Through its ICE Data Services (“IDS”) business, ICE operates the Data Center, from which the Exchange provides co-location services to Users.
ICE previously announced to Users that the Data Center would be closed to third parties starting on March 16, 2020, to help avoid the spread of COVID-19, which could negatively impact Data Center functions. Prior to the closure of the Data Center, the Chief Executive Officer of the Exchange took the actions required under NYSE Chicago Rule 7.1 to close the co-location facility of the Exchange to third parties. The closure period was extended twice, through June 30, 2020 (the “Initial Closure”).
ICE has announced to Users that, because the concerns that led to the Initial Closure still apply, the closure of the Data Center will be extended, with the date of the reopening announced through a customer notice.
If a User's equipment requires work while a Rule 7.1 closure is in effect, the User has to use the Hot Hands service and, absent a waiver, incurs Hot Hands fees for the work. Given that, the Exchange waived all Hot Hands fees for the duration of the Initial Closure.
The Exchange believes that there will be sufficient Data Center staff on-site to comply with User requests for Hot Hands service.
The proposed extension of the waiver would apply equally to all Users. The proposed extension of the fee waiver would not apply differently to distinct types or sizes of market participants. Rather, it would continue to apply uniformly to all Users.
The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed rule change is reasonable for the following reasons.
Given that the closure of the Data Center has been extended, the Exchange believes that it is reasonable to grant the proposed corresponding extension of the waiver of the Hot Hands Fee. While a Rule 7.1 closure is in effect, User representatives are not allowed access to the Data Center. If a User's equipment requires work during such period, the User has to use the Hot Hands service. Absent a waiver, the User would incur Hot Hands fees for the work.
The proposed extension of the waiver would allow a User to have work carried out on its equipment notwithstanding the closure of the Data Center without incurring Hot Hands fees.
The Exchange believes the proposed rule change is an equitable allocation of its fees and credits for the following reasons.
The proposed extension of the waiver would apply equally to all Users. The proposed extension would not apply differently to distinct types or sizes of market participants. Rather, it would apply uniformly to all Users.
The Exchange believes that the proposal is equitable because the extension of the waiver would mean that for the duration of the closure of the Data Center all similarly-situated Users would not be charged a fee to use the Hot Hands service.
The Exchange believes that the proposed change is not unfairly discriminatory for the following reasons.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment requires work during the extension of the Data Center closure would have the resulting fees waived, and the extension of the waiver would apply uniformly to all Users during the period. For the reasons above, the proposed changes do not unfairly discriminate between or among market participants.
In addition, the Exchange believes that the proposed rule change would perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest because it would allow a User to have work carried out on its equipment notwithstanding a Rule 7.1 closure without incurring Hot Hands fees. Accordingly, the Exchange believes that the requested extension of the waiver is designed to perfect the mechanisms of a free and open market and a national market system and, in general, protect investors and the public interest by facilitating the uninterrupted availability of Users' equipment.
For all of the above reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act,
The Exchange does not believe that the proposed change would place any burden on intramarket competition that is not necessary or appropriate.
The proposed extension of the waiver is not designed to affect competition, but rather to provide relief to Users that, while a Rule 7.1 closure is in effect, have no option but to use the Hot Hands service.
The proposed extension of the waiver would not apply differently to distinct types or sizes of market participants. Rather, all Users whose equipment
The Exchange does not believe that the proposed change would impose any burden on intermarket competition that is not necessary or appropriate.
The Exchange believes that the proposed change would not affect the competitive landscape among the national securities exchanges, as the Hot Hands service is solely charged within co-location to existing Users, and would be temporary.
For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
85 FR 39035, June 29, 2020.
Wednesday, July 1, 2020 at 2:00 p.m.
The Closed Meeting scheduled for Wednesday, July 1, 2020 at 2:00 p.m., has been cancelled.
For further information; please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551-5400.
Pursuant to the authority vested in the Secretary of State by the laws of the United States including the Foreign Missions Act (22 U.S.C. 4301
Furthermore, I hereby determine it to be reasonably necessary to protect the interests of the United States to require the representative offices and operations in the United States of the above noted entities, and their agents or employees acting on their behalf, to comply with the terms and conditions specified by the Department of State's Office of Foreign Missions relating to the above noted entities' activities in the United States.
Finally, I determine that the requirements established by Designation 2020-2, dated June 5, 2020, will not be
Pursuant to the authority vested in the Secretary of State under the Foreign Missions Act, 22 U.S.C. 4301,
1. Any state, local, or municipal government;
2. any educational institution (public or private); and
3. any research institution (public or private), including national laboratories;
Federal Motor Carrier Safety Administration (FMCSA), Transportation (DOT).
Notice of final disposition; grant of application for exemption.
FMCSA announces its decision to grant the application of the U.S. Department of Energy (DOE) for a renewal of its exemption from the 30-minute rest break provision of the Agency's hours-of-service (HOS) regulations for commercial motor vehicle (CMV) drivers. DOE currently holds an exemption for the period through June 29, 2020, which enables DOE's contract motor carriers and their employee-drivers engaged in the transportation of security-sensitive radioactive materials to be treated similarly to drivers of shipments of explosives. The exempted drivers will be allowed to use 30 minutes or more of on-duty “attendance time” to meet the HOS rest break requirements providing they do not perform any other work during the break.
The requested exemption renewal is effective from June 30, 2020, through September 29, 2020.
Ms. Pearlie Robinson, Driver and Carrier Operations Division; Office of Carrier, Driver and Vehicle Safety Standards, FMCSA; Telephone: 202-366-4325. Email:
To view comments, as well as documents mentioned in this preamble as being available in the docket, go to
FMCSA has authority under 49 U.S.C. 31136(e) and 31315(b) to grant exemptions from the Federal Motor Carrier Safety Regulations. FMCSA must publish a notice of each exemption request in the
The Agency reviews the safety analyses and the public comments, and determines whether granting the exemption would likely achieve a level of safety equivalent to, or greater than, the level that would be achieved by the current regulation (49 CFR 381.305). The decision of the Agency must be published in the
From 2013 to 2015, DOE held a limited exemption from the mandatory 30-minute rest break requirement of 49 CFR 395.3(a)(3)(ii) that allowed DOE contract carriers and their drivers transporting security-sensitive radioactive materials to be treated the same as drivers transporting explosives pursuant to § 395.1(q). As that exemption neared expiration, DOE applied for its renewal. FMCSA reviewed DOE's request and the public comments and reaffirmed its previous conclusion that allowing these drivers to count on-duty time “attending” their CMVs toward the required 30-minute break, would likely provide a level of
On July 25, 2016 (81 FR 48495), FMCSA announced the extension of the 2015 DOE exemption notice to June 29, 2020 in response to section 5206(b)(2)(A) of the “Fixing America's Surface Transportation Act” (FAST Act). That section extends the expiration date of all HOS exemptions in effect on the date of enactment (Dec. 4, 2015) to five years from the date of issuance of the exemptions. DOE has now requested a renewal of the exemption. A copy of DOE's request is in the docket referenced at the beginning of this notice.
DOE has implemented several technical and administrative controls to ensure the continued effective use of driver on-duty and rest-break time, which would remain in effect under the requested exemption renewal. They include the following:
• Real-time tracking and monitoring of transuranic waste and security-sensitive shipments using DOE's satellite-based systems;
• Use of electronic on-board recorders on trucks, which are contractually required for motor carriers involved in the Waste Isolation Pilot Plant to ensure compliance with driver HOS rules; and
• Continuous monitoring of the performance of DOE-qualified motor carriers using the FMCSA Compliance Safety Accountability Program's Safety Measurement System, and DOE's Motor Carrier Evaluation Program.
Further details regarding DOE's safety controls can be found in its application for a renewal of the exemption. The application can be accessed in the docket identified at the beginning of this notice. DOE contends that these controls enable them to achieve a high level of safety and security for transportation of security-sensitive radioactive materials.
On April 23, 2020, FMCSA published notice of this application, and requested public comment (85 FR 22785). Two comments were submitted, one by an individual, Garrett Chaffey, and the other by the Commercial Vehicle Safety Alliance (CVSA). Both supported the exemption.
Garrett Chaffey wrote:
In conclusion, the DOE should be granted the continued exemption as requested because the DOE is best situated to evaluate its needs, there is a lack of evidence of negative consequences to the exemption, the transport of radioactive materials provides similar risks that explosives drivers also are granted exemption for, and after five years of this exemption the exemption appears to be having the desired impact without creating additional risks.
CVSA wrote the following:
CVSA believes that DOE drivers have demonstrated an ability to maintain an equivalent level of safety under this exemption and does not oppose the renewal. However, FMCSA recently released a final rule that makes changes to the hours-of-service requirements that addresses DOE's scenario, by allowing all drivers to satisfy the 30-minute rest break requirement with any non-driving time. As a result, the Alliance supports extending DOE's exemption through the implementation date of the new hours-of-service regulations, at which time the exemption will no longer be necessary.
In reviewing the DOE request, FMCSA considered a wide range of studies, including the 2011 Blanco study,
The Agency has analyzed DOE's application for renewal and comments filed to the docket and believe the application for exemption renewal is likely to achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption.
The exemption from the requirements of 49 CFR 395.3(a)(3)(ii) is granted for the period from 12:01 a.m., June 30, 2020, through 11:59 p.m. on September 29, 2020. Thereafter, revised § 395.3(a)(3)(ii) will make this exemption unnecessary.
The exemption is restricted to DOE's contract driver-employees transporting security-sensitive radioactive materials. This exemption is limited to the provisions of 49 CFR 395.3(a)(3)(ii) to allow contract driver-employees transporting security-sensitive radioactive materials to be treated the same as drivers transporting explosives, as provided in § 395.1(q). These drivers must comply with all other applicable provisions of the FMCSRs.
In accordance with 49 U.S.C. 31315(d), during the period this exemption is in effect, no State shall enforce any law or regulation that conflicts with or is inconsistent with this exemption with respect to a firm or person operating under the exemption.
The DOE must notify FMCSA within 5 business days of any accident (as defined in 49 CFR 390.5), involving any of the motor carrier's CMVs operating under the terms of this exemption. The notification must include the following information:
a. Exemption Identity: “DOE”;
b. Name of operating motor carrier and USDOT number;
c. Date of the accident;
d. City or town, and State, in which the accident occurred, or closest to the accident scene;
e. Driver's name and driver's license number and State of issuance;
f. Vehicle number and State license plate number;
g. Number of individuals suffering physical injury;
h. Number of fatalities;
i. The police-reported cause of the accident;
j. Whether the driver was cited for violation of any traffic laws or motor carrier safety regulations; and
k. The driver's total driving time and total on-duty time period prior to the accident.
Reports filed under this provision shall be emailed to
FMCSA does not believe the drivers covered by this exemption will experience any deterioration of their safety record. However, should this occur, FMCSA will take all steps necessary to protect the public interest, including revocation or restriction of the exemption. The FMCSA will immediately revoke or restrict the
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995 (PRA). Currently the Bureau of the Fiscal Service within the Department of the Treasury is soliciting comments concerning the Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery.
Written comments should be received on or before September 4, 2020 to be assured of consideration.
Direct all written comments and requests for additional information to Bureau of the Fiscal Service, Bruce A. Sharp, Room #4006-A, P.O. Box 1328, Parkersburg, WV 26106-1328, or
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See Supplementary Information section for applicable date(s).
OFAC: Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855.
Electronic Availability
The Specially Designated Nationals and Blocked Persons List and additional information concerning OFAC sanctions programs are available on OFAC's website (
Notice of OFAC Actions
On November 5, 2019, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authority listed below.
Identified as meeting the definition of the term, “Government of Venezuela,” pursuant to section 6(d) of Executive Order 13884, “Blocking Property of the Government of Venezuela,” 84 FR 38843 (“E.O. 13884” or the “Order”), for acting of purported to act for or on behalf of, directly or indirectly, the Government of Venezuela.
Identified as meeting the definition of the term, “Government of Venezuela,” pursuant to section 6(d) of the Order, for acting of purported to act for or on behalf of, directly or indirectly, the Government of Venezuela.
Identified as meeting the definition of the term, “Government of Venezuela,” pursuant to section 6(d) of the Order, for acting of purported to act for or on behalf of, directly or indirectly, the Government of Venezuela.
Identified as meeting the definition of the term, “Government of Venezuela,” pursuant to section 6(d) of the Order, for acting of purported to act for or on behalf of, directly or indirectly, the Government of Venezuela.
Identified as meeting the definition of the term, “Government of Venezuela,” pursuant to section 6(d) of the Order, for acting of purported to act for or on behalf of, directly or indirectly, the Government of Venezuela.
This document was received for publication by the Office of the Federal Register on June 30, 2020.
Environmental Protection Agency (EPA).
Final rule.
This action finalizes the residual risk and technology review (RTR) conducted for the Ethylene Production source category regulated under National Emission Standards for Hazardous Air Pollutants (NESHAP). In addition, the U.S. Environmental Protection Agency (EPA) is taking final action to correct and clarify regulatory provisions related to emissions during periods of startup, shutdown, and malfunction (SSM), including removing general exemptions for periods of SSM, adding work practice standards for periods of SSM where appropriate, and clarifying regulatory provisions for certain vent control bypasses. The EPA is also taking final action to revise requirements for heat exchange systems; add monitoring and operational requirements for flares; add provisions for electronic reporting of performance test results and other reports; and include other technical corrections to improve consistency and clarity. We estimate that these final amendments will reduce hazardous air pollutants (HAP) emissions from this source category by 29 tons per year (tpy) and reduce excess emissions of HAP from flares by an additional 1,430 tpy.
This final rule is effective on July 6, 2020. The incorporation by reference (IBR) of certain publications listed in the rule is approved by the Director of the Federal Register as of July 6, 2020.
The EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2017-0357. All documents in the docket are listed on the
For questions about this final action, contact Mr. Andrew Bouchard, Sector Policies and Programs Division (E143-01), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541-4036; and email address:
Table 1 of this preamble is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by the final action for the source category listed. To determine whether your facility is affected, you should examine the applicability criteria in the appropriate NESHAP. If you have any questions regarding the applicability of any aspect of this NESHAP, please contact the appropriate person listed in the preceding
In addition to being available in the docket, an electronic copy of this final action will also be available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this final action at:
Additional information is available on the RTR website at
Under the Clean Air Act (CAA) section 307(b)(1), judicial review of this final action is available only by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit (the Court) by September 4, 2020. Under CAA section 307(b)(2), the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings brought by the EPA to enforce the requirements.
Section 307(d)(7)(B) of the CAA further provides that only an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review. This section also provides a mechanism for the EPA to reconsider the rule if the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within the period for public comment or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule. Any person seeking to make such a demonstration should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, WJC South Building,
Section 112 of the CAA establishes a two-stage regulatory process to address emissions of HAP from stationary sources. In the first stage, we must identify categories of sources emitting one or more of the HAP listed in CAA section 112(b) and then promulgate technology-based NESHAP for those sources. “Major sources” are those that emit, or have the potential to emit, any single HAP at a rate of 10 tpy or more, or 25 tpy or more of any combination of HAP. For major sources, these standards are commonly referred to as maximum achievable control technology (MACT) standards and must reflect the maximum degree of emission reductions of HAP achievable (after considering cost, energy requirements, and non-air quality health and environmental impacts). In developing MACT standards, CAA section 112(d)(2) directs the EPA to consider the application of measures, processes, methods, systems, or techniques, including, but not limited to, those that reduce the volume of or eliminate HAP emissions through process changes, substitution of materials, or other modifications; enclose systems or processes to eliminate emissions; collect, capture, or treat HAP when released from a process, stack, storage, or fugitive emissions point; are design, equipment, work practice, or operational standards; or any combination of the above.
For these MACT standards, the statute specifies certain minimum stringency requirements, which are referred to as MACT floor requirements, and which may not be based on cost considerations. See CAA section 112(d)(3). For new sources, the MACT floor cannot be less stringent than the emission control achieved in practice by the best-controlled similar source. The MACT standards for existing sources can be less stringent than floors for new sources, but they cannot be less stringent than the average emission limitation achieved by the best-performing 12 percent of existing sources in the category or subcategory (or the best-performing five sources for categories or subcategories with fewer than 30 sources). In developing MACT standards, we must also consider control options that are more stringent than the floor under CAA section 112(d)(2). We may establish standards more stringent than the floor, based on the consideration of the cost of achieving the emissions reductions, any non-air quality health and environmental impacts, and energy requirements.
In the second stage of the regulatory process, the CAA requires the EPA to undertake two different analyses, which we refer to as the technology review and the residual risk review. Under the technology review, we must review the technology-based standards and revise them “as necessary (taking into account developments in practices, processes, and control technologies)” no less frequently than every 8 years, pursuant to CAA section 112(d)(6). Under the residual risk review, we must evaluate the risk to public health remaining after application of the technology-based standards and revise the standards, if necessary, to provide an ample margin of safety to protect public health or to prevent, taking into consideration costs, energy, safety, and other relevant factors, an adverse environmental effect. The residual risk review is required within 8 years after promulgation of the technology-based standards, pursuant to CAA section 112(f). In conducting the residual risk review, if the EPA determines that the current standards provide an ample margin of safety to protect public health, it is not necessary to revise the MACT standards pursuant to CAA section 112(f).
The Ethylene Production MACT standards (herein called the EMACT standards) for the Ethylene Production source category are contained in the GMACT NESHAP which also includes MACT standards for several other source categories. The EMACT standards were promulgated on July 12, 2002 (67 FR 46258), and codified at 40 CFR part 63, subparts XX and YY. The EMACT standards regulate HAP emissions from ethylene production units located at major sources. An ethylene production unit is a chemical manufacturing process unit in which ethylene and/or propylene are produced by separation from petroleum refining process streams or by subjecting hydrocarbons to high temperatures in the presence of steam. The EMACT defines the affected source as all storage vessels, ethylene process vents, transfer racks, equipment, waste streams, heat exchange systems, and ethylene cracking furnaces and associated decoking operations that are associated with each ethylene production unit located at a major source as defined in CAA section 112(a).
As of January 1, 2017, there were 26 facilities in operation and subject to the EMACT standards. We are also aware of the expansion and construction of several facilities. Based upon this anticipated growth for the Ethylene Production source category, we estimate that a total of 31 facilities will ultimately be subject to the EMACT standards and complying with this final rule over the course of the next 3 years. The source category and the EMACT standards are further described in the October 9, 2019, RTR proposal. See 84 FR 54278.
On October 9, 2019, the EPA published a proposed rule in the
We also proposed the following amendments:
• Revisions to the operating and monitoring requirements for flares used as air pollution control devices (APCDs), pursuant to CAA section 112(d)(2) and (3);
• requirements and clarifications for periods of SSM and bypasses, including for pressure relief device(s) (PRD) releases, bypass lines on closed vent systems, in situ sampling systems, maintenance activities, and certain gaseous streams routed to a fuel gas system, pursuant to CAA section 112(d)(2) and (3);
• work practice standards for decoking ethylene cracking furnaces (
• revisions to the SSM provisions of the NESHAP (in addition to those related to flares, vent control bypasses, or ethylene cracking furnace decoking operations) in order to ensure that they are consistent with the Court decision in
• a requirement for electronic submittal of performance test results and reports, and Notification of Compliance Status (NOCS) reports;
• removal of certain exemptions for once-through heat exchange systems;
• overlap provisions for equipment at ethylene production facilities subject to both the EMACT standards and synthetic organic chemicals manufacturing equipment leak standards at 40 CFR part 60, subpart VVa;
• IBR of an alternative test method for EPA Methods 3A and 3B (for the manual procedures only and not the instrumental procedures);
• IBR of an alternative test method for EPA Method 18 (with caveats);
• IBR of an alternative test method for EPA Method 320 (with caveats); and
• several minor editorial and technical changes in the subpart.
This action finalizes the EPA's determinations pursuant to the RTR provisions of CAA section 112 for the Ethylene Production source category and amends the EMACT standards based on those determinations. This action also finalizes other changes to the NESHAP, including adding requirements and clarifications for periods of SSM and bypasses; revisions to the operating and monitoring requirements for flares used as APCDs; adding provisions for electronic reporting of performance test results and reports, NOCS reports, and Periodic Reports; and other minor editorial and technical changes. This action also reflects several changes to the October 9, 2019 RTR proposal in consideration of comments received during the public comment period as described in section IV of this preamble.
This section describes the final amendments to the EMACT standards being promulgated pursuant to CAA section 112(f). The EPA proposed no changes to the EMACT standards based on the risk reviews conducted pursuant to CAA section 112(f). In this action, we are finalizing our proposed determination that risks from this source category are acceptable, and that the standards provide an ample margin of safety to protect public health and prevent an adverse environmental effect. Section IV.A.3 of this preamble provides a summary of key comments we received regarding risk review and our responses.
The EPA is finalizing its proposed determination in the technology review that there are no developments in practices, processes, and control technologies that warrant revisions to the EMACT standards for process vents, transfer racks, equipment leaks, and waste streams in this source category. Therefore, we are not finalizing revisions to the EMACT standards for these emission sources under CAA section 112(d)(6). Also, based on comments received on the proposed rulemaking, we are not finalizing the proposed revisions to the EMACT standards for storage vessels under CAA section 112(d)(6) to tighten the control applicability thresholds for MTVP of total organic HAP (
For heat exchange systems, we determined that there are developments in practices, processes, and control technologies that warrant revisions to the EMACT standards for this source category. Therefore, to satisfy the requirements of CAA section 112(d)(6), we are revising the EMACT standards, consistent with the October 9, 2019, RTR proposal, to include revisions to the heat exchange system requirements to require owners or operators to use the Modified El Paso Method and repair leaks of total strippable hydrocarbon concentration (as methane) in the stripping gas of 6.2 ppmv or greater. In addition, based on comments received on the proposed rulemaking, we are also including an alternative mass-based leak action level of total strippable hydrocarbon equal to or greater than 0.18 kilograms per hour for heat exchange systems with a recirculation rate of 10,000 gallons per minute (gpm) or less.
Section IV.B.3 of this preamble provides a summary of key comments we received on the technology review and our responses.
Consistent with
Lastly, based on comments received on the proposed rulemaking, we are adding a separate standard for storage vessel degassing for storage vessels subject to the control requirements in Table 7 to 40 CFR 63.1103(e)(3)(b) and (e)(3)(c).
Section IV.C.3 of this preamble provides a summary of key comments we received on the CAA section 112(d)(2) and (3) provisions and our responses.
We are finalizing the proposed amendments to the EMACT standards to remove and revise provisions related to SSM. In its 2008 decision in
We are also finalizing, as proposed, eliminating SSM exemptions for waste streams at facilities with a total annual benzene less than 10 megagrams per year (Mg/yr) and amending language in the definitions of “dilution steam blowdown waste stream” and “spent caustic waste stream” at 40 CFR 63.1082(b) to remove the exclusion for streams generated from sampling, maintenance activities, or shutdown purges. In addition, we are finalizing a revision to the performance testing requirements at 40 CFR 63.1108(b)(4)(ii)(B). The final performance testing provisions do not include the language that precludes startup and shutdown periods from being considered “representative” for purposes of performance testing, and instead allows performance testing during periods of startup or shutdown if specified by the Administrator. However, the final performance testing provisions prohibit performance testing during malfunctions because these conditions are not representative of normal operating conditions. The final rule also requires that operators maintain records to document that operating conditions during the test represent normal operations.
The legal rationale and detailed changes for SSM periods that we are finalizing here are set forth in the proposed rule. See 84 FR 54278, October 9, 2019. Also, based on comments received during the public comment period, we are revising 40 CFR 63.1103(e)(9) to sufficiently address the SSM exemption provisions from subparts referenced by the EMACT standards. For example, in addition to what we proposed, we are also clarifying that the certain referenced provisions do not apply when demonstrating compliance with the EMACT standards, such as phrases like “other than a start-up, shutdown, or malfunction” in the recordkeeping and reporting requirements of 40 CFR 63, subparts SS and UU. We are also not removing as proposed the term “breakdowns” in 40 CFR 63.998(b)(2)(i) as well as 40 CFR 63.998(d)(1)(ii) in its entirety.
Section IV.D.3 of this preamble provides a summary of key comments we received on the SSM provisions and our responses.
This rule also finalizes, as proposed, revisions to several other NESHAP requirements. We describe these revisions in this section as well as other revisions that have changed since proposal. To increase the ease and efficiency of data submittal and data accessibility, we are finalizing, as proposed, a requirement that owners and operators of facilities in the Ethylene Production source category submit electronic copies of certain required performance test results and reports and NOCS reports through the EPA's Central Data Exchange (CDX) website using an electronic performance test report tool called the Electronic Reporting Tool. In addition, in the final rule, we are correcting an error to clarify that Periodic Reports must also be submitted electronically (
To correct a disconnect between having a National Pollutant Discharge Elimination System (NPDES) permit that meets certain allowable discharge limits at the discharge point of a facility (
We are finalizing all of the revisions that we proposed for clarifying text or correcting typographical errors, grammatical errors, and cross-reference errors. These editorial corrections and clarifications are summarized in Table 9 of the proposal. See 84 FR 54278, October 9, 2019. We are also including several additional minor clarifying edits in the final rule based on comments received during the public comment period. We did not receive many substantive comments on these other amendments in the Ethylene Production RTR proposal. The comments and our specific responses to these items can be found in the document,
The revisions to the EMACT standards being promulgated in this action are effective on July 6, 2020. From our assessment of the timeframe needed for implementing the entirety of the revised requirements (see 84 FR 54278, October 9, 2019), the EPA proposed a period of 3 years to be the most expeditious compliance period practicable. Although opposing comments regarding the proposed compliance dates were received during the public comment period, we are finalizing the 3-year compliance period as proposed. Amendments to EMACT standards for adoption under CAA sections 112(d)(2) and (3) and 112(d)(6) are subject to the compliance deadlines outlined in the CAA under section 112(i). For existing sources, CAA section 112(i) provides that the compliance date shall be as expeditiously as practicable, but no later than 3 years after the effective date of the standard. For new sources, compliance is required by the effective date of the final amendments or upon startup, whichever is later. As explained in the preamble to the proposed rule (84 FR 54278, October 9, 2019), the EPA recognizes the confusion that multiple different compliance dates for individual requirements would create and the additional burden such an assortment of dates would impose; and from our assessment of the timeframe needed for compliance with the entirety of the revised requirements, the EPA considers a period of 3 years after the effective date of the final rule to be the most expeditious compliance period practicable. Furthermore, as discussed in sections III and IV of this preamble, we are adding separate work practice standards to the final rule for the following SSM activities/events: (1) Periods of SSM for when flares are used as an APCD, (2) periods of SSM for certain vent streams (
For each issue, this section provides a description of what we proposed and what we are finalizing for the issue, the EPA's rationale for the final decisions and amendments, and a summary of key comments and responses. For all comments not discussed in this preamble, comment summaries and the EPA's responses can be found in the comment summary and response document available in the docket.
Pursuant to CAA section 112(f), the EPA conducted a residual risk review and presented the results of this review, along with our proposed decisions regarding risk acceptability and ample margin of safety, in the October 9, 2019, proposed rule for 40 CFR part 63, subparts XX and YY (84 FR 54278). The results of the risk assessment for the proposal are presented briefly in Table 2 of this preamble. More detail is in the residual risk technical support document,
Using actual emissions data, the results of the proposed inhalation risk assessment, as shown in Table 2 of this preamble, indicate the estimated cancer maximum individual risk (MIR) is 100-in-1 million, with naphthalene and benzene as the major contributors to the risk. There is only one census block, and one person, at this risk level. The second-highest facility cancer risk is 30-in-1 million. At proposal, the total estimated cancer incidence from this source category was estimated to be 0.1 excess cancer cases per year, or one excess case in every 10 years. Approximately 2.8 million people were estimated to have cancer risks above 1-in-1 million from HAP emitted from the facilities in this source category. At proposal, the estimated maximum chronic noncancer TOSHI for the source category was 1 (neurological and respiratory) driven by emissions of manganese and epichlorohydrin.
Using the MACT-allowable emissions, the risk results at proposal for the inhalation risk assessment indicated that the estimated cancer MIR was 100-in-1 million with naphthalene and benzene emissions driving the risks, and that the estimated maximum chronic noncancer TOSHI was 1 with manganese and epichlorohydrin as the major contributors to the TOSHI. At proposal, the total estimated cancer incidence from this source category considering allowable emissions was 0.2 excess cancer cases per year or 1 excess case in every 5 years. Based on allowable emission rates, 4.6 million people were estimated to have cancer risks above 1-in-1 million.
As shown in Table 2 of this preamble, the reasonable worst-case acute HQ (based on the REL) at proposal was less than 1. This value is the highest HQ that is outside facility boundaries. No facilities were estimated to have an HQ greater than or equal to 1 based on any benchmark (REL, acute exposure guideline level, or emergency response planning guidelines). In addition, at proposal, we identified emissions of arsenic compounds, cadmium compounds, mercury compounds, and polycyclic organic matter (POM), all HAP known to be persistent and bio-accumulative in the environment. The multipathway risk screening assessment resulted in a maximum Tier 2 cancer screening value of 30 for arsenic and a maximum Tier 3 noncancer screening value of 2 for mercury compounds. Based on facility-specific analyses performed for mercury for other source categories, we concluded that such analyses would reduce the mercury screening value to 1 or lower. In addition, a screening-level evaluation of the potential adverse environmental risk associated with emissions of arsenic, cadmium, hydrochloric acid, hydrofluoric acid, lead, mercury, and POMs indicated that no ecological benchmarks were exceeded.
We weighed all health risk factors, including those shown in Table 2 of this preamble, in our risk acceptability determination and proposed that the risks posed by the Ethylene Production source category are acceptable (section IV.C.1 of proposal preamble, 84 FR 54311, October 9, 2019).
We then considered whether the existing EMACT standards provide an ample margin of safety to protect public health and whether, taking into consideration costs, energy, safety, and other relevant factors, more stringent standards are required to prevent an adverse environmental effect. In considering whether the standards are required to provide an ample margin of safety to protect public health, we considered the same risk factors that we considered for our acceptability determination and also considered the costs, technological feasibility, and other relevant factors related to emissions control options that might reduce risk associated with emissions from the source category. We proposed that additional emissions controls for the Ethylene Production source category are not necessary to provide an ample margin of safety to protect public health and that more stringent standards are not necessary to prevent an adverse environmental effect (section IV.C.2 of proposal preamble, 84 FR 54312, October 9, 2019).
We also evaluate risk from whole facility emissions in order to help put the risks in context. Whole facility (or “facility-wide”) emissions include those regulated under this source category plus all other emissions generated at each facility. The results of the chronic inhalation cancer risk assessment based on facility-wide emissions are more uncertain and rely on the quality of the emissions data collected for source categories outside this regulatory review. These emissions sources may not undergo the same level of data quality review as those being assessed in this regulatory assessment. The estimated maximum lifetime individual cancer risk based on facility-wide emissions is 2,000-in-1 million, with ethylene oxide from non-category (non-ethylene production process) emissions driving the risk. The total estimated cancer incidence based on facility-wide emissions is 1 excess cancer case per year. Approximately 6,500,000 people are estimated to have cancer risks above 1-in-1 million from HAP emitted from all sources at the facilities in this source category. The estimated maximum chronic noncancer hazard index (HI) based on facility-wide emissions is 4 (for the respiratory HI), driven by emissions of chlorine from non-category (non-ethylene production process) emissions. Approximately 200 people are estimated to be exposed to noncancer HI levels above 1.
We have not changed any aspect of the risk assessment since the October 9, 2019, RTR proposal for the Ethylene Production source category.
We received comments in support of and against the proposed residual risk review and our determination that no revisions were warranted under CAA section 112(f)(2) for the Ethylene Production source category. Generally, the comments that were not supportive of the determination from the risk reviews suggested changes to the underlying risk assessment methodology. For example, some commenters stated that the 100-in-1 million lifetime cancer risk cannot be considered safe or “acceptable,” and the EPA should include emissions outside of the source categories in question in the risk assessment and assume that pollutants with noncancer health risks have no safe level of exposure. After review of all the comments received, we determined that no changes were necessary. The comments and our specific responses can be found in the document,
As noted in our proposal, the EPA sets standards under CAA section 112(f)(2) using “a two-step standard-setting approach, with an analytical first step to determine an `acceptable risk' that considers all health information, including risk estimation uncertainty, and includes a presumptive limit on MIR of approximately 1-in-10 thousand” (84 FR 54278, October 9, 2019; see also 54 FR 38045, September 9, 1989). We weigh all health risk factors in our risk acceptability determination, including the cancer MIR, cancer incidence, the maximum cancer TOSHI, the maximum acute noncancer HQ, the extent of noncancer risks, the distribution of cancer and noncancer risks in the exposed population, multipathway risks, and the risk estimation uncertainties.
Since proposal, neither the risk assessment nor our determinations regarding risk acceptability, ample margin of safety, or adverse environmental effects have changed. For the reasons explained in the proposed rule, we determined that the risks from the Ethylene Production source category are acceptable, the current standards provide an ample margin of safety to protect public health, and more stringent standards are not necessary to prevent an adverse environmental effect. Therefore, we are not revising the EMACT standards to require additional controls pursuant to CAA section 112(f)(2) based on the residual risk review, and we are readopting the existing standards under CAA section 112(f)(2).
Pursuant to CAA section 112(d)(6), the EPA proposed to conclude that no revisions to the current EMACT standards are necessary for ethylene process vents, transfer racks, equipment leaks, and waste streams (sections IV.D.2 through IV.D.5 of proposal preamble, 84 FR 54314, October 9, 2019). We did not find any developments (since promulgation of the original NESHAP) in practices, processes, and control technologies that could be applied to ethylene process vents and that could be used to reduce emissions from ethylene production facilities. We also did not identify any developments in work practices, pollution prevention techniques, or process changes that could achieve emission reductions from ethylene process vents. For transfer racks, we identified one emission reduction option, at proposal, to revise the transfer rack applicability threshold (for volumetric throughput of liquid loaded) from 76 m
Also, pursuant to CAA section 112(d)(6), we proposed revisions to the current EMACT standards for storage vessels and heat exchange systems (sections IV.D.1 and IV.D.6 of proposal preamble, 84 FR 54314, October 9, 2019). For storage vessels, we proposed tightening both the applicability threshold for MTVP of total organic HAP (
The EPA has not changed any aspect of the technology review for process vents, transfer racks, equipment leaks, and waste streams since the October 9, 2019, RTR proposal for the Ethylene Production source category. However, based on comments received on the proposed rulemaking, we are not finalizing the proposed revisions to the EMACT standards for storage vessels under CAA section 112(d)(6) to tighten the applicability threshold for MTVP of total organic HAP (
The EPA received comments in support of and against the proposed technology review amendments and our determination that no revisions were warranted under CAA section 112(d)(6) for process vents, transfer racks, equipment leaks, and waste streams in the Ethylene Production source category and that revisions were warranted for storage vessels and heat exchange systems in the Ethylene Production source category. Generally, for process vents, transfer racks, equipment leaks, and waste streams, the comments were either supportive of the determination that no cost-effective developments from the technology review were found, or that the Agency should re-open and re-evaluate the MACT standards for these emission sources and not consider cost in the technology review for the emissions sources. Based on our review of the comments received for process vents, transfer racks, equipment leaks, and waste streams, we are finalizing our determination that no cost-effective developments exist and that it is not necessary to revise these emission standards under CAA section 112(d)(6).
For storage vessels, the EPA received additional information from commenters on material composition, storage vessels that would be affected by the proposed option, and costs necessary for control of the storage vessels that would be affected by the proposed control option. After review of all the comments received, we determined that it is not cost effective to revise the storage vessel control requirements and are not finalizing revisions for this emissions source under CAA section 112(d)(6).
For heat exchange systems, the EPA received additional information from commenters on costs necessary for control of these sources as well as comments on a number of technical clarifications and allowance of compliance with an alternative mass-based leak action level should the EPA finalize the requirements for heat exchange systems. After review of all the comments received, we determined that it is cost effective to revise the heat exchange system requirements, and we are finalizing revisions for this emissions source under CAA section 112(d)(6) however, we are also including, based on comments received on the proposed rulemaking, an alternative mass-based leak action level of total strippable hydrocarbon equal to or greater than 0.18 kilograms per hour for heat exchange systems with a recirculation rate of 10,000 gpm or less.
This section provides comment and responses for the key comments received regarding the technology review amendments we proposed for storage vessels and heat exchange systems. Comment summaries and the EPA's responses for additional issues raised regarding the proposed requirements resulting from our technology review are in the document,
Similarly, another commenter stated that it would be unlawful, arbitrary, and capricious for the EPA not to set stronger standards for emissions from storage vessels. The commenter stated that although the EPA identified two other developments in technology for storage vessels: (1) Requiring LDAR for fittings on fixed roof storage vessels (
The commenter argued that the EPA's decision to make cost-per-ton the standard-setting criterion and to choose a number it deems unreasonable, without a rational explanation, is arbitrary and capricious. The commenter stated the cost-per-ton of HAP reduction does not indicate whether a stronger standard is feasible and does not consider whether the industry could bear the costs of additional controls. The commenter stated that the ethylene production industry generated $50.8 billion in revenue in 2016 and the EPA cannot plausibly claim that this industry cannot afford to implement the identified storage vessel developments. The commenter noted that cost-per-ton says nothing about health risk, and that a ton of HAP is a very large amount. The commenter stated that the risk assessment for this source category shows the pollutants emitted in ethylene production are known to be hazardous at an exposure level of micrograms or less, and the carcinogens emitted (
The commenter also contended the EPA may consider cost but CAA section 112(d)(6) does not authorize the EPA to refuse to update standards based on cost. The commenter stated the Court has recognized that developments are the core requirement, and if developments have occurred, the EPA must account for those. The commenter further claimed that the EPA should follow the plain text of CAA section 112(d)(2)-(3) and applicable precedent requiring explicit authorization to consider cost. The commenter stated the EPA's cost-focused analysis ignores the statutory objective of assuring the “maximum” achievable degree of emission reduction provided in CAA section 112(d)(2), as implemented through the technology review. The commenter stated that this analysis also ignores the statutory goal of protecting public health, per CAA section 112 (f)(2).
The commenter also stated that although the EPA initially considered tightening the threshold for storage vessel capacity from 95 m
The commenter's comparison of cost-per-ton estimates against other rules and other requirements within this final rule is also misplaced. The commenter draws a comparison to an analysis for metal HAP in the Secondary Lead NESHAP RTR, where those costs per ton were determined to be within the range of metal HAP values for other CAA section 112 rules (see 77 FR 576, January 5, 2012). However, organic HAP are the issue of concern for storage vessels, and the EPA has historically used a different and significantly lower cost-effectiveness scale for organic HAP versus metal HAP due to their relative toxicity. Generally, for organic HAP, we consider a cost effectiveness of $10,000/ton or more to be near the upper end of what the EPA has traditionally considered to be cost effective for control for these particular type of HAP.
In addition, we disagree with the commenter that consideration of incremental cost effectiveness was an unreasonable approach for comparing differing strategies that build upon one another. We note that CAA section 112(d)(6) does not prescribe a methodology for the agency's costs analysis, and the EPA has sometimes presented cost/ton-reduced numbers in the supporting analyses for regulations that we issue. See for example,
Lastly, we disagree with the commenter that it was unreasonable to consider an infrequently used storage vessel with a capacity of 58 m
Additionally, with respect to rules where we have determined that
A commenter said the EPA should calculate the equivalent mass-based emission rate using the 90th percentile heat exchange system recirculation rates (165,000 gpm) and the leak definition of 6.2 ppmv as methane in the stripping gas, assuming 100 percent of the hydrocarbon is hexane, for an equivalent mass leak-based leak definition of 6.1 pounds per hour (2.8 kilograms per hour) of Table 1 to 40 CFR part 63, subpart XX HAP.
Another commenter said the EPA should modify the leak action level to be defined as potential strippable hydrocarbon emissions greater than 4.0 pounds per hour for heat exchange systems with a recirculation flowrate less than or equal to 100,000 gpm. The commenter asserted that the memorandum,
A commenter also recommended the EPA adjust the “delay of repair” leak action level in 40 CFR 63.1088(d)(3) to 40 pounds per hour of potential strippable hydrocarbon emissions for heat exchange systems with a recirculation rate of 100,000 gpm or less, and maintain the “delay of repair” action level at a total strippable hydrocarbon concentration (as methane) in the stripping gas of 62 ppmv (approximately 800 ppbw in the cooling water) for heat exchange systems with a recirculation rate greater than 100,000 gpm.
Our technology review focused on the identification and evaluation of developments in practices, processes, and control technologies that have occurred since the EMACT standards were originally promulgated on July 12, 2002 (67 FR 46258). Specifically, we
During the public comment period, we received several comments on our proposed determinations for the technology review. The comments and our specific responses and rationale for our final decisions can be found in section IV.B.3 of this preamble and in the document,
Under CAA section 112(d)(2) and (3) we proposed to amend the operating and monitoring requirements for flares used as APCDs in the Ethylene Production source category to ensure that facilities that use flares as APCDs meet the EMACT standards at all times when controlling HAP emissions. We proposed to add a provision, 40 CFR 63.1103(e)(4), to extend the application of the Petroleum Refinery Flare Rule requirements in 40 CFR part 63, subpart CC to flares in the Ethylene Production source category with clarifications, including, but not limited to, specifying that several definitions in 40 CFR part 63, subpart CC, that apply to petroleum refinery flares also apply to flares in the Ethylene Production source category, adding a definition and requirements for pressure-assisted multi-point flares, and specifying additional requirements when a gas chromatograph or mass spectrometer is used for compositional analysis. Specifically, we proposed to retain the General Provisions requirements of 40 CFR 63.11(b) and 40 CFR 60.18(b) that flares used as APCDs in the Ethylene Production source category operate pilot flame systems continuously and that flares operate with no visible emissions (except for periods not to exceed a total of 5 minutes during any 2 consecutive hours) when the flare vent gas flow rate is below the smokeless capacity of the flare. We also proposed to consolidate measures related to flare tip velocity and new operational and monitoring requirements related to the combustion zone gas. Further, in keeping with the elimination of the SSM exemption, we proposed a work practice standard related to the visible emissions and velocity limits during periods when the flare is operated above its smokeless capacity (
In addition, we proposed provisions and clarifications for periods of SSM and bypasses, including PRD releases, bypass lines on closed vent systems, in situ sampling systems, maintenance activities, and certain gaseous streams routed to a fuel gas system to ensure that CAA section 112 standards apply continuously, consistent with
For bypass lines on closed vent systems, we proposed to add a provision, 40 CFR 63.1103(e)(6), to not allow an owner or operator to bypass the APCD at any time, and if a bypass is used, then the owner or operator is to estimate and report the quantity of organic HAP released. We proposed this revision to be consistent with
For maintenance activities, we proposed a definition for “periodically discharged” and removed “episodic or nonroutine releases” from the list of vents not considered ethylene process vents. We proposed to add a work practice standard at 40 CFR 63.1103(e)(5) requiring that, prior to opening process equipment to the atmosphere, the equipment either: (1) Be drained and purged to a closed system so that the hydrocarbon content is less than or equal to 10 percent of the lower explosive limit (LEL); (2) be opened and vented to the atmosphere only if the 10-percent LEL cannot be demonstrated and the pressure is less than or equal to 5 psig, provided there is no active purging of the equipment to the atmosphere until the LEL criterion is met; (3) be opened when there is less than 50 pounds of VOC that may be emitted to the atmosphere; or (4) for installing or removing an equipment blind, depressurize the equipment to 2 psig or less and maintain pressure of the equipment where purge gas enters the equipment at or below 2 psig during the blind flange installation, provided none of the other proposed work practice standards can be met. For cases where an emission source is required to be controlled in the EMACT standards but is routed to a fuel gas system, we proposed to add footnote b to Table 7 of 40 CFR 63.1103(e) to require that any flare, utilizing fuel gas whereby the majority (
We proposed to add work practice standards at 40 CFR 63.1103(e)(7) and (8) to address the decoking of ethylene cracking furnaces (
More information concerning our proposal to address CAA section 112(d)(2) and (3) can be found in the proposed rule (84 FR 54278, October 9, 2019).
The EPA is finalizing the revisions to the monitoring and operational requirements for flares, as proposed, except that we are not finalizing the work practice standard for velocity exceedances for flares operating above their smokeless capacity. In response to comments that owners or operators have historically considered degassing emissions from shutdown of storage vessels to be covered by their SSM plans per 40 CFR 63.1108(a)(5) and relied on the language in 40 CFR 63.1108(a)(5) that back-up control devices are not required, we are adding a separate standard for storage vessel degassing for storage vessels subject to the control requirements in Table 7 to 40 CFR 63.1103(e)(3)(b) and (c). The standard requires owners or operators to control degassing emissions for floating roof and fixed roof storage vessels until the vapor space concentration is less than 10 percent of the LEL. Storage vessels may be vented to the atmosphere once the storage vessel degassing concentration threshold is met (
Lastly, based on comments received on the proposal, we are making some minor editorial corrections and technical clarifications to the work practice standards for the decoking of ethylene cracking furnaces. Specifically, we are adding delay of repair provisions to the flame impingement inspection requirements, adding clarifying text to the CO
This section provides comment and responses for the key comments received regarding our proposed revisions for flares and clarifications for periods of SSM, including PRD releases, decoking operations for ethylene cracking furnaces (
Another commenter also suggested other improvements to the proposed flared revisions. According to this commenter, data shows the proposed rule does not assure heating values in the combustion zone that are high enough to achieve the EMACT standards. The commenter said that the EPA has an extensive record to support its conclusion that some ethylene production facility flares do not destroy at least 98 percent of HAP, and urged the EPA to mandate additional measures to ensure 98-percent flare destruction efficiency. The commenter noted that at least one operator, Formosa, recognizes that flares can achieve 99-percent reduction in HAP emissions for small molecules.
• Prohibit wake dominated flow flaring conditions. The commenter noted that studies have shown that high winds can decrease flare destruction efficiency.
• Require continuous video monitoring and recording for flares equipped with video monitoring and flares that vent more than 1 million standard cubic feet scf per day (MMscf/day).
• Require monitoring of pilot gas, which is already required by the South Coast Air Quality Management District (SCAQMD) and Bay Area Air Quality Management District (BAAQMD).
The commenter also stated that the EPA should require that facilities conduct necessary flare maintenance and upgrades and have additional flare capacity on standby. The commenter stated that if a flare is smoking, that may mean it simply needs to be either maintained or updated to address the problem. The commenter recommended add-on equipment to augment the smokeless capacity of a flare.
We disagree with the commenter's specific request to prohibit wake dominated flow flaring conditions as we have extremely limited data to suggest that wind adversely impacts the combustion efficiency of flares, let alone the combustion efficiency of industrial-sized flares used at ethylene production units. Commenters submitted no new data to otherwise support the assertion that wind does indeed affect flare performance, and, as such, we are not persuaded into changing our position at proposal that no flare operating parameter(s) are needed to minimize wind effects on flare performance.
We disagree with the commenter's specific request to require continuous video monitoring and recording for flares equipped with video monitoring and flares that vent more than 1 MMscf/day. We note that in the final rule we have provided for the use of video camera surveillance monitoring as an alternative to EPA Method 22 monitoring. Observation via the video camera feed can be conducted readily throughout the day and will allow the operators of the flare to watch for visible emissions at the same time they are adjusting the flare operations.
We also disagree with the commenter's specific request to require monitoring of pilot gas. The data available to us suggests that heat release from the flare pilots are generally negligible when regulated materials are sent to the flare and exclusion of the flare pilot gas simplifies the NHVcz calculation. Even when only purge gas is used, the flare pilots typically only provided about 10 percent of the total heat input to the flare and typically well less than 1 percent in the recent passive fourier transform infrared spectrometry flare tests when potential regulated material is routed to the flare (this is dependent on the size of the flare, number of pilots, and flare tip design, which impacts minimum purge flows). We are finalizing the definition of flare vent gas as proposed, which excludes pilot gas.
Also, we disagree with the commenter's specific request to require additional flare capacity on standby to avoid a smoking flare because it would require new additional flares to operate at idle conditions for the vast majority
Finally, the commenter did not provide any context regarding their comment about other types of conveyances and justifying standards; therefore, we are unable to respond to this portion of the comment.
The commenter argued the EPA should have evaluated the flare revisions under CAA section 112 (d)(6), found the revisions were not cost effective, and not proposed the flare revisions. To support the commenter's contention that the proposed flare requirements would not be cost effective, the commenter provided updated estimates for the costs presented in Tables 3, 6, and 7 of the EPA memorandum,
• The EPA did not consider the cost of constructing new flares at existing facilities to meet the proposed requirements. The commenter stated that they know that at least one company would be required under the proposed rule to install at least two new flares, due to the high potential for existing flares to exceed the number of visible emissions events allowed, with a capital cost of $20 million and annualized costs of $3.1 million.
• Gas chromatographs would need to be installed in certain instances to comply with the proposed monitoring requirements, which the commenter suggests would have an estimated nationwide capital investment of $964,000 and annualized costs of $140,000 for installation and operation.
• The EPA did not account for the costs associated with upgrading natural gas controls and flow monitoring; the commenter estimated approximately 47 flares will require upgraded supplemental fuel controls and monitoring equating to a nationwide capital investment of $5.3 million and an annualized cost of approximately $1 million.
• The EPA did not account for supplemental natural gas firing to meet the revised NHVcz operating parameter, which the commenter estimates would cost approximately $66.8 million per year in additional operating costs.
• The EPA underestimated the costs to develop the flare management plan by inappropriately relying on the cost estimated for refineries. However, most refineries were subject to similar flare management plan requirements under 40 CFR part 60, subpart Ja, and, therefore, were only required to update existing plans, whereas the commenter said ethylene producers will generally be required to develop new flare management plans. The commenter estimated the cost to develop a new flare management plan is $23,300 per flare.
• The EPA did not include the cost to develop the continuous parametric monitoring system monitoring plan required by 40 CFR 63.671(b), which they estimate is an additional $7,400 per flare to develop.
Using their updated costs and the EPA's estimated 1,430 tpy of HAP reductions, the commenter stated that the cost effectiveness of the proposed flare requirements would be $55,874 per ton of HAP reduced. The commenter argued that the EPA would have found the proposed flare revisions not cost effective under CAA section 112(d)(6) and, therefore, would not have included the changes in the proposed rule.
Another commenter stated there would be complications complying with the proposed flare revisions, which would further increase the cost of the proposal, including: (1) When gas chromatographs are currently in use, some flares will need to add calorimeters to directly measure the net heating value on a minute-by-minute basis to help with process control and meet the requirements on a 15-minute basis; (2) some flares have multiple vent gas lines entering the flare system (
Contrary to the commenter's assertions, we did estimate costs in order to provide the resulting impacts of the proposed flare requirements, and we are not revising these costs as a result of this comment. The largest impact on annual costs is associated with supplemental natural gas to meet the NHVcz limit, which the commenter estimated is approximately 18 times higher than our estimate ($66.8 million from the commenter versus $3.7 million for the EPA). We find the commenter's cost estimate unreasonable, and that commenters notably did not account for adjusting other flare parameters instead of using such a large amount of natural gas. We are also unable to re-create and establish how the estimated costs were developed by commenters due to a lack of information pertaining to baseline flare flows, waste gas compositions, current supplemental natural gas flows and steam flows. The commenter also stated that we did not include costs for flow monitors and controls, but these were specific items we included at proposal (see Table 3 in the memorandum,
Several commenters objected to the EPA's proposed emergency flaring provisions for smoking flares. Some commenters stated that the proposed number of visible emissions exceedance events allowed is not supported by data the EPA received in response to the CAA section 114 ICR. A commenter said that the information the EPA used indicates that there were zero velocity exceedances during any smoking; however, 40 CFR 63.670(o) implies that the flare must be operating above its smokeless capacity in order to smoke. The commenter said that unless the EPA has data indicating that these flares were exceeding their smokeless capacity (
A commenter also stated that the information the ACC provided to the EPA showing visible emissions events and velocity exceedances (see Appendix B of Docket ID Item No. EPA-HQ-OAR-2017-0357-0017) identifies two flares as material handling flares and one flare as a process wastewater flare while all other flares are not characterized in any way. The commenter said that the inconsistent characterization of the flares raises questions about the nature of the flares used to support the EPA's claims on the frequency of these events at the best performing flares.
In addition, the commenter reiterated that the proposed revisions for releases from smoking flares do not satisfy CAA section 112(d)(2) or (3). The commenter said the EPA did not provide rationale, and did not meet, the statutory test for smoking flares. The commenter also said the EPA did not provide a reasonable analysis or determination showing that allowing one to two uncontrolled such events every 3 calendar years (plus
The commenter recommended the EPA consider the data it collected on flares to determine the amount of HAP emitted. The commenter stated that the EPA has not explained why its own data on emission exceedances from equipment connected to flares would not allow it to set limits on smoking flares, and that the EPA has not and could not show, based on the record that the complete exemption for one to two smoking flare incidents at each flare, every 3 years, in any way satisfies CAA section 112(d)(3). The commenter stated that the EPA's failure to review actual data is especially egregious given the fact that the Texas Commission on Environmental Quality (TCEQ), the BAAQMD, and the SCAQMD have extensive data on the frequency that operators report smoking emissions from flares,
The commenter also warned that the EPA does not meet the BTF requirements in CAA section 112(d)(2). The commenter stressed that the EPA has not demonstrated that allowing multiple smoking flare exemptions from the standards is the “maximum achievable degree of emission reduction” from those flares. The commenter argued that, at the very least, the EPA must set standards on the duration and amount of gas that is routed to a flare during a malfunction event that causes the flare to operate above its smokeless capacity, in addition to the cap on the number of exemptions included in the proposed rule. The commenter stated that the HAP emission limits for flares during malfunctions cannot be less stringent than the emission limits that apply during normal operations.
The commenter stated that, based on data from TCEQ, smoking flare events can last several minutes or multiple days, and the EPA's proposed regulations do not make clear whether this should be considered a single event or multiple smoking events. The commenter additionally noted that the EPA's proposed regulation does not make clear whether visible smoke emissions that are caused by multiple root causes occurring at the same time should count as one visible emission event or two.
Regarding the operational standards for flares operating above the smokeless capacity, we note that these flare emissions are due to a sudden increase in waste gas entering the flare, typically resulting from a malfunction or an emergency shutdown at one or more pieces of equipment that vents emissions to the flare. The EPA disagrees with commenter's suggestion that standards are warranted for the duration and amount of gas discharged to a flare during malfunction events, which are infrequent, unpredictable and not under the control of an operator. Flares are associated with a wide variety of process equipment and the emissions routed to a flare during a malfunction can vary widely based on the cause of the malfunction and the type of associated equipment. Thus, it is not feasible to establish a one-size-fits-all standard on the amount of gas allowed to be routed to flares during a malfunction. Moreover, we note that routing emissions to the flare will result in less pollution than the alternative, which would be to emit directly to the atmosphere. We note that we do not set similar limits for thermal oxidizers, baghouses, or other control devices that we desire to remain operational during malfunction events to limit pollutant emissions to the extent practicable. However, we did propose work practice standards that we believed would be effective in reducing the size and duration of flaring events that exceed the smokeless capacity of the flare to improve overall flare performance. On that premise, we acknowledge that the data we received from ACC's survey identifies zero exceedances of the flare tip velocity during a smoking event; and we agree with the commenter that our proposed determination of the frequency of these events at the best performing sources is not supported. Therefore, in response to comments on our proposal, we are not finalizing the proposed work practice standard for when the flare vent gas flow rate exceeds the smokeless capacity of the flare and the tip velocity exceeds the maximum flare tip velocity operating limit. Instead, we are finalizing provisions that require compliance with the maximum flare tip velocity operating limit at all times, regardless of whether you are operating above the smokeless capacity of the flare.
In order to ensure 98-percent destruction of HAP discharged to the flare (as contemplated at the time the EMACT standards were promulgated) during both normal operating conditions when the flare is used solely as a control device and malfunction releases where the flare acts both as a safety device and a control device, we are finalizing, as proposed, the work practice standard for when the flare vent gas flow rate exceeds the smokeless capacity of the flare and visible emissions are present from the flare for more than 5 minutes during any 2 consecutive hours during the release event. As described in more detail in our technical memorandum,
With respect to the comment about conducting a BTF analysis under CAA section 112(d)(2), we note the work practice combustion efficiency standards (specifically limits on the net heating value in combustion zone)
A commenter further objected to the proposed work practice standards because, they asserted, the EPA proposed the standards in part on the basis that the cost of measuring emissions is too high. The commenter stated that the EPA must set a MACT floor without consideration of cost, and that the cost is reasonable if 12 percent of existing sources met the limitation. The commenter argued that although the EPA stated that it would be economically prohibitive to construct an appropriate conveyance and install and operate continuous monitoring systems for each individual PRD that vents to atmosphere, the EPA fails to provide the estimated cost for construction and installation of such monitoring systems. The commenter argued that any such calculation would need to consider the impact of the EPA and state imposed flaring reduction programs, and the social and economic cost of the excess emissions from PRD emissions, including costs associated with the disruption in communities that are subject to “shelter in place” programs because of episodic releases from facilities.
A commenter stated that even assuming
A commenter argued that the fact that the EPA required three non-defined steps (including monitoring mechanisms, such as flow indicators, routine inspection and maintenance, and operator training) to be taken to try to prevent such releases does not mean that there is a continuous CAA section 112-compliant emission standard that applies. The commenter stated that none of these steps would restrict pollution released during PRD openings, would make the PRD malfunction exemptions lawful, or would turn them into a standard instead of an exemption. The commenter noted that although there are some potential controls listed as work practice requirements that a facility may choose to implement (
The commenter stated that because analyses, reports, and potential corrective action steps would be required after such releases occur, that does not mean that the EPA has implemented a continuous emission standard. The commenter also stated that uncontrolled releases are not considered a violation, and there is no civil penalty for the HAP emitted during the allowable PRD releases. Under the proposed rule, the commenter argued, no matter how many corrective actions a facility may take afterward, the release would still be an authorized release, allowing an unlimited amount of toxic air pollution to be emitted into the air from facility equipment albeit through a PRD. The commenter said that post-hoc measures may help discover why a release happened, and might even help to prevent release, but these measures are not considered controls or limits on the pollution that was released. The commenter stated that the EPA additionally failed to propose any regulatory requirement to end PRD releases as soon as it is discovered.
Another commenter agreed that the EPA has the authority and obligation to adopt work practice standards under the
The commenter argued that historically there has been no limit on
The commenter stated that the EPA cannot create any exemption from or weakening of EMACT equipment standards simply because excess emissions from equipment are routed through a PRD. The commenter argued that doing so unlawfully weakens the original CAA section 112(d) standards for the linked equipment, without any reasoned explanation or support for doing so. Further, the commenter stated that because the EPA proposes that no emission standard applies during the uncontrolled releases, the exemptions violate CAA sections 112(d) and 302(k) and flout the Court's decisions in these cases, and also conflict with the EPA's decision not to create an unlawful exemption in the Boilers case.
The commenter asserted that the proposed rule therefore seeks to establish major exemptions that allow uncontrolled releases due to predictable and often-repeated malfunctions. The commenter noted that the even though the standard explicitly defines a violation as the second or even the third such release from the same PRD during a 3-year period, whether the second uncontrolled release from the same PRD is a violation depends on if the release has the same root cause. The commenter stated that PRDs are not independent emission points, and that PRDs never release pollution into the air or smoke unless there is a malfunction. The commenter also asserted that the EPA's attempt to define a new way in which a facility can claim excess emissions are not a violation echoes the “affirmative defense” provision the Court held unlawful in
According to the commenter, by granting this exemption, the EPA may incentivize facilities to release large amounts of HAP through PRDs rather than flares to avoid using one of their “free passes” for the prohibition on visible smoke emissions from flares. Instead of meeting the CAA section 112 standards that apply to other facility equipment routed to PRDs or flares, the commenter asserted that exemptions authorize a facility to violate those limits and have no liability if the excess emissions are emitted directly into the air. The commenter stated that this even creates a perverse incentive for operators to install redundant PRDs on process equipment. The commenter also stated that, at the very least, the EPA must include regulations prohibiting the installation of new redundant PRDs to circumvent the prohibition on atmospheric releases.
The commenter further stated that emissions from malfunctions at ethylene production facilities that are released through PRDs are a significant source of underestimated HAP emissions. The commenter suggested that the emissions from PRD releases are a substantial problem for the industry as a whole when viewed over time. Further, the commenter argued that there is no upper limit on the amount of pollution an individual PRD event can release to the atmosphere. The commenter asserted that the EPA's proposed exemptions would, therefore, bar enforcement action against the worst events.
A commenter observed that uncontrolled PRD releases are preventable and avoidable, and that they need not occur if a facility avoids over-pressure in the system. The commenter referred to the proposal preamble, noting that such “pressure build-ups are typically a sign of a malfunction of the underlying equipment,” and PRDs “are equipment installed specifically to release during malfunctions.” Therefore, the commenter argued that the EPA cannot rely on any argument that equipment can fail, and that PRDs are necessary to address over-pressure and avoid a larger safety incident, and that the EPA has not relied on or demonstrated with any evidence that it is a valid concern. The commenter stated that even if it may be considered by the EPA in an administrative enforcement context or by the courts in an enforcement case, the EPA cannot authorize, up front, a whole set of problematic releases.
The commenter stated that the proposed malfunction standards for PRDs also break with prior Agency policy regarding malfunctions and for the use of case-by-case enforcement discretion to address malfunctions. The commenter stated that the Agency has repeatedly explained why case-by-case
Under the final rule, if an affected PRD releases to the atmosphere, the owner or operator is required to perform root cause analysis and corrective action analysis as well as implement corrective actions and comply with the specified reporting requirements. The work practice standard also includes criteria for releases from affected PRDs that would result in a violation at 40 CFR 63.1107(h)(3)(v). We also note that a facility cannot simply choose to release pollutants from a PRD; any release that is caused willfully or caused by negligence or operator error is considered a violation.
We also disagree that PRDs are not independent emission points and instead function in venting emissions from other emission points during a malfunction. The commenter incorrectly suggests that the PRD work practice standard replaces the existing emission standards for connected equipment. The amendments to the NESHAP addressing PRDs do not affect requirements in the NESHAP that apply to equipment associated with the PRD. For example, compliance with the PRD provisions are required in addition to requirements for ethylene process vents for the same equipment. We also disagree with the comment that the standards for PRDs also break with prior agency policy regarding malfunctions. As commenters correctly note, the EPA has indeed both set work practice standards for PRDs and prohibited PRD releases in other source categories. As explained at proposal, however, the basis of the work practice standards promulgated for PRD releases in the Petroleum Refinery Sector RTR (80 FR 75178, December 1, 2015) were our underlying basis for the proposed work practice standards for PRD releases for facilities in the Ethylene Production source category (84 FR 54303, October 9, 2019).
The EPA evaluated the best performing facilities in determining the appropriate work practice standard, and as a result considered requirements established in the SCAQMD and BAAQMD rules and the Chemical Accident Prevent Provisions rule (84 FR 54303, October 9, 2019). These rules are the only rules we are aware of that address the infrequent and unpredictable nature of PRD releases. The EPA established a MACT standard based on these rules, and as part of this, we determined that either two or three PRD releases (depending on the root cause) from a single PRD in a 3-year period is a violation of the work practice standard.
Regarding citizen suits, we note that the regulations do not specify that the EPA Administrator would make a binding determination regarding whether a PRD release is in compliance or a violation, and the issue could be argued and resolved by a court in the context of a citizen suit.
Another commenter asserted that the EPA did not set a standard for PRDs that complies with the CAA requirements to assure both the “average emission limitation achieved” by the relevant best-performing sources and the
The commenter stated that the TCEQ data that the EPA relies on clearly demonstrate that at least 23 percent (likely higher) of ethylene production facilities have zero atmospheric releases. The EPA reviewed roughly 30 percent of all operating ethylene production facilities (
A commenter argued that the EPA should set a zero emission limit for all PRDs because the best-performing PRD has no emissions to the atmosphere and the average of the best-performing 12 percent emit nothing to the atmosphere. The commenter stated that since the emission limitation for new sources is to reflect the performance of best performing PRD, new PRDs would presumably be required to capture and return discharges to process units; existing PRDs would have to meet the average of the best performing PRD, which could not be less stringent than the emission rate of the best performing PRD controlled by flares.
A commenter recommended that the EPA require new and modified atmospheric PRDs or existing PRDs on modified process equipment to be routed to the fuel gas system, flare, or other control device that achieves 98-percent destruction efficiency, pursuant to the MACT floor, as the best performing PRDs are controlled and the best performing process units are not equipped with any PRDs that are capable of venting emissions directly to the atmosphere. The commenter requested that the EPA propose that uncontrolled HAP emissions no longer be allowed from a PRD, and any releases from such devices would have to be routed through a control device.
The commenter further stated that the EPA's determination on PRDs was based on review of SCAQMD and BAAQMD adopted programs that attempt to reduce uncontrolled releases from PRDs, with generally more stringent emission limitations and LDAR programs than federal programs. The commenter stated that the EPA should adopt the best features of those programs in strengthening the NESHAP, but that these efforts were not subject to or aiming to satisfy the MACT floor requirements of the CAA, nor are they determinative of the MACT floor for PRDs, which must be based on the level of control “achieved in practice” by the relevant best-performing 12 percent of emission sources (for existing sources), or the best single source (for new sources).
According to the commenter the SCAQMD data on PRD releases from refineries shows that five out of eight (more than 50 percent) of regulated facilities reported zero atmospheric PRDs releases between 2010 and 2015 (the total number of refineries in the SCAQMD data do not include those operated by Alon Refining, which were idled in 2012). Thus, the commenter stated that the SCAQMD data demonstrate that the best performing PRDs do not release emissions directly to the atmosphere.
The commenter further stated that the EPA has not actually implemented the requirements of the BAAQMD and SCAQMD programs, and that the BAAQMD and SCAQMD programs are far more protective than the proposed rule. First, the commenter noted the BAAQMD requires that the operator must control (via flare or routing to a process unit) all PRDs that discharge for a second time in a 5-year period, whereas the SCAQMD rules include a similar provision, but offer as an alternative payment of a fee of $350,000 for each PRD that is not controlled. The commenter added that SCAQMD rules also require control of any PRD that has a single large release of greater than 2,000 pounds per day (lbs/day). Second, the commenter noted the BAAQMD and SCAQMD rules require the use of three redundant systems, including worker training, inspection, and maintenance, and two redundant “hardware” oriented systems. The third significant difference noted by the commenter is the greater number of releases allowed by the option to parse releases by “root cause.”
The commenter also stated that the EPA appears to have inappropriately categorized PRDs in its analysis. The commenter noted that the EPA stated it intended to regulate “atmospheric” PRD releases,
As a general matter, CAA section 112 requires MACT for existing sources to be no less stringent than “the average emission limitation achieved by the best performing 12 percent of the existing sources (for which the Administrator has emissions information). . .” [(CAA section 112(d)(3)(A)]. “Emission limitation” is defined in the CAA as “. . .a requirement established by the State or Administrator which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis, including any requirement relating to operation or maintenance of a source to assure continuous emission reduction, and any design, equipment, work practice, or operational standard promulgated under this chapter” [CAA section 302(k)]. The EPA specifically considers existing rules from state and local authorities in identifying the “emission limitations” for a given source. We then identify the best performers to identify the MACT floor (the no less stringent than level) for that source. The EPA identified the requirements established in the SCAQMD and BAAQMD rules, and the Chemical Accident Prevent Provisions rule (40 CFR part 68) as the basis of the MACT floor because they represented the requirements applicable to the best performing sources. 84 FR 54303. Work practice standards are established in place of a numeric limit where it is not feasible to establish such limits. Thus, in a case such as this, where the EPA has determined that it is appropriate to establish work practice standards, it was reasonable for the EPA to identify the rules that impose the most stringent requirements and, thus, represent what applies to the best performers, and then to apply the requirements from those rules as MACT.
We recognize that the proposed standard for PRDs did not exactly mirror the SCAQMD, BAAQMD, or Chemical Accident Prevent Provisions rules exactly, but consider the requirements to be comparable. For example, we did not include a provision similar to that in the SCAQMD rule that excludes releases less than 500 lbs/day from the requirement to perform a root cause analysis; that provision in the SCAQMD rule does not include any other obligation to reduce the number of these events. Similarly, we did not include a provision that only catastrophic PRD releases must be investigated, as the commenter noted. Rather than allowing unlimited releases less than 500 lbs/day or that are not considered catastrophic, we require a root cause analysis for releases of any size. Because we count small releases that the SCAQMD rule does not regulate at all, we considered it reasonable to provide a higher number of releases prior to considering the owner or operator to be in violation of the work practice standard. We also adopted the three prevention measures requirements in the BAAQMD rule with limited modifications. After considering the PRD release event limits in both the SCAQMD and BAAQMD rules, we determined it was reasonable and appropriate to establish PRD requirements consistent with the flare work practice standard provisions in the SCAQMD and BAAQMD rules. Therefore, the final requirements provide that two or three events (depending on the root cause) from the same PRD in a 3-calendar-year period is a violation of the work practice standard. We also note that a facility cannot simply choose to release pollutants from a PRD; any release that is caused willfully or caused by negligence or operator error is considered a violation.
With respect to subcategorizing PRDs into those that vent to the atmosphere versus those that vent to a control system, we note that the only information we have available about when PRD releases occur at ethylene production facilities are from those PRDs that release directly to atmosphere. Regardless of whether we subcategorize or not, the best performing PRD for which we have information had one release over a 7-year period, and the backstop for how many releases are allowed to occur is based on this information over a long-term period of time given the random nature of when a PRD release might occur.
In summary, the work practice standard we are finalizing provides a comprehensive program to manage entire populations of PRDs and includes prevention measures, continuous monitoring, root cause analysis, and corrective actions, and addresses the potential for violations for multiple releases over a 3-year period. We followed the requirements of section 112 of the CAA, including CAA section 112(h), in establishing what work practice constituted the MACT floor.
The commenter stated that the EPA referenced the memorandum,
We are aware of the following three regulations that address storage vessel degassing, two in the state of Texas and the third for the SCAQMD in California. Texas has degassing provisions in the Texas Administrative Code (TAC) (30 TAC Chapter 115, Subchapter F, Division 3. See
Ethylene production facilities located in Texas are subject to maintenance, startup, and shutdown (MSS) special permit conditions, but no ethylene production facilities are subject to the SCAQMD rule. Of the 26 currently operating ethylene production facilities, 17 are in Texas. Therefore, the Texas permit conditions relying on storage vessel degassing until 10 percent of LEL is achieved reflect what the best performers have implemented for storage vessel degassing and we considered this information as the MACT floor for both new and existing sources. Notably, this also aligns with the commenter's assessment.
We reviewed permit condition 6 (applicable to floating roof storage vessels) and permit condition 7 (applicable to fixed roof storage vessels) for key information that could be implemented to form the basis of a standard for storage vessel degassing that are required for facilities in Texas. The permit conditions require control of degassing emissions for floating roof and fixed roof storage vessels until the vapor space concentration is less than 10 percent of the LEL. The permit conditions also specify that facilities can also degas a storage vessel until they meet a VOC concentration of 10,000 ppmv, but we do not consider 10,000 ppmv to be equivalent to or as stringent as the compliance option to meet 10 percent of the LEL and are not including this as a compliance option. We also do not expect the best performers would be using this concentration for compliance, which is supported by the commenters recommending the requirements mimic the maintenance vent requirements and because the Texas permit conditions allow facilities to calibrate their LEL monitor using methane. Storage vessels may be vented to the atmosphere once the storage vessel degassing concentration threshold is met (
We calculated the impacts due to controlling storage vessel degassing emissions by evaluating the population of storage vessels that are subject to control under Table 7 at 40 CFR 63.1103(e)(3)(b) and (c) and not located in Texas. Storage vessels in the Ethylene Production source category in Texas would already be subject to the degassing requirements, and there would not be additional costs or emissions reductions for these facilities. Our review of the CAA section 114 ICR survey responses, showed that most storage vessels are seldom degassed, with an average of 14 years between degassing events. Based on this average and the population of storage vessels that are not in Texas, we estimated two storage vessel degassing events would be newly subject to control each year. Controlling storage vessel degassing would reduce HAP emissions by 1.7 tpy, with a total annual cost of $9,400. See the technical memoranda,
We also considered options BTF, but we did not identify any and are not aware of storage vessel degassing control provisions more stringent than those discussed above and being finalized in this rule, therefore, no BTF option was evaluated.
However, another commenter stated that the proposed requirements for new and existing decoking operations failed to meet the requirements of CAA sections 112(d)(2) and (3). The commenter stated that the EPA correctly proposes to remove the general SSM exemptions, but instead proposes to regulate HAP emissions from decoking operations through work practice standards rather than emission limits, and includes four alternate actions for decoking of radiant tubes. The commenter asserted that the EPA may not set work practice standards unless it is “not feasible to prescribe or enforce an emission standard.” The commenter noted that the EPA provides no explanation or justification for why it chose four alternate practices, rather
We disagree that the work practice standards for decoking operations fail to meet the requirements of CAA sections 112(d)(2) and (3) and are inconsistent with the CAA's MACT requirements. As explained in the preamble to the proposed rule, we are adopting work practice standards instead of numeric emission limits as it is “not feasible to prescribe or enforce an emission standard” for these emissions because “the application of measurement technology to a particular class of sources is not practicable due to technological and economic limitations” (see CAA section 112(h)(2)(B)). 84 FR 54307-309. The emissions stream generated from decoking operations (
Moreover, the final rule, at 40 CFR 63.1103(e)(7), requires owners or operators to conduct daily inspections for flame impingement and also implement at least two of four other work practices to minimize coke combustion emissions from the decoking of the radiant tube(s) in each ethylene cracking furnace. Specifically, 40 CFR 63.1103(e)(7)(ii) through (v) requires owners or operators choose to conduct two of the following work practices: Monitor CO
We evaluated all of the comments on the EPA's proposed amendments to revisions for flares used as APCDs, clarifications for periods of SSM and bypasses, including PRD releases, bypass lines on closed vent systems, in situ sampling systems, maintenance activities, certain gaseous streams routed to a fuel gas system, and associated decoking operations for ethylene cracking furnaces (
We proposed amendments to the EMACT standards to remove and revise provisions related to SSM that are not consistent with the requirement that the standards apply at all times. In a few instances, we are finalizing alternative standards for certain emission points during periods of SSM to ensure a continuous CAA section 112 standard applies “at all times,” (see section IV.C); however for the majority of emission points in the Ethylene Production source category, we proposed eliminating the SSM exemptions and to have the MACT standards apply at all times. More information concerning the elimination of SSM provisions is in the preamble to the proposed rule (84 FR 54278, October 9, 2019).
We are finalizing the SSM provisions as proposed (84 FR 54278, October 9, 2019) with only minor changes to 40 CFR 63.1103(e)(9) to sufficiently address the SSM exemption provisions from subparts referenced by the EMACT standards.
While we are finalizing some alternative standards in this final rule for certain emission points during periods of SSM to ensure a continuous CAA section 112 standard applies “at all times,” (see section IV.C), we also proposed eliminating the SSM exemptions for the majority of emission points in the Ethylene Production source category. We did not receive many substantive comments on the removal of these exemptions; however, the comments and our specific responses to these items can be found in the document,
We evaluated all of the comments on the EPA's proposed amendments to the SSM provisions. For the reasons explained in the proposed rule (84 FR 54278, October 9, 2019), we determined that these amendments, which remove and revise provisions related to SSM, are necessary to be consistent with the requirement that the standards apply at all times. More information concerning the amendments we are finalizing for SSM is in the preamble to the proposed rule (84 FR 54278, October 9, 2019) and in the comments and our specific responses to the comments in the document,
We proposed that owners or operators submit electronic copies of required performance test results and reports and NOCS reports through the EPA's CDX using the CEDRI; and we proposed two broad circumstances in which we may provide extension to these requirements. We proposed at 40 CFR 63.1110(a)(10)(iii) that an extension may be warranted due to outages of the EPA's CDX or CEDRI that precludes an owner or operator from accessing the system and submitting required reports. We also proposed at 40 CFR 63.1110(a)(10)(iv) that an extension may be warranted due to a
To correct a disconnect between having a NPDES permit that meets certain allowable discharge limits at the discharge point of a facility
Further, to provide flexibility and reduce the burden on ethylene production facilities, we proposed overlap provisions at 40 CFR 63.1100(g) allowing an owner or operator subject to both the equipment leak EMACT standards and 40 CFR part 60, subpart VVa to comply with the EMACT standards only (instead of complying with both standards), provided the owner or operator also complies with the calibration drift assessment provisions at 40 CFR 60.485a(b)(2).
Finally, we proposed revisions for clarifying text or correcting typographical errors, grammatical errors, and cross-reference errors. These editorial corrections and clarifications are summarized in Table 9 of the proposal. See 84 FR 54278, October 9, 2019.
Since proposal, the electronic reporting requirements and the technical and editorial corrections in Table 9 of the proposal (see 84 FR 54278, October 9, 2019) have not changed and we are finalizing all the proposed requirements. Additionally, we are correcting an error in the final rule to clarify that Periodic Reports must also be submitted electronically (
We did not receive many substantive comments on the other amendments in the Ethylene Production RTR proposal. These items generally include issues related to electronic reporting, removal of the allowance to use NPDES permits to identify leaks for heat exchange systems, overlap provisions for equipment leaks, and revisions that we proposed for clarifying text or correcting typographical errors, grammatical errors, and cross-reference errors. The comments and our specific responses to these items can be found in the document,
Based on the comments received for these other amendments, we are generally finalizing all proposed requirements. In a few instances (
As of January 1, 2017, there were 26 ethylene production facilities currently operating that are major sources of HAP, and the EPA is aware of five ethylene production facilities under construction. As such, we estimate that 31 ethylene production facilities will be subject to the final amendments within the next 3 years. A complete list of facilities that are currently subject, or will be subject, to the EMACT standards is available in Appendix A of the memorandum,
A. What are the affected facilities?
As of January 1, 2017, there were 26 ethylene production facilities currently operating that are major sources of HAP, and the EPA is aware of five ethylene production facilities under construction. As such, we estimate that 31 ethylene production facilities will be subject to the final amendments within the next 3 years. A complete list of facilities that are currently subject, or will be subject, to the EMACT standards is available in Appendix A of the memorandum,
B. What are the air quality impacts?
We estimate HAP emissions reductions of 29 tpy and VOC emissions reductions of 232 tpy as a result of the final amendments for storage vessels, heat exchange systems, and decoking operations for ethylene cracking furnaces. These emissions reductions do not consider the potential excess emissions reductions from flares that could result from the final monitoring requirements; we estimate flare excess emissions reductions of 1,430 tpy HAP and 13,020 tpy VOC. When considering the flare excess emissions, the total emissions reductions as a result of the final amendments are estimated at 1,459 tpy HAP and 13,252 tpy VOC. These emissions reductions are documented in the following memoranda, which are available in Docket ID No. EPA-HQ-OAR-2017-0357:
We estimate the total capital costs of the final amendments to be $47.2 million and the total annualized costs to be about $10.4 million in 2016 dollars (annualized costs include annual recovery credits of $180,000). The present value in 2020 of the costs is $87.5 million at a discount rate of 3 percent and $74.9 million at 7 percent. Calculated as an equivalent annualized value, which is consistent with the present value of costs, the costs are $9.4 million at a discount rate of 7 percent and $10.9 million at a discount rate of 3 percent. These cost estimates are included in the memorandum,
The EPA conducted economic impact analyses for the amendments to the final rule, as detailed in the memorandum,
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.
To examine the potential for any environmental justice issues that might be associated with the source category, we performed a demographic analysis, which is an assessment of risks to individual demographic groups of the populations living within 5 kilometers (km) and within 50 km of the facilities. In the analysis, we evaluated the distribution of HAP-related cancer and noncancer risks from the Ethylene Production source category across different demographic groups within the populations living near facilities.
Our analysis of the demographics of the population with estimated risks greater than 1-in-1 million indicates potential disparities in risks between demographic groups, including the African American, Hispanic or Latino, Over 25 Without a High School Diploma, and Below the Poverty Level groups. In addition, the population living within 50 km of the ethylene production facilities has a higher percentage of minority, lower income, and lower education people when compared to the nationwide percentages of those groups. However, acknowledging these potential disparities, the risks for the source category were determined to be acceptable, and emissions reductions from the final amendments will benefit these groups the most.
The methodology and the results of the demographic analysis are presented in a technical report,
The EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are summarized in section IV.A of this preamble and are further documented in the risk report,
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was, therefore, not submitted to the Office of Management and Budget (OMB) for review. The EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis,
This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.
The information collection activities in this rule have been submitted for approval to OMB under the PRA. The ICR document that the EPA prepared has been assigned EPA ICR number 1983.10. The OMB Control Number is 2060-0489. You can find a copy of the ICR in the docket for this rule, and it is briefly summarized here. The information collection requirements are not enforceable until OMB approves them.
We are finalizing amendments that change the reporting and recordkeeping requirements for several emission sources at ethylene production facilities (
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, the Agency will announce that approval in the
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. There are no small entities affected in this regulated industry. See the document,
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local, or tribal governments or the private sector.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the
This action does not have tribal implications as specified in Executive Order 13175. None of the ethylene production facilities that have been identified as being affected by this final action are owned or operated by tribal governments or located within tribal lands. Thus, Executive Order 13175 does not apply to this action.
This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are contained in sections IV.A of this preamble.
This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.
This rulemaking involves technical standards. As discussed in the preamble of the proposal, the EPA conducted searches for the EMACT standards through the Enhanced National Standards Systems Network Database managed by the American National Standards Institute (ANSI). We also contacted voluntary consensus standards (VCS) organizations and accessed and searched their databases. We conducted searches for EPA Methods 1, 1A, 2, 2A, 2C, 2D, 2F, 2G, 3B, 4, 5, 18, 21, 22, 25, 25A, 27, and 29 of 40 CFR part 60, appendix A, EPA Methods 301, 316, and 320 of 40 CFR part 63, appendix A, and EPA Methods 602 and 624 of 40 CFR part 136, appendix A. During the EPA's VCS search, if the title or abstract (if provided) of the VCS described technical sampling and analytical procedures that are similar to the EPA's reference method, the EPA reviewed it as a potential equivalent method.
The EPA incorporates by reference VCS ANSI/ASME PTC 19.10-1981 (Part 10), “Flue and Exhaust Gas Analyses,” as an acceptable alternative to EPA Methods 3A and 3B for the manual procedures only and not the instrumental procedures. This method is used to quantitatively determine the gaseous constituents of exhausts including oxygen, CO
Also, the EPA incorporates by reference VCS ASTM D6420-18, “Standard Test Method for Determination of Gaseous Organic Compounds by Direct Interface Gas Chromatography-Mass Spectrometry,” as an acceptable alternative to EPA Method 18 with the following caveats. This ASTM procedure uses a direct interface gas chromatograph/mass spectrometer to identify and quantify VOC and has been approved by the EPA as an alternative to EPA Method 18 only when the target compounds are all known and the target compounds are all listed in ASTM D6420-18 as measurable. ASTM D6420-18 should not be used for methane and ethane because the atomic mass is less than 35; and ASTM D6420-18 should never be specified as a total VOC method.
In addition, the EPA incorporates by reference VCS ASTM D6348-12e1, “Determination of Gaseous Compounds by Extractive Direct Interface Fourier Transform (FTIR) Spectroscopy,” as an acceptable alternative to EPA Method 320 with caveats requiring inclusion of selected annexes to the standard as mandatory. This ASTM procedure uses an extractive sampling system that routes stationary source effluent to an FTIR spectrometer for the identification and quantification of gaseous compounds. The test plan preparation and implementation in the Annexes to ASTM D 6348-03, Sections A1 through A8 are mandatory; therefore, the EPA incorporates by reference, “Standard Test Method for Determination of Gaseous Compounds by Extractive Direct Interface Fourier Transform Infrared (FTIR) Spectroscopy.” This ASTM procedure also uses an extractive sampling system and FTIR spectrometer for the identification and quantification of gaseous compounds. The percent (%) R must be determined for each target analyte (Equation A5.5) when using ASTM D6348-03, Annex A5 (Analyte Spiking Technique). In order for the test data to be acceptable for a compound, %R must be 70% ≥ R ≤ 130%. If the %R value does not meet this criterion for a target compound, the test data is not acceptable for that compound and the test must be repeated for that analyte (
The three ASTM methods (ASTM D6420-18, ASTM D6348-12e1, and ASTM D 6348-03) newly incorporated by reference in this rule are available to the public for free viewing online in the Reading Room section on ASTM's website at
Also, the EPA decided not to include 17 other VCS; these methods are impractical as alternatives because of the lack of equivalency, documentation, validation date, and other important technical and policy considerations. The search and review results have been documented and are in the memorandum,
Under 40 CFR 63.7(f) and 40 CFR 63.8(f) (in subpart A—General Provisions), a source may apply to the EPA for permission to use alternative test methods or alternative monitoring requirements in place of any required testing methods, performance specifications, or procedures in the final rule or any amendments.
Finally, although not considered a VCS, the EPA incorporates by reference, “Volatile Organic Compounds by Gas Chromatography/Mass Spectrometry (GC/MS)” (SW-846-8260B) and “Semivolatile Organic Compounds by Gas Chromatography/Mass Spectrometry (GC/MS)” (SW-846-8270D) into 40 CFR 63.1107(a); and “Air Stripping Method (Modified El Paso
The EPA believes that this action does not have disproportionately 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 documentation for this decision is contained in section IV.A of this preamble and in the technical report,
This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Environmental protection, Administrative practice and procedures, Air pollution control, Hazardous substances, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the EPA is amending 40 CFR part 63 as follows:
42 U.S.C. 7401,
The revisions and addition read as follows:
(e) * * *
(1) ANSI/ASME PTC 19.10-1981, Flue and Exhaust Gas Analyses [Part 10, Instruments and Apparatus], issued August 31, 1981, IBR approved for §§ 63.309(k), 63.457(k), 63.772(e) and (h), 63.865(b), 63.997(e), 63.1282(d) and (g), 63.1625(b), 63.3166(a), 63.3360(e), 63.3545(a), 63.3555(a), 63.4166(a), 63.4362(a), 63.4766(a), 63.4965(a), 63.5160(d), table 4 to subpart UUUU, table 3 to subpart YYYY, 63.9307(c), 63.9323(a), 63.11148(e), 63.11155(e), 63.11162(f), 63.11163(g), 63.11410(j), 63.11551(a), 63.11646(a), and 63.11945, table 5 to subpart DDDDD, table 4 to subpart JJJJJ, table 4 to subpart KKKKK, tables 4 and 5 of subpart UUUUU, table 1 to subpart ZZZZZ, and table 4 to subpart JJJJJJ.
(h) * * *
(18) ASTM D1946-90 (Reapproved 1994), Standard Method for Analysis of Reformed Gas by Gas Chromatography, 1994, IBR approved for §§ 63.11(b), 63.987(b), and 63.1412.
(83) ASTM D6348-03, Standard Test Method for Determination of Gaseous Compounds by Extractive Direct Interface Fourier Transform Infrared (FTIR) Spectroscopy, including Annexes A1 through A8, Approved October 1, 2003, IBR approved for §§ 63.457(b), 63.997(e), and 63.1349, table 4 to subpart DDDD, table 4 to subpart UUUU, table 4 subpart ZZZZ, and table 8 to subpart HHHHHHH.
(85) ASTM D6348-12e1, Standard Test Method for Determination of Gaseous Compounds by Extractive Direct Interface Fourier Transform Infrared (FTIR) Spectroscopy, Approved February 1, 2012, IBR approved for §§ 63.997(e) and 63.1571(a) and Table 4 to subpart UUUU.
(92) ASTM D6420-18, Standard Test Method for Determination of Gaseous Organic Compounds by Direct Interface Gas Chromatography-Mass Spectrometry, Approved November 1, 2018, IBR approved for § 63.987(b) and § 63.997(e).
(n) * * *
(12) SW-846-8260B, Volatile Organic Compounds by Gas Chromatography/Mass Spectrometry (GC/MS), Revision 2, December 1996, in EPA Publication No. SW-846, Test Methods for Evaluating Solid Waste, Physical/Chemical Methods, Third Edition, IBR approved for §§ 63.1107(a), 63.11960, 63.11980, and table 10 to subpart HHHHHHH.
(13) SW-846-8270D, Semivolatile Organic Compounds by Gas Chromatography/Mass Spectrometry (GC/MS), Revision 4, February 2007, in EPA Publication No. SW-846, Test Methods for Evaluating Solid Waste, Physical/Chemical Methods, Third Edition, IBR approved for §§ 63.1107(a), 63.11960, 63.11980, and table 10 to subpart HHHHHHH.
(t) * * *
(1) “Air Stripping Method (Modified El Paso Method) for Determination of Volatile Organic Compound Emissions from Water Sources,” Revision Number One, dated January 2003, Sampling Procedures Manual, Appendix P: Cooling Tower Monitoring, January 31, 2003, IBR approved for §§ 63.654(c) and (g), 63.655(i), 63.1086(e), 63.1089(d), and 63.11920.
(b) * * *
(3) * * *
(ii) * * *
(e) * * *
(2) * * *
(iii)
(C) * * *
(
(D) To measure the total organic regulated material concentration at the outlet of a control device, use Method 18 of 40 CFR part 60, appendix A, or ASTM D6420-18 (incorporated by reference, see § 63.14). If you have a combustion control device, you must first determine which regulated material compounds are present in the inlet gas stream using process knowledge or the screening procedure described in Method 18. In conducting the performance test, analyze samples collected at the outlet of the combustion control device as specified in Method 18 or ASTM D6420-18 for the regulated material compounds present at the inlet of the control device. The method ASTM D6420-18 may be used only under the conditions specified in paragraphs (e)(2)(iii)(D)(
(
(
(
(iv)
(F) To measure inlet and outlet concentrations of total organic regulated material, use Method 18 of 40 CFR part 60, appendix A, or ASTM D6420-18 (incorporated by reference, see § 63.14), under the conditions specified in paragraphs (e)(2)(iii)(D)(
(I) If the uncontrolled or inlet gas stream to the control device contains formaldehyde, you must conduct emissions testing according to paragraphs (e)(2)(iv)(I)(
(
(
(
You must comply with the requirements of this subpart according to the schedule specified in § 63.1102(a). Each heat exchange system which is part of an ethylene production affected source also must comply with paragraph (a) of this section. Each waste stream which is part of an ethylene production affected source also must comply with paragraph (b) of this section.
(a) Each heat exchange system that is part of an ethylene production affected source that commenced construction or reconstruction on or before October 9, 2019, must be in compliance with the heat exchange system requirements specified in §§ 63.1084(f), 63.1085(e) and (f), 63.1086(e), 63.1087(c) and (d), 63.1088(d), and 63.1089(d) and (e) upon initial startup or July 6, 2023, whichever is later. Each heat exchange system that is part of an ethylene production affected source that commences construction or reconstruction after October 9, 2019, must be in compliance with the heat exchange system requirements specified in §§ 63.1084(f), 63.1085(e) and (f), 63.1086(e), 63.1087(c) and (d), 63.1088(d), and 63.1089(d) and (e) upon initial startup, or July 6, 2020, whichever is later.
(b) Each waste stream that is part of an ethylene production affected source that commenced construction or reconstruction on or before October 9, 2019, must be in compliance with the flare requirements specified in § 63.1095(a)(1)(vi) and (b)(3) upon initial startup or July 6, 2023, whichever is later. Each waste stream that is part of an ethylene production affected source that commences construction or reconstruction after October 9, 2019, must be in compliance with the flare requirements specified in § 63.1095(a)(1)(vi) and (b)(3) upon initial startup, or July 6, 2020, whichever is later.
(b) * * *
Except as specified in paragraph (f) of this section, your heat exchange system is exempt from the requirements in §§ 63.1085 and 63.1086 if it meets any one of the criteria in paragraphs (a) through (e) of this section.
(f) Beginning no later than the compliance dates specified in § 63.1081(a), your heat exchange system is no longer exempt from the requirements in §§ 63.1085 and 63.1086 if it meets the criteria in paragraph (c) or (d) of this section; instead, your heat exchange system is exempt from the requirements in §§ 63.1085 and 63.1086 if it meets any one of the criteria in paragraph (a), (b), or (e) of this section.
Unless you meet one of the requirements for exemptions in § 63.1084, you must meet the requirements in paragraphs (a) through (f) of this section.
(a) Except as specified in paragraph (e) of this section, you must monitor the cooling water for the presence of substances that indicate a leak according to § 63.1086(a) through (d).
(b) Except as specified in paragraph (f) of this section, if you detect a leak, then you must repair it according to § 63.1087(a) and (b) unless repair is delayed according to § 63.1088(a) through (c).
(e) Beginning no later than the compliance dates specified in § 63.1081(a), the requirements specified in § 63.1086(a) through (d) no longer apply; instead, you must monitor the cooling water for the presence of total strippable hydrocarbons that indicate a leak according to § 63.1086(e). At any time before the compliance dates specified in § 63.1081(a), you may choose to comply with the requirements in this paragraph in lieu of the requirements in paragraph (a) of this section.
(f) Beginning no later than the compliance dates specified in § 63.1081(a), the requirements specified in §§ 63.1087(a) and (b) and 63.1088(a) through (c), no longer apply; instead, if you detect a leak, then you must repair it according to § 63.1087(c) and (d), unless repair is delayed according to § 63.1088(d). At any time before the compliance dates specified in § 63.1081(a), you may choose to comply with the requirements in this paragraph in lieu of the requirements in paragraph (b) of this section.
Except as specified in § 63.1085(e) and paragraph (e) of this section, you must monitor for leaks to cooling water by monitoring each heat exchange system according to the requirements of paragraph (a) of this section, monitoring each heat exchanger according to the requirements of paragraph (b) of this section, or monitoring a surrogate parameter according to the requirements of paragraph (c) of this section. Except as specified in § 63.1085(e) and paragraph (e) of this section, if you elect to comply with the requirements of paragraph (a) or (b) of this section, you may use alternatives in paragraph (d)(1) or (2) of this section for determining the mean entrance concentration.
(e) Beginning no later than the compliance dates specified in § 63.1081(a), you must perform monitoring to identify leaks of total strippable hydrocarbons from each heat exchange system subject to the requirements of this subpart according to the procedures in paragraphs (e)(1) through (5) of this section.
(1)
(i) Each cooling tower return line or any representative riser within the cooling tower prior to exposure to air for each heat exchange system.
(ii) Selected heat exchanger exit line(s), so that each heat exchanger or group of heat exchangers within a heat exchange system is covered by the selected monitoring location(s).
(2)
(i) Selected heat exchanger exit line(s), so that each heat exchanger or group of heat exchangers within a heat exchange system is covered by the selected monitoring location(s). The selected monitoring location may be at a point where discharges from multiple heat exchange systems are combined provided that the combined cooling water flow rate at the monitoring location does not exceed 165,000 gallons per minute.
(ii) The inlet water feed line for a once-through heat exchange system prior to any heat exchanger. If multiple heat exchange systems use the same water feed (
(3)
(i) You must determine the total strippable hydrocarbon concentration (in parts per million by volume (ppmv) as methane) at each monitoring location using the “Air Stripping Method (Modified El Paso Method) for Determination of Volatile Organic Compound Emissions from Water Sources” (incorporated by reference, see § 63.14) using a flame ionization detector analyzer for on-site determination as described in Section 6.1 of the Modified El Paso Method.
(ii) You must convert the total strippable hydrocarbon concentration (in ppmv as methane) to a total hydrocarbon mass emissions rate (as methane) using the calculations in Section 7.0 of “Air Stripping Method (Modified El Paso Method) for Determination of Volatile Organic Compound Emissions from Water Sources” (incorporated by reference—see § 63.14).
(4)
(i) For each heat exchange system that is part of an ethylene production affected source that commenced construction or reconstruction on or before December 6, 2000, you must monitor quarterly using a leak action level defined as a total strippable hydrocarbon concentration (as methane) in the stripping gas of 6.2 ppmv or, for heat exchange systems with a recirculation rate of 10,000 gallons per minute or less, you may monitor quarterly using a leak action level defined as a total hydrocarbon mass emissions rate from the heat exchange system (as methane) of 0.18 kg/hr. If a leak is detected as specified in paragraph (e)(5) of this section, then you must monitor monthly until the leak has been repaired according to the requirements in § 63.1087(c) or (d). Once the leak has been repaired according to the requirements in § 63.1087(c) or (d), quarterly monitoring for the heat exchange system may resume.
(ii) For each heat exchange system that is part of an ethylene production affected source that commences construction or reconstruction after December 6, 2000 and on or before October 9, 2019, you must monitor at the applicable frequency specified in paragraph (e)(4)(ii)(A) or (B) of this section using a leak action level defined as a total strippable hydrocarbon concentration (as methane) in the stripping gas of 6.2 ppmv or, for heat exchange systems with a recirculation rate of 10,000 gallons per minute or less, you may monitor at the applicable frequency specified in paragraph (e)(4)(ii)(A) or (B) of this section using a leak action level defined as a total hydrocarbon mass emissions rate from the heat exchange system (as methane) of 0.18 kg/hr.
(A) If you have completed the initial weekly monitoring for 6-months of the heat exchange system as specified in § 63.1086(a)(2)(ii) or (b)(1)(ii) then you must monitor monthly. If a leak is detected as specified in paragraph (e)(5) of this section, then you must monitor weekly until the leak has been repaired according to the requirements in § 63.1087(c) or (d). Once the leak has been repaired according to the requirements in § 63.1087(c) or (d), monthly monitoring for the heat exchange system may resume.
(B) If you have not completed the initial weekly monitoring for 6-months of the heat exchange system as specified in § 63.1086(a)(2)(ii) or (b)(1)(ii), or if you elect to comply with paragraph (e) of this section rather than paragraphs (a) through (d) of this section upon startup, then you must initially monitor weekly for 6-months beginning upon startup and monitor monthly thereafter. If a leak is detected as specified in paragraph (e)(5) of this section, then you must monitor weekly until the leak has been repaired according to the requirements in § 63.1087(c) or (d). Once the leak has
(iii) For each heat exchange system that is part of an ethylene production affected source that commences construction or reconstruction after October 9, 2019, you must initially monitor weekly for 6-months beginning upon startup and monitor monthly thereafter using a leak action level defined as a total strippable hydrocarbon concentration (as methane) in the stripping gas of 6.2 ppmv or, for heat exchange systems with a recirculation rate of 10,000 gallons per minute or less, you may use a leak action level defined as a total hydrocarbon mass emissions rate from the heat exchange system (as methane) of 0.18 kg/hr if the heat exchange system has a recirculation rate of 10,000 gallons per minute or less. If a leak is detected as specified in paragraph (e)(5) of this section, then you must monitor weekly until the leak has been repaired according to the requirements in § 63.1087(c) or (d). Once the leak has been repaired according to the requirements in § 63.1087(c) or (d), monthly monitoring for the heat exchange system may resume.
(5)
(i) For once-through heat exchange systems for which the inlet water feed is monitored as described in paragraph (e)(2)(ii) of this section, a leak is detected if the difference in the measurement value of the sample taken from a location specified in paragraph (e)(2)(i) of this section and the measurement value of the corresponding sample taken from the location specified in paragraph (e)(2)(ii) of this section equals or exceeds the leak action level.
(ii) For all other heat exchange systems, a leak is detected if a measurement value of the sample taken from a location specified in paragraph (e)(1)(i), (ii), or (e)(2)(i) of this section equals or exceeds the leak action level.
Except as specified in § 63.1085(f) and paragraphs (c) and (d) of this section, if a leak is detected, you must comply with the requirements in paragraphs (a) and (b) of this section unless repair is delayed according to § 63.1088.
(c) Beginning no later than the compliance dates specified in § 63.1081(a), if a leak is detected using the methods described in § 63.1086(e), you must repair the leak to reduce the concentration or mass emissions rate to below the applicable leak action level as soon as practicable, but no later than 45 days after identifying the leak, except as specified in § 63.1088(d). Repair must include re-monitoring at the monitoring location where the leak was identified according to the method specified in § 63.1086(e)(3) to verify that the total strippable hydrocarbon concentration or total hydrocarbon mass emissions rate is below the applicable leak action level. Repair may also include performing the additional monitoring in paragraph (d) of this section to verify that the total strippable hydrocarbon concentration is below the applicable leak action level. Actions that can be taken to achieve repair include but are not limited to:
(1) Physical modifications to the leaking heat exchanger, such as welding the leak or replacing a tube;
(2) Blocking the leaking tube within the heat exchanger;
(3) Changing the pressure so that water flows into the process fluid;
(4) Replacing the heat exchanger or heat exchanger bundle; or
(5) Isolating, bypassing, or otherwise removing the leaking heat exchanger from service until it is otherwise repaired.
(d) Beginning no later than the compliance dates specified in § 63.1081(a), if you detect a leak when monitoring a cooling tower return line according to § 63.1086(e)(1)(i), you may conduct additional monitoring of each heat exchanger or group of heat exchangers associated with the heat exchange system for which the leak was detected, as provided in § 63.1086(e)(1)(ii). If no leaks are detected when monitoring according to the requirements of § 63.1086(e)(1)(ii), the heat exchange system is considered to have met the repair requirements through re-monitoring of the heat exchange system, as provided in paragraph (c) of this section.
You may delay the repair of heat exchange systems if the leaking equipment is isolated from the process. At any time before the compliance dates specified in § 63.1081(a), you may also delay repair if repair is technically infeasible without a shutdown, and you meet one of the conditions in paragraphs (a) through (c) of this section. Beginning no later than the compliance dates specified in § 63.1081(a), paragraphs (a) through (c) of this section no longer apply; instead, you may delay repair if the conditions in paragraph (d) of this section are met.
(d) Beginning no later than the compliance dates specified in § 63.1081(a), you may delay repair when one of the conditions in paragraph (d)(1) or (2) of this section is met and the leak is less than the delay of repair action level specified in paragraph (d)(3) of this section. You must determine if a delay of repair is necessary as soon as practicable, but no later than 45 days after first identifying the leak.
(1) If the repair is technically infeasible without a shutdown and the total strippable hydrocarbon concentration or total hydrocarbon mass emissions rate is initially and remains less than the delay of repair action level for all monitoring periods during the delay of repair, then you may delay repair until the next scheduled shutdown of the heat exchange system. If, during subsequent monitoring, the delay of repair action level is exceeded, then you must repair the leak within 30 days of the monitoring event in which the leak was equal to or exceeded the delay of repair action level.
(2) If the necessary equipment, parts, or personnel are not available and the total strippable hydrocarbon concentration or total hydrocarbon mass emissions rate is initially and remains less than the delay of repair action level for all monitoring periods during the delay of repair, then you may delay the repair for a maximum of 120 calendar days. You must demonstrate that the necessary equipment, parts, or personnel were not available. If, during subsequent monitoring, the delay of repair action level is exceeded, then you must repair the leak within 30 days of the monitoring event in which the leak was equal to or exceeded the delay of repair action level.
(3) The delay of repair action level is a total strippable hydrocarbon concentration (as methane) in the stripping gas of 62 ppmv or, for heat exchange systems with a recirculation rate of 10,000 gallons per minute or less, the delay of repair action level is a total hydrocarbon mass emissions rate (as methane) or 1.8 kg/hr. The delay of repair action level is assessed as described in paragraph (d)(3)(i) or (ii) of this section, as applicable.
(i) For once-through heat exchange systems for which the inlet water feed
(ii) For all other heat exchange systems, the delay of repair action level is exceeded if a measurement value of the sample taken from a location specified in § 63.1086(e)(1)(i) and (ii) or § 63.1086(e)(2)(i) equals or exceeds the delay of repair action level.
(d) At any time before the compliance dates specified in § 63.1081(a), you must keep documentation of delay of repair as specified in § 63.1088(a) through (c). Beginning no later than the compliance dates specified in § 63.1081(a), the requirement to keep documentation of delay of repair as specified in § 63.1088(a) through (c) no longer applies; instead, you must keep documentation of delay of repair as specified in paragraphs (d)(1) through (4) of this section.
(1) The reason(s) for delaying repair.
(2) A schedule for completing the repair as soon as practical.
(3) The date and concentration or mass emissions rate of the leak as first identified and the results of all subsequent monitoring events during the delay of repair.
(4) An estimate of the potential total hydrocarbon emissions from the leaking heat exchange system or heat exchanger for each required delay of repair monitoring interval following the applicable procedures in paragraphs (d)(4)(i) through (iii) of this section.
(i) If you comply with the total strippable hydrocarbon concentration leak action level, as specified in § 63.1086(e)(4), you must calculate the mass emissions rate by complying with the requirements of § 63.1086(e)(3)(ii) or by determining the mass flow rate of the cooling water at the monitoring location where the leak was detected. If the monitoring location is an individual cooling tower riser, determine the total cooling water mass flow rate to the cooling tower. Cooling water mass flow rates may be determined using direct measurement, pump curves, heat balance calculations, or other engineering methods. If you determine the mass flow rate of the cooling water, calculate the mass emissions rate by converting the stripping gas leak concentration (in ppmv as methane) to an equivalent liquid concentration, in parts per million by weight (ppmw), using equation 7-1 from “Air Stripping Method (Modified El Paso Method) for Determination of Volatile Organic Compound Emissions from Water Sources” (incorporated by reference—see § 63.14) and multiply the equivalent liquid concentration by the mass flow rate of the cooling water.
(ii) For delay of repair monitoring intervals prior to repair of the leak, calculate the potential total hydrocarbon emissions for the leaking heat exchange system or heat exchanger for the monitoring interval by multiplying the mass emissions rate, determined in § 63.1086(e)(3)(ii) or paragraph (d)(4)(i) of this section, by the duration of the delay of repair monitoring interval. The duration of the delay of repair monitoring interval is the time period starting at midnight on the day of the previous monitoring event or at midnight on the day the repair would have been completed if the repair had not been delayed, whichever is later, and ending at midnight of the day the of the current monitoring event.
(iii) For delay of repair monitoring intervals ending with a repaired leak, calculate the potential total hydrocarbon emissions for the leaking heat exchange system or heat exchanger for the final delay of repair monitoring interval by multiplying the duration of the final delay of repair monitoring interval by the mass emissions rate determined for the last monitoring event prior to the re-monitoring event used to verify the leak was repaired. The duration of the final delay of repair monitoring interval is the time period starting at midnight of the day of the last monitoring event prior to re-monitoring to verify the leak was repaired and ending at the time of the re-monitoring event that verified that the leak was repaired.
(e) At any time before the compliance dates specified in § 63.1081(a), if you validate a 40 CFR part 136 method for the HAP listed in Table 1 to this subpart according to the procedures in appendix D to this part, then you must keep a record of the test data and calculations used in the validation. On the compliance dates specified in § 63.1081(a), this requirement no longer applies.
If you delay repair for your heat exchange system, you must report the delay of repair in the semiannual report required by § 63.1110(e). If the leak remains unrepaired, you must continue to report the delay of repair in semiannual reports until you repair the leak. Except as provided in paragraph (f) of this section, you must include the information in paragraphs (a) through (e) of this section in the semiannual report.
(f) For heat exchange systems subject to § 63.1085(e) and (f), Periodic Reports must include the information specified in paragraphs (f)(1) through (5) of this section, in lieu of the information specified in paragraphs (a) through (e) of this section.
(1) The number of heat exchange systems at the plant site subject to the monitoring requirements in § 63.1085(e) and (f) during the reporting period.
(2) The number of heat exchange systems subject to the monitoring requirements in § 63.1085(e) and (f) at the plant site found to be leaking during the reporting period.
(3) For each monitoring location where the total strippable hydrocarbon concentration or total hydrocarbon mass emissions rate was determined to be equal to or greater than the applicable leak definitions specified in § 63.1086(e)(5) during the reporting period, identification of the monitoring location (
(4) For leaks that were repaired during the reporting period (including delayed repairs), identification of the monitoring location associated with the repaired leak, the total strippable hydrocarbon concentration or total hydrocarbon mass emissions rate measured during re-monitoring to verify repair, and the re-monitoring date (
(5) For each delayed repair, identification of the monitoring location associated with the leak for which repair is delayed, the date when the delay of repair began, the date the repair is expected to be completed (if the leak is not repaired during the reporting period), the total strippable hydrocarbon concentration or total hydrocarbon mass emissions rate and date of each monitoring event conducted on the delayed repair during the reporting period, and an estimate of the potential total hydrocarbon emissions over the reporting period associated with the delayed repair.
The revisions and additions read as follows:
(a) * * *
(1) Route the continuous butadiene stream to a treatment process or wastewater treatment system used to treat benzene waste streams that complies with the standards specified in 40 CFR 61.348. Comply with the requirements of 40 CFR part 61, subpart FF; with the changes in Table 2 to this subpart, and as specified in paragraphs (a)(1)(i) through (vi) of this section.
(vi) Beginning no later than the compliance dates specified in § 63.1081(b), if you use a steam-assisted, air-assisted, non-assisted, or pressure-assisted multi-point flare to comply with 40 CFR part 61, subpart FF, then you must comply with the requirements § 63.1103(e)(4) in lieu of 40 CFR 61.349(a)(2)(iii) and (d), 40 CFR 61.354(c)(3), 40 CFR 61.356(f)(2)(i)(D) and (j)(7), and 40 CFR 61.357(d)(7)(iv)(F).
(3) Before July 6, 2023, if the total annual benzene quantity from waste at your facility is less than 10 Mg/yr, as determined according to 40 CFR 61.342(a), comply with the requirements of this section at all times except during periods of startup, shutdown, and malfunction, if the startup, shutdown, or malfunction precludes the ability of the affected source to comply with the requirements of this section and the owner or operator follows the provisions for periods of startup, shutdown, and malfunction, as specified in § 63.1111. Beginning on July 6, 2023, if the total annual benzene quantity from waste at your facility is less than 10 Mg/yr, as determined according to 40 CFR 61.342(a), you must comply with the requirements of this section at all times.
(b)
(1) If the total annual benzene quantity from waste at your facility is less than 10 Mg/yr, as determined according to 40 CFR 61.342(a), manage and treat spent caustic waste streams and dilution steam blowdown waste streams according to 40 CFR 61.342(c)(1) through (c)(3)(i). Before July 6, 2023, the requirements of this paragraph (b)(1) shall apply at all times except during periods of startup, shutdown, and malfunction, if the startup, shutdown, or malfunction precludes the ability of the affected source to comply with the requirements of this section and the owner or operator follows the provisions for periods of startup, shutdown, and malfunction, as specified in § 63.1111. Beginning on July 6, 2023, the requirements of this paragraph (b)(1) shall apply at all times.
(3) Beginning no later than the compliance dates specified in § 63.1081(b), if you use a steam-assisted, air-assisted, non-assisted, or pressure-assisted multi-point flare to comply with 40 CFR part 61, subpart FF, then you must comply with the requirements of § 63.1103(e)(4) in lieu of 40 CFR 61.349(a)(2)(iii) and (d), 40 CFR 61.354(c)(3), 40 CFR 61.356(f)(2)(i)(D) and (j)(7), and 40 CFR 61.357(d)(7)(iv)(F).
The revisions and additions read as follows:
(a) * * *
(b)
(g)
(4) * * *
(ii) After the compliance dates specified in § 63.1102, equipment that must be controlled according to this subpart YY and subpart H of this part is in compliance with the equipment leak requirements of this subpart YY if it complies with either set of requirements. For ethylene production affected sources, the requirement in § 63.1103(e)(9)(i) also applies. The owner or operator must specify the rule with which they will comply in the Notification of Compliance Status report required by § 63.1110(a)(4).
(iii) Beginning no later than the compliance dates specified in § 63.1102(c), for ethylene production affected sources, equipment that must be controlled according to this subpart YY and subpart VVa of 40 CFR part 60 is required only to comply with the equipment leak requirements of this subpart, except the owner or operator must also comply with the calibration drift assessment requirements specified at 40 CFR 60.485a(b)(2) if they are required to do so in subpart VVa of 40 CFR part 60. When complying with the calibration drift assessment requirements at 40 CFR 60.485a(b)(2), the requirement at 40 CFR 60.486a(e)(8)(v) to record the instrument reading for each scale used applies.
(5)
(7)
(ii) Beginning no later than the compliance dates specified in § 63.1102(c), flares subject to § 63.987 and used as a control device for an emission point subject to the requirements in Table 7 to § 63.1103(e) are only required to comply with § 63.1103(e)(4).
(iii) Beginning no later than the compliance dates specified in § 63.1102(c), flares subject to the requirements in 40 CFR part 63, subpart CC and used as a control device for an emission point subject to the requirements in Table 7 to § 63.1103(e) are only required to comply with the flare requirements in 40 CFR part 63, subpart CC. This paragraph does not apply to multi-point pressure assisted flares.
(a)
(c) All ethylene production affected sources that commenced construction or reconstruction on or before October 9, 2019, must be in compliance with the requirements listed in paragraphs (c)(1) through (13) of this section upon initial startup or July 6, 2023, whichever is later. All ethylene production affected sources that commenced construction or reconstruction after October 9, 2019, must be in compliance with the requirements listed in paragraphs (c)(1) through (13) of this section upon initial startup, or July 6, 2020, whichever is later.
(1) Overlap requirements specified in § 63.1100(g)(4)(iii) and (7), if applicable.
(2) The storage vessel requirements specified in paragraphs (b)(1)(iii) and (c)(1)(ii) of Table 7 to § 63.1103(e), and the degassing requirements specified in § 63.1103(e)(10).
(3) The ethylene process vent requirements specified in paragraph (d)(1)(ii) of Table 7 to § 63.1103(e).
(4) The transfer rack requirements specified in § 63.1105(a)(5).
(5) The equipment requirements specified in paragraph (f)(1)(ii) of Table 7 to § 63.1103(e) and § 63.1107(h).
(6) The bypass line requirements specified in paragraph (i) of Table 7 to § 63.1103(e), and § 63.1103(e)(6).
(7) The decoking requirements for ethylene cracking furnaces specified in paragraph (j) of Table 7 to § 63.1103(e), and § 63.1103(e)(7) and (8).
(8) The flare requirements specified in § 63.1103(e)(4).
(9) The maintenance vent requirements specified in § 63.1103(e)(5).
(10) The requirements specified in § 63.1103(e)(9).
(11) The requirements in § 63.1108(a)(4)(i), (b)(1)(ii), (b)(2), and (b)(4)(ii)(B).
(12) The recordkeeping requirements specified in § 63.1109(e) through (i).
(13) The reporting requirements specified in § 63.1110(a)(10), (d)(1)(iv) and (v), and (e)(4) through (8).
The revisions and additions read as follows:
(b) * * *
(2) * * *
(e) * * *
(1) * * *
(i)
(F) All heat exchange systems (as defined in § 63.1082(b)) associated with an ethylene production unit.
(ii) * * *
(J) Air emissions from all ethylene cracking furnaces.
(2) * * *
(A) Pressure relief device discharges;
(B) Gaseous streams routed to a fuel gas system, including any flares using fuel gas, of which less than 50 percent
(C) Gaseous streams routed to a fuel gas system whereby any flares using fuel gas, of which 50 percent or more of the fuel gas is derived from an ethylene production unit, comply with § 63.1103(e)(4) beginning no later than the compliance dates specified in § 63.1102(c);
(D) Leaks from equipment regulated under this subpart;
(E) Episodic or nonroutine releases such as those associated with startup, shutdown, and malfunction until July 6, 2023;
(F) In situ sampling systems (online analyzers) until July 6, 2023; and
(G) Coke combustion emissions from decoking operations beginning no later than the compliance dates specified in § 63.1102(c).
(3)
(4)
(i) The owner or operator may elect to comply with the alternative means of emissions limitation requirements specified in of § 63.670(r) of subpart CC in lieu of the requirements in § 63.670(d) through (f) of subpart CC, as applicable. However, instead of complying with § 63.670(r)(3) of subpart CC, the owner or operator must submit the alternative means of emissions limitation request following the requirements in § 63.1113.
(ii) Instead of complying with § 63.670(o)(2)(i) of subpart CC, the owner or operator must develop and implement the flare management plan no later than the compliance dates specified in § 63.1102(c).
(iii) Instead of complying with § 63.670(o)(2)(iii) of subpart CC, if required to develop a flare management plan and submit it to the Administrator, then the owner or operator must also submit all versions of the plan in portable document format (PDF) to the EPA via the Compliance and Emissions Data Reporting Interface (CEDRI), which can be accessed through the EPA's Central Data Exchange (CDX) (
(iv) Section 63.670(o)(3)(ii) of subpart CC and all references to § 63.670(o)(3)(ii) of subpart CC do not apply. Instead, the owner or operator must comply with the maximum flare tip velocity operating limit at all times.
(v) Substitute “ethylene production unit” for each occurrence of “petroleum refinery.”
(vi) Each occurrence of “refinery” does not apply.
(vii) Except as specified in paragraph (e)(4)(vii)(G) of this section, if a pressure-assisted multi-point flare is used as a control device for an emission point subject to the requirements in Table 7 to this section, then the owner or operator must comply with the requirements specified in paragraphs (e)(4)(vii)(A) through (F) of this section.
(A) The owner or operator is not required to comply with the flare tip velocity requirements in § 63.670(d) and (k) of subpart CC;
(B) The owner or operator must substitute “800” for each occurrence of “270” in § 63.670(e) of subpart CC;
(C) The owner or operator must determine the 15-minute block average NHVvg using only the direct calculation method specified in § 63.670(l)(5)(ii) of subpart CC;
(D) Instead of complying with § 63.670(b) and (g) of subpart CC, if a pressure-assisted multi-point flare uses cross-lighting on a stage of burners rather than having an individual pilot flame on each burner, the owner or operator must operate each stage of the pressure-assisted multi-point flare with a flame present at all times when regulated material is routed to that stage of burners. Each stage of burners that cross-lights in the pressure-assisted multi-point flare must have at least two pilots with at least one continuously lit and capable of igniting all regulated material that is routed to that stage of burners. Each 15-minute block during which there is at least one minute where no pilot flame is present on a stage of burners when regulated material is routed to that stage is a deviation of the standard. Deviations in different 15-minute blocks from the same event are considered separate deviations. The pilot flame(s) on each stage of burners that use cross-lighting must be continuously monitored by a thermocouple or any other equivalent device used to detect the presence of a flame;
(E) Unless the owner or operator of a pressure-assisted multi-point flare chooses to conduct a cross-light performance demonstration as specified in this paragraph, the owner or operator must ensure that if a stage of burners on the flare uses cross-lighting, that the distance between any two burners in series on that stage is no more than 6 feet when measured from the center of one burner to the next burner. A distance greater than 6 feet between any two burners in series may be used provided the owner or operator conducts a performance demonstration that confirms the pressure-assisted multi-point flare will cross-light a minimum of three burners and the spacing between the burners and location of the pilot flame must be representative of the projected installation. The compliance demonstration must be approved by the permitting authority and a copy of this approval must be maintained onsite. The compliance demonstration report must include: A protocol describing the test methodology used, associated test method QA/QC parameters, the waste gas composition and NHVcz of the gas tested, the velocity of the waste gas tested, the pressure-assisted multi-point flare burner tip pressure, the time, length, and duration of the test, records of whether a successful cross-light was observed over all of the burners and the length of time it took for the burners to cross-light, records of maintaining a stable flame after a successful cross-light and the duration for which this was observed, records of any smoking events during the cross-light, waste gas temperature, meteorological conditions (
(F) The owner or operator of a pressure-assisted multi-point flare must install and operate pressure monitor(s) on the main flare header, as well as a valve position indicator monitoring system for each staging valve to ensure that the flare operates within the proper range of conditions as specified by the manufacturer. The pressure monitor must meet the requirements in Table 13 to subpart CC of this part.
(G) If a pressure-assisted multi-point flare is operating under the requirements of an approved alternative means of emission limitations, the owner or operator shall either continue to comply with the terms of the alternative means of emission limitations or comply with the provisions in paragraphs (e)(4)(vii)(A) through (F) of this section.
(viii) If an owner or operator chooses to determine compositional analysis for net heating value with a continuous process mass spectrometer, the owner or operator must comply with the requirements specified in paragraphs (e)(4)(viii)(A) through (G) of this section.
(A) The owner or operator must meet the requirements in § 63.671(e)(2). The owner or operator may augment the minimum list of calibration gas components found in § 63.671(e)(2) with compounds found during a pre-survey or known to be in the gas through process knowledge.
(B) Calibration gas cylinders must be certified to an accuracy of 2 percent and traceable to National Institute of Standards and Technology (NIST) standards.
(C) For unknown gas components that have similar analytical mass fragments to calibration compounds, the owner or operator may report the unknowns as an increase in the overlapped calibration gas compound. For unknown compounds that produce mass fragments that do not overlap calibration compounds, the owner or operator may use the response factor for the nearest molecular weight hydrocarbon in the calibration mix to quantify the unknown component's NHV
(D) The owner or operator may use the response factor for n-pentane to quantify any unknown components detected with a higher molecular weight than n-pentane.
(E) The owner or operator must perform an initial calibration to identify mass fragment overlap and response factors for the target compounds.
(F) The owner or operator must meet applicable requirements in Performance Specification 9 of 40 CFR part 60, appendix B, for continuous monitoring system acceptance including, but not limited to, performing an initial multi-point calibration check at three concentrations following the procedure in Section 10.1 and performing the periodic calibration requirements listed for gas chromatographs in Table 13 to subpart CC of this part, for the process mass spectrometer. The owner or operator may use the alternative sampling line temperature allowed under Net Heating Value by Gas Chromatograph in Table 13 to subpart CC of this part.
(G) The average instrument calibration error (CE) for each calibration compound at any calibration concentration must not differ by more than 10 percent from the certified cylinder gas value. The CE for each
(ix) An owner or operator using a gas chromatograph or mass spectrometer for compositional analysis for net heating value may choose to use the CE of NHV
(x) Instead of complying with § 63.670(p) of subpart CC, the owner or operator must keep the flare monitoring records specified in § 63.1109(e).
(xi) Instead of complying with § 63.670(q) of subpart CC, the owner or operator must comply with the reporting requirements specified in § 63.1110(d) and (e)(4).
(xii) When determining compliance with the pilot flame requirements specified in § 63.670(b) and (g), substitute “pilot flame or flare flame” for each occurrence of “pilot flame.”
(xiii) When determining compliance with the flare tip velocity and combustion zone operating limits specified in § 63.670(d) and (e), the requirement effectively applies starting with the 15-minute block that includes a full 15 minutes of the flaring event. The owner or operator is required to demonstrate compliance with the velocity and NHVcz requirements starting with the block that contains the fifteenth minute of a flaring event. The owner or operator is not required to demonstrate compliance for the previous 15-minute block in which the event started and contained only a fraction of flow.
(xiv) In lieu of meeting the requirements in §§ 63.670 and 63.671 of subpart CC, an owner or operator may submit a request to the Administrator for approval of an alternative test method in accordance with § 63.7(f). The alternative test method must be able to demonstrate on an ongoing basis at least once every 15-minutes that the flare meets 96.5% combustion efficiency and provide a description of the alternative recordkeeping and reporting that would be associated with the alternative test method. The alternative test method request may also include a request to use the alternative test method in lieu of the pilot or flare flame monitoring requirements of 63.670(g).
(5)
(i) Prior to venting to the atmosphere, remove process liquids from the equipment as much as practical and depressurize the equipment to either: A flare meeting the requirements specified in paragraph (e)(4) of this section, or a non-flare control device meeting the requirements specified in § 63.982(c)(2) of subpart SS, until one of the following conditions, as applicable, is met.
(A) The vapor in the equipment served by the maintenance vent has a lower explosive limit (LEL) of less than 10 percent.
(B) If there is no ability to measure the LEL of the vapor in the equipment based on the design of the equipment, the pressure in the equipment served by the maintenance vent is reduced to 5 pounds per square inch gauge (psig) or less. Upon opening the maintenance vent, active purging of the equipment cannot be used until the LEL of the vapors in the maintenance vent (or inside the equipment if the maintenance is a hatch or similar type of opening) is less than 10 percent.
(C) The equipment served by the maintenance vent contains less than 50 pounds of total volatile organic compounds (VOC).
(D) If, after applying best practices to isolate and purge equipment served by a maintenance vent, none of the applicable criterion in paragraphs (e)(5)(i)(A) through (C) of this section can be met prior to installing or removing a blind flange or similar equipment blind, then the pressure in the equipment served by the maintenance vent must be reduced to 2 psig or less before installing or removing the equipment blind. During installation or removal of the equipment blind, active purging of the equipment may be used provided the equipment pressure at the location where purge gas is introduced remains at 2 psig or less.
(ii) Except for maintenance vents complying with the alternative in paragraph (e)(5)(i)(C) of this section, the owner or operator must determine the LEL or, if applicable, equipment pressure using process instrumentation or portable measurement devices and follow procedures for calibration and maintenance according to manufacturer's specifications.
(iii) For maintenance vents complying with the alternative in paragraph (e)(5)(i)(C) of this section, the owner or operator must determine mass of VOC in the equipment served by the maintenance vent based on the equipment size and contents after considering any contents drained or purged from the equipment. Equipment size may be determined from equipment design specifications. Equipment contents may be determined using process knowledge.
(6)
(i) Except for pressure relief devices subject to 40 CFR 63.1107(h)(4), equipment such as low leg drains and equipment subject to the requirements specified in paragraph (f) of Table 7 to § 63.1103(e) are not subject to this paragraph (e)(6) of this section.
(ii) Open-ended valves or lines that use a cap, blind flange, plug, or second valve and follow the requirements specified in § 60.482-6(a)(2), (b), and (c) or follow requirements codified in another regulation that are the same as § 60.482-6(a)(2), (b), and (c) are not subject to this paragraph (e)(6) of this section.
(7)
(i) During normal operations, conduct daily inspections of the firebox burners and repair all burners that are impinging on the radiant tube(s) as soon as practical, but not later than 1 calendar day after the flame impingement is found. The owner or operator may delay burner repair beyond 1 calendar day using the procedures specified in paragraphs (e)(7)(i)(A) and (B) of this section provided the repair cannot be completed during normal operations, the burner cannot be shutdown without significantly impacting the furnace heat distribution and firing rate, and action is taken to reduce flame impingement as much as possible during continued operation. An inspection may include, but is not limited to: visual inspection of the radiant tube(s) for localized bright spots (this may be confirmed with a temperature gun), use of luminescent powders injected into the burner to illuminate the flame pattern, or identifying continued localized coke build-up that causes short runtimes between decoking cycles. A repair may include, but is not limited to: Taking the burner out of service, replacing the burner, adjusting the alignment of the burner, adjusting burner configuration, making burner air corrections, repairing a malfunction of the fuel liquid removal equipment, or adding insulation around the radiant tube(s).
(A) If a shutdown for repair would cause greater emissions than the potential emissions from delaying repair, repair must be completed following the next planned decoking operation (and before returning the ethylene cracking furnace back to normal operations) or during the next ethylene cracking furnace complete shutdown (when the ethylene cracking furnace firebox is taken completely off-line), whichever is earlier.
(B) If a shutdown for repair would cause lower emissions than the potential emissions from delaying repair, then shutdown of the ethylene cracking furnace must immediately commence and the repair must be completed before returning the ethylene cracking furnace back to normal operations.
(ii) During decoking operations, beginning before the expected end of the air-in decoke time, continuously monitor (or use a gas detection tube or equivalent sample technique every three hours to monitor) the CO
(iii) During decoking operations, continuously monitor the temperature at the radiant tube(s) outlet when air is being introduced to ensure the coke combustion occurring inside the radiant tube(s) is not so aggressive (
(iv) After decoking, but before returning the ethylene cracking furnace back to normal operations, verify that decoke air is no longer being added.
(v) After decoking, but before returning the ethylene cracking furnace back to normal operations and/or during normal operations, inject materials into the steam or feed to reduce coke formation inside the radiant tube(s) during normal operation.
(8)
(i) Prior to decoking operation, inspect the applicable ethylene cracking furnace isolation valve(s) to confirm that the radiant tube(s) being decoked is completely isolated from the ethylene production process so that no emissions generated from decoking operations are sent to the ethylene production process. If poor isolation is identified, then the owner or operator must rectify the isolation issue prior to continuing decoking operations to prevent leaks into the ethylene production process.
(ii) Prior to returning the ethylene cracking furnace to normal operations after a decoking operation, inspect the applicable ethylene cracking furnace isolation valve(s) to confirm that the radiant tube(s) that was decoked is completely isolated from the decoking pot or furnace firebox such that no emissions are sent from the radiant tube(s) to the decoking pot or furnace firebox once the ethylene cracking furnace returns to normal operation. If poor isolation is identified, then the owner or operator must rectify the isolation issue prior to continuing normal operations to prevent product from escaping to the atmosphere through the decoking pot or furnace firebox.
(9)
(i) The second sentence of § 63.181(d)(5)(i) of subpart H.
(ii) The second sentence of § 63.983(a)(5) of subpart SS.
(iii) The phrase “except during periods of start-up, shutdown and malfunction as specified in the referencing subpart” in § 63.984(a) of subpart SS.
(iv) The phrase “except during periods of start-up, shutdown and malfunction as specified in the referencing subpart” in § 63.985(a) of subpart SS.
(v) The phrase “other than start-ups, shutdowns, or malfunctions” in § 63.994(c)(1)(ii)(D) of subpart SS.
(vi) Section 63.996(c)(2)(ii) of subpart SS.
(vii) The last sentence of § 63.997(e)(1)(i) of subpart SS.
(viii) Section 63.998(b)(2)(iii) of subpart SS.
(ix) The phrase “other than periods of startups, shutdowns, and malfunctions” from § 63.998(b)(5)(i)(A) of subpart SS.
(x) The phrase “other than a start-up, shutdown, or malfunction” from § 63.998(b)(5)(i)(B)(3) of subpart SS.
(xi) The phrase “other than periods of startups, shutdowns, and malfunctions” from § 63.998(b)(5)(i)(C) of subpart SS.
(xii) The phrase “other than a start-up, shutdown, or malfunction” from § 63.998(b)(5)(ii)(C) of subpart SS.
(xiii) The phrase “except as provided in paragraphs (b)(6)(i)(A) and (B) of this section” from § 63.998(b)(6)(i) of subpart SS.
(xiv) The second sentence of § 63.998(b)(6)(ii) of subpart SS.
(xv) Section 63.998(c)(1)(ii)(D) through (G) of subpart SS.
(xvi) Section 63.998(d)(3) of subpart SS.
(xvii) The phrase “may be included as part of the startup, shutdown, and malfunction plan, as required by the referencing subpart for the source, or” from § 63.1024(f)(4)(i) of subpart UU.
(xviii) The phrase “(except periods of startup, shutdown, or malfunction)” from § 63.1026(e)(1)(ii)(A) of subpart UU.
(xix) The phrase “(except periods of startup, shutdown, or malfunction)” from § 63.1028(e)(1)(i)(A) of subpart UU.
(xx) The phrase “(except periods of startup, shutdown, or malfunction)” from § 63.1031(b)(1) of subpart UU.
(10)
(i) Remove liquids from the storage vessel as much as practicable;
(ii) Comply with one of the following:
(A) Reduce emissions of total organic HAP by 98 weight-percent by venting emissions through a closed vent system to a flare and meet the requirements of § 63.983 and paragraphs (e)(4) and (9) of this section.
(B) Reduce emissions of total organic HAP by 98 weight-percent by venting emissions through a closed vent system to any combination of non-flare control devices and meet the requirements specified in § 63.982(c)(1) and paragraph (e)(9) of this section.
(C) Reduce emissions of total organic HAP by 98 weight-percent by routing emissions to a fuel gas system or process and meet the requirements specified in § 63.982(d) and paragraph (e)(9) of this section.
(iii) Maintain records necessary to demonstrate compliance with the requirements in § 63.1108(a)(4)(ii) including, if appropriate, records of existing standard site procedures used to empty and degas (deinventory) equipment for safety purposes.
(c)
(a)
(5) Beginning no later than the compliance dates specified in § 63.1102(c), if emissions are vented through a closed vent system to a flare at an ethylene production affected source, then the owner or operator must comply with the requirements specified in § 63.1103(e)(4) instead of the requirements in § 63.987 and the provisions regarding flare compliance assessments at § 63.997(a) through (c).
(a) Each piece of equipment within a process unit that can reasonably be expected to contain equipment in organic HAP service is presumed to be in organic HAP service unless an owner or operator demonstrates that the piece of equipment is not in organic HAP service. For a piece of equipment to be considered not in organic HAP service, it must be determined that the percent organic HAP content can be reasonably expected not to exceed the percent by weight control applicability criteria specified in § 63.1103 for an affected source on an annual average basis. For purposes of determining the percent
(h)
(1)
(2)
(i) If the pressure relief device does not consist of or include a rupture disk, conduct instrument monitoring, as specified in § 63.1023(b) of subpart UU or § 63.180(b) and (c) of subpart H, no later than 5 calendar days after the pressure relief device returns to organic HAP gas or vapor service following a pressure release to verify that the pressure relief device is operating with an instrument reading of less than 500 ppm.
(ii) If the pressure relief device includes a rupture disk, either comply with the requirements in paragraph (h)(2)(i) of this section (and do not replace the rupture disk) or install a replacement disk as soon as practicable after a pressure release, but no later than 5 calendar days after the pressure release.
(iii) If the pressure relief device consists only of a rupture disk, install a replacement disk as soon as practicable after a pressure release, but no later than 5 calendar days after the pressure release. The owner or operator must not initiate startup of the equipment served by the rupture disk until the rupture disc is replaced.
(3)
(i) The owner or operator must equip each affected pressure relief device with a device(s) or use a monitoring system that is capable of:
(A) Identifying the pressure release;
(B) Recording the time and duration of each pressure release; and
(C) Notifying operators immediately that a pressure release is occurring. The device or monitoring system must be either specific to the pressure relief device itself or must be associated with the process system or piping, sufficient to indicate a pressure release to the atmosphere. Examples of these types of devices and systems include, but are not limited to, a rupture disk indicator, magnetic sensor, motion detector on the pressure relief valve stem, flow monitor, or pressure monitor.
(ii) The owner or operator must apply at least three redundant prevention measures to each affected pressure relief device and document these measures. Examples of prevention measures include:
(A) Flow, temperature, liquid level and pressure indicators with deadman switches, monitors, or automatic actuators. Independent, non-duplicative systems within this category count as separate redundant prevention measures.
(B) Documented routine inspection and maintenance programs and/or operator training (maintenance programs and operator training may count as only one redundant prevention measure).
(C) Inherently safer designs or safety instrumentation systems.
(D) Deluge systems.
(E) Staged relief system where the initial pressure relief device (with lower set release pressure) discharges to a flare or other closed vent system and control device.
(iii) If any affected pressure relief device releases to atmosphere as a result of a pressure release event, the owner or operator must perform root cause analysis and corrective action analysis according to the requirement in paragraph (h)(6) of this section and implement corrective actions according to the requirements in paragraph (h)(7) of this section. The owner or operator must also calculate the quantity of organic HAP released during each pressure release event and report this quantity as required in § 63.1110(e)(8)(iii). Calculations may be based on data from the pressure relief device monitoring alone or in combination with process parameter monitoring data and process knowledge.
(iv) The owner or operator must determine the total number of release events that occurred during the calendar year for each affected pressure relief device separately. The owner or operator must also determine the total number of release events for each pressure relief device for which the root cause analysis concluded that the root cause was a force majeure event, as defined in § 63.1103(e)(2).
(v) Except for pressure relief devices described in paragraphs (h)(4) and (5) of this section, the following release events from an affected pressure relief device are a violation of the pressure release management work practice standards.
(A) Any release event for which the root cause of the event was determined to be operator error or poor maintenance.
(B) A second release event not including force majeure events from a single pressure relief device in a 3-calendar year period for the same root cause for the same equipment.
(C) A third release event not including force majeure events from a single pressure relief device in a 3-calendar year period for any reason.
(4)
(ii) Before the compliance dates specified in § 63.1102(c), both the
(iii) The drain system (if applicable) referenced in paragraph (h)(4)(i) of this section must meet the applicable requirements specified in § 61.346 or § 63.136.
(5)
(i) Pressure relief devices in heavy liquid service, as defined in § 63.1020 of subpart UU.
(ii) Thermal expansion relief valves.
(iii) Pressure relief devices on mobile equipment.
(iv) Pilot-operated pressure relief devices where the primary release valve is routed through a closed vent system to a control device or back into the process, a fuel gas system, or drain system.
(v) Balanced bellows pressure relief devices where the primary release valve is routed through a closed vent system to a control device or back into the process, a fuel gas system, or drain system.
(6)
(i) You may conduct a single root cause analysis and corrective action analysis for a single emergency event that causes two or more pressure relief devices that are installed on the same equipment to release.
(ii) You may conduct a single root cause analysis and corrective action analysis for a single emergency event that causes two or more pressure relief devices to release, regardless of the equipment served, if the root cause is reasonably expected to be a
(iii) Except as provided in paragraphs (h)(6)(i) and (ii) of this section, if more than one pressure relief device has a release during the same time period, an initial root cause analysis must be conducted separately for each pressure relief device that had a release. If the initial root cause analysis indicates that the release events have the same root cause(s), the initial separate root cause analyses may be recorded as a single root cause analysis and a single corrective action analysis may be conducted.
(7)
(i) All corrective action(s) must be implemented within 45 days of the event for which the root cause and corrective action analyses were required or as soon thereafter as practicable. If an owner or operator concludes that no corrective action should be implemented, the owner or operator must record and explain the basis for that conclusion no later than 45 days following the event.
(ii) For corrective actions that cannot be fully implemented within 45 days following the event for which the root cause and corrective action analyses were required, the owner or operator must develop an implementation schedule to complete the corrective action(s) as soon as practicable.
(iii) No later than 45 days following the event for which a root cause and corrective action analyses were required, the owner or operator must record the corrective action(s) completed to date, and, for action(s) not already completed, a schedule for implementation, including proposed commencement and completion dates.
(8)
(a)
(4)(i) For acrylic and modacrylic fiber production affected sources and polycarbonate production affected sources, and beginning no later than the compliance dates specified in § 63.1102(c), ethylene production affected sources, the emission limitations and established parameter ranges of this part shall apply at all times except during periods of non-operation of the affected source (or specific portion thereof) resulting in cessation of the emissions to which this subpart applies. Equipment leak requirements shall apply at all times except during periods of non-operation of the affected source (or specific portion thereof) in which the lines are drained and depressurized resulting in cessation of the emissions to which the equipment leak requirements apply.
(ii) At all times, the owner or operator must operate and maintain any affected source, including associated air pollution control equipment and monitoring equipment, in a manner consistent with safety and good air pollution control practices for minimizing emissions. The general duty
(b) * * *
(1) * * *
(ii) Excused excursions are not allowed for acrylic and modacrylic fiber production affected sources, polycarbonate production affected sources, and beginning no later than the compliance dates specified in § 63.1102(c), ethylene production affected sources. For all other affected sources, including ethylene production affected sources prior to the compliance dates specified in § 63.1102(c), an excused excursion, as described in § 63.998(b)(6)(ii), is not a violation.
(2)
(3)
(4) * * *
(i)
(ii) * * *
(B) For acrylic and modacrylic fiber production affected sources, polycarbonate production affected sources, and beginning no later than the compliance dates specified in § 63.1102(c), ethylene production affected sources, performance tests shall be conducted under such conditions as the Administrator specifies to the owner or operator based on representative performance of the affected source for the period being tested. Representative conditions exclude periods of startup and shutdown unless specified by the Administrator or an applicable subpart. The owner or operator may not conduct performance tests during periods of malfunction. The owner or operator must record the process information that is necessary to document operating conditions during the test and include in such record an explanation to support that such conditions represent normal operation. Upon request, the owner or operator shall make available to the Administrator such records as may be necessary to determine the conditions of performance tests.
(e)
(1) Retain records of the output of the monitoring device used to detect the presence of a pilot flame or flare flame as required in § 63.670(b) of subpart CC and the presence of a pilot flame as required in § 63.1103(e)(4)(vii)(D) for a minimum of 2 years. Retain records of each 15-minute block during which there was at least one minute that no pilot flame or flare flame is present when regulated material is routed to a flare for a minimum of 5 years. For each pressure-assisted multi-point flare that uses cross-lighting, retain records of each 15-minute block during which there was at least one minute that no pilot flame is present on each stage when regulated material is routed to a flare for a minimum of 5 years. You may reduce the collected minute-by-minute data to a 15-minute block basis with an indication of whether there was at least one minute where no pilot flame or flare flame was present.
(2) Retain records of daily visible emissions observations as specified in paragraphs (e)(2)(i) through (iv) of this section, as applicable, for a minimum of 3 years.
(i) To determine when visible emissions observations are required, the record must identify all periods when regulated material is vented to the flare.
(ii) If visible emissions observations are performed using Method 22 of 40 CFR part 60, appendix A-7, then the record must identify whether the visible emissions observation was performed, the results of each observation, total duration of observed visible emissions, and whether it was a 5-minute or 2-hour observation. Record the date and start time of each visible emissions observation.
(iii) If a video surveillance camera is used pursuant to § 63.670(h)(2) of subpart CC, then the record must include all video surveillance images recorded, with time and date stamps.
(iv) For each 2-hour period for which visible emissions are observed for more than 5 minutes in 2 consecutive hours, then the record must include the date and start and end time of the 2-hour period and an estimate of the cumulative number of minutes in the 2-hour period for which emissions were visible.
(3) The 15-minute block average cumulative flows for flare vent gas and, if applicable, total steam, perimeter assist air, and premix assist air specified to be monitored under § 63.670(i) of subpart CC, along with the date and time interval for the 15-minute block. If multiple monitoring locations are used to determine cumulative vent gas flow, total steam, perimeter assist air, and premix assist air, then retain records of the 15-minute block average flows for each monitoring location for a minimum of 2 years, and retain records of the 15-minute block average cumulative flows that are used in subsequent calculations
(4) The flare vent gas compositions specified to be monitored under § 63.670(j) of subpart CC. Retain records of individual component concentrations from each compositional analysis for a minimum of 2 years. If an NHVvg analyzer is used, retain records of the 15-minute block average values for a minimum of 5 years.
(5) Each 15-minute block average operating parameter calculated following the methods specified in § 63.670(k) through (n) of subpart CC, as applicable.
(6) All periods during which operating values are outside of the applicable operating limits specified in § 63.670(d) through (f) of subpart CC and § 63.1103(e)(4)(vii) when regulated material is being routed to the flare.
(7) All periods during which the owner or operator does not perform flare monitoring according to the procedures in § 63.670(g) through (j) of subpart CC.
(8) For pressure-assisted multi-point flares, if a stage of burners on the flare uses cross-lighting, then a record of any changes made to the distance between burners.
(9) For pressure-assisted multi-point flares, all periods when the pressure monitor(s) on the main flare header show burners are operating outside the range of the manufacturer's specifications. Indicate the date and time for each period, the pressure measurement, the stage(s) and number of burners affected, and the range of manufacturer's specifications.
(10) For pressure-assisted multi-point flares, all periods when the staging valve position indicator monitoring system indicates a stage of the pressure-assisted multi-point flare should not be in operation and when a stage of the pressure-assisted multi-point flare should be in operation and is not. Indicate the date and time for each period, whether the stage was supposed to be open, but was closed or vice versa, and the stage(s) and number of burners affected.
(11) Records of periods when there is flow of vent gas to the flare, but when there is no flow of regulated material to the flare, including the start and stop time and dates of periods of no regulated material flow.
(12) Records when the flow of vent gas exceeds the smokeless capacity of the flare, including start and stop time and dates of the flaring event.
(13) Records of the root cause analysis and corrective action analysis conducted as required in § 63.670(o)(3) of subpart CC and § 63.1103(e)(4)(iv), including an identification of the affected flare, the date and duration of the event, a statement noting whether the event resulted from the same root cause(s) identified in a previous analysis and either a description of the recommended corrective action(s) or an explanation of why corrective action is not necessary under § 63.670(o)(5)(i) of subpart CC.
(14) For any corrective action analysis for which implementation of corrective actions are required in § 63.670(o)(5) of subpart CC, a description of the corrective action(s) completed within the first 45 days following the discharge and, for action(s) not already completed, a schedule for implementation, including proposed commencement and completion dates.
(15) Records described in § 63.10(b)(2)(vi).
(f)
(1) The owner or operator must maintain standard site procedures used to deinventory equipment for safety purposes (
(2) If complying with the requirements of § 63.1103(e)(5)(i)(A) and the LEL at the time of the vessel opening exceeds 10 percent, records that identify the maintenance vent, the process units or equipment associated with the maintenance vent, the date of maintenance vent opening, and the LEL at the time of the vessel opening.
(3) If complying with the requirements of § 63.1103(e)(5)(i)(B) and either the vessel pressure at the time of the vessel opening exceeds 5 psig or the LEL at the time of the active purging was initiated exceeds 10 percent, records that identify the maintenance vent, the process units or equipment associated with the maintenance vent, the date of maintenance vent opening, the pressure of the vessel or equipment at the time of discharge to the atmosphere and, if applicable, the LEL of the vapors in the equipment when active purging was initiated.
(4) If complying with the requirements of § 63.1103(e)(5)(i)(C), records of the estimating procedures used to determine the total quantity of VOC in equipment and the type and size limits of equipment that contain less than 50 pounds of VOC at the time of maintenance vent opening. For each maintenance vent opening of equipment that contains greater than 50 pounds of VOC for which the deinventory procedures specified in paragraph (f)(1) of this section are not followed or for which the equipment opened exceeds the type and size limits established in the records specified in this paragraph, records that identify the maintenance vent, the process units or equipment associated with the maintenance vent, the date of maintenance vent opening, and records used to estimate the total quantity of VOC in the equipment at the time the maintenance vent was opened to the atmosphere.
(5) If complying with the requirements of § 63.1103(e)(5)(i)(D), identification of the maintenance vent, the process units or equipment associated with the maintenance vent, records documenting actions taken to comply with other applicable alternatives and why utilization of this alternative was required, the date of maintenance vent opening, the equipment pressure and LEL of the vapors in the equipment at the time of discharge, an indication of whether active purging was performed and the pressure of the equipment during the installation or removal of the blind if active purging was used, the duration the maintenance vent was open during the blind installation or removal process, and records used to estimate the total quantity of VOC in the equipment at the time the maintenance vent was opened to the atmosphere for each applicable maintenance vent opening.
(g)
(h)
(1) Records that document the day and time each inspection specified in § 63.1103(e)(7)(i) took place, the results of each inspection, and any repairs made to correct the flame impingement; and for any repair that is delayed beyond 1 calendar day, the records specified in paragraphs (h)(1)(i) through (iii) of this section.
(i) The reason for the delay.
(ii) An estimate of the emissions from shutdown for repair and an estimate of the emissions likely to result from delay of repair, and whether the requirements at § 63.1103(e)(7)(i)(A) or (B) were met.
(iii) The date the repair was completed or, if the repair has not been completed, a schedule for completing the repair.
(2) If the owner or operator chooses to monitor the CO
(3) If the owner or operator chooses to monitor the temperature at the radiant tube(s) outlet during decoking as specified in § 63.1103(e)(7)(iii), then for each decoking cycle, records must be kept for all measured temperature values and the target used to indicate a reduction in temperature of the inside of the radiant tube(s) is necessary.
(4) If the owner or operator chooses to comply with § 63.1103(e)(7)(iv), then records must be kept that document that decoke air is no longer being added after each decoking cycle.
(5) If the owner or operator chooses to treat steam or feed to reduce coke formation as specified in § 63.1103(e)(7)(v), then records must be kept that document that the planned treatment occurred.
(6) For each decoking operation of an ethylene cracking furnace subject to the requirements in § 63.1103(e)(8), the owner or operator must keep records that document the day each inspection took place and the results of each inspection where an isolation problem was identified including any repairs made to correct the problem.
(i)
(1) Records of the prevention measures implemented as required in § 63.1107(h)(3)(ii).
(2) Records of the number of releases during each calendar year and the number of those releases for which the root cause was determined to be a force majeure event. Keep these records for the current calendar year and the past five calendar years.
(3) For each release to the atmosphere, the owner or operator must keep the records specified in paragraphs (i)(3)(i) through (iv) of this section.
(i) The start and end time and date of each pressure release to the atmosphere.
(ii) Records of any data, assumptions, and calculations used to estimate of the mass quantity of each organic HAP released during the event.
(iii) Records of the root cause analysis and corrective action analysis conducted as required in § 63.1107(h)(3)(iii), including an identification of the affected pressure relief device, a statement noting whether the event resulted from the same root cause(s) identified in a previous analysis and either a description of the recommended corrective action(s) or an explanation of why corrective action is not necessary under § 63.1107(h)(7)(i).
(iv) For any corrective action analysis for which implementation of corrective actions are required in § 63.1107(h)(7), a description of the corrective action(s) completed within the first 45 days following the discharge and, for action(s) not already completed, a schedule for implementation, including proposed commencement and completion dates.
The revisions and additions read as follows:
(a)
(7) Startup, Shutdown, and Malfunction Reports described in § 63.1111 (except for acrylic and modacrylic fiber production affected sources, ethylene production affected sources, and polycarbonate production affected sources).
(9) Within 60 days after the date of completing each performance test (as defined in § 63.2), the owner or operator must submit the results of the performance tests, including any associated fuel analyses, required by this subpart according to the methods specified in paragraph (a)(9)(i) or (ii) of this section.
(10)(i) Beginning no later than the compliance dates specified in § 63.1102(c), within 60 days after the date of completing each performance test required by this subpart, the owner or operator must submit the results of the performance test following the procedures specified in paragraphs (a)(10)(i)(A) through (C) of this section.
(A)
(B)
(C)
(ii) Beginning no later than the compliance dates specified in § 63.1102(c), the owner or operator must submit all subsequent Notification of Compliance Status reports required under paragraph (a)(4) of this section in PDF format to the EPA via CEDRI, which can be accessed through EPA's CDX (
(iii) If you are required to electronically submit a report through CEDRI in the EPA's CDX, you may assert a claim of EPA system outage for failure to timely comply with the reporting requirement. To assert a claim of EPA system outage, the owner or operator must meet the requirements outlined in paragraphs (a)(10)(iii)(A) through (G) of this section.
(A) The owner or operator must have been or will be precluded from accessing CEDRI and submitting a required report within the time prescribed due to an outage of either the EPA's CEDRI or CDX systems.
(B) The outage must have occurred within the period of time beginning five business days prior to the date that the submission is due.
(C) The outage may be planned or unplanned.
(D) The owner or operator must submit notification to the Administrator in writing as soon as possible following the date you first knew, or through due diligence should have known, that the event may cause or has caused a delay in reporting.
(E) The owner or operator must provide to the Administrator a written description identifying:
(
(
(
(
(F) The decision to accept the claim of EPA system outage and allow an extension to the reporting deadline is solely within the discretion of the Administrator.
(G) In any circumstance, the report must be submitted electronically as soon as possible after the outage is resolved.
(iv) If you are required to electronically submit a report through CEDRI in the EPA's CDX, you may assert a claim of force majeure for failure to timely comply with the reporting requirement. To assert a claim of force majeure, the owner or operator must meet the requirements outlined in paragraphs (a)(10)(iv)(A) through (E) of this section.
(A) You may submit a claim if a
(B) The owner or operator must submit notification to the Administrator in writing as soon as possible following the date you first knew, or through due diligence should have known, that the event may cause or has caused a delay in reporting.
(C) The owner or operator must provide to the Administrator:
(
(
(
(
(D) The decision to accept the claim of force majeure and allow an extension to the reporting deadline is solely within the discretion of the Administrator.
(E) In any circumstance, the reporting must occur as soon as possible after the force majeure event occurs.
(d) * * *
(1)
(i) Except as specified in paragraphs (d)(1)(iv) and (v) of this section, the Notification of Compliance Status shall include the information specified in this subpart and the subparts referenced by this subpart. Alternatively, this information can be submitted as part of a title V permit application or amendment.
(iv) For each flare subject to the requirements in § 63.1103(e)(4), in lieu of the information required in § 63.987(b) of subpart SS, the Notification of Compliance Status shall include flare design (
(v) For pressure relief devices subject to the requirements of § 63.1107(h), the Notification of Compliance Status shall include the information specified in paragraphs (d)(1)(v)(A) and (B) of this section.
(A) A description of the monitoring system to be implemented, including the relief devices and process parameters to be monitored, and a description of the alarms or other methods by which operators will be notified of a pressure release.
(B) A description of the prevention measures to be implemented for each affected pressure relief device.
(e) * * *
(1)
(4)
(i) Records as specified in § 63.1109(e)(1) for each 15-minute block during which there was at least one minute when regulated material is routed to a flare and no pilot flame or flare flame is present. Include the start and stop time and date of each 15-minute block.
(ii) Visible emission records as specified in § 63.1109(e)(2)(iv) for each period of 2 consecutive hours during which visible emissions exceeded a total of 5 minutes.
(iii) The periods specified in § 63.1109(e)(7). Indicate the date and start time for the period, and the net heating value operating parameter(s) determined following the methods in § 63.670(k) through (n) of subpart CC as applicable.
(iv) For flaring events meeting the criteria in § 63.670(o)(3) of subpart CC and § 63.1103(e)(4)(iv):
(A) The start and stop time and date of the flaring event.
(B) The length of time that emissions were visible from the flare during the event.
(C) Results of the root cause and corrective actions analysis completed during the reporting period, including the corrective actions implemented during the reporting period and, if applicable, the implementation schedule for planned corrective actions to be implemented subsequent to the reporting period.
(v) For pressure-assisted multi-point flares, the periods of time when the pressure monitor(s) on the main flare header show the burners operating outside the range of the manufacturer's specifications.
(vi) For pressure-assisted multi-point flares, the periods of time when the staging valve position indicator monitoring system indicates a stage should not be in operation and is or when a stage should be in operation and is not.
(5)
(i) Identification of the maintenance vent and the equipment served by the maintenance vent.
(ii) The date and time the maintenance vent was opened to the atmosphere.
(iii) The LEL, vessel pressure, or mass of VOC in the equipment, as applicable, at the start of atmospheric venting. If the 5 psig vessel pressure option in § 63.1103(e)(5)(i)(B) was used and active purging was initiated while the LEL was 10 percent or greater, also include the LEL of the vapors at the time active purging was initiated.
(iv) An estimate of the mass of organic HAP released during the entire atmospheric venting event.
(6)
(7)
(i) For each control measure selected to minimize coke combustion emissions as specified in § 63.1103(e)(7)(ii) through (v), report instances where the control measures were not followed.
(ii) Report instances where an isolation valve inspection was not conducted according to the procedures specified in § 63.1103(e)(8).
(iii) For instances where repair was delayed beyond 1 calendar day as specified in § 63.1103(e)(7)(i), report the information specified in § 63.1109(h)(1).
(8)
(i) For pressure relief devices in organic HAP gas or vapor service, pursuant to § 63.1107(h)(1), report any instrument reading of 500 ppm or greater.
(ii) For pressure relief devices in organic HAP gas or vapor service subject to § 63.1107(h)(2), report confirmation that any monitoring required to be done during the reporting period to show compliance was conducted.
(iii) For pressure relief devices in organic HAP service subject to § 63.1107(h)(3), report each pressure release to the atmosphere, including duration of the pressure release and estimate of the mass quantity of each organic HAP released; the results of any root cause analysis and corrective action analysis completed during the reporting period, including the corrective actions implemented during the reporting period; and, if applicable, the implementation schedule for planned corrective actions to be implemented subsequent to the reporting period.
(g) * * *
(1)
(2)
(a)
(b)
(c)
(d) * * *
(2) Recordkeeping or reporting requirements may be waived upon written application to the Administrator if, in the Administrator's judgment, the affected source is achieving the relevant standard(s), or the source is operating under an extension of compliance, or the owner or operator has requested an extension of compliance and the Administrator is still considering that request. Electronic reporting to the EPA cannot be waived, and as such, compliance with the provisions of this paragraph does not relieve owners or operators of affected facilities of the requirement to submit electronic reports required in this subpart to the EPA.
(a) * * *
(2) Any such notice shall be published only after public notice and an opportunity for public comment.
(b) In delegating implementation and enforcement authority of this subpart to a state, local, or tribal agency under subpart E to this part, the authorities contained in paragraphs (b)(1) through (6) of this section are retained by the EPA Administrator and are not transferred to the State, local, or tribal agency.
(6) Approval of an alternative to any electronic reporting to EPA required by this subpart.
Office of the Comptroller of the Currency (OCC), Treasury; Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Farm Credit Administration (FCA); National Credit Union Administration (NCUA).
Notification and request for comment.
The OCC, Board, FDIC, FCA, and NCUA (collectively, the Agencies) propose to reorganize, revise, and expand the Interagency Questions and Answers Regarding Flood Insurance and solicit comment on all aspects of the amendments. To help lenders meet their responsibilities under Federal flood insurance law and to increase public understanding of their flood insurance regulations, the Agencies have prepared proposed new and revised guidance addressing the most frequently asked questions and answers about flood insurance. Significant topics addressed by the proposed revisions include the effect of major amendments to flood insurance laws with regard to the escrow of flood insurance premiums, the detached structure exemption, and force-placement procedures.
Comments on the proposed questions and answers must be submitted on or before September 4, 2020.
Interested parties are invited to submit written comments to:
•
•
•
•
•
You may review comments and other related materials that pertain to this action by any of the following methods:
•
The docket may be viewed after the close of the comment period in the same manner as during the comment period.
•
•
•
•
•
All public comments will be made available on the Board's website at
•
•
•
•
•
•
•
•
You may review copies of all comments we receive at our office in McLean, Virginia, or from our website at
•
•
•
•
The National Flood Insurance Act of 1968 created the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency
Congress expanded the NFIP by enacting the Flood Disaster Protection Act of 1973 (FDPA).
In connection with the 1996 joint rulemaking process, commenters asked the Agencies to clarify specific issues covering a wide spectrum of the proposed rule's provisions. The Agencies addressed many of these requests in the preamble to the joint final rule. The Agencies concluded, however, that given the number, level of detail, and diversity of the requests, guidance addressing technical compliance issues would be helpful and appropriate. The Federal Financial Institutions Examination Council (FFIEC) fulfilled that objective through the initial release of the Interagency Questions and Answers in 1997 (1997 Interagency Questions and Answers).
After notice and comment, the Agencies comprehensively updated the 1997 Interagency Questions and Answers in July 2009 (2009 Interagency Questions and Answers) through significant revision and reorganization. As part of the 2009 effort, the Agencies also proposed five new Q&As for comment relating to insurable value and force placement of flood insurance.
On October 17, 2011, the Agencies finalized two of the five new proposed Q&As from 2009, one relating to insurable value and one relating to force placement, and withdrew one Q&A regarding insurable value.
Before the Agencies could finalize the three re-proposed Q&As, the Federal flood insurance statutes were amended by two major pieces of legislation, the Biggert-Waters Flood Insurance Reform Act of 2012 (the Biggert-Waters Act) and the 2014 Homeowner Flood Insurance Affordability Act (HFIAA). The Biggert-Waters Act amended the requirements that the Agencies have authority to implement and enforce.
In October 2013, the Agencies jointly issued proposed rules to implement the escrow, force placement, and private flood insurance provisions of the Biggert-Waters Act.
The Agencies are releasing for public comment proposed revisions and new Interagency Q&As in light of the significant changes to flood insurance requirements pursuant to the Biggert-Waters Act and HFIAA as well as regulations issued to implement these laws. Further, over the years, the lending industry has requested that the Agencies provide additional guidance on flood insurance compliance issues on many occasions, including at conferences and through interagency webinars. Finally, pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), certain Agencies are directed to conduct a joint review of their regulations every 10 years and consider whether any of those regulations are outdated, unnecessary, or unduly burdensome.
Accordingly, the Agencies, in proposing these Interagency Questions and Answers for public comment, are addressing the commitment made in the EGRPRA Joint Report to Congress.
This 2020 proposal to reorganize, revise, and introduce new Interagency Q&As includes the introduction of new Q&As on escrow of flood insurance premiums, force placement of flood insurance, and the detached structures exemption. The Agencies are also proposing to revise and reorganize the existing Q&As into new categories by subject to enhance clarity and understanding for users, and improve efficiencies by making it easier to find information related to technical flood insurance topics. Once finalized, the new Interagency Questions and Answers will supersede the 2009 and the 2011 Interagency Questions and Answers and supplement other guidance or interpretations issued by the Agencies relative to loans in areas having special flood hazards. Along with the finalized new Interagency Questions and Answers, the Agencies plan to issue separately for notice and comment another set of proposed Q&As relating to the private flood insurance rule. In the interim, the Agencies have provided information regarding the private flood insurance rule that may serve as a resource in a webinar dated June 18, 2019.
The Agencies invite specific public comment on the proposed new and revised Interagency Questions and Answers. If lenders, community groups, or other parties have unanswered questions or comments about the Agencies' flood insurance regulations, they should submit them to the Agencies. The Agencies will consider including these Q&As in future guidance. Comments are also invited on whether the proposed Q&As are stated clearly and how they might be revised to be easier to read.
For ease of reference and in light of the increased number of subjects covered that address complex issues, the Agencies propose to reorganize the Interagency Questions and Answers to provide a more logical flow of questions through the flood insurance process for lenders, servicers, regulators, and policyholders. The table below sets forth the current categories and the corresponding new, reorganized categories for purposes of comparison:
Moreover, the Agencies also propose a new system of designation for the Q&As. Rather than numbering the Q&As successively through all the categories, each Q&A will be designated by the category to which it belongs and then designated in numerical order for that particular category. For example, Q&As in the first category,
For ease of reference, the following terms are used throughout this document: “Act” refers to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as revised by the National Flood Insurance Reform Act of 1994, Biggert-Waters Flood Insurance Reform Act of 2012 and Homeowner Flood Insurance Affordability Act (codified at 42 U.S.C. 4001
The heading to proposed section I has been streamlined to provide greater clarity with no intended change in substance or meaning. This new proposed general applicability section would include current Q&As 1-7 relating to residential buildings and, for organizational purposes, would incorporate current section V's Q&As 24 and 25, which address flood insurance requirements for nonresidential buildings. The Agencies propose to re-designate current Q&A 1 as proposed Q&A Applicability 1 with only minor language modifications, with no intended change in substance or meaning. Current Q&A 24 would be re-designated as proposed Q&A Applicability 2 and revised so that the proposed answer depends on whether buildings with limited utility meet the detached structure exemption for purposes of mandating flood insurance for such buildings. Current Q&A 25 would be re-designated as proposed Q&A Applicability 3 and current Q&As 2, 3, 5-7 would be re-designated as proposed Q&As Applicability 4, 5, 6-8, respectively. Current Q&A 4 would be re-designated as proposed Q&A Applicability 9.
The Agencies are proposing revisions to proposed Q&A Applicability 3 to include an example to provide greater clarity and to improve readability, with no intended change in substance or meaning. Proposed Q&A Applicability 4 would be revised from current Q&A 2 to also address a lender's responsibility if a building or mobile home that secures a loan is not located within an SFHA. The proposed answer would be expanded to state that a lender may, at its discretion and subject to applicable State law, require flood insurance for property outside of SFHAs for risk management purposes as a condition of a loan being made. Proposed Q&As Applicability 5, 7, 8, and 9 would have only minor language modifications for greater clarity, with no intended change in substance or meaning. Proposed Q&A Applicability 6 would remain unchanged from current Q&A 5.
Lastly, the Agencies propose to add three new Q&As, Applicability 10, 11, and 12. Proposed new Q&A Applicability 10 would address a lender's obligations when participating in a multi-tranche credit facility, specifically whether a lender is expected to consider any triggering event and any cashless roll of which it becomes aware in any tranche. The proposed answer would provide that a multi-tranche credit facility is analogous to a loan syndication or participation and that the Agencies do not expect a lender participating in one tranche in a multi-tranche credit facility to be responsible for taking action to comply with flood insurance requirements in connection with a triggering event or cashless roll that occurs in a tranche in which the lender does not participate. Furthermore, the proposed answer clarifies that the Agencies expect a lender participating in a multi-tranche credit facility to perform upfront due diligence to determine whether the lead lender has adequate controls to monitor the loan on an ongoing basis for compliance with flood insurance requirements. Proposed new Q&A Applicability 11 would clarify that an automatic extension of a credit facility agreed upon by the borrower and lender in the original loan agreement would not constitute a triggering event for purposes of the federal flood insurance requirements. Proposed new Q&A Applicability 12, which would be based on guidance previously issued by the Agencies,
Current section III would be moved to proposed section II and significantly expanded with the addition of six new
As stated above, the Agencies propose to add six new Q&As to address the application of the detached structure exemption and related lender obligations. The new proposed Q&As would be designated as Exemptions 2-7. This set of Q&As on the detached structure exemption responds to a request for more guidance related to this exemption in the EGRPRA report. Proposed new Q&A Exemptions 2 would be added to address whether a lender must take a security interest in the primary residential structure for a detached structure to be eligible for the detached structure exemption. The proposed answer would provide that although a lender does not have to take a security interest in the primary residential structure, it would need to evaluate the uses of the detached structures to confirm each is eligible for the exemption. Proposed new Q&A Exemptions 3 would clarify that a flood hazard determination is required for a detached structure even though flood insurance coverage is not required on such structure because it is used to identify the number and type of structures present on the property. Proposed new Q&A Exemptions 4 would provide that a lender or its servicer may cancel its flood insurance requirement on an eligible detached structure that is currently insured, but that a lender alternatively may want to continue to require flood insurance coverage for detached structures of relatively high value if such coverage would be beneficial to the borrower and the lender. Proposed new Q&A Exemptions 5 would address whether a property being re-mapped into an SFHA triggers a review of the intended use of each detached structure. Specifically, the proposed answer states that although there is no duty to monitor the status of a detached structure following the lender's initial determination, sound risk management practices may lead a lender to conduct scheduled periodic reviews that track the need for flood insurance on properties securing loans in its portfolio.
Proposed new Q&A Exemptions 6 would discuss whether a lender, following a review of its loan portfolio, may determine it would no longer require flood insurance on a detached structure in an SFHA if the structure does not provide contributory value. The Agencies propose to clarify that, while a lender or servicer could initiate such a review, the Regulation does not permit the exemption of structures from the mandatory flood insurance purchase requirement based solely on their contributory value, but instead on whether a specific exemption applies. Lastly, proposed new Q&A Exemptions 7 would address whether a building would qualify as a detached structure if it is joined to another building by a stairway or covered walkway. The proposed answer would provide that for purposes of the detached structure exemption, a structure is “detached” from the primary residential structure if it is not joined by any structural connection to that structure.
For organizational purposes, current section XI would be moved to proposed section III, logically following the discussions of applicability and exemptions from flood insurance requirements. The heading to proposed section III would be expanded to cover the various types of flood insurance policies available to borrowers. Proposed section III would cover questions related to flood insurance policy coverage issues under the NFIP and private flood insurance. Current Q&A 63 would be deleted because it is inconsistent with the Agencies' final rule implementing the private flood insurance provision of the Biggert-Waters Act.
Specifically, proposed new Coverage 1 would list several factors a lender may consider in determining whether a flood insurance policy issued by a private insurer or mutual aid plan provides sufficient protection of the loan. These factors may include whether: (1) A policy's deductibles are reasonable based on the borrower's financial condition; (2) the insurer provides adequate notice of cancellation to the mortgagor and mortgagee to allow for timely force placement of flood insurance, if necessary; (3) the terms and conditions of the policy with respect to payment per occurrence or per loss and aggregate limits are adequate to protect the regulated lending institution's interest in the collateral; (4) the flood insurance policy complies with applicable State insurance laws; and (5) the private insurance company has the financial solvency, strength, and ability to satisfy claims. A lender may include its analysis of such factors in documenting its conclusion of sufficient protection of the loan when accepting flood insurance coverage issued by a private insurer or mutual aid society in satisfaction of the mandatory purchase requirement.
Proposed Q&A Coverage 2 would be slightly revised to address when a lender may rely on a private insurance policy providing portfolio-wide coverage. The proposed answer would be revised by removing the reference to criteria set forth by FEMA and including language addressing a lender's reliance on a policy that provides portfolio-wide coverage. Lastly, proposed new Q&A Coverage 3 would explain when mandatory flood insurance on a designated loan needs to be in place during the closing process. The proposed answer would clarify that a lender should use the loan “closing date” to determine the date by which flood insurance should be in place for a designated loan. FEMA deems the “closing date” as the date the ownership of the property transfers to the new owner based on State law. The proposed answer further explains the difference between “wet funding” and “dry funding” States and how it impacts the “closing date” for purposes of flood insurance.
For organizational purposes, current section XII would be moved to proposed section IV. Accordingly, current Q&As 65-68 would be re-designated as proposed Q&As SFHDF 1-4, respectively, with only minor language modifications and no intended change in substance or meaning.
For organizational purposes, current section XIII would be moved to proposed section V. Current Q&As 69 and 70 would be re-designated as proposed Q&As Fees 1 and 2 with only minor changes and no intended change in substance or meaning.
For organizational purposes, current section XIV would be moved to proposed section VI. Current Q&As 71 and 72 would be re-designated as proposed Q&As Zone 1 and 2. The Agencies propose to revise current Q&A 71, re-designated as proposed Q&A Zone 1, to reflect a change in the Agencies' expectations regarding a lender's obligation when there is a discrepancy between the flood determination form and the flood insurance policy. A lender no longer would be required to attempt to resolve the discrepancy, but the lender should consider documenting the discrepancy in the loan file. If the flood determination form indicates that the building securing the loan is in an SFHA, the lender must require the appropriate amount of insurance coverage and would not otherwise be required to attempt to resolve the discrepancy as previously indicated in current Q&A 71. The Agencies note in the proposed answer that the issue of flood zone discrepancies is an insurance rating issue, not a coverage issue. Proposed Q&A Zone 2 would clarify that a lender is not in violation of the Regulation if there is a discrepancy between the flood zone on the flood determination form and the flood zone on the policy declarations page. Lastly, proposed new Q&A Zone 3 would explain what a lender should do when a borrower disputes the lender's flood zone determination that a building securing the loan is located in an SFHA requiring mandatory flood insurance coverage.
For organizational purposes, current section XV would be moved to proposed section VII. This section would include current Q&As 73-76 and 78-80 and would be re-designated as proposed Q&As Notice 1-7, respectively. Proposed Q&A Notice 1 would have minor language modifications for purposes of clarity with no change in meaning or substance. Proposed Q&A Notice 2 would be amended to conform more closely to the Regulation. As modified, the answer to proposed Q&A Notice 2 would state that a lender must provide the Notice of Special Flood Hazards to the borrower within a reasonable time before the completion of the transaction, even if the lender only learns where the mobile home will be located just prior to closing and delivery of the Notice of Special Flood Hazards would delay closing. Proposed Q&A Notice 3 would remain unchanged from current Q&A 75. For organizational purposes, current Q&As 76 and 77 would be consolidated, with no substantive changes, into proposed Q&A Notice 4 in this section. Current Q&A 78 would be re-designated as Notice 5 and revised to list examples of what constitutes an acceptable record of receipt. Current Q&As 79 and 80 would be re-designated as Q&As Notice 6 and 7, respectively, and would be revised nonsubstantively to provide additional clarity.
The Agencies propose to move current section II to proposed section VIII. The heading to proposed section VIII would be amended for streamlining purposes. Current Q&As 8, 9, and 11-17 would be re-designated as Amount 1, Amount 2, and Amount 3-9 respectively. Proposed Q&A Amount 1 would discuss NFIP coverage limits more fully to include coverage for condominiums and contents coverage. The proposed answer would provide that for single-family and two-to-four family or individually-owned condominium units insured under the Dwelling Form policy, the maximum limit is $250,000. For a residential condominium building insured under the Residential Condominium Building Association Policy (RCBAP) form, the maximum amount of insurance available is $250,000 multiplied by the number of units. For all other buildings insured under the General Property Form, the maximum limit of building coverage available is $500,000. The maximum limit for contents insured under the Dwelling Form and RCBAP is $100,000 total (not per unit) and $500,000 for contents insured under the General Property Form. Proposed Q&A Amount 2, which defines “insurable value,” would be revised to remove references to the rescinded FEMA
Proposed Q&A Amount 3 would be revised to include more detailed definitions from the NFIP
Current section IV would be moved to proposed section IX and would include current Q&As 19-23, which would be re-designated as proposed Q&As Construction 1-5, respectively. The Agencies propose minor changes to proposed Q&As Construction 1 and Construction 2 for purposes of clarification. The Agencies would revise proposed Q&A Construction 3 to accurately cite to the NFIP
The heading to proposed section X would be expanded to include other multi-family dwellings such as cooperatives. This section would include current Q&As 26-33, which would be re-designated as proposed Q&As Condo and Co-Op 1-8, respectively. Proposed Q&As Condo and Co-Op 1, Condo and Co-Op 2, and Condo and Co-Op 7 would remain generally unchanged. Proposed Q&As Condo and Co-Op 3, 4, 5, 6, and 8 would have minor revisions to provide greater clarity or accurate references with no intended changes in substance or meaning. A new proposed Q&A Condo and Co-Op 9 would be added to proposed section X to address flood insurance requirements for loans secured by a unit in a cooperative building located in an SFHA. The proposed answer provides that a loan to a cooperative unit owner is not a designated loan subject to the Act or Regulation because the unit owner does not own a title to the building but simply the right to occupy a particular unit based on the cooperative ownership structure.
The heading to section XI would be amended for purposes of clarity. This section would include current Q&As 34, 35 and 36-43, which would be re-designated as Other Security Interests 1, Other Security Interests 2, and Other Security Interests 4-9 and 11-12, respectively. Proposed Q&As Other Security Interests 1, 2, 5, 6, 8, 11, and 12 would remain substantively unchanged. A new proposed Q&A Other Security Interests 3 would be added to address flood insurance coverage requirements for a line of credit secured by improved real property located in an SFHA. The proposed answer would provide alternative approaches depending on when the lender requires flood insurance to be in place. Proposed Q&A Other Security Interests 4 would be amended slightly with no intended changes in substance or meaning. Proposed Q&A Other Security Interests 7 would be revised to clarify the application of Federal flood insurance requirements when both a building and its contents secure a loan. Proposed Q&A Other Security Interests 9 would be revised to clarify the impact of including language regarding contents taken as security for a loan in the loan agreement. Proposed new Q&A Other Security Interests 10 would indicate that flood insurance is required if the lender takes a security interest in contents regardless of whether that security interest is perfected.
With the passage of HFIAA, the escrow requirements for flood insurance premiums have been significantly revised through the introduction of new escrow requirements that are not dependent on whether other insurance or taxes are escrowed, lender and loan-related exceptions to those requirements, and the requirement for an escrow notice. Accordingly, the Agencies propose to revise the discussion of escrow requirements by designating four sections to address escrow considerations. The first section, proposed section XII, would include Q&As covering the general escrow requirement for flood insurance premiums and fees. The second section, proposed section XIII, would include Q&As related to the small lender exception to flood insurance escrow requirements. Proposed section XIV, the third section, would include Q&As related to loan-related exceptions to the requirement to escrow flood insurance premiums and fees. These sets of Q&As on the escrow of flood insurance premiums and fees respond to a request for more guidance related to the escrow requirement in the EGRPRA report.
Proposed new section XII would contain two Q&As from current section IX and five new proposed Q&As. Specifically, current Q&As 51 and 52 would be included in proposed section XII and re-designated as Escrow 5 and Escrow 1, respectively. Proposed Q&A Escrow 1 would be significantly revised from current Q&A 52 to address the general question of when escrow accounts for flood insurance premiums and fees must be established. The proposed revised answer would explain that the new escrow requirement applies only upon a triggering event and would not apply if either the small lender exception or any of the loan-related exceptions apply. The proposed revised answer also would address a lender's escrow obligations if the lender no longer qualifies for the small lender exception. Proposed new Q&A Escrow 2 would clarify that a lender must escrow flood insurance premium payments even if it does not escrow for taxes or homeowner's insurance. Proposed new Q&A Escrow 3 would state that a lender must escrow force-placed flood insurance premium payments because there is no exception for force-placed insurance under the Act or Regulation. Proposed new Q&A Escrow 4 would discuss whether flood insurance premium payments must be escrowed when a loan has not experienced a triggering event (a making, increase, renewal, or extension) but the loan has experienced a non-triggering event, such as a loan modification, a FEMA remapping, or the assumption of the loan by a new borrower. The Agencies explain in the proposed answer that, subject to certain exceptions, until a loan experiences a triggering event, the lender is not required to escrow flood insurance premiums and fees unless: (i) A borrower requests the escrow in connection with the requirement that the lender provide an option to escrow for outstanding loans; or (ii) the lender determines that a loan exception to the escrow requirement no longer applies.
The Agencies propose revisions to current Q&A 51, which has been re-designated as proposed Q&A Escrow 5, to reflect updates to clarify that multi-family buildings or mixed-use properties are included in the definition of “residential improved real estate” and therefore are subject to the escrow requirement unless an exception applies. New proposed Q&A Escrow 6 would address the situation in which a junior lienholder determines that the primary lienholder does not have sufficient flood insurance coverage in place and is also not escrowing for flood insurance. The proposed answer would clarify that if the primary lienholder has not obtained adequate flood insurance, the junior lienholder would need to ensure adequate flood insurance is in place and also would need to escrow for that flood insurance. The proposed answer also would indicate that the escrow requirements would not apply to a junior lien that is a home equity line of credit (HELOC), since HELOCs have a separate escrow exception under the Act and Regulation. New proposed Q&A Escrow 7 addresses whether a lender or its servicer must escrow when real
As previously discussed, new section XIII would include seven new proposed Q&As related to the small lender exception to the requirement to escrow flood insurance premiums. New proposed Q&A Small Lender Exception 1 would specify that the $1 billion threshold for the small lender exception would be based on assets held at the regulated financial institution level and not at the holding company level. New proposed Q&A Small Lender Exception 2 would discuss whether a qualifying lender must escrow flood insurance premiums if it was previously required to escrow only under the Higher-Priced Mortgage Loan (HPML) rules
New proposed Q&A Small Lender Exception 5 would discuss whether the option to escrow is required for: (1) All outstanding loans not excepted from the escrow requirement and secured by residential real estate and (2) outstanding loans not secured by buildings located in an SHFA. The proposed answer would clarify that the option to escrow notice requirement only applies to lenders who have a change in status and no longer qualify for the small lender exception. Such lenders will be required to provide the option to escrow notice by September 30 of the first calendar year in which the lender has had a change in status for all outstanding designated loans secured by residential improved real estate or a mobile home as of July 1 of the first calendar year in which the lender no longer qualifies for the small lender exception. The proposed answer would also clarify that the option to escrow requirement does not apply to loans or lenders that are excepted by the Regulation from the escrow requirement nor does the notice requirement apply to loans not subject to the mandatory flood insurance purchase requirement. New proposed Q&A Small Lender Exception 6 would explain that a lender must send to a borrower a notice of the option to escrow flood insurance premium payments when the borrower has previously waived escrow for flood insurance because it is possible the borrower's circumstances have changed and, if offered another chance to escrow, the borrower may desire to do so. Lastly, new proposed Q&A Small Lender Exception 7 would make clear that lenders who qualify for the small lender exception are not required to provide borrowers with either the escrow notice or the option to escrow notice.
New section XIV would include five Q&As regarding the loan-related exceptions to the escrow requirement. Current Q&A 55 would be re-designated as proposed Q&A Loan Exceptions 1 and revised to address whether escrow accounts must be set up for commercial loans secured by residential buildings based on the new loan-related exceptions. Specifically, the proposed answer would clarify that extensions of credit primarily for business, commercial, or agricultural purposes are not subject to the escrow requirement even if such loans are secured by residential improved real estate or a mobile home. New proposed Q&A Loan Exceptions 2 would indicate that construction-permanent loans that have a construction phase before the loan converts into permanent financing do not qualify for the 12-month exception from escrow even if one phase of the loan is for 12 months or less. New proposed Q&A Loan Exceptions 3 would clarify that a subordinate lienholder must begin to escrow as soon as reasonably practicable after it becomes aware that it has moved into the primary lien position on a designated loan subject to the escrow requirement. Current Q&A 56 would be re-designated as proposed Q&A Loan Exceptions 4 and revised to address an escrow account for insured real property covered by an RCBAP. The proposed answer would note that while escrow is not required for property covered by an RCBAP, if the RCBAP coverage is inadequate and the borrower obtains a separate dwelling policy, escrow would be required for such a policy unless an escrow exception applies. Lastly, new proposed Q&A Loan Exceptions 5 would discuss whether there is an exception to the escrow requirement for loans secured by multi-family buildings. The Agencies would make clear in the proposed answer that escrow requirements do not apply to a loan that is an extension of credit primarily for business, commercial, or agricultural purposes, even if the loan is secured by residential real estate such as a multi-family building, nor would it apply to a loan secured by a particular unit in a multi-family residential building if a condominium association, cooperative, homeowners association, or other applicable group provides an adequate policy and pays for the insurance as a common expense. Otherwise, under the proposed answer, the escrow requirements generally would apply to
For organizational purposes, the Agencies propose to move current section X to proposed section XV. This section would include current Q&As 57-62 and add ten new Q&As. This set of Q&As responds to a request for more guidance related to force placement of flood insurance from commenters through the EGRPRA process. Current Q&A 57, re-proposed in 2011 but not finalized, would be re-designated as proposed Q&A Force Placement 1 and would discuss the requirements that must be fulfilled before force placement can occur, as well as the notice requirements a lender must follow prior to force placing flood insurance. The Agencies explain in the proposed answer that if a lender, or a servicer acting on its behalf, determines at any time during the term of a designated loan, that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required, then the lender or its servicer must notify the borrower that the borrower should obtain flood insurance, at the borrower's expense, in an amount at least equal to the amount required. The proposed answer further provides that before the lender or service must force place insurance, if the lender or servicer is aware that a borrower has obtained insurance that otherwise satisfies the flood insurance requirements but in an insufficient amount, the lender or servicer should inform the borrower an additional amount of insurance is needed in order to comply with the Regulation. Finally, the proposed answer would specify that if the borrower fails to obtain flood insurance within 45 days after notification, then the lender or its servicer must purchase insurance on the borrower's behalf at that time. The proposed answer explains that the lender must force place flood insurance for the full amount required under the Regulation, or if the borrower purchases flood insurance that otherwise satisfies the flood insurance requirements, but in an insufficient amount, the lender would be required to force place only for the “insufficient amount,” that is, the difference between the amount the borrower insured and the amount of flood insurance required under the Regulation.
Additionally, while not required under the Act or the Regulation, the Agencies indicate that a lender or its servicer could include in the notice to the borrower the amount of flood insurance needed to satisfy the statutory requirement. By providing this information, the lender or its servicer can help ensure that a borrower obtains the appropriate amount of insurance.
New proposed Q&A Force Placement 2 would clarify that the Regulation requires the lender, or its servicer, to send the borrower the force-placement notice upon making a determination that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under the Regulation.
Current Q&A 58 would be re-designated as proposed Q&A Force Placement 3 and would remain unchanged. Proposed Q&A 60, re-proposed in 2011 but not finalized, would be re-designated as proposed Q&A Force Placement 4 and would discuss whether a lender can satisfy its notice requirement by sending the force-placement notice to the borrower prior to the expiration of the flood insurance policy. The Agencies would specifically state in the proposed answer that a lender or servicer must send a notice upon determining that the collateral property securing the loan is either not covered by flood insurance or the insurance is inadequate. Although the proposed answer provides that a lender may send notice prior to the expiration date as a courtesy, the lender or servicer is still required to send notice upon determining the flood insurance policy has actually lapsed or is determined to be insufficient in order to meet the statutory requirement. Current Q&A 61 would be re-designated as proposed Q&A Force Placement 5 and would contain minor revisions for clarity with no change in meaning or substance. New proposed Force Placement 6 would clarify that, once a lender makes a determination that a designated loan has no or insufficient flood insurance coverage, the lender must notify the borrower and, if the borrower fails to obtain sufficient flood insurance coverage within 45 days after the original notice, the lender must purchase coverage on the borrower's behalf and may not extend the period for obtaining force-placed coverage by sending another force-placement notice during that time. New proposed Q&A Force Placement 7 would address when a force-placed policy should begin to provide coverage and give an example. Specifically, the proposed answer would state that a lender's new force-placed policy should begin to provide coverage the day after the borrower's existing policy expires. The proposed answer would also state that a lender or its servicer may not require the borrower to pay for double coverage and that the Regulation requires a lender or servicer to refund the borrower for any periods of overlap between the borrower's policy and the force-placed policy.
Current Q&A 59 would be re-designated as proposed Q&A Force Placement 8 and would be significantly revised to discuss more fully the minimum amount of flood insurance coverage that is statutorily required and to illustrate this point through a hypothetical example. Specifically, the proposed answer would illustrate that if the outstanding principal balance is the basis for the minimum amount of required flood insurance, the lender must ensure that the force-placed policy amount covers the existing loan balance plus any additional force-placed premium and fees that will be added to the loan balance.
Current Q&A 62 would be re-designated as proposed Q&A Force Placement 9 and would clarify that a lender or servicer may charge a borrower for the cost of force-placed insurance beginning on the date of lapse or insufficient coverage, and would not have to wait 45 days after providing notification to force place insurance. Lenders that monitor loans secured by property located in an SFHA for continuous coverage of flood insurance help ensure that they complete the force placement of flood insurance in a timely manner and minimize any gaps in coverage and any charge to the borrower for coverage for a timeframe prior to the lender's or its servicer's date of discovery and force placement. The proposed answer would explain that if a lender or its servicer, despite its monitoring efforts, discovers a loan with no or insufficient coverage, it may charge for the cost of premiums and fees incurred by the lender or servicer in purchasing the flood insurance on the borrower's behalf, including premiums and fees incurred for coverage beginning on the date of lapse, if the lender has purchased a policy on the borrower's behalf and that policy was effective as of the date of the insufficient coverage.
The Agencies propose to add new Q&A Force Placement 10 to discuss whether the addition of the amount of force-placed insurance policy premiums and fees to the outstanding balance of a loan would constitute an “increase” that would trigger the applicability of flood insurance regulatory requirements. In the answer to proposed Q&A Force Placement 10, the Agencies discuss three options that the Agencies understand lenders currently use to
New proposed Q&A Force Placement 11 would address the sufficiency of evidence of flood insurance in connection with refunding premiums paid by a borrower for force-placed insurance during any period of overlap with borrower-purchased insurance. The proposed answer would provide that as stated in the Regulation, a lender is required to refund premiums paid by a borrower for force-placed insurance during any period of overlap with borrower-purchased insurance. The proposed answer would state that in that scenario, a lender must accept a policy declarations page that includes the existing flood insurance policy number and the identity of and contact information for, the insurance company or its agent and that the Regulation does not require that the declarations page include any additional information. In addition, the proposed answer would note that in situations not involving a lender's refund of premiums for force-placed insurance, the Regulation does not specify what documentation would be sufficient. The proposed answer also provides that generally, it is appropriate, although not required by the Regulation, for lenders to accept a copy of the flood insurance application and premium payment as evidence of proof of purchase for new policies.
New proposed Q&A Force Placement 12 would reinforce the requirement that a lender is to refund any premiums and fees paid for by the borrower for force-placed insurance for any overlap period within 30 days of receipt of a confirmation of a borrower's existing flood insurance coverage without exception. Such refund is required even in situations in which a lender cannot obtain a refund from the insurance company because the borrower did not provide proof of coverage in a timely manner, or when the insurance company fails to provide the refund within 30 days.
New proposed Q&A Force Placement 13 would explain that a lender can rely on a force-placed insurance policy to satisfy the mandatory purchase requirement for a refinance or loan modification if the borrower does not purchase his or her own policy. Assuming the force-placed policy is in effect and otherwise satisfies the regulatory coverage standards, then that policy may satisfy the mandatory purchase requirement. The Agencies suggest in the proposed answer that lenders could encourage the borrower to purchase his or her own policy, likely at a reduced cost, prior to the loan closing.
In response to an issue raised in the EGRPRA report, new proposed Q&A Force Placement 14 would explain the process for renewal of force-placed coverage by requiring the lender to follow its normal communications practice with its insurance provider to renew the flood insurance policy on the borrower's behalf to ensure that flood insurance coverage remains in place. Under the proposed answer, the lender is not required to send a notice prior to force-placing insurance at the expiration of a force-placed policy. However, the proposed answer provides that the lender or its servicer, at its discretion, may notify the borrower about its plan to renew the force-placed policy.
New proposed Q&A Force Placement 15 would indicate that, although there is no explicit duty to monitor flood insurance coverage over the life of the loan in the Act or Regulation, for purposes of safety and soundness, many lenders obtain “life-of-loan” monitoring. The Agencies believe such a practice could help ensure that lenders complete the force placement of flood insurance in a timely manner upon lapse of a policy, that there is continuous coverage, and that lenders are promptly made aware of flood map changes.
New proposed Q&A Force Placement 16 would address what the Act and Regulation require a lender or its servicer to do if a lender or servicer receives a notice of remapping that states that a property will be remapped into an SFHA as of a future effective date. The proposed answer would clarify that if a lender or its servicer determines at any time during the term of a designated loan that the building or mobile home and any personal property securing the loan is uninsured or underinsured, the lender or servicer must begin the force-placement process. For a loan secured by a property subject to a remapping that was not previously located in an SFHA, such a loan does not become a designated loan until the effective date of the map change. Therefore, when a lender or its servicer receives advance notice of a map change, the effective date of the map change is the date the lender or servicer must determine whether the property is covered by sufficient flood insurance. If the borrower does not purchase a flood insurance policy that begins on the effective date of the map change, the lender or its servicer must send the force-placement notice to the borrower.
The Agencies propose to move current section VIII to proposed section XVI as part of the overall reorganization of the Interagency Questions and Answers. Current Q&As 44 through 50 would be re-designated as proposed Q&As Servicing 1-7, respectively, with minor nonsubstantive modifications to account for the change in the title of the head of FEMA from “Director” to “Administrator” and for purposes of clarity.
For organizational purposes, the Agencies propose to move current section XVI to proposed section XVII. Current Q&As 81 and 82 would be included in this section and re-designated as proposed Q&As Penalty 1 and 2, respectively. The changes proposed to the Q&As are for purposes of clarity and accuracy with no intended change in meaning or substance.
The Agencies solicit comments on all aspects of the revised and new proposed Q&As.
The following re-designation table is provided as an aid to assist the public in reviewing the proposed revisions to the 2009 and 2011 Interagency Questions and Answers.
The Interagency Questions and Answers are organized by topic. Each topic addresses a major area of flood insurance law and regulations. For ease of reference, the following terms are used throughout this document: “Act” refers to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as revised. “Regulation” refers to each agency's current final rule.
Yes, the Regulation does apply; however, a lender need not require borrowers to obtain flood insurance for a building or mobile home located in a community that does not participate in the NFIP, even if the building or mobile home securing the loan is located in a Special Flood Hazard Area (SFHA). Nonetheless, a lender, using the standard Special Flood Hazard Determination Form (SFHDF), must still determine whether the building or mobile home is located in an SFHA.
Lenders must require flood insurance on a building or mobile home when those structures are part of the property securing the loan and are located in an SFHA in a participating community.
APPLICABILITY 3. What are a lender's requirements under the Regulation for a loan secured by multiple buildings when some of the buildings are located in an SFHA in which flood insurance is available and other buildings are not? What if the buildings are located in different communities and some of the communities participate in the NFIP and others do not?
A lender must determine whether any improved real property securing the loan is in an SFHA.
• Buildings 1 and 2 are located in an SFHA and the community participates in the NFIP;
• Building 3 is not located in an SFHA; and
• Buildings 4 and 5 are located in an SFHA, but the communities do not participate in the NFIP.
In this scenario, the lender is required to obtain insurance only on buildings 1 and 2. As a matter of safety and soundness, however, a lender may decide to require the purchase of flood insurance (from a private insurer) on buildings 4 and 5 because these buildings are located in an SFHA. Further, depending on the risk factors of building 3, the lender may elect to require flood insurance as a matter of safety and soundness, even if the building is not located in an SFHA.
Although a lender is not obligated to require mandatory flood insurance on a building or mobile home securing a loan that is not located within an SFHA or is no longer located within an SFHA, a lender may, at its discretion and taking into consideration State law, as appropriate, require flood insurance for property outside of SFHAs for safety and soundness purposes as a condition of a loan being made. Each lender should tailor its own flood insurance policies and procedures to suit its business needs and protect its ongoing interest in the collateral. For loans in which the property is no longer located in an SFHA, the borrower can elect to convert the existing NFIP standard-rated policy to a lower cost NFIP Preferred Risk Policy, if available.
No. A lender's purchase of a loan, secured by a building or mobile home located in an SFHA in which flood insurance is available under the Act, alone, is not an event that triggers the Regulation's requirements, such as making a new flood determination or requiring a borrower to purchase flood insurance. Requirements under the Regulation are triggered when a lender makes, increases, extends, or renews a designated loan.
However, if a lender becomes aware at any point during the life of a designated loan that flood insurance is required, the requirements of the Regulation apply, including force placing insurance, if necessary.
It depends. If the loan otherwise meets the definition of a designated loan and if the lender increases the amount of the loan, or extends or renews the terms of the original loan, then the Regulation applies.
Yes. Table funding, as defined in the Regulation, means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person
No. Apart from the requirements mandated when a loan is made, increased, extended, or renewed, a lender need only review and take action on any part of its existing portfolio for safety and soundness purposes, or if it knows or has reason to know of the need for NFIP coverage.
The acquisition by a lender of an interest in a loan either by participation or syndication after that loan has been made does not trigger the requirements of the Act or the Regulation, such as making a new flood determination or requiring a borrower to purchase flood insurance.
Nonetheless, as with purchased loans, depending upon the circumstances, the lender may undertake due diligence for safety and soundness purposes to protect itself against the risk of flood or other types of loss.
Lenders who pool or contribute funds that will be simultaneously advanced to a borrower or borrowers as a loan secured by improved real estate would be making a loan that triggers the requirements of the Act and Regulation.
No. Consistent with Q&A Applicability 9, the Agencies expect that a lender participating in a multi-tranche credit facility will perform upfront due diligence to determine whether the lead lender has adequate controls to monitor the loan on an ongoing basis for compliance with the flood insurance requirements. Even though each lender participating in a tranche in a multi-tranche credit facility remains individually responsible for compliance with the flood insurance requirements relating to structures securing the tranche in which it participates, this obligation can be achieved through the upfront due diligence process when determining the lead lender/administrative agent's ongoing monitoring for compliance with flood insurance requirements.
A multi-tranche credit facility is analogous in many respects to a loan syndication or participation. Q&A Applicability 9 addresses applicability of the mandatory purchase requirements when a lender participates in a loan syndication or participation. Similar to a loan syndication or participation, a multi-tranche credit facility involves one credit agreement that describes and governs all the tranches. In addition, similar to a loan syndication or participation, a multi-tranche credit facility typically has one lead lender that acts as the administrative agent for the credit facility and its tranches. Thus, the Agencies do not expect a lender participating in one tranche in a multi-tranche credit facility to be responsible for taking direct steps to comply with flood insurance requirements in connection with a triggering event (
A multi-tranche commercial credit facility is a loan arrangement containing more than one type of loan or tranche. Each loan within the overall credit facility is made to the same borrower or group of related borrowers, but the loans may have different lenders and different terms and conditions. For example, a credit facility might have one tranche that is a revolving line of credit with a one-year maturity date and one or more additional tranches that are fixed rate loans with different interest rates and different maturity dates. Various lenders may participate in each tranche. Generally, the tranches share the same collateral and there is one credit agreement that describes and governs all the tranches.
Under most multi-tranche credit facility agreements, a triggering event can occur within a particular tranche without any requirement to notify and obtain the consent of the lenders not participating in that tranche. Lenders may also participate in a “cashless roll,” which is an exchange of an existing loan for a new or amended loan without any transfer of cash. A cashless roll may be used to replace or supplement existing tranches, but not to increase the total amount of committed debt; therefore, this is not considered a triggering event.
No. An automatic extension of a credit facility that was agreed upon by the lender and the borrower at loan origination and memorialized in the loan agreement does not constitute a
During a period when coverage under the NFIP is not available, such as due to a lapse in authorization or in appropriations, lenders may continue to make loans subject to the Regulation without requiring flood insurance coverage. However, lenders must continue to make flood determinations,
In addition, lenders should evaluate safety and soundness and legal risks and prudently manage those risks during a period when coverage under the NFIP is not available. Lenders should take appropriate measures or consider possible options in consultation with the borrower to mitigate loss exposures in the event of a flood during such periods. For example,
• Lenders may determine the risk of loss is sufficient to justify a postponement in closing the loan until the NFIP coverage is available again.
• Lenders may require the borrower to obtain private flood insurance if available, as a condition of closing the loan. However, after considering the cost of the private flood policy, a lender or the borrower may decide to postpone closing rather than incur a long-term obligation to address a possible short-term lapse.
• Lenders may make the loan without requiring the borrower to apply for flood insurance and pay the premium while NFIP coverage is unavailable. However, this option poses a number of risks that should be carefully evaluated. Moreover, once NFIP coverage becomes available again, the Agencies expect that flood insurance will be obtained for these loans, including, if necessary, by force placement.
There are only three exemptions from the mandatory requirement to purchase flood insurance on a designated loan. The first applies to State-owned property covered under a policy of self-insurance satisfactory to the Administrator of FEMA.
The lender does not have to take a security interest in the primary residential structure for detached structures to be eligible for the exemption, but the lender needs to evaluate the uses of detached structures to determine if they are eligible.
Because a flood hazard determination is often needed to identify the number and types of structures on the property, conducting a flood hazard determination remains necessary for the lender to be able to comply with the flood insurance requirements.
Yes. If a borrower has a flood insurance policy on a detached structure that is part of a residential
No. A lender must examine the status of a detached structure upon a qualifying triggering event—
A lender or servicer could initiate such a review; however, the Regulation does not permit the exemption of structures from the mandatory flood insurance purchase requirement based solely on whether the detached structure contributes value to the overall residential property securing the loan.
For purposes of the detached structure exemption, a structure is “detached” from the primary residential structure if it is not joined by any structural connection to that structure.
For purposes of insurance coverage under the NFIP, FEMA provides that if one building is attached to another through a covered breezeway or similar connection, it may be insured as one building under one policy or may be insured separately under two policies.
Some factors, among others, that a lender could consider in determining whether a policy provides sufficient protection of a loan include whether: (1) A policy's deductibles are reasonable based on the borrower's financial condition; (2) the insurer provides adequate notice of cancellation to the mortgagor and mortgagee to allow for timely force placement of flood insurance, if necessary; (3) the terms and conditions of the policy with respect to payment per occurrence or per loss and aggregate limits are adequate to protect the regulated lending institution's interest in the collateral; (4) the flood insurance policy complies with applicable State insurance laws; and (5) the private insurance company has the financial solvency, strength, and ability to satisfy claims.
No. A private insurance policy that provides a lender portfolio-wide coverage may provide protection to the lender in certain circumstances. For example, when a flood insurance policy has expired and the borrower has failed to renew coverage, private insurance policies providing portfolio-wide coverage may be useful protection for the lender for a gap in coverage in the period of time before a force-placed policy takes effect. However, even if a lender has portfolio-wide coverage to address gaps, the lender must still ensure the flood insurance purchase requirement is satisfied at the time a loan is made, increased, renewed or extended, and the lender must still force place coverage on the borrower's behalf in a timely manner, as required,
The Regulation states that a lender cannot “make” a loan secured by a property in an SFHA without adequate flood insurance coverage being in place.
“Wet funding” and “dry funding,” which varies by State, refer to when a mortgage is considered officially closed. In a “wet” settlement State, the signing of closing documents, funding, and transfer of title occur all on the same day. By contrast, in a “dry” settlement State, documents are signed on one date, but loan funding and/or transfer of title/recording occur on subsequent date(s). Therefore, in “dry” settlement States, the “closing date” is the date of property transfer, regardless of loan signing or funding date.
It is also important to note that the application and premium payment for NFIP flood insurance must be provided at or prior to the closing date since this impacts the FEMA flood insurance effective date and any resulting 30-day waiting period for new policies not made in connection with a triggering event. This application requirement applies for properties located in both dry and wet settlement States.
No. The SFHDF is used by the lender to determine whether the building or mobile home offered as collateral security for a loan is or will be located in an SFHA in which flood insurance is available under the Act.
Yes. Although not a statutory requirement, a lender may provide a copy of the flood determination to the borrower so they can better understand their flood risk. The Agencies note that under the FEMA process for a Letter of Determination Review (LODR), a lender would also need to make the determination available to the borrower. FEMA requires that the lender and the borrower request the LODR jointly within 45-days of the notification of the requirement to purchase flood insurance for a fee. In the event a lender provides the SFHDF to the borrower, the signature of the borrower is not required to acknowledge receipt of the form.
Yes.
It depends. The Act (42 U.S.C. 4104b(e)) permits a lender to rely on a previous flood determination using the SFHDF when it increases, extends, renews, or purchases a loan secured by a building or a mobile home. Under the Act, the “making” of a loan is not listed as a permissible event that permits a lender to rely on a previous determination. When the loan involves a refinancing or assumption by the same lender who obtained the original flood determination on the same property, the lender may rely on the previous determination only if the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made. Further, if the same lender makes multiple loans to the same borrower secured by the same improved real estate, the lender may rely on its previous determination if the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made. These loans are extended by the same lender, to the same borrower, and are secured by the same improved real estate, and, therefore, these types of transactions are the functional equivalent of an increase of a loan.
When the loan involves a refinancing or assumption made by a lender different from the one who obtained the original determination, this would constitute the making of a new loan, thereby requiring a new determination.
There are four instances under the Act and Regulation when the borrower can be charged a fee for a flood determination:
• When the determination is made in connection with the making, increasing, extending, or renewing of a loan that is initiated by the borrower;
• When the determination reflects a revision or updating by FEMA of floodplain areas or flood-risk zones;
• When the determination reflects FEMA's publication of a notice or compendium that affects the area in which the security property is located, or FEMA requires a determination as to whether the building securing the loan is located in an SFHA; or
• When the determination results in force placement of insurance.
Loan or other contractual documents between the parties may also permit the imposition of fees.
Yes, with limitations noted below. In addition to the initial determination at the time a loan is made, increased, renewed, or extended, many flood determination firms provide a service to the lender to review and report changes in the flood status of a dwelling for the entire term of the loan (
However, the life-of-loan fee is based on the authority to charge a determination fee and, therefore, the composite determination/life-of-loan
If a lender receives a policy declarations page that has a flood zone designation that is different from the flood zone shown on the SFHDF, it should consider documenting the discrepancy in the loan file. If the SFHDF indicates that the building securing the loan is in an SFHA, the lender must require the appropriate amount of insurance coverage in accordance with the Act and Regulation,
For a policy issued under the NFIP, if a misrating is discovered at the time of loss resulting from an incorrect flood zone, and a policyholder has underpaid the flood insurance premium, a policyholder may keep the contracted coverage limits if an additional premium is paid. Once paid, a revised declarations page will be issued showing the corrected flood zone. The lender will receive a copy of the declarations page and may receive a copy of the underpayment notice.
If the borrower does not pay the additional premium, resulting in inadequate coverage, lenders must proceed with force-placement procedures.
No, a lender is not in violation of the Regulation if there is a discrepancy between the flood zone on the SFHDF and the flood zone on the policy declarations page. As provided in Q&A Zone 1, a lender should consider documenting any zone discrepancy in the loan file.
If a borrower disputes a lender's determination that the building securing the loan is located in an SFHA requiring mandatory flood insurance coverage, the parties involved in making the determination are encouraged to resolve the flood zone discrepancy before contacting FEMA for a final determination. If the flood zone discrepancy cannot be resolved, an appeal may be filed with FEMA. Depending on the nature of the dispute, FEMA has different options for review, including:
• Letters of Determination Review (LODR), and
• Letters of Map Change (LOMC), which include Letters of Map Amendment (LOMA), Letters of Map Revision (LOMR), and Letters of Map Revision Based on Fill (LOMR-F).
Lenders and borrowers should consult FEMA guidance on the appropriate process to follow, any applicable fees, and any deadlines by which the request to review must be made. However, as long as the lender's flood determination specifies that a building securing the loan is located in an SFHA and requires mandatory flood insurance coverage, sufficient coverage must be in place in accordance with the Act and the Regulation until FEMA has determined that the building is not in an SFHA.
No. The Notice of Special Flood Hazards must be provided to one borrower when the lender determines that the property securing the loan is or will be located in an SFHA.
As required by the Regulation, a lender must provide the Notice of Special Flood Hazards to the borrower within a reasonable time before the completion of the transaction.
In the case of loan transactions secured by mobile homes not located on a permanent foundation, the Agencies note that such “home only” transactions are excluded from the definition of mobile home and the notice requirements would not apply to these transactions. However, the Agencies encourage a lender to advise the borrower that if the mobile home is later located on a permanent foundation in an SFHA, flood insurance will be
Because the servicer of a loan is often not identified prior to the closing of a loan, the Regulation requires that notice be provided no later than the time the lender transmits other loan data, such as information concerning hazard insurance and taxes, to the servicer.
Delivery to the servicer of a copy of the notice given to the borrower is appropriate notice. The Regulation also provides that the notice can be made either electronically or by a written copy.
In the case of a servicer affiliated with the lender, the Act requires the lender to notify the servicer of special flood hazards and the Regulation reflects this requirement. Neither the Act nor the Regulation contains an exception for affiliates.
The record of receipt provided by the borrower must be maintained for the period of time that the lender owns the loan.
The Regulation does not address waiving the requirement to provide the Notice of Special Flood Hazards to the borrower. Although subsequent transactions by the same lender with respect to the same property are the functional equivalent of a renewal and do not require a new determination, the lender must still provide a new Notice of Special Flood Hazards to the borrower.
Although lenders are required to provide a Notice of Special Flood Hazards to a borrower when they make, increase, extend, or renew a loan secured by an improved structure located in an SFHA,
“The maximum limit of coverage available for the particular type of property under the Act” depends on the value of the secured collateral. First, under the NFIP, there are maximum caps on the amount of insurance available for buildings located in a participating community under the Regular Program. For single-family and two-to-four family dwellings and individually owned condominium units insured under the Dwelling Form policy, the maximum limit is $250,000. For a residential condominium building insured under the Residential Condominium Building Association Policy (RCBAP) form, the maximum amount of insurance available is $250,000 multiplied by the number of units. For all other buildings insured under the General Property Form, the maximum limit of building coverage available is $500,000. This includes all non-residential buildings, mixed-use condominium buildings not eligible for coverage under the RCBAP, and other residential buildings of five or more families, such as cooperatives or apartment buildings in the non-condominium form of ownership. (In participating communities that are under the emergency program phase, the maximum limits of insurance are different.) The maximum limit for contents insured under the Dwelling Form and RCBAP is $100,000 ($100,000 total, not per unit) and $500,000 for contents insured under the General Property Form.
In addition to the maximum caps under the NFIP, the Regulation also provides that “flood insurance coverage under the Act is limited to the building or mobile home and any personal property that secures a loan and not the land itself,” which is commonly referred to as the “insurable value” of a structure.
An NFIP policy will not cover an amount exceeding the “insurable value” of the structure, so the maximum amount of insurance coverage is the applicable limit available under the NFIP or the insurable value, whichever is less. In determining coverage amounts for flood insurance, lenders often follow the same practice used to establish other hazard insurance coverage amounts. However, unlike the insurable valuation used to underwrite most other hazard insurance policies, the insurable value of improved real estate for flood insurance purposes also includes the repair or replacement cost of the foundation and supporting structures. It is very important to calculate the correct insurable value of the property; otherwise, the lender might inadvertently require the borrower to purchase too much or too little flood insurance coverage. For example, if the lender fails to exclude the value of the land when determining the insurable value of the improved real estate, the borrower will be asked to purchase coverage that exceeds the amount the NFIP will pay in the event of a loss. (Please note, however, when taking a security interest in improved real estate where the value of the land, excluding the value of the improvements, is sufficient collateral for the debt, the lender must nonetheless require flood insurance to cover the value of the structure if it is located in a participating community's SFHA.)
The insurable value of the building may generally be the same as 100 percent Replacement Cost Value (RCV), which is the cost to replace the building with the same kind of material and construction without deduction for depreciation. In calculating the amount of insurance to require, the lender and borrower (either by themselves or in consultation with the flood insurance provider or other appropriate professional) may choose from a variety of approaches or methods to establish the insurable value. They may use an appraisal based on a cost-value (not market-value) approach, a construction-cost calculation, the insurable value used on a hazard insurance policy (recognizing that the insurable value for flood insurance purposes may differ from the coverage provided by the hazard insurance and that adjustments may be necessary; for example, most hazard policies do not cover foundations), or any other reasonable approach, so long as it can be supported.
In cases involving certain residential or condominium properties, insurance policies under the NFIP should be written to, and the insurance loss payout usually would be the equivalent of, RCV. However, lenders should avoid a situation in which the insured borrower pays for more coverage than the insured would recover in the event of a loss. Therefore, to strictly link insurable value to RCV is not always practical. In cases involving nonresidential properties, and even some residential properties, the insurance loss payout might be based on actual cash value, which is RCV less physical depreciation. Insurance policies written at RCV for these properties would require an insured to pay for coverage that exceeds the amount the NFIP or private insurer would pay in the event of a loss, and this situation should be avoided. Therefore, it is reasonable for lenders, in determining the amount of flood insurance required, to consider the extent of recovery allowed under the NFIP or private policy for the type of property being insured. Doing so would allow the lender to assist the borrower in avoiding situations in which the insured pays for coverage that exceeds the amount the insured would recover in the event of a loss.
Lenders should be equally mindful of avoiding situations in which, as a result of insuring at a level below RCV, they underinsure property.
A residential building is a non-commercial building designed for habitation by one or more families or a mixed-use building that qualifies as a
The NFIP provides the following definitions:
A
A
An
For more complete information, refer to the NFIP
A nonresidential building is one in which the named insured is a commercial enterprise primarily carried out to generate income and the coverage is for:
• A building designed as a non-habitational building;
• A mixed-use building in which the total floor area devoted to residential uses is 50 percent or less of the total floor area within the building if the residential building is a single-family property;
• A building designed for use as office or retail space, wholesale space, hospitality space, or for similar uses.
In addition, the NFIP describes other non-residential buildings as including, but not limited to, churches, schools, farm buildings (including grain bins and silos), garages, pool houses, clubhouses, and recreational buildings.
For more complete information, refer to the NFIP
The amount of insurance required by the Act and Regulation is the lesser of:
• The outstanding principal balance of the loan(s); or
• The maximum amount of insurance available under the NFIP, which is the lesser of:
○ The maximum limit available for the type of structure; or
○ The “insurable value” of the structure.
Loan security includes one equipment shed located in an SFHA in a participating community under the Regular Program.
• Outstanding loan principal balance is $300,000.
• Maximum amount of insurance available under the NFIP:
○ Maximum limit available for type of structure is $500,000 per building (nonresidential building).
○ Insurable value of the equipment shed is $30,000.
The minimum amount of insurance required by the Regulation for the equipment shed is $30,000.
Yes. The lender must determine the amount of insurance required on each building and add these individual amounts together.
• The outstanding principal balance of the loan(s); or
• The maximum amount of insurance available under the NFIP, which is the lesser of:
○ The maximum limit available for the type of structures; or
○ The “insurable value” of the structures.
The amount of total required flood insurance can be allocated among the secured buildings in varying amounts, but all buildings in an SFHA must be covered in accordance with the statutory requirement.
• Outstanding loan principal is $150,000.
• Maximum amount of insurance available under the NFIP.
○ Maximum limit available for the type of structure is $500,000 per building for nonresidential buildings (or $1.5 million total); or
○ Insurable value ($100,000 for each nonresidential building for which insurance is required, or $300,000 total).
Amount of insurance required for the three buildings is $150,000. This amount of required flood insurance could be allocated among the three buildings in varying amounts, so long as each is covered in accordance with the statutory requirement.
No. The Regulation provides that the amount of flood insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for a particular type of property under the Act. The Regulation also provides that flood insurance coverage under the Act is limited to the building or mobile home and any personal property that secures a loan and not the land itself.
Yes. Lenders are permitted to require more than the minimum amount of flood insurance required by the Regulation, taking into consideration applicable State and Federal law and safe and sound banking practices, as appropriate. However, the borrower or lender may have to seek such coverage outside the NFIP. Although a lender has the responsibility to tailor its own flood insurance policies and procedures to suit its business needs and protect its ongoing interest in the collateral, it should consider the extent of recovery allowed under the NFIP or a private policy for the type of property being insured to assist the borrower in avoiding paying for coverage that exceeds the amount the insured would recover in the event of a loss.
Yes. However, it may not be a sound business practice for a lender, as a matter of policy, to always allow the borrower to use the maximum deductible. A lender should determine the reasonableness of the deductible on a case-by-case basis, taking into account the risk that such a deductible would pose to the borrower and lender. A lender may not allow the borrower to use a deductible amount equal to the insurable value of the property to avoid the mandatory purchase requirement for flood insurance.
No. A designated loan is a loan secured by a building or mobile home that is located or to be located in an SFHA in which flood insurance is available under the Act.
Yes. A lender must always make a flood determination prior to loan origination to determine whether a building to be constructed that is security for the loan is located or will be located in an SFHA in which flood insurance is available under the Act.
Yes. Buildings in the course of construction that have yet to be walled and roofed are eligible for coverage except when construction has been halted for more than 90 days and/or if the lowest floor used for rating purposes is below the Base Flood Elevation (BFE). Materials or supplies intended for use in such construction, alteration, or repair are not insurable unless they are contained within an enclosed building on the premises or adjacent to the premises. (NFIP
The NFIP
Although an NFIP policy may be purchased prior to the start of construction, as a practical matter, coverage under an NFIP policy is not effective until actual construction commences or when materials or supplies intended for use in such construction, alteration, or repair are contained in an enclosed building on the premises or adjacent to the premises.
Under the Act, as implemented by the Regulation, a lender may not make, increase, extend, or renew any loan secured by a building or a mobile home, located or to be located in an SFHA in which flood insurance is available, unless the property is covered by adequate flood insurance for the term of the loan.
Alternatively, a lender may allow a borrower to defer the purchase of flood insurance until either a foundation slab has been poured and/or an EC has been issued or, if the building to be constructed will have its lowest floor below the Base Flood Elevation, when the building is walled and roofed. However, in order to comply with the Regulation,
Yes. Under the NFIP, a 30-day waiting period applies anytime a lender requires flood insurance not in connection with the making, increasing, renewing or extending of a designated loan. Therefore, a 30-day waiting period will apply if a lender allows a borrower to delay the purchase of flood insurance in connection with a construction loan. (NFIP
If the lender allows a borrower to defer the purchase of flood insurance until either the foundation slab has been poured and/or an Elevation Certificate has been issued, or if the building to be constructed will have its lowest floor below Base Flood Elevation when the building is walled and roofed, a lender must escrow flood insurance premiums and fees at the time of purchase of the flood insurance, unless one of the escrow exceptions applies.
Yes. The mandatory flood insurance purchase requirements under the Act and Regulation apply to loans secured by individual residential condominium units, including those located in multi-story condominium complexes, located in an SFHA in which flood insurance is available under the Act.
The RCBAP is a master policy for residential condominiums issued by FEMA. A residential condominium building is defined as having 75 percent or more of the building's floor area in residential use. It may be purchased only by condominium owners associations. The RCBAP covers both the common and individually owned building elements within the units, improvements within the units, and contents owned in common (if contents coverage is purchased). The maximum
To comply with the Regulation, the lender must ensure that the minimum amount of flood insurance covering the condominium unit is the lesser of:
• The outstanding principal balance of the loan(s); or
• The maximum amount of insurance available under the NFIP, which is the lesser of:
○ The maximum limit available for the residential condominium unit; or
○ The “insurable value” allocated to the residential condominium unit, which is the replacement cost value of the condominium building divided by the number of units.
FEMA requires agents to provide on the declarations page of the RCBAP the replacement cost value of the condominium building and the number of units. Lenders may rely on the replacement cost value and number of units on the RCBAP declarations page in determining insurable value unless they have reason to believe that such amounts clearly conflict with other available information. If there is a conflict, the lender should notify the borrower of the facts that cause the lender to believe there is a conflict. If the lender determines that the borrower is underinsured, it must require the purchase of supplemental coverage.
Assuming that the maximum amount of coverage available under the NFIP is less than the outstanding principal balance of the loan, the lender must require a borrower whose loan is secured by a residential condominium unit to either:
• Ensure the condominium owners association has purchased an NFIP Residential Condominium Building Association Policy (RCBAP) covering either 100 percent of the insurable value (replacement cost) of the building, including amounts to repair or replace the foundation and its supporting structures, or the total number of units in the condominium building times $250,000, whichever is less; or
• Obtain flood insurance coverage if there is no RCBAP, as explained in proposed Q&A Condo and Co-Op 4, or if the RCBAP coverage is less than 100 percent of the replacement cost value of the building or the total number of units in the condominium building times $250,000, whichever is less, as explained in Q&A Condo and Co-Op 5.
• Outstanding principal balance of loan is $300,000.
• Maximum amount of coverage available under the NFIP, which is the lesser of:
○ Maximum limit available for the residential condominium unit is $250,000; or
○ Insurable value of the unit based on 100 percent of the building's replacement cost value ($15 million ÷ 50 = $300,000).
The lender does not need to require additional flood insurance since the RCBAP's $250,000 per unit coverage ($12.5 million ÷ 50 = $250,000) satisfies the Regulation's mandatory flood insurance purchase requirement. (This is the lesser of the outstanding principal balance ($300,000), the maximum coverage available under the NFIP ($250,000), or the insurable value ($300,000)). (NFIP
The requirement discussed in this Q&A applies to any loan that is made, increased, extended, or renewed after October 1, 2007. This requirement does not apply to any loans made prior to October 1, 2007, until a triggering event occurs (that is, the loan is refinanced, extended, increased, or renewed) in connection with the loan. Absent a new triggering event, loans made prior to October 1, 2007, will be considered compliant if the lender complied with the Agencies' previous guidance that an RCBAP with 80 percent RCV coverage was sufficient. FEMA issued guidance effective October 1, 2007, requiring NFIP insurers to add the RCV of the condominium building and the number of units to the RCBAP declarations page of all new and renewed policies.
If there is no RCBAP on the residential condominium building, then the lender must require the individual unit owner/borrower to obtain coverage in an amount sufficient to meet the requirements outlined in Q&A Condo and Co-Op 3.
Under the NFIP, a Dwelling Policy is available for condominium unit owners' purchase when there is no or inadequate RCBAP coverage.
• Outstanding principal balance of loan is $175,000.
• Maximum amount of coverage available under the NFIP, which is the lesser of:
○ Maximum limit available for the residential condominium unit is $250,000; or
○ Insurable value of the unit based on 100 percent of the building's replacement cost value ($10 million ÷ 50 = $200,000).
The lender must require the individual unit owner/borrower to purchase flood insurance coverage in the amount of at least $175,000, since there is no RCBAP, to satisfy the Regulation's mandatory flood insurance purchase requirement. (This is the lesser of the outstanding principal balance ($175,000), the maximum coverage available under the NFIP ($250,000), or the insurable value ($200,000).)
If the lender determines that flood insurance coverage purchased under the
• Outstanding principal balance of loan is $300,000.
• Maximum amount of coverage available under the NFIP, which is the lesser of:
○ Maximum limit available for the residential condominium unit ($250,000); or
○ Insurable value of the unit based on 100 percent of the building's replacement value ($10 million ÷ 50 = $200,000).
The lender must require the individual unit owner/borrower to purchase supplemental flood insurance coverage in the amount of $40,000 to satisfy the Regulation's mandatory flood insurance purchase requirement of $200,000. (This is the lesser of the outstanding principal balance ($300,000), the maximum coverage available under the NFIP ($250,000), or the insurable value ($200,000).) The RCBAP fulfills only $160,000 of the Regulation's flood insurance requirement.
While the individual unit owner's purchase of a separate policy that provides for adequate flood insurance coverage under the Regulation will satisfy the Regulation's mandatory flood insurance purchase requirements, the lender and the individual unit owner/borrower may still be exposed to additional risk of loss. Lenders are encouraged to apprise borrowers of this risk. For example, the NFIP Dwelling Policy provides individual unit owners with supplemental building coverage that is in excess to the RCBAP. The policies are coordinated such that the Dwelling Policy purchased by the unit owner responds to shortfalls on building coverage pertaining either to improvements owned by the insured unit owner or to assessments. However, the Dwelling Policy does not extend the RCBAP limits, nor does it enable the condominium association to fill in gaps in coverage.
If a lender determines at any time during the term of a designated loan that the loan is not covered by flood insurance or is covered by such insurance in an amount less than that required under the Act and the Regulation, the lender must notify the individual unit owner/borrower of the requirement to maintain flood insurance coverage sufficient to meet the Regulation's mandatory requirements.
In the event the RCBAP's coverage on a condominium building at the time of loss is less than 80 percent of either the building's replacement cost or the maximum amount of insurance available for that building under the NFIP (whichever is less), then the loss payment, which is subject to a coinsurance penalty, is determined as follows (subject to all other relevant conditions in the policy, including those pertaining to valuation, adjustment, settlement, and payment of loss):
A. Divide the actual amount of flood insurance carried on the condominium building at the time of loss by 80 percent of either its replacement cost or the maximum amount of insurance available for the building under the NFIP, whichever is less.
B. Multiply the amount of loss, before application of the deductible, by the figure determined in A above.
C. Subtract the deductible from the figure determined in B above.
The policy will pay the amount determined in C above, or the amount of insurance carried, whichever is less.
Replacement value of the building: $250,000.
80% of replacement value of the building: $200,000.
Actual amount of insurance carried: $180,000.
Amount of the loss: $150,000.
Deductible: $500.
The policy will pay no more than $134,500. The remaining $15,500 is not covered due to the co-insurance penalty ($15,000) and application of the deductible ($500).
Replacement value of the building: $250,000.
80% of replacement value of the building: $200,000.
Actual amount of insurance carried: $200,000.
Amount of the loss: $150,000.
Deductible: $500.
In this example there is no co-insurance penalty, because the actual amount of insurance carried meets the 80 percent requirement to avoid the co-insurance penalty. The policy will pay no more than $149,500 ($150,000 amount of loss minus the $500 deductible). This example also assumes a $150,000 outstanding principal loan balance.
The following examples demonstrate how the unit owner's NFIP Dwelling Policy may cover in certain loss situations:
If the unit owner purchases building coverage under the Dwelling Policy and if there is an RCBAP covering at least 80 percent of the building replacement cost value, the loss assessment coverage under the Dwelling Policy will pay that part of a loss that exceeds 80 percent of the association's building replacement cost allocated to that unit.
The loss assessment coverage under the Dwelling Policy will not cover the association's policy deductible purchased by the condominium association.
If building elements within units have also been damaged, the Dwelling Policy pays to repair building elements after the RCBAP limits that apply to the unit have been exhausted. Coverage combinations cannot exceed the total limit of $250,000 per unit.
If the unit owner purchases building coverage under the Dwelling Policy and there is no RCBAP, the Dwelling Policy covers assessments against unit owners for damages to common areas up to the Dwelling Policy limit.
However, if there is damage to the building elements of the unit (
It is important to recognize the difference between ownership of a condominium and a cooperative. Although an owner of a condominium owns title to real property, a cooperative unit holder holds stock in a corporation with the right to occupy a particular unit, but owns no title to the building. As a result, a loan to a cooperative unit owner, secured by the owner's share in the cooperative, is not a designated loan that is subject to the Act or the Regulation.
Although there is no requirement under the Act or Regulation to purchase flood insurance on the cooperative building if the loan is secured by the unit owner's share in the cooperative, for safety and soundness purposes, residential or nonresidential cooperative buildings may be insured by the association or corporation under the General Property Form. The entity that owns the cooperative building, not the individual unit members, is the named insured.
Yes. A home equity loan is a designated loan, regardless of the lien priority, if the loan is secured by a building or a mobile home located in an SFHA in which flood insurance is available under the Act.
No. While a line of credit secured by a building or mobile home located in an SFHA in which flood insurance is available under the Act is a designated loan and, therefore, requires a flood determination before the loan is made, draws against an approved line do not require further determinations.
A lender may take the following alternative approaches:
• For administrative convenience in complying with the flood insurance requirements, upon origination, a lender may require the purchase of flood insurance for the total amount of all loans or the maximum amount of flood insurance coverage available, whichever is less;
• A lender may actively review its records throughout the year to determine whether the appropriate amount of flood insurance coverage is maintained, considering the draws made against the line or repayments made to the account. In those instances in which there is no policy on the collateral at time of origination, the borrower must, at a minimum, obtain a policy as a requirement for drawing on the line. Lenders that choose to actively review the line should inform the borrower that this option may have more risks, such as inadequate flood insurance coverage during the 30-day waiting period for an NFIP flood policy to become effective. Lenders should be prepared to initiate force-placement procedures if at any time the lender determines a lack of adequate flood insurance coverage for a designated line of credit, as required under the Regulation.
The lender must ensure that adequate flood insurance is in place or require that additional flood insurance coverage be added to the flood insurance policy in the amount of the lesser of either the combined total outstanding principal balance of the first and second loan, the maximum amount available under the Act (currently $250,000 for most residential buildings and $500,000 for other buildings), or the insurable value of the building or mobile home.
A junior lienholder should work with the senior lienholder, the borrower, or with both of these parties, to determine how much flood insurance is needed to cover improved real estate collateral. A junior lienholder should obtain the borrower's consent in the loan agreement or otherwise for the junior lienholder to obtain information on balance and existing flood insurance coverage on senior lien loans from the senior lienholder.
Junior lienholders also have the option of pulling a borrower's credit report and using the information from that document to establish how much flood insurance is necessary upon increasing, extending, or renewing a junior lien, thus protecting the interests of the junior lienholder, the senior lienholder(s), and the borrower. In the limited situation in which a junior lienholder or its servicer is unable to obtain the necessary information about the amount of flood insurance in place on the outstanding balance of a senior lien (for example, in the context of a loan renewal), the lender may presume that the amount of insurance coverage relating to the senior lien in place at the time the junior lien was first established (provided that the amount of flood insurance relating to the senior lien was adequate at the time) continues to be sufficient.
It depends. Assuming the requirements in Section 528 of the Act (42 U.S.C. 4104b) are met and the same lender made the first mortgage, then a new determination may not be necessary when the existing determination is not more than seven years old, there have been no map changes, and the determination was recorded on an SFHDF. If, however, a lender other than the one that made the first mortgage loan is making the junior lien loan, a new determination would be required because this lender would be deemed to be “making” a new loan.
No. The Act and the Regulation provide that a lender shall not make, increase, extend, or renew a designated loan, that is, a loan secured by a building or mobile home located or to be located in an SFHA, “unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan.”
Yes. Flood insurance is required for the building located in the SFHA and any personal property securing the loan.
No. If collateral securing the loan is stored in Building B, which does not secure the loan, then flood insurance is not required on those contents whether or not Building B is located in an SFHA.
Yes. The Act and Regulation look to the collateral securing the loan. If the lender takes a security interest in improved real estate and contents located in an SFHA, then flood insurance is required.
The language in the loan agreement determines whether the contents are taken as security for the loan. If a lender intends to take a security interest in the contents, the loan agreement should include language indicating that the contents are security for the loan. If the lender does not intend to take a security interest in the contents, the loan agreement should not include language to this effect, including language inserted out of an “abundance of caution.”
Yes, flood insurance is required. The language in the loan agreement determines whether the contents are taken as security for the loan. If the lender takes a security interest in contents located in a building in an SFHA securing the loan, flood insurance is required for the contents, regardless of whether that security interest is perfected.
No. A designated loan is a loan secured by a building or mobile home that is located or to be located in an SFHA in which flood insurance is available under the Act.
Yes. In this scenario, a loan is made on condition of a personal guarantee by a third party and further secured by improved real estate, which is located in an SFHA and owned by that third party. Under these circumstances, the security of improved real estate in an SFHA is so closely tied to the making of the loan that it is considered a designated loan that requires flood insurance.
A lender, or a servicer acting on its behalf, must escrow all premiums and fees for any flood insurance required under the mandatory purchase of flood insurance requirement for any designated loan secured by residential improved real estate or a mobile home that is made, increased, extended, or renewed on or after January 1, 2016. The escrow must be payable with the same frequency as payments on the designated loan are required to be made for the duration of the loan, unless the loan or lender is subject to one of the exceptions.
A lender is not required to escrow for flood insurance if it qualifies for the small lender exception
• A loan that is an extension of credit primarily for business, commercial, or agricultural purposes;
• A loan that is in a subordinate position to a senior lien secured by the same property for which the borrower has obtained adequate flood insurance coverage;
• A loan that is covered by a condominium association, cooperative, homeowners association or other applicable group's adequate flood insurance policy;
• A loan that is a home equity line of credit;
• A loan that is a nonperforming loan that is 90 or more days past due; or
• A loan that has a term not longer than 12 months.
If a lender no longer qualifies for the small lender exception, it must escrow all premiums and fees for any flood insurance required under the mandatory purchase of flood insurance requirement for any designated loan secured by residential improved real estate or a mobile home that is made, increased, extended, or renewed on or after July 1 of the first calendar year in which a lender has a change in status, unless a loan qualifies for another exception.
If a lender or its servicer is required to escrow for flood insurance under the Regulation, it must do so even if it does not escrow for taxes or other insurance.
Yes, the Regulation requires lenders or their servicers to escrow flood insurance premiums for any residential designated loan made, increased, extended, or renewed on or after January 1, 2016, unless the lender or the loan qualifies for an exception from the escrow requirement.
No, subject to certain exceptions. The Regulation provides that a lender or its servicer is required to escrow flood insurance premiums and fees when a designated loan is made, increased, extended, or renewed (a triggering event), unless either the lender or the loan is excepted from the escrow requirement.
Yes. For the purposes of the Act and the Regulation, the definition of residential improved real estate does not make a distinction between whether a building is single- or multi-family, or whether a building is owner- or renter-occupied.
However, with regard to mixed-use properties, the lender should look to the primary use of a building to determine whether it meets the definition of “residential improved real estate.” (
Under the Regulation, for a closed-end second mortgage loan, junior lienholders are not required to escrow for flood insurance as long as the borrower has obtained flood insurance coverage that meets the mandatory purchase requirement. Thus, the junior lender or its servicer must ensure that adequate flood insurance is in place (
Under the Regulation, lenders and servicers are only required to escrow for loans that are secured by residential improved real estate or a mobile home located or to be located in SFHAs where flood insurance is available under the NFIP and that experience a triggering event (made, increased, extended, or
By its own terms, the small lender exception to the flood insurance escrow requirement applies to lenders rather than holding companies.
The Act and Regulation provide that a small lender is eligible for the exception only if, on or before July 6, 2012, the lender: (1) Was not required under Federal or State law to deposit taxes, insurance premiums, fees, or any other charges in an escrow account for the entire term of any loan secured by residential improved real estate or a mobile home; and (2) did not have a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or other charges in an escrow account for any loans secured by residential improved real estate or a mobile home.
(a) With respect to an HPML, Federal law in effect on or before July 6, 2012, permitted a borrower to request cancellation of the escrow rather than have it apply for the entire term of the loan. Therefore, HPML escrow requirements would not result in the loss of the escrow exception for a small lender that made an HPML-covered loan prior to July 6, 2012, because the lender was not required under Federal law to escrow for the entire term of the loan. Note that the phrase “entire term” applies only with respect to the Federal or State law requirements criterion of the exception. In addition, if a lender required escrow for an HPML solely to comply with Federal law, a lender complying with that law would not be considered to have its own separate policy of consistently and uniformly requiring escrow.
(b) With respect to loans under the USDA or FHA programs, under Federal law, such loans require the deposit of taxes, insurance premiums, fees and other charges in an escrow account for the entire term of the loan. Therefore, the first criterion of the exception would not be met and would disqualify the lender from the small lender exception under the Act and the Regulation.
To qualify for the small lender exception, one requirement is the lender must not have had a policy on or before July 6, 2012, of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or any other charges in an escrow account for any loans secured by residential improved real estate or a mobile home.
• With regard to mortgage loans for which the lender had a policy on or before July 6, 2012, of collecting escrow funds at closing and the lender maintained servicing of the loan, the lender would not qualify for the exception because the lender established an individual escrow account for the loan it would then service.
• With regard to mortgage loans for which the lender did not have a policy on or before July 6, 2012, of collecting the escrow funds on its own behalf at closing, but escrowed funds on behalf of a third party and then transferred those escrow funds to the third party servicing that loan, the lender would be able to qualify for the small lender exception provided the lender did not establish an individual escrow account and the lender transferred the funds to the third party as soon as reasonably practicable. The small lender must also satisfy the other requirements for the exception, but because no individual escrow account was established for the loan whose servicing rights were transferred pursuant to a third party's requirements, the lender would not have had a policy of consistently and uniformly requiring the deposit of funds in an escrow account.
Yes. If a lender only offers escrow accounts upon the request of borrowers, this practice does not constitute a consistent or uniform policy of requiring escrow. The small lender exception does not apply if, on or before July 6, 2012, the lender had a policy of consistently and uniformly requiring the deposit of taxes, insurance premiums, fees, or any other charges in an escrow account for a loan secured by residential improved real estate or a mobile home.
Under the Regulation, lenders or their servicers are required to offer and make available the option to escrow flood insurance premiums and fees for all outstanding designated loans secured by residential improved real estate or a mobile home located in an SFHA as of January 1, 2016, or July 1 of the first calendar year in which the lender no longer qualifies for the small lender exception to the escrow requirement.
Yes, if the small lender exception no longer applies. (
Yes. Lenders that qualify for the small lender exception are not required to provide borrowers either the escrow notice or the option to escrow notice unless the lender ceases to qualify for the small lender exception.
No. Extensions of credit primarily for business, commercial or agricultural purposes are not subject to the escrow requirement for flood insurance premiums and fees, even if such loans are secured by residential improved real estate or a mobile home.
Generally, no. Construction-permanent loans (or C-P loans) are loans that have a construction phase of approximately one year before the loan converts into permanent financing. During the construction phase, the loan is typically interest-only, so the borrower does not start paying principal until the permanent phase. After the construction phase, the borrower generally comes in to sign papers to start the permanent phase, but this is not a true closing. Given that C-P loans are generally 20- to 30-year term loans, a C-P loan would not qualify for the 12 month-exception from escrow, even if one phase of the loan is for 12 months or less.
If at any time during the term of the loan a lender determines that a subordinate lien exception no longer applies, the lender must begin escrowing flood insurance premiums and fees as soon as reasonably practicable (unless another exception applies).
An RCBAP (Residential Condominium Building Association Policy) is a policy purchased by the condominium association on behalf of itself and the individual unit owners in the condominium. Typically, a portion of the periodic dues paid to the association by the condominium owners applies to the premiums on the policy. When a lender makes, increases, renews, or extends a loan secured by a condominium unit that is adequately covered by an RCBAP and RCBAP premiums are paid by the condominium association as a common expense, an escrow account is not required.
Under the Regulation, the escrow requirements do not apply to a loan that is an extension of credit primarily for business, commercial, or agricultural purposes even if secured by residential real estate, such as a multi-family building.
In addition, the escrow requirements in the Regulation would not apply to a loan secured by a particular unit in a multi-family residential building if a condominium association, cooperative, homeowners association, or other applicable group provides an adequate policy and pays for the insurance as a common expense.
When a lender makes a determination that the collateral securing the loan is uninsured or underinsured, it must begin the force-placement process. Specifically, the Act and the Regulation provide that if a lender, or a servicer acting on its behalf, determines at any time during the term of a designated loan that a building or mobile home and any personal property securing the loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under the Regulation, the lender or its servicer must notify the borrower that the borrower must obtain flood insurance, at the borrower's expense, in an amount at least equal to the minimum amount required under the Regulation. If the borrower fails to obtain flood insurance within 45 days of the lender's notification to the borrower, the lender must purchase flood insurance on the borrower's behalf at that time. The lender must force place flood insurance for the full amount required under the Regulation, or if the borrower has purchased flood insurance that otherwise satisfies the flood insurance requirements but in an insufficient amount, the lender would be required to force place only for the “insufficient amount,” that is, the difference between the amount the borrower insured and the required amount of flood insurance. The Act and the Regulation also provide that the lender or its servicer may purchase insurance on the borrower's behalf and may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance beginning on the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount. (
A lender or its servicer may include in the force-placement notice the amount of flood insurance needed. By providing this information, the lender or its servicer can help ensure that a borrower obtains the appropriate amount of insurance. In addition, before the lender or servicer must force place flood insurance, if the lender or servicer is aware that a borrower has obtained insurance that otherwise satisfies the flood insurance requirements but in an insufficient amount, the lender or servicer should inform the borrower an additional amount of insurance is needed in order to comply with the Regulation.
The Regulation requires the lender, or its servicer, to send notice to the borrower upon making a determination that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under the Regulation. The Agencies expect that such notice will be provided to the borrower at the time of determination of no or insufficient coverage. If there is a brief delay in providing the notice, the Agencies will expect the lender or servicer to provide a reasonable explanation for the delay, for example, that the lender uses batch processing to send the force-placement notice to its borrowers.
Yes. Assuming the statutory prerequisites for force placement are met, and subject to the servicing contract between the lender and its servicer, the Act authorizes servicers to force place flood insurance on behalf of the lender, following the procedures set forth in the Regulation.
No. The Act specifically provides that the lender or servicer for a loan must send a notice upon its determination that the collateral property securing the loan is either not covered by flood insurance or is covered by flood insurance in an amount less than the amount required.
The Regulation provides that the lender or its servicer shall purchase insurance on the borrower's behalf if the borrower fails to obtain flood insurance within 45 days after notification.
No. The Act and Regulation state that once a lender makes a determination that a designated loan has no or insufficient flood insurance coverage, the lender must notify the borrower and, if the borrower fails to obtain sufficient flood insurance coverage within 45 days after that notice, the lender must purchase coverage on the borrower's behalf.
The Regulation provides that the lender or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance, including premiums or fees incurred for coverage, beginning on the date on which flood insurance lapsed or did not provide a sufficient coverage amount.
A lender, however, may not require the borrower to pay for double coverage. The Regulation requires the lender or its servicer to refund to the borrower all premiums paid by the borrower for any force-placed insurance purchased by the lender or its servicer during any period in which the borrower's flood insurance coverage and the force-placed insurance policy were each in effect.
If the previous policy expires at the end of Day 1, the lender's new force-placed policy should not begin to provide coverage until the beginning of Day 2. If the lender did force place on Day 1 and the policy provided overlapping coverage on Day 1, the lender could not charge the borrower for the period of overlapping coverage on Day 1.
The Regulation states that the minimum amount of flood insurance required “must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act.”
To illustrate this point, assume that there is a loan with an outstanding principal balance of $200,000, secured by a residential property located in a special flood hazard area that has an insurable value of $350,000. The borrower has a $200,000 flood insurance policy for that property, reflecting the minimum amount required under the Agencies' regulations. If the $200,000 flood insurance policy lapses, the lender or its servicer must notify the borrower of the need to obtain adequate flood insurance. If the borrower fails to obtain adequate flood insurance within 45 days after notification, then the lender or its servicer must purchase insurance on the borrower's behalf.
If the lender intends to add the premium for the force-placed policy to the loan balance, the lender must ensure that the policy is issued in an amount sufficient to cover the anticipated higher loan balance, including the force-placed policy premium, even if the addition of the force-placed premium is not considered a triggering event. (
A lender, or a servicer acting on its behalf, may force place insurance and charge the borrower for the cost of premiums and fees incurred by the lender or servicer in purchasing the flood insurance on the borrower's behalf at any time starting from the date on which flood insurance coverage lapsed or did not provide a sufficient coverage amount. The lender or servicer would not have to wait 45 days after providing notification to force place insurance.
Lenders that monitor loans secured by property located in an SFHA for continuous flood insurance coverage can minimize any gaps in coverage and any charge to the borrower for coverage for a timeframe prior to the lender's or its servicer's date of discovery and force placement. If a lender or its servicer, despite its monitoring efforts, discovers a loan with no or insufficient coverage, for example, due to a re-mapping, it may charge the borrower for premiums and fees incurred by the lender or servicer for a force-placed flood insurance policy purchased on the borrower's behalf, including premiums and fees for coverage, beginning on the date of no or insufficient coverage, provided that the policy was effective as of the date of the insufficient coverage. When a lender or its servicer purchases a policy on the borrower's behalf, the lender or its servicer may not charge for premiums and fees for coverage beginning on the date of lapse or insufficient coverage if that policy purchased on the borrower's behalf did not provide coverage for the borrower prior to purchase.
The Act and the Regulation require a lender to notify the borrower that the borrower should obtain adequate flood insurance when the lender determines that a building or a mobile home located or to be located in a Special Flood Hazard Area is not covered by any or adequate flood insurance.
Among the various methods that a lender might use to charge a borrower for force-placed flood insurance are: (1) Adding the premium and fees to the existing mortgage loan balance; (2) adding the premium and fees to a separate, unsecured account; or (3) billing the borrower directly for the premiums and fees of the force-placed flood insurance. The treatment of force-placed flood insurance premiums and fees depends on the method the lender chooses for charging the borrower.
If the lender's loan contract with the borrower includes a provision permitting the lender or servicer to advance funds to pay for flood insurance premiums and fees as additional debt to be secured by the building or mobile home, such an advancement would be considered part of the loan. As such, the addition of the flood insurance premiums and fees to the loan balance is not considered an “increase” in the loan amount, and thus would not be considered a triggering event. If, however, there is no explicit provision permitting this type of
If the lender accounts for and tracks the amount owed on the force-placed flood insurance premium and fees in a separate, unsecured account, this approach does not result in an increase in the loan balance and, therefore, is not considered a triggering event.
If the lender bills the borrower directly for the cost of the force-placed flood insurance, this approach does not increase the loan balance and is not considered a triggering event.
With respect to when a lender is required to refund premiums paid by a borrower for force-placed insurance during any period of overlap with borrower-purchased insurance, the Regulation specifically addresses the documentation requirements. The Regulation provides that, for purposes of confirming a borrower's existing flood insurance coverage, a lender must accept from the borrower an insurance policy declarations page that includes the existing flood insurance policy number and the identity of, and contact information for, the insurance company or its agent.
In situations not involving a lender's refund of premiums for force-placed insurance, the Regulation does not specify what documentation would be sufficient. Generally, it is appropriate, although not required by the Regulation, for lenders to accept a copy of the flood insurance application and premium payment as evidence of proof of purchase for new policies.
Yes. The Regulation specifically requires the refund of force-placed insurance premiums and any related fees charged to the borrower for any overlap period within 30 days of receipt of a confirmation of a borrower's existing flood insurance coverage without exception.
A lender can rely on the force-placed insurance to satisfy the mandatory flood insurance purchase requirement if the borrower does not purchase his or her own policy. The Regulation states that a lender “shall not make, increase, extend or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan.”
When a lender refinances increases, renews, or extends an existing loan, the lender is required to provide the notice of special flood hazards, which details the borrower's obligation to obtain a flood insurance policy for any building in an SFHA securing the loan.
No. The Regulation does not require the lender to send a notice to the borrower prior to renewing a force-placed policy. However, the lender or its servicer, at its discretion, may notify the borrower that the lender is planning to renew or has renewed the force-placed policy. Such a notification may encourage the borrower to purchase his or her own policy, which may be available for a lower premium amount.
Although there is no explicit duty to monitor flood insurance coverage over the life of the loan in the Act or Regulation, for purposes of safety and soundness, many lenders monitor the continuous coverage of flood insurance for the building or mobile home and any personal property securing the loan. Such a practice helps to ensure that lenders complete the force placement of flood insurance in a timely manner upon lapse of a policy, that there is continuous coverage to protect both the borrower and the lender, and that lenders are promptly made aware of flood map changes.
The Act and Regulation provide that if a lender, or its servicer, determines at any time during the term of a designated loan, that a building or mobile home and any personal property securing a loan is uninsured or underinsured, the lender or its servicer must begin the notice and force-placement process, as detailed in Q&A Force Placement 1.
In addition, as of the effective date of the remapping, the lender or servicer may force place flood insurance and charge the borrower for the force-placed insurance. However, if the borrower purchases an adequate flood insurance policy, the lender or servicer would need to reimburse the borrower for premiums and fees charged for the force-placed coverage during any period of overlapping coverage.
The regulated lender must comply with all requirements of the Regulation, including making the initial flood determination, providing appropriate notice to the borrower, and ensuring that the proper amount of insurance is obtained. In the event the regulated lender sells or transfers the loan and servicing rights, the regulated lender must provide notice of the identity of the new servicer to FEMA or its designee.
If the regulated lender retains ownership of the loan and only transfers or sells the servicing rights to a nonregulated party, the regulated lender must notify FEMA or its designee of the identity of the new servicer.
Generally, the Regulation does not impose obligations on a loan servicer independent from the obligations it imposes on the owner of a loan. Loan servicers are covered by the escrow, force placement, and flood hazard determination fee provisions of the Act and Regulation primarily so that they may perform the administrative tasks for the regulated lender, without fear of liability to the borrower for the imposition of unauthorized charges. It is the Agencies' longstanding position that the obligation of a loan servicer to fulfill administrative duties with respect to the flood insurance requirements arises from the contractual relationship between the loan servicer and the regulated lender or from other commonly accepted standards for performance of servicing obligations. The regulated lender remains ultimately liable for fulfillment of those responsibilities, and must take adequate steps to ensure that the loan servicer maintains compliance with the flood insurance requirements.
A regulated lender's purchase of a loan and servicing rights, secured by a building or mobile home located in an SFHA in which flood insurance is available under the Act, is not an event that triggers certain requirements under the Regulation, such as making a new flood determination or requiring a borrower to purchase flood insurance.
When a regulated lender purchases only the servicing rights to a loan originated by a nonregulated lender, the regulated lender is obligated to follow the terms of its servicing contract with the owner of the loan. In the event the regulated lender subsequently sells or transfers the servicing rights on that loan, the regulated lender must notify FEMA or its designee of the identity of the new servicer, if required to do so by the servicing contract with the owner of the loan.
The Regulation states that the Administrator's designee is the insurance company issuing the flood insurance policy.
In the event the servicing is subsequently transferred to a new servicer, the lender must provide notice to the insurance company of the identity of the new servicer no later than 60 days after the effective date of such a change.
Yes. The delivery of a copy of the Notice of Transfer or any other form of notice is sufficient if the sender includes, on or with the notice, the following information that FEMA has indicated is needed by its designee:
• Borrower's full name;
• Flood insurance policy number;
• Property address (including city and State);
• Name of lender or servicer making notification;
• Name and address of new servicer; and
• Name and telephone number of contact person at new servicer.
Yes. The Regulation specifically permits transmission by electronic means.
Yes.
No. After servicing rights are sold or transferred, subsequent notification obligations are the responsibility of the new servicer.
If a lender is acquired by or merges with another lender, the duty to provide notice for the loans being serviced by the acquired lender will fall to the successor lender in the event that notification is not provided by the acquired lender prior to the effective date of the acquisition or merger.
A pattern or practice of violations of any of the following requirements of the Act and its implementing Regulation triggers a mandatory civil money penalty:
• Purchase of flood insurance where available (42 U.S.C. 4012a(b));
• Escrow of flood insurance premiums (42 U.S.C. 4012a(d));
• Failure to provide force-placement notice or purchase force-placed flood insurance coverage, as appropriate (42 U.S.C. 4012a(e));
• Notice of special flood hazards and the availability of Federal disaster relief assistance (42 U.S.C. 4104a(a)); and
• Notice of servicer and any change of servicer (42 U.S.C. 4104a(b)).
The Act provides that any regulated lending institution found to have a pattern or practice of the violations “shall be assessed a civil penalty” by its Federal supervisory agency in an amount not to exceed $2,000 per violation (42 U.S.C. 4012a(f)(5)). There is no ceiling on the total penalty amount that a Federal supervisory agency can assess for a pattern or practice of violations. Each Agency adjusts the limit pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note).
The Act does not define “pattern or practice.” The Agencies make a determination of whether a pattern or practice exists by weighing the individual facts and circumstances of each case. In making the determination, the Agencies look both to guidance and experience with determinations of pattern or practice under other regulations (such as Regulation B (Equal Credit Opportunity) and Regulation Z (Truth in Lending)), as well as Agencies' precedents in considering the assessment of civil money penalties for flood insurance violations.
The Policy Statement on Discrimination in Lending (Policy Statement) provided the following guidance on what constitutes a pattern or practice: Isolated, unrelated, or accidental occurrences will not constitute a pattern or practice. However, repeated, intentional, regular, usual, deliberate, or institutionalized practices will almost always constitute a pattern or practice. The totality of the circumstances must be considered when assessing whether a pattern or practice is present.
In determining whether a lender has engaged in a pattern or practice of flood insurance violations, the Agencies' considerations may include, but are not limited to, the presence of one or more of the following factors:
• Whether the conduct resulted from a common cause or source within the lender's control;
• Whether the conduct appears to be grounded in a written or unwritten policy or established process;
• Whether the noncompliance occurred over an extended period of time;
• The relationship of the instances of noncompliance to one another (for example, whether the instances of noncompliance occurred in the same area of a lender's operations);
• Whether the number of instances of noncompliance is significant relative to the total number of applicable transactions. (Depending on the circumstances, however, violations that involve only a small percentage of a lender's total activity could constitute a pattern or practice);
• Whether a lender was cited for violations of the Act and Regulation at prior examinations and the steps taken by the lender to correct the identified deficiencies;
• Whether a lender's internal and/or external audit process had not identified and addressed deficiencies in its flood insurance compliance; and
• Whether the lender lacks generally effective flood insurance compliance policies and procedures and/or a training program for its employees.
Although these considerations are not dispositive of a final resolution, they do serve as a reference point in assessing whether there may be a pattern or practice of violations of the Act and Regulation in a particular case. As previously stated, the presence or absence of one or more of these considerations may not eliminate a finding that a pattern or practice exists.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; 12-month finding and availability of status review documents.
We, NMFS, have completed a comprehensive status review under the Endangered Species Act (ESA) for the Indo-Pacific, reef-building coral
This finding was made on July 6, 2020.
The petition, General Status Assessment of Indo-Pacific Reef-building Corals,
Lance Smith, NMFS, Pacific Islands Regional Office, Protected Resources Division, (808) 725-5131; or Celeste Stout, NMFS, Office of Protected Resources, (301) 427-8436.
This 12-month finding is a response to a petition to list
On March 14, 2018, we received a petition from the Center for Biological Diversity to list the Indo-Pacific reef-building coral
On September 20, 2018, we published a 90-day finding (83 FR 47592) announcing that the petition presented substantial scientific or commercial information indicating that
We are responsible for determining whether
Section 3 of the ESA defines an endangered species as any species which is in danger of extinction throughout all or a significant portion of its range, and a threatened species as one which is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range. Thus, in the context of the ESA, the Services interpret an “endangered species” to be one that is presently at risk of extinction. A “threatened species” is not currently at risk of extinction, but is likely to become so in the foreseeable future (that is, at a later time). The key statutory difference between a threatened and endangered species is the timing of when a species is or is likely to become in danger of extinction, either presently (endangered) or in the foreseeable future (threatened).
When we consider whether a species qualifies as threatened under the ESA, we must consider the meaning of the term “foreseeable future.” It is appropriate to interpret “foreseeable future” as the horizon over which predictions about the conservation status of the species can be reasonably relied upon. What constitutes the foreseeable future for a particular species depends on species-specific factors such as the life history of the species, habitat characteristics, availability of data, particular threats, ability to predict threats, and the reliability to forecast the effects of these threats and future events on the status of the species under consideration. That is, the foreseeability of a species' future status is case specific and depends upon both the foreseeability of threats to the species and foreseeability of the species' response to those threats. Our consideration of the foreseeable future for this status review is described in the Global Climate Change and the Foreseeable Future section below.
The statute requires us to determine whether any species is endangered or threatened throughout all or a significant portion of its range as a result of any one or a combination of any of the following factors: The present or threatened destruction, modification, or curtailment of its habitat or range; overutilization for commercial, recreational, scientific, or educational purposes; disease or predation; the inadequacy of existing regulatory mechanisms; or other natural or manmade factors affecting its continued existence. 16 U.S.C. 1533(a)(1). We are also required to make listing determinations based solely on the best scientific and commercial data
The rangewide Status Review of
The two reports that make up this Status Review (Smith 2019a,b) represent a compilation of the best available scientific and commercial information on the
We subsequently reviewed the Status Review reports (Smith 2019a,b), their cited references, and peer review comments, and believe the Status Review reports, upon which this 12-month finding are based, provide the best available scientific and commercial information on
Many of the threats to
Global climate change refers to increased concentrations of greenhouse gases (GHGs; primarily carbon dioxide, but also methane, nitrous oxide, and others) in the atmosphere from anthropogenic emissions, and subsequent warming of the earth, acidification of the oceans, rising sea-levels, and other impacts since the beginning of the industrial era in the mid-19th century. Since that time, the release of carbon dioxide (CO
Observed and projected global mean surface temperatures (GMST) from the pre-industrial baseline period of 1850-1900 to the year 2100 provide context for the climate change threats facing
In order to ensure consistency in the application of climate change science to
AR5 (IPCC 2013a) projected GMST from 2006 over the remainder of the 21st century using a set of four representative concentration pathways (RCPs) that provide a standard framework for consistently modeling future climate change under different assumptions. The four RCPs span a range of possible futures, from high GHG emissions peaking near 2100 (RCP8.5), to intermediate emissions (RCP6.0 and RCP4.5), to low emissions (RCP2.6). The 1.5° Report (IPCC 2018) developed additional pathways with lower emissions than RCP2.6. The IPCC's pathways are based on projected concentrations of CO
The various pathways were developed with the intent of providing different potential climate change projections to guide policy discussions. The IPCC does not attach likelihoods to the pathways. Taken together, the four pathways in AR5 project wide ranges of increases in GMSTs, ocean warming, ocean acidification, sea level rise, and other changes globally throughout the 21st century (Smith 2019a). Summaries of the most recent information on observed and projected ocean warming, ocean acidification, and sea-level rise are provided in the GSA (Smith 2019a), and support RCP8.5 as representative of the status quo. For example, according to the most recent Global Carbon Budget report (Friedlingstein
The Climate Guidance (NMFS 2016) directs us to determine the longest period over which we can reasonably foresee the effects of climate change on the species. The IPCC pathways (IPCC 2013a, IPCC 2018) use the year 2100 as the main end-point for their climate change projections. The IPCC's AR5 and the 1.5° Reports (IPCC 2013a, IPCC 2018), together with the large and growing scientific literature on projected impacts of the IPCC pathways on coral reef ecosystems, provide considerable information on how climate change threats are likely to affect corals and coral reefs from now to 2100. Although there is wide variability in the IPCC pathways (
Since the status quo is best represented by RCP8.5, we consider climate indicator values projected under RCP8.5 to be likely over at least the near future. Beyond that, current GHG emissions policies resulting from the 2015 Paris Agreement may eventually lead to climate indicator values projected under the intermediate emissions pathways RCPs 6.0 and 4.5 (CAT 2019, Hausfather and Peters 2020, UNEP 2019). However, such projections have high inherent uncertainty (IPCC 2018, Jeffery
The two most severe threats to
For each RCP (8.5, 6.0, 4.5) and time period (2016-2035, 2046-2065, 2081-2100), AR5 provides global maps of projected annual warming across the earth's surface, as explained in more detail in NMFS (2020a). Projected additional warming above what has already occurred is highest under RCP8.5, intermediate under RCP6.0, and lowest under RCP4.5 (NMFS 2020a, Fig. 2). The ranges of projected warming
Ocean warming can result in the bleaching of the tissues of reef-building coral colonies, including
The projected responses of reef-building corals to ocean warming in the 21st century under RCPs 8.5, 6.0 and 4.5 have been modeled in several recent papers. An analysis of likely disease outbreaks in reef-building corals resulting from ocean warming projected by RCP8.5 and RCP4.5 concluded that both pathways are likely to cause sharply increased coral disease before 2100 (Maynard
As far as we know, there are no reports that model projected responses of
Based on the available information, we cannot distinguish the likely responses of
Under RCP8.5, mean global pH of open surface waters is projected to decline from the 1986-2005 average of approximately 8.12 to approximately 7.77 by 2100, with the greatest reductions in the higher latitude areas of the
These general projections are for open surface waters, and are not necessarily representative of nearshore waters, because of multiple physical factors that cause high natural variability in pH of seawater and Ω
As described in more detail in the GSA (Smith 2019a), ocean acidification impacts reef-building corals and coral reef communities in several ways. The reduced Ω
The projected responses of reef-building corals and coral reefs to ocean acidification in the 21st century under conditions projected for RCPs 8.5, 6.0 and 4.5 have been reviewed or modeled in several recent papers. A review of laboratory studies on the effects of
As far as we know, there are no reports that model projected responses of
Based on the available information, we cannot distinguish the likely responses of
Likewise, while different levels of ocean acidification are projected under RCPs 8.5, 6.0, and 4.5 from now to 2100, the projected impacts of reduced Ω
Indo-Pacific reef-building corals share many biological characteristics, occupy many similar habitat types, are subject to similar key trends, and are threatened primarily by the same suite of global climate change and local threats. In addition, typically more information is available on the status and trends of reef coral communities (
Reef-building corals are defined by symbioses with unicellular photosynthetic algae living within their tissues (zooxanthellae), giving them the capacity to grow large skeletons and thrive in nutrient-poor tropical and subtropical seas. Since reef-building corals are defined by their symbiosis with zooxanthellae, they are sometimes referred to as “zooxanthellate” or “hermatypic” corals. Reef-building corals collectively produce shallow coral reefs over time, but also occur in non-reef and mesophotic areas, both of which are defined in the habitat section below. That is, these species are reef-building, but they are not reef-dependent, thus reef-building corals are not limited to shallow coral reefs (NMFS 2014).
Reef-building corals are marine invertebrates in the phylum Cnidaria that occur as polyps, usually forming colonies of many clonal polyps on a calcium carbonate skeleton. The Cnidaria include true stony corals (class Anthozoa, order Scleractinia, including both reef-building, zooxanthellate and non-reef-building, azooxanthellate species), the blue coral (class Anthozoa, order Helioporacea), and fire corals (class Hydrozoa, order Milleporina). Most reef-building corals form complex colonies made up of a tissue layer of polyps (a column with mouth and tentacles on the upper side) growing on top of a calcium carbonate skeleton, which the polyps produce through the process of calcification (Brainard
Most Indo-Pacific reef-building corals have many biological features that complicate the determination of the status of any given species, including but not necessarily limited to the following: They are modular, colonial, and sessile; the definition of the individual is ambiguous; the taxonomy of many species is uncertain; field identification of species is difficult; each colony is a collection of coral-algae-microbe symbiotic relationships; they have high skeletal plasticity; they utilize a combination of sexual and asexual reproduction; hybridization may be common in many species; and they typically occur as many populations across very large ranges. These and other biological features of Indo-Pacific reef-building corals are described in more detail in the GSA (Smith 2019a).
Indo-Pacific reef-building corals occur on shallow coral reefs (<30 m depth), as well as in non-reef and mesophotic areas (>30 m depth), in the tropical and sub-tropical waters of the Indian and Pacific Oceans, including the eastern Pacific. This vast region includes over 50,000 islands and over 40,000 km of continental coastline, spanning approximately 180 degrees longitude and 60 degrees latitude, and including more than 90 percent of the total coral reefs of the world. In addition to this region's extensive shallow coral reefs, the Indo-Pacific includes: (1) Abundant non-reef habitat, defined as areas where environmental conditions prevent reef formation by reef-building corals, but some reef-building coral species are present; and (2) vast but scarcely known
In addition to the biological features described above, there are several habitat features of Indo-Pacific reef-building coral species that should be considered in the determination of the status of any given species including, but not necessarily limited to: (1) Specific substrate and water quality requirements of each life history stage; (2) ranges of many of these species encompass shallow coral reef, non-reef, and mesophotic habitats that vary tremendously across latitude, longitude, depth, distance from land, and in other ways; and (3) physical variability in habitat characteristics within the ranges of these species produces spatial and temporal refuges from threats. That is, habitat heterogeneity and refugia produce a patchy mosaic of conditions across the ranges of Indo-Pacific reef-building corals, which complicates the determination of the status of any given species. These and other habitat features of Indo-Pacific reef-building corals are described in more detail in the GSA (Smith 2019a).
The health of reef-building coral communities is largely determined by the extent of disturbance, together with recovery from it. The most common measure of the condition of Indo-Pacific reef-building corals is live coral cover. Resilience is the capacity of a community to recover from disturbance. Observations and projections of anthropogenic disturbance, recovery time, coral cover, and overall resilience of Indo-Pacific reef-building coral communities provide insight on the status and trends of these communities.
The main threats to Indo-Pacific reef-building corals are acute and chronic anthropogenic disturbances, most of which have been increasing over the last half-century or more. In particular, warming-induced coral bleaching events are acute disturbances that have been increasing in frequency, severity, and magnitude over the last several decades, especially since 2014. Other disturbances of Indo-Pacific coral reef communities are chronic, such as ocean acidification because of its continual effects on both coral calcification and reef accretion, and localized land-based sources of pollution and coral disease outbreaks. Both acute and chronic anthropogenic disturbances are broadening and worsening on coral reefs near human populations throughout the Indo-Pacific, and all anthropogenic disturbances of Indo-Pacific coral reefs are projected to worsen throughout the foreseeable future (Smith 2019a,b).
Studies of the recovery of Indo-Pacific reef-building corals (excluding the eastern Pacific) show that the majority of sites showed significant recovery from, or resistance to, anthropogenic disturbance over the latter part of the 20th century and early part of the 21st century (Tables 1a and 1b, Smith 2019a). The available information does not indicate that the capacity for recovery of Indo-Pacific reef-building corals has substantially declined. However, due to increased frequency of disturbance, the amount of time available for corals to recover has declined. Furthermore, since the frequency of disturbance is projected to increase as climate change worsens, recovery time is projected to continue to decrease throughout the foreseeable future (Smith 2019a,b).
The available information clearly indicates that mean coral cover has declined across much of the Indo-Pacific since the 1970s (Tables 2 and 3, Smith 2019a), and likely many decades before then in some locations. High spatial and temporal variability influenced by a large number of natural and anthropogenic factors can mask the overall trend in coral cover, but long-term monitoring programs and meta-analyses demonstrate downward temporal trends in most of the Indo-Pacific. Because disturbance is projected to increase in frequency throughout the foreseeable future (Smith 2019a,b), and this is expected to result in reduced recovery times, mean coral cover in the Indo-Pacific is also projected to decrease, especially as climate change worsens (Smith 2019a).
Despite increasing disturbance, decreasing recovery times, and decreasing coral cover, the available information suggests that overall resilience of Indo-Pacific reef-building corals remains quite high because: (1) Observed impacts of disturbances on corals have been spatially highly variable due to habitat heterogeneity; (2) factors that confer resilience (high habitat heterogeneity, large ecosystem size, high coral and reef fish species diversity) have not declined; (3) observed responses of corals to disturbances indicate that most either recovered or were resistant; and (4) observed responses of corals to disturbances indicate that phase shifts have so far been either rare or reversed. However, the trends in disturbance, recovery time, and coral cover are projected to worsen with climate change, thus overall resilience is also projected to decrease throughout the foreseeable future (Smith 2019a,b).
We consider global climate change-related threats of ocean warming, ocean acidification, and sea-level rise, and the local threats of fishing, land-based sources of pollution, coral disease, predation, and collection and trade, to be the most important to the extinction risk of Indo-Pacific reef-building corals currently and throughout the foreseeable future. The most important of these is ocean warming. In addition, five lesser global and local threats are also described (changes in ocean circulation, changes in tropical storms, human-induced physical damage, invasive species, and changes in salinity). The interactions of threats with one another could be significantly worse than any individual threat, especially as each threat grows. Each threat, and the interactions of threats, are described both in terms of observed effects since relevant scientific information became available (usually mid-20th century), and projected effects throughout the foreseeable future (Smith 2019a,b).
The effects of most threats to Indo-Pacific reef-building corals have already been observed to be worsening, based on the monitoring results and the scientific literature. Ocean warming in conjunction with the other threats have recently resulted in the worst impacts to Indo-Pacific reef-building corals ever observed. These impacts are further described in terms of increasing disturbance, less time available for recovery, decreasing coral cover, and decreasing resilience in the trends section above. All threats are projected to worsen throughout the foreseeable future (Smith 2019a,b), based on the scientific literature, climate change models, and other information such as human population trends in the Indo-Pacific.
Indo-Pacific reef-building corals are a diverse group (≉760 species) with many biological features that complicate the determination of the status of any given species. These species occur in vast and diverse habitats including shallow coral reefs, non-reef areas, and mesophotic areas throughout the Pacific and Indian Oceans. Key observed trends include
This status review of
Taxonomic uncertainty refers to how a species should be scientifically classified. Taxonomic uncertainty appears to be lower for
As with most other reef-building corals,
Reef-building corals like
Reef-building corals like
The preferred habitat of
In summary, several characteristics of
In order to determine the extinction risk of species being considered for ESA listing, NMFS uses a demographic risk analysis framework that considers the four demographic factors of distribution, abundance, productivity, and diversity (NMFS 2017). Each demographic risk factor is described for
The Corals of the World website (
Although
We conclude that
With regard to absolute abundance, we estimate
With regard to abundance trends, in the 10 ecoregions for which time-series abundance data or information are available, abundance of
We conclude that
Rapid turnover of
We conclude that
The spatial and temporal habitat heterogeneity of
We conclude that
The relative abundance of
The high reproductive capacity, broad dispersal, high recruitment, rapid skeletal growth, and adaptability of
Genetic studies show high genotypic diversity in
Section 4(a)(1) of the ESA and NMFS' implementing regulations (50 CFR part 424) state that the agency must determine whether a species is endangered or threatened because of any one or a combination of the following five factors: (A) Present or threatened destruction, modification, or curtailment of habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence. Based on the 2011 SRR (Brainard
The observed and projected trends of each threat, as well as the vulnerability of
The vulnerability of
The vulnerability of
The vulnerability of
The vulnerability of
The vulnerabilities of
The vulnerability of
The vulnerability of
The vulnerability of
The vulnerabilities of
We consider the current vulnerabilities of
As described in more detail in the GSA (Smith 2019a), GHGs are regulated through international agreements (
As described in more detail in the GSA (Smith 2019a), existing regulatory mechanisms that address the major local threats (
General coral protection regulatory mechanisms include overarching environmental laws that may protect corals from damage, harm, and destruction, and specific coral reef management laws. Of the 68 countries, 18 (27 percent) have general coral protection laws. Coral collection and trade regulatory mechanisms include specific laws that prohibit the collection, harvest, and mining of corals. Of the 68 countries, 32 (50 percent) have laws prohibiting the collection of live corals from coral reefs. Fishing regulations that pertain to reefs, include regulations that prohibit explosives, poisons and chemicals, electrocution, spearfishing, specific mesh sizes of nets, or other fishing gear. Of the 68 countries, 53 (78 percent) have laws that regulate coral reef fisheries. Pollution control regulations include oil pollution laws, marine pollution laws, ship-based pollution laws, and coastal land use and development laws. Of the 68 countries, 23 (34 percent) have laws that regulate pollution of coral reef waters. Managed area regulatory mechanisms include the capacity to create national parks and reserves, sanctuaries, and marine protected areas. Of the 68 countries, nearly all have managed areas that include coral reefs. Details about these five categories of regulatory mechanisms for the
The 2014 final coral listing rule concluded that global regulatory mechanisms for GHG emissions management were ineffective at reducing global climate change-related impacts to Indo-Pacific reef-building coral species at that time (NMFS 2014). Since then, the Paris Agreement was developed in 2015 and signed in 2016 (UN 2016), representing a major potential advance in GHG emissions management because its successful implementation would limit GMST to 1.5 °C above pre-industrial, as explained in the GSA (Smith 2019a). However, there are several reasons why there is uncertainty with regard to successful implementation of the Paris Agreement: (1) Despite past international agreements for GHG emissions management (
The 2014 final coral listing rule concluded that national, state, local, and other regulatory mechanisms in the 68 countries with Indo-Pacific reef-building corals were generally ineffective at preventing or sufficiently controlling local threats to these species (NMFS 2014). Since that time, new coral reef MPAs have been established in the Indo-Pacific, slightly increasing the total proportion of coral reef ecosystems protected by MPAs in the region. However, human populations have also grown in many Indo-Pacific countries during that time, most likely leading to an increase in local threats since we completed our analysis in 2014. Thus, we conclude that current regulatory mechanisms are ineffective at reducing the impacts of local threats to Indo-Pacific reef-building corals including
The current susceptibilities, exposures, and subsequent vulnerabilities of
An extinction risk assessment (ERA) was carried out by a seven member ERA Team for
The Team rated
The Team rated
The Team rated
The Team rated
In conclusion,
In both the draft and final ratings, the Team rated ocean warming, ocean acidification, and interactions of threats as posing moderate risk to the species (1.7-2.1), while the other seven threats were rated as posing low risk (0.7-1.4; Table 2). The worst threats to
The interactions of threats were also rated as posing increased risk to
While the other seven threats were all rated as relatively less severe in both the draft and final ratings (Table 2), at least some of them can be severe on small spatial scales, and most or all have the potential to negatively interact with other threats. For example, fishing, land-based sources of pollution, and predation heavily impact
In conclusion,
The Low extinction risk category received 33.5 points (47.9 percent) in the draft rating, and 24.5 points (35.0 percent) in the final rating, for a mean of 29 points (41.4 percent; Table 3). Several Team members moved likelihood points from Low to Moderate for the final rating following the September 30, 2019, Team meeting at which the climate change assumptions in the SRR were emphasized (
The Moderate extinction risk category received 26.5 points (37.9 percent) in the draft rating, and 39.5 points (56.4 percent) in the final rating, for a mean of 33 points (47.1 percent; Table 3). Several Team members moved likelihood points from Low to Moderate, and one Team member moved likelihood points from High to Moderate, for the final rating following the September 30, 2019, Team meeting. Species at Moderate extinction risk are on a trajectory that puts them at a high level of extinction risk in the foreseeable future, due to projected threats or declining trends in distribution, abundance, productivity, or diversity. While
The High extinction risk category received 10 points (14.3 percent) in the draft rating, and 6 points (8.6 percent) in the final rating, for a mean of 8 points (11.4 percent; Table 3). One Team member moved likelihood points from High to Moderate, for the final rating following the September 30, 2019, Team meeting in response to clarification regarding the temporal distinction between High and Moderate extinction risk (Smith 2019b). Species at High extinction risk are those whose continued persistence is in question due to weak demographic factors, or that face clear and present threats such as imminent destruction. However,
In conclusion, the information in the GSA (Smith 2019a), the SRR (Smith 2019b), and the ERA Team's results (Tables 1-3) provide support for
Section 4(b)(1)(A) of the ESA requires that NMFS make listing determinations based solely on the best scientific and commercial data available after conducting a review of the status of the species and taking into account those efforts, if any, being made by any state or foreign nation, or political subdivisions thereof, to protect and conserve the species. We have independently reviewed the best available scientific and commercial information including the petition, public comments submitted on the 90-day finding (83 FR 47592; September 20, 2018), the GSA (Smith 2019a), the SRR (Smith 2019b), and literature cited therein and in this finding. In addition, we have consulted with a large number of species experts and individuals familiar with
Although all threats are projected to worsen within
Taken together, these demographic characteristics of
As also explained in the Listing Species Under the Endangered Species Act section of this finding, a “threatened species” is not currently at risk of extinction, but is likely to become so in the foreseeable future. Based on the information in the GSA (Smith 2019a), SRR (Smith 2019b), and this finding,
The definitions of both “threatened” and “endangered” in the ESA contain the phrase “significant portion of its range” (SPR), referring to an area smaller than the entire range of the species which must be considered when evaluating a species' risk of extinction. Under the final SPR Policy announced in July 2014, should we find that the species is of low extinction risk throughout its range and not warranted for listing, as we have for
The SPR analysis for
The first step of the SPR analysis is to identify any SPRs. We determined that several portions of
SPR A qualifies as an SPR because it is significant to the viability of
SPR B qualifies as an SPR because it is significant to the viability of
SPR C qualifies as an SPR because it is significant to the viability of
SPR D qualifies as an SPR because it is significant to the viability of
Aside from SPRs A-D, no other portions of the range of
The second step in our SPR analysis was to determine the status of each SPR with an Extinction Risk Assessment (ERA) similar to the process described in the Rangewide Extinction Risk Assessment section, except that the ERA Team was not involved. Instead, based on the information in the GSA (Smith 2019a), SRR (2019b), and NMFS (2020b), staff of the NMFS Pacific Islands Regional Office analyzed the demographic factors and threats for each of the four SPRs to inform its extinction risk.
Of SPR A's 68 ecoregions, relative abundance information is available for 38 ecoregions, in which it is not dominant in any, common in eight, uncommon in 29, and rare in one (Smith 2019b, Fig. 2; NMFS 2020b). We estimate
Based on the information in the SRR, we consider SPR A's productivity to be high, despite declining abundance trends in some ecoregions. Evidence for high productivity is provided by observations from the GBR indicating strong recoveries in recent years from disturbances by displacing less competitive coral species and becoming more abundant than before the disturbances. In addition, studies and observations from ecoregions in other populations have documented multiple recoveries (Smith 2019b, Section 3.2.3). These recoveries demonstrate continued high productivity, thus we consider SPR A's productivity to be high and stable (Table 4).
Although there is little information available on the genotypic and phenotypic diversity of SPR A, its large distribution and high habitat heterogeneity suggest that both types of diversity are high for this population. In addition, the population's distribution has not been reduced (Smith 2019b, Section 3.1). Therefore, we consider SPR A's diversity to be high and stable (Table 4).
The vulnerabilities of
The extinction risk of SPR A depends on its demographic factors and threats. Populations at Low extinction risk have stable or increasing trends in abundance and productivity with connected, diverse populations, and are not facing threats that result in declining trends in distribution, abundance, productivity, or diversity (NMFS 2017). Currently, SPR A has a very large distribution, very high abundance, stable (two ecoregions) or decreasing (two ecoregions) abundance in the four ecoregions for which abundance trend data or information are available, and high and stable productivity and diversity. The population has life history characteristics that provide resilience to disturbances and a high capacity for recovery. However, SPR A faces multiple threats, the worst of which are expected to increase in the foreseeable future (NMFS 2020a, Smith 2019a). Thus, on the one hand, most demographic factors suggest Low extinction risk for SPR A, but on the other hand, recent declining abundance trends in two of the four known ecoregions, as well as increasing threats throughout the foreseeable future, suggest increased extinction risk.
Species at Moderate extinction risk are on a trajectory that puts them at a high level of extinction risk in the foreseeable future, due to projected threats or declining trends in distribution, abundance, productivity, or diversity. While SPR A's distribution, productivity, and diversity are currently strong and stable, recent abundance trends are declining in half of the ecoregions for which data or information are available (two of four ecoregions). In addition, all threats are expected to worsen throughout the foreseeable future, including the two greatest threats, ocean warming and ocean acidification, resulting in increased frequency, magnitude, and severity of warming-induced coral bleaching, reduced coral calcification, and increased reef erosion. These climate change threats are likely to be exacerbated by local threats such as fishing and land-based sources of pollution throughout much of SPR A's range. In conclusion, the information in the GSA (Smith 2019a), the SRR (Smith 2019b), and NMFS (2020b) provide support for SPR A currently being at low to moderate extinction risk throughout the foreseeable future.
Relative abundance information is available for all of SPR B's 27 ecoregions, in which it is dominant in seven, common in 10, uncommon in seven, and rare in three. It is a very common species in many of the
Based on the information in the SRR, we consider SPR B's productivity to be high, despite declining abundance trends in some ecoregions. Evidence for high productivity is provided by SPR B's recovery from disturbance in several ecoregions, including: (1) Demographic data suggests that recovery from back-to-back bleaching events is occurring in the MHI Ecoregion (
Although there is little information available on the genotypic and phenotypic diversity of SPR B, its large distribution and high habitat heterogeneity suggest that both types of diversity are very high for this population. In addition, information from portions of individual ecoregions within SPR B shows high genotype and phenotypic diversity (Smith 2019b, Section 3.4). Furthermore, the population's distribution has not been reduced (Smith 2019b, Section 3.1). Therefore, we consider SPR B's diversity to be high and stable (Table 4).
The vulnerabilities of
The extinction risk of SPR B depends on its demographic factors and threats. Populations at Low extinction risk have stable or increasing trends in abundance and productivity with connected, diverse populations, and are not facing threats that result in declining trends in distribution, abundance, productivity, or diversity (NMFS 2017). Although SPR B only includes approximately 15 percent of the range of
Species at Moderate extinction risk are on a trajectory that puts them at a high level of extinction risk in the foreseeable future, due to projected threats or declining trends in distribution, abundance, productivity, or diversity. While SPR B's distribution, productivity, and diversity are currently strong and stable, recent abundance trends are declining in half of the ecoregions for which data or information are available (three of six ecoregions). In addition, all threats are expected to worsen in the foreseeable future, including the two greatest threats, ocean warming and ocean acidification, resulting in increased frequency, magnitude, and severity of warming-induced coral bleaching, reduced coral calcification, and increased reef erosion. These climate change threats are likely to be exacerbated by local threats such as fishing and land-based sources of pollution in some of SPR B's range. In
Of SPR C's 58 ecoregions, relative abundance information is available for 34 ecoregions, in which it is common in seven, and uncommon in 27 (Smith 2019b, Fig. 2; NMFS 2020b). SPR C contains the entire Coral Triangle (Indonesia, Malaysia, Papua New Guinea, Philippines, Solomon Islands), which has over half of the coral reef area in the Indo-Pacific (Smith 2019a). While many of the Coral Triangle's ecoregions are relatively small, they collectively include over 25,000 islands, providing extensive habitat for SPR C. The total abundance estimate for
Based on the information in the SRR, we consider SPR C's productivity to be high, despite declining abundance trends in one ecoregion. Evidence for high productivity is provided by observations from the GBR indicating strong recoveries in recent years from disturbances by displacing less competitive coral species and becoming more abundant than before the disturbances. In addition, studies and observations from ecoregions outside of SPR C have documented multiple recoveries (Smith 2019b, Section 3.2.3). These recoveries demonstrate continued high productivity, thus we consider SPR C's productivity to be high and stable (Table 4).
Although there is little information available on the genotypic and phenotypic diversity of SPR C, its large distribution and high habitat heterogeneity suggest that both types of diversity are high for this population. In addition, the population's distribution has not been reduced (Smith 2019b, Section 3.1). Therefore, we consider SPR C's diversity to be high and stable (Table 4).
The vulnerabilities of
The extinction risk of SPR C depends on its demographic factors and threats. Populations at Low extinction risk have stable or increasing trends in abundance and productivity with connected, diverse populations, and are not facing threats that result in declining trends in distribution, abundance, productivity, or diversity (NMFS 2017). Currently, SPR C has a very large distribution, very high abundance, stable (two ecoregions) or decreasing (one ecoregion) abundance in the three ecoregions for which abundance trend data or information are available, and high and stable productivity and diversity. The population has life history characteristics that provide resilience to disturbances and a high capacity for recovery. However, SPR C faces multiple threats, the worst of which are expected to increase in the foreseeable future (Smith 2019a). Thus, on the one hand, most demographic factors suggest Low extinction risk for SPR C, but on the other hand, recent declining abundance trends in one of the three known ecoregions, as well as increasing threats in the foreseeable future, suggest increased extinction risk.
Species at Moderate extinction risk are on a trajectory that puts them at a high level of extinction risk in the foreseeable future, due to projected threats or declining trends in distribution, abundance, productivity, or diversity. While SPR C's distribution, productivity, and diversity are currently strong and stable, recent abundance trends are declining in one of the three ecoregions for which data or information are available. In addition, all threats are expected to worsen in the foreseeable future, including the two greatest threats, ocean warming and ocean acidification, resulting in increased frequency, magnitude, and severity of warming-induced coral bleaching, reduced coral calcification, and increased reef erosion. These climate change threats are likely to be exacerbated by local threats such as fishing and land-based sources of pollution throughout much of SPR C's range. In conclusion, the information in the GSA (Smith 2019a), the SRR (Smith 2019b), and NMFS (2020b) provide
Relative abundance information is available for all of SPR D's 19 ecoregions, in which it is dominant in seven, common in 7, and uncommon in five. Many of the coral reef communities within this population are
Based on the information in the SRR, we consider SPR D's productivity to be high, despite declining abundance trends in some ecoregions. Evidence for high productivity is provided by SPR D's recovery from disturbance in several ecoregions, including: (1) Demographic data suggests that recovery from back-to-back bleaching events is occurring in the MHI Ecoregion (
Although there is little information available on the genotypic and phenotypic diversity of SPR D, its large distribution and high habitat heterogeneity suggest that both types of diversity are very high for this population. In addition, information from portions of individual ecoregions within SPR D shows high genotype and phenotypic diversity (Smith 2019b, Section 3.4). Furthermore, the population's distribution has not been reduced (Smith 2019b, Section 3.1). Therefore, we consider SPR D's diversity to be high and stable (Table 4).
The vulnerabilities of
The extinction risk of SPR D depends on its demographic factors and threats. Populations at Low extinction risk have stable or increasing trends in abundance and productivity with connected, diverse populations, and are not facing threats that result in declining trends in distribution, abundance, productivity, or diversity (NMFS 2017). Currently, SPR D has a large distribution, high abundance, stable (two ecoregions) or decreasing (two ecoregions) abundance in the four ecoregions for which abundance trend data or information are available, and high and stable productivity and diversity. The population has life history characteristics that provide resilience to disturbances and a high capacity for recovery. However, SPR D faces multiple threats, the worst of which are expected to increase in the foreseeable future (Smith 2019a). Thus, on the one hand, most demographic factors suggest Low extinction risk for SPR D, but on the other hand, recent declining abundance trends in two of the four known ecoregions, as well as increasing threats in the foreseeable future, suggest increased extinction risk.
Species at Moderate extinction risk are on a trajectory that puts them at a high level of extinction risk in the foreseeable future, due to projected threats or declining trends in distribution, abundance, productivity, or diversity. While SPR D's distribution, productivity, and diversity are currently strong and stable, recent abundance trends are declining in half of the ecoregions for which data or information are available (two of four ecoregions). In addition, all threats are expected to worsen in the foreseeable future, including the two greatest threats, ocean warming and ocean acidification, resulting in increased frequency, magnitude, and severity of warming-induced coral bleaching, reduced coral calcification, and increased reef erosion. These climate change threats are likely to be exacerbated by local threats such as fishing and land-based sources of pollution in some of SPR D's range. In conclusion, the information in the GSA (Smith 2019a), the SRR (Smith 2019b),
Determinations based on status of the species within SPRs follow the process described in the introduction to the Rangewide Determination above. If the species within the SPR meets the definition of threatened or endangered, then the species should be listed throughout its range based on the status within that SPR. The determinations for
SPR A can be characterized as a population with strong demographic factors facing broad and worsening threats: It has a very large and stable distribution, very high overall abundance but unknown overall abundance trend, high and stable productivity, and high and stable diversity (Table 4). But it faces multiple global and local threats, all of which are worsening, and existing regulatory mechanisms are inadequate to ameliorate the threats. As explained in the Foreseeable Future for
Although all threats are projected to worsen within SPR A's range over the foreseeable future (Smith 2019a,b; NMFS 2020a), the following characteristics of the population moderate its extinction risk, summarized from information in the SRR (Smith 2019b), NMFS (2020b), and the SPR A component of the Extinction Risk Assessments of the SPRs section above: (1) Its very large geographic distribution (68 ecoregions, ≉197,000 km
Taken together, these demographic characteristics of SPR A are expected to substantially moderate the impacts of the worsening threats over the foreseeable future. While broadly deteriorating conditions will likely result in a downward trajectory of SPR A's overall abundance in the foreseeable future, the demographic characteristics summarized above are expected to allow the population to at least partially recover from many disturbances, thereby slowing the downward trajectory. Thus, our interpretation of the information in the GSA (Smith 2019a), SRR (Smith 2019b), and this finding is that SPR A is currently at low risk of extinction, and that it will be at low to moderate risk of extinction in the foreseeable future. Therefore,
SPR B can be characterized as a population with strong demographic factors facing broad and worsening threats: it has a large and stable distribution, high overall abundance but unknown overall abundance trend, high and stable productivity, and high and stable diversity (Table 4). But it faces multiple global and local threats, all of which are worsening, and existing regulatory mechanisms are inadequate to ameliorate the threats. As explained in the Foreseeable Future for
Although all threats are projected to worsen within SPR B's range over the foreseeable future (Smith 2019a,b; NMFS 2020a), the following characteristics of the population moderate its extinction risk, summarized from information in the SRR (Smith 2019b), NMFS (2020b), and the SPR B component of the Extinction Risk Assessments of the SPRs section above: (1) Its large geographic distribution (27 ecoregions, ≉35,000 km
Taken together, these demographic characteristics of SPR B are expected to substantially moderate the impacts of the worsening threats over the foreseeable future. Although SPR B only consists of approximately 15 percent of the range of
SPR C can be characterized as a population with strong demographic factors facing broad and worsening threats: it has a very large and stable distribution, very high overall abundance but unknown overall abundance trend, high and stable productivity, and high and stable diversity (Table 4). But it faces multiple global and local threats, all of which are worsening, and existing regulatory mechanisms are inadequate to ameliorate the threats. As explained in the Foreseeable Future for
Although all threats are projected to worsen within SPR C's range over the foreseeable future (Smith 2019a,b; NMFS 2020a), the following characteristics of the population moderate its extinction risk, summarized from information in the SRR (Smith 2019b), NMFS (2020b), and the SPR C component of the Extinction Risk Assessments of the SPRs section above: (1) Its very large geographic distribution (58 ecoregions, ≉178,000 km
Taken together, these demographic characteristics of SPR C are expected to substantially moderate the impacts of the worsening threats over the foreseeable future. While broadly deteriorating conditions will likely result in a downward trajectory of SPR C's overall abundance in the foreseeable future, the demographic characteristics summarized above are expected to allow the population to at least partially recover from many disturbances, thereby slowing the downward trajectory. Thus, our interpretation of the information in the GSA (Smith 2019a), SRR (Smith 2019b), and this finding is that SPR C is currently at low risk of extinction, and that it will be at low to moderate risk of extinction in the foreseeable future. Therefore,
SPR D can be characterized as a population with strong demographic factors facing broad and worsening threats: it has a large and stable distribution, high overall abundance but unknown overall abundance trend, high and stable productivity, and high and stable diversity (Table 4). But it faces multiple global and local threats, all of which are worsening, and existing regulatory mechanisms are inadequate to ameliorate the threats. As explained in the Foreseeable Future for
Although all threats are projected to worsen within SPR D's range over the foreseeable future (Smith 2019a,b; NMFS 2020a), the following characteristics of the population moderate its extinction risk, summarized from information in the SRR (Smith 2019b), NMFS (2020b), and the SPR D component of the Extinction Risk Assessments of the SPRs section above: (1) Its large geographic distribution (19 ecoregions, ≉32,000 km
Taken together, these demographic characteristics of SPR D are expected to substantially moderate the impacts of the worsening threats over the foreseeable future. Although SPR D only consists of approximately 14 percent of the range of
This is a final action, and, therefore, we are not soliciting public comments.
A complete list of the references used in this 12-month finding is available at
The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
Bureau of Industry and Security, Commerce.
Publication of a report.
The Bureau of Industry and Security (BIS) in this notice is publishing a report that summarizes the findings of an investigation conducted by the U.S. Department of Commerce (the “Department”) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”), into the effect of imports of aluminum on the national security of the United States. This report was completed on January 17, 2018 and posted on the BIS website on February 16, 2018. BIS has not published the appendices to the report in this notification of report findings, but they are available online at the BIS website, along with the rest of the report (
The report was completed on January 17, 2018. The report was posted on the BIS website on February 16, 2018.
The full report, including the appendices to the report, are available online:
For further information about this report contact Erika Maynard, Special Projects Manager, (202) 482-5572; and David Boylan-Kolchin, Trade and Industry Analyst, (202) 482-7816. For more information about the Office of Technology Evaluation and the Section 232 Investigations, please visit:
This report summarizes the findings of an investigation conducted by the U.S. Department of Commerce (the “Department”) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862 (“Section 232”)), into the effect of imports of aluminum on the national security of the United States.
In conducting this investigation, the Secretary of Commerce (the “Secretary”) noted the Department's prior investigations under Section 232. This report incorporates the statutory analysis from the Department's 2001 Report
As required by statute, the Secretary considered all factors set forth in Section 232(d). In particular, the Secretary examined the effect of imports on national security requirements, including: domestic production needed for projected national defense requirements; the capacity of domestic industries to meet such requirements; existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense; the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth; and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries; and
The Secretary also recognized the close relation of the economic welfare of the United States to its national security; the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills, or any other serious effects resulting from the displacement of any domestic products by excessive imports, without excluding other factors, in determining whether a weakening of the U.S. economy by such imports threaten to impair national security. In particular, this report assesses whether aluminum is being imported “in such quantities” and “under such circumstances” as to “threaten to impair the national security.”
In conducting the investigation, the Secretary found:
(1) Aluminum is essential to U.S. national security. Aluminum is needed to satisfy requirements for:
a.
b.
(2) The U.S. Government does not maintain any strategic stockpile of bauxite, alumina, aluminum ingots, billets or any semi-finished aluminum products such aluminum plate.
(3) The present quantity of imports adversely impacts the economic welfare of the U.S. aluminum industry.
a. Imports and global aluminum production overcapacity, caused in part by foreign government subsidies—particularly in China, have had a substantial negative impact on the economic welfare and production capacity of the United States primary aluminum industry. The decline in U.S. production has occurred despite growing demand for aluminum both in the U.S. and abroad.
b. In 2016, the United States imported five times as much primary aluminum on a tonnage basis as it produced; the import penetration level was about 90 percent, up from 66 percent in 2012.
c. U.S. primary aluminum production in 2016 was about half of what it was in 2015, and output further declined in 2017. U.S. smelters are now producing at 43 percent of capacity and at annual rate of 785,000 metric tons. As recently as 2013, U.S. production was approximately 2 million metric tons per year.
d. Since 2012, six smelters with a combined 3,500 workers have been permanently shut down, totaling 1.13 million metric tons in lost production capacity per year.
e. The loss of jobs in the primary aluminum sector has been precipitous between 2013 and 2016, falling 58 percent from about 13,000 to 5,000 employees.
f. The U.S. currently has five smelters remaining, only two smelters that are operating at full capacity. Only one of these five smelters produces high-purity aluminum required for critical infrastructure and defense aerospace applications, including types of high performance armor plate and aircraft-grade aluminum products used in upgrading F-18, F-35, and C-17 aircraft. Should this one U.S. smelter close, the U.S. would be left without an adequate domestic supplier for key national security needs. The only other high-volume producers of high-purity aluminum are located in the UAE and China (internal use only).
g. The impact so far has been greatest on the primary (unwrought) aluminum sector. Now, however, the downstream aluminum sector also is threatened by overcapacity and surging imports.
h. Imports accounted for 64 percent of U.S. consumption of aluminum (primary and downstream mill products combined) in 2016.
i. U.S. imports in the aluminum categories subject to this investigation totaled 5.9 million metric tons in 2016, up 34 percent from 4.4 million metric tons in 2013. In the first 10 months of 2017, aluminum imports rose 18 percent above 2016 levels on a tonnage basis.
j. In the downstream aluminum sectors of bars, rods, plates, sheets, foil, wire, tubes and pipes, imports rose 33 percent from 1.2 million metric tons in 2013 to 1.6 million metric tons in 2016.
k. Overall in 2016, for the aluminum product categories covered by this investigation, the United States ran a trade deficit of $7.2 billion.
(4) Global excess aluminum capacity is a circumstance that contributes to the weakening of the U.S. aluminum industry and the U.S. economy.
a. A major cause of the recent decline in the U.S. aluminum industry is the rapid increase in production in China. Chinese overproduction suppressed global aluminum prices and flooded into world markets.
b. China's aluminum production is largely unresponsive to market forces. China produced approximately one million metric tons of excess supply in 2016. This excess alone exceeds the total U.S. 2016 production of primary aluminum of 840,000 metric tons.
c. China's industrial policies encourage development and domination of the entire aluminum production chain. These policies are further intended to stimulate the export of aluminum processed into sheets, plates, rods, bars, foils and other semi-manufactures and to target development of increasingly sophisticated and high-value product sectors such as automotive and aerospace.
d. China imposes an excise tax that creates a disincentive for the export of primary aluminum ingots and billets. It provides tax rebates on exports of semi-finished or finished aluminum products. Thus, U.S. imports of aluminum from China are not in the form of unwrought aluminum, but primarily semi-finished downstream aluminum products.
e. As imports make further inroads into the higher value-added, more sophisticated downstream sectors, U.S. downstream companies supporting the defense sector will be increasingly impacted.
Based on these findings, the Secretary of Commerce has concluded that the present quantities and circumstance of aluminum imports are “weakening our internal economy” and threaten to impair the national security as defined in Section 232. The Department of Defense and critical domestic industries depend on large quantities of aluminum. But recent import trends have left the U.S. almost totally reliant on foreign producers of primary aluminum. The U.S. is also at risk of becoming completely reliant on foreign producers of high-purity aluminum that is essential for key military and commercial systems. The domestic aluminum industry is at risk of becoming unable to satisfy existing national security needs or respond to a national security emergency that requires a large increase in domestic production. These risks and long-run industry trends “threaten to impair the national security” as defined by Section 232.
The Secretary has determined that to remove the threat of impairment, it is necessary to reduce imports to a level that will provide the opportunity for U.S. primary aluminum producers to
The imposition of a quota or tariff on downstream products also is necessary because global overcapacity, coupled with industrial policies that promote exports of downstream products, have had a negative impact on the U.S. primary aluminum industry through reduced demand for inputs from downstream companies, as well as directly on the downstream companies that face increased import penetration in many aluminum product sectors.
Due to the threat, as defined in Section 232, to national security from the quantities and circumstances of aluminum imports, the Secretary recommends that the President take immediate action by adjusting the level of these imports. Under alternatives 1 and 2, the quotas or tariffs would be designed, even after any exemptions (if granted), to enable U.S. aluminum production to utilize an average of 80 percent of production capacity. The quotas and tariffs described below should be sufficient to enable U.S. aluminum producers to operate profitably under current market prices for aluminum and will allow them to reopen idled capacity (
Two alternatives for achieving this object are described. In each alternative, quotas or tariffs would be imposed on imports of: 1) unwrought aluminum (Harmonized Tariff Schedule (HTS) Code 7601); 2) aluminum castings and forgings (HTS Codes 7616.99.51.60 and 7616.99.51.70); 3) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS Codes 7606 and 7607); 4) aluminum wire (HTS Code 7605); 5) aluminum bars, rods and profiles (HTS Code 7604); and 6) aluminum tubes and pipes (HTS Code 7608); and 7) aluminum tube and pipe fittings (HTS Code 7609) based on 2017 annualized imports in those categories.
In either alternative, the Secretary recommends that the action taken to adjust the level of imports must be in effect for a duration sufficient to allow necessary time and assurances to stabilize the U.S. industry. It takes up to nine months to restart idled smelting capacity. Market certainty is needed to build cash flow to pay down debt and to raise capital for plant modernization to improve manufacturing efficiency.
The Department of Commerce, in consultation with other appropriate departments and agencies, will monitor the status of the U.S. aluminum industry and the effectiveness of the remedies to determine if the remedies should be terminated, extended, or adjusted as needed.
A worldwide quota of 86.7 percent on imports described above would restrict aluminum imports sufficiently to allow U.S. primary aluminum producers to increase production by about 669,000 metric tons, bringing total production to about 1.45 million metric tons, or about 80 percent of U.S. primary aluminum production capacity. This quota would also be applied to the five other aluminum product categories listed above and would help ensure the viability of those U.S. producers to meet national security needs.
A tariff rate of 7.7 percent on imports of unwrought aluminum and the other aluminum product categories listed above should have the same impact as the 86.7 percent quota. This tariff rate would be in addition to any antidumping or countervailing duty collections applicable to any product.
This tariff rate also will adequately adjust for the price distortions in downstream aluminum product sectors that are caused by global overcapacity and overproduction being exported in the form of downstream products.
A tariff rate of 23.6 percent on imports of aluminum products from China, Hong Kong, Russia, Venezuela, and Vietnam should also restrict aluminum imports sufficiently to allow U.S. aluminum producers to utilize an average of 80 percent of capacity. These five countries are the source of substantial imports due to significant overcapacity, and/or are potential unreliable suppliers or likely sources of transshipped aluminum from China.
As in Alternative 1 above, this tariff rate would be in addition to any antidumping or countervailing duty collections applicable to any product. (For targeted tariff, all other countries would be limited to 100 percent of their 2017 import volumes.)
In selecting an alternative, the President could determine that specific countries should be exempted from the proposed quota (by granting those specific countries 100 percent of their prior imports in 2017 or exempting them entirely), based on an overriding economic or security interest of the United States, which could include their willingness to work with the United States to address global excess capacity and other challenges facing the U.S. aluminum industry.
The Secretary recommends that any such determination should be made at the outset and a corresponding adjustment be made to the final quota or tariff imposed on the remaining countries. This would ensure that overall imports of aluminum to the United States remain at or below the level needed to enable the domestic aluminum industry to return to 2012 production and import penetration levels.
The Secretary recommends an appeal process by which affected U.S. parties could seek an exclusion from the tariff or quota imposed. The Secretary would grant exclusions based on a demonstrated: (1) Lack of sufficient U.S. production capacity of comparable products; or (2) specific national security-based considerations. This appeal process would include a public comment period on each exclusion request, and in general, would be completed within 90 days of a completed application being filed with the Secretary.
An exclusion may be granted for a period to be determined by the Secretary and may be terminated if the conditions that gave rise to the exclusion change. The U.S. Department of Commerce will lead the appeal process in coordination with the Department of Defense and other agencies as appropriate. Should exclusions be granted the Secretary would consider at the time whether the quota or tariff for the remaining products needs to be adjusted to ensure that U.S. aluminum production meets target levels.
Section 232 provides the Secretary with the authority to conduct investigations to determine the effect on the national security of the United States of imports of any article. It authorizes the Secretary to conduct an investigation if requested by the head of any department or agency, upon application of an interested party, or upon his own motion.
Section 232 directs the Secretary to submit to the President a report with recommendations for “action or inaction under this section” and requires the Secretary to advise the President if any article “is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.”
Section 232(d) directs the Secretary and the President to, in light of the requirements of national security and without excluding other relevant factors, give consideration to the domestic production needed for projected national defense requirements and the capacity of the United States to meet national security requirements.
Section 232(d) also directs the Secretary and the President to “recognize the close relation of the economic welfare of the Nation to our national security, and
. . .take into consideration the impact of foreign competition on the economic welfare of individual domestic industries” by examining whether any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports,
Once an investigation has been initiated, Section 232 mandates that the Secretary provide notice to the Secretary of Defense that such an investigation has been initiated. Section 232 also requires the Secretary to do the following:
(1) “Consult with the Secretary of Defense regarding the methodological and policy questions raised in [the] investigation;”
(2) “Seek information and advice from, and consult with, appropriate officers of the United States;” and
(3) “If it is appropriate and after reasonable notice, hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to such investigation.”
As detailed in Parts III and VI of this report, each of the legal requirements set forth above has been satisfied.
In conducting the investigation, Section 232 permits the Secretary to request that the Secretary of Defense provide an assessment of the defense
Upon completion of a Section 232 investigation, the Secretary is required to submit a report to the President no later than 270 days after the date on which the investigation was initiated.
(1) Set forth “the findings of such investigation with respect to the effect of the importation of such article in such quantities or under such circumstances upon the national security;”
(2) Set forth, “based on such findings, the recommendations of the Secretary for action or inaction under this section;” and
(3) “If the Secretary finds that such article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security . . . so advise the President.”
All unclassified and non-proprietary portions of the report submitted by the Secretary to the President must be published.
Within 90 days after receiving a report in which the Secretary finds that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the President shall:
(1) “Determine whether the President concurs with the finding of the Secretary”; and
(2) “If the President concurs, determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security.”
While Section 232 does not contain a definition of “national security,” both Section 232, and its implementing regulations at 15 CFR part 705, contain non-exclusive lists of factors that Commerce must consider in evaluating the effect of imports on national security.
Congress in Section 232 explicitly determined that “national security” includes, but is not limited to, “national defense” requirements.
The Department also concluded in 2001 that “in addition to the satisfaction of national defense requirements, the term “national security” can be interpreted more broadly to include the general security and welfare of certain industries, beyond those necessary to satisfy national defense requirements, which are critical to the minimum operations of the economy and government.” The Department called these “critical industries.”
Section 232 directs the Secretary to determine whether imports of any article are being made “in such quantities” or “under such circumstances” that those imports “threaten to impair the national security.”
The statute does not define a threshold for when “such quantities” of imports are sufficient to threaten to impair the national security, nor does it define the “circumstances” that might qualify.
Likewise, the statute does not require a finding that the quantities or circumstances are impairing the national security. Instead, the threshold question under Section 232 is whether those quantities or circumstances “threaten to impair the national security.”
Section 232(d) contains a considerable list of factors for the Secretary to consider in determining if imports “threaten to impair the national security”
Two of the factors listed in the second sentence of Section 232(d) are most relevant in this investigation. Both are directed at how “such quantities” of imports threaten to impair national security.
Another factor, not on the list, that the Secretary found to be a relevant is the presence of massive foreign excess capacity for producing aluminum. This excess capacity results in aluminum imports occurring “under such circumstances” that that they threaten to impair the national security.
It is these three factors—displacement of domestic aluminum by excessive imports and the consequent adverse impact on the economic welfare of the domestic aluminum industry, along with global (primarily Chinese) excess capacity in aluminum- that the Secretary has concluded are “weakening. . .our internal economy” and therefore “threaten to impair” the national security as defined in Section 232.
The Secretary also considered whether or not the source of the imports affects the analysis under Section 232. The Department has previously determined “imports can threaten to impair U.S. national security if the United States is excessively dependent on imports from unreliable or unsafe sources, and thereby is vulnerable to a supply disruption” for an input or article.
The source of imports could also be a “factor” the Secretary considers under the analysis required by Section 232(d).
The statute allows the Secretary to reasonably conclude that, in the absence of adequate domestic supply, imports from allies should not be relied upon in order to ensure domestic production facilities are sufficient to meet U.S. national security as defined in Section 232. Similarly, the statute also permits the Secretary to consider the availability of reliable imports as a factor that supports a conclusion that imports are not threatening to impair U.S. national security.
On April 26, 2017, U.S. Secretary of Commerce Wilbur Ross initiated an investigation to determine the effect of imported aluminum on national security under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862).
Pursuant to Section 232, the Department notified the U.S. Department of Defense in an April 26, 2017 letter from Secretary Ross to Secretary James Mattis. On April 27, 2017, President Donald Trump signed a Presidential Memorandum directing Secretary Ross to proceed expeditiously in conducting his investigation and submit a report on his findings to the President.
On May 3, 2017, the Department invited interested parties to submit written comments, opinions, data, information, or advice relevant to the criteria listed in § 705.4 of the National Security Industrial Base Regulations (15 CFR 705.4) as they affect the requirements of national security, including the following:
(a) Quantity of the articles subject to the investigation and other circumstances related to the importation of such articles;
(b) Domestic production capacity needed for these articles to meet projected national defense requirements;
(c) The capacity of domestic industries to meet projected national defense requirements;
(d) Existing and anticipated availability of human resources, products, raw materials, production equipment, facilities, and other supplies and services essential to the national defense;
(e) Growth requirements of domestic industries needed to meet national defense requirements and the supplies and services including the investment, exploration and development necessary to assure such growth;
(f) The impact of foreign competition on the economic welfare of any domestic industry essential to our national security;
(g) The displacement of any domestic products causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;
(h) Relevant factors that are causing or will cause a weakening of our national economy; and
(i) Any other relevant factors. (
The public comment period ended on June 23, 2017. The Department received 91 written submissions concerning this investigation. These public comments are set forth in Appendix A.
The Department held a public hearing to elicit further information concerning this investigation in Washington, DC on June 22, 2017. The Department heard testimony from 32 witnesses at the hearing. A transcript of the testimonies given at the Public Hearing is included in Appendix B.
Pursuant to the requirements of Section 232, Commerce Secretary Ross notified Defense Secretary Mattis of this investigation on April 26, 2017. In addition, Department of Commerce staff consulted with their counterparts in the Department of Defense regarding methodological and policy questions that arose during the investigation.
The Department also consulted with other agencies of the U.S. Government with expertise and information regarding the aluminum industry, including the U.S. Geological Survey of the Department of the Interior and the U.S. International Trade Commission.
For this report, aluminum is defined at the Harmonized Tariff Schedule (HTS) 4-digit level. The HTS codes covered by this report are listed in Table 2. In addition, two HTS codes at the ten digit level are included, covering aluminum castings and forgings.
The scope of this investigation does not include bauxite or alumina, which are feedstocks for production of primary (unwrought) aluminum. Also excluded from analysis are aluminum waste and scrap (HTS 7602) and aluminum powders and flakes (HTS 7603) as these represent different industrial sectors.
Aluminum is the most abundant naturally occurring metal in the earth's crust, and it is an essential element of modern life. Virtually every person in the United States, and indeed most of the world, uses aluminum every single day. More aluminum is consumed today than at any point in the 125-year history of the metal's commercial production. Lightweight, corrosion resistant, easily formed, highly conductive, highly reflective, durable and recyclable—aluminum is a highly useful material for manufacturers. It offers a wide range of options for product innovation and process improvements. Aluminum is critical to modern mobility, increasing sustainability, and the national economy.
Aluminum is used in a wide variety of applications, and global demand for it is expected to grow at an annual rate of 3.8 percent.
Aluminum originates from bauxite, an ore typically found in the topsoil of various tropical and subtropical regions; the United States is not a significant
The industry can be divided into three basic segments:
The majority of U.S. aluminum production today is based on recycled scrap, called secondary production, and is captured within HTS Code 7602. The United States is the world's leading producer of secondary unwrought aluminum, due to its long established aluminum recycling industry. Secondary production increased from 22 percent of aluminum production in 1980, to 64 percent of domestic production in 2016.
The processing of aluminum into semi-finished aluminum goods such as rods, bars, sheets, plates, castings, forgings and extrusions is the
Aluminum products are used widely across U.S. society in a range of consumer products, commercial applications, and industrial products. The supply of aluminum ingot, bar, rod, coils, sheet, cable and wire, and plate products is essential to the functioning of the U.S. economy, critical infrastructure, and the national defense. This lightweight, electrically conductive, corrosion resistant material has widespread uses in consumer goods, commercial products, and in many industrial applications.
From food packaging to advanced military aircraft, aluminum is a vital material used in industry and in infrastructure critical to U.S. economic growth. These sectors consume large quantities aluminum for new construction, production of aircraft, automobiles, bridges, building materials, heating and cooling systems, housing, power transmission cable, trucks and trailers and other applications.
A predictable supply of this versatile metal is required for the supply of many types of products and systems supporting U.S. government civilian and defense operations. For economic stability and to support national security requirements for U.S. critical infrastructure and the national defense, the United States needs domestic capability to produce both primary aluminum and semi- finished aluminum products.
Specifically, U.S. capability must be maintained for: 1) primary aluminum production, 2) processing of recycled aluminum into products, and 3) making bar and rod, plate and sheet, coils, extrusions, castings, forgings, pigments and powders, and other aluminum products. In 2016, imports of aluminum ingot and semi-finished aluminum products accounted for 64 percent of U.S. aluminum consumption.
Total reliance on imports cannot provide an assured supply of aluminum to meet U.S. critical infrastructure and defense needs in a national emergency—as production facilities are vulnerable and supply lines are easily disrupted. A significant shortfall in the flow of imported aluminum to U.S. manufacturers could disrupt essential commercial production in the absence of a domestic supply base for aluminum. Moreover, the aluminum smelting and downstream aluminum products industry are critical to the minimum operations of the economy and government.
Critical infrastructure sectors where there is significant dependence on aluminum content include:
•
•
•
•
•
•
The U.S. Department of Defense (DoD) and its contractors use a small percentage of U.S. aluminum production. The DoD “Top Down” estimate of average annual demand for aluminum during peacetime is [TEXT REDACTED], or [TEXT REDACTED] percent of total U.S. demand
The following sections of the report describe the use of aluminum in U.S. military systems and in critical infrastructure.
In the area of ground weapons, cold-rolled thick aluminum plate is an integral part of the structure of armored vehicles such as tanks, personnel carriers, and amphibious vehicles. Such plate is classified within Harmonized Tariff Schedule (HTS) 7606. In these applications, aluminum provides outstanding ballistic protection and excellent corrosion resistance. Aluminum bar and other extrusions (HTS 7604) are used in cage armor on a number of vehicles. Aluminum cage armor is approximately 50 percent lighter than steel cage armor.
The use of aluminum also allows the design of low-weight, reliable, and cost-efficient components for light-armored
Aluminum alloys are the predominant choice for the fuselage, wing, and supporting structures of many military aircraft. These types of products are classified within HTS 7606 (aluminum sheet) as well aluminum casting and forgings classified within HTS 7616.99.51. The use of aluminum has been key to the success of advanced aircraft over the decades, including planes such as the Lockheed SR-71 Blackbird, C-17 Globemaster, Boeing F-18—and today, the F-35 Joint Strike Fighter.
Because of aluminum's light weight and excellent damage tolerance capability, it is used in a large number of aircraft applications: vertical stabilizers, horizontal stabilizers, plate for trailing edges, spars, ribs, fuselage frames, and air intake shells. A variety of aircraft-related systems, including bombs, decoy systems, and radar also require aluminum. The airframe of a military aircraft can be as much as 80 percent aluminum by weight. The military aircraft industry also demands high-strength aluminum products that can perform in harsh environments without cracking or outright failure.
Aluminum products used in military aircraft are often highly engineered to meet specific performance attributes to facilitate machining complex aircraft parts. Structural components of U.S. military aircraft may be made of cast or fabricated wrought aluminum (forged, machined and assembled parts) as well as rolled sheet products.
The supply of high-purity aluminum is critical to the production of high- performance aluminum alloys used in military aircraft and other applications. To meet aircraft component performance requirements, “Purity” and “High-purity” grades of aluminum must be used to enable the manufacture of aluminum materials with greater tensile strength, fracture toughness, improved high-temperature operating ability, and corrosion resistance.
Aircraft deployed by the DoD are expected to continue to use significant amounts of aluminum, even as composite materials replace parts traditionally made of aluminum or titanium. At least 36 types of U.S. military aircraft and related systems that require aluminum parts are in service today. These aircraft are purchased and used by the U.S. Government and foreign governments. In addition, there are 19 other military aircraft systems for which spare aluminum parts continue to be required or may be required (
The U.S. manufacturers of products based on aluminum require 250,000 metric tons of high-purity aluminum a year. Approximately 90 percent of this is for commercial aerospace and other applications. Ten percent is used to support the manufacture of defense-related products. The United States produced annually, until recently, 125,000 metric tons of high-purity aluminum (Grades P0404, P0303, P0202). The balance is imported, principally from the UAE, but also small quantities from Canada, New Zealand, and Russia.
Century Aluminum operates the only high-volume, pure aluminum smelter in the United States. Its Hawesville, Kentucky facility has demonstrated capability to produce at least 100,000 metric tons of high-purity aluminum a year (it manufactured 60,000 metric tons high-purity aluminum in 2016). Arconic currently has an annual capability to produce approximately [TEXT REDACTED] of high-purity aluminum using standard aluminum ingot in a fractionalization crystallization process. All of its production is for internal consumption for the manufacture of company products; it supplements its own production with imported high-purity aluminum (from the UAE).
Aluminum from Century's Hawesville smelter supplies the electrical
The actions of Century's customers are driven in part because of concerns about Century Aluminum's future financial viability. Century has been closing smelting facilities in response to reduced orders for aluminum product from traditional customers—a situation attributed to foreign government intervention in the aluminum industry with massive subsidies. This has produced a global aluminum supply glut and a collapse of world aluminum prices. In turn, it has driven up U.S. imports of aluminum, which have drastically reduced company production and income.
There is a history of extensive use of aluminum in space applications, including launch vehicles, space capsules, satellites, and missiles. Aluminum has been a preferred material because of it is light weight, able to withstand stress, heat reflectance, and has other properties.
For missile and space applications, aluminum has been the material used across a wide range of structures. Once again, its light weight and its ability to withstand the stresses that occur during launch and operation in space environments are why aluminum has been used on Apollo spacecraft, the Skylab, the space shuttles and the International Space Station, as well as in missiles.
Aluminum alloys consistently exceed other metals in such areas as mechanical stability, dampening, thermal management and reduced weight. Powdered aluminum is also used as the key ingredient in primary propellant for solid rocket booster motors for tactical missiles and space-launch platforms. The reason for this is because it has a high volumetric energy density and is difficult to ignite accidentally.
Military marine designers and naval engineers recognize that aluminum's low density, high strength, and corrosion resistance make it an advantageous material for some types of shipbuilding. Use of aluminum enhances ship speeds and enables operation in shallower water because of reduced draft. Increased fuel efficiency and higher cargo carrying capability also are enabled by vessel weight reductions achieved using aluminum.
The greatest use of aluminum in the U.S. Navy is with four classes of ships: Expeditionary Fast Transport, Joint High Speed Vessel, Littoral Combat Ship—Monohull and the Littoral Combat Ship—Tirmarian. Smaller quantities of aluminum will be required for the construction of smaller craft—
Although the cost of aluminum material is higher than for steel, and more labor hours are required to build the structure for aluminum ships, for some types of vessels there is an overall cost savings due to the life-cycle benefits of aluminum's significantly lower weight.
DoD projects that its requirements for defense products and systems using aluminum will grow in the years ahead. DoD estimates that annual consumption for just wrought aluminum plate used in nine defense systems will climb from [TEXT REDACTED] in 2017 to more than [TEXT REDACTED] tons in 2020.
Much of this increase for wrought aluminum plate is attributed to orders for the Joint Light Tactical Vehicle (JLTV), Armored Multi-Purpose Vehicle (AMPV), M109 Paladin Artillery Vehicle, and the Amphibious Assault Vehicle (AAV), and the Littoral Combat Ship. Aluminum also is required for foreign military sales of Bradley Fighting Vehicles. These DoD aluminum projections do not include aluminum consumed for the production of spare parts for more than 70 Army, Air Force, and Navy systems in use by DoD.
In addition, ongoing research focused on improving sheet aluminum performance characteristics as well as casting and forging technology for aircraft and other defense application could result in greater use in DoD platforms. Indeed, R&D is expected to drive expanded use of the material—raising overall DoD tonnage requirements for production of defense systems.
Yet the pace of expansion of aluminum use in defense and commercial markets may be slower than it might be were it not for the collapse of aluminum prices and loss of revenue at U.S. aluminum producers. At this time most aluminum companies cannot afford to fund research. The importance of research in this industry is clear, however. More than 90 percent of all alloys currently used in the aerospace industry were developed through Alcoa's research.
Retention of domestic capacity to meet DoD production requirements for conventional aluminum plate, armor plate, and other aluminum production capacity is of concern to DoD. DoD does not keep any type of aluminum product, including armor plate, in the U.S. Government's national stockpile.
With U.S. commercial applications accounting for 90 percent of high performance aluminum consumption, limited commercial stockpiles located in the United States are not likely to be sufficient to support DoD aluminum requirements in a time of a major war. The ability to ship aluminum products across the ocean could be severely restricted, if not impossible.
As of June 2017, there were approximately 295,000 metric tons of primary and alloy aluminum held in U.S. warehouses operated by the London Metals Exchange (LME). Based on 2016 U.S. consumption of 5.1 million metric tons, the amount of aluminum held in LME warehouses in Baltimore, Detroit, and New Orleans represents three weeks of domestic industrial demand.
U.S. national security cannot be assured if the United States becomes entirely dependent on foreign suppliers for primary aluminum and high-purity aluminum. The U.S. in 2016 relied on imports for 89 percent of its primary aluminum requirements, up from 64 percent in 2012.
In the future there is no assurance that some non-U.S. suppliers such as Russia (the largest supplier of primary aluminum to the U.S. after Canada) will provide all the necessary aluminum products on a timely basis and in the quantities requested, particularly in a time of war or national emergency. Shifts in the policies of the governments of offshore aluminum suppliers, many of them state- owned, could leave the United States stranded.
The Department of Homeland Security has designated 16 critical infrastructure sectors in the United States, which are considered so vital that their incapacitation or destruction would have a debilitating effect on defense capability, national economic security, national public health or safety.
Specifically, these sectors include chemical production, commercial facilities, communications, critical manufacturing, dams, defense industrial base, emergency services, energy, food and agriculture, government facilities, transportation systems, and water
Of particular importance to U.S. critical infrastructure are core manufacturing activities such as primary metals manufacturing, including aluminum production and processing.
Although aluminum use for electrical applications accounted for approximately seven percent of total U.S. aluminum consumption in 2016 (or about 836,000 metric tons),
The health of the U.S. economy hinges on functioning power transmission systems and the timely supply of reliable, durable aluminum cable for use by electric utilities. Predictable supply is especially important for recovery from storms and other natural disasters. Commercial office buildings also use large amounts of aluminum cable; and it is widely used as the primary service feed to residential power meters and breaker boxes.
The sector consuming the largest amount of aluminum is transportation. The manufacture of aircraft, automobiles, buses, freight and subway cars, boats and ships, tractor trailers, and related components accounted for about 35 percent (about 4.2 million metric tons) of U.S. aluminum consumption in 2016, according to the Aluminum Association.
The ready availability of high quality aluminum bar, rod, coils, plate, sheet, and extrusions is critical to the ability of manufacturers to deliver product to their customers in a timely way and to respond to national emergencies. For this reason, Boeing purchases [TEXT REDACTED] percent of the aluminum it uses for the manufacture of aircraft from suppliers in the United States.
The agriculture and food supply industries are another of the Department of Homeland Security's (DHS) 16 critical infrastructure sectors. This industry relies heavily on the availability of aluminum packaging, including canning materials and foils (HTS 7607). Aluminum containers and packaging accounted for about 18 percent of U.S. aluminum consumption in 2016 (about 2.2 million metric tons). Aluminum is also widely used in crop irrigation piping in fields.
Building and construction, according to the Aluminum Association, was the third-largest major market for aluminum products in 2016, accounting for about 12 percent of total U.S. consumption (about 1.5 million metric tons). Aluminum is used for structural supports; door, wall, and door framing; roofs and awnings; architectural trim; utility cabinets; air conditioning systems; drawbridges and portable emergency bridges; and many other applications. Many of these applications of aluminum are classified in HTS 7604 and HTS 7608.
Excessive reliance on offshore producers as the primary suppliers of aluminum ingot, semi-finished, and finished products to sustain systems for critical infrastructure would pose risks. The ability of the United States to respond to national emergencies could be constrained by a lack of domestic production capability. Domestic inventories of aluminum products are often limited. Dependence on offshore manufacturers can hinder U.S. capabilities to respond to catastrophes and market surges.
Continued access to U.S.-based aluminum production is important to critical infrastructure and to the nation's overall defense objectives as well as economic security. All segments of the U.S. aluminum industry contribute, directly or indirectly, to the U.S. defense industrial base as aluminum is used in a variety of defense applications. High-strength aluminum alloys have become among the most commonly used materials to make military aircraft; and aluminum armor plate is used to protect against explosives and other threats. A number of U.S. Navy ships are now made with aluminum.
The U.S. Department of Defense has a large and ongoing need for a range of aluminum products. These include:
• High-purity aluminum for the F-35 Joint Strike Fighter, the F-18, and the C-17.
• High-purity aluminum for the armor plate in military vehicles, littoral combat vessels, and missiles. The percentage of aluminum content in armor plate in military platforms is increasing and may reach as much as 60 percent in the next generation military vehicles.
• The U.S. Coast Guard employs aluminum-intensive 47-foot first- response lifeboats. The craft are self-bailing, self-righting and have a long cruising radius for their size.
Reliance on foreign suppliers for essential aluminum and aluminum products is contrary to U.S. national security. Moreover, overreliance on assumed future U.S. production capacity without adequate analysis given to the financial health and viability of the U.S. aluminum industrial base can lead to shortfalls in needed production, capabilities and related skilled work force when called upon.
To ensure U.S. national security response capability, the nation must have sufficient domestic aluminum production capacity to meet most commercial demand and to fulfill DoD contractor and critical infrastructure requirements. The economic stability of companies manufacturing aluminum in the United States is undermined by growing volumes of imported aluminum in key product sectors.
Although the United States imports large quantities of aluminum products from foreign suppliers, historically U.S. aluminum manufacturers have been industry leaders. Innovation by U.S. aluminum producers has provided technological and cost advantages to many domestic industries that use aluminum, including the aerospace, automotive, and defense sectors.
U.S. manufacturers have produced numerous high performance alloys to increase the strength, durability, performance of aluminum products. The wide- spread adoption of high-strength aluminum structural components and panels in automobiles, trucks, and aircraft are examples.
To maintain the health of advanced aerospace and defense product lines, the domestic industry must have a strong aluminum manufacturing capability and commercial product portfolio (
In 2016, global aluminum smelter capacity totaled 72.5 million metric tons, which was approximately two percent higher than the 2015 level.
During World War II, aluminum was considered so important to U.S. national security that the U.S. government embarked on a program to expand U.S. production capacity, which in 1940 was limited to one producer (Alcoa). Through the government-owned Defense Plant Corporation, the U.S. expanded primary aluminum production capacity by building new smelters to meet military demands. The government-owned plants were ultimately sold to U.S. corporations Kaiser Aluminum and Reynolds Aluminum in 1950.
During the Korean War, the U.S. government sought to further expand U.S. primary aluminum capacity to meet military needs. This time, incentives were used including accelerated amortization (reducing or eliminating corporate taxes) and purchase contracts (in which the government purchased all unsold aluminum). Further expansion in U.S. production capacity took place in the 1960's, but during these years it was driven by increasing commercial demand.
U.S. primary aluminum production and capacity was relatively stable at between 3.5 million and 4 million metric tons per year from 1970 to 2000. Since 2000, there has been a steep decline in U.S. production. It corresponds with a large increase in U.S. imports of primary aluminum (
One of the main reasons for the decline in U.S. primary aluminum production capacity is that the United States is a relatively high cost producer. Because aluminum production is highly energy intensive, the world's leading producers are generally the countries with the lowest energy costs (including Canada, Russia, the United Arab Emirates (UAE), and Bahrain). The exception is China, where electricity costs are actually higher than those of the United States ($614 per metric ton of aluminum produced in China versus $532 per metric ton in the United States); China' overall production costs were equal to that of U.S. producers.
Total U.S. primary aluminum production capacity and actual production for the most recent five-year period is shown in Table 9 below. The decline in U.S. production and capacity utilization has been particularly dramatic in just the past two years, during which aluminum prices were at near record lows. The erosion of primary aluminum production capacity in the United States due to falling aluminum prices and subsequent closure of smelters has been precipitous.
In 1981, the U.S. produced 30 percent of the world's primary aluminum and it remained the world's largest producer until 2000, when there were 23 smelters in operation. In 2016, the U.S. accounted for just 1.5 percent of global production.
In the same timeframe, production of primary aluminum in China grew from less than 15 percent of global production in 2000 to about 55 percent in 2016.
In 2017, there are only two aluminum (upstream) producers in the United States that operate smelters: Alcoa and Century Aluminum. A third company, Noranda, is in bankruptcy and its idled smelter was sold to ARG International AG of Switzerland. Table 10 below lists the status of aluminum smelting in the United States. At the beginning of 2016, three companies operated eight primary aluminum smelters in six U.S. states. In November, 2017, domestic smelters were operating at about 43 percent of capacity of about 1.8 million metric tons per year.
There are five smelters in the United States currently producing at some level, of which only two are operating at full production capacity. Three others are operating, but have reduced output levels below capacity by shutting down pot lines. During periods of weak demand or low aluminum prices, firms often shut down individual pot lines rather than run them at reduced capacity due to the 24/7 nature of primary smelting operations.
Industry leader Alcoa has just one fully operational smelter in the U.S.: Massena West (NY), with 130,000-ton-per-year capacity. It was saved from closure by $73 million in aid from New York State.
Although Alcoa announced in 2016 that its Warrick smelting operations in Evansville, Indiana would permanently close in July 2017 the company reversed that position announcing that three of five pot lines would be restarted by the second quarter of 2018, providing 275 jobs. Similarly, Century was close to idling one third of its Sebree, Kentucky smelter output in 2015, but made some organizational changes that enabled it to keep operating at full capacity.
Two additional smelters are currently shut down, although no formal announcement of their permanent closure has been made: Alcoa's Wenatchee, WA and Magnitude 7 Metals' New Madrid, Missouri smelter (formerly Noranda). On October 28, 2016, ARG International AG of Switzerland completed the purchase of Noranda's idle smelter and renamed it Magnitude 7 Metals; the new owner is attempting to negotiate a power contract that will enable it to restart operations.
Of the five smelters currently in operation at some level, only one is capable of producing high-purity aluminum needed for many advanced aerospace and defense applications: Century Aluminum's Hawesville, KY plant. Century attributes its production decline to Chinese overproduction of high-purity aluminum and associated increases in Chinese exports of aluminum products. This smelter is a major source of high-purity aluminum to product fabricators, including Constellium, and Kaiser. These companies use high-purity materials to produce aluminum products for DoD, including types of high-performance armor plate and aircraft-grade aluminum products used in upgrading F-18, F-35, and C-17 aircraft.
Since 2012, six aluminum smelters have been permanently shut down, totaling 1.13 million metric tons of annual production capacity,
In addition, the reopening of Noranda's Missouri smelter (now Magnitude 7 Metals) is in doubt. If these smelters were to make their closures permanent, total lost U.S. annual smelting capacity since 2012 could reach 1.5 million metric tons, and a loss of over 4,000 jobs.
The closures of these facilities have had a significant impact on the local economies that relied on them for high quality jobs. Even temporary idling of plants threatens the U.S. industry as there are significant financial costs with re- opening an aluminum plant. According to industry experts, it takes six to nine months to restart aluminum production at an idled smelter or pot line. The longer the facility is idled, the more difficult it is to bring back the highly skilled workforce needed to operate the facility, adding additional costs for worker training and production delays.
As has been noted, secondary aluminum production today accounts for a substantial portion of the total supply of aluminum in the United States. According to the Aluminum Association, about 75 percent of all the aluminum ever produced is still in use today. Table 12 below provides statistics on the recovery of aluminum from new and old scrap. In 2016, aluminum recovered from scrap was 3.6 million metric tons, which was over four times primary aluminum production that year (841,000 metric tons). This figure represents secondary production by merchant producers; captive secondary production by downstream aluminum companies is not included.
The USITC study also included an estimate for change in U.S. production and production capacity for secondary unwrought aluminum. The ITC found that U.S. secondary production capacity increased by 5.6 percent between 2011 and 2015, while actual production increased by 13.4 percent during that timeframe. The USITC report estimates that merchant secondary aluminum producers operated at about 80 percent of capacity in 2015.
Despite its increasing usage, there is insufficient recycled aluminum available to meet growing demand for aluminum. Most of the major downstream aluminum manufacturers rely on a combination of secondary aluminum and primary aluminum in their manufacturing operations. The amount of primary versus recycled aluminum used varies on the specific product and its applications; manufacturers must control the properties of the alloy precisely to meet product specifications, which often requires using primary aluminum.
Moreover, as aluminum is repeatedly recycled, impurities from paint, labels and other metals build up, affecting product composition and performance. A study by materials scientists at the Massachusetts Institute of Technology
Specialized applications such as airplane parts and electronics require the cleanest materials, for which recycled aluminum is not suitable. The MIT scientists note that there is a need for more research on ways to reduce accumulated contaminants, and that this is an area in which there has been underinvestment to date. As U.S. aluminum capacity shifts away from primary to secondary production, developing methodologies to increase the usability of ever- decreasing quality scrap is of major importance. Since secondary scrap production in the United States is dominated by numerous smaller operations, their investment in R&D in this area is not likely to be sufficient.
The U.S. and Canadian defense industrial bases are integrated. This cooperative relationship has existed since 1956 and is codified in a number of bilateral defense agreements. For example in 1987, DoD (all Services), the Defense Logistics Agency (DLA), the Office of the Secretary of Defense (OSD), and the Canadian Department of National Defence (DND) joined together to form a North American Technology and Industrial Base Organization (NATIBO). NATIBO is chartered to promote a cost effective, healthy technology and industrial base that is responsive to the national and economic security needs of the United States and Canada. Current policy calls for a national defense force that derives its strength and technical superiority from a unified commercial- military industrial base.
While small compared to China's production, Canada is the third largest producer of primary aluminum in the world, with an estimated 3.15 million metric tons produced in 2016, up from 2.83 million metric tons in 2015.
In 2016, Canada exported about 2.3 million metric tons of primary aluminum to the United States—which represents over 70 percent of its total production. Canadian primary aluminum production is important to the U.S. aluminum industry.
There are over a thousand companies in the United States involved in the production of downstream aluminum products—such as bars, rods, sheet, plate, extrusions, tubes, pipes, forgings and castings. Many of these are small- and medium-sized businesses that serve specialized markets. The downstream industry is the largest segment of the overall aluminum industry in the United States, and is second in size only to that of China.
This industry segment is diverse—from production of large-volume commodity-grade articles such as can sheet for beverage cans, to high value added goods, including specialized products for the defense sector. Overall, downstream production is a capital-intensive process; some products require sophisticated manufacturing techniques. The U.S. industry is widely considered to be one of the world's most technically advanced.
Due to its size and diversity, there is little publicly available information on the production of the downstream aluminum industry as a whole. According to the American Foundry Association, there are 130 U.S. aluminum foundries in the defense casting supplier database maintained by the Defense Logistics Agency.
These firms—many of which are small businesses—have been identified as qualified suppliers available to produce the over 10,000 distinct aluminum cast components procured by the military.
The U.S. International Trade Commission's report contains data from market research firm CRU Group for U.S. production of certain downstream aluminum products -flat rolled, extrusions, and wire and cable.
For flat-rolled aluminum, which includes HTS categories 7606 (plate, sheet and strip) and 7607 (foil), the U.S. is the world's second largest producer, after China. These types of products are used extensively in automobile and aerospace applications. While U.S. production has been essentially flat between 2012 and 2015, China's production has grown from 6.64 million metric tons in 2011 to 9.2 million metric tons in 2015—a 38 percent increase in just four years. According to CRU, the U.S. flat-rolled aluminum sector is operating at about 70 percent of capacity throughout the period.
Extruded aluminum products (including bars, rods and profiles in HTS 7604 as well as pipes and tubes in HTS 7608) are used mainly in building and construction applications. The U.S. produced 1.9 million metric tons of aluminum extrusions in 2015, with the sector showing modest growth in production over the past four years. U.S. production, while second in the world, is small compared to China's production, which topped 17 million metric tons in 2015. China's production of extrusions accounted for nearly two thirds of global production, and has been increasing year over year (due to demand for China's massive infrastructure development).
U.S. production of aluminum wire and cable is small and declining (
For comparison purposes, China produced nearly five million metric tons in 2015 (60 percent of global production). Wire and cable is used in building and construction, and also in electricity transmission and distribution systems.
Additional data on the U.S. downstream aluminum industry are available based on the U.S. International Trade Commission's survey (which had a 64 percent response rate). While the survey did not capture the entire U.S. industry, the agency estimated total U.S. production based on these responses. The Table below shows data on U.S. production, capacity, and capacity utilization for downstream aluminum products, based on the responses to the USITC industry survey.
USITC's survey results indicate that production rose 13 percent between 2011 and 2015. The biggest sector of the downstream industry in the United States is flat rolled products (62 percent), followed by extrusion (32 percent). The USITC study also reported on capacity utilization rates for the companies responding to their survey: overall, the downstream industry was operating at 78 percent of capacity. However, this figure varied significantly by product sector: 99 percent for aluminum plate manufacturers (benefiting from strong demand from the auto sector); 62 percent for wire and cable; 72 percent for rod, bar and profile; and just 41 percent for tube and pipe producers.
While USITC survey respondents reported very high levels of capacity utilization in the plate, sheet and strip sector, this capacity utilization rate was markedly higher than the comparable number reported by CRU Group—69 percent in 2015 for flat rolled aluminum producers.
CRU data, as reported in the USITC report, indicate that Chinese flat rolled products manufacturers are operating at only 62 percent of capacity. Although extruded products account for the highest percentage of Chinese wrought aluminum production, the largest amount of U.S. imports from China are in the flat-rolled product categories—plate, sheet and strip (HTS 7606) and foil (7607). It is likely that excess Chinese capacity and production in this segment, for which internal Chinese demand is insufficient, is being unloaded onto world markets, including the United States.
The leading integrated aluminum production companies in the United States making downstream products include Constellium, Novelis, Aleris, Kaiser, Arconic, and Sapa. While commercial/industrial sectors account for most of their sales, these companies are also major suppliers of aluminum products for the defense industry. While the defense-related production of these companies makes up a small portion of their business, the same equipment is used to make military as well as commercial production. It is large-volume standard products that enable the companies to invest in fixed equipment and capacity that support the production of high-value added products, including defense.
With U.S. headquarters in Atlanta, Georgia,
In Muscle Shoals, Alabama, Constellium produces cansheet for the packaging industry at its plant with 1,200 employees. Its Ravenswood, West Virginia facility, with 1,050 employees produces advanced alloyed plates for military aircraft, armored vehicles and U.S. Navy vessels. The company partners with the U.S. Army through the U.S. Army Tank Automotive Research Development and Engineering Center (TARDEC) in developing new aluminum solutions for combat vehicles of the future. Constellium states that it has been negatively affected by imports of low-price aluminum plate from China, which have displaced Constellium's products in the market.
The company has 22,800 employees in 40 countries; in North America there are 6,500 employees in 23 facilities. It has four R&D Centers—three in Europe and one in Troy, MI. According to the company's 2016 annual report, North American sales volume was 585,000 metric tons.
In 2016, global primary aluminum consumption was 59.7 million metric tons, reflecting a 5.4 percent year-over-year increase. This was the seventh straight year of significant growth for aluminum consumption, and growth is forecast to continue at this rate.
The world's top five leading consuming countries were responsible for more than 72 percent of total aluminum demand in 2016 (see Figure 5). According to CRU International, the leading aluminum consuming markets in 2016 were China, the United States, and Germany.
Combined U.S. and Canadian shipments of all types of aluminum (primary, secondary, as well as downstream production of semi-manufactures) totaled 12.0 million metric tons in 2016, according to the Aluminum Association.
U.S. consumption of primary aluminum has steadily increased rising
The U.S. Geological Survey (USGS) statistics show increases in U.S. apparent consumption
Based on USGS production and U.S. Census statistics for U.S. exports and imports of primary aluminum, U.S. import dependence for primary aluminum was nearly 90 percent of apparent consumption in 2016, up from 64 percent in 2012.
U.S. import reliance increased because domestic primary aluminum production decreased, so U.S. manufacturers by necessity filled their materials needs through imports. Since primary aluminum companies are globalized, some of the imported aluminum was from the foreign business units of U.S.-based companies.
The Aluminum Association uses a different methodology to estimate U.S. consumption
Overall U.S. imports of the aluminum categories subject to this investigation
Imports of aluminum on weight basis are a better indication of true trade
Canada is the leading source of aluminum imports into the United States, accounting for about 43 percent of total imports by both value and weight in 2016. Imports from Canada have been at consistent level over the four-year period at about 2.6 million metric tons per year.
In contrast, imports from the second leading source (by value), China, increased by 70 percent by value and 75 percent by weight between 2013 and 2015. Imports from China by weight were 531,000 metric tons valued at $1.3 billion in 2016, a slight decline from 2015 levels. However, imports from China in all aluminum categories are up by about 33 percent by value and 25 percent by weight for the first 10 months of 2017 compared with the same period last year.
By product category, unwrought aluminum (primary) makes up by far the largest portion of imports—63 percent of the total by value. The second largest category − aluminum plates, sheets and strips—accounts for an additional 19 percent of imports.
The following subsections present detailed information on U.S. imports of aluminum in specific product categories, as the source of the imports varies significantly. In general, the import data are provided in metric tons, which allows for a true picture of trends in import levels (versus import data by value, which fluctuate based on aluminum prices).
Of total U.S. aluminum imports, unwrought (primary) aluminum accounted for the bulk by weight (4.3 of 6.5 million metric tons), with a total value of $7.9 billion. U.S. imports of unwrought aluminum have increased dramatically in recent years—nearly 40 percent by weight since 2014. In 2016, of the total U.S. imports of 4.3 million metric tons, the majority was from Canada (54 percent), followed by Russia (16 percent), United Arab Emirates (13 percent), Argentina (4 percent), Qatar (3 percent); the rest of the world accounted for 10 percent. While still not among the top sources, imports from Oman, South Africa and Venezuela have shown tremendous growth in the past year.
For aluminum bars, rods and profiles (HTS 7604) the total value of U.S. imports (from all sources) in this category was $801 million in 2016, down slightly from $804 million in 2015. By weight, there was a slight increase in import levels in 2016 over 2015 levels (200,000 metric tons). Canada and Mexico are major players in this category. Imports from China fell off beginning in 2015 from earlier levels. Imports from Vietnam increased dramatically during the period, rising by over 800 percent between 2013 and 2016, with the trend continuing in 2017. Some industry analysts have observed that a portion of the imports in this category from Vietnam are likely Chinese products that are being transshipped to avoid duties.
Aluminum plates, sheets and strip (HTS 7606) are the second largest category of imports (after unwrought aluminum) with a total value of $2.5 billion in 2016. On a weight basis, imports were essentially unchanged in 2016 compared to 2015 levels, but data for the first 10 months of 2017 show a nearly 20 percent increase over the same period in 2017.
Over a third of total imports came from China, and imports from China are on the rise again (after tapering off in 2016). Canada, South Africa, Bahrain and Germany also supply significant amounts of plates, sheet and strip. Imports from Indonesia are on the rise in this category, double in 2017 over 2016 levels.
Aluminum foil imports are presented in the table below. The total value of imports in this category was $910 million in 2016, of which $475 million was from China.
On a weight basis, China dominates, accounting for two thirds of the total imports to the United States in 2016. (Note: Aluminum foil imports from China are the subject of an ongoing antidumping/countervailing duty investigation).
The table below presents data on imports of aluminum pipes and tubes (HTS 7608) as well as pipe and tube fittings (HTS 7609). Unlike the other sectors, imports were down slightly in this category in 2016, but are growing in 2017 due to increases in imports from Mexico. Mexico is the largest supplier in the segment, followed by Canada, China, and Japan.
Aluminum castings and forgings, the final category addressed in the report, also are an area where imports are on the rise (
In 2016, the United States exported a total of $ 6.4 billion in the aluminum product categories subject to this investigation (HTS 7601, 7604-7609, 7616.99.51.60; 7616.99.51.70). The value of U.S. exports fell each year between 2013 and 2016. Exports for the first ten months of 2017 also show a slight decline from the same period in 2016.
The largest category for U.S. exports is aluminum plates sheets and strip ($3.4 billion), followed by aluminum bars, rods and profiles ($1.0 billion) and then unwrought, primary aluminum with $640 million.
By country, the vast majority of U.S. exports of aluminum products go to neighboring countries and NAFTA partners, Mexico and Canada. By value, these two countries accounted for nearly two thirds of U.S. exports.
U.S. exports to Vietnam had a spike in 2016 that did not occur in any other year (including 2017); a closer look at these exports shows that they were primarily in HTS category 7604, and in particular, HTS 760421, which is “Aluminum Alloy Hollow Profiles.” The U.S. also saw a spike in imports from Vietnam in 2016.
The composition of U.S. aluminum exports varies significantly by product category. For unwrought (primary) aluminum, exports to Mexico and Canada account for 92 percent of total U.S. exports by value and 95 percent by weight. Currently, Mexico does not have a primary aluminum smelter due to its inability to provide reliable, steady energy.
The aluminum plate, sheet, and strip industry segment (HTS 7606) accounts for the biggest portion of U.S. exports of aluminum products subject to this investigation—nearly 900,000 tons valued at over $3.4 billion dollars in 2016. Once again, NAFTA partners Canada and Mexico account for the majority of exports.
Exports in the first 10 months of 2017 are down slightly from 2016 levels, continuing a declining trend that occurred throughout the 2013-2017 period. Overall, since 2013, U.S. exports are down 10 percent by value and weight.
A category of aluminum products that is a significant source of exports for the United States is bars, rods and profiles (HTS 7604) which are most commonly extrusions. Total U.S. exports in these aluminum products were just over one billion dollars in 2016. The export of 82,000 metric tons of these items valued at $233 million to Vietnam in 2016 appears to have been an anomaly.
After increasing significantly in 2016 over 2015 levels, exports of these items were down by a quarter in value in the first ten months of 2017 compared to the same period in 2016; the decline in exports on a weight basis is even greater (42 percent), largely due to the return of exports to Vietnam to typical levels in 2017. Canada and Mexico again account for the bulk of U.S. exports.
U.S. exports of aluminum castings and forgings, a relatively small category, were steady for the period 2013 to 2015, before rising in 2016 (
Overall, for the aluminum product categories subject to this investigation (HTS 7601, 7604-7609), 7616.99.51.60; 7616.99.51.70), the United States ran a trade deficit of $7.1 billion in 2016. These data suggest that the trade deficit in aluminum will be larger in 2017.
The table below shows the U.S. trade balance by major trading partners. The U.S. runs substantial trade deficits in aluminum products with Canada, China, Russia, the United Arab Emirates and Bahrain, and the deficit is growing. For the first 10 months of 2017, the total trade deficit is nearly double what it was for the same period in 2016. The U.S. runs a large trade surplus with Mexico in aluminum products—about $2.1 billion in 2016, and a smaller trade surplus with the United Kingdom, Japan and South Korea.
The U.S. runs a substantial trade deficit with China, totaling $1.6 billion in 2016; the trade deficit with China in aluminum categories. Unlike the other countries with which the U.S. runs a trade deficit in aluminum (
Included in the table is the U.S. trade balance with Hong Kong and Vietnam; while not large in an absolute sense, the trade balance with these countries is volatile from year to year, reflective in unusual trade patterns that may indicate transshipments.
By industry sector, the U.S. trade balance varies: there is a trade surplus in a number of sectors such as hollow profiles and plate, sheet and strip. However, these surpluses are by far overshadowed by the categories in which the U.S. runs a trade deficit—primary aluminum and aluminum powders, foil, and wire.
The U.S. trade deficit is particularly pronounced in the primary (unwrought) aluminum industry segment. The deficit for this category reached nearly $7 billion in 2016, and data for the initial six months indicate that it will be even greater in 2017.
The United States exported very little unwrought aluminum, but imported large amounts from Canada, Russia and other countries. On a weight basis, the U.S. deficit was nearly 4 million metric tons in 2016.
In the area of semi-finished aluminum products (including bars, rods, plates, sheet and strip), the United States ran a trade surplus in 2016 of $2.2 billion. However, there are certain countries with which the U.S. ran a trade deficit, including China, South Africa, Germany and Bahrain.
The trade deficit with China in particular is substantial and growing in 2017 over 2016 levels. Countries with which the United States ran a trade surplus in are NAFTA partners Mexico and Canada, as well as South Korea, Japan and the United Kingdom.
The table below presents a snapshot of direct employment in the U.S. aluminum industry, by sector, based on data collected for the Aluminum Association. The loss of jobs in the primary aluminum sector has been precipitous between 2013 and 2016, falling 58 percent as several smelters were either permanently shut down or temporarily idled.
Other (older) data from the association indicated that in 2010, employment in the Alumina Refining/Primary Aluminum sector totaled 21,600; employment in that sector declined by 75 percent in just six years. Employment in secondary production was 6,400 in 2010, so that segment of the industry has nearly doubled in employment by 2013, but has not increased substantially since then.
Employment in the other segments of industry has seen moderate growth over the past three years as demand for aluminum has grown, with aluminum foundries and manufacturers of semi-finished goods such as plates, sheets, and extrusions showing the strongest growth (and also accounting for the largest level of employment). Data from 2010 found that employment in “semi-fabrication” facilities was 101,000, and in Service Centers, 27,000.
Information on employment in the domestic aluminum industry is also available from the Bureau of the Census' Annual Survey of Manufactures, which includes data on the Alumina and Aluminum Production and Processing industry (North American Industry Classification System (NAICS # 33131)). The table below presents employment data from the Annual Survey of Manufactures for 2013-2015, the latest year for which data are available. The employment data, too, show declining employment in the primary aluminum sector between 2013 and 2015, but do not reflect the jobs lost in 2016 as additional smelters closed. These data also show relatively stable/slightly growing employment in other industry sectors.
Modern aluminum production—particularly production of high-purity aluminum needed for critical infrastructure and military applications—is a complex and technical process. It requires a trained, skilled workforce that in some cases requires a decade or more of experience. As smelting facilities close, the loss of this skill-base is eroding and the workforce will become increasingly difficult to bring back.
While the primary aluminum industry sector has seen dramatic job losses in recent years, the downstream industry is likely to suffer as well in the future as foreign aluminum overcapacity drives into the domestic value-added industry sectors. This is already happening as evidenced by growing imports of aluminum semi-manufactured products.
Low global aluminum prices and soaring imports due to overcapacity in the aluminum sector have damaged U.S. aluminum companies.
Noranda Aluminum (a Canadian company with U.S. smelting operations) filed for Chapter 11 bankruptcy in February 2016, citing high power prices and low prices for aluminum and the bauxite from its mine in Jamaica. Its New Madrid, Missouri smelter was shut down in March 2016. The facility was recently purchased by ARG International, a Swiss holding company, but its future as an aluminum smelter
Another former participant in the primary U.S. aluminum industry, Ormet, declared bankruptcy and sold its shuttered aluminum plant to a land developer in 2014. Ormet cited lower aluminum prices, Chinese competition, and high energy costs as the reasons for its financial problems.
Financial performance of upstream aluminum companies was particularly poor between 2013 and 2016, when aluminum prices began to fall sharply.
Chinese production of aluminum soared, and imports into the United States surged. The three publicly traded companies posted negative net incomes for much of those years. Alcoa and Noranda operated at a loss in three of the five years, including the two most recent years. Century Aluminum only had positive net income in one of the five years (2014). In 2016, the three remaining primary aluminum companies reported operating losses totaling $912 million.
While the two smaller aluminum manufactures posted relatively stable sales/revenue during the period, the biggest player, Alcoa, saw sales drop drastically between 2014 and 2015. That trend continued in 2016. Over the past several years, Alcoa attempted to adjust to the market realities facing the aluminum sector by shutting down or selling high cost upstream assets and investing in assets that produce value added products. In 2015, Alcoa announced planned production curtailments of 503,000 metric tons of aluminum and 1.2 million metric tons of alumina to ensure continued competitiveness amid deteriorating market conditions.
As part of this strategy, in 2016, after 128 years of operating as a vertically integrated aluminum company, Alcoa split the company into two separate entities. Alcoa Corp. retained the upstream commodity assets including primary aluminum smelters, bauxite mines, alumina refineries, and power plants. Arconic, Inc. owns the downstream, value-added fabrication businesses, including rolling mills and associated secondary aluminum capacity, as well as specialty metal, aerospace and automobile product assets.
Financial analysts are bullish on the restructured Alcoa, predicting its sales revenues to grow by 25 percent in 2017 and by single digits in 2018. This optimism is predicated on improving market conditions in alumina and aluminum sectors based on strong demand and higher aluminum metal prices. However, the majority of Alcoa's production operations are no longer in the United States, and its financial success is based on its global operations in bauxite, alumina, aluminum smelting, and limited rolling and casting.
The domestic upstream industry showed improved financial performance in the first quarter of 2017, largely due to improved market pricing of aluminum.
Alcoa's First Quarter 2017 results (its first full quarter since spinning off its downstream businesses) showed a positive Net Income of $225 million ($1.21/share); Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was $533 million, up 59 percent due to higher alumina and aluminum pricing. The company expects its full year 2017 adjusted EBITDA of between $2.1 and $2.3 billion.
Century Aluminum Company (CENX), too, reported improved First Quarter 2017 results, although it still posted a net income loss. The company had an Adjusted EBITDA of $22 million 1Q17 vs. $12 in 4Q16. The company's net loss in 1Q17 was $5 million, compared to $12 million loss in 4Q16. As a whole, the three primary aluminum companies together had EBITDA of $2.273 billion in 2012, but this figure decreased to $1.114 billion for 2016, a 50 percent decline.
While the U.S. industry is seeing an uptick in demand and better pricing, it is not clear that this can be maintained given the rise of imported aluminum products, which are steadily eroding the customer base for domestic production. A sustained improvement in profitability over many quarters is needed for companies to stabilize and recover from financial losses suffered over the past 10 years.
The downstream sector as a whole experienced modest job growth across a range of industrial sectors between 2013 and 2016 based on increased demand for their products (such as the growing automotive sector). Downstream manufacturers of aluminum products have made investments in capital equipment to improve their manufacturing capabilities. According to the Aluminum Association, their member companies have invested $2.3 billion since 2013 in facilities to produce aluminum products—including aluminum sheet for automotive applications.
To date, the downstream sector has largely remained profitable by shifting production to markets not yet affected imports. Some formerly vertically- integrated companies have shifted to production of higher value-added products (
While the impact of imports on the downstream industry sector has so far been limited to certain product categories, the USITC noted that Chinese firms are striving to enter the more profitable automotive and aerospace markets.
Research and development in the aluminum sector is important—it has made possible new applications for this material and has enabled more effective manufacturing processes. Because aluminum is lightweight, resistant to corrosion, high strength and recyclable, it is an essential material for modern economies. Exploiting the material's properties required focused R&D.
Some areas of research that are important include reducing the high energy usage in smelting (which accounts for an estimated 30 to 40 percent of the cost of production) and reducing the undesirable by-products of smelting, such as pollution. R&D is also important to meet regulatory requirements; and developing new markets, processes, and products for various market sectors, including automotive, aerospace, packaging, and construction.
Arconic (formerly a part of Alcoa) is a leader in research and development in the aluminum industry. After establishing its first facility dedicated to improving production processes and finding new applications for aluminum in 1930, Alcoa established the Alcoa Technical Center outside of Pittsburgh in 1965 as a center for innovation. A success story of innovation, in 2005 Alcoa (now Arconic) signed a $1.1 billion, 10-year agreement with jet engine maker Pratt & Whitney to supply key engine parts. This supply pact included forging for the first-ever aluminum fan blades for jet engines.
As recently as 2015, Alcoa undertook a $60 million expansion of its Technical Center to pursue the development of advanced 3D printing materials and manufacturing processes to meet increasing demand for complex, high- performance 3D-printed parts for aerospace, automotive, medical, building and construction and other high-growth markets.
Of the three remaining companies with U.S. smelting operations in 2016, Alcoa is the only company to report spending on Research and Development over the past five years in its financial statements; Century Aluminum and Noranda reported zero spending on R&D since 2012.
Despite its long history of innovation in the aluminum industry, poor market conditions and financial health have apparently significantly affected both Alcoa's and Arconic's research and development efforts. Alcoa's R&D expenditures plunged from $95 million in 2014 to $33 million in 2016.
Most of Alcoa's R&D assets went to Arconic in the split. In 2016, Alcoa eliminated 90 positions at its technical center as part of an efficiency initiative; this followed a previous elimination of 50 workers in 2015. Alcoa is leasing a single R&D building at Arconic's New Kensington, PA R&D campus (previously Alcoa's R&D complex) for three years. Arconic reported R&D expenditures of $100 million for 2015, $132 million for 2016, and the company projects spending of [TEXT REDACTED] in 2017.
Limitations on the funding of research and development caused by sliding revenues could have serious implications for development of next-generation aluminum-based products, including those required for U.S. national security. U.S. defense programs continue to rely on strong, lightweight aluminum for use in engine parts and structural components for aircraft, military vehicles, equipment, armor and many other applications. Aluminum is a critical part of any armor solution because it has better blast absorption characteristics. More than 90 percent of all alloys currently used in the aerospace industry were developed through Alcoa's research.
While downstream aluminum companies continue to conduct R&D in specific areas, the absence of fully integrated aluminum companies in the United States may be an inhibiting factor in development of next generation aluminum technologies.
According to the Aluminum Association, since 2013 their member companies have invested $2.3 billion in facilities to produce downstream aluminum products. The USITC's survey of downstream aluminum companies indicated that capital investment was on the increase, rising by 65 percent from 2011 to 2015; much of this investment was by companies involved in the plate, sheet and strip industry segment.
In the secondary aluminum industry, the ITC's survey found an average of
$291 million per year of investments, with merchant producers accounting for 60 percent of the investments. There was also a significant greenfield construction by a foreign firm (Shandong Nanshan Aluminum Co.), which built a captive secondary aluminum/extrusion mill in Lafayette, IN.
In the downstream wrought aluminum industry, the US ITC survey indicated that capital spending rose 65 percent between 2011 and 2015, to $995.3 million. Two thirds of this investment was by the flat rolled plate sector, which is due to the fact that the sector is experiencing demand growth and the high costs associated with rolling mill equipment compared to extrusion presses.
Information on capital expenditures by the U.S. aluminum industry is available through the Bureau of Census' Annual Survey of Manufactures (NAICS #33131—Alumina and Aluminum Production and Processing) and is presented in the Table below.
These data include the total new and used capital expenditures reported by establishments in operation, including any known plants under construction, permanent additions, and major alterations to manufacturing and mining establishments, and new and used machinery and equipment. The table above shows that capital expenditures by the industry as a whole have been largely consistent over the three-year period. Capital investment by the primary and secondary aluminum smelting sectors account for a relatively small percentage of the total. The majority of capital expenditures are made by establishments in the downstream sector of the industry. As noted previously, 2015 is the most recent year for which this information is available; data for 2016 would likely show a decline in capital expenditures by the primary aluminum sector.
The USITC report on the Competitive Conditions Affecting the U.S. Aluminum Industry noted that several U.S. firms planned upgrades to smelting operations, but did not proceed due to financial considerations and market conditions. For example, in 2012 Alcoa announced plans to replace antiquated pot lines at its Massena East smelter, but cancelled the modernization plan in 2015—and instead shut down the facility. Noranda also planned to
Aluminum is an exchange-traded commodity and global market prices for aluminum are determined on the basis of global supply and demand. The London Metal Exchange (LME) is the world's largest exchange for base and other metals, including aluminum. In Asia, the Shanghai Futures Exchange (SHFE) is a major commodity exchange for unwrought aluminum contracts. Aluminum contracts for the United States and Europe are traded on the LME. Aluminum prices in China are set on the SHFE. The LME price of aluminum is used as the global reference point both in the metal industry and in the investment community.
The price chart for aluminum on the LME illustrates the price weakness seen over recent years. The fundamental reason for the price drop is chronic oversupply, despite healthy growth in global demand for aluminum and stable costs of production. In fact, demand has increased by over nine times over the past decade and a half.
The oversupply situation in the global market is primarily caused by developments in the Chinese aluminum industry. Chinese consumption rose from 3.2 million metric tons in 2001 to 29.2 million metric tons in 2015. At the same time, production in the country increased by almost 14 times.
In 2016 the world produced a total of 57.6 million tons of aluminum of which 31 million (54 percent) came from China. The result is that in 2015, there were huge stockpiles of aluminum in the world with nearly 3 million tons on the London Metal Exchange, the world's primary market for trading in nonferrous metals. Since then, there has been a drawdown in global LME warehouse inventories to just over 2 million tons.
The figures below show prices on the London Metals Exchange for aluminum. First, the recession of 2008 is readily evident in the figure. After bottoming out in 2008-2009, the price of aluminum recovered, only to fall dramatically between 2011 and 2016 in response to global oversupply. The price drop for aluminum was particularly dramatic in 2015. In November, 2014 the LME price for aluminum was as high as $2,100 per metric ton; one year later the price was less than $1,500 per metric ton. Aluminum prices on the LME fell 18.6 percent in 2015 reaching a six-year low at $1,475 per ton, or an average of 75 cents per pound, and less than 73 cents per pound on average for 2016.
The sharp drop in aluminum prices had a devastating effect on the U.S. industry—a number of U.S. smelters were forced to either temporarily or permanently halt operations during 2014-2016; two primary aluminum producers declared bankruptcy.
In recent months, the LME price for aluminum has rebounded to more typical levels, and reached a five-year high in October, 2017 at nearly $2,200 per ton. Despite the improvement in the market, U.S. smelter operators have no confidence that prices will remain at or above current levels that are needed in order for them to operate profitably.
Low aluminum prices, rising inventories and continued supply growth in China and other countries have caused many producers to close or curtail their U.S. smelting operations. While aluminum prices are beginning to rise from their historic low, it is not clear how readily the U.S. primary aluminum industry will rebound. Indeed, global aluminum production capacity continues to expand, which may mean that the increase in aluminum prices seen thus far in 2017 may not be sustained. While there has been a modest reduction in Chinese aluminum production in recent months, this trend, too, may be temporary. According to analysts at Bloomberg Intelligence, despite cuts to China's aluminum capacity earlier in 2017, Chinese aluminum makers added 4 million metric tons net capacity in 2017 and may add an additional 3 million metric tons in 2018.
Based on these findings, the Secretary of Commerce concludes that the present quantities and circumstance of aluminum imports (wrought and unwrought) are “weakening our internal economy” and threaten to impair the national security as defined in Section 232. The Secretary has determined that to remove the threat of impairment, it is necessary to reduce imports to a level that will provide the opportunity for U.S. primary aluminum producers to restart idled capacity. This will increase and stabilize U.S. production of aluminum at the minimal level needed to meet current and future national security needs. If no action is taken, the United States is in danger of losing the capability to smelt primary aluminum altogether.
A quota or tariff on downstream products is also necessary because global overcapacity, coupled with industrial policies that promote exports of downstream products, have had a negative impact on the U.S. primary aluminum industry through reduced demand for inputs from downstream companies, as well as directly on the downstream companies which face increased import penetration in many aluminum product sectors.
The continued rise in levels of imports of foreign aluminum threatens to impair the national security by placing the U.S. aluminum industry at substantial risk of losing the capacity to produce aluminum and aluminum products needed to support critical infrastructure and national defense.
A major factor contributing to the decline in domestic aluminum production and loss of domestic production capacity has been excess production and capacity in China, which now accounts for over half of global aluminum production. This is despite the fact that China has no natural competitive advantage for aluminum production. Chinese excess production, unresponsive to market forces, flooded world markets and caused a steep decline in global aluminum prices between 2014 and 2016. During this time of low prices, a number of U.S. aluminum smelters were forced to permanently shut down, while
Although global aluminum prices have regained lost ground in recent months, the damage to U.S. aluminum production capability was significant and irreversible. U.S. ability to smelt primary aluminum, including high-purity aluminum needed for the most sophisticated commercial and defense applications, has been reduced to minimal levels. Imports of primary aluminum now account for nearly 90 percent of domestic consumption. Imports of downstream aluminum products are surging as well, up 30 percent in 2017 over 2016 levels.
Since defense and critical infrastructure requirements alone are not sufficient to support a robust aluminum industry, U.S. primary and downstream aluminum producers must be financially viable and competitive in commercial markets to be able to produce the needed output. In fact, it is the ability to quickly shift production capacity used for commercial products to defense and critical infrastructure production that provides the United States a surge capability that is vital to national security, especially in an unexpected or extended conflict or national emergency. It is that capability that is now at serious risk.
In addition, it is in the interest of U.S. national security and overall economic welfare that the United States retains an aluminum industry that is financially viable and able to invest in research and development of the latest technologies. This is especially important given the growing role that aluminum plays in both commercial and defense applications.
The Secretary has determined that to remove the threat of impairment, it is necessary to reduce imports to a level that will provide the opportunity for U.S. primary aluminum producers to restart idled capacity. If no action is taken, the United States is in danger of losing the capability to smelt primary aluminum altogether.
Moreover, the Secretary has concluded that action to adjust imports must apply to imported downstream (wrought) aluminum products as well as primary (unwrought) aluminum. The reason for this is threefold. First, the downstream industry has been also adversely affected by surging imports. Foreign industrial policies that promote exports of downstream products while discouraging exports of primary aluminum have resulted in increased import penetration in many aluminum product sectors. Second, reducing imports of downstream products and their replacement by domestic production will serve to increase domestic demand for primary aluminum. Lastly, import relief to downstream producers is necessary in order to compensate for the increase in primary aluminum prices that they will face. If the raw materials costs are increased for U.S. downstream producers, a tariff on imported downstream products is necessary so as not to adversely affect them vis a vis their foreign competitors.
Due to the threat, as defined in Section 232, to national security from aluminum imports, the Secretary recommends that the President take immediate action by adjusting the level of these imports. There are a few different means by which import restrictions could help address the threat to U.S. national security. Under alternatives 1 and 2, the quotas or tariffs would be designed, even after any exemptions (if granted), to enable U.S. aluminum producers to utilize an average of 80 percent of their production capacity. The quotas and tariffs described below should be sufficient to enable U.S. aluminum producers to operate profitably under current market prices for aluminum and will allow them to reopen idled capacity.
Two alternatives for achieving this objective are described below. In each alternative, quotas or tariffs would be imposed on imports of: 1) unwrought aluminum (Harmonized Tariff Schedule (HTS) Code 7601); 2) aluminum castings and forgings (HTS Codes 7616.99.51.60 and 7616.99.51.70); 3) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS Codes 7606 and 7607); 4) aluminum wire (HTS Code 7605); 5) aluminum bars, rods and profiles (HTS Code 7604); 6) aluminum tubes and pipes (HTS Code 7608); and 7) aluminum tube and pipe fittings (HTS Code 7609) based on 2017 annualized imports in those categories.
In either alternative, the Secretary recommends that the action taken to adjust the level of imports must be in effect for a duration sufficient to allow sufficient time and assurances to stabilize the U.S. industry. It takes up to nine months to restart idled smelting capacity. Market certainty is needed to build case flow to pay down debt and to raise capital for plant modernization to improve manufacturing efficiency.
The Department of Commerce, in consultation with other appropriate departments and agencies, will monitor the status of the U.S. aluminum industry and the effectiveness of the remedies to determine if the remedies should be terminated or extended.
A worldwide quota of 86.7 percent on imports described above would restrict aluminum imports sufficiently to allow U.S. primary aluminum producers to increase production by about 669,000 metric tons, bringing total production to about 1.45 million metric tons, or about 80 percent of existing U.S. primary aluminum production capacity. This quota would also be applied to the five other aluminum product categories listed above and would help ensure the viability of those U.S. producers to meet national security needs.
A tariff rate of 7.7 percent on imports of unwrought aluminum and the other aluminum product categories listed above should have the same impact as the 86.7 percent quota. This tariff rate would be in addition to any antidumping or countervailing duty collections applicable to any product.
This tariff rate also will adequately adjust for the price distortions in downstream aluminum product sectors that are caused by global overcapacity and overproduction being exported in the form of downstream products.
A tariff rate of 23.6 percent on imports of aluminum products from China, Hong Kong, Russia, Venezuela, and Vietnam should also restrict aluminum imports sufficiently to allow U.S. aluminum producers to utilize an average of 80 percent of their capacity. These five countries are the source of substantial imports due to significant overcapacity and potential unreliable suppliers or likely sources of transshipped aluminum from China.
As in Alternative 1 above, this tariff rate would be in addition to any antidumping or countervailing duty collections applicable to any product. For the targeted tariff, all other countries would be limited to 100 percent of their 2017 import volumes.
In selecting an alternative, the President could determine that specific countries should be exempted from the proposed quota by granting those specific countries 100 percent of their prior imports in 2017 or exempting them entirely, based on an overriding
The Secretary recommends an appeal process by which affected U.S. parties could seek an exclusion from the tariff or quota imposed. The Secretary would grant exclusions based on a demonstrated: (1) Lack of sufficient U.S. production capacity of comparable products; or (2) specific national security based considerations. This appeal process would include a public comment period on each exclusion request, and in general, would be completed within 90 days of a completed application being filed with the Secretary.
An exclusion may be granted for a period to be determined by the Secretary and may be terminated if the conditions that gave rise to the exclusion change. The U.S. Department of Commerce will lead the appeal process in coordination with the Department of Defense and other agencies as appropriate. Should exclusions be granted the Secretary would consider at the time whether the quota or tariff for the remaining products needs to be adjusted to ensure that U.S. aluminum production meets targeted levels.