Acronyms and Abbreviations. Frequently used acronyms and abbreviations are set forth below for reference.

DOE is responsible for authorizing exports of natural gas, including LNG, 1 to foreign countries pursuant to section 3 of the Natural Gas Act (NGA), 15 U.S.C. 717b. 2 The policy announced in this notice is specific to applications to export natural gas to countries with which the United States does not have a free trade agreement (FTA) requiring national treatment for trade in natural gas, and with which trade is not prohibited by U.S. law or policy (non-FTA countries). 3 For such applications, NGA section 3(a) authorizes the exportation of natural gas from the United States unless DOE determines that doing so “will not be consistent with the public interest.”  4 DOE has consistently interpreted this provision as creating a rebuttable presumption favoring export authorization. 5 Accordingly, DOE will conduct an informal adjudication and grant a non-FTA application unless DOE finds that the proposed exportation of natural gas will not be consistent with the public interest. 6

Before reaching a final decision, DOE must also comply with the National Environmental Policy Act of 1969 (NEPA). 7 DOE's environmental review process under NEPA may result in the preparation or adoption of an environmental impact statement (EIS) or environmental assessment (EA) describing the potential environmental impacts associated with the application. 8 In other cases, DOE may determine that an application is eligible for a categorical exclusion from the preparation or adoption of an EIS or EA, pursuant to DOE's regulations implementing NEPA. 9

Both the NGA and DOE's regulations (10 CFR 590.404) provide DOE with broad authority to attach conditions to non-FTA export authorizations. 10 However, neither NGA section 3(a) nor DOE's regulations prescribe a specific time period for a non-FTA authorization. For this reason, DOE has determined that it has discretion under 10 CFR 590.404 to impose a suitable term for long-term non-FTA authorizations, in light of the evidence in each proceeding. 11

For nearly a decade, DOE has issued long-term authorizations to export LNG (and compressed natural gas) produced from the lower-48 states to non-FTA countries for a standard term of 20 years. 12 As set forth in each order, the 20-year term begins when the authorization holder commences commercial export from its facility. 13 DOE also allows a term for commercial export operations to commence—typically seven years—set from the date the order is issued, and a three-year “make-up period” following the end of the 20-year export term, during which the authorization holder may continue to export any “make-up volume” that it was unable to export during the 20-year export term. 14

To date, DOE has issued 43 final long-term non-FTA authorizations to export domestically produced LNG and compressed natural gas from the lower-48 states—each with an export term of 20 years. These authorizations total a cumulative volume of 45.89 billion cubic feet (Bcf) per day (Bcf/d) of natural gas, or approximately 16.7 trillion cubic feet per year. 15 Additionally, 16 long-term non-FTA applications requesting to export domestically produced LNG or compressed gas liquid from the lower-48 states are currently pending before DOE. 16

On February 11, 2020, DOE published a notice in the Federal Register proposing to extend this standard 20-year term for non-FTA authorizations (Proposed Policy Statement or Proposal). 17 Publication of the notice began a 30-day public comment period that ended on March 12, 2020. In the Proposed Policy Statement, DOE proposed an end date of December 31, 2050, for non-FTA exports, inclusive of any make-up period. DOE explained that, under this change, existing authorization holders would be able to extend their export term from 20 to 30 (or more) years, depending on when the authorization holder begins exporting LNG. 18 DOE stated, however, that for the majority of existing authorization holders, the proposed term extension would result in a maximum 30-year export term. Likewise, DOE stated that it would provide up to a 30-year export term—through December 31, 2050—for new authorizations issued beginning this year ( i.e., in 2020). DOE explained that, by extending the period over which these exports would occur, a term extension would provide a mechanism for existing authorization holders to increase the total volume of LNG exports over the life of their authorization.

The Proposed Policy Statement described an implementation process based on the status of the authorization holder or applicant, as follows:

DOE offered two principal reasons for this proposed term extension. 19 First, DOE stated that there is new evidence to support changing from the standard 20-year export term to an export term with an end date of December 31, 2050. DOE cited its 2018 LNG Export Study, which was performed by NERA Economic Consulting (NERA). 20 The principal conclusion of the 2018 LNG Export Study is that the United States will experience net economic benefits from the export of domestically produced LNG through the 30-year study period, i.e., from 2020 through 2050. 21 DOE explained that, although it had limited its existing non-FTA export authorizations to a 20-year export term based on the projections in its prior LNG export studies, that limitation is no longer required based on the findings of the 2018 LNG Export Study that included analysis on an expanded time period. 22 Specifically, because the 2018 LNG Export Study considered unconstrained (or market-determined) levels of LNG exports and included analysis through the year 2050, the 2018 LNG Export Study supports export terms lasting through December 31, 2050. 23

DOE also pointed to a new environmental analysis entitled Life Cycle Greenhouse Gas Perspective on Exporting Liquefied Natural Gas From the United States: 2019 Update (LCA GHG Update). In 2018, DOE's National Energy Technology Laboratory (NETL) conducted this study as a follow-up to its life cycle analysis (LCA) conducted in 2014. The analysis in the LCA GHG Update was based on the most current available science, methodology, and data from the U.S. natural gas system to assess emissions of greenhouse gases (GHGs) associated with exports of U.S. LNG. In January 2020, upon review of both the LCA GHG Update and the public comments received on that study, DOE determined that it saw no reason to conclude that U.S. LNG exports will increase global GHG emissions in a material or predictable way. DOE thus found that the LCA GHG Update “supports the proposition that exports of LNG from the lower-48 states will not be inconsistent with the public interest.”  24

Second, DOE stated that authorization holders have indicated that a 30-year export term would better match the operational life of LNG export facilities, which are typically designed for a service life of 30 to 50 years. A 30-year export term thus would provide authorization holders with greater security in financing their export facility and would maximize their ability to enter into natural gas supply and export contracts for a longer period of time.

In particular, DOE observed that a 30-year export term would benefit U.S. authorization holders as they compete for long-term export contracts in the global market. DOE noted that, in December 2019, the Canadian Government granted the first-ever 40-year export term to a Canadian LNG export project—the proposed Kitimat LNG project, being developed by Chevron Canada Limited. Additionally, citing an earlier comment in a proceeding made by Cheniere Energy, Inc. (Cheniere)—the first company to have large-scale exports of U.S. LNG to non-FTA countries from the lower-48 states, and currently the leading U.S. exporter in terms of volume  25 —DOE observed that foreign buyers have shown an interest in securing long-term contracts for U.S. LNG that last beyond 20 years. Therefore, a 30-year export term could prove decisive when foreign buyers are deciding between U.S. LNG and alternative long-term sources of LNG, such as the Canadian project.

DOE received 22 comments on the Proposed Policy Statement from a variety of sources, including U.S. Senators, participants in the natural gas industry, environmental organizations, and individuals. Eight comments supported the Proposed Policy Statement, 26 13 comments opposed the Proposed Policy Statement, 27 and one comment was non-responsive. 28 The Proposed Policy Statement and comments received in response are available on DOE's website at https://fossil.energy.gov/app/docketindex/docket/index/22. Several comments express general opposition to LNG exports and the use of fossil fuels, advocate for the use of renewable energy, argue against an individual non-FTA application, or challenge the design of the 2018 LNG Export Study. DOE has considered these comments carefully, but considers them outside the scope of the Proposed Policy Statement, which addressed whether DOE should extend the standard 20-year term for non-FTA authorizations through December 31, 2050. DOE previously received public comments on the 2018 LNG Export Study, and addressed those comments in the Federal Register in December 2018. 29 The remaining relevant comments are summarized below, together with DOE's response to these comments.

Commenters in support of the Proposed Policy Statement cite the 2018 LNG Export Study, maintaining that economic benefits for the United States will increase with U.S. LNG exports “since the U.S. natural gas industry . . . will remain demand-limited, and not supply-limited.”  30 The commenters also identify the following positive commercial benefits that, in their view, will accrue as a result of the proposed term extension.

• Planning and financing. Delfin, DECP, API, and CLNG/NGSA state that an extended export term through December 31, 2050, will better align with the expected lifespan of export facilities—which, DECP states, is “much longer than 20 years.”  31 Commenters including LNG Allies and API emphasize that LNG export projects are highly capital intensive and require a considerable amount of planning and construction time. 32 They state that, for an export project to be successful, developers must be reasonably certain that the LNG project can remain in operation long enough to recover those costs and generate a return. 33 According to Delfin and Senators Barrasso, Cassidy, Hoeven, and Cramer, the longer export term will provide reassurance that export facilities have a reasonable expectation of recouping their investment. 34 This reassurance, in turn, will facilitate the financing of such projects, as well as enable project development teams to move forward with greater confidence when making critical investment decisions. 35

• Market competitiveness. API and other commenters assert that the proposed term extension will afford U.S. authorization holders more flexibility in responding to LNG buyers, and thus will level the playing field in competing with other global suppliers. 36 LNG Allies states that DOE's current non-FTA practice—authorizing exports for a 20-year term—constrains the flexibility that U.S. companies can offer in contract negotiations. Specifically, LNG Allies and API assert that the inability of U.S. exporters to offer export terms longer than 20 years is a major disadvantage in an increasingly competitive, dynamic global LNG market with new projects planned in Qatar, Russia, Mozambique, and elsewhere. According to LNG Allies, export facilities require most U.S. project sponsors to raise financing of up to $10 billion or more to construct their terminals, underwritten by long-term LNG offtake contracts. A longer export term thus would allow U.S. companies to offer contract arrangements that have a greater certainty of supply and that are more attractive to potential customers. 37 LNG Allies points to the proposed Kitimat LNG export facility to be constructed in British Columbia, Canada, which it states has a 40-year export license and will be a direct competitor to U.S. projects seeking to serve importing countries in Asia. 38 API also notes that other exporting countries, such as Russia, place few limitations on a project's operational timeline. 39 In sum, these commenters argue that the proposed term extension will better reflect domestic and international market dynamics. 40

• Regulatory certainty in the United States and abroad. CLNG/NGSA and Senators Barrasso, Cassidy, Hoeven, and Cramer state that the proposed term extension provides a more certain pathway for U.S. natural gas to be sold abroad, sends a clear statement of confidence in U.S. LNG, and provides greater regulatory certainty to the industry. 41

On the other hand, opponents of the Proposed Policy Statement challenge the anticipated economic and commercial benefits associated with an extended export term. IECA, for example, contends that DOE should not extend export terms to 2050 or approve any additional LNG export applications until DOE conducts economic studies that, in IECA's view, fully evaluate the economic impacts of exporting U.S. LNG. 42 Additionally, Public Citizen asserts that the trend of LNG exports is shifting away from long-term, fixed price contracts and towards spot and short-term sales. 43 According to Public Citizen, this shift increases the likelihood that LNG export destinations will be determined by the markets offering the highest prices, and thus is at odds with DOE's proposal to “lock in” 30-year export volumes. 44

DOE agrees with the commenters stating that this Final Policy Statement will provide important commercial benefits to existing and future authorization holders in the lower-48 states, while enhancing long-term regulatory certainty for both authorization holders and foreign buyers of U.S. LNG. More generally, DOE notes that the 2018 LNG Export Study, as well as DOE's four prior LNG export studies, consistently have projected positive economic benefits from increased levels of U.S. LNG exports, as measured by GDP. 45

Although Public Citizen notes certain commercial trends in the U.S. LNG market—such as the use of flexible short-term sales, in addition to long-term contracts—Public Citizen does not explain how these market variations are any more or less significant whether existing authorization holders have a 20-year export term or an extended export term lasting through 2050. 46

Insofar as IECA argues that the 2018 LNG Export Study used propriety economic models and failed to evaluate certain economic impacts, and thus cannot provide support for the Proposed Policy Statement, DOE finds that these issues are beyond the scope of this proceeding. DOE previously addressed IECA's (and other commenters') arguments concerning the scope, design, and methodology of the 2018 LNG Export Study. In that proceeding, DOE determined that none of the comments opposing the 2018 LNG Export Study—including IECA's arguments—provided sufficient evidence to rebut the findings of the 2018 Study. 47

Some commenters, including IECA, Public Citizen, and Senators Markey and Merkley, suggest that any net economic benefits associated with the proposed term extension are overstated and not sustainable. Senators Markey and Merkley contend, for example, that the Proposed Policy Statement will result in higher profits for the natural gas industry, while “cutting American consumers out of any potential benefits.”  48 Likewise, IECA and Public Citizen argue that the Proposed Policy Statement prioritizes the supply of natural gas to foreign countries and the financial interests of natural gas producers and LNG exporters at the expense of domestic consumers and households. 49

Public Citizen and Morgan Schmitz also contend that extending export terms for LNG would link U.S. GDP to price-volatile, finite natural resources that will become increasingly more difficult to obtain. 50 Ms. Schmitz argues that the fossil fuel industry causes negative economic effects, and the United States would experience more economic gain over the long term by expanding renewable energy sources and investing in jobs in “green energy.”  51

Other commenters, including LNG Allies, Cheniere, and API, seek to rebut these concerns by pointing to the conclusion of the 2018 LNG Export Study that the United States will experience net economic benefits from the export of domestically produced LNG (in a volume up to 52.8 Bcf/d of natural gas) through the year 2050. 52 Cheniere also emphasizes the Study's conclusion that “there is greater gain in GDP as the LNG export volume increases.”  53

Additionally, Senators Barrasso, Cassidy, Hoeven, and Cramer maintain that LNG exports will help the U.S. natural gas industry continue to be an engine for growth—creating thousands of jobs in the United States and generating millions in tax revenue for federal, state, and local governments. 54 API adds that the 2018 LNG Export Study's conclusion was consistent with an API study published in 2017, which found that an increase in LNG export volumes to approximately 16 Bcf/d in 2040 could support between 220,000 to 452,000 additional jobs and add $50 to $73 billion to the U.S. economy. 55

The 2018 LNG Export Study measured the broad macroeconomic effects of LNG exports on the U.S. economy through several metrics, including the wellbeing of the average U.S. consumer, total household income from all sources, economy-wide investment, output effects on key manufacturing sectors, and GDP.

With respect to GDP, the 2018 LNG Export Study showed that, for each of the supply scenarios, higher levels of LNG exports in response to international demand consistently lead to higher levels of GDP. 56 Specifically, GDP grows as LNG exports increase because the U.S. economy benefits from investment in liquefaction facilities, export revenues, income from the upstream and midstream natural gas industry, and tolling charges generated by the LNG export facilities. With respect to consumer well-being, the 2018 LNG Export Study found that all scenarios within the “more likely” range of results are welfare-improving for the average U.S. household. 57

Upon review, DOE is not persuaded by the commenters' claims of negative economic impacts from the proposed term extension. The commenters have not presented sufficient evidence to support their assertions of economic harm and, indeed, do little more than acknowledge the 2018 LNG Export Study without rebutting its analysis. Consistent with the conclusions of the 2018 LNG Export Study, DOE finds that exports of U.S. LNG under the proposed term extension will generate positive economic benefits in the United States through the year 2050.

IECA and Public Citizen contend that LNG exports will impact the domestic energy-intensive, trade exposed (EITE) sectors disproportionately. Specifically, IECA states that, if natural gas prices rise due to LNG exports over an extended export term, U.S. manufacturers will lose their current competitive advantage of relatively low natural gas prices. IECA asserts that DOE's implementation of this Final Policy Statement thus “could jeopardize nearly 13 million manufacturing jobs and trillions of dollars in assets.”  58

In contrast, LNG Allies asserts that IECA has failed to cite evidence supporting its claim that manufacturers have been adversely affected over the past four years as U.S. LNG exports have increased. 59 LNG Allies states that IECA cannot point to any manufacturing facility in the United States that has been forced to cut back its operations due to an inability to secure an adequate or affordable supply of natural gas. 60

In response to IECA's claim that increases in LNG exports will threaten the competitiveness of the U.S. manufacturing base by driving up natural gas prices, DOE notes that the 2018 LNG Export Study and U.S. Energy Information Administration's (EIA) Annual Energy Outlook 2020 (AEO 2020)  61 project robust domestic supply conditions that are more than adequate to satisfy both domestic needs and exports of LNG under the proposed term extension— i.e., through December 31, 2050. 62

Further, the 2018 LNG Export Study consistently shows macroeconomic benefits to the U.S. economy in every scenario, as well as positive annual growth across the energy intensive sectors of the economy. 63 Specifically, the 2018 Study found that, “[a]ll negatively affected sectors, and in particular the natural gas intensive sectors, continue to grow robustly at higher levels of LNG exports, albeit at slightly lower rates of increase than they would at lower levels.”  64 Based on these and other findings in the 2018 LNG Export Study, DOE does not find it credible that approval of the Proposed Policy Statement would put trillions of dollars of U.S. manufacturing assets and millions of jobs at risk, as IECA claims. 65

Some commenters, such as IECA, Public Citizen, and Senators Markey and Merkley, warn of large increases in domestic prices of natural gas if the term extension is implemented. They contend that increases in LNG exports through 2050 will increase demand for natural gas—thus driving up prices in the United States and adversely affecting electric and natural gas utility customers (including residential customers) and manufacturing-based energy-intensive industries. 66

The final rule objectives are to:

• Enhance the usefulness of high-risk loan categories;

• Replace the subjective measure of “reasonable doubt” used for reinstating loans to accrual status with a measurable standard;

• Improve the timely recognition of a change in a loan's status; and

• Update existing terminology and make other grammatical changes.

The Farm Credit Act of 1971, as amended (Act), 1 requires Farm Credit System (System) institutions to maintain financial statements in accordance with generally accepted accounting principles (GAAP). 2 FCA is charged with issuing regulations to implement this requirement. FCA regulations at Part 621 address accounting and reporting requirements for System institutions, including the use of GAAP. As part of these requirements, subpart C of part 621, “Loan Performance and Valuation Assessment,” establishes standard performance categories for high-risk loans and sets forth the criteria for reinstating those loans to accrual status. 3

We issued a proposed rule on April 3, 2019, to amend subparts A and C of part 621. 4 Specifically, we proposed changes to § 621.6 on loan performance categories as well as the § 621.9 criteria for reinstating loans to accrual status. We proposed using more measurable standards and aligning high-risk loan categories with the criteria used to determine when a loan is suitable for reinstatement to accrual status. We also proposed emphasizing the role servicing plays in addressing high-risk loans and moving definitions currently located in the body of §§ 621.6 and 621.9 to the existing definition section of part 621. We proposed moving four terms and their meaning from subpart C to subpart A, which contains the “Definition” section at § 621.2. In doing so, we proposed some modifications to the terms. The comment period for the proposed rule closed on June 3, 2019.

We received eight comment letters on our proposed changes to subparts A and C of part 621: One letter from the Federal Farm Credit Banks Funding Corporation on behalf of the System's Accounting Standards Workgroup (SASW); one letter from a Farm Credit bank (CoBank, ACB); and six letters from System associations. CoBank and two associations expressed support for remarks made by the SASW, but the associations noted either exceptions or additions to specific aspects of the SASW comments. Two associations submitted remarks substantially similar to those offered by SASW. Two other associations offered comments independent of the SASW comment letter.

In general, all the commenters supported our objectives in issuing the proposed rule. However, most commenters asked that we amend the rule to mirror the guidance provided by the Federal Financial Institutions Examination Council (FFIEC). 5 The commenters' reason for asking us to change our rules to mirror FFIEC standards was comparability within the financial services industry. In the proposed rule, we explained that, unlike commercial lenders and their regulators, neither FCA nor the System is subject to the reporting standards issued by the FFIEC. 6 However, FCA's present accounting classification rules are generally similar, although not identical, to FFIEC standards. 7 Further, we issued the proposed rule with an understanding of the financial regulatory environment as it relates to both the System's cooperative structure and status as a GSE. As a result, we continue our policy of maintaining a similarity to the FFIEC guidance, but deviating where necessary to accommodate the different operational and credit considerations of the System.

Separately, two associations commented on certain areas of discussion in the preamble to the proposed rule. One association expressed concern with the sample list of risk factors we gave for evaluating the collectability of a loan. This commenter stated that the examples of substantial collateral being abandoned and a lawsuit being filed against a primary obligor could, as stand-alone considerations, cause a loan to be placed into nonaccrual status. We believe there are many risks affecting current or future payments on a loan, including but not limited to those described in the preamble to the proposed rule. However, institutions must still evaluate the risk to the continued collection of principal or interest in connection with the requirements in § 621.6 to determine the proper loan performance category. The other commenter raised concerns with a footnote in the preamble to the proposed rule that gave samples of what might be an “adverse action.” This commenter remarked that the samples given were more expansive then those currently in regulations. We agree that we provided in the preamble to the proposed rule more examples of what might be considered an adverse action than are listed in § 617.7400(d). Just as examples given in part 617 of our regulations are not all-inclusive, the list we used in the preamble is also not all-inclusive. Both lists of examples are intended to inform the reader of possible items to consider when making the identification of an adverse action.

Below we address comments specific to our proposed changes to §§ 621.2, 621.6 and 621.9. All provisions are finalized as proposed, unless changes are discussed in our response to comments below.

We proposed moving four existing terms, whose meanings are currently located in the body of regulatory provisions, to the “Definitions” section in § 621.2. In moving the terms, we also proposed contextual and grammatical changes to each of the terms to improve clarity. We finalize this action, but with changes to the definitions for three terms to respond to comments received.

1. Term “adequately secured”.

We proposed clarifying language to explain that the term “adequately secured” describes collateral where there is a perfected security interest. Five of the eight commenters suggested the term “adequately secured” be replaced by “well secured” to mirror FFIEC terminology. These commenters also asked that the definition be replaced with the one used by other financial regulators. One association supported our proposed clarifications to the meaning of the term “adequately secured” and stated it did not believe the term should be changed to “well secured” as doing so would change System credit quality classifications, specifically the loss given default parameters for loan-to-net-realizable-value requirements. 8 Instead, this commenter suggested just using the term “secured.” Another association stated a preference for a clearer definition, making no comment on the term “adequately secured” itself. This commenter asked for the definition to discuss net realizable value.

We believe the existing term “adequately secured” is known and established in System policies and procedures. Changing it as suggested by some commenters could create unnecessary confusion. The term “adequately secured” has been used in FCA regulations since 1986  9 to describe loan security. Additionally, it is used in System-wide risk rating guidance for specific loan risk categories. Any of the suggested changes to the term would directly impact this credit guidance and potentially result in deviations from the operational and credit considerations of the System. Therefore, we do not believe changing the existing term, “adequately secured,” to either “well secured” or just “secured” would be appropriate.

We considered making some adjustments to the definition of “adequately secured” based on comments expressing concern with the phrase “perfected security interest” but decided to make no change to that element. We want institutions to consider whether a lien on collateral is valid and enforceable when making “adequately secured” decisions in the context of categorizing high-risk assets. Should a particular security interest not be properly perfected, we expect institutions to look to other collateral when deciding if the loan is “adequately secured.” However, we are replacing the term “collateralized” with “secured” in the introductory sentence of the definition to improve clarity and comparability with other financial regulators. Additionally, the final rule adds “collateral in the form of” to the beginning of item (1) in the definition of “adequately secured.” This change increases comparability with other financial regulators and adds clarity to the term's use as requested by commenters. We also corrected punctuation identified by one commenter as causing confusion. As finalized, the rule clarifies that the term “adequately secured” means either a lienhold on property or a guarantee on repayment, or both.

2. Term “in the process of collection”.

We proposed removing language on documented future collection of past due amounts, replacing it with language clarifying that the term “in the process of collection” includes both debt collection and loan servicing efforts expected to result in either the recovery of the loan balance (including accrued interest and penalties) or reinstatement of the loan to current status in the near future. One association supported the proposed removal of the 180 day timeframe in the definition, while all other commenters were silent on that specific aspect. The SASW, CoBank, and four associations commented that the definition of “in the process of collection” was too restrictive. Commenters explained that the use of a probable and specific event is a higher hurdle than the definition used by other financial regulators.

We agree with the comments that using probable and specific events within the definition is too constraining so we remove it from the final rule text. Instead, as suggested by commenters, we replace it by adding the word “reasonably” before “expected to result in recovery.” We believe this increases the definition's similarity to FFIEC guidance without adverse impact to the System's unique operating structure. We also remove the word “and” joining both “debt collection and loan servicing efforts”, replacing it with “or” as is done in FFIEC guidance. We believe this change is appropriate as it may not always be applicable to have both debt collection and loan servicing occurring in all circumstances.

3. Term “past due”.

We proposed replacing language within the definition of “past due” when discussing existing servicing actions. There were no specific comments on this proposed change to the definition. Instead, the SASW, CoBank, and four associations asked that the definition of “past due” be adjusted to reflect the definition used by other financial regulators under FFIEC. Commenters specifically remarked that our definition of “past due” is inconsistent with other financial regulators and suggested clarifying the term to allow for either interest or principle to be delinquent in satisfaction of the term “past due.”

We reviewed the FFIEC definition for “past due” and believe the concerns of the commenters regarding separation of principle and interest was based on receipt of partial payments. As such, we adjust the definition to provide that when loan payments have not been received in full and on time, they will be “past due.” We believe adding “in full” addresses concerns that past due amount may consist of interest and not principal, or vice versa. If either principal or interest are due under the payment terms (as may be the case when there is a partial payment), but unpaid, the loan is past due.

4. Term “sustained performance”.

We proposed clarifying that “sustained performance” on a loan is based on contractual payment terms. Only one comment was received on this proposed clarification. That commenter was an association that expressed support for the clarification. We final the term as proposed.

We proposed clarifying changes to the categories for high-risk loans in § 621.6, including removing redundancies and aligning § 621.6 with proposed changes to § 621.9. We also proposed removing the last sentence of this section's introductory paragraph that required loans meeting more than one performance category to be, in all cases, categorized as “nonaccrual.” One association objected to removing this sentence, expressing concern that doing so would result in inconsistencies in classifications due each association's interpretation of which is the most appropriate performance category to assign a loan. We do not share this commenter's concern and final this change as proposed. We believe institutions should determine the most appropriate performance category for a high-risk loan, understanding that no more than one category may be used at any given time. We also believe the other changes to §§ 621.6 and 621.9 will facilitate this decision-making process.

We note that the final rule does not address disclosures required by the Accounting Standards Update related to credit losses and the disclosure of nonaccrual loans. 10 FCA addressed disclosure requirements related to the new accounting standard in a separate rulemaking process. 11 While the current incurred loss methodology under GAAP is based on a probable threshold, the measurement of credit losses is changing under the Financial Accounting Standards Board's (FASB) new credit loss standard. When effective, the new standard will replace the current GAAP incurred loss methodology with one that reflects lifetime expected credit losses for financial assets measured at amortized cost over the entire contractual term. 12 Although the new standard does not address when a financial asset should be placed in nonaccrual status, it will increase the credit quality-related disclosures for loans.

We proposed updating language in § 621.6(a) to clarify that a loan is properly categorized as a “nonaccrual loan” when there is a known risk to the continued collection of principal or interest. We also proposed clarifying the use of “charge off” in § 621.6 by retaining its classification use for loans with any portion charged off through means other than formal loan servicing as discussed in part 617 or a Troubled Debt Restructuring (TDR). The SASW, CoBank, and four associations suggested conforming our nonaccrual loan classification rules to those used by other financial regulators, which do not use charge offs in classifications. 13

In response to these comments, the final rule does not include charge offs as a consideration when classifying a loan. By removing charge offs, the final rule increases comparability with the FFIEC's three possible conditions for nonaccrual status: Deterioration in the financial condition of the borrower; payment of full principal and interest is not expected; and loans 90 days or more past due. A loan with a charge off should still be considered for nonaccrual status if there is known risk to the continued collection of the principal or interest. If an institution has determined the collection of a loan's outstanding principal and interest, plus future interest accruals, over the full term of the loan is not expected because of a documented deterioration in the financial condition of the borrower, then the loan should be placed in nonaccrual status, including loans with charge offs.

As final, the rule regarding categorizing high-risk loans remains consistent with GAAP and the financial industry's performance categories. 14 Although not exactly matching FFIEC guidelines, those aspects of FFIEC guidance appropriate for System operations already exist in our rules, to the extent possible. Therefore, we are not making the other requested changes to § 621.6(a) beyond a corresponding adjustment to language on loans past due to read “90 days or more past due.” We also make a technical change to adjust the numbering of the subparagraphs required after removing the charge off provision.

One association questioned how the term “charge off” was used in a footnote of the preamble to the proposed rule. The commenter explained the usage of the term was inconsistent with how the term was applied in the context of existing §§ 621.6 and 621.9, noting that we did not propose a definition of “charge off” in § 621.2. Any identified loan loss, whether it is principal or interest, must be charged off. The charge off discussion in the proposed rule preamble related to earned but uncollected interest income that was accrued and determined to be uncollectible. FCA was not attempting to define the term charge off to include only interest income, but explaining that when an institution determines that the contractual value of a loan or other asset exceeds the amount that can reasonably be expected to be collected, the institution is expected to immediately charge off the asset in the amount determined to be uncollectible. 15

We proposed adding a short explanation of loans classified under the TDR category. The SASW, CoBank, and four associations suggested what we proposed was too narrow, explaining the reference to `financial concession' does not encompass other potential concessions. These commenters suggested we replace the sentence with the GAAP definition. A separate commenter expressed support for our clarification effort to distinguish TDRs from other servicing.

Since we proposed the language to add clarity and comments received indicated the proposed additional language raised more questions, we are not finalizing the rule with this second sentence. We believe referencing a TDR under GAAP in the first sentence accurately reflects the category and, by removing the last sentence, the rule will avoid having to be amended for any future changes to GAAP. For this same reason we are not accepting the suggestion to quote GAAP within the rule. We also make a technical change to spell out the meaning of “TDR” within the rule text.

We proposed changes to the high-risk loan category, “Loans 90 days past due still accruing interest,” to improve readability and add clarity. We received no comments on our proposed changes, but as a conforming change to comments made on our definition of “past due” and other comments asking for our rules to more closely resemble FFIEC guidance, we have adjusted the language discussing this category to read “90 days or more past due.” This change allows the specific provision to read substantially similar to FFIEC guidance.

We proposed replacing the criteria a loan must satisfy before being reinstated to accrual status with requirements that are based upon repayment patterns and loan security. The SASW, CoBank, and four associations asked that we instead use the same reinstatement criteria as is contained in FFIEC guidance. In response to comments received, we again considered the FFIEC reinstatement guidance but continue to believe System operations require different reinstatement criteria. In particular, we are sensitive to the fact the FFIEC guidelines are premised upon monthly loan repayments whereas the System most often provides annual payment amortizations. Additionally, safety and soundness concerns related to the economics of primarily lending to the agricultural sector also warrant deviations from the reinstatement practices of commercial lenders. As such, we believe the final rule strikes the appropriate balance given the risks arising from the specialized lending activities of the System.

Some commenters questioned the value of qualifying reinstatement based on a loan becoming past due while classified as nonaccrual. We agree with these comments and final the rule with changes that remove the language regarding a loan becoming past due while in nonaccrual status from all of paragraph (a), excepting the core requirement that a loan be current when reinstated. Additionally, a commenter remarked on an apparent redundancy in the proposed text discussing servicing efforts. We agree and the final rule removes the identified redundancy between paragraph (a) and subparagraph (a)(1). Specifically, we removed from § 621.9(a)(1) the requirement that known risks have been addressed through servicing, because the servicing element is already mentioned in paragraph (a) as an aspect that must be considered for all loans in nonaccrual status. We also accepted the related comment that the proposed language of (a)(1) implied only servicing could address the risks leading a loan to be classified as nonaccrual. The final rule replaces the relevant phrase in (a)(1) with one asking that the risks be mitigated. This change leaves open the manner of mitigation, as suggested by the commenter.

One association asked that we entirely remove servicing as a consideration to reinstating a loan to accrual status. This same commenter asked if documentation maintained elsewhere in a loan file regarding servicing could serve to demonstrate an association's efforts for purposes of complying with § 621.9(a). Other commenters remarked that servicing should not be used at all in accounting classifications. We disagree that servicing does not play an important role in addressing high risk loans. Servicing a loan is a key element of addressing risk to collectability and assessing the loan's readiness to be reinstated to accrual status. Loans that receive effective and constructive loan servicing have a much greater likelihood of remaining current over time. Further, loan servicing is a critical process for institutions to work through with borrowers to address the underlying cause of the borrower's financial and repayment weaknesses that caused the loan's original nonaccrual designation. We also remind the commenters that the servicing element replaces the requirement to remove all reasonable doubt as to the willingness and ability of the borrower to perform under the loan terms. As explained in the preamble to the proposed rule, we looked for alternative criteria that were more measurable than the “reasonable doubt” requirement and identified loan servicing as an appropriate substitute. We continue to believe servicing addresses the safety and soundness concerns behind the “reasonable doubt” requirement and therefore is an appropriate replacement. As to the question on documentation, as a general matter we are not seeking duplication of existing servicing documentation when considering a loan for reinstatement. We anticipate a reference to documented servicing should be sufficient.

One commenter supported changing the reinstatement criteria to allow a continuously current loan to be restored to accrual status without sustained performance. Six other commenters stated that the reinstatement criteria should not consider future performance or repayment. We believe the consideration of future repayment capacity is part of the process in determining the collectability of the loan and whether the loan should be reinstated to accrual status. Demonstrating future repayment capacity ensures the known risks to the collection of the loan have been mitigated. By requiring future repayment capacity, a reinstated loan should have mitigated the known risks to loan collection and the loan should not subsequently fall back into nonaccrual status in the next reporting period. We also believe this is consistent with prudent credit risk management practices. Further, the final rule adds flexibility for establishing the repayment pattern for loans placed in nonaccrual status when past due and that are adequately secured, which we believe improve the timely recognition of a change in a loan's status when compared to the existing rule.

One association asked that we incorporate into our nonaccrual regulations the guidance contained in our Informational Memorandum, “Examination of Loans Guaranteed by Federal and Local Government Agencies,” dated July 10, 1998. This IM discusses, among other things, the loan guarantees from United States Department of Agriculture Farm Services Agency. We do not believe our nonaccrual regulations should prescribe the accounting treatment for specific loan types and circumstances. We continue to believe guaranteed loans being serviced in accordance with the terms of a Government guarantee are normally presumed to be in process of collection and adequately secured.

Two associations commented that our performance criteria, used to reinstate nonaccrual loans, causes a direct negative monetary impact on member-borrowers. These commenters explained that under each of their board approved patronage program, member-borrowers are not eligible for patronage when a loan is in nonaccrual status, even if the loan is current on payments. Therefore, by not being able to reinstate the loan to accrual status once current, its member-borrowers are denied patronage.

FCA does not believe our regulations created the disadvantage cited by the commenters because each association sets its own patronage payment pools in a manner it determines is rational and equitable. 16 Further, FCA discourages System institutions from solely using loan performance categories for patronage policies. As illustrated by the above two comments, using loan performance categories for purposes other than what they are intended may inappropriately cost a member-borrower patronage he or she earned. One of the benefits of being a member-borrower of the System is the opportunity to earn, and be paid, patronage. When an institution has a patronage policy, the policy sets forth if patronage will be paid and the eligibility requirements for receiving patronage payments. 17 Should, for example, a policy provide that patronage may be denied or reduced based solely on a loan's performance classification, a member-borrower with a current loan in nonaccrual status would be denied patronage. Meaning, the institution relying solely on a performance classification when setting patronage pools may not be giving full consideration to whether those loans in nonaccrual status that also are current on payments contributed to the earnings of the institution and therefore should receive consideration for patronage payments. 18 Thus, these commenters can address their concerns about a loan classification's having a direct negative monetary impact on their member-borrowers by changing their own patronage policies.

As a corresponding change to those made in § 621.6, we final the rule without the proposed § 621.9(a)(2), which would have required charged off amounts to be collected prior to reinstatement. As discussed earlier, we removed charge offs as a consideration to placing a loan into nonaccrual status. For consistency, we also remove use of charge offs when reinstating a loan. In relation to this, the proposed subparagraphs (a)(3) and (a)(4) were renumbered (a)(2) and (a)(3) within this final rulemaking.

We received several comments on a section of our regulations where no changes had been proposed. The comments were directed at our rules of aggregation in § 621.7, asking us to apply the rule at the loan level rather than the customer level. Commenters also asked us to consider revising or eliminating the rule of aggregation because it requires an institution to move a performing loan to nonaccrual status despite having its own performance assessment and collateral support. The commenters also stated FCA's rule of aggregation is not consistent with other financial regulators.

We proposed no changes to this section of our regulations so are not making any as part of this final rulemaking. Instead, we will take the request for changes to § 621.7 under consideration and potentially address them in future rulemakings. We do explain that when one loan to a borrower is placed into nonaccrual status, FCA regulations do not require an institution to automatically place all of a borrower's loans into nonaccrual status. The primary purpose of FCA's rule of aggregation is to ensure that when a borrower's loan is placed in nonaccrual status, an institution immediately evaluates whether or not other loans to the same borrower, or loans for which the same borrower is responsible for repayment, should also be placed in nonaccrual. 19 FCA regulation § 621.7(b) provides if the borrower's other loans represent an independent credit risk and are fully collectible, then they may remain in their current performance category and are not required to be moved to nonaccrual status. This is comparable to the recommendation of other financial regulators that a financial institution evaluate its loans and other extensions of credit to a single borrower when one of the borrower's loans meets the criteria for nonaccrual status.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), FCA hereby certifies that the final rule would not have a significant economic impact on a substantial number of small entities. Each of the banks in the System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, System institutions are not “small entities” as defined in the Regulatory Flexibility Act.

Under the provisions of the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Management and Budget's Office of Information and Regulatory Affairs has determined that this final rule is not a “major rule,” as the term is defined at 5 U.S.C. 804(2).

For the reasons stated in the preamble, parts 611, 615 and 621 of chapter VI, title 12 of the Code of Federal Regulations is amended as follows:

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0168R1, dated July 29, 2020 (“EASA AD 2020-0168R1”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Dassault Aviation Model MYSTERE-FALCON 900, FALCON 900EX, FALCON 2000, and FALCON 2000EX airplanes.

This AD was prompted by reports of loose or missing nuts on the pilot and co-pilot ventral seat belt attachment points. The FAA is issuing this AD to address this condition, which could lead to detachment of the seat belt at a critical phase of flight, such as landing or, in the case of turbulence or emergency landing, resulting in the flight crew becoming unrestrained from their seat, causing injury to the flight crew and/or subsequent loss of control of the airplane. This condition could impede the continued safety of flight. See the MCAI for additional background information.

EASA AD 2020-0168R1 describes procedures for a detailed inspection of certain seat belt attaching point nuts for any loose or missing nuts and corrective action, which is replacement. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI referenced above. The FAA is issuing this AD because the FAA evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in EASA AD 2020-0168R1, described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2020-0168R1 is incorporated by reference in this final rule. This AD, therefore, requires compliance with EASA AD 2020-0168R1 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD. Service information specified in EASA AD 2020-0168R1 that is required for compliance with EASA AD 2020-0168R1 is available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0777.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies foregoing notice and comment prior to adoption of this rule because the detachment of the seat belt at a critical phase of flight such as landing or, in the case of turbulence or emergency landing, could result in the flight crew becoming unrestrained from their seat, causing injury to the flight crew and/or subsequent loss of control of the airplane, thereby impeding continued safety of flight. In addition, the compliance time for the required action is shorter than the time necessary for the public to comment and for publication of the final rule. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are impracticable. In addition, for the reasons stated above, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and the FAA did not precede it by notice and opportunity for public comment. The FAA invites you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2020-0777; Project Identifier MCAI-2020-01071-T” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one copy of the comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted documents as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to the person identified in the FOR FURTHER INFORMATION CONTACT section. Any commentary that the FAA receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking.

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

The FAA estimates that this AD affects 793 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has received a report indicating that a The Boeing Company Model 787 airplane equipped with General Electric Company (GE) GEnx-1B model turbofan engines experienced temporary thrust anomalies on both engines during descent into Kansai International Airport in Japan, on March 29, 2019. Specifically, both engines briefly fell below idle thrust, and the flightcrew received failure messages for both engines.

The FAA's review of the data from this incident indicated the thrust anomalies resulted from fuel control instability. The fuel tanks of the event airplane had recently been treated with Kathon FP 1.5 biocide for suspected microbial growth contamination. Salt crystals can form in the fuel under certain conditions after Kathon FP 1.5 biocide is applied. These salt crystals have the potential to cause slow response of engine hydromechanical control features, resulting in compressor stalls or flameouts, potentially on both engines.

This condition, if not addressed, could result in malfunction of the engine's control system hydromechanical unit due to undispersed Kathon FP 1.5 biocide contaminating and restricting the movement of internal parts. Because the fuel systems for both engines on an affected airplane are likely to be similarly affected, there is the potential for loss of thrust control on both engines. Loss of thrust control on both engines could result in failure to climb on takeoff, a forced off-airport landing, or an unacceptably high flightcrew workload.

However, after this biocide is added to the fuel tanks, adding fuel without biocide diminishes the hazard. Eventually, after the tanks have been refilled a sufficient number of times with untreated fuel, enough of the treated fuel would be dissipated, and the unsafe condition would be removed. Specifically, Boeing determined that operating the airplane, or any individual engine, for at least 30 flight cycles, while adding only fuel that has not been treated with this biocide, would flush the biocide from the fuel tank system and the engines. The FAA finds this number of flight cycles to be sufficiently conservative, and therefore has incorporated it the requirements of this AD.

The FAA's analysis of the risks posed by this issue has been ongoing, as has the information available to the agency. On March 10, 2020, the manufacturer of Kathon FP 1.5 issued a letter recommending an immediate halt of using Kathon FP 1.5 biocide for aviation fuel applications. A copy of that letter is in the docket for this rulemaking. On March 25, 2020, the FAA issued a Special Airworthiness Information Bulletin (SAIB), which is in the docket for this rulemaking, regarding the use of Kathon FP 1.5 and another biocide. Most recently, on June 25, 2020, the Japan Transport Safety Board issued an “Aircraft Serious Incident Investigation Report” regarding the March 29, 2019 incident. That report is in the docket for this rulemaking.

The engine and aircraft manufacturers also evaluated the potential of Kathon FP 1.5 biocide application resulting in adverse effects on the engines besides GEnx-1B model engines installed on Model 787 airplanes. Based on this evaluation, the FAA has determined that the unsafe condition also exists on The Boeing Company Model 747-8 and -8F series airplanes powered by GEnx-2B model engines.

The FAA issued AD 2020-14-09, Amendment 39-21163 (85 FR 42689, July 15, 2020), for The Boeing Company Model 737-8 and -9 airplanes to require the same actions required by this AD.

The FAA reviewed Boeing Multi-Operator Messages MOM-MOM-20-0577-01B, dated July 13, 2020; and MOM-MOM-20-0578-01B, dated July 14, 2020. This service information describes procedures for removing Kathon FP 1.5 biocide from fuel tanks and engines. These documents are distinct since they apply to different airplane models. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA is issuing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires removing Kathon FP 1.5 biocide from the fuel tanks and engines, installing a fuel limitation placard, and revising the existing AFM to prohibit operation of the airplane with Kathon FP 1.5 biocide in a fuel tank or engine.

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq. ) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without providing notice and seeking comment prior to issuance. Further, section 553(d) of the APA authorizes agencies to make rules effective in less than thirty days, upon a finding of good cause.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public and flightcrews justifies forgoing notice and comment prior to adoption of this rule because the simultaneous loss of thrust control on both engines, due to malfunction of the engine's control system hydromechanical unit due to undispersed Kathon FP 1.5 biocide contaminating and restricting the movement of internal parts, could result in failure to climb on takeoff, a forced off-airport landing, or an unacceptably high flightcrew workload. In addition, the compliance time for the required action is shorter than the time necessary for the public to comment and for publication of the final rule. Therefore this rule must be issued immediately, to ensure the continued safe operation of these airplanes. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B). In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forgo notice and comment.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2020-0690 and Project Identifier AD-2020-00860-T at the beginning of your comments. The most helpful comments refer to a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments. Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to https://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact received about this final rule.

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

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

The FAA estimates that this AD affects 137 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0112R1, dated May 27, 2020 (“EASA AD 2020-0112R1”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus SAS Model A310-203, -204, -221, -222, -304, -322, -324, and -325 airplanes.

This AD was a prompted by reports of cracking found at certain fuselage frames. The FAA is issuing this AD to address crack initiation and propagation, which could result in reduced structural integrity of the fuselage. See the MCAI for additional background information.

EASA AD 2020-0112R1 describes procedures for repetitive rototest and high frequency eddy current inspections for discrepancies of the fuselage internal structure from frame (FR) 2 to FR 4, windshield frame lower section and closing panel; repetitive low frequency eddy current inspections for discrepancies of the stringer couplings in circumferential junction areas at FR40/41, from stringer 13 to the crown center line internal surface; and applicable corrective actions (repair of discrepancies). This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI referenced above. The FAA is issuing this AD because the FAA evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in EASA AD 2020-0112R1 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2020-0112R1 is incorporated by reference in this final rule. This AD, therefore, requires compliance with EASA AD EASA AD 2020-0112R1 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD. Service information specified in EASA AD EASA AD 2020-0112R1 that is required for compliance with EASA AD 2020-0112R1 is available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0682.

There are currently no domestic operators of these products. Therefore, the FAA finds that notice and opportunity for prior public comment are unnecessary and that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and the FAA did not precede it by notice and opportunity for public comment. The FAA invites you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2020-0682; Product Identifier 2020-NM-090-AD” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this AD based on those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this final rule, request for comments, contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this final rule, request for comments, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this final rule, request for comments. Submissions containing CBI should be sent to the person identified in the FOR FURTHER INFORMATION CONTACT section. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

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

Currently, there are no affected U.S.-registered airplanes. If an affected airplane is imported and placed on the U.S. Register in the future, the FAA provides the following cost estimates to comply with this AD:

The FAA has received no definitive data that would enable providing cost estimates for the on-condition actions specified in this AD

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

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

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

For the reasons discussed above, I certify that this AD:

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

(2) Will not affect intrastate aviation in Alaska.

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

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0148, dated July 6, 2020 (“EASA AD 2020-0148”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A319-115 and -153N; A320-214, -216, -232, -251N, -252N, -271N, and -273N; and A321-211, -231, -251N, -253N, -271N, -272N, -251NX, -252NX, -253NX, and -271NX airplanes.

This AD was prompted by reports of fuel leaks at the interface of the low pressure shut off valves on the pylon areas of engines 1 and 2 due to improperly installed parts during production. The FAA is issuing this AD to address incorrect installation of the low pressure shut off valves, which could result in fuel spillage in the flammable zone. This condition, if not corrected, could result in an uncontrollable fire in an engine pylon. See the MCAI for additional background information.

EASA AD 2020-0148 describes procedures for a one-time detailed inspection of each low pressure shut off valve on the pylon areas of engines 1 and 2 for correct installation, and replacing the O-rings and torqueing the mounting bolts within specified values as applicable. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI referenced above. The FAA is issuing this AD because the FAA evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in EASA AD 2020-0148 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2020-0148 is incorporated by reference in this final rule. This AD, therefore, requires compliance with EASA AD 2020-0148 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD. Service information specified in EASA AD 2020-0148 that is required for compliance with EASA AD 2020-0148 is available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0688.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because incorrect installation of the low pressure shut off valves on the pylon areas of engines 1 and 2 could result in fuel spillage in the flammable zone. This condition, if not corrected, could result in an uncontrollable fire in an engine pylon. In addition, the compliance time for the required action is shorter than the time necessary for the public to comment and for publication of the final rule. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are impracticable. In addition, for the reasons stated above, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and the FAA did not precede it by notice and opportunity for public comment. The FAA invites you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2020-0688; Project Identifier MCAI-2020-00901-T” at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this AD. The FAA will consider all comments received by the closing date and may amend this AD based on those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Sanjay Ralhan, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3223; email Sanjay.Ralhan@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

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

The FAA estimates that this AD affects 188 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA issued an NPRM to amend 14 CFR part 39 by adding an AD that would apply to GA8 Airvan (Pty) Ltd Models GA8 and GA8-TC320 airplanes. The NPRM published in the Federal Register on August 12, 2019 (84 FR 39782). The NPRM proposed to correct an unsafe condition for the specified products and was based on MCAI originated by an aviation authority of another country. The Civil Aviation Safety Authority (CASA), which is the aviation authority for Australia, issued AD No. AD/GA8/10, dated October 17, 2018 (referred to after this as “the MCAI”), which states:

While the U.S. type certificate holder is GA8 Airvan C/O GippsAero, service manuals for the GA8 and GA8-TC320 model airplanes are issued by GippsAero.

The MCAI can be found in the AD docket on the internet at: https://www.regulations.gov/document?D=FAA-2019-0615-0002.

The FAA gave the public the opportunity to participate in developing this AD. The FAA received no comments on the NPRM or on the determination of the cost to the public.

The FAA reviewed the relevant data and determined that air safety and the public interest require adopting the AD as proposed.

GippsAero has issued GippsAero, Model GA8, GA8 Airplane Service Manual, C01-00-04, Chapter 4, Airworthiness Limitations, dated May 14, 2018; and GippsAero Model GA8-TC 320, GA8-TC 320 Airplane Service Manual, C01-00-06, Chapter 4, Airworthiness Limitations, dated May 14, 2018. For the applicable airplane model indicated on the documents, these revised airworthiness limitations establish life limits for certain fuselage strut pick up ribs No. 5 and 6. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD will affect 30 products of U.S. registry. The FAA also estimates that it will take about 1 work-hour per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour.

Based on these figures, the FAA estimates the cost of this AD on U.S. operators to be $2,550, or $85 per product.

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

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

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

For the reasons discussed above, I certify this AD:

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

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2019-03-06, Amendment 39-19558 (84 FR 5587, February 22, 2019) (“AD 2019-03-06”). AD 2019-03-06 applied to certain The Boeing Company Model 737-300, -400, and -500 series airplanes. The NPRM published in the Federal Register on March 9, 2020 (85 FR 13581). The NPRM was prompted by a report indicating that the PSUs became separated from their attachments during several survivable accident sequences, and by the determination that additional actions are necessary for five airplanes. The NPRM proposed to retain the requirement to install lanyard assemblies on PSUs and, for certain airplanes, on the life vest panels. The NPRM further proposed to require installing lanyard assemblies on the life vest panels for those five airplanes on which installation was not originally required. The FAA is issuing this AD to address the potential for the PSUs to detach and fall into the cabin, which could lead to passenger injuries and impede egress during an evacuation.

The FAA gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment.

Two anonymous commenters supported the NPRM.

Another anonymous commenter supported the NPRM and requested information about the five airplanes for which the additional work would be required by the proposed AD. The commenter asked where those airplanes are registered and how they pertain to the jurisdiction of the FAA.

The FAA has jurisdiction over airplanes identified in the applicability of this AD regardless of where they are registered. The United States is the state of design for the affected Boeing airplanes, and the FAA is taking action to resolve the unsafe condition that could exist or develop on the identified airplanes. The FAA has not changed the final rule regarding this issue.

Boeing requested that the FAA revise paragraph (i) of the proposed AD, which would provide credit for use of Boeing Service Bulletin 737-25-1728, dated October 10, 2016, to do the actions specified in paragraph (g)(1) of the proposed AD. (Boeing Service Bulletin 737-25-1728, Revision 1, dated November 26, 2019, was issued when it was discovered that five airplanes had been inadvertently excluded from the requirement to install lanyards on the life vest panels. Revision 1 moved those five airplanes from Group 1 to form new Group 3, and added the lanyard installation procedures for Group 3.) Boeing asserted that the proposed credit language would provide credit for all requirements for a Group 3 airplane, although the work performed would not fully mitigate the unsafe condition because the life vest panels would not include lanyards.

The FAA agrees that clarification is necessary. Boeing Service Bulletin 737-25-1728, dated October 10, 2016, while not requiring the lanyard installation on life vest panels for Group 3 airplanes, did provide the lanyard installation procedures for other airplanes. Therefore, credit may be allowed for a Group 3 airplane if lanyards were installed on the life vest panels using that service bulletin. To emphasize that the lanyard installation is mandatory for Group 3 airplanes, the FAA has clarified the provisions of paragraph (i) of this AD to state that the lanyard installation is required, regardless of the service bulletin revision level used.

Aviation Partners Boeing stated that the installation of winglets per Supplemental Type Certificate (STC) ST01219SE does not affect the accomplishment of the manufacturer's service instructions.

The FAA agrees that STC ST01219SE does not affect the accomplishment of the manufacturer's service instructions. Therefore, the installation of STC ST01219SE does not affect the ability to accomplish the actions required by this AD. The FAA has not changed this AD in this regard.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously, and minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

The FAA also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

The FAA reviewed Boeing Special Attention Service Bulletin 737-25-1728, Revision 1, dated November 26, 2019. The service information describes procedures for installing lanyard assemblies on the PSUs and life vest panels, as applicable to the airplane group.

This AD also requires Boeing Requirements Bulletin 737-25-1758 RB, dated November 8, 2017, which the Director of the Federal Register approved for incorporation by reference as of March 29, 2019 (84 FR 5587, February 22, 2019).

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 221 airplanes of U.S. registry. The new actions in this AD apply to only 5 airplanes, none of which is registered in the U.S. The FAA estimates the following costs to comply with this AD:

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

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

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

For the reasons discussed above, I certify that this AD:

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

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

The FAA published a final rule in the Federal Register (85 FR 44467; July 23, 2020) for Docket FAA-2020-0350 amending Class E airspace designated as a surface area. Class E airspace extending upward from 700 feet above the surface and Class E airspace extending upward from 1,200 feet above the surface. Subsequent to publication, the FAA identified the spelling errors within the airport's name throughout the document. This action corrects spelling errors.

Class E2, and E5 airspace designations are published in paragraph 6002, 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 designation listed in this document will be published subsequently in the Order.

Accordingly, pursuant to the authority delegated to me, Amendment of the Class E Airspace; Kotzebue, AK, published in the Federal Register of July 23, 2020 (85 FR 44467), FR Doc. 2020-15930, is corrected as follows:

Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act provides that these regulations should, among other things, prohibit consumer deception and the use of misleading statements on labels and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated the functions and duties in the administration and enforcement of these provisions to the TTB Administrator through Treasury Order 120-01, dated December 10, 2013 (superseding Treasury Order 120-01, dated January 24, 2003).

Part 4 of the TTB regulations (27 CFR part 4) authorizes TTB to establish definitive viticultural areas and regulate the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission to TTB of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved AVAs.

Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region having distinguishing features, as described in part 9 of the regulations, and a name and a delineated boundary, as established in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to the wine's geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA is neither an approval nor an endorsement by TTB of the wine produced in that area.

Section 4.25(e)(2) of the TTB regulations (27 CFR 4.25(e)(2)) outlines the procedure for proposing an AVA and provides that any interested party may petition TTB to establish a grape-growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions for the establishment or modification of AVAs. Petitions to establish an AVA must include the following:

• Evidence that the area within the proposed AVA boundary is nationally or locally known by the AVA name specified in the petition;

• An explanation of the basis for defining the boundary of the proposed AVA;

• A narrative description of the features of the proposed AVA affecting viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed AVA distinctive and distinguish it from adjacent areas outside the proposed AVA;

• The appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed AVA, with the boundary of the proposed AVA clearly drawn thereon;

• If the proposed AVA is to be established within, or overlapping, an existing AVA, an explanation that both identifies the attributes of the proposed AVA that are consistent with the existing AVA and explains how the proposed AVA is sufficiently distinct from the existing AVA and therefore appropriate for separate recognition; and

• A detailed narrative description of the proposed AVA boundary based on USGS map markings.

TTB received a petition from Wesley D. Hagen, on behalf of local vineyard owners and winemakers, proposing the establishment of the “Alisos Canyon” AVA in Santa Barbara County, California. The proposed Alisos Canyon AVA lies entirely within the established Central Coast AVA (27 CFR 9.75).

Within the 5,774-acre proposed AVA, there are currently 9 producing commercial vineyards, which cover a total of approximately 238 acres. There is also one winery within the proposed AVA. According to the petition, the distinguishing features of the proposed Alisos Canyon AVA include its climate and soils. The petition also listed topography and geology as distinguishing features. However, based on the petition's descriptions, topography and geology appear to be too integral to the region's climate and soils, respectively, to be considered separately from those features. Therefore, TTB does not consider topography and geology to be separate distinguishing features of the proposed AVA.

The climate of the proposed Alisos Canyon AVA is affected by cool marine air which travels into the proposed AVA via the drainage system of San Antonio Creek. The proposed AVA is located approximately 25 miles from the Pacific Ocean and is situated in a transitional region, between the cooler coastal regions and the warmer inland areas. Growing degree day accumulations  1 within the proposed Alisos Canyon AVA are higher than those of the regions to the northwest and southwest, which are closer to the ocean, and lower than those in the more inland regions to the south and east. The region due north of the proposed AVA also has higher growing degree day accumulations due to its location east of ridges and hills which trap warm air and block cool marine air from entering the region. According to the petition, the proposed AVA's location is a “Goldilocks Rhone Zone,” meaning that temperatures are neither too hot nor too cold for growing Rhone wine varietals such as Syrah, which is the most common varietal grown in the proposed AVA.

Soils within the proposed Alisos Canyon AVA are primarily derived from sandstone and shale. The most common soils are the Paso Robles Formation and Careaga Sandstone, which comprise 63 percent and 13 percent of the total soils, respectively. High calcium content from shale pebbles increases the thickness of the skins of red varietal wine grapes, which in turn increases the color and tannin levels in the resulting wine. High sand content provides excellent drainage for vineyards, thus reducing the risks from certain pests such as nematodes and phylloxera. The low clay content of Careaga Sandstone soils reduces the uptake of nutrients and reduces the vigor of the vines, resulting in smaller grapes with a higher skin-to-juice ratio than grapes of the same varietal grown in different soils with higher clay content.

To the north of the proposed AVA, within the Santa Maria Valley, the soils have sandier top soils. South of the proposed Alisos Canyon AVA, the soils are characterized by Metz fine sandy loam. To the east of the proposed AVA, the soils are primarily derived from serpentine and chert. To the west of the proposed AVA, the soils are described as deep, sandy soils of the Shedd, Chamise, and Point Sal Formation series.

TTB published Notice No. 185 in the Federal Register on October 15, 2019 (84 FR 55082), proposing to establish the Alisos Canyon AVA. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed AVA. The notice also compared the distinguishing features of the proposed AVA to the surrounding areas. For a detailed description of the evidence relating to the name, boundary, and distinguishing features of the proposed AVA, and for a detailed comparison of the distinguishing features of the proposed AVA to the surrounding areas, see Notice No. 185.

In Notice No. 185, TTB solicited comments on the accuracy of the name, boundary, and other required information submitted in support of the petition. In addition, given the proposed Alisos Canyon AVA's location within the Central Coast AVA, TTB solicited comments on whether the evidence submitted in the petition regarding the distinguishing features of the proposed AVA sufficiently differentiates it from the established AVA. TTB also requested comments on whether the geographic features of the proposed AVA are so distinguishable from the established AVA that the proposed AVA should no longer be part of the established AVA. The comment period closed December 16, 2019.

In response to Notice No. 185, TTB received a total of 18 comments. Commenters included the co-authors of the petition, local wine industry members, and members of the public who did not state an affiliation. All of the comments support the establishment of the proposed Alisos Canyon AVA, with most comments being an expression of general support. A few comments expressed agreement with the petition's description of the proposed AVA's soils and microclimate. None of the comments mentioned the proposed AVA's location within the established Central Coast AVA.

After careful review of the petition and the comments received in response to Notice No. 185, TTB finds that the evidence provided by the petitioner supports the establishment of the Alisos Canyon AVA. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and parts 4 and 9 of the TTB regulations, TTB establishes the “Alisos Canyon” AVA in Santa Barbara County, California, effective 30 days from the publication date of this document.

TTB has also determined that the Alisos Canyon AVA will remain part of the established Central Coast AVA. As discussed in Notice No. 185, the Alisos Canyon AVA shares some broad characteristics with the established AVA. For example, the proposed AVA has a marine-influenced climate that moderates growing season temperatures. A marine-influenced climate is also the basic viticultural feature of the Central Coast AVA. However, due to its smaller size, the Alisos Canyon AVA experiences a much smaller range of growing degree day accumulations within its proposed boundaries than the diverse, multicounty Central Coast AVA. It also has fewer soil types than the Central Coast AVA.

See the narrative description of the boundary of the Alisos Canyon AVA in the regulatory text published at the end of this final rule.

The petitioners provided the required maps, and they are listed below in the regulatory text. The Alisos Canyon AVA boundary may also be viewed on the AVA Map Explorer on the TTB website, at https://www.ttb.gov/wine/ava-map-explorer.

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a wine to be labeled with an AVA name or with a brand name that includes an AVA name, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with an AVA name and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the AVA name appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Different rules apply if a wine has a brand name containing an AVA name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

With the establishment of the Alisos Canyon AVA, its name, “Alisos Canyon,” will be recognized as a name of viticultural significance under § 4.39(i)(3) of the TTB regulations (27 CFR 4.39(i)(3)). The text of the regulations clarifies this point. Consequently, wine bottlers using the name “Alisos Canyon” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the AVA name as an appellation of origin.

The establishment of the Alisos Canyon AVA will not affect the existing Central Coast AVA, and any bottlers using “Central Coast” as an appellation of origin or in a brand name for wines made from grapes grown within the Central Coast AVA will not be affected by the establishment of this new AVA. The establishment of the Alisos Canyon AVA will allow vintners to use “Alisos Canyon” and “Central Coast” as appellations of origin for wines made primarily from grapes grown within the Alisos Canyon AVA if the wines meet the eligibility requirements for the appellation.

TTB certifies that this regulation will not have a significant economic impact on a substantial number of small entities. The regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of an AVA name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

It has been determined that this final rule is not a significant regulatory action as defined by Executive Order 12866 of September 30, 1993. Therefore, no regulatory assessment is required.

Karen A. Thornton of the Regulations and Rulings Division drafted this final rule.

For the reasons discussed in the preamble, TTB amends title 27, chapter I, part 9, Code of Federal Regulations, as follows:

You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. 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:

• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.325 and 324110), e.g., chemical manufacturing and petroleum refineries.

To determine whether you or your business may be affected by this action, you should carefully examine the applicability provisions in § 721.5. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, persons who export or intend to export the chemical that is the subject of this revocation will no longer be subject to the TSCA section 12(b)(15 U.S.C. 2611(b)) export notification requirements at 40 CFR part 707 that are currently triggered by the SNUR that is being revoked.

The docket includes information considered by the Agency in developing the proposed and final rules. The docket for this action, identified by docket identification (ID) number EPA-HQ-OPPT-2019-0595, is available at http://www.regulations.gov or at the Office of Pollution Prevention and Toxics Docket (OPPT Docket), Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPPT Docket is (202) 566-0280. Please review the visitor instructions and additional information about the docket that is available at http://www.epa.gov/dockets.

In the April 5, 2019 Federal Register (84 FR 13531) (FRL-9991-19), EPA promulgated a SNUR at 40 CFR 721.11193 for the chemical substance identified generically as alpha 1-, 3-polysaccharide (P-16-581). The SNUR designated certain activities as significant new uses. After that date, EPA received new data on the biosolubility of the chemical substance. Based on its review of these data, EPA proposed a revocation of the SNUR in the April 1, 2020 Federal Register (85 FR 18179) (FRL-10005-89). In Unit II.A. of the proposed revocation, EPA provides a description of the chemical substance and the results of the submitted biosolubility data, which were the basis for revoking the SNUR pursuant to 40 CFR 721.185. These new data and EPA's analysis are available in the docket EPA-HQ-OPPT-2017-0575.

EPA has determined that the criteria set forth in 40 CFR 721.185(a)(1) have been satisfied for the chemical substance. Therefore, EPA is revoking the SNUR for this chemical substance. The significant new use notification and the recordkeeping requirements at 40 CFR 721.11193 will terminate upon the effective date of this revocation. In addition, export notification under TSCA section 12(b) and 40 CFR part 707, subpart D, triggered by the SNUR will no longer be required.

In addition, EPA is making a corresponding change to 40 CFR part 9 to remove the entry from the table that appears in 40 CFR 9.1. Under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ), an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable. This listing of the OMB control numbers and their subsequent codification in the CFR satisfies the display requirements of PRA and OMB's implementing regulations at 5 CFR part 1320. When promulgated, the SNUR was added to the table in 40 CFR part 9, and it is now being removed to reflect the revocation of the SNUR. EPA finds that further notice and comment to amend the table in 40 CFR 9.1 is unnecessary. As a result, EPA finds that there is “good cause” under section 553(b)(3)(B) of the Administrative Procedure Act (5 U.S.C. 553(b)(3)(B)) to amend this table without further notice and comment.

Under 40 CFR 721.185, EPA may at any time revoke a SNUR for a chemical substance which has been added to subpart E of 40 CFR part 721 if EPA makes one of the determinations set forth in 40 CFR 721.185(a)(1) through (6). Revocation may occur on EPA's initiative or in response to a written request. Under 40 CFR 721.185(b)(3), if EPA concludes that a SNUR should be revoked, the Agency will propose the changes in the Federal Register , briefly describe the grounds for the action, and provide interested parties an opportunity to comment.

EPA received comments from two identifying entities on the proposed rule revocation (85 FR 18179, April 1, 2020) (FRL-10005-89) that were supportive of the action as proposed, and one anonymous public comment on the proposed rule that was general in nature and did not pertain to the proposed rule revocation. Therefore, no response is required, and EPA made no changes to the proposed action based on these comments.

This rule revokes or eliminates an existing regulatory requirement and does not contain any new or amended requirements. As such, the Agency has determined that this revocation would not have any adverse impacts, economic or otherwise.

The Office of Management and Budget (OMB) has exempted these types of regulatory actions from review under Executive Order 12866 entitled, Regulatory Planning and Review (58 FR 51735, October 4, 1993). This rule does not contain any information collections subject to approval under the PRA, (44 U.S.C. 3501 et seq. ). Since this rule eliminates a reporting requirement, the Agency certifies pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C.601 et seq. ), that this SNUR revocation would not have a significant economic impact on a substantial number of small entities.

For the same reasons, this action does not require any action under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq. ). This rule has neither Federalism implications, because it would not have substantial direct effects on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 entitled, Federalism (64 FR 43255, August 10, 1999), nor Tribal implications, because it would not have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes, as specified in Executive Order 13175 entitled, Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000).

This action is not subject to Executive Order 13045 entitled, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined under Executive Order 12866, and it does not address environmental health or safety risks disproportionately affecting children. Likewise, this action is not subject to Executive Order 1311 entitled, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use. Because this action does not involve any technical standards, section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) does not apply to this action. This action does not involve special considerations of environmental justice related issues as required by Executive Order 12898 entitled, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Pursuant to the CRA (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, for the reasons stated in the preamble, EPA amends 40 CFR chapter I as follows:

This action reduces the in-season possession limit adjustment trigger for southern red hake, effective upon publication in the Federal Register , as described in the Northeast Multispecies Fishery Management Plan (FMP). The accountability measures for the small-mesh multispecies fishery require the reduction of the possession limit adjustment trigger when the fishery exceeds a stock's annual catch limit (ACL), as occurred with southern red hake in 2018.

The small-mesh multispecies fishery is managed as a component of the FMP, using a series of exemptions from the minimum mesh size requirements of the groundfish fishery. There are three hake species managed as five stocks under these regulations: Northern and southern silver hake; northern and southern red hake, and offshore hake. The northern stock areas generally encompass the Gulf of Maine and Georges Bank, and the southern stock areas are in the southern New England and Mid-Atlantic regions. Silver hake, also known as “whiting,” is generally the primary target species of the fishery. Red hake are caught concurrently with whiting and in other small-mesh fisheries targeting squid and are typically sold as bait.

Under the current regulations, if the small-mesh multispecies fishery exceeds its ACL for a stock in a given fishing year, the accountability measures require us to reduce the in-season possession limit adjustment trigger (currently 90 percent for southern red hake) in a subsequent fishing year. The reduction is one-to-one; therefore, the possession limit trigger is reduced by 1 percent for each percentage point by which the ACL was exceeded. During each fishing year, when we project that the landings have reached the trigger percentage of the total allowable level of landings (TAL), we reduce the possession limit for that stock to an incidental level for the remainder of the fishing year. Such accountability measure actions are taken under the authority of the FMP and the Magnuson-Stevens Fishery Conservation and Management Act.

In fishing year 2018, the southern red hake ACL was 1,007 metric tons (mt). Southern red hake commercial catch, including landings and discards, was 1,507 mt, exceeding the ACL by 500 mt, or 49.6 percent. As a result, this action reduces the possession limit trigger from the 90 percent to 40.4 percent of the TAL for fishing year 2020. The fishing year 2020 southern red hake TAL is 305 mt; therefore, the incidental limit takes effect when the fleet lands approximately 123.2 mt. Review of catch reports as of July 31, 2020, indicate that the new in-season possession limit trigger, effective with this rule, has been reached ( i.e., 135 mt of southern red hake have been harvested). As a result, the possession limit for southern red hake is hereby reduced from 5,000 lb (2,268 kg) to the incidental possession limit of 400 lb (181.4 kg) for the remainder of the year. The revised possession limit trigger will remain in effect until the New England Fishery Management Council (Council) changes it through specifications or a framework action. This action does not alter the possession limit triggers for any of the other small-mesh multispecies stocks because catch of those stocks did not exceed the respective ACLs in 2018. At its June meeting, the Council took final action on alternatives to rebuild the overfished southern red hake stock. These alternatives include a reduced harvest level for a 10-year rebuilding period and tiered possession limits based on fishing gear. Separate rulemaking will be conducted to implement the southern red hake rebuilding measures.

NMFS is issuing this rule pursuant to 305(d) of the Magnuson-Stevens Act. The reason for using this regulatory authority is the Secretary has the general responsibility for carrying out the provisions of the FMP. The NMFS Assistant Administrator has determined that this final rule is consistent with the Northeast Multispecies FMP and other applicable law.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and opportunity for additional public comment for the modifications to the southern red hake possession limit trigger because it would be impracticable and contrary to the public interest. The final rule for Amendment 19 to the Northeast Multispecies FMP, which set the specifications and accountability measures for the small-mesh multispecies fishery, already considered comment on these measures with the understanding that the possession limit trigger would be adjusted when the ACL is exceeded. This action modifies the regulations regarding the accountability measures as intended by the Council and as required in the regulations. Adjustment of the possession limit trigger is a non-discretionary, formulaic action required by the provisions of Amendment 19 to the FMP. Because the ACL was exceeded in 2018, the 90-percent trigger for southern red hake is reduced by this rule to 40.4 percent (123.2 mt). As of July 31, 2020, the fleet has landed approximately 135 mt, exceeding the new trigger limit put in place by this action. If the new trigger is not effective upon publication for the 2020 fishing year which started on May 1, 2020, the fishery will continue to exceed the catch limits because fishery participants would not be aware of the new reduced trigger level. This could result in adverse impacts to fishery resources and curtailed fishing opportunities leading to unnecessary adverse economic impacts for fishery participants. For the reasons stated above, there is also good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness of these accountability measures.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

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

Because prior notice and opportunity for public comment are not required for this rule by 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are inapplicable.

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows: