The Department of Homeland Security (DHS) published a notice of proposed rulemaking in the Federal Register , 85 FR 13831, March 10, 2020, proposing to exempt portions of the system of records from one or more provisions of the Privacy Act because of criminal, civil, and administrative enforcement requirements. In concert with that rulemaking, DHS issued a modified system of records notice, “DHS/ALL-038 Insider Threat Program System of Records” in the Federal Register , 85 FR 13914, March 10, 2020, to the public (1) outlining that DHS is expanding the categories of individuals to all individuals who have or had access to the Department's facilities, information, equipment, networks, or systems; (2) to clarify that the categories of records in this SORN will be modified to cover records from any DHS Component, office, program, record, or source, including records from information security, personnel security, and systems security for both internal and external security threats; and (3) to clarify and expand several previously issued routine uses.

DHS invited comments on both the System of Records Notice (SORN) and Notice of Proposed Rulemaking (NPRM).

DHS received five comments on the NPRM and one comment on the SORN.

DHS received four comments on the published NPRM regarding the collection of information by DHS generally, and not specific to the Insider Threat Program system of records. DHS received one comment on the published NPRM regarding DHS's proposed exemptions covered by the associated Insider Threat Program system of records. In short, the comment argues that DHS's proposed use of these exemptions would circumvent Privacy Act safeguards and contravene legislative intent by permitting DHS to collect records that are not relevant and necessary, failing to disclose its sources of records, and preventing individuals from accessing and amending their records. DHS believes the explanations and justifications provided in the NPRM and this final rule fully support DHS's uses of these exemptions. In summary, DHS appreciates the public comments and strives to be transparent regarding all Insider Threat collections and uses. After consideration of the public comments, DHS has determined that the exemptions should remain in place and will implement the rulemaking as proposed.

DHS received one comment on the SORN proposing to (1) minimize the scope of information collected because of the surge of federal government data breaches and general cybersecurity weaknesses that allegedly federal agencies, including DHS, may incur as part of their systems; (2) exclude category of individuals and relevant personal associations, including those not under investigation by DHS; and (3) eliminate the use of routine uses that are incompatible with the purpose for which the data was collected, including those that relate to disclosures for: Employment, licensing, and other benefit eligibility decisions; to the news media and public for a legitimate public interest; and to foreign entities. DHS appreciates the public comment and strives to be transparent regarding all Insider Threat collections. After consideration of the public comment, DHS has determined that the SORN should remain in place.

For the reasons stated in the preamble, DHS proposes to amend Chapter I of Title 6, Code of Federal Regulations, as follows:

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rulemaking has been determined to be not significant for purposes of Executive Order 12866 or Executive Order 13563. Accordingly, the Office of Management and Budget (OMB) has waived the review process.

Additionally, because this final rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017 titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This final rule is not intended to have retroactive effect. The Act prohibits States or political subdivisions of a State from imposing any requirement that is in addition to, or inconsistent with, any requirement of the Act. There are no civil justice implications associated with this final rule.

This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications.

AMS has considered the potential civil rights implications of this rule on minorities, women and persons with disabilities to ensure that no person or group shall be discriminated against on the basis of race, color, national origin, gender, religion, age, disability, sexual orientation, marital or family status, political beliefs, parental status, or protected genetic information. This rule does not require affected entities to relocate or alter their operations in ways that could adversely affect such persons or groups. Further, this final rule does not deny any persons or groups the benefits of the program or subject any persons or groups to discrimination.

This final rule has been reviewed under Executive Order 13132, Federalism. This Order directs agencies to construe, in regulations and otherwise, a federal statute to preempt State law only when the statute contains an express preemption provision. There are no federalism implications associated with this final rule.

The Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621-1627), hereinafter referred to as the “Act,” directs and authorizes the Secretary of Agriculture to facilitate the efficient and competitive marketing of agricultural products. AMS programs support a strategic marketing perspective that adapts product and marketing decisions to consumer demands, changing domestic and international marketing practices, and new technology. Under this directive, AMS provides impartial verification services that ensure agricultural products meet specified requirements, such as USDA grade standards, a feeding regime, or a production system. Services also include audit verification programs, laboratory approval and accreditation programs, and audit activities based on government-to-government agreements with international trading partners regarding specific foreign market requirements. These services are voluntary, with users paying for the cost of the requested service.

Currently, AMS voluntary, user-fee audit verification and accreditation programs and services are collectively regulated by: 7 CFR Part 51—FRESH FRUITS, VEGETABLES AND OTHER PRODUCTS (INSPECTION, CERTIFICATION, AND STANDARDS); 7 CFR Part 52—PROCESSED FRUITS AND VEGETABLES, PROCESSED PRODUCTS THEREOF, AND CERTAIN OTHER PROCESSED FOOD PRODUCTS; 7 CFR Part 56—VOLUNTARY GRADING OF SHELL EGGS; 7 CFR Part 58—GRADING AND INSPECTION, GENERAL SPECIFICATIONS FOR APPROVED PLANTS AND STANDARDS FOR GRADES OF DAIRY PRODUCTS; 7 CFR Part 62—LIVESTOCK, MEAT, AND OTHER AGRICULTURAL COMMODITIES (QUALITY SYSTEMS VERIFICATION PROGRAMS); 7 CFR Part 70—VOLUNTARY GRADING OF POULTRY PRODUCTS AND RABBIT PRODUCTS; 7 CFR Part 75—PROVISIONS FOR INSPECTION AND CERTIFICATION OF QUALITY OF AGRICULTURAL AND VEGETABLE SEEDS; and 7 CFR Chapter I, Subchapter E—COMMODITY LABORATORY TESTING PROGRAMS, parts 90 and 91. Each part of the CFR is applicable to a different group of agricultural commodities and its products. This final rule incorporates the commodities and program services for audit verification and accreditation programs currently regulated by the aforementioned parts of the CFR into a single regulatory reference, 7 CFR Part 62.

This rule expands the definition of “product” in 7 CFR part 62, which currently references livestock, meat, seed and feedstuffs, to include all commodities covered under the Act. Additionally, this final rule clarifies the scope of existing and future voluntary, fee-for-service audit verification and accreditation programs offered by AMS and houses all such programs under one part.

With these changes, AMS maintains uniformity, transparency, and efficiency of service delivery of the QSVP and other AMS voluntary, user-fee audit verification and accreditation programs. Without these changes, AMS would be required to maintain similar or duplicate programs in each commodity area that carries out comparable functions.

This final rule implements other administrative changes. For example, the title of part 62, “LIVESTOCK, MEAT, AND OTHER AGRICULTURAL COMMODITIES (QUALITY SYSTEMS VERIFICATION PROGRAMS)”, is changed to “AGRICULTURAL MARKETING SERVICE AUDIT VERIFICATION AND ACCREDITATION PROGRAMS (AVAAP).” Additional changes to the part's terminology reflect the broader scope of commodities and program services, and better coordinate administrative service provisions within AMS. Lastly, conforming changes to parts 54, 56, 70, 90 and 91 remove duplicative or conflicting language and update terminology.

The purpose of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) is to fit regulatory actions to the scale of businesses subject to such actions so small businesses will not be unduly or disproportionately burdened. The U.S. Small Business Administration's Table of Small Business Size Standards matched to the North American Industry Classification System Codes identifies small business size by average annual receipts or by the average number of employees at a firm. This information can be found at 13 CFR parts 121.104, 121.106, and 121.201.

AMS has determined that this action will not have a significant impact on a substantial number of small entities, as defined by the RFA, because the services are voluntary, are provided on a fee-for-service basis, and are not subject to scalability based on the business size. Nonetheless, this analysis is provided.

All applicants for audit services provide information about their companies for processing payment invoices. Information collected from an applicant includes company name, business name if different from company name, Federal Tax Identification Number, billing address, contact information of the accounts payable department, and the name of the person filing the application. The Federal Tax Identification Number is required by the Federal Debt Collection Procedure Act of 1990 (28 U.S.C. 3101 et seq. ). All entities doing business with the Federal Government are required to provide the Federal Tax Identification Number before an account can be set up.

AMS does not collect information about the size of a business that applies for a service. However, based on working knowledge of the USDA personnel assigned to provide service to these operations, AMS estimates the following based on the number of its employees:

Approximately 950 livestock and poultry industry applicants subscribe to AMS' voluntary, fee-for-service program and will be subject to the requirements of this regulation. Roughly 25 percent of those applicants may be classified as small entities.

Approximately 550 dairy industry applicants subscribe to AMS' voluntary, fee-for-service program and will be subject to the requirements of this regulation. Roughly 10 percent of those applicants may be classified as small entities.

Approximately 4,300 fruit, vegetable, and specialty crop industry applicants subscribe to AMS' voluntary, fee-for-service audit verification and accreditation programs and will be subject to the requirements of this regulation. Roughly 33 percent of those applicants may be classified as small entities.

Approximately 84 agricultural laboratory applicants subscribe to AMS's voluntary, fee-for-service testing and will be subject to the requirements of this regulation. Roughly 80 percent of those applicants may be classified as small entities.

Approximately 24 agricultural seed applicants subscribe to AMS' voluntary, fee-for-service program and will be subject to the requirements of this regulation. Roughly 80 percent of those applicants may be classified as small entities.

It is not anticipated that this action will impose additional costs to applicants, regardless of size. Current applicants will not be required to provide any additional information to receive service. The effects of this rule are not expected to be disproportionately greater or lesser for small applicants than for larger applicants. As described above, these programs are voluntary, fee-for-service activities.

AMS is committed to complying with the E-Government Act of 2002 (44 U.S.C. 101) to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to government information and services, and for other purposes.

USDA has not identified any relevant federal rules that duplicate, overlap, or conflict with this rulemaking.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), this final rule will not change the current information collection and recordkeeping requirements previously approved but will increase the number of respondents upon completion of the rulemaking process.

USDA has considered the reporting and recordkeeping burden on applicants for the AMS services that will be impacted by this action. Currently, applicants are required to complete an application for service and submit additional documentation. Recordkeeping requirements on each applicant will remain the same, though the overall burden will increase due to an increase in applications received.

Since this action expands the scope of covered commodities, which will increase the number of respondents, the already approved OMB Control Numbers 0581-0128, 0581-0283, 0581-0125 and 0581-0251 will be revised to reflect the increase in the reporting and recordkeeping burden. Therefore, AMS has submitted a Justification for Change to OMB to reflect burden of increase in the number of respondents affected by the amendments to part 62.

As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

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

A proposed rule concerning this action was published in the Federal Register on February 19, 2020, (85 FR 9399). The rule was made available through the internet by USDA and the Office of the Federal Register. A 60-day comment period ending April 20, 2020, was provided to allow interested persons to respond to the proposal. A total of four comments were received.

Two comments received questioned whether AMS would make additional changes to authorize third-party entities to conduct process verification program verifications and provide laboratory audit and accreditation services. Given that this rulemaking is limited in scope to incorporating existing and future voluntary, fee-for-service audit verification and accreditation programs offered by AMS into a single regulatory reference, 7 CFR part 62, AMS has determined that the comments fall outside the scope of this action.

A third comment questioned this rule's usage of the word “safety” as it relates to “consumption or biological levels” of concern as opposed to administrative or management aspects of a production process. In response to the comment, AMS clarifies that QSVPs are voluntary, user-fee programs designed to provide impartial verification services that ensure agricultural products meet specified requirements, such as USDA grade standards, a feeding regime, or a production system. Services also include audit verification programs, laboratory approval and accreditation programs, and audit activities based on government-to-government agreements with international trading partners regarding specific foreign market requirements. These services are focused, for the most part, on certifying that a given process adheres to a prescribed set of administrative and process management criteria.

A fourth comment was received from a person seeking home refinance assistance. This comment also falls outside the scope of this rulemaking action.

According to consideration given to all comments received as described above, no changes will be made to the rule as proposed.

After consideration of all relevant material presented, it is hereby found that this rule will tend to effectuate the declared policy of the Act.

For the reasons set forth in the preamble, 7 CFR parts 54, 56, 62, 70, 90 and 91 are amended as follows:

Background

The Egg Research and Consumer Information Act of 1974 (Act) authorizes the Secretary to establish an Egg Board composed of egg producers or representatives of egg producers appointed by the Secretary so that the representation of egg producers on the Board reflects, to the extent practicable, the proportion of eggs produced in each geographic area of the United States. 7 U.S.C. 2707(b). The Board administers the Order with oversight by the U.S Department of Agriculture (USDA).

The Order outlines the geographic representation of the current 18-member board, composed of members from six distinct geographical areas. To ensure that representation on the Board remains representative of the industry, § 1250.328 of the Order provides for reapportionment of Board membership based on the Board's periodic review of production by geographic area. This periodic review can occur at any time based on changes in egg production in various geographical areas; however, the Order requires that the area distribution be reviewed at least every five years. Sections 1250.328(d) and (e) of the Order provide that any changes in the delineation of the geographical areas and the area distribution of the Board be determined by the percentage of total U.S. egg production.

The Board and the Agricultural Marketing Service (AMS) reviewed production data to determine what, if any, changes were needed in the distribution of Board membership. The Board and AMS verified certain shifts in production trends. Section 8 of the Act (7 U.S.C. 2707) provides for a Board of not more than 20 members. Section 1250.328 of the Order provides for an 18-member Board and contemplates changes to the Board by determining the percentage of United States egg production in each area times 18 (total Board membership) and rounding to the nearest whole number. Using the calculation for the North Atlantic region results in two members while the calculation for the other five regions result in three members each, for a total 17 members, one less than the number stated in the Order. Therefore, regions were changed so that the 18-member Board can be established. Table 1 shows that reducing regions from six to three expands the number of States included in each region and suggests that the grouping of more States into fewer regions improves consistency in the proportion of small versus large farms represented on the Board.

With the inclusion of more states into fewer regions, the proportion of small versus large farms is less variable. For example, in Regions I and II in the current structure, 93 percent and 76 percent, respectively, of the farms are classified as small. In the new structure the two regions are more or less combined, and the new Region I is composed of 87 percent small firms. The table shows less variation in size between the three new regions than there is in the current structure.

Section 1250.326 of the Order establishes a Board, composed of 18 egg producers or representatives of egg producers, and 18 specific alternates, appointed by the Secretary from nominations submitted by eligible organizations, associations, or cooperatives, or by other producers pursuant to § 1250.328. The current 18-member Board is composed of three members representing each of the six regions. There were no changes to the total number of members (18 members with 18 alternates). However, regions were reduced to three from six and each region will include more States.

Pursuant to the requirements of the Order, the Board began its most recent review of Board member apportionment in 2019. Production data from the 2018 National Agricultural Statistics Service (NASS) report was used to establish the percentage of U.S. egg production in each area. The goal of this reapportionment of Board members is to ensure representation on the Board remains consistent with the Act and Order by recognizing production shifts over time. These changes are effective with the Secretary's appointments for terms beginning in the year 2021.

The Board and AMS recognize that shifts in production have resulted in the Northeast region no longer being proportionately represented on the Board. The Board and AMS also found that industry consolidation has also contributed to a more limited number of egg producing entities in each region. The Board and AMS desire a structure that allows the full representation of all the egg producing entities. The Board and AMS have found that it is increasingly difficult for State nominating organizations to present an appropriate number of candidates each year. By reducing the number of regions and increasing the geographic size of regions, the Board and AMS believe that more egg producing entities may be represented on the Board.

This final rule results in the proportionate representation of each geographic area and increases the number of egg-producing entities represented in each geographic area. The Board and AMS have determined that these changes will better represent the distribution of egg production and enable eligible nominating organizations to more easily identify potential nominees.

In accordance with § 1250.328(e) of the Order, the Board has recommended changes to the number and composition of geographic regions represented on the Board.

The current and new representation are indicated in the following two tables:

The objectives of the final rule are to authorize FCS associations to buy as investments for risk management purposes, portions of certain loans that non-System lenders originate, and the USDA fully guarantees as to principal and interest to:

• Augment the liquidity of rural credit markets;

• Reduce the capital burden on community banks and other non-System lenders who choose to sell their USDA guaranteed portions of loans, so they may extend additional credit in rural areas; and

• Enhance the ability of associations to manage risk.

In 1916, Congress created the System to provide permanent, stable, affordable, and reliable sources of credit and related services to American agricultural and aquatic producers. The System consists of 3 Farm Credit Banks, 1 agricultural credit bank, 67 agricultural credit associations, 1 Federal land credit association, service corporations, the Federal Farm Credit Banks Funding Corporation (Funding Corporation) and the Federal Agricultural Mortgage Corporation (Farmer Mac). 1 Farm Credit banks (which include both the Farm Credit Banks and the agricultural credit bank) issue System-wide consolidated debt obligations in the capital markets through the Funding Corporation, which enable associations to provide short-, intermediate-, and long-term credit and related services to farmers, ranchers, producers and harvesters of aquatic products, rural residents for housing, and farm-related service businesses. 2 The System's enabling statute is the Farm Credit Act of 1971, as amended (Act). 3

This rulemaking addresses investments that associations purchase and hold pursuant to their authority in sections 2.2(11) and 2.12(17) of the Act. In 2014, FCA proposed a new rule that would have authorized associations to purchase and hold, as investments, obligations issued or guaranteed by the United States or its agencies for risk management purposes. 4 Under the proposed rule, no association could hold investments in an amount that exceeds 10 percent of its total outstanding loans.

FCA received more than 1,250 comment letters on this proposal. After consideration of these comments, FCA changed the term “obligations” in the proposed rule to the more narrow term “securities” in the final rule. FCA also added § 615.5140(b)(2) to the final regulation to clarify that individual loan portions purchased in the secondary market that are unconditionally guaranteed or insured by the United States (U.S.) government or its agencies as to principal and interest are not eligible risk management investments for FCS associations. The FCA delayed the effective date of the final rule until January 1, 2019. 5

Shortly after we approved and published the final rule, several FCS associations, community banks, and a broker-dealer expressed concern that final § 615.5140(b)(1) and (b)(2) would disrupt the secondary market for the portions of loans that USDA fully and unconditionally guarantees as to both principal and interest. Representatives of the Office of the Administrator for the Rural Business Cooperative Service at USDA (USDA Administrator) contacted FCA to support these parties. More specifically, concerns were raised about the potential impact that the final rule could have on the secondary market for USDA-guaranteed portions of loans and, more broadly, on rural development. The USDA Administrator, two community banks, and the broker-dealer warned that the withdrawal of FCS associations from this market could substantially reduce the liquidity in this market and the availability of credit in rural areas.

In response to the concerns raised by the USDA Administrator and market participants, FCA decided to review final § 615.5140(b)(1) and (b)(2) and consider their impact on the secondary market for loans that the USDA fully and unconditionally guarantees as to principal and interest. As a result of this review, FCA proposed to amend § 615.5140(b)(2) to exempt USDA-guaranteed loan portions from § 615.5140(b)(1), as well as a conforming change to § 615.5140(b)(3). 6 More specifically, the proposed rule would amend § 615.5140(b)(2) to allow System associations to purchase in the secondary market, portions of loans that are originated by non-FCS institutions, and that the USDA fully and unconditionally guaranteed or insured as to both principal and interest.

The FCA also decided to grant temporary regulatory relief to certain System associations that had been active or expressed an interest in the secondary market for USDA-guaranteed loan portions, notwithstanding the prohibition in § 615.5140(b)(1) and (b)(2) that became effective on January 1, 2019. 7 We believe that granting the “No Action” requests of these associations is appropriate to prevent any disruption in the secondary market for USDA-guaranteed loan portions and to maintain the pre-existing status quo while this rulemaking is pending and we consider input from the public. FCA placed strict conditions on those associations that were granted regulatory relief, and closely monitored their activity.

The comment period expired on November 18, 2019. We received a total of 34 comment letters from a trade association representing FCS lenders, 2 Farm Credit banks, 7 FCS associations, the National Rural Lenders' Roundtable, which is a forum for lenders that use USDA guarantee programs, a commercial bank trade association, 21 community bankers, and an individual. Essentially, 24 commenters supported the proposed rule, but asked us to further revise the regulation so System associations could buy loan portions that any U.S. government agency fully and unconditionally guarantees as to principal and interest. One System commenter suggested that our regulations should grant both System banks and associations the exact same investment authorities. Nine commenters opposed the proposed rule, and asked FCA to withdraw it. Commercial bank commenters were divided with 13 supporting the proposed rule and, for the most part, seeking its expansion to all U.S. government loan-guarantee programs, while 9 bank commenters opposed it. The individual commenter expressed no opinion about whether FCA should adopt, modify, or retract the proposed rule.

Supporters claim that the proposed rule mutually benefits community banks and other non-System rural lenders, System associations, and rural communities. According to these commenters, selling USDA-guaranteed loan portions to FCS associations is advantageous to rural community banks because it increases their liquidity, which can enable them to originate more loans in rural areas. The proposed rule also strengthens the informal secondary market for USDA-guaranteed loans in rural areas, in which commercial bankers comprise the majority of buyers and sellers. As several commenters point out, System institutions have historically played a pivotal role in the secondary market for USDA-guaranteed loans. 8 The proposed rule benefits System associations by enabling them to diversify their portfolios in a way that is consistent with their statutory mission to provide an adequate and flexible flow of stable credit into rural areas. 9 USDA guarantees ensure that System associations generally have no credit risk  10 when they purchase these loan portions in the secondary market, which reduces risk exposure to capital and increases resilience of the balance sheet.

Most commenters who supported the proposed rule also told us that § 615.5140(b) should permit associations to purchase and hold portions of loans guaranteed by other U.S. government agencies as investments, such as the Small Business Administration (SBA), 11 Bureau of Indian Affairs, and the Department of Energy. According to these commenters, the logic for allowing associations to buy USDA-guaranteed loan portions also applies to all U.S. government-guarantee loan programs. More specifically, expanding this regulatory authority beyond USDA would, in the opinion of these commenters, promote a more robust secondary market for all U.S. government loan programs, which would ultimately benefit the customers of commercial banks and their local communities.

System commenters point out that the plain language of sections 2.2(11) and 2.12(17) of the Act expressly authorize associations to invest in obligations issued or insured by the U.S. and its agencies. Most System commenters asked us to authorize associations to buy loan portions guaranteed by other U.S. government agencies after we enact this final rule. System commenters noted that our previous investment regulations permitted FCS banks and associations to buy and hold loan obligations that U.S. government agencies guaranteed, and they urged us to restore this regulatory framework.

One System association opined that FCA exceeded its statutory authority by repealing the regulation that authorized associations to buy any guaranteed obligation issued by any U.S. government agency. According to this commenter, existing § 615.5140(b)(1) and (b)(2) is incompatible with the “unambiguously expressed intent of Congress.” This commenter asked the FCA to authorize System associations to buy and hold any obligation guaranteed by all U.S. government agencies, either in this final rule, or by another prompt agency action.

As noted earlier, nine commercial bank commenters asked the FCA to withdraw the proposed rule and retain the current investment regulation for FCS associations. According to these commenters, Congress specifically established Farmer Mac as the System institution that would operate the secondary market for loan portions that the USDA guarantees for loan originators. Augmenting the liquidity of rural credit markets and reducing the capital burdens on loan originators is the role that these commenters believe Congress assigned to Farmer Mac, not FCS associations. Opponents of the proposed rule claim that the FCA, as the regulator of both FCS lenders and Farmer Mac, is creating “a duplicate and redundant secondary market” that will create unnecessary intra-System competition to Farmer Mac's detriment. The proposed rule's objective of enhancing the ability of associations to manage risks could, in the view of these commenters, be achieved if associations “were to use Farmer Mac as a secondary market as Congress intended, rather than trying to create their own secondary market.”

These commenters also dispute that sections 2.2(11) and 2.12(17) of the Act authorize associations to purchase interest in loans that non-System lenders originate and USDA guarantees. According to these commenters, these two statutory provisions authorize associations to buy and sell loans insured by U.S. government agencies and FCS banks, not loans originated by non-System lenders. Opponents of the proposed rule claim that FCS associations are not indispensable to the secondary market of USDA-guaranteed loan portions and, therefore, this rule is not necessary to provide a flexible flow of affordable credit into rural areas.

After reviewing and considering the comment letters received on the proposed rule, the FCA now finalizes the proposed rule without change. Specifically, the final rule amends § 615.5140(b)(2) to allow System associations to purchase in the secondary market, the portions of loans that non-FCS institutions originate and that the USDA fully and unconditionally guarantee  12 or insured as to both principal and interest.

The FCA proposed to amend existing § 615.5140(b)(2) so associations could purchase only USDA-guaranteed loan portions because it is specifically what the USDA Administrator, several FCS associations, community banks and a broker-dealer requested. Loan guarantee programs of other U.S. government agencies are outside the scope of this rulemaking. Most System commenters urged us to promptly finalize the proposed rule, and then subsequently consider other U.S. agency-guaranteed loan programs. For all these reasons, this final rule allows FCS associations to purchase and hold only loan portions that the USDA fully and unconditionally guarantees as to principal and interest.

One System commenter claims that sections 2.2(11) and 2.12(17) of the Act reflects Congress' “unambiguously expressed intent” to allow associations to buy and hold obligations guaranteed by any U.S government agency as investments. Therefore, any regulation that prohibits or restricts the ability of associations to do so would, in the opinion of that commenter, exceed FCA authority. For this reason, the commenter's position is that the final rule or another action by FCA must immediately authorize associations to buy loan obligations guaranteed under any U.S. government agency program.

FCA disagrees with the commenter's interpretation of Act. The text, structural framework, and history of the Act indicates that Congress granted FCA discretion to impose conditions and constraints by regulation on how System institutions exercise their statutory powers in various circumstances. We note that the introductory text to sections 2.2 and 2.12 of the Act, which the commenter invokes, expressly states the powers of each association are subject to regulation by FCA. Additionally, section 5.17(a)(9) of the Act authorizes FCA to “prescribe rules and regulations necessary or appropriate for carrying out this Act.”

From time to time, FCA has exercised its powers under these statutory provisions to enact regulations that place limits on the statutory authorities of System banks and associations, especially in the area of investments. Reasons for limiting System's statutory authorities include, but are not limited to: (1) Preserving the System's safety and soundness; (2) implementing various legal requirements that apply to the System; and (3) ensuring that FCS activities and operations are compatible with its status as a government-sponsored enterprise that extends credit to agriculture and other eligible borrowers in rural America. For decades, FCA regulations have limited System investments by amount, type, credit quality, and purpose even though the Act is silent on these issues. For these reasons, we conclude that FCA has authority under the Act to impose by regulations restrictions on the types of obligations guaranteed by U.S. government agencies that System institutions may purchase and hold.

In this context, the final rule is within the scope of the Act and FCA's statutory authority. We have amended our association investment regulations periodically in the past as circumstances changed, and we may do so again in the future if we determine that evolving conditions require further regulatory revisions. In the meantime, the final rule strikes a balance between the needs and interests of USDA, FCS associations, a significant segment of rural community banks, and rural credit markets. We observe that USDA loan guarantee programs focus primarily on the credit needs of rural residents and their communities, whereas similar loan guarantee programs of other U.S. government agencies do not. USDA loan guarantee programs overall are uniquely compatible with the System's mission, as a government-sponsored enterprise, to provide stable and affordable credit to agriculture and other authorized needs in rural America.

As noted earlier, one System commenter opined that FCS banks and associations should have the exact same investment authorities under our regulations. This issue is outside the scope of our current rulemaking. The preamble to the final Investment Eligibility rule that we issued in 2018 explained why the investment authorities of System banks and associations are different under these regulations. 13

We now respond to comments from the commercial bankers who opposed the proposed rule. As discussed earlier, these commenters point out that Congress established Farmer Mac as the System's secondary market operator. These commenters also note that the Act expressly authorizes Farmer Mac, not System associations, to operate the secondary market for USDA-guaranteed loans. These commenters claim that our proposal would establish a duplicative secondary market, without statutory authority, and the resulting intra-System competition will harm Farmer Mac as well as “several hundred community banks that actively conduct business with Farmer Mac.”

Farmer Mac did not submit a comment letter. As a result, Farmer Mac, on its own behalf, did not raise any of the issues that the commenters brought up.

This amendment to § 615.5140(b)(2) neither violates the Act, nor is it contrary to Congressional intent, as these commenters allege. In response to these commenters, sections 2.2(11) and 2.12(17) of the Act expressly authorize associations to buy obligations of or insured by the U.S. and its agencies, and these provisions are separate and distinct from Farmer Mac's authority under several provisions of title VIII of the Act to purchase, hold, and securitize loan portions guaranteed by USDA. 14 In granting these authorities to Farmer Mac, Congress did not repeal other provisions of the Act that authorize FCS banks and associations, subject to FCA regulation, to invest in obligations of or insured by the U.S. or its agencies, including USDA fully-guaranteed loan portions.

The opponents of the proposed rule also claim that the Act does not allow FCS associations to buy USDA-guaranted loan portions from non-System loan originators. We respond that these commenters have misinterpreted the Act. Although FCA banks and associations generally lack authority to buy most loans (and portions thereof) from the non-System lenders, the Act carves out exceptions, such as sections 2.2(11) and 2.12(17) of the Act. Since USDA-guaranteed obligations qualify as eligible investments under sections 2.2(11) and 2.12(17), System associations may buy them from any bona fide seller, including community banks, and other non-System lenders.

Beyond their legal arguments, these commenters also claim that allowing associations to buy USDA-guaranteed loan portions from non-System originators is detrimental to Farmers Mac and the broader secondary market. However, these commenters did not provide any data, information, or analysis that supports their claim that the proposed rule would harm Farmer Mac. 15 Instead information provided by the USDA, and comment letters received from a majority of community bank commenters contradict these assertions. As noted in the preamble to the proposed rule, USDA informed FCA that the FCS in recent years has constituted as much as 40 percent of the secondary market for USDA loan guarantees. The majority of community bankers who commented on the proposed rule told us that System associations play a beneficial role in this secondary market. These commenters also stated that System associations that buy these guaranteed loan portions enable community banks to reinvest the sale proceeds back into local communities. These comments support one of FCA's objectives in this rulemaking, which is to augment liquidity of rural credit markets. As stated above, Farmer Mac did not comment on the proposed rule.

One commenter claimed that “FCS lenders have long desired to operate their own secondary market, and FCA's proposal would lay the groundwork allowing them to do so.” We disagree with this comment. As discussed in greater detail above, the Act does not authorize System banks and associations to securitize assets and then sell the resulting securities to investors. Associations buy USDA guaranteed loan portions in the secondary market from willing sellers, the majority of which are commercial banks, and then hold those investments for risk management purposes.

The proposed rule would not enable FCS lenders to “operate their own secondary market” as the commenter alleges. At most, System associations would resume their previous role as a meaningful participant in the longstanding informal secondary market. FCA proposed this rule after USDA provided data and information that substantiated its claim  16 that the System's withdrawal from this secondary market actually disrupts it. Allowing System associations to return to the informal secondary market for USDA loan guarantees provides additional liquidity and funding sources to those market participants who opt to engage in these transactions.

For the reasons discussed in the preamble, the final rule amends § 615.5140(b)(2) to allow System associations to purchase in the secondary market, the portions of loans that non-FCS institutions originate and that the USDA fully and unconditionally guarantee or insured as to both principal and interest.

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, part 615 of chapter VI, title 12 of the Code of Federal Regulations are amended as follows:

Under the PRIME program, SBA is authorized by 15 U.S.C. 6902 to make grants to qualified organizations for the purpose of funding: (i) Training and technical assistance to disadvantaged microentrepreneurs; (ii) training and capacity-building services for microenterprise development organizations; (iii) research and development of the best practices in the fields of microenterprise development and technical assistance for disadvantaged microentrepreneurs; and (iv) other related activities as the Agency deems appropriate.

In this rule, SBA is modifying one regulation and removing 19 regulations from the CFR related to the Program for Investment in Microentrepreneurs (PRIME) that are no longer necessary because they duplicate identical guidance and requirements already stipulated in the enabling legislation (15 U.S.C. 6901, et seq. ), the governmentwide grant regulations (2 CFR part 200), and/or provided to grant applicant and recipients in the PRIME funding opportunity announcements published annually by SBA at www.grants.gov. The removal of these regulations will assist the public by simplifying SBA's regulations in the CFR and reducing the amount of time grant applicants and recipients must spend reviewing programmatic guidance.

SBA proposed a rule with these amendments on February 7, 2020, and the comment period ended on April 7, 2020. 85 FR 7254. SBA received three comments on the proposed rule. None of the comments received contained any substantive comments on the content of the rule. Therefore, SBA is proceeding with publication of the final rule with no changes from the proposed rule text.

This rule currently summarizes the purpose of the PRIME program. SBA retains this statement of programmatic purpose and adds further subsections addressing how qualified organizations may apply for grant awards under the PRIME program.

These rules provided guidance to PRIME program applicants regarding the application and selection process, as well as inform grant recipients of certain restrictions and requirements related to the conduct of PRIME grant projects. They are no longer necessary because the guidance, restrictions, and requirements they reiterate are also covered in other sources that are more authoritative, informative, and/or frequently updated. As such, they are duplicative of, and of less utility, than these other sources. SBA therefore is removing these sections and instead relying upon the content contained in other Federal guidance, such as the enabling legislation (15 U.S.C. 6901 et seq. ), the government-wide grant regulations (2 CFR part 200), and the PRIME program annual funding opportunity announcements and award terms and conditions issued by SBA. Program information will be published annually at www.grants.gov.

The Office of Management and Budget (OMB) has determined that this rule does not constitute a significant regulatory action for purposes of Executive Order 12866 and is not a major rule under the Congressional Review Act, 5 U.S.C. 801, et seq.

This rule is an Executive Order 13771 deregulatory action with an annualized net savings of $15,382 and a net present value of $219,743 in savings, both in 2016 dollars. This rule will remove redundant information which will save grant applicants from reading the same information from multiple sources. The reduced burden assumes 130 grant applicants read the regulation per year, which is the average number of applicants per year, and that they would save 2 hours each from not reading the removed information. This time is valued at $62.82 per hour—the wage of a community service manager based on 2018 U.S. Bureau of Labor Statistics (BLS) data—and adding 100 percent more for benefits and overhead for a total savings per year of $16,333 in current dollars.

It is assumed that there will be no costs to this rule as it removes duplicative information. SBA received no comments on its regulatory economic analysis.

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

This rule does not have federalism implications as defined in Executive Order 13132. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in the Executive order. As such it does not warrant the preparation of a Federalism Assessment.

The SBA has determined that this rule does not affect any existing collection of information.

When an agency issues a proposed rule, the Regulatory Flexibility Act (RFA) requires the agency to prepare an initial regulatory flexibility analysis (IRFA), which describes whether the rule will have a significant economic impact on a substantial number of small entities. However, Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an IRFA, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

The Administrator of the SBA certified that this rule will not have a significant economic impact on a substantial number of small entities during the proposed rule stage and no comments were received on this certification.

Accordingly, for the reasons stated in the preamble, SBA is amending 13 CFR part 119 as follows:

Good Cause for Immediate Adoption

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C.) 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.” In addition, section 553(d) of the APA requires that agencies publish a rule not less than 30 days before its effective date, except a substantive rule that relieves a restriction or “as otherwise provided by the agency for good cause found and published with the rule.” 5 U.S.C. 553(d)(1) and (3).

The FAA finds good cause under 5 U.S.C. 553(b)(3)(B) to waive prior notice and the opportunity for public comment. The provisions in this final rule provide temporary relief to persons who have been unable to meet certain requirements during the national emergency concerning COVID-19. Without this final rule, certain individuals will not be able to continue exercising privileges in support of essential operations due to their inability to satisfy certain training, recent experience, testing, and checking requirements. In addition, other individuals may be unable to satisfy certain requirements due to a reduced availability of personnel that are able to conduct routine aviation activities. In other instances, such activities may be contrary to State and local directives that continue certain restrictions as they implement phased recovery plans.

The FAA recognizes that there are aviation operations outside of air carrier and commercial operations conducted under part 119 of title 14 of the Code of Federal Regulations (14 CFR) that are critical, including operations that support essential services and flights that support the COVID-19 public health emergency response efforts. These operations are likely to face disruption due to a decreased supply of qualified pilots resulting from the effects of the COVID-19 public health emergency including the reduced number of personnel available to administer required training, checking, and testing. Without the relief in this SFAR, beginning October 1, 2020, and with each month thereafter, a new group of pilots will become unavailable to perform critical operations due to an inability to comply with regulatory requirements. This SFAR will provide temporary relief to certain individuals whose qualifications would otherwise lapse to ensure there are a sufficient number of qualified personnel available to conduct essential aviation activities during this period. The FAA finds that this temporary action is needed to enable individuals to continue to exercise their airman certificate privileges as the impacts of the COVID-19 public health emergency continue.

This action is also needed to provide immediate notification to individuals facing impending expiration dates for certificates, endorsements, and test results. 1 With the cessation of many non-essential aviation training and testing activities during the first several months of the public health emergency, many individuals were unable to complete certain activities before encountering expiration dates.

Despite the gradual resumption of training, checking, and testing activities, the demand for completing these activities remains high because the industry has not yet been able to catch up from the backlog created during the initial closures and shutdowns. Affording flexibility in this final rule to the next group of affected individuals is necessary to manage the demand and account for a reduced number of personnel available to complete the activities. This final rule provides immediate relief from certain duration and renewal requirements to reduce unnecessary risk of exposure and to assure persons that they will not endure economic burdens due to non-compliance with certain regulations.

Accordingly, the FAA finds that providing notice and an opportunity to comment is contrary to the public interest, because any delay in implementation of this final rule could result in disruption to critical aviation operations and could increase the incidence of exposure during this public health emergency and into the period of recovery. Furthermore, the continually evolving public health situation as a result of, and State and local responses to, the COVID-19 public health emergency significantly limits how far in advance the FAA can usefully assess the need for the flexibilities provided for in this regulation.

In addition, for the same reasons stated above, the FAA finds good cause to waive the 30-day delay in effective date of this final rule under 5 U.S.C. 553(d)(3) for the SFAR provisions that address the training and qualification requirements. Because the APA also allows a substantive rule that relieves a restriction to become effective in less than 30 days after publication, the FAA finds that the SFAR provisions that provide relief by extending duration and renewal requirements may also be immediately effective. 5 U.S.C. 553(d)(1).

The FAA's authority to issue rules on aviation safety is found in Title 49 of the United States Code (49 U.S.C.). Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in 49 U.S.C. 106(f), which establishes the authority of the Administrator to promulgate regulations and rules; 49 U.S.C. 44701(a)(5), which requires the Administrator to promulgate regulations and minimum standards for other practices, methods, and procedures necessary for safety in air commerce and national security; and 49 U.S.C. 44703(a), which requires the Administrator to prescribe regulations for the issuance of airman certificates when the Administrator finds, after investigation, that an individual is qualified for, and physically able to perform the duties related to, the position authorized by the certificate. This rulemaking provides airmen relief from certain training, recency, testing, and checking requirements, and establishes qualification requirements for airmen seeking to conduct essential operations during the COVID-19 public health emergency. For these reasons, this rulemaking is within the scope of the FAA's authority.

The FAA's regulations contain several training, recent experience, testing, and checking requirements that persons must comply with prior to exercising their airman or crewmember privileges. The FAA's regulations also contain duration requirements, such as those pertaining to medical certificates, the validity of knowledge tests, and general procedures for completing a practical test. Persons continue to have difficulty complying with several of the FAA's requirements because of the ongoing effects of the COVID-19 public health emergency, including the continuation of social distancing guidelines to prevent transmission of the virus. For example, the FAA finds that there are increases in flight operations and improvements in the availability of facilities and personnel to provide training, testing, and checking; yet, reduced class sizes and disinfection protocols at facilities continue to present challenges in scheduling and completing required events. The FAA also finds that the availability of designees to complete practical tests and aviation medical exams has improved, but there are still challenges in some locations with an increase in the number of people competing to schedule events necessary to comply with regulatory requirements.

As a result, “lapses” in qualifications, which occur on the last day of each month, will affect an additional cohort of regulated parties at the end of each month even as State and local directives for phased recovery and routine activities resume. The regulatory relief provided in this final rule will amend the Limited Extension of Relief for Certain Persons and Operations during the Coronavirus Disease 2019 (COVID-19) Public Health Emergency final rule (SFAR 118-1) (85 FR 38763) issued by the FAA on June 25, 2020. This amendment will enable the continuity of aviation operations that are critical during the COVID-19 public health emergency and the recovery, including operations that support essential services and flights that support response efforts. In addition, the SFAR contains regulatory relief for persons who are unable to satisfy certain requirements to prevent those persons from enduring unnecessary economic burdens due to circumstances related to the public health emergency that are outside of their control. Finally, this amendment will extend relief to air carriers and operators allowing them to fly temporary overflow aircraft to a point of storage with a continuing authorization.

The FAA notes that no extension of relief has been granted to airmen who were eligible for relief in SFAR 118-1. The FAA also notes that, in this final rule, it is not expanding every area of relief provided in SFAR 118-1. Because the industry is seeing improvements in the availability of facilities for training, testing, and examinations and the number of persons available to conduct those activities is increasing, the extent of the relief in this final rule is reduced in many areas. The FAA expects that, with continued improvement over the next several months, no further relief will be necessary. Although this amended SFAR will remain effective through April 30, 2021, that date does not reflect the duration for every provision. As a result, airman, operators, and air agencies should review the eligibility, conditions, and duration of the SFAR carefully to ensure compliance.

The table below summarizes SFAR 118 and the amendments to it.

In March 2020, the FAA received several letters from industry associations petitioning the FAA for relief and extensions from certain requirements during the COVID-19 public health emergency. 4 The content of the letters and the relief and flexibility sought were described in the Relief for Certain Persons and Operations during the Coronavirus Disease 2019 (COVID-19) final rule (SFAR 118) (85 FR 26326). On May 29, 2020, the FAA received an additional letter signed by seven industry associations seeking to extend by a month the relief granted to those individuals eligible for relief in SFAR 118. 5 The letter also requested the FAA expand the eligibility of the relief to additional groups of pilots, operators, and certificate holders who face expiring experience, testing, checking, duration, medical, and renewal requirements in July through September 2020. The content of this letter and the rationale behind the need for additional relief was described in the Limited Extension of Relief for Certain Persons and Operations during the Coronavirus Disease 2019 (COVID-19) Public Health Emergency final rule (SFAR 118-1) (85 FR 38763). This final rule also detailed the petition for exemption submitted by Airlines for America (A4A) to provide medical relief for pilots and flight engineers.

On September 3, 2020, the FAA received a letter signed by the same seven industry associations as the previous May 2020 letter, seeking to expand the eligibility of the relief to additional groups of pilots, operators, and certificate holders who face expiring experience, testing, checking, duration, medical, and renewal requirements in October through December 2020. 6 As in the prior letter, the industry associations supported their position by acknowledging that while restrictions are easing in some areas, they continue to see burdens and restrictions that will continue to have a negative impact on the aviation community into the foreseeable future. The letter cited guidance from the Centers for Disease Control and Prevention (CDC), which continues to recommend limited contact with persons outside of one's household, and added that State and local governments are enforcing social distancing requirements. As a result, many aviation stakeholders seek to minimize their risk of exposure. 7

Although the letter acknowledged that most aviation medical examiners (AMEs) are now scheduling appointments, it noted that additional flexibility would continue to be a benefit because there are still backlogs. The letter further stated that pilots who hold special issuance medical certificates or are required to supply the FAA with information regarding a medical condition may have difficulty obtaining the information in time due to the limited availability of treating specialists ( e.g., cardiologists, pulmonologists). They also added that the additional flexibility will allow airmen and examiners to abide by CDC and individual State recommendations while stimulating the economy and moving medical and emergency supplies when needed. The industry associations assert that the safety mitigations in SFAR 118-1 will continue to ensure an equivalent level of safety during the extensions. 8

In addition, on May 19, 2020, the President issued Executive Order 13924, Regulatory Relief to Support Economic Recovery, setting forth “the policy of the United States to combat the economic consequences of COVID-19 with the same vigor and resourcefulness with which the fight against COVID-19 itself has been waged.” Among other things, the Executive order directed executive branch agencies to “address this economic emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery consistent with applicable law and with protection of the public health and safety. . . .” This final rule is consistent with this Executive order.

Without the expanded relief provided in this SFAR, certain persons are at risk of ceasing operations due to their inability to satisfy training and qualification requirements due to disruptions caused by the COVID-19 public health emergency. Aviation activity continues to increase, and industry is beginning to address the backlog of required events. However, many of the challenges that existed when the FAA first issued SFAR 118 remain today.

Airmen continue to have trouble complying with certain training, recency, checking, testing, duration, and renewal requirements. The Nation continues to transition to various phases of reopening throughout the country and authorities continue to promote social distancing and limiting exposure to slow the spread of the virus. To comply with many of the FAA's training, recency, checking, testing, duration, and renewal requirements, an airman is required to be in close proximity to another individual, often in a small, confined space such as the flight deck of an aircraft or inside a simulator. In such an environment, there is an increased risk of transmission of the virus.

As eligible airmen exercise the relief in SFAR 118-1 and reschedule training and qualification activities, there continues to be a strain on the training ecosystem for those airmen who are due for events in the upcoming months. In addition, the FAA workforce and its designees have not fully returned to normal activity. As a result, airman qualifications could lapse because persons cannot access training or testing facilities or schedule events in a timely fashion or because FAA inspectors or designees are unavailable to conduct required tests, checks, or observations. To enable the continuity of aviation operations that are critical to the Nation, the FAA finds it necessary to provide short-term relief from certain training, qualification, duration, and renewal requirements to a new cohort of airmen.

Because this SFAR addresses multiple regulations from several parts of the Federal Aviation Regulations, the FAA has provided the necessary background information in the relevant sections of the Discussion of the Final Rule. The FAA emphasizes that, apart from the limited relief granted in this SFAR, individuals must continue to comply with all applicable FAA regulations. 9

Each of the following sections explains the relief being granted and the persons, airmen, or certificate holders eligible for the relief. 10 For those provisions that are being extended in this final rule, the mitigations the FAA found necessary to ensure aviation safety remain unchanged from SFAR 118; therefore, they are not fully explained in the preamble of this amendment. 11

While the FAA is expanding the relief in SFAR 118-1 to a new group of airmen, it has not extended the period of relief provided to the group of airmen due in the months March through September 2020. The FAA maintains that limited extensions, not to exceed 3 calendar months (grace months), for training, checking, and currency requirements are acceptable in these extraordinary circumstances. Further extending the scope of the relief provided to the airmen covered by SFAR 118-1, however, presents an added risk to the system that the FAA does not broadly support. The grace months provided by the SFAR were to offer flexibility in scheduling the necessary events given the disruption caused by the COVID-19 public health emergency. The FAA further notes that, with aviation activity continuing to increase and the increased availability of personnel to complete training and checking activities, the FAA might not extend relief to additional groups of persons, airmen, and operators after this final rule provided this improvement continues. All certificate holders who are facing lapses in qualifications should seek to schedule the necessary events as soon as it is practical and safe to do so given individual circumstances.

As noted in the letters from industry, general aviation operators and crewmembers can be a key part of the U.S. infrastructure. The support that general aviation provides is particularly critical as the Nation continues to recover from the public health emergency. Because some phased recovery measures continue to recommend that people limit exposure through social distancing, and with the enhanced cleaning requirements for aircraft and facilities and facility capacity restrictions in some locations, some airmen will continue to have difficulty completing certain regulatory requirements in the short-term because the capacity for completing these events may be reduced. As aviation activity resumes, the capacity for training, testing, and checking is still not at pre-COVID-19 levels and the demand for these events exceeds the availability of qualified instructors, check airmen, and examiners in some locations. Therefore, the FAA finds temporary relief from some requirements is still necessary to maintain critical operations, increase flexibility in scheduling, and reduce burdens on airmen; however, the FAA is reducing the amount of additional time and flexibility in many of the relief areas as the industry is improving in its ability to absorb the demand. This reduction in additional time will also help facilitate the transition back to the regulatory training and checking intervals without further relief. To ensure compliance by the end of the grace periods, the FAA encourages airmen not to delay scheduling until the last possible moment.

Relief granted in this section to certain eligible pilots and crewmembers applies only to persons conducting specific operations for which the FAA has determined relief is appropriate. The overarching eligibility for relief in Section A remains unchanged from the original issuance of SFAR 118 and the first amendment; however, it is reiterated here for clarity. No individuals who obtained relief under SFAR 118-1 will receive an extension of that relief. Specific changes in the relief granted for individual sections will be discussed in those sections.

The relief applies to any operation that requires the pilot to hold at least a commercial pilot certificate. This provision will support the continuity of essential commercial operations, which include aerial observation of critical infrastructure, aerial applications ( e.g., crops), and private carriage of medical supplies and equipment, which are conducted under part 91, subpart K, and parts 125, 133, and 137. 12

In addition, this relief applies to some operations conducted by pilots exercising private pilot privileges, provided the pilot has at least 500 hours of total time as a pilot of which 400 hours is as PIC and 50 of the PIC hours were accrued in the last 12 calendar months. The kinds of operations permitted are those that are:

• Incidental to business or employment,

• In support of family medical needs or to transport essential goods for personal use,

• Necessary to fly an aircraft to a location in order to meet a requirement of this chapter, or

• A flight to transport essential goods and/or medical supplies to support public health needs.

This SFAR also extends to pilots conducting charitable medical flights for a volunteer pilot organization pursuant to an exemption issued under part 11, provided the pilots continue to comply with the conditions and limitations of the exemption. For flights conducted by private pilots under this relief, no one may be carried on the aircraft unless that person is essential to the purpose of the flight, such as when transporting doctors for the purpose of providing medical care. This relief does not permit private pilots to conduct these operations for compensation or hire unless permitted under the exceptions in § 61.113(b), (d), (e), or (h) or by exemption. 13

This relief also extends to flight attendant crewmembers, check pilots, and flight instructors under part 91, subpart K, and part 125. Finally, this relief applies to operations conducted under part 107 of this chapter by a person who holds a remote pilot certificate issued under part 107. 14 Pilots exercising commercial pilot privileges have at least 190 hours of flight time as a pilot and have been tested to a higher standard than private pilots. The eligibility requirements for private pilots are consistent with additional conditions and limitations imposed on private pilots conducting charitable flights under a part 11 exemption.

This amendment to SFAR 118-1 addresses crewmember qualifications that may lapse in the next few months, provided the crewmember is eligible for the relief and satisfies the safety mitigations before exercising the privileges. The eligibility requirements and mitigations are discussed more fully in each subsection.

Part 61 prescribes the requirements for pilot, flight instructor, and ground instructor certification, which include training, recency, testing, and checking requirements. The FAA is providing relief for second-in-command (SIC) qualifications, pilot flight reviews, and the PIC proficiency check for pilots that operate aircraft that require more than one pilot flight crewmember or are turbojet-powered. 15 The specific relief is described in paragraphs A.1.a. through A.1.c.

Section 61.55(b) states that no person may serve as SIC of an aircraft certificated for more than one required pilot flight crewmember or in operations requiring an SIC unless that person has, within the previous 12 calendar months, become familiar with certain information specific to the type of aircraft and performed and logged pilot time in the type of aircraft or in a flight simulator that represents the type of aircraft. 16 Although paragraph (c) provides SICs a grace month  17 for accomplishing this recency requirement, the effects of the COVID-19 public health emergency continue to create challenges for compliance even within that additional timeframe.

As a result, the FAA finds, under the extraordinary circumstances of the COVID-19 public health emergency, that allowing eligible SICs two additional grace months for completing the requirements of § 61.55(b) would not present additional risk to aviation safety that cannot be mitigated. 18 The additional grace months under this extension of the SFAR are available to pilots whose base month falls in October 2020 through January 2021. The “base month” is the month in which training is due. This new cohort of pilots will have a total of two grace months after the base month to accomplish the requirements of § 61.55(b). 19 If eligible pilots complete these requirements during the grace period, they will be considered to have completed them during the base month. To attain the two additional grace months, eligible pilots must complete the requirements prescribed in SFAR 118-2 prior to serving as an SIC.

The FAA reiterates that no additional relief has been provided to pilots who obtained relief under the original SFAR and the first extension. The following table outlines the expiration of relief pertinent to § 61.55 for all groups of pilots covered under the terms of the SFAR.

Section 61.56(c) states that no person may act as PIC of an aircraft, unless since the beginning of the 24th calendar month before the month in which that person acts as PIC, that person has accomplished a flight review in an aircraft for which that person is rated and the person's logbook has been endorsed for that review by an authorized instructor certifying the review was satisfactorily completed. 20

The FAA finds, under the extraordinary circumstances of the COVID-19 public health emergency, that extending the 24-calendar month requirement of § 61.56(c) is necessary. However, with increased aviation activity and growing availability of instructors, the FAA has determined that pilots whose flight review is due from October 2020 through January 2021 require at most two additional calendar months to complete their flight reviews instead of the three calendar months previously granted. This change acknowledges that some flexibility still is needed for scheduling these events, but the circumstances of the public health emergency no longer require an extension of three calendar months. The FAA also notes that the industry organizations requested a two-month extension for this next group of pilots whose flight reviews are coming due.

This extension will not adversely affect safety, provided the relief applies to active pilots and certain risk mitigations are met. 21 The two-calendar month extension applies only to pilots who were current to act as PIC of an aircraft in March 2020, and whose flight review is due in October 2020 through January 2021. Eligible pilots must complete the requirements prescribed in SFAR 118-2 prior to serving as a PIC.

The FAA reiterates that no additional relief has been provided to pilots who obtained relief under the original SFAR and the first extension. The following table outlines the expiration of relief pertinent to § 61.56 for all groups of pilots covered under the terms of the SFAR.

Section 61.58 requires a PIC proficiency check for those pilots that fly an aircraft that requires more than one pilot or is turbojet-powered. Paragraph (a)(1) requires a pilot to complete a PIC proficiency check within the preceding twelve calendar months in an aircraft that is type certificated for more than one required pilot or is turbojet-powered. In addition, paragraph (a)(2) requires a pilot to accomplish, within the preceding 24 calendar months, a PIC proficiency check in the particular type of aircraft in which that person will serve as PIC that is type-certificated for more than one required pilot flight crewmember or is turbojet-powered. 22 Paragraph (i) establishes a grace month for completing the PIC proficiency check. Specifically, it allows the check to be completed in the month prior to or the month after the month in which the check is due.

The FAA finds, under the extraordinary circumstances of the COVID-19 public health emergency, that allowing two additional grace months for completing the PIC proficiency checks required by § 61.58(a)(1) and (2) does not present a risk to aviation safety that cannot be mitigated, as explained in SFAR 118. 23 Eligible pilots under this extension are those pilots who are required to complete a proficiency check in accordance with § 61.58(a)(1) and whose base month falls within the time period of October 2020 through January 2021. In accordance with § 61.58(a)(2), pilots who have not completed a proficiency check in the aircraft they intend to fly within the preceding 24 calendar months and whose base month falls between October 2020 and January 2021 are also included in the relief in this SFAR. Pilots will have a total of two grace months after the base month to accomplish the PIC proficiency check required by § 61.58(a)(1) and (2). 24 A PIC proficiency check completed during the extended grace period will be considered to have been completed in the base month.

The FAA reiterates that no additional relief has been provided to pilots who obtained relief under the original SFAR and the first extension. The following table outlines the expiration of relief pertinent to § 61.58 for all groups of pilots covered under the terms of the SFAR.

Part 91, subpart K, prescribes the additional rules that apply to private, general aviation fractional ownership programs. There are currently nine fractional ownership programs operating under part 91, subpart K. They range in size from managers with two aircraft to managers with over 500 airplanes and helicopters.

The crewmember testing and checking requirements are established in §§ 91.1065, 91.1067, 91.1069, and 91.1071. Recurrent training requirements for crewmembers are specified in §§ 91.1073, 91.1099, and 91.1107. These requirements cover the following activities and timelines for completion:

• Section 91.1065—pilot knowledge testing and competency checking requirements (completed within the previous twelve months before the pilot serves as a required crewmember);

• Section 91.1067—flight attendant crewmember testing requirements (completed within the previous twelve months before serving as a flight attendant crewmember);

• Section 91.1069(a) and (b)—instrument proficiency checking requirements for PICs (completed within the previous six months) and SICs (completed in previous twelve months);

• Section 91.1099—initial or recurrent training (completed within the previous twelve months before serving as a crewmember);

• Section 91.1107—crewmember recurrent training (completed within the previous twelve months before serving as a crewmember);

• Section 91.1069(c)—instrument approach procedure recency (demonstrated that type of approach within previous six months);

• Section 91.1071(a)—creates a grace month that allows a crewmember test or flight check required by subpart K to be completed in the month before or after the month it is required; and

• Section 91.1073(b)—creates a grace month that allows crewmember recurrent training required by subpart K to be completed in the month before or after the month it is required.

Subpart K of part 91 also contains instructor and check pilot qualifications in §§ 91.1089 through 91.1095. Sections 91.1089 and 91.1091 require check pilots and flight instructors qualified in simulators to fly at least two flight segments as a required crewmember for the type, class, or category of aircraft involved within the previous twelve-month period or complete an approved line-observation program within the period prescribed by that program. Paragraph (g) in both sections provides a grace month stating that the flight segments or line observations are considered complete if completed in the month before or the month after in which they are due. Sections 91.1093 and 91.1095 require that a person who conducts checking or instruction have satisfactorily completed an observation check within the preceding 24 months. Paragraph (b) in both sections also provides a grace month for the checks to be completed.

The FAA finds, under the extraordinary circumstances of the COVID-19 public health emergency, that extending the relief to a new group of individuals does not present a risk to aviation safety that cannot be mitigated under the conditions of SFAR 118. 25 As such, the final rule allows a total of two grace months after the base month for completing the covered training, testing, and checking requirements for crewmembers, check pilots, and flight instructors whose base month is in October 2020 through January 2021—many of which already permit one grace month. If a management specification holder seeks the relief provided in this amendment, the risk mitigation plan must include reference to crewmembers whose base month is October 2020 through January 2021, as appropriate. This may require an amendment to a previously submitted mitigation plan under the conditions of SFAR 118; however, persons whose base month was March through September 2020 receive no further relief under this portion of the final rule.

The following table outlines the expiration of relief pertinent to part 91, subpart K for all crewmembers covered under the terms of the SFAR.

Subpart N of part 91 contains training, experience, and operating requirements specific to the Mitsubishi MU-2B series airplane. Except as specified in § 91.1703(b), 26 a person may not manipulate the controls, act as PIC, or act as SIC of a MU-2B series airplane for the purpose of flight unless that person satisfies certain ground and flight training requirements, 27 including recurrent training requirements, in an FAA-approved MU-2B training program that meets the standards of subpart N of part 91. This requirement is contained in § 91.1705(a)(1). 28

In addition, § 91.1705(b)(1) states that, except as specified in § 91.1703(b), a person may not manipulate the controls, act as PIC, or act as SIC, of a MU-2B series airplane for the purpose of flight unless that person satisfactorily completes, if applicable, recurrent pilot training on the special emphasis items and all items listed in the Training Course Final Phase Check in accordance with an FAA-approved MU-2B training program that meets the standards of subpart N of part 91. 29

Section 91.1703(e) requires a person to complete recurrent training within the preceding twelve months without the option of a grace month. 30 Under § 91.1705(e), however, a person has one grace month to comply with the training requirements of § 91.1705(a) or (b). Therefore, § 91.1705(e) allows a person to accomplish the recurrent training one month after the month it is due.

Section 91.1715(c) stipulates that completion of a flight review to satisfy the requirements of § 61.56 is valid for operation of a Mitsubishi MU-2B series airplane only if that flight review is conducted in a Mitsubishi MU-2B series airplane, or an MU-2B simulator approved for landings with an approved course conducted under part 142.

Under the extraordinary circumstances of the COVID-19 public health emergency, the FAA supports extending the relief previously granted for certain experienced pilots flying MU-2B series airplanes to a new group of pilots. This relief is not applicable to pilots that are required to complete initial/transition or requalification training in an MU-2B series airplane  31 because these pilots could not meet the qualification requirements.

With this final rule, a person may obtain one additional grace month to complete the recurrent training requirements. 32 To be eligible for this relief, pilots must be qualified under subpart N of part 91 and their base month for completing the recurrent training must fall in October 2020 through January 2021. If a pilot completes the recurrent training requirements within the grace period provided by this SFAR, the requirements will be considered to have been completed in the base month. In addition, to ensure there is no adverse impact to safety, the FAA has determined it is necessary to impose certain qualification requirements on pilots seeking to exercise this relief. The qualification requirements are intended to serve as risk mitigations and are described in the final rule for the original SFAR 118. 33

The FAA reiterates that no additional relief has been provided to pilots who obtained relief under the original SFAR and the first extension. The following table outlines the expiration of relief pertinent to part 91, subpart N for all groups of pilots covered under the terms of the SFAR.

Part 125 certificated operators conduct non-common carriage operations. The FAA issues a Letter of Deviation Authority (LODA) for various kinds of operations to include airplane ferry, sales demonstrations, or training. 34 These LODA-holders conduct operations under part 91 and may hold an operating certificate and have operations specifications (OpSpecs). 35 The FAA also issues a LODA to an operator that conducts only non-commercial operations ( i.e., private use only)—specifically an A125 LODA. Holders of an A125 LODA do not hold an operating certificate or have OpSpecs. Instead, they are issued a letter of authorization (LOA) because the flightcrew members operating under an A125 LODA must comply with the recency, recurrent testing, and proficiency checking requirements of part 125.

Section 125.287 requires a pilot of a part 125 operation to have passed a written or oral test given by the Administrator or a check airman every 12 calendar months and pass a competency check in the type of airplane flown in part 125 operations every 12 calendar months. 36 Section 125.289 requires a flight attendant to complete recurrent testing every 12 calendar months. Section 125.293(a) provides for a grace month for crewmembers to complete testing or checking. 37 Section 125.291(a) requires that since the beginning of the sixth calendar month before service, the PIC of an airplane in a part 125 operation under IFR must have passed an instrument proficiency check and the Administrator or an authorized check airman has so certified in a letter of competency. 38 Finally, § 125.285(a) requires that pilot flight crewmembers complete three takeoffs and landings within the preceding 90 days in the type airplane in which that person is to serve.

The FAA finds, under the extraordinary circumstances of the COVID-19 public health emergency, that extending the relief to a new group of pilots by allowing one additional grace month for completing the recurrent testing, checking, and training requirements does not present a risk to aviation safety that cannot be mitigated. However, in a change from SFAR 118-1, the FAA is granting only an additional thirty days for completing the three required takeoffs and landings. With aviation activity increasing, there are increased opportunities to gain the required takeoffs and landings when compared to the circumstances the industry faced in the original SFAR, and a sixty-day extension is no longer warranted. The requirements of this SFAR ensure that certificate holders and A125 LODA holders demonstrate a plan to mitigate any potential risk introduced by extending flight crewmember qualifications. 39

The relief in this final rule applies to requirements for currently qualified flight crewmembers only, whose base month is October 2020 through January 2021. It does not apply to requirements for the training and qualification of new personnel. To utilize the relief provided by this SFAR, the certificate holder or A125 LODA holder must provide an acceptable risk mitigation plan as described in SFAR 118. 40 If a certificate holder or A125 LODA holder seeks the relief provided in this amendment, the mitigation plan must include reference to crewmembers whose base month is October 2020 through January 2021, as appropriate. This may require an amendment to a previously submitted mitigation plan under the conditions of SFAR 118. However, persons whose base month was March through September 2020 receive no further relief under this portion of the final rule.

The following table outlines the expiration of relief pertinent to part 125 for all crewmembers covered under the terms of the SFAR.

SFAR 73 established special training and experience requirements for pilots operating the Robinson model R-22 or R-44 helicopters to maintain safe operation of these helicopters.

To act as PIC of a Robinson R-22 or R-44 helicopter, SFAR 73 requires the person to complete the flight review required under § 61.56 in an R-22 or R-44 helicopter, as appropriate to the PIC privileges sought, if the person has at least 200 flight hours in helicopters of which at least 50 flight hours are in the applicable Robinson model helicopter for which the person has PIC privileges. 41 Otherwise, it requires the person to comply with the endorsement requirements of SFAR 73. 42

Under the extraordinary circumstances of the COVID-19 public health emergency, the FAA has determined that the PIC of an R-22 or R-44 is compliant with SFAR 73 if the person meets the recency requirements of § 61.56 established in this SFAR in an R-22 or R-44, or both, as appropriate. 43 This relief is limited to Robinson pilots that have at least 200 hours in helicopters of which at least 50 hours are in the applicable Robinson model helicopter for which the person has PIC privileges. Low-time Robinson pilots that are required to complete a flight review every twelve calendar months in accordance with SFAR 73 must continue to comply with that SFAR.

For the relief in this SFAR, the flight review must include SFAR 73 awareness training subjects in paragraph 2(a)(3) and the flight training subjects in paragraph 2(b). R-22 or R-44 pilots whose flight review is due in October 2020 through January 2021 may extend an additional two calendar months, provided the pilots meet the requirements prescribed in SFAR 118.

The FAA reiterates that no additional relief has been provided to pilots who obtained relief under the original SFAR and the first extension. The following table outlines the expiration of relief pertinent to SFAR 73 for all groups of pilots covered under the terms of the SFAR.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to RRD Trent 1000-AE3, Trent 1000-CE3, Trent 1000-D3, Trent 1000-G3, Trent 1000-H3, Trent 1000-J3, Trent 1000-K3, Trent 1000-L3, Trent 1000-M3, Trent 1000-N3, Trent 1000-P3, Trent 1000-Q3, Trent 1000-R3, Trent 7000-72, and Trent 7000-72C model turbofan engines. The NPRM published in the Federal Register on April 2, 2020 (85 FR 18478). The NPRM was prompted by a report of crack findings in the front air seal on the IPC shaft assembly during the stripping of a flight test engine. The NPRM proposed to require initial and repetitive BSIs of the IPC shaft assembly and, depending on the results of the inspection, replacement of the IPC shaft assembly with a part eligible for installation. The FAA is issuing this AD to address the unsafe condition on these products.

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2019-0282, dated November 20, 2019 (referred to after this as “the MCAI”), to address the unsafe condition on these products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0293.

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

Delta Air Lines (DAL) requested that paragraph (g)(1), Required Actions, of this AD be updated to specify that gaining access to the front air seal of the IPC shaft assembly to perform the BSI can be accomplished through the engine inlet and low-pressure compressor (LPC) fan blades or through the outlet guide vanes (OGVs) regardless of whether the BSI of the front air seal is performed concurrently with any other inspections.

DAL cited paragraph 3.B.(2)(b) of Rolls-Royce Trent 1000 Alert Non-Modification Service Bulletin (NMSB) 72-AK451, Initial Issue, dated November 14, 2019 (“the NMSB”), that states that accessing the front air seal may be made through the OGVs “if performed concurrently with IP Compressor Stage 1 blade inspections.” As a result, inspectors may have less difficulty accessing the inspection area through the OGVs. Further, DAL reasoned that tooling for entry through the OGVs might be more readily available in certain stations where the affected aircraft operate.

The FAA agrees that access to the front air seal of the IPC shaft assembly can be accomplished through the engine inlet and LPC fan blades or through the OGVs regardless of any other inspections occurring at the time. The FAA, however, disagrees with updating paragraph (g)(1) of this AD because this AD does not require a certain method to access the front air seal of the IPC shaft assembly.

DAL requested that the FAA update paragraph (g)(3), Required Actions, of this AD to require removal of the engine before further flight and to allow verification of any cracks prior to mandating replacement of the IPC shaft assembly. DAL added that the EASA AD, which states to remove of the engine from service if any crack is detected and to contact RRD for approved corrective actions, allows for the possibility that an engine can be removed from the aircraft and then subsequently cleared for continued service after cleaning and reassessment of a suspected indication.

The FAA disagrees with updating paragraph (g)(3) of this AD to require removal of the engine. While the engine can be removed from the aircraft and subsequently cleared for continued service after cleaning and reassessment, the engine does not need to be removed from the aircraft to verify a crack. According to the Accomplishment Instructions, paragraph 3.B.(2)(e), of the NMSB, if a crack is found, it is permissible to clean the suspected area and then repeat the BSI or visual inspection of the IPC shaft assembly. Therefore, no change to this AD is required.

DAL requested that the FAA update paragraph (g)(2), Required Actions, of this AD to allow credit for an IPC shaft assembly that received the BSI using the NMSB or a general visual inspection during an engine shop visit. DAL reasoned that when the IPC shaft assembly is exposed during an engine shop visit, the inspection area can be accessed without a borescope.

The FAA agrees that visual inspections using standard shop procedures would provide an equivalent level of safety as an on-wing BSI if the front air seal of the IPC shaft assembly is exposed. The FAA updated paragraph (g)(2) of this AD to allow a visual inspection using FAA-approved maintenance procedures if the part is exposed.

DAL requested that the FAA update the definition of a “part eligible for installation” be revised to also include a part that has been inspected per standard shop procedures. DAL reasoned that paragraph (h) of the NPRM only defined a part eligible for installation to include a new IPC shaft assembly or an IPC shaft assembly that, before installation, passed an inspection in accordance with referenced service information, which only includes an on-wing BSI and does not allow for inspection during an engine shop visit. Therefore, paragraph (h) of the NPRM, as written, allows only for the reinstallation of the IPC shaft assembly that had been previously inspected on-wing before removal from an engine. Additionally, DAL noted that both the RRD Trent 1000 and Trent 7000 Cleaning, Inspection, and Repair Manuals, Section 72-32-31, provide standard manual procedures for identifying cracks on the IPC shaft assembly.

The FAA agrees and updated the definition of a “part eligible for installation” in paragraph (h)(2) of this AD to include an in-shop BSI and visual inspection using FAA-approved maintenance procedures.

DAL requested that the FAA update paragraph (g)(2), Required Actions, of this AD to remove the reference to Table 1 to paragraph (g)(1) for inspection intervals. DAL suggested that the FAA mirror the language of the MCAI that states that in-shop inspections “may be substituted for any on-wing BSI as required by paragraph (1) of this [EASA] AD, provided the compliance time is not exceeded.” DAL reasoned that Table 1 to paragraph (g)(1) of the NPRM includes only the initial inspection intervals, and therefore could be interpreted to exclude substitution for repetitive inspections.

The FAA agrees that Table 1 to paragraph (g)(1) of this AD provides the compliance time for the initial inspection, whereas paragraph (g)(1) of this AD requires repetitive inspections at stated intervals. The FAA updated paragraph (g)(2) of this AD from “may be substituted for any on-wing BSI, provided the compliance time specified in Table 1 to paragraph (g)(1) of this AD is not exceeded” to “may be substituted for any on-wing BSI, provided the compliance time specified in paragraph (g)(1) of this AD is not exceeded.”

The Boeing Company expressed support for the AD as written.

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

• Αre 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 has also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

The FAA reviewed Rolls-Royce Trent 1000 Alert NMSB 72-AK451, Initial Issue, dated November 14, 2019. The Alert NMSB describes procedures for initial and repetitive BSIs of the IPC shaft assembly. 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 14 engines installed on airplanes of U.S. registry.

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

The FAA estimates the following costs to do any necessary replacement that are required based on the results of the mandated inspection. The FAA has no way of determining the number of engines that might need this replacement:

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

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

This AD 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 supplemental notice of proposed rulemaking (SNPRM) to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model MBB-BK 117 A-3, MBB-BK 117 A-4, MBB-BK 117 B-1, MBB-BK 117 B-2, and MBB-BK 117 C-1 helicopters. The SNPRM published in the Federal Register on April 28, 2020 (85 FR 23492) (“the SNPRM”). The FAA preceded the SNPRM with a notice of proposed rulemaking (NPRM) that published in the Federal Register on May 5, 2016 (81 FR 27057) (“the NPRM”). The NPRM was prompted by reports that the adhesive seal prevented the doors from jettisoning properly. The NPRM proposed to require removing adhesive seal part number (P/N) 117-800201.01 from the exterior and interior of each sliding door. The NPRM also proposed to prohibit the installation of this part-numbered adhesive seal on any helicopter sliding door. The SNPRM proposed to expand the applicability. The SNPRM also proposed to add requirements to replace certain seals with newly certified seals and revise the existing RFM for your helicopter. The FAA is issuing this AD to address the presence of sealant on a sliding door, which could result in the door failing to jettison and preventing helicopter occupants from exiting the helicopter during an emergency.

EASA, which is the aviation authority for the Member States of the European Union, issued EASA AD 2015-0163R1, dated April 27, 2016 (“EASA AD 2015-0163R1”) (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for Airbus Helicopters Model MBB-BK 117 A-3, MBB-BK 117 A-4, MBB-BK 117 B-1, MBB-BK 117 B-2, and MBB-BK 117 C-1 helicopters. EASA advised that difficulties were reported regarding the jettisoning of doors. The malfunction was caused by the adhesive seal, which hampered the free movement of the inner handle. According to EASA, a subsequent investigation showed that the adhesive seal has mechanical and physical properties that do not meet relevant certification requirements. EASA stated that this condition, if not detected and corrected, could lead to a malfunction of the door's jettisoning mechanism, reducing or preventing the evacuation of the helicopter during an emergency, possibly resulting in injury to occupants. To address this condition, EASA AD 2015-0163R1 required inspecting the exterior and interior door jettisoning system on the left and right sliding doors for adhesive seal P/N 117-800201.01 and removing those adhesive seals.

You may examine the MCAI in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2015-3941.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA received no comments on the SNPRM 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 this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

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

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

The FAA reviewed Airbus Helicopters Alert Service Bulletin MBB-BK11720A-114, Revision 2, dated March 30, 2016, for Model MBB-BK 117 A-3, MBB-BK 117 A-4, MBB-BK 117 B-1, MBB-BK 117 B-2, and MBB-BK 117 C-1 helicopters. This service information describes procedures for cleaning and degreasing the seal installation areas and installing adhesive seal P/N 117-800201.02. This service information also specifies flight manual revisions with preflight check information for this new seal.

The FAA also reviewed Section 4—Normal Procedures, of MBB Helicopters Flight Manual MBB-BK117 A-3, Revision 17.1, MBB Helicopters Flight Manual MBB-BK117 A-4, Revision 16.1, MBB Helicopters Flight Manual MBB-BK117 B-1, Revision 20.1, Eurocopter Flight Manual BK117 B-2, Revision 21.2, and Eurocopter Flight Manual BK117 C-1, Revision 30.1, each dated March 25, 2015. This revision of the service information adds preflight check procedures for “Jettisonable sliding door installed, after ASB-BK117-20A-114” in Section 4—Normal Procedures, Preflight Exterior Check, under both “Fuselage—right side” and “Fuselage—left side” of the existing RFM for your helicopter.

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 EASA AD does not mandate the installation of the new adhesive seals, whereas this AD does. Model MBB-BK 117 B-2 serial number 7203 is affected by the EASA AD but is not affected by this AD because it is ineligible for U.S. registration.

The FAA estimates that this AD affects 45 helicopters of U.S. registry. Labor costs are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this AD.

If installed, removing adhesive seals P/N 117-800201.01 would take about 0.5 work-hour for an estimated cost of about $43 per helicopter. Installing new seals and revising the existing RFM for your helicopter would take about 1 work-hour and a set of new seals (4 units) would cost about $5 for an estimated cost of $90 per helicopter and $4,050 for the U.S. fleet.

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

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

This AD 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 issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 747-400, 747-400D, and 747-400F series airplanes. The NPRM published in the Federal Register on May 3, 2016 (81 FR 26490). The NPRM was prompted by the FAA's analysis of the Model 747 fuel system reviews conducted by the manufacturer. The NPRM proposed to require modifying the FQIS to prevent development of an ignition source inside the center fuel tank due to electrical fault conditions. The proposed AD also proposed to provide alternative actions for cargo airplanes.

The FAA is issuing this AD to address ignition sources inside the center fuel tank, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane.

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

The Air Line Pilots Association, International (ALPA) and National Air Traffic Controllers Association (NATCA) supported the intent of the NPRM. Additional comments from NATCA are addressed below.

Airlines for America and the Cargo Airline Association, in consolidated comments (A4A/CAA), United Parcel Service (UPS) and KLM Royal Dutch Airlines (KLM) requested that the FAA withdraw the NPRM. A4A/CAA and UPS cited comments submitted by Boeing to Docket No. FAA-2012-0187 in which Boeing stated that the risk is “less than extremely improbable.” A4A/CAA added that Boeing does not believe that an unsafe condition exists. UPS stated the Boeing's comments demonstrate an unsafe condition does not exist. A4A/CAA and UPS noted that they consider the Boeing comments to be applicable to the airplane models in the NPRM. KLM added that it understands that Boeing is not able to explain or substantiate the rationale behind the NPRM.

KLM and Martinair stated that the NPRM does not clarify the necessity of additional actions beyond the currently mandated Special Federal Aviation Regulation (SFAR) No. 88 (in 14 CFR part 21), related service bulletins, airworthiness limitations, and critical design configuration control limitations. UPS stated that an agency is required to consider all relevant factors and articulate a satisfactory explanation for its action. UPS noted that the FAA is apparently basing its decision to issue the AD on historical SFAR 88 design reviews that have been superseded by the more recent Boeing analysis and favorable operational experience in the years since the SFAR 88 reviews were completed.

The FAA disagrees with the commenters' request. The FAA notes that Boeing's comments were addressed in the supplemental NPRM (SNPRM) for Docket No. FAA-2012-0187 (80 FR 9400, February 23, 2015) in the comment response for “Request To Withdraw NPRM (77 FR 12506, March 1, 2012): Unjustified by Risk.” As explained in that comment response, in addition to examining average risk and total fleet risk, the FAA examines the individual flight risk on the worst reasonably anticipated flights. In general, the FAA issues ADs in cases where reasonably anticipated flights with preexisting failures (either due to latent failure conditions or allowable dispatch configurations) are vulnerable to a catastrophic event due to an additional foreseeable single failure condition. This is because the FAA considers operation of flights vulnerable to a potentially catastrophic single failure condition to be an excessive safety risk to the passengers on those flights. The FAA has determined that the currently mandated SFAR 88 service bulletins, airworthiness limitations, and critical design configuration control limitations do not adequately address the unsafe condition identified in this AD and therefore it is necessary to issue this final rule. The FAA has not changed this AD regarding this issue.

Boeing requested that the FAA withdraw the NPRM. Boeing suggested that, by requiring center fuel tank FQIS wire separation for passenger airplanes that have not incorporated a nitrogen generating system (NGS), the NPRM specifically addresses airplanes regulated by the European Union Aviation Safety Agency (EASA) and other civil aviation authorities and the lack of a flammability reduction means (FRM) rule. Boeing stated that because it considered the use of FRM (NGS) to address unknown ignition sources as the final corrective action, Boeing has not developed center tank FQIS wire separation service instructions for passenger aircraft. Boeing stated that it believes no unsafe condition exists and does not feel that the lack of FRM rule harmonization should cause additional work and expense for airlines.

The FAA disagrees with the commenter's request. The FAA determined that an unsafe condition exists using the criteria in FAA Policy Memorandum ANM100-2003-112-15, “SFAR 88—Mandatory Action Decision Criteria,” dated February 25, 2003. 1 That policy was used to evaluate the noncompliant design areas identified in the manufacturer's fuel system reviews and to determine which noncompliance issues were unsafe conditions that required corrective action under 14 CFR part 39. The FAA's unsafe condition determination was not based on an assessment of average risk or total fleet risk, but rather was driven by the qualitative identification of an unacceptable level of individual risk that exists on flights that are anticipated to occur with a preexisting latent in-tank failure condition and with a flammable center fuel tank. For these reasons, and based on further detailed responses to similar comments in the SNPRM for Docket No. FAA-2012-0187, and in the subsequently issued final rule, AD 2016-07-07, Amendment 39-18452 (81 FR 19472, April 5, 2016) (“AD 2016-07-07”), which addressed the same unsafe condition for Boeing Model 757 airplanes, the FAA has determined that it is necessary to issue this final rule.

A4A/CAA and UPS requested that the FAA withdraw the NPRM. The commenters stated that the assumption of a single failure regardless of probability is inconsistent with 14 CFR part 25 regulatory requirements. The commenters referred to the phrase “regardless of probability” associated with single failures. A4A/CAA and UPS acknowledged that the term is used with single failures in FAA Advisory Circular (AC) 25.981-1C, 2 “Fuel Tank Ignition Source Prevention Guidelines,” but since that term does not appear in 14 CFR 25.981(a)(3), the commenters considered its use arbitrary, possibly introducing additional requirements not included in that section. A4A/CAA and UPS stated that the “worst reasonably anticipated flight” is a flight with a latent FQIS failure and a high-flammability tank, and this “latent plus one” failure—regardless of probability of a single failure—is not consistent with 14 CFR 25.981(a)(3).

The FAA disagrees with the commenters' request. The FAA notes that the commenters' assertion about the intent of 14 CFR 25.981(a)(3) is incorrect based on both the language of the rule and on the published rulemaking documents. The absence of a probabilistic qualifier in both the “from each single failure” clause and in the “from each single failure in combination with each latent failure not shown to be extremely remote” clause in 14 CFR 25.981(a)(3) in fact means just that—there is no probabilistic qualifier intended by the regulation. The intent for single failures in these two scenarios to be considered regardless of probability of the single failure was explicitly stated in the NPRM for 14 CFR 25.981, as amended by amendment 25-102 (66 FR 23085, May 7, 2001) (“amendment 25-102”). That NPRM stated, in pertinent part, that it would also add a new paragraph (a)(3) to require that a safety analysis be performed to demonstrate that the presence of an ignition source in the fuel tank system could not result from “any single failure, from any single failure in combination with any latent failure condition not shown to be extremely remote, or from any combination of failures not shown to be extremely improbable.” These new requirements would define three scenarios that must be addressed in order to show compliance with the proposed paragraph (a)(3). “The first scenario is that any single failure, regardless of the probability of occurrence of the failure, must not cause an ignition source. The second scenario is that any single failure, regardless of the probability occurrence, in combination with any latent failure condition not shown to be at least extremely remote ( i.e., not shown to be extremely remote or extremely improbable), must not cause an ignition source. The third scenario is that any combination of failures not shown to be extremely improbable must not cause an ignition source.”

The preamble to the final rule for amendment 25-102 made a nearly identical statement, including the same uses of the phrase “regardless of probability.” The FAA has determined that it is necessary to proceed with issuance of this final rule as proposed. Further details and a description of the FAA's risk assessment can be found in responses to similar comments in a related SNPRM that addressed the same unsafe condition for Model 757 airplanes, in Docket No. FAA-2012-0187, and in the subsequently issued final rule, AD 2016-07-07, amendment 39-18452 (81 FR 19472, April 5, 2016) (“AD 2016-07-07”). No change to this AD was made in response to these comments.

A4A/CAA and UPS requested that the FAA withdraw the NPRM based on a lack of new data since the issuance of the FTFR rule (73 FR 42444, July 21, 2008). The commenters referred to the FTFR rule and decision to not require FRM for all-cargo airplanes, and the FAA's intent to gather additional data and consideration of further rulemaking if flammability of these airplanes is excessive. UPS stated that since the FTFR rule, no additional data has been publicly introduced that would support or justify the applicability of this rulemaking to all-cargo aircraft. The commenters also referred to the FAA's response to comments in the preamble to the SNPRM for Docket No. FAA-2012-0187, which documented the FAA's decision on applicability of FRM and cost estimates. The commenters stated that the FAA response was misleading and not factual since manufacturers did not begin detailed designs to address the proposed unsafe condition until after the FTFR rule was published. The commenters added that the FAA did not discuss other changes to the FQIS system in the FTFR rule.

The FAA disagrees with the commenters' request. The FAA notes that the FTFR rule and FQIS ADs are two different issues with separate FAA actions. The intent of the FTFR rule was to provide an order of magnitude reduction in the rate of fuel tank explosions for the airplanes affected by that rule through adding a new airworthiness standard for the flammability of fuel tanks. The FAA notes that the FTFR rule was never intended to be a replacement for the issuance of ADs to address identified unsafe conditions. An unsafe condition due to the identified FQIS latent-plus-single failure issue in high-flammability fuel tanks was determined to exist during the SFAR 88 AD Board held by the FAA in 2003 using the guidance in FAA Policy Memorandum ANM100-2003-112-15 for high-flammability fuel tanks, including the center fuel tank on Model 747-400 airplanes. That same issue was not considered to be an unsafe condition in low-flammability wing fuel tanks based on that same policy memorandum. The FAA has not changed this AD regarding this issue.

A4A/CAA and UPS requested that the FAA withdraw the NPRM based on a lack of consistent design standards for FQIS wire separation. The commenters assumed that the approved standard for the retrofit is a 2-inch wire separation minimum, which the commenters considered arbitrary and inconsistently applied. The commenters reported that the amount of wiring capable of meeting that separation standard varies widely among airplane models. A4A/CAA and UPS also acknowledged that other separation methods were used in areas not meeting the 2-inch wire separation requirement.

The FAA does not agree with the commenters' request. The degree of physical isolation of FQIS wiring from other wiring, whether provided by physical distance or barrier methods, that is necessary to eliminate the potential for hot shorts due to wiring faults is dependent on the materials used, the wire securing methods, and the possible types of wiring faults. The FAA relied on the manufacturer to assess the details of the design and to propose the appropriate isolation measures. While 2 inches of physical separation may appear to be an arbitrary number, it was the distance proposed by the manufacturer as appropriate for their design based on analysis of the design details. The FAA has not changed this AD regarding this issue.

A4A/CAA and UPS requested that the FAA withdraw the NPRM. The commenters noted that airplanes with FRM are not included in the applicability, and the NPRM would therefore not fully address the unsafe condition. The commenters added that the distinction between high- and low-flammability exposure time fuel tanks as used in the NPRM is arbitrary. The commenters stated that an arbitrary differentiation of high- versus low-flammability as decisional criteria for the need for corrective action does not take into account the actual probability of the impact of the difference in flammability on the potential of catastrophic failure. The commenters also stated that allowing the proposed alternative actions for cargo airplanes does not fully address the unsafe condition in the NPRM. The commenters referenced the FAA's response to comments in AD 2016-07-07 regarding this issue. The commenters summarized numerical analysis showing no significant difference in risk between high- and low-flammability fuel tanks. The commenters concluded that the FAA's risk analysis is arbitrary and an unsafe condition does not exist.

The FAA disagrees with the assertion that the NPRM is arbitrary and inconsistent. The NPRM follows defined policy in FAA Policy Memorandum ANM100-2003-112-15, and consistently applies the policy to several airplane models with similar unsafe conditions, similar to AD 2016-07-07. The FAA defined the difference between low- and high-flammability exposure time fuel tanks based on recommendations from the Aviation Rulemaking Advisory Committee Fuel Tank Harmonization Working Group (FTHWG). The preamble to the final rule for amendment 25-102, which amended 14 CFR 25.981, defined this difference as based upon comparison of “the safety record of center wing fuel tanks that, in certain airplanes, are heated by equipment located under the tank, and unheated fuel tanks located in the wing.” The FTHWG concluded that the safety record of fuel tanks located in the wings was adequate and that if the same level could be achieved in center wing fuel tanks, the overall safety objective would be achieved.

In the response to comments in the preamble to the final rule for AD 2016-07-07 referenced by the commenters, the FAA described why FRM or alternative actions for cargo airplanes provide an acceptable level of safety, even if they do not completely eliminate the non-compliance with 14 CFR 25.981(a)(3).

The fuel tank explosion history for turbojet/turbofan powered transport airplanes fueled with kerosene type fuels, outside of maintenance activity, has consisted of explosions of tanks that (1) are not conventional aluminum wing tanks and (2) spend a considerable amount of their operating time empty. The service history of conventional aluminum wing tanks has been acceptable. The intent of the difference in decision criteria in FAA Policy Memorandum ANM100-2003-112-15 was to give credit for this satisfactory service experience, and to differentiate between tanks with a level of flammability similar to that of a conventional wing tank and those with a significantly higher level of flammability.

The numerical analysis provided by the commenters is inconsistent with the fuel tank explosion service history. There are at least three identifiable physics-based reasons for that inconsistency. First, low-flammability tanks on most types of airplanes are main tanks that are the last tanks used. During a large portion of their operating time, the systems and structural features that have the potential to be ignition sources in the event of a failure condition are covered with liquid fuel, and an ignition source, if it occurs, is likely to be submerged. When a potential ignition source in a main tank is uncovered, it is likely to be later in the flight when the tank is cool and no longer flammable. The commenters' analysis does not account for this significant effect. Second, the numerical analysis used by the commenters assumes that any given ignition source has a random occurrence in time at the estimated probability, and that, in order for an explosion to occur, that random occurrence of an ignition source needs to coincide with the tank being in a flammable state. In fact, many of the identified ignition threats do not simply occur briefly and then go away. Instead, a fault occurs that, until it is discovered and corrected, repeatedly creates an ignition source, and repeatedly tests whether flammable conditions exist.

Third, the flammability of low-flammability fuel tanks is typically dependent on weather, and a low-flammability fuel tank may operate for months without ever becoming flammable. This is not true of most high-flammability fuel tanks, which typically have significant on-airplane heat sources driving their temperature. This factor can mean that, on some airplanes, an in-tank latent failure can occur and, after some period of time, be detected and corrected without the low-flammability tank ever having flammable conditions. The numerical analysis provided by the commenters does not account for these significant factors. The difference in likelihood of a failure that results in repeated ignition source events causing a tank explosion is not simply proportional to difference in the fleet average flammability of the tank for the reasons stated above. The FAA has not changed this AD regarding this issue.

Boeing requested that the FAA withdraw the NPRM. Boeing stated that the fleet exposure for the affected fleet continues to decrease due to aging airplanes and production stopping on Model 747-400 airplanes. Boeing added that the estimated costs in the NPRM do not take into account the costs of compliance for passenger airplanes without FRM installed.

The FAA disagrees with the commenter's request. The FAA did not base its unsafe condition determination on fleet risk but instead on individual risk. This is discussed in detail in the response to comments in the SNPRM for Docket No. FAA-2012-0187, under the heading “Request To Withdraw NPRM (77 FR 12506, March 1, 2012): Unjustified by Risk.” Therefore, the age of the airplane and its current production stoppage do not affect the determination that an unsafe condition still exists on an individual airplane.

The NPRM for this proposed rule did contain a cost estimate for passenger airplanes that was based on the estimate provided by Boeing for the Model 757 and Model 767 airplanes, which have an FQIS of similar design. The FAA notes that Boeing asserted that the cost to operators of modifying an airplane's FQIS to be fully compliant with the airworthiness standards would be similar to the cost of installing Boeing's NGS flammability reduction system. Based on that, Boeing requested that the FAA agree to not require Boeing to develop service information for a fully compliant FQIS modification. However, the FAA used Boeing's estimate of the cost to modify the Model 757 and Model 767 FQIS to a fully part-25-compliant configuration to provide the estimated costs in the NPRM, based on an assumption that the cost for Model 747 airplanes would be similar. At the time, Boeing concurred with this estimate. This is discussed in detail in the response to comments in the SNPRM for Docket No. FAA-2012-0187. Therefore, the FAA has not changed this AD regarding this issue.

Based on an assertion that the FAA did not sufficiently explain how the unsafe condition justifies AD rulemaking, UPS requested that the FAA withdraw the NPRM. UPS stated that the FTFR rule did not suggest that any future modifications of FQIS systems had been considered. UPS contended that all-cargo operators were surprised and prejudiced by costly proposed FQIS modifications that are unsupported by both an updated risk assessment and full cost/benefit analysis that consider the pertinent facts. UPS alleged that the FAA did not fully explain or justify its decision making for the NPRM, and concluded that the NPRM is arbitrary and does not reflect properly reasoned agency action.

The FAA disagrees with the commenter's request. A review of the rulemaking record shows that the commenter's first assertion is not correct. The FAA notes that Section III.K.5. of the preamble of the FTFR rule states that “the findings from the analysis required by SFAR 88 showed that most transport category airplanes with high-flammability fuel tanks needed transient suppression units (TSUs) to prevent electrical energy from airplane wiring from entering the fuel tanks in the event of a latent failure in combination with a single failure.” In addition, the NPRM for the FTFR rule (70 FR 70922, November 23, 2005) states: “As part of the safety reviews of SFAR 88, we have identified other models that likewise would need a transient suppression device.” These statements indicate that the FAA expects to take AD action on multiple airplane models to address FQIS issues identified through the SFAR 88 analyses. The preamble of the FTFR rule also states that the proposed FRM has the potential to reduce the industry cost associated with those expected ADs because the installation of an FRM likely would eliminate the need to further address the FQIS issue through AD actions.

The purpose of those statements was to note that there would be some cost savings to industry resulting from the elimination of other actions required to address an unsafe condition for the airplanes affected by the proposed rules, and to point out that the FAA did not take credit for those potential cost reductions in assessing the cost of the FTFR rule because the costs were not well understood at the time. That statement was not a commitment by the FAA to forego issuing ADs if necessary to address an identified unsafe condition on the airplanes but rather to not require the affected airplanes to incorporate FRM. As noted previously, the NPRM for the FTFR rule and the FTFR rule both made statements indicating that the FAA expects to issue AD actions on multiple airplane models to address FQIS issues identified through the SFAR 88 analyses. The FAA explained the unsafe condition and the risk on anticipated flights with a pre-existing latent failure condition in the NPRM to this final rule. The FAA also provided an estimate of the costs associated with the proposed AD in accordance with FAA rulemaking policy and the Administrative Procedures Act. The FAA has not changed this AD regarding this issue.

Boeing requested that the NPRM be revised to make the alternative actions for cargo airplanes specified in paragraph (h) of the proposed AD applicable to all airplanes, including passenger airplanes with FRM not installed due to differences in foreign regulations. In addition, Boeing requested that the actions specified in paragraph (h) of the proposed AD become the primary means of compliance for all airplanes, not an alternative method of compliance for some airplanes. In addition, KLM proposed that the FAA review if the “Alternative Actions for Cargo Airplanes” as described in paragraph (h) of the proposed AD is a possible acceptable means of compliance for passenger airplanes.

The FAA disagrees with the commenters' requests. As discussed in the comment response in the SNPRM for Docket No. FAA-2012-0187, under the heading “Requests To Withdraw NPRM (77 FR 12506, March 1, 2012) Based on Applicability” the FAA does not consider the alternative action for cargo airplanes allowed by this AD to provide an adequate level of safety for passenger airplanes. The FAA is willing to accept a higher level of individual flight risk exposure for cargo flights that are not fail-safe due to the absence of passengers and the resulting significant reduction in occupant exposure on a cargo airplane versus a passenger airplane, and due to relatively low estimated individual flight risk that would exist on a cargo airplane after the corrective actions are taken. The FAA has not changed this AD regarding this issue.

Boeing requested that paragraph (h)(1) of the proposed AD be revised to only require corrective actions if a nondispatchable fault code pertaining to the center wing tank is recorded (as opposed to any nondispatchable fault code being recorded). Boeing stated that all FQIS wire separation changes in the proposed AD are limited to the center wing tank, therefore only built-in test equipment (BITE) check messages pertaining to the center wing tank are applicable to the proposed AD.

The FAA agrees that the unsafe condition addressed by this AD is limited to the center wing tank. However, the FAA does not agree that the AD should be changed as proposed by Boeing. It is not clear to the FAA whether there may be FQIS BITE fault codes that are not clearly identified as related to the center wing tank but that may impact center tank circuits. Therefore, the FAA has determined that all nondispatchable fault codes recorded prior to the BITE check or as a result of the BITE check required by paragraph (h)(1) of this AD must be addressed. Operators or Boeing may request an alternative method of compliance (AMOC) under the provisions of paragraph (i) of this AD if they can provide sufficient data that a particular fault code does not pertain to the unsafe condition addressed by this AD.

Regarding the requirement to record and address fault codes read immediately prior to running the BITE check procedure, the FAA notes that the normal Boeing procedure for performing an FQIS BITE check is to first erase all of the existing fault codes, then perform the BITE check and troubleshoot any resulting new fault codes. For this AD, the FAA did not want any already stored fault codes to be potentially ignored due to erasure at the first step because some of the failures of concern can be intermittent. This AD therefore requires operators to record the existing codes before doing the BITE check, then do the BITE check and record the new codes that result from that BITE check, and then do the appropriate troubleshooting and corrective action for both sets of codes per the manufacturer's guidance. The FAA has not changed this AD regarding this issue.

Delta Airlines (DAL) requested that the FAA revise the proposed AD to exclude airplanes that are affected by 14 CFR 121.1117. DAL and United Airlines (UAL) noted that the FRM required by 14 CFR 121.1117 will have been installed on all affected airplanes in passenger configuration by December 26, 2018. DAL suggested modifying paragraph (c) of the proposed AD to clarify that the proposed AD is only applicable to aircraft that are not affected by 14 CFR 121.1117. UAL also suggested that the FAA either delete paragraph (g) of the proposed AD or make paragraph (g) of the proposed AD applicable only to airplanes in a cargo configuration that do not have an FRM installed and non-U.S.-registered airplanes that do not have to comply with FRM requirements.

The FAA disagrees with the commenters' requests. There are other passenger-carrying airplanes operated under 14 CFR part 91 that are not required to install FRM. (The requirement to install FRM on all passenger-carrying airplanes operated by air carriers is in 14 CFR 121.1117.) The FAA notes that foreign air carriers may not have to comply with that requirement or similar requirements of their own civil aviation authority. EASA, for example, has chosen not to require FRM to be retrofitted to in-service airplanes. This AD is intended to require any Model 747-400 series passenger airplane that does not have FRM, regardless of the rules under which it is operated, to address the FQIS latent-plus-one unsafe condition with a corrective action that fully complies with the FAA airworthiness standards. This requirement fulfills the FAA's International Civil Aviation Organization (ICAO) obligation to address unsafe conditions on all of the aircraft manufactured by the state of design, not just those aircraft whose operation is under the jurisdiction of the state of design. The FAA has not changed this AD regarding this issue.

A4A/CAA requested that the FAA extend the compliance time for the modifications specified in paragraphs (g) and (h)(2) of the proposed AD to 72 months. The commenter stated that the compliance time should match that of AD 2016-07-07 because the unsafe condition and corrective actions are similar. A4A/CAA stated that although service information was not yet available, the compliance time should align with major maintenance schedules, but should be not less than 72 months after service information is available.

Conversely, NATCA recommended that the FAA reject requests for a compliance time longer than 5 years as proposed in the NPRM. Assuming final rule issuance in 2016, NATCA estimated that a 5-year compliance time would result in required compliance by 2021—25 years after the TWA Flight 800 fuel tank explosion that led to the requirements in SFAR 88, and 20 years after issuance of SFAR 88.

The FAA agrees with A4A/CAA's requests to extend the compliance time, and disagrees with NATCA's request. The FAA received similar requests to extend the compliance time from several commenters regarding the NPRMs for the FQIS modification on other airplanes. The FAA disagrees with establishing a compliance time based on issuance of the service information that is not yet approved or available. The FAA has determined that a 72-month compliance time is appropriate and will provide operators adequate time to prepare for and perform the required modifications without excessive disruption of operations. The FAA has determined that the requested moderate increase in compliance time will continue to provide an acceptable level of safety. The FAA has changed paragraphs (g) and (h)(2) of this AD accordingly.

Virgin Atlantic Airways (VAA) and British Airways (BA) requested that the proposed AD be revised to provide dispensation for aircraft to be retired. VAA specifically asked for dispensation for aircraft to be retired before 2022, noting that a costly retrofit is a real concern and a penalty to continued operation of aircraft that are scheduled for retirement in the coming years.

The FAA disagrees with the commenters' request. As previously mentioned, the FAA has revised this AD to provide 72 months from the effective date of this AD for incorporation of the required modification. This compliance time extends several years beyond the 2022 date requested by VAA, and appears to be beyond the 747-400 fleet retirement time planned by BA based on media reports. Therefore, the FAA has determined that special dispensation for aircraft to be retired is not needed. The FAA has not changed this AD regarding this issue.

Boeing, KLM, and Martinair requested that paragraph (h)(1) of the proposed AD be revised to extend the repetitive check interval for the BITE checks. Boeing requested that the repetitive interval be extended to 750 flight hours to match the repetitive intervals specified in Boeing Service Bulletin 747-28-2340, dated June 6, 2014. KLM and Martinair requested that the repetitive check interval be extended to 1,000 flight hours to match A-check intervals.

The FAA agrees to extend the repetitive check interval to 750 flight hours to match the repetitive intervals specified in Boeing Service Bulletin 747-28-2340, dated June 6, 2014. The FAA intended to propose a 750 flight hour interval, but inadvertently specified 650 flight hour intervals in the proposed AD. The FAA disagrees with extending the repetitive check interval to 1,000 flight hours because the 750 flight hours was agreed to during discussion of the risk assessment and service information for the cargo airplane option with Boeing. The FAA has revised paragraph (h)(1) of this AD to specify repetitive intervals of 750 flight hours.

Boeing requested that paragraph (h) or (i) of the proposed AD be revised to add Boeing Service Bulletin 747-28-2344, dated October 12, 2018, as an optional method of compliance. Boeing noted that the proposed AD does not specify any authority for how to perform the required modification. Boeing noted that Boeing Service Bulletin 747-28-2344, dated October 12, 2018, provides a certified design and procedure for accomplishing the wire separation modification and will ensure the modification is performed to specified requirements.

The FAA agrees with the commenter's request. The FAA has revised paragraph (h)(2) of this AD to specify that Boeing Service Bulletin 747-28-2344, dated October 12, 2018, is an acceptable method of compliance. This revision includes adding paragraphs (h)(2)(i) and (ii) of this AD. The FAA has also revised the Estimated Costs for Alternative Actions table in this final rule to include the estimated costs for the inspections and wire separation modification specified in Boeing Service Bulletin 747-28-2344, dated October 12, 2018, if operators choose to comply using that method.

The FAA notes that this cost estimate is based on data provided in Boeing Service Bulletin 747-28-2344, dated October 12, 2018, while the cost estimate provided for a modification using methods approved in accordance with the procedures specified in paragraph (h)(2)(i) of this AD (paragraph (h)(2) of the proposed AD) is based on data provided by the manufacturer for Model 757 and 767 airplanes. The FAA had previously determined, as specified in the NPRM, that the work involved for the cargo airplane wire separation modification would take 230 work-hours. Boeing has since provided an updated estimate of 74 work-hours for the alternative modification for cargo airplanes. The FAA has revised the cost estimate for the modification accordingly in this final rule.

NATCA recommended that the FAA require design changes that eliminate unsafe FQIS failure conditions on all fuel tanks on the affected models, regardless of fuel tank location or the percentage of time the fuel tank is flammable. NATCA referred to four fuel tank explosions in low-flammability exposure time fuel tanks identified by the FAA during FTFR rulemaking. NATCA stated that neither FRM nor alternative actions for cargo airplanes ( e.g., BITE checks (checks of built-in test equipment) followed by applicable repairs before further flight and modification of the center fuel tank FQIS wiring within 60 months) would bring the airplane into full regulatory compliance. NATCA added that the combination of failures described in the NPRM meets the criteria for “known combinations” of failures that require corrective action in FAA Policy Memorandum ANM100-2003-112-15.

The FAA disagrees with the commenter's request. The FAA has determined that according to Policy Memorandum ANM100-2003-112-15, the failure condition for the airplanes affected by this AD should not be classified as a “known combination.” While the FQIS design architecture is similar to that of the early Boeing Model 747 configuration that is suspected of contributing to the TWA Flight 800 fuel tank explosion, significant differences exist in the design of FQIS components and wire installations between the affected The Boeing Company models and the early Model 747 airplanes such that the intent of the “known combinations” provision for low-flammability fuel tanks in the policy memorandum is not applicable. Therefore, this AD affects only the identified Boeing airplanes with high-flammability exposure time fuel tanks, as specified in paragraph (c) of this AD. The FAA provided a detailed response to similar comments in the preamble of the final rule for AD 2016-07-07. The FAA has not changed this final rule regarding this issue.

NATCA recommended that the FAA revise paragraph (g) of the proposed AD to clearly state that the required FQIS design changes must comply with the fail-safe requirements of 14 CFR 25.901(c), as amended by amendment 25-46 (43 FR 50597, October 30, 1978); and 14 CFR 25.981(a) and (b), as amended by amendment 25-102; NATCA added that these provisions are required by SFAR 88.

The FAA does not agree to change paragraph (g) of this AD. While the FAA agrees that modifications to comply with paragraph (g) of this AD should be required to comply with the referenced regulations, that requirement already exists in 14 CFR part 21. No change to this AD is necessary.

NATCA recommended that the FAA require designs that comply with 14 CFR 25.901(c) and 25.981(a)(3) on all newly produced transport airplanes. NATCA stated that continuing to grant exemptions to 14 CFR 25.901(c), as amended by amendment 25-40 (42 FR 15042, March 17, 1977); and 14 CFR 25.981(a)(3), as amended by amendment 25-102; has allowed continued production of thousands of airplanes with this known unsafe condition.

The FAA disagrees with the commenter's request. The recommendation to require production airplanes to fully comply with 14 CFR 25.901(c) and 14 CFR 25.981(a)(3) is outside the scope of this rulemaking. This AD applies only to Model 747-400, 747-400D, and 747-400F series airplanes, which are no longer in production. In addition, the FAA has implemented requirements for all large transport airplanes produced after September 2010 to include flammability reduction methods for tanks that would otherwise be high-flammability fuel tanks. Boeing incorporated this change into the Model 747 series airplanes that are still in production and the FAA has excluded those models from the applicability of this AD. The FAA has not changed this final rule regarding this issue.

Boeing requested that paragraph (h) of the proposed AD be revised to state that an exemption is required to accomplish the specified actions. Boeing stated that the FAA has identified that the BITE procedure and wire separation design changes specified in the proposed AD are not sufficient for compliance to 14 CFR 25.981(a) at the FQIS level. Boeing stated that an exemption is therefore needed prior to approval of the related design change.

The FAA agrees to clarify. The BITE check is not a type design change or alteration, so no exemption from the airworthiness standards is required for that action. The design data approval of any partial wire separation modification would require an exemption. That exemption would be obtained by the party seeking approval of the alteration data, and no further exemption would be required for the party using that data to alter an aircraft. Obtaining such an exemption would be part of the certification process for such a change, so the FAA does not find it necessary to include such information in paragraph (h) of this AD. In addition, some parties may choose to comply with the AD using a design change that fully complies with the airworthiness standards. The FAA also notes that the commenter appears to misunderstand why an exemption is needed for the required modification. The exemption is needed because, even with the modification, the FQIS does not comply with 14 CFR 25.901(c) and 14 CFR 25.981(a). The exemption does not authorize evaluation of a partial system for compliance with the system level requirement. The FAA has not changed this AD regarding this issue.

Korean Air Lines (KAL), VAA, KLM, and BA requested that the FAA encourage Boeing to provide a cost-effective method of compliance for passenger airplanes. KAL noted that the proposed AD does not provide a clear means of compliance for the modification, such as a Boeing service bulletin. KAL and VAA noted that the majority of non-FAA operators are not required to retrofit the NGS system. The commenters requested that the FAA encourage Boeing to develop an acceptable cost-effective method of compliance that does not require installation of an NGS. KLM and Martinair also noted that EASA only adopted the FAA operational requirement to equip an FRM on newly delivered airplanes.

The FAA agrees that the lack of service information for FQIS modifications makes it difficult to assess the required work to modify the FQIS, and acknowledges the high cost of NGS. However, the FAA disagrees with the commenters' request. For passenger-carrying airplanes, the cost per airplane of providing a modification of the FQIS that fully complies with the airworthiness standards was estimated by Boeing and their FQIS vendor (Goodrich) prior to the issuance of the NPRM to be comparable to the cost of installing NGS. Based on that cost estimate, Boeing proposed that they not be required to develop a fully compliant FQIS modification for passenger airplanes because it would not provide significant savings to operators and NGS would provide a greater safety benefit. The FAA agreed.

The FAA's understanding is that Boeing's current position is the same, and that they do not plan to develop a fully compliant FQIS modification for passenger airplanes to address paragraph (g) of this AD. However, if service information is developed, approved, and available in the future, operators may request approval under the provisions of paragraph (i) of this AD to use approved service instructions as an AMOC for the requirements of this AD, or the FAA may approve the service information as a global AMOC for this AD. In addition, as noted previously, Boeing has issued Service Bulletin 747-28-2344, dated October 12, 2018, for all-cargo airplanes, and the FAA has revised paragraph (h)(2)(ii) of this AD to specify that Boeing Service Bulletin 747-28-2344, dated October 12, 2018, is an acceptable method of compliance.

NATCA recommended that the FAA follow the agency's compliance and enforcement policy to require manufacturers to develop the necessary design changes soon enough to support operators' ability to comply with the proposed requirements. NATCA noted that SFAR 88 required manufacturers to develop all design changes for unsafe conditions identified by their SFAR 88 design reviews by December 2002, or within an additional 18 months if the FAA granted an extension.

The FAA acknowledges the commenter's concerns. However, any enforcement action is outside the scope of this rulemaking. The FAA has not changed this final rule regarding this issue.

The FAA has revised paragraph (h)(1) of this AD to clarify the compliance time for the BITE check relative to the requirement to record the fault codes. The FAA recognized that operators might interpret the proposed requirements for alternative actions for cargo airplanes as allowing additional flights prior to performing the BITE check after first recording the fault codes. The FAA intended for operators to perform the BITE check immediately after recording the fault codes to address both the fault codes that exist prior to performing the BITE check and any new codes that are identified during the BITE check.

The FAA has revised paragraph (c) of this AD to clarify that airplanes equipped with an ignition mitigation means (IMM) approved by the FAA as compliant with certain regulations are excluded from this AD. This revision includes adding paragraphs (c)(1) and (2) of this AD. The FAA intended for airplanes with compliant IMM to be excluded from the actions required by this AD. The FAA has determined that the installation of an approved IMM provides a level of risk reduction at least as great as that provided by FRM and adequately addresses the unsafe condition.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule 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 final rule.

The FAA reviewed Boeing Service Bulletin 747-28-2340, dated June 6, 2014. This service information describes procedures for a BITE check (check of built-in test equipment) of the FQIS.

The FAA also reviewed Boeing Service Bulletin 747-28-2344, dated October 12, 2018. This service information describes procedures for a general visual inspection for any damage to the FQIS wire bundle, repair of damaged FQIS wire bundles, and modification of the airplane by separating FQIS wiring that runs between the FQIS processor and the center tank wing spar penetrations from other airplane wiring.

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 71 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 2020-0181, dated August 13, 2020 (“EASA AD 2020-0181”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Dassault Aviation Model FALCON 7X, FALCON 900EX, and FALCON 2000EX airplanes. This AD was prompted by reports of PDU data flickering on airplanes equipped with EASy software and the possibility of losing information on all flightdeck PDUs. Data flickering or loss of all flightdeck PDUs could lead to total loss of control of the airplane due to erroneous information or lack of information presented to the pilot. The FAA is issuing this AD to address PDU data flickering and the possibility of total loss of information on all flightdeck PDUs, which could result in excessive workload for pilots and the inability of the pilot to perform communications and navigation of the airplane, leading to loss of control of the airplane. See the MCAI for additional background information.

EASA AD 2020-0181 describes procedures for amending the AFM with the applicable CP emergency and abnormal procedures to address PDU failure and flickering.

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 the service information 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 2020-0181 is incorporated by reference in this final rule. This AD, therefore, requires compliance with EASA AD 2020-0181 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 AD 2020-0181 that is required for compliance with EASA AD 2020-0181 is available on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-0852.

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 PDU primary flight data flickering may lead to erroneous information on other PDUs with the possibility of total loss of information on all flightdeck PDUs, which could result in pilot's excessive workload and the inability of the pilot to perform communications and navigation of the airplane, leading to loss of control of the airplane. 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 final rule. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2020-0852; and Project Identifier MCAI-2020-01179-T” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, 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 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 the FAA received, without change, to https://www.regulations.gov, including any personal information you provide. The agency 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 Tom Rodriguez, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206 231 3226; email tom.rodriguez@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 409 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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 FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 767-200, -300, -300F, and -400ER series airplanes. The NPRM published in the Federal Register on May 4, 2016 (81 FR 26747). The NPRM was prompted by the FAA's analysis of the Model 767 fuel system reviews conducted by the manufacturer. The NPRM proposed to require modifying the FQIS to prevent development of an ignition source inside the center fuel tank due to electrical fault conditions. The NPRM also proposed to provide optional actions for cargo airplanes. The FAA is issuing this AD to address ignition sources inside the center fuel tank, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane.

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

The Air Line Pilots Association, International (ALPA) and National Air Traffic Controllers Association (NATCA) supported the intent of the NPRM. Additional comments from NATCA are addressed below.

Boeing requested that the FAA withdraw the NPRM. Boeing suggested that, by requiring center fuel tank FQIS wire separation for passenger airplanes that have not incorporated a nitrogen generating system (NGS), the NPRM specifically addresses airplanes regulated by the European Union Aviation Safety Agency (EASA) and other civil aviation authorities and the lack of a flammability reduction means (FRM) rule. Boeing stated that because it considered the use of FRM (NGS) to address unknown ignition sources as the final corrective action, Boeing has not developed center tank FQIS wire separation service instructions for passenger aircraft. Boeing stated that it believes no unsafe condition exists and does not feel that the lack of FRM rule harmonization should cause additional work and expense for airlines.

The FAA disagrees with the commenter's request. The FAA determined that an unsafe condition exists using the criteria in FAA Policy Memorandum ANM100-2003-112-15, “SFAR 88—Mandatory Action Decision Criteria,” dated February 25, 2003. 1 That policy was used to evaluate the noncompliant design areas identified in the manufacturer's fuel system reviews and to determine which noncompliance issues were unsafe conditions that required corrective action under 14 CFR part 39. The FAA's unsafe condition determination was not based on an assessment of average risk or total fleet risk, but rather was driven by the qualitative identification of an unacceptable level of individual risk that exists on flights that are anticipated to occur with a preexisting latent in-tank failure condition and with a flammable center fuel tank. For these reasons, and based on further detailed responses to similar comments in the supplemental NPRM (SNPRM) for Docket No. FAA-2012-0187 (80 FR 9400, February 23, 2015), and in the subsequently issued final rule, AD 2016-07-07, Amendment 39-18452 (81 FR 19472, April 5, 2016) (“AD 2016-07-07”), which addressed the same unsafe condition for Boeing Model 757 airplanes, the FAA has determined that it is necessary to issue this final rule.

Airlines for America and the Cargo Airline Association, in consolidated comments (A4A/CAA), United Parcel Service (UPS) and FedEx requested that the FAA withdraw the NPRM. A4A/CAA and UPS cited comments submitted by Boeing to Docket No. FAA-2012-0187 in which Boeing stated that the risk is “less than extremely improbable.” A4A/CAA added that Boeing does not believe that an unsafe condition exists. UPS stated that Boeing's comments demonstrate an unsafe condition does not exist. A4A/CAA and UPS noted that they consider the Boeing comments to be applicable to the airplane models in the NPRM. FedEx stated that the proposed rule is not supported with a safety risk assessment and it is therefore difficult to understand the validity and justification of the proposed rule.

UPS stated that an agency is required to consider all relevant factors and articulate a satisfactory explanation for its action. UPS noted that the FAA is apparently basing its decision to issue the AD on historical Special Federal Aviation Regulation (SFAR) No. 88 design reviews that have been superseded by the more recent Boeing analysis and favorable operational experience in the years since the SFAR 88 reviews were completed.

The FAA disagrees with the commenters' requests. The FAA notes that Boeing's comments were addressed in the SNPRM for Docket No. FAA-2012-0187 in the comment response for “Request To Withdraw NPRM (77 FR 12506, March 1, 2012): Unjustified by Risk.” As explained in that comment response, in addition to examining average risk and total fleet risk, the FAA examines the individual flight risk on the worst reasonably anticipated flights. In general, the FAA issues ADs in cases where reasonably anticipated flights with preexisting failures (either due to latent failure conditions or allowable dispatch configurations) are vulnerable to a catastrophic event due to an additional foreseeable single failure condition. This is because the FAA considers operation of flights vulnerable to a potentially catastrophic single failure condition to be an excessive safety risk to the passengers on those flights. The FAA has determined that the currently mandated SFAR 88 service bulletins, airworthiness limitations, and critical design configuration control limitations do not adequately address the unsafe condition identified in this AD and therefore it is necessary to issue this final rule. The FAA has not changed this AD regarding this issue.

FedEx requested that the FAA withdraw the NPRM, stating that a safety risk assessment was not included with the proposed rule. FedEx quoted the NPRM to the fuel tank flammability reduction (FTFR) rule (70 FR 70922, November 23, 2005), which noted that the FAA had not evaluated the risk to all-cargo airplanes because they are derivatives of passenger airplanes. FedEx noted that the NPRM to the FTFR rule also stated that the risk may be lower for all-cargo operations due to fewer miles flown and more nighttime operations when temperatures are lower. FedEx stated that its fleet utilization is only about 5 flight hours per day, which would further lower the risk of accidents. FedEx requested that the FAA provide a safety risk assessment for the Model 767 FQIS that justifies the proposed rule.

The FAA does not agree to withdraw the NPRM. The FAA's determination that an unsafe condition exists was not based on a calculation of the total risk of an accident occurring in the life of the fleet. Instead, the FAA's determination was based on an analysis showing that numerous Model 767 all-cargo airplane flights will occur with a latent FQIS in-tank failure, and that such flights will not provide the minimum acceptable level of safety for transport airplanes defined in FAA regulations and policy because they will not be fail-safe for one additional electrical wiring fault. This was discussed in detail in the SNPRM for Docket No. FAA-2012-0187, which addresses the same issue for Model 757 airplanes, in the comment response for “Request To Withdraw NPRM (77 FR 12506, March 1, 2012): Unjustified by Risk.” That comment response is applicable to this AD. The FAA has not changed this AD regarding this issue.

A4A/CAA and UPS requested that the FAA withdraw the NPRM. The commenters stated that the assumption of a single failure regardless of probability is inconsistent with 14 CFR part 25 regulatory requirements. The commenters referred to the phrase “regardless of probability” associated with single failures. A4A/CAA and UPS acknowledged that the term is used with single failures in FAA Advisory Circular (AC) 25.981-1C, 2 “Fuel Tank Ignition Source Prevention Guidelines,” but since that term does not appear in 14 CFR 25.981(a)(3), the commenters considered its use arbitrary, possibly introducing additional requirements not included in that section. A4A/CAA and UPS stated that the “worst reasonably anticipated flight” is a flight with a latent FQIS failure and a high-flammability tank, and this “latent plus one” failure—regardless of probability of a single failure—is not consistent with 14 CFR 25.981(a)(3).

The FAA disagrees with the commenters' request. The FAA notes that the commenters' assertion about the intent of 14 CFR 25.981(a)(3) is incorrect based on both the language of the rule and on the published rulemaking documents. The absence of a probabilistic qualifier in both the “from each single failure” clause and in the “from each single failure in combination with each latent failure not shown to be extremely remote” clause in 14 CFR 25.981(a)(3) in fact means just that—there is no probabilistic qualifier intended by the regulation. The intent for single failures in these two scenarios to be considered regardless of probability of the single failure was explicitly stated in the NPRM for 14 CFR 25.981, as amended by amendment 25-102 (66 FR 23085, May 7, 2001). That NPRM stated, in pertinent part, that it would also add a new paragraph (a)(3) to require that a safety analysis be performed to demonstrate that the presence of an ignition source in the fuel tank system could not result from “any single failure, from any single failure in combination with any latent failure condition not shown to be extremely remote, or from any combination of failures not shown to be extremely improbable.” These new requirements would define three scenarios that must be addressed in order to show compliance with the proposed paragraph (a)(3). “The first scenario is that any single failure, regardless of the probability of occurrence of the failure, must not cause an ignition source. The second scenario is that any single failure, regardless of the probability occurrence, in combination with any latent failure condition not shown to be at least extremely remote ( i.e., not shown to be extremely remote or extremely improbable), must not cause an ignition source. The third scenario is that any combination of failures not shown to be extremely improbable must not cause an ignition source.”

The preamble to the final rule for amendment 25-102 made a nearly identical statement, including the same uses of the phrase “regardless of probability.” The FAA has determined that it is necessary to proceed with issuance of this final rule as proposed. Further details and a description of the FAA's risk assessment can be found in responses to similar comments in a related SNPRM that addressed the same unsafe condition for Model 757 airplanes, in Docket No. FAA-2012-0187, and in the subsequently issued final rule, AD 2016-07-07, amendment 39-18452 (81 FR 19472, April 5, 2016) (“AD 2016-07-07”). No change to this AD was made in response to these comments.

FedEx requested that the FAA withdraw the NPRM, stating that the proposed requirement has not been technically justified. FedEx stated that 14 CFR 25.981, as amended by amendment 25-102; and SFAR 88 (in 14 CFR part 21); required the aircraft original equipment manufacturer (OEM) to evaluate the Model 767 fuel system and components for compliance with the new requirements. FedEx added that it understands that Boeing and Goodrich Aerospace determined that the only FQIS component that did not meet those requirements was the center tank's densitometer. FedEx noted that AD 2010-06-10, Amendment 39-16234 (75 FR 15322, March 29, 2010) (“AD 2010-06-10”), was issued to install support hardware, modify the wiring of the center wing tank FQIS densitometer, and replace the hot short protector for the center tank. FedEx added that Boeing and Goodrich did not determine a need for additional barrier devices on the Model 767 FQIS.

The FAA does not agree to withdraw the rule. The FAA notes that FedEx's understanding of the results of Boeing's Model 767 FQIS SFAR 88 analysis is not correct. Boeing's analysis also identified the FQIS latent-plus-one condition as non-compliant with 14 CFR 25.981(a)(3). Consequently, the FAA has determined modifying the FQIS is necessary to prevent development of an ignition source inside the center fuel tank due to electrical fault conditions. The FAA has not changed this AD regarding this issue.

A4A/CAA and UPS requested that the FAA withdraw the NPRM based on a lack of new data since the issuance of the FTFR rule (73 FR 42444, July 21, 2008). The commenters referred to the FTFR rule and decision to not require FRM for all-cargo airplanes, and the FAA's intent to gather additional data and consideration of further rulemaking if flammability of these airplanes is excessive. UPS stated that since the FTFR rule, no additional data has been publicly introduced that would support or justify the applicability of this rulemaking to all-cargo aircraft. The commenters also referred to the FAA's response to comments in the preamble to the SNPRM for Docket No. FAA-2012 0187, which documented the FAA's decision on applicability of FRM and cost estimates. The commenters stated that the FAA response was misleading and not factual since manufacturers did not begin detailed designs to address the proposed unsafe condition until after the FTFR rule was published. The commenters added that the FAA did not discuss other changes to the FQIS system in the FTFR rule.

The FAA disagrees with the commenters' request. The FAA notes that the FTFR rule and FQIS ADs are two different issues with separate FAA actions. The intent of the FTFR rule was to provide an order of magnitude reduction in the rate of fuel tank explosions for the airplanes affected by that rule through adding a new airworthiness standard for the flammability of fuel tanks. The FAA notes that the FTFR rule was never intended to be a replacement for the issuance of ADs to address identified unsafe conditions. An unsafe condition due to the identified FQIS latent-plus-single failure issue in high-flammability fuel tanks was determined to exist during the SFAR 88 AD Board held by the FAA in 2003 using the guidance in FAA Policy Memorandum ANM100-2003-112-15 for high-flammability fuel tanks, including the center fuel tank on Model 767-200, -300, -300F, and -400ER series airplanes. That same issue was not considered to be an unsafe condition in low-flammability wing fuel tanks based on that same policy memorandum. The FAA has not changed this AD regarding this issue.

Based on an assertion that the FAA did not sufficiently explain how the unsafe condition justifies AD rulemaking, UPS requested that the FAA withdraw the NPRM. UPS stated that the FTFR rule did not suggest that any future modifications of FQIS systems had been considered. UPS contended that all-cargo operators were surprised and prejudiced by costly proposed FQIS modifications that are unsupported by both an updated risk assessment and full cost/benefit analysis that consider the pertinent facts. UPS alleged that the FAA did not fully explain or justify its decision making for the NPRM, and concluded that the NPRM is arbitrary and does not reflect properly reasoned agency action.

The FAA disagrees with the commenter's request. A review of the rulemaking record shows that the commenter's first assertion is not correct. The FAA notes that Section III.K.5. of the preamble of the FTFR rule states that “the findings from the analysis required by SFAR 88 showed that most transport category airplanes with high-flammability fuel tanks needed transient suppression units (TSUs) to prevent electrical energy from airplane wiring from entering the fuel tanks in the event of a latent failure in combination with a single failure.” In addition, the NPRM for the FTFR rule states: “As part of the safety reviews of SFAR 88, we have identified other models that likewise would need a transient suppression device.” These statements indicate that the FAA expects to take AD action on multiple airplane models to address FQIS issues identified through the SFAR 88 analyses. The preamble of the FTFR rule also states that the proposed FRM has the potential to reduce the industry cost associated with those expected ADs because the installation of an FRM likely would eliminate the need to further address the FQIS issue through AD actions.

The purpose of those statements was to note that there would be some cost savings to industry resulting from the elimination of other actions required to address an unsafe condition for the airplanes affected by the proposed rules, and to point out that the FAA did not take credit for those potential cost reductions in assessing the cost of the FTFR rule because the costs were not well understood at the time. That statement was not a commitment by the FAA to forego issuing ADs if necessary to address an identified unsafe condition on the airplanes but rather to not require the affected airplanes to incorporate FRM. As noted previously, the NPRM for the FTFR rule and the FTFR rule both made statements indicating that the FAA expects to issue AD actions on multiple airplane models to address FQIS issues identified through the SFAR 88 analyses. The FAA explained the unsafe condition and the risk on anticipated flights with a pre-existing latent failure condition in the NPRM to this final rule. The FAA also provided an estimate of the costs associated with the proposed AD in accordance with FAA rulemaking policy and the Administrative Procedures Act. The FAA has not changed this AD regarding this issue.

A4A/CAA and UPS requested that the FAA withdraw the NPRM. The commenters noted that airplanes with FRM are not included in the applicability, and the NPRM would therefore not fully address the unsafe condition. The commenters added that the distinction between high- and low-flammability exposure time fuel tanks as used in the NPRM is arbitrary. The commenters stated that an arbitrary differentiation of high- versus low-flammability as decisional criteria for the need for corrective action does not take into account the actual probability of the impact of the difference in flammability on the potential of catastrophic failure. The commenters also stated that allowing the proposed alternative actions for cargo airplanes does not fully address the unsafe condition in the NPRM. The commenters referenced the FAA's response to comments in AD 2016-07-07 regarding this issue. The commenters summarized numerical analysis showing no significant difference in risk between high- and low-flammability fuel tanks. The commenters concluded that the FAA's risk analysis is arbitrary and an unsafe condition does not exist.

The FAA disagrees with the assertion that the NPRM is arbitrary and inconsistent. The NPRM follows defined policy in FAA Policy Memorandum ANM100-2003-112-15, and consistently applies the policy to several airplane models with similar unsafe conditions, similar to AD 2016-07-07. The FAA defined the difference between low- and high-flammability exposure time fuel tanks based on recommendations from the Aviation Rulemaking Advisory Committee Fuel Tank Harmonization Working Group (FTHWG). The preamble to the final rule for amendment 25-102, which amended 14 CFR 25.981, defined this difference as based upon comparison of “the safety record of center wing fuel tanks that, in certain airplanes, are heated by equipment located under the tank, and unheated fuel tanks located in the wing.” The FTHWG concluded that the safety record of fuel tanks located in the wings was adequate and that if the same level could be achieved in center wing fuel tanks, the overall safety objective would be achieved.

In the response to comments in the preamble to the final rule for AD 2016-07-07 referenced by the commenters, the FAA described why FRM or alternative actions for cargo airplanes provide an acceptable level of safety, even if they do not completely eliminate the non-compliance with 14 CFR 25.981(a)(3).

The fuel tank explosion history for turbojet/turbofan powered transport airplanes fueled with kerosene type fuel, outside of maintenance activity, has consisted of explosions of tanks that (1) are not conventional aluminum wing tanks and (2) spend a considerable amount of their operating time empty. The service history of conventional aluminum wing tanks has been acceptable. The intent of the difference in decision criteria in FAA Policy Memorandum ANM100-2003-112-15 was intended to give credit for this satisfactory service experience, and to differentiate between tanks with a level of flammability similar to that of a conventional wing tank and those with a significantly higher level of flammability.

The numerical analysis provided by the commenters is inconsistent with the fuel tank explosion service history. There are at least three identifiable physics-based reasons for that inconsistency. First, low-flammability tanks on most types of airplanes are main tanks that are the last tanks used. During a large portion of their operating time, the systems and structural features that have the potential to be ignition sources in the event of a failure condition are covered with liquid fuel, and an ignition source, if it occurs, is likely to be submerged. When a potential ignition source in a main tank is uncovered, it is likely to be later in the flight when the tank is cool and no longer flammable. The commenters' analysis does not account for this significant effect. Second, the numerical analysis used by the commenters assumes that any given ignition source has a random occurrence in time at the estimated probability, and that, in order for an explosion to occur, that random occurrence of an ignition source needs to coincide with the tank being in a flammable state. In fact, many of the identified ignition threats do not simply occur briefly and then go away. Instead, a fault occurs that, until it is discovered and corrected, repeatedly creates an ignition source, and repeatedly tests whether flammable conditions exist.

Third, the flammability of low-flammability fuel tanks is typically dependent on weather, and a low-flammability fuel tank may operate for months without ever becoming flammable. This is not true of most high-flammability fuel tanks, which typically have significant on-airplane heat sources driving their temperature. This factor can mean that, on some airplanes, an in-tank latent failure can occur and, after some period of time, be detected and corrected without the low flammability tank ever having flammable conditions. The numerical analysis provided by the commenters does not account for these significant factors. The difference in likelihood of a failure that results in repeated ignition source events causing a tank explosion is not simply proportional to difference in the fleet average flammability of the tank for the reasons stated above. The FAA has not changed this AD regarding this issue.

A4A/CAA and UPS requested that the FAA withdraw the NPRM based on a lack of consistent design standards for FQIS wire separation. The commenters assumed that the approved standard for the retrofit is a 2-inch wire separation minimum, which the commenters considered arbitrary and inconsistently applied. The commenters reported that the amount of wiring capable of meeting that separation standard varies widely among airplane models. A4A/CAA and UPS also acknowledged that other separation methods were used in areas not meeting the 2-inch wire separation requirement.

The FAA does not agree with the commenters' request. The degree of physical isolation of FQIS wiring from other wiring, whether provided by physical distance or barrier methods, that is necessary to eliminate the potential for hot shorts due to wiring faults is dependent on the materials used, the wire securing methods, and the possible types of wiring faults. The FAA relied on the manufacturer to assess the details of the design and to propose the appropriate isolation measures. While 2 inches of physical separation may appear to be an arbitrary number, it was the distance proposed by the manufacturer as appropriate for their design based on analysis of the design details. The FAA has not changed this AD regarding this issue.

FedEx noted that the proposed AD does not include a cost-benefit analysis. FedEx added that in the NPRM for the FTFR rule, the FAA stated that proposal would not extend to airplanes used in all-cargo operations because the cost did not appear justified by the associated benefits. FedEx acknowledged that the FAA's statement was meant for the installation of the NGS. However, FedEx stated that it believes the current proposed rule would provide cost-benefit results that are less justifiable than the FTFR rule. FedEx stated that while the costs may be comparable, the benefits associated with the FQIS modification will be less. The FAA infers that FedEx is requesting that the proposed rule be withdrawn because it cannot be shown to be cost beneficial.

The FAA does not agree that the proposed AD should be withdrawn or that a full cost-benefit analysis is required to justify AD action to address the identified unsafe condition. In the NPRM to this AD, the FAA provided the cost analysis that is required by FAA policy and the Administrative Procedures Act. In the NPRM, the FAA described the basis for the unsafe condition determination, noting that a significant number of flights are anticipated to occur in a non-fail-safe condition. Such flights would not meet the minimum level of safety expectations for transport airplanes. The cost of the requirement in the airworthiness standards to provide fail-safe design was justified at the time of rulemaking for the associated regulatory standards. The fact that a design is later discovered not to have met the regulatory standard and is very expensive to correct should not and does not prevent the FAA from requiring appropriate corrective action to restore a design to the minimum acceptable level of safety defined in the airworthiness standards for that product. The FAA has not changed this AD regarding this issue.

Boeing requested that the FAA withdraw the NPRM. Boeing stated that the fleet exposure for the affected fleet continues to decrease due to aging airplanes and adequate wire separation design on Model 767 airplanes. Boeing added that the estimated costs in the NPRM do not take into account the costs of compliance for passenger airplanes without FRM installed.

The FAA disagrees with the commenter's request. The FAA did not base its unsafe condition determination on fleet risk but instead on individual risk. This is discussed in detail in the response to comments in the SNPRM for Docket No. FAA-2012-0187, under the heading “Request To Withdraw NPRM (77 FR 12506, March 1, 2012): Unjustified by Risk.” Therefore, the age of the airplane and its current production stoppage do not affect the determination that an unsafe condition still exists on an individual airplane.

The NPRM for this proposed rule did contain a cost estimate for passenger airplanes that was based on the estimate provided by Boeing for the Model 757 and Model 767 airplanes, which have an FQIS of similar design. The FAA notes that Boeing asserted that the cost to operators of modifying an airplane's FQIS to be fully compliant with the airworthiness standards would be similar to the cost of installing Boeing's NGS flammability reduction system. Based on that, Boeing requested that the FAA agree to not require Boeing to develop service information for a fully compliant FQIS modification. However, the FAA used Boeing's estimate of the cost to modify the Model 757 and Model 767 FQIS to a fully part-25-compliant configuration to provide the estimated costs in the NPRM, based on an assumption that the cost for Model 747 airplanes would be similar. At the time, Boeing concurred with this estimate. This is discussed in detail in the response to comments in the SNPRM for Docket No. FAA-2012-0187. The FAA has not changed this AD regarding this issue.

FedEx stated that the proposed rule underestimates costs for the required actions. Specifically, FedEx noted that Boeing estimates the part kit cost for installing NGS to be $440,000, not $200,000 as stated in the proposed AD. FedEx stated that the NGS is a very expensive system, which adds undue burden on operators. FedEx claimed that the proposed rule is therefore unjustified.

The FAA agrees to clarify. The FAA's cost estimate in the NPRM was not for installation of NGS, but rather was for an FQIS modification to bring the FQIS into compliance with the applicable regulations. The estimated parts cost and work hours used were those supplied by Boeing and Goodrich Aerospace for such a modification. However, if an operator chooses to install an NGS in lieu of accomplishing the modification, the FAA acknowledges the parts cost would likely be higher for that operator. The FAA has not changed this AD regarding this issue.

Boeing requested that the NPRM be revised to make the alternative actions for cargo airplanes specified in paragraph (h) of the proposed AD applicable to all airplanes, including passenger airplanes with FRM not installed due to differences in foreign regulations. In addition, Boeing requested that the actions specified in paragraph (h) of the proposed AD become the primary means of compliance for all airplanes, not an alternative method of compliance for some airplanes.

The FAA disagrees with the commenter's request. As discussed in the comment response in the SNPRM for Docket No. FAA-2012-0187, under the heading “Requests To Withdraw NPRM (77 FR 12506, March 1, 2012) Based on Applicability” the FAA does not consider the alternative action for cargo airplanes allowed by this AD to provide an adequate level of safety for passenger airplanes. The FAA is willing to accept a higher level of individual flight risk exposure for cargo flights that are not fail-safe due to the absence of passengers and the resulting significant reduction in occupant exposure on a cargo airplane versus a passenger airplane, and due to relatively low estimated individual flight risk that would exist on a cargo airplane after the corrective actions are taken. The FAA has not changed this AD regarding this issue.

A4A/CAA, FedEx, Japan Airlines (JAL), and Air Transport International requested that the FAA extend the compliance time for the modifications specified in paragraphs (g) and (h)(2) of the proposed AD to 72 months. A4A/CAA stated that the compliance time should match that of AD 2016-07-07 because the unsafe condition and corrective actions are similar. Air Transport International noted the longer compliance time would provide additional time for passenger-to-freighter conversions to incorporate a currently unreleased service bulletin into any supplemental type certificate (STC). A4A/CAA stated that although service information was not yet available, the compliance time should align with major maintenance schedules, but should be not less than 72 months after service information is available.

Conversely, NATCA recommended that the FAA reject requests for a compliance time longer than 5 years as proposed in the NPRM. Assuming final rule issuance in 2016, NATCA estimated that a 5-year compliance time would result in required compliance by 2021—25 years after the TWA Flight 800 fuel tank explosion that led to the requirements in SFAR 88, and 20 years after issuance of SFAR 88.

The FAA agrees with the commenters' requests to extend the compliance time, and disagrees with NATCA's request. The FAA received similar requests to extend the compliance time from several commenters regarding the NPRMs for the FQIS modification on other airplanes. The FAA disagrees with establishing a compliance time based on issuance of the service information that is not yet approved or available. The FAA has determined that a 72-month compliance time is appropriate and will provide operators adequate time to prepare for and perform the required modifications without excessive disruption of operations. The FAA has determined that the requested moderate increase in compliance time will continue to provide an acceptable level of safety. The FAA has changed paragraphs (g) and (h)(2) of this AD accordingly.

Air Transport International and All Nippon Airways (ANA) requested that paragraph (h)(1) of the proposed AD be revised to extend the repetitive check interval for the BITE checks. Air Transport International requested that the repetitive interval be extended to 750 flight hours to match the repetitive interval specified in AD 2016-07-07. ANA noted that an interval of 750 flight hours will allow the check to be done during A-check intervals.

The FAA agrees to extend the repetitive check interval to 750 flight hours. The FAA intended to propose a 750 flight hour interval, but inadvertently specified 650 flight hour intervals in the proposed AD. The FAA has revised paragraph (h)(1) of this AD to specify repetitive intervals of 750 flight hours.

ANA requested that the FAA clarify the actions specified in paragraph (h)(1) of the proposed AD. ANA noted there are two actions (record the existing fault code stored in the FQIS processor prior to doing the BITE check of the FQIS and do a BITE check of the FQIS) that must be done using Boeing Service Bulletin 767-28-0118, dated July 15, 2014. ANA stated Boeing Service Bulletin 767-28-0118, dated July 15, 2014, does not contain specific instructions to record existing fault codes. ANA noted that recording existing fault codes can be done using existing maintenance tasks. ANA asked if recording the existing fault codes must be done using Boeing Service Bulletin 767-28-0118, dated July 15, 2014, and if so, requested that Boeing Service Bulletin 767-28-0118, dated July 15, 2014, be revised to address the AD action.

The FAA agrees to clarify. Boeing Service Bulletin 767-28-0118, dated July 15, 2014, contains notes in Parts 4 and 5 of the Accomplishment Instructions stating that operators should record the existing faults prior to initiating the BITE check of the processor. However, those notes don't include specific procedures. Operators may use accepted procedures, including existing maintenance tasks, to comply with the requirements to record existing fault codes. No change to this AD is necessary.

ABX AIR requested that the FAA clarify whether it can perform the repetitive checks specified in paragraph (h)(1) of the proposed AD. ABX AIR noted that it operates airplanes converted to a cargo configuration using an STC, so its airplanes are not included in the effectivity of Boeing Service Bulletin 767-28-0118, dated July 15, 2014. ABX AIR asked if it could still do the repetitive checks in accordance with Boeing Service Bulletin 767-28-0118, dated July 15, 2014, without obtaining an AMOC.

The FAA agrees to clarify. The FAA determined that the BITE check procedures in the service bulletin are applicable to all Boeing 767 airplanes. Therefore, it is acceptable to use the procedures specified in the service information even on airplanes that are not listed in the effectivity of Boeing Service Bulletin 767-28-0118, dated July 15, 2014.

British Airways (BA) requested that the proposed AD be revised to provide dispensation for aircraft to be retired, which would not be prohibitive for operators. BA stated that the only Boeing solution available to comply with the proposed AD is to install an NGS. BA further stated that NGS is not mandatory for operators outside of the U.S. and is a high cost, high work-hour modification.

The FAA infers that the commenter is requesting an extension of the compliance time for airplanes that will be retired by a certain date or for the AD to exclude those airplanes. The FAA notes that the commenter did not propose a specific period of additional time for operation without addressing the unsafe condition, and did not propose any specific alternative corrective actions. The FAA's understanding is that British Airways no longer operates Model 767 airplanes. The FAA also notes that this AD does not require installing an NGS; this AD requires an FQIS modification. If the commenter or another operator wishes to make a specific proposal, they can submit that proposal using the AMOC process specified in paragraph (j) of this AD. The FAA has not changed this AD regarding this issue.

Boeing requested that paragraph (h) of the proposed AD be revised to state that an exemption is required to accomplish the specified actions. Boeing stated that the FAA has identified that the BITE procedure and wire separation design changes specified in the proposed AD are not sufficient for compliance to 14 CFR 25.981(a) at the FQIS level. Boeing stated that an exemption is therefore needed prior to approval of the related design change.

The FAA agrees to clarify. The BITE check is not a type design change or alteration, so no exemption from the airworthiness standards is required for that action. The FAA design data approval of any partial wire separation modification would require an exemption. That exemption would be obtained by the party seeking approval of the alteration data, and no further exemption would be required for the party using that data to alter an aircraft. Obtaining such an exemption would be part of the certification process for such a change, so the FAA does not find it necessary to include such information in paragraph (h) of this AD. In addition, some parties may choose to comply with the AD using a design change that fully complies with the airworthiness standards. The FAA also notes that the commenter appears to misunderstand why an exemption is needed for the required modification. The exemption is needed because, even with the modification, the FQIS does not comply with 14 CFR 25.901(c) and 14 CFR 25.981(a). The exemption does not authorize evaluation of a partial system for compliance with the system level requirement. The FAA has not changed this AD regarding this issue.

NATCA recommended that the FAA revise paragraph (g) of the proposed AD to clearly state that the required FQIS design changes must comply with the fail-safe requirements of 14 CFR 25.901(c), as amended by amendment 25-46 (43 FR 50597, October 30, 1978); and 14 CFR 25.981(a) and (b), as amended by amendment 25-102; NATCA added that these provisions are required by SFAR 88.

The FAA does not agree to change paragraph (g) of this AD. While the FAA agrees that modifications to comply with paragraph (g) should be required to comply with the referenced regulations, that requirement already exists in 14 CFR part 21. No change to this AD is necessary.

NATCA recommended that the FAA require designs that comply with 14 CFR 25.901(c) and 25.981(a)(3) on all newly produced transport airplanes. NATCA stated that continuing to grant exemptions to 14 CFR 25.901(c), as amended by amendment 25-40 (42 FR 15042, March 17, 1977); and 14 CFR 25.981(a)(3), as amended by amendment 25-102; has allowed continued production of thousands of airplanes with this known unsafe condition.

The FAA disagrees with the commenter's request. The recommendation to require production airplanes to fully comply with 14 CFR 25.901(c) and 14 CFR 25.981(a)(3) is outside the scope of this rulemaking. The FAA has implemented requirements for all large transport airplanes produced after September 2010 to include flammability reduction methods for tanks that would otherwise be high-flammability fuel tanks. Boeing incorporated this change into the Model 767 series airplanes that are still in production and the FAA has excluded those airplanes from the applicability of this AD. The FAA has not changed this final rule regarding this issue.

United Airlines (UAL) requested that the FAA revise the proposed AD to exclude airplanes that are affected by 14 CFR 121.1117. UAL noted that the FRM required by 14 CFR 121.1117 will have been installed on all affected airplanes in passenger configuration by December 26, 2018. UAL suggested that the FAA either delete paragraph (g) of the proposed AD or make paragraph (g) of the proposed AD applicable only to airplanes in a cargo configuration that do not have an FRM installed and non-U.S.-registered airplanes that do not have to comply with FRM requirements.

The FAA disagrees with the commenter's request. There are other passenger-carrying airplanes operated under 14 CFR part 91 that are not required to install FRM. (The requirement to install FRM on all passenger-carrying airplanes operated by air carriers is in 14 CFR 121.1117.) The FAA notes that foreign air carriers may not have to comply with that requirement or similar requirements of their own civil aviation authority. EASA, for example, has chosen not to require FRM to be retrofitted to in-service airplanes. The proposed AD is intended to require any Model 767 series passenger airplane that does not have FRM, regardless of the rules under which it is operated, to address the FQIS latent-plus-one unsafe condition with a corrective action that fully complies with the FAA airworthiness standards. This requirement fulfills the FAA's International Civil Aviation Organization (ICAO) obligation to address unsafe conditions on all of the aircraft manufactured by the state of design, not just those aircraft whose operation is under the jurisdiction of the state of design. The FAA has not changed this AD regarding this issue.

BA and JAL requested that the FAA encourage Boeing to provide a cost-effective method of compliance for passenger airplanes. JAL noted that Boeing expects the NGS installation to be an AMOC for the proposed AD. However, JAL and BA noted that the majority of non-FAA operators are not required to retrofit the NGS system. The commenters requested that the FAA encourage Boeing to develop an acceptable cost-effective method of compliance that does not require installation of an NGS.

The FAA agrees that the lack of service information for FQIS modifications makes it difficult to assess the required work to modify the FQIS, and acknowledges the high cost of NGS. However, the FAA disagrees with the commenters' request. For passenger-carrying airplanes, the cost per airplane of providing a modification of the FQIS that fully complies with the airworthiness standards was estimated by Boeing and their FQIS vendor (Goodrich) prior to the issuance of the NPRM to be comparable to the cost of installing NGS. Based on that cost estimate, Boeing proposed that they not be required to develop a fully compliant FQIS modification for passenger airplanes because it would not provide significant savings to operators and NGS would provide a greater safety benefit. The FAA agreed. The FAA's understanding is that Boeing's current position is the same, and that they do not plan to develop a fully compliant FQIS modification for passenger airplanes to address paragraph (g) of this AD. However, if service information is developed, approved, and available in the future, operators may request approval under the provisions of paragraph (j) of this AD to use approved service instructions as an AMOC for the requirements of this AD, or the FAA may approve the service information as a global AMOC for this AD. In addition, Boeing has issued Service Bulletin 767-28-0122, Revision 1, dated February 26, 2020, for all-cargo airplanes, and the FAA has revised paragraph (h)(2) of this AD to specify that Boeing Service Bulletin 767-28-0122, Revision 1, dated February 26, 2020, is an acceptable method of compliance. This revision includes adding paragraphs (h)(2)(i) and (ii) of this AD. The FAA has also added paragraph (i) of this AD to provide credit for Boeing Service Bulletin 767-28-0122, dated October 11, 2016, and redesignated subsequent paragraphs accordingly. The FAA has also revised the Estimated Costs for Alternative Actions table in this final rule to include the estimated costs for the wire separation modification specified in Boeing Service Bulletin 767-28-0122, Revision 1, dated February 26, 2020, if operators choose to comply using that method.

The FAA notes that this cost estimate is based on data provided in Boeing Service Bulletin 767-28-0122, dated October 11, 2016, while the cost estimate provided for a modification using methods approved in accordance with the procedures specified in paragraph (h)(2)(i) of this AD (paragraph (h)(2) of the proposed AD) is based on data provided by the manufacturer for Model 757 and 767 airplanes. The FAA had previously determined, as specified in the NPRM, that the work involved for the cargo airplane wire separation modification would take 230 work-hours. Boeing has since provided an updated estimate of 74 work-hours for the alternative modification for cargo airplanes. The FAA has revised the cost estimate for the modification accordingly in this final rule.

NATCA recommended that the FAA follow the agency's compliance and enforcement policy to require manufacturers to develop the necessary design changes soon enough to support operators' ability to comply with the proposed requirements. NATCA noted that SFAR 88 required manufacturers to develop all design changes for unsafe conditions identified by their SFAR 88 design reviews by December 2002, or within an additional 18 months if the FAA granted an extension.

The FAA acknowledges the commenter's concerns. However, any enforcement action is outside the scope of this rulemaking. The FAA has not changed this final rule regarding this issue.

NATCA recommended that the FAA require design changes that eliminate unsafe FQIS failure conditions on all fuel tanks on the affected models, regardless of fuel tank location or the percentage of time the fuel tank is flammable. NATCA referred to four fuel tank explosions in low-flammability exposure time fuel tanks identified by the FAA during FTFR rulemaking. NATCA stated that neither FRM nor alternative actions for cargo airplanes ( e.g., BITE checks (checks of built-in test equipment) followed by applicable repairs before further flight and modification of the center fuel tank FQIS wiring within 60 months) would bring the airplane into full regulatory compliance. NATCA added that the combination of failures described in the NPRM meets the criteria for “known combinations” of failures that require corrective action in FAA Policy Memorandum ANM100-2003-112-15.

The FAA disagrees with the commenter's request. The FAA has determined that according to Policy Memorandum ANM100-2003-112-15, the failure condition for the airplanes affected by this AD should not be classified as a “known combination.” While the FQIS design architecture is similar to that of the early Boeing Model 747 configuration that is suspected of contributing to the TWA Flight 800 fuel tank explosion, significant differences exist in the design of FQIS components and wire installations between the affected The Boeing Company models and the early Model 747 airplanes such that the intent of the “known combinations” provision for low-flammability fuel tanks in the policy memorandum is not applicable. Therefore, this AD affects only the identified Boeing airplanes with high-flammability exposure time fuel tanks, as specified in paragraph (c) of this AD. The FAA provided a detailed response to similar comments in the preamble of the final rule for AD 2016-07-07. The FAA has not changed this final rule regarding this issue.

The FAA has added paragraph (c)(3) to this AD to clarify that airplanes equipped with an ignition mitigation means (IMM) approved by the FAA as compliant with certain regulations are excluded from this AD. The FAA intended for airplanes with compliant IMM to be excluded from the actions required by this AD. The FAA has determined that the installation of an approved IMM provides a level of risk reduction at least as great as that provided by FRM and adequately addresses the unsafe condition.

The FAA has revised paragraph (h)(1) of this AD to clarify the compliance time for the BITE check relative to the requirement to record the fault codes. The FAA recognized that operators might interpret the proposed requirements for alternative actions for cargo airplanes as allowing additional flights prior to performing the BITE check after first recording the fault codes. The FAA intended for operators to perform the BITE check immediately after recording the fault codes to address both the fault codes that exist prior to performing the BITE check and any new codes that are identified during the BITE check.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule 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 final rule.

The FAA reviewed Boeing Service Bulletin 767-28-0118, dated July 15, 2014. This service information describes procedures for a BITE check of the FQIS.

The FAA also reviewed Boeing Service Bulletin 767-28-0122, Revision 1, dated February 26, 2020. This service information describes procedures for modifying the airplane by separating FQIS wiring that runs between the FQIS processor and the center tank wing spar penetrations from other airplane wiring and applicable corrective actions (including correcting loop resistance and electrical bonding resistance).

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 261 airplanes of U.S. registry. This estimate includes 255 cargo airplanes; 4 private, business/corporate/executive, or government airplanes; and 2 experimental airplanes. The FAA estimates the following costs to comply with this AD:

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2018-06-07, Amendment 39-19227 (83 FR 13398, March 29, 2018) (“AD 2018-06-07”). AD 2018-06-07 applied to all The Boeing Company Model 757-200, -200CB, and -300 series airplanes. The NPRM published in the Federal Register on February 18, 2020 (85 FR 8773). The NPRM was prompted by a report of fatigue cracking found in the fuselage frame at station (STA) 1640, which severed the inner chord and web. The NPRM proposed to continue to require the actions in AD 2018-06-07. The NPRM also proposed to require an expanded inspection area, additional inspections, a modified inspection type, and applicable repairs. The FAA is issuing this AD to address cracking of the fuselage frame at STA 1640, which could result in reduced structural integrity of the airplane.

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.

United Airlines stated concurrence with the proposed actions in the NPRM. FedEx Express expressed support for the NPRM.

Boeing requested that the “Proposed AD Requirements” paragraph of the NPRM be revised to specify that the repetitive intervals are a function of both the configuration and the most recent inspection option accomplished. Boeing pointed out that the repeat intervals in tables 2 through 11 of Boeing Alert Service Bulletin 757-53A0108, Revision 1, dated July 17, 2019, each provide two options for repeat inspections, depending on whether certain other inspections were last accomplished. Boeing requested that the following wording be used: “. . . depending on the configuration, and the most recent inspection option accomplished.”

The FAA agrees that the requested change would be an accurate clarification. However, the “Proposed AD Requirements” section is included in an NPRM as background information on the proposed requirements to provide adequate information for the public on which to comment. The “Proposed AD Requirements” section is not included in the final rule. The FAA has not changed this AD in this regard.

Boeing requested that the FAA clarify the estimated costs for the required actions specified in the NPRM. Boeing pointed out that the most significant amount of time for the inspections is open and close access, which would be required for each inspection, unless the inspections are combined. Boeing mentioned that the estimated costs in the NPRM only include these hours for the repetitive high frequency eddy current (HFEC) and low frequency eddy current (LFEC) inspections, and suggested separating the costs for open and close access from the inspections. Boeing also mentioned that the detailed inspection is listed as taking 1 work-hour, whereas the service information specifies 0.20 hours per side of each airplane. Boeing went on to point out that the costs for the repetitive HFEC and LFEC inspections in the NPRM appear to include possible combinations of inspections, and to include inspections that are not repetitive. Additionally, Boeing specified that the service information contained some mathematical errors in the manpower estimates.

The FAA agrees to clarify the estimated costs. The work hours required for open and close access are provided under the line item costs for the repetitive HFEC and LFEC inspections, as these are on-going inspections required by this AD. The work-hour estimates in this AD are based on the service information provided to the FAA by the manufacturer; however, it is FAA policy in ADs to round work-hour estimates up to the next full hour. The FAA is unable to predict whether operators will choose to do Option 1 or Option 2 inspections, thus the FAA estimates the highest costs to do the required actions using the best industry data available at the time of publication. The cost estimates in this final rule have been revised to indicate that the costs could be “up to” the highest number of work hours needed for the specified actions.

American Airlines (AAL) requested that the FAA revise the proposed compliance times for the general visual inspection and the detailed visual inspection to match. AAL stated that the compliance times for the two separate actions should be the same to align with CONDITION 2, specified in Aviation Partners Boeing Service Bulletin AP757-53-001, Revision 2, dated October 22, 2019. AAL did not provide further reasoning.

The FAA disagrees with the request for matching compliance times. The compliance times do not need to match to align with CONDITION 2, specified in Aviation Partners Boeing Service Bulletin AP757-53-001, Revision 2, dated October 22, 2019. The general visual inspection for repairs was included in Aviation Partners Boeing Alert Service Bulletin AP757-53-001, Revision 1, dated June 21, 2017, and mandated by AD 2018-06-07, and is carried over from the requirements of AD 2018-06-07. Aviation Partners Boeing Service Bulletin AP757-53-001, Revision 2, dated October 22, 2019, introduced a new detailed visual inspection for any crack, nick, or gouge, which specifies a new grace period. Both the general visual and detailed visual inspections must be performed. The FAA expects that most operators will choose to do both the general visual and detailed visual inspections at the earlier compliance time, because the inspections are in the same area and the access requirements are the same; however, from a safety perspective, the inspections do not need to be performed at the same time, and can be performed at their respective compliance times. This AD has not been changed in this regard.

VT Mobile Aerospace Engineering Inc. (VT MAE) requested that the FAA allow inspection of certain passenger airplanes converted to a specific freighter configuration (VT MAE Supplemental Type Certificate (STC) ST04242AT, Passenger to 15-Pallet Configuration) using VT MAE 15-Pallet Maintenance Planning Data (MPD) Supplement 757SF-MPD-01. VT MAE pointed out that the STA 1640 frame is completely modified (the existing passenger frame is removed and new frame section is installed). VT MAE also pointed out that the 11866470 FRAME INSTL-STA 1640 drawing is used for the analysis, and that Boeing has performed analysis of the modified airplane, which also includes the Fatigue and Damage Tolerance Analysis of modified aft fuselage structures from STA 1640 to STA 1720 to accommodate 15 full-size pallets. VT MAE then specified that the new STA 1640 frame is inspected as part of the VT MAE MPD Supplement 757SF-MPD-01, which specifies inspections for all of the affected frames and also requires inspection of this new STA 1640 frame (left-hand and right-hand) at the frame inner chord and the frame web between stringer (S) 16 and S-17. VT MAE also mentioned its plan to submit a request for approval of an alternative method of compliance (AMOC) for airplanes modified using VT MAE STC ST04242AT.

The FAA acknowledges that airplanes modified using VT MAE STC ST04242AT are no longer configured as passenger airplanes. However, the FAA disagrees with the request to include inspections using VT MAE MPD Supplement 757SF-MPD-01 as an appropriate source of service information because sufficient data was not submitted to substantiate that the inspections specified in VT MAE MPD Supplement 757SF-MPD-01 would provide an acceptable level of safety. Under the provisions of paragraph (i) of this AD, the FAA will consider requests for approval of alternative actions and compliance times if sufficient data are submitted to substantiate that the change would provide an acceptable level of safety. The FAA has not changed this AD in this regard.

VT MAE requested that the FAA revise paragraphs (g)(3) and (4) of the proposed AD to include reference to airplanes modified using VT MAE STC ST03952AT (Combi to 14-Pallet Configuration). VT MAE explained that the modification to the STA 1640 frame is identical to that of Boeing Model 757-200 special freighter airplanes identified as Group 2 and Group 5 in Boeing Alert Service Bulletin 757-53A0108, Revision 1, dated July 17, 2019. VT MAE pointed out that the modification instructions for the STA 1640 frame is contained in Drawing 657N3160—Frame Instl—Modified, Aft Pallet Mod. VT MAE also proposed utilizing all of the inspections, methods, and compliance times specified in Boeing Alert Service Bulletin 757-53A0108, Revision 1, dated July 17, 2019, for those airplanes.

The FAA agrees for the reasons provided and has revised paragraphs (g)(3) and (4) of this AD to include reference to airplanes modified using VT MAE STC ST03952AT.

Aviation Partners Boeing (APB) requested that the FAA clarify the interaction of the configurations specified in paragraphs (g)(2) and (3) of the proposed AD (airplanes that have been converted from passenger to freighter configuration using VT MAE STC ST03562AT, and on which APB blended or scimitar blended winglets are installed using STC ST01518SE). APB stated that it is not clear whether the freighter configuration compliance times or the winglet configuration compliance times take precedence. APB pointed out that STC ST01518SE was not certified for a freighter configuration (factory or STC). APB noted that other STC holders have obtained FAA approval for freighter conversion STCs that include a statement of compatibility with STC ST01518SE ( e.g., ST03562AT, ST04242AT, and ST01529SE). APB also mentioned that Aviation Partners Boeing Alert Service Bulletin AP757-53-001, Revision 2, dated October 22, 2019, reduces the compliance times for airplanes identified as Group 1 or Group 3 in Boeing Alert Service Bulletin 757-53A0108, Revision 1, dated July 17, 2019. APB explained that the compliance time reduction is based solely on the interaction of STC ST01518SE with the Boeing type certificated configuration, and does not include effects from any other STCs. APB also stated that Group 4 airplanes are not eligible to install STC ST01518SE, and therefore, there is no conflict for Group 4 airplanes. APB requested that the FAA modify paragraph (g)(2) of the proposed AD to exclude airplanes identified in paragraph (g)(3) of the proposed AD.

The FAA agrees that it is possible for both STC ST03562AT and STC ST01518SE to be incorporated on the same airplane. However, the FAA does not agree that revising paragraph (g)(2) of this AD as requested by the commenter is appropriate. The FAA acknowledges that the compliance times for airplanes with APB winglets installed were developed based solely on the interaction of STC ST01518SE with the Boeing type certificated configuration. However, the FAA also acknowledges that the effects of installing APB winglets on Model 757-200 passenger airplanes converted to freighter configuration in accordance with VT MAE STC ST03562AT have not been evaluated, and that sufficient data was not submitted to substantiate any positive or negative effects on the unsafe condition. The FAA has therefore added paragraph (g)(5) to this AD to specifically address airplanes with both STCs installed.

FedEx Express requested that the FAA allow certain AMOCs approved for AD 2018-06-07, including local frame replacements. FedEx Express stated that it defines a local frame replacement as a frame repair splice between stringers S-9 and S-20 along the STA 1640 fuselage frame, and explained that the local frame replacement replaces the entire inspection area and does not interfere with the inspections specified in the NPRM. FedEx Express pointed out that its fleet has several local frame replacements along the STA 1640 fuselage frame that have AMOC approval for AD 2018-06-07. FedEx Express also pointed out that it would be required to request new AMOCs for the existing repairs, possibly extending ground time for its fleet.

The FAA agrees for the reasons provided and has included paragraph (i)(5) of this AD to specifically allow AMOCs approved in FAA Letters 790-18-8737, 790-18-9637, 790-18-10097, 790-18-10177, and 790-20-10108, as AMOCs for certain actions required by this AD. The FAA has also included paragraph (g)(6) of this AD to provide inspection instructions for Group 1 airplanes that have been converted from passenger to freighter configuration using VT MAE STC ST03562AT or STC ST03952AT and that have local frame replacements that do not include a reinforcement repair or repair splice member between stringers S-11 and S-16 as specified in FAA AMOC approval Letters 790-18-8737, 790-18-9637, 790-18-10097, 790-18-10177, and 790-20-10108.

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 Alert Service Bulletin 757-53A0108, Revision 1, dated July 17, 2019. This service information describes procedures for an inspection of the STA 1640 fuselage frame between S-11 and S-16 for existing frame repairs or replacements, a detailed inspection for any crack, nick, or gouge, and repetitive HFEC and LFEC inspections for cracking and repair.

The FAA also reviewed Aviation Partners Boeing Alert Service Bulletin AP757-53-001, Revision 2, dated October 22, 2019. This service information provides compliance times for accomplishing the procedures identified in Boeing Alert Service Bulletin 757-53A0108, Revision 1, dated July 17, 2019, for airplanes on which APB blended or scimitar blended winglets are installed.

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

The FAA has received no definitive data that would enable the FAA to provide cost estimates for the on-condition repair 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 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's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it returns restricted area R-4811 Hawthorne, NV, as it is no longer needed for its designated purpose within the NAS.

This action amends 14 Code of Federal Regulations (CFR) part 73 by revoking restricted area R-4811, Hawthorne, NV. The Army no longer has a use for the restricted area, which was originally established R-4811 for the purpose of ordinance disposal. The history of the restricted area shows the airspace was activated an average of 179 days per year, but has not been utilized since 2017. Therefore, the FAA has determined that a valid requirement for the airspace no longer exists and the restricted area is being returned to the NAS.

Since this action reduces restricted airspace, the solicitation of comments would only delay the return of airspace to public use without offering any meaningful right or benefit to any segment of the public; therefore, notice and public procedure under 5 U.S.C. 553(b) are unnecessary.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action of revoking of R-4811, Hawthorne, NV, qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5.c, “Actions to return all or part of special use airspace (SUA) to the National Airspace System (NAS), such as revocation of airspace, a decrease in dimensions, or a reduction in times of use ( e.g., from continuous to intermittent, or use by a Notice to Airmen (NOTAM)):” This action returns restricted airspace to the NAS. Therefore, this airspace action is not expected to result in any significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, this action has been reviewed for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis, and it is determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 73 as follows:

Items on the Commerce Control List (CCL), Supplement No. 1 to part 774 of the Export Administration Regulations (EAR), are listed for multilateral and unilateral control reasons to serve U.S. national security and foreign policy interests. Under the EAR, multiple criteria related to those multilateral and unilateral reasons for control may be considered in reviewing license applications for the export or reexport of items. Under the EAR, multilateral reasons for control include chemical and biological (CB), nuclear nonproliferation (NP), national security (NS), and missile technology (MT) reasons. Unilateral reasons for control include regional stability (RS), crime control (CC) and anti-terrorism (AT) reasons, as well as reasons related to exports of firearms to Organization of American States member countries (FC) and United Nations embargoes (UN). Controls for United Nations Security Council purposes are identified by the abbreviation “UN” in the applicable CCL entries. The “UN” reason for control is described in § 746.2(b) of the EAR.

To date, § 742.7 of the EAR has addressed the licensing of CC equipment and related technology and software (CC-controlled items). The licensing requirement set forth in paragraph (a) and the licensing policy set forth in paragraph (b) of § 742.7 were created to promote the observance of human rights throughout the world. The impact of an export or reexport based on human rights concerns has been a consideration for CC-controlled items. Under the licensing policy set forth in paragraph (b) of § 742.7, BIS will generally consider license applications favorably on a case-by-case basis unless there is civil disorder in the country or region of destination or unless there is evidence that the government of the importing country may have violated internationally recognized human rights.

In this final rule, the Bureau of Industry and Security (BIS) is amending the EAR by revising the licensing policy of paragraph (b) of § 742.7. With these amendments, BIS will both expand its licensing policy as it applies to CC-controlled items and expand its consideration of human rights beyond CC-controlled items to include those items controlled for any other reason, with the exception of items controlled for short supply. Therefore, this final rule amends § 742.7 by revising paragraph (b), in part, to specify in new subparagraph (b)(1) that BIS generally will consider favorably, on a case-by-case basis, license applications for a CC-controlled item unless there is civil disorder in the country or region of destination or if BIS assesses that there is a risk that the items will be used in a violation or abuse of human rights. This revision is necessary to clarify to the exporting community that licensing decisions are based in part upon U.S. Government assessments about whether CC-controlled items may be used to engage in or enable violations or abuses of human rights including through violations and abuses involving censorship, surveillance, detention, or excessive use of force.

This final rule also amends § 742.7 by adding a new subparagraph (b)(2) to make clear that BIS will consider the licensing policy set forth in new subparagraph (b)(1) when reviewing items controlled for reasons other than CC with the exception of items controlled for short supply. This revision furthers the foreign policy interests of the United States pertaining to the prevention of human rights violations and abuses by helping to ensure that items controlled for reasons other than CC are not exported or reexported in support of human rights violations or abuses. This revision is necessary to prevent items currently controlled for reasons other than CC, including reasons related to certain telecommunications and information security and sensors, from being used to engage in or enable the violation or abuse of human rights. As revised, this licensing policy will enable BIS and other reviewing agencies to consider (1) violations or abuses of human rights by individuals or entities other than the government of the importing country and (2) abuses of human rights by the government in addition to violations of internationally recognized human rights.

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA), 50 U.S.C. Sections 4801-4852. ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated to be not significant for purposes of Executive Order 12866. The requirements of Executive Order 13771 do not apply because the rule is not significant.

2. Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid OMB control number. This rule affects an approved collection, the Simplified Network Application Processing (control number 0694-0088), which carries a burden hour estimate of 43 minutes, including the time necessary to submit license applications, among other things, as well as miscellaneous and other recordkeeping activities that account for 12 minutes per submission. The amendment to the licensing review policy for items controlled for crime control reasons, which typically are licensable, is not expected to significantly increase the number of submissions under these collections.

3. This rule does not contain policies associated with Federalism as that term is defined under Executive Order 13132.

4. Pursuant to section 1762 of ECRA ( see 50 U.S.C. 4821), this action is exempt from the Administrative Procedure Act requirements (under 5 U.S.C. 553) for notice of proposed rulemaking, opportunity for public participation, and delay in effective date.

5. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

Accordingly, part 742 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

This rule furthers U.S. foreign policy interests for crime control (CC) reasons and is intended to promote the U.S. foreign policy of protecting human rights by imposing a license requirement under the Export Administration Regulations (EAR) for water cannon systems and related items.

Specifically, in this rule, BIS establishes export and reexport controls on water cannon systems for riot or crowd control and parts and components specially designed therefor by creating new Export Control Classification Numbers (ECCN) 0A977, 0D977 and 0E977 within the Commerce Control List (CCL) of the EAR, Supplement No. 1 to Part 774. A license is now required under the EAR for the export and reexport of water cannon systems and related software and technology to countries that have been designated with an X in CC (crime control) Column 1 of the Commerce Country Chart, Supplement No. 1 to Part 738 of the EAR. This includes most countries worldwide, other than NATO member countries and certain other military allies.

Consistent with the current licensing policy described in § 742.7 of the EAR—Crime control and detection—applications to export or reexport items subject to control pursuant to this rule will generally be considered favorably on a case-by-case basis, unless there is civil disorder in the country or region or unless there is evidence that the government of the importing country may have violated internationally recognized human rights. These ECCN entries include illustrative, but not comprehensive, lists of features and items for additional clarity of what is controlled.

As a conforming change, BIS amends § 742.7 of the EAR by adding ECCNs 0A977, 0D977 and 0E977 to paragraph (a) ( License requirements ), which identifies the license requirements for items controlled for Crime Control reasons on the CCL.

On November 27, 2019, the Congress passed Public Law 116-77 to prohibit the commercial export of covered munitions items to the Hong Kong Police Force (the “Act”). The Act explicitly directs the President to prohibit, starting 30 days after enactment, the issuance of licenses for the export of water cannons, among other items, to the Hong Kong Police Force, unless the President makes certain certifications to Congress beforehand. Prior to this rule, all of the items covered by the licensing prohibition cited in the Act were generally controlled for export to Hong Kong, except for water cannons. With this rule, water cannons and related items will now require a license for export or reexport to Hong Kong, and license applications will be reviewed consistent with all applicable laws.

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA) (codified, as amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has not been designated to be a “significant regulatory action” under section 3(f) of Executive Order 12866.

2. This final rule is not subject to the requirements of E.O. 13771 (82 FR 9339, February 3, 2017) because it is issued with respect to a military and foreign affairs function of the United States. In particular, protection of human rights is a foreign affairs function addressed by this rule. Accordingly, this rule meets the requirements set forth in the April 5, 2017, OMB guidance implementing E.O. 13771. See https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-21-OMB.pdf.

3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

4. Pursuant to section 1762 of the Export Control Reform Act of 2018 (50 U.S.C. 4821), this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation, and delay in effective date.

5. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

6. Notwithstanding any other provision of law, no person may be required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves a collection currently approved by OMB under control number 0694-0088, Simplified Network Application Processing System. This collection includes, among other things, license applications, and carries a burden estimate of 42.5 minutes for a manual or electronic submission for a total burden estimate of 31,878 hours. BIS expects the burden hours associated with this collection to minimally increase and have limited impact on the existing estimates. Any comments regarding the collection of information associated with this rule, including suggestions for reducing the burden, may be submitted through www.reginfo.gov/public/do/PRAMain.

Accordingly, parts 742 and 774 of the Export Administration Regulations (15 CFR parts 730 through 774) are amended as follows:

BIS is adding to part 756 of the EAR new § 756.3, which is entitled “Judicial Review of Agency Action.” Section 4.1(e) of Executive Order (E.O.) 13526 provides that “Persons authorized to disseminate classified information outside the executive branch shall ensure the protection of the information in a manner equivalent to that provided within the executive branch.” This section specifies the procedure for providing a reviewing court access to classified information for any agency action under the EAR. By providing such information ex parte and in camera to a reviewing court, BIS can limit access to the information and prevent public disclosure of the information during the course of litigation.

On December 29, 2009, the President issued E.O. 13526, prescribing a uniform system for classifying, safeguarding, and declassifying national security information. E.O. 13526 provides the legal basis and authority under which BIS issues this rule.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has not been designated a “significant regulatory action,” and not economically significant, under section 3(f) of Executive Order 12866. This final rule will protect national security information by preventing unauthorized persons from accessing such information in the course of judicial review of any agency action.

2. Notwithstanding any other provision of law, no person may be required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation does not involve any OMB collection of information.

3. This rule does not contain policies with federalism implications as that term is defined under Executive Order 13132.

4. This final rule is not subject to the requirements of Executive Order 13771 (82 FR 9339, February 3, 2017) because the subsection (b) requirement that agencies publish a notice of proposed rulemaking that includes information on the public proceedings does not apply when an agency for good cause finds that the notice and public procedures are impracticable, unnecessary, or contrary to the public interest, and the agency incorporates the finding (and reasons therefor) in the rule that is issued (5 U.S.C. 553(b)(3)(B)). In addition, the section 553(d)(3) requirement that publication of a rule shall be made not less than 30 days before its effective date can be waived if an agency finds there is good cause to do so.

BIS finds good cause to issue this rule without advance notice and public comment because such procedures are unnecessary, see 5 U.S.C. 553(b)(3)(B). This final rule does not affect any substantive changes to the EAR. It implements the provision in E.O. 13526 that executive branch officials who are authorized to disseminate classified information outside the executive branch ensure the protection of the information in a manner equivalent to that provided within the executive branch. This final rule safeguards classified information by preventing unauthorized persons from accessing classified information submitted to a court reviewing agency action under the EAR. For the same reasons, the Department has determined that this final rule should be issued without a delayed effective date pursuant to 5 U.S.C. 553(d)(3).

5. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

Accordingly, part 756 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

The Textile Fiber Products Identification Act (“Textile Act”)  1 and Rules require marketers to, among other things, attach a label to each covered textile product disclosing: (1) The product's generic names; (2) the percentages, by weight, of its constituent fibers; (3) the name under which the manufacturer or other responsible company does business or, in lieu thereof, the company's registered identification number; and (4) the name of the country where the product was processed or manufactured. 2

Section 303.7 of the Textile Rules (Generic names and definitions for manufactured fibers) establishes the generic names for man-made fibers that manufacturers must disclose. This provision lists the generic names and definitions established by the Commission through its textile petition process under § 303.8, and incorporates by reference the generic names and definitions set forth in the ISO 2076 standard.

The Commission cannot automatically incorporate future changes to an incorporated standard. 3 Therefore, it periodically updates the Rule's reference to the ISO standard to keep abreast of ISO 2076 amendments. 4

In a Notice of Proposed Rulemaking (“NPRM”) published on February 18, 2020, 5 the Commission proposed amending § 303.7 to incorporate the most recent version of the relevant ISO standard, ISO 2076:2013(E), “Textiles—Man-made fibres—Generic names.” This standard includes seven generic fiber names that are not defined in the currently-incorporated 2010 ISO standard: “chitin,” “ceramic,” “polybenzimidazol,” “polycarbamide,” “polypropylene/polyamide bicomponent,” “protein,” and “trivinyl.”

In the NPRM, the Commission noted that Commission staff had received several inquiries from manufacturers interested in using the petition process to add “chitin,” a name recognized in ISO 2076:2013(E), to the Commission's list of approved generic fiber names. The Commission stated that incorporating the updated ISO standard into the Textile Rules would resolve those requests, save both the Commission and manufacturers resources, and harmonize the two standards without the need to address other ISO recognized names individually.

The Commission did not receive any germane comments. Accordingly, based on the analysis provided in the NPRM, the Commission now amends the Textile Rules to change the Rules' current reference to the ISO 2076:2010(E) standard for generic fiber names to the updated ISO 2076:2013(E) standard.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs has designated this rule as not a `major rule,' as defined by 5 U.S.C. 804(2).

The Textile Rules contain recordkeeping and disclosure requirements that constitute information collection requirements as defined by 5 CFR 1320.3(c), the definitional provision within the Office of Management and Budget (“OMB”) regulations that implement the Paperwork Reduction Act (“PRA”). OMB has approved the Rule's existing information collection requirements through May 31, 2021 (OMB Control No. 3084-0101). The amended Textile Rules do not impose any additional collection of information requirements.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires that the Commission provide an Initial Regulatory Flexibility Analysis (IRFA) with a Proposed Rule, and a Final Regulatory Flexibility Analysis (FRFA) with the final Rule, unless the Commission certifies that the Rule will not have a significant economic impact on a substantial number of small entities. 6

The Commission anticipates that the final amendment will not have a significant economic impact on a substantial number of small entities. The amendment incorporates the most recent version of the relevant ISO standard for textile fiber names, ISO 2076:2013(E), and should not increase the costs of small entities that manufacture or import textile fiber products. Instead, the amendment will enable these entities to market products in the United States under seven additional fiber names. Therefore, based on available information, the Commission certifies that amending the Textile Rules will not have a significant economic impact on a substantial number of small businesses. Although the Commission certifies under the RFA that the amendment will not have a significant impact on a substantial number of small entities, the Commission has determined, nonetheless, that it is appropriate to publish a Final Regulatory Flexibility Analysis in order to explain the impact of the amendment on small entities as follows:

The Commission is amending the Rules to provide greater flexibility in complying with the Rules' disclosure requirements by permitting textile fiber product marketers to market products containing fibers defined in the updated ISO 2076:2013(E) standard.

The Commission did not receive any comments related to the impact of the final amendment on small businesses. In addition, the Commission did not receive any comments filed by the Chief Counsel for Advocacy of the Small Business Administration.

Under the Small Business Size Standards issued by the Small Business Administration, textile apparel manufacturers qualify as small businesses if they have 500 or fewer employees. Clothing wholesalers qualify as small business if they have 100 or fewer employees. The Commission's staff has estimated that approximately 10,744 textile fiber product manufacturers and importers are covered by the Textile Rules' disclosure requirements. 7 A substantial number of these entities likely qualify as small businesses. The Commission estimates that the amendment will not have a significant impact on these small businesses because it does not impose any new obligations; rather, it permits them to offer more products while complying with the Textile Rules.

The amendment is not expected to increase any reporting, recordkeeping, or other requirements associated with the Textile Rules.

The Commission did not propose any specific small entity exemption or other significant alternatives because the amendment is not expected to increase reporting requirements and will not impose any new requirements or compliance costs. No comments identified any new compliance costs.

Consistent with 5 U.S.C. 552(a) and 1 CFR part 51, the Commission incorporates the specifications of the following standard issued by the International Organization of Standardization (ISO): ISO 2076:2013(E), which lists the generic names used to designate the different categories of man-made fibres, based on a main polymer, currently manufactured on an industrial scale for textile and other purposes, together with the distinguishing attributes that characterize them.

This ISO standard is reasonably available to interested parties. Members of the public can obtain copies of ISO 2076:2013(E) from the International Organization for Standardization, ISO Central Secretariat, Chemin de Blandonnet 8, CP 401-1214 Vernier, Geneva, Switzerland; (+41 22 749 01 11); central@iso.org; https://www.iso.org/home.html. They can also obtain copies from the American National Standards Institute, 25 West 43rd Street, Fourth Floor, New York, NY 10036-7417; (212) 642-4900; isot@ansi.org; https://www.ansi.org. This ISO standard is also available for inspection at the FTC Library, (202) 326-2395, Federal Trade Commission, Room H-630, 600 Pennsylvania Avenue NW, Washington, DC 20580.

For the reasons discussed in the preamble, the Commission amends part 303 of title 16, Code of Federal Regulations, as follows:

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

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

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

Pursuant to 21 U.S.C. 811(a), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. 551-559. 21 CFR 1308.41-1308.45; 21 CFR part 1316, subpart D. Such requests or notices must conform to the requirements of 21 CFR 1308.44(a) or (b), and 1316.47 or 1316.48, as applicable, and include a statement of the person's interests in the proceeding and the objections or issues, if any, concerning which the person desires to be heard. Any waiver must conform to the requirements of 21 CFR 1308.44(c) and may include a written statement regarding the interested person's position on the matters of fact and law involved in any hearing.

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

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

Subsection (j)(2) states that the 90-day timeframe starts the later of (1) the date DEA receives HHS' scientific and medical evaluation/scheduling recommendation, or (2) the date DEA receives notice of the NDA approval by HHS. Subsection (j)(3) specifies that the rulemaking shall become immediately effective as an interim final rule without requiring DEA to demonstrate good cause therefore. Thus, the purpose of subsection (j) is to speed the process by which DEA schedules newly approved drugs that are currently either in schedule I or not controlled (but which have sufficient abuse potential to warrant control) so that such drugs may be marketed without undue delay following FDA approval. 1

Subsection (j)(3) further provides that the interim final rule shall give interested persons the opportunity to comment and to request a hearing. After the conclusion of such proceedings, DEA must issue a final rule in accordance with the scheduling criteria of 21 U.S.C. 811(b) through (d) and 812(b).

Remimazolam (4 H -imidazol[1,2- a ][1,4]benzodiazepine-4-propionic acid, 8-bromo-1-methyl-6-(2-pyridinyl)-(4 S )-methyl ester, benzenesulfonate (1:1) or methyl 3-[(4 S )-8-bromo-1-methyl-6-pyridin-2-yl-4 H -imidazo[1,2- a ][1,4]benzodiazepin-4yl]propanoate benzenesulfonic acid), is a new molecular entity with CNS depressant properties. Remimazolam is an agonist at gamma-aminobutyric acid subtype A (GABA A ) receptors. On April 5, 2019, Cosmo Technologies, Ltd. (Sponsor) submitted an NDA for BYFAVO (remimazolam) to FDA with a proposed dose of 5.0 mg (intravenous; i.v.) with supplemental doses of 2.6 mg (i.v.). On July 2, 2020, DEA received notification that FDA, on the same date, approved the NDA for BYFAVO (remimazolam), under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), to be used as an i.v. treatment for the induction and maintenance of procedural sedation in adults undergoing procedures lasting 30 minutes or less. In January 2020, remimazolam was approved for marketing in Japan for general anesthesia. 2

On July 10, 2020, DEA received from HHS a scientific and medical evaluation (dated April 15, 2020) entitled “Basis for the Recommendation to Control Remimazolam and its Salts in Schedule IV of the Controlled Substances Act” and a scheduling recommendation. Pursuant to 21 U.S.C. 811(b) and (c), this document contained an eight-factor analysis of the abuse potential, legitimate medical use, and dependence liability of remimazolam, along with HHS's recommendation to control remimazolam and its salts under schedule IV of the CSA.

In response, DEA reviewed the scientific and medical evaluation and scheduling recommendation provided by HHS, along with all other relevant data, and completed its own eight-factor review pursuant to 21 U.S.C. 811(c). DEA concluded that remimazolam meets the 21 U.S.C. 812(b)(4) criteria for placement in schedule IV of the CSA.

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

Included below is a brief summary of each factor as analyzed by HHS and DEA, and as considered by DEA in its scheduling action. Please note that both DEA and HHS analyses are available in their entirety under “Supporting Documents” in the public docket for this interim final rule at http://www.regulations.gov, under Docket Number “DEA-658.” Full analysis of, and citations to, the information referenced in the summary may also be found in the supporting and related material.

Remimazolam is a new molecular entity that has not been marketed in the United States, and was approved in Japan for general anesthesia in January 2020. Evidence regarding its diversion, illicit manufacturing, or deliberate ingestions is lacking. DEA notes that there are no reports for remimazolam in the National Forensic Laboratory Information System (NFLIS), 3 which collects drug cases submitted to and analyzed by state and local forensic laboratories. There were also no reports in STARLiMS, 4 DEA's laboratory drug evidence data system of record.

As stated by HHS, remimazolam is so related in action to depressant drugs such as benzodiazepines in schedule IV that it is reasonable to assume that there may be comparable diversions from legitimate channels, use contrary to or without medical advice, and capability of creating hazards to the users and to the safety of the community. Preclinical and clinical studies show that remimazolam has similar pharmacological mechanism of action as an agonist at the GABA A receptors as midazolam. Data gathered from general behavior studies indicate remimazolam produces a sedative effect, and similar abuse-related effects in humans and in animal studies to those of midazolam, a schedule IV depressant. It is likely that remimazolam has similar abuse potential and is likely to be abused for its depressant effects, contrary to medical advice.

Remimazolam shares similar pharmacological mechanism of action via GABA A receptor agonism as schedule IV benzodiazepines, such as midazolam. The GABA A receptor is a ligand-gated chloride ion channel consisting of five subunits and a central chloride channel. Benzodiazepines enhance the opening of the ligand-gated chloride channel and the influx of chloride.

Remimazolam, similar to schedule IV benzodiazepines, has sedative activity in animals. Acute administration of remimazolam in rats elicited dose-dependent behaviors indicative of sedative and muscle relaxation properties of the drug. In a drug discrimination study using male rats previously trained to discriminate midazolam, remimazolam produced interoceptive cues that are similar to those of midazolam. Remimazolam was self-administered variably based on session duration. In the shorter-access paradigm (two-hour sessions), only two of four monkeys tested self-administered remimazolam, whereas for the longer-access paradigm (24-hour sessions), all four monkeys self-administered remimazolam at a rate higher than placebo and pentobarbital, the reference drug (a schedule II or III depressant). 5

In human abuse potential studies, remimazolam, in agreement with its mechanism of action as a GABA A receptor agonist, produced subjective responses and abuse-related neuropharmacology profile similar to that of midazolam, a schedule IV depressant.

Remimazolam is a new molecular entity. It is chemically known as 4 H -imidazol[1,2- a ][1,4]benzodiazepine-4- propionic acid, 8-bromo-1-methyl-6-(2-pyridinyl)-(4 S )-methyl ester, benzenesulfonate (1:1) and also as methyl 3-[(4 S )-8-bromo-1-methyl-6-pyridin-2-yl-4 H -imidazo[1,2- a ][1,4]benzodiazepin-4yl]propanoate benzenesulfonic acid. It is a white to off-white powder that is freely soluble in water. In preclinical studies, remimazolam, an ester based drug, is rapidly hydrolyzed by tissue esterases, primarily in the liver by carboxylesterase-1, and results in one inactive metabolite. In humans, acute administration of the proposed therapeutic dose (5 mg, i.v.) of remimazolam resulted in rapid onset sedative effects (one to three minutes), fast time to maximal plasma concentration (T max, nine minutes), and a short half-life (twenty minutes).

There is no information on the history and current pattern of abuse for remimazolam, since it has not been marketed, legally or illegally, in the United States, and only recently in Japan. HHS notes that the abuse potential of remimazolam is similar to that of schedule IV benzodiazepines. Therefore, if remimazolam were available for marketing, it is likely to be abused in a manner similar to schedule IV benzodiazepines, such as midazolam.

DEA conducted a search of NFLIS and STARLiMS databases for remimazolam encounters. No records of encounters by law enforcement were identified in these databases, which is consistent with the fact that remimazolam is a new molecular entity.

The pharmacological mechanism of action of remimazolam through GABA A receptor agonism suggests that its pattern of abuse would be similar to schedule IV depressants with a similar mechanism of action, such as midazolam.

Remimazolam is not marketed in the United States, legally or illegally, and marketed only recently in Japan. However, because of remimazolam's pharmacological similarities to schedule IV benzodiazepines, remimazolam, similar to these schedule IV substances, is likely to be abused when available in the market.

According to HHS, the public health risk associated with remimazolam is due to its abuse potential and is largely borne by the individual. Data from preclinical and clinical studies showed that remimazolam has abuse potential similar to that of the schedule IV depressant midazolam. In clinical studies when remimazolam was given to healthy individuals, adverse events such as euphoric mood and somnolence occurred; thus, remimazolam produced rewarding and depressant effects, as would be expected from a benzodiazepine. Therefore, upon availability for marketing, it is likely to pose a public health risk to a degree similar to schedule IV benzodiazepines, such as midazolam.

As described in the HHS review, the Sponsor conducted a study related to physical dependence liability produced by remimazolam in six cynomolgus monkeys (0.5, 0.75, and 1.0 mg/kg/h, continuous i.v. infusion for 28 days) and psychic dependence liability in 39 humans (doses tested 5 and 10 mg, i.v.).

During extended daily dosing administrations lasting a period of 28 days, all monkeys showed depressant signs, such as ataxia, slowed motion, and hyporeactivity. During the discontinuation phase, all monkeys showed withdrawal signs including: Facial apprehension, hyperirritability, piloerection, muscle rigidity, retching and vomiting, tremors, restlessness, and impaired motor activity. Decreases in food consumption and body weights were also observed. Severe withdrawal symptoms such as dissociation from the environment, systemic convulsions, and continuously prone position for 25 hours were observed in one monkey, and remimazolam administration lessened this withdrawal syndrome in this monkey. HHS concluded that remimazolam produces physical dependence, as evidenced by the withdrawal syndrome observed after its chronic administration was discontinued.

Remimazolam produced positive subjective responses to ratings of Drug Liking, Overall Drug Liking, Good Drug Effects, and Take Drug Again in a human abuse potential study. The responses were significantly higher than the placebo and similar to midazolam, a schedule IV depressant. HHS concluded that remimazolam can produce psychic dependence to a similar extent as midazolam.

Remimazolam is not an immediate precursor of any controlled substance, as defined by 21 U.S.C. 802(23).

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

The CSA lists the findings required to place a drug or other substance in any particular schedule (I, II, III, IV, or V). 21 U.S.C. 812(b). After consideration of the analysis and recommendation of the Assistant Secretary for Health of HHS and review of all available data, the Acting Administrator of DEA, pursuant to 21 U.S.C. 812(b)(4), finds that:

Remimazolam, similar to that of the schedule IV drug midazolam, is an agonist at GABA A receptors. Remimazolam produced depressant effects in general behavior assessments, and generalized to midazolam (schedule IV) in a drug discrimination study in animals, demonstrating it has GABA A receptor agonist properties. In a human abuse potential study, remimazolam at the therapeutic and supra-therapeutic doses produced positive subjective responses such as Drug Liking, Overall Drug Liking, Good Drug Effects, and Take Drug Again similar to those of midazolam (schedule IV) and significantly higher than placebo. Furthermore, data from other clinical studies show that remimazolam produced abuse-related adverse events, namely euphoria and somnolence. Because remimazolam is similar to midazolam (schedule IV) in its abuse potential, remimazolam has a lower potential for abuse relative to the drugs or other substances in schedule III.

FDA recently approved the NDA for BYFAVO (remimazolam) injection for use in the induction and maintenance of procedural sedation in adults undergoing procedures lasting 30 minutes or less. Thus, remimazolam has a currently accepted medical use for treatment in the United States.

Remimazolam shares a similar pharmacology profile with benzodiazepine drugs. Abrupt discontinuation of benzodiazepines is associated with withdrawal symptoms. Remimazolam produced withdrawal symptoms after abrupt discontinuation in monkeys, indicative of physical dependence, similar to that of benzodiazepines. In addition, remimazolam produced positive subjective responses and euphoria-related adverse events in a human abuse potential study. It is likely that remimazolam can produce psychic dependence similar to midazolam. Thus, abuse of remimazolam may lead to limited physical or psychological dependence relative to the drugs or other substances in schedule III of the CSA.

Based on these findings, the Acting Administrator of DEA concludes that remimazolam warrants control in schedule IV of the CSA. 21 U.S.C. 812(b)(4).

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

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

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

3. Security. Remimazolam is subject to schedule III-V security requirements and must be handled and stored in accordance with 21 CFR 1301.71-1301.77. Non-practitioners handling remimazolam must also comply with the employee screening requirements of 21 CFR 1301.90-1301.93.

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

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

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

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

6. Records and Reports. DEA registrants must maintain records and submit reports for remimazolam, pursuant to 21 U.S.C. 827, 832(a), and 958(e), and in accordance with 21 CFR 1301.74(b) and (c) and parts 1304, 1312, and 1317.

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

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

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

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

Section 553 of the APA (5 U.S.C. 553) generally requires notice and comment for rulemakings. However, 21 U.S.C. 811(j) provides that in cases where a certain new drug is (1) approved by HHS, under section 505(c) of the FDCA and (2) HHS recommends control in CSA schedule II-V, DEA shall issue an interim final rule scheduling the drug within 90 days. As stated in the legal authority section, the 90-day time frame is the later of: (1) the date DEA receives HHS's scientific and medical evaluation/scheduling recommendation, or (2) the date DEA receives notice of the NDA approval by HHS. Additionally, subsection (j) specifies that the rulemaking shall become immediately effective as an interim final rule without requiring DEA to demonstrate good cause.

Executive Orders 12866, 13563, and 13771, Regulatory Planning and Review, Improving Regulation and Regulatory Review, and Reducing Regulation and Controlling Regulatory Costs

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

This interim final rule is not an E.O. 13771 regulatory action pursuant to E.O. 12866 and OMB guidance. 6

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

This rulemaking does not have federalism implications warranting the application of E.O. 13132. The rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule does not have tribal implications warranting the application of E.O. 13175. It does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.

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

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

This action does not impose a new collection of information requirement under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action would not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

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

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

Background

Section 3402(a)(1) provides that, except as otherwise provided in section 3402, every employer making a payment of wages shall deduct and withhold from such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary of the Treasury. Section 3402(a)(1) further provides that any tables or procedures prescribed under section 3402(a)(1) shall be in such form, and provide for such amounts to be deducted and withheld, as the Secretary determines to be most appropriate to carry out the purposes of chapter 1 (imposition of individual income tax). Section 3402 sets forth certain methods of withholding but also gives the Secretary broad regulatory authority in providing for tables or computational procedures for income tax withholding.

Generally, employers apply the withholding tables or computational procedures based on the entries on the Form W-4 the employee furnishes the employer. An employee who receives wages subject to withholding under section 3402 is required to furnish his or her employer a Form W-4 on commencement of employment or, generally, within 10 days after the employee experiences a “change of status” that reduces the “withholding allowance” to which the employee is entitled. See section 3402(f)(2).

An employee completes Form W-4 based on the employee's personal tax situation by applying the factors listed in section 3402(f)(1). Section 3402(f)(1) describes the combination of these factors as the employee's “withholding allowance.” Once an employee completes a valid Form W-4, the employee must furnish the Form W-4 to the employer. The employer puts the Form W-4 into effect in accordance with the timing rules in section 3402(f)(3). Once in effect, the employer generally applies the entries on an employee's Form W-4 (the withholding allowance) to compute the amount of income tax to withhold from the employee's regular wages under either the percentage method of withholding or the wage bracket method of withholding. See section 3402(b) and (c). 1

In certain cases, the IRS may issue an employer a lock-in letter that notifies the employer in writing that an employee is not entitled to claim exemption from withholding or is not entitled to the withholding allowance claimed on the employee's Form W-4 and prescribes the withholding allowance the employer must use to figure withholding. If the employer employs the employee at the time the employer receives the lock-in letter, the employer must furnish the employee notice of the lock-in letter within 10 days of receipt of the lock-in letter. In this case, the employer must withhold in accordance with the lock-in letter as of the date specified in the lock-in letter, which cannot be any earlier than 45 calendar days after the date of issuance of the lock-in letter.

After the lock-in letter becomes effective, the IRS may issue a subsequent notice (modification notice) modifying the lock-in letter. Generally, a modification notice is issued only after the employee contacts the IRS to request an adjustment to the withholding prescribed in the lock-in letter. In certain cases, if warranted, the IRS may issue a notice releasing the employee from the lock-in program. If the employee is subject to a lock-in letter or modification notice, the employer may put in effect a Form W-4 only if doing so results in more withholding than specified by the lock-in letter or modification notice. Finally, an employee who was subject to a lock-in letter or modification notice, who terminates employment and then resumes employment with the same employer within 12 months of termination, remains subject to the lock-in letter or the modification notice withholding instructions upon resuming the employment.

Prior to the Tax Cuts and Jobs Act, Public Law 115-97, 131 Stat. 2054 (2017) (TCJA), one withholding exemption was equal to the amount of one personal exemption provided in section 151(b), prorated to the payroll period. See section 3402(a)(2) (2017). TCJA enacted section 151(d)(5), which reduced the personal exemption amount to zero for the years 2018-2025. See TCJA section 11041(a). TCJA also increased the standard deduction under section 63, increased the child tax credit under section 24, and created a new credit under section 24 for other dependents. See TCJA sections 11021 and 11022.

TCJA permanently modified the wage withholding rules in section 3402(a)(2) and, replaced “withholding exemptions” with a “withholding allowance, prorated to the payroll period.” See TCJA section 11041(c)(1). TCJA also repealed section 3401(e), which, prior to TCJA, provided, for purposes of chapter 24 (relating to collection of income tax at source on wages), that the “number of withholding exemptions claimed” meant the number of withholding exemptions claimed in a withholding exemption certificate in effect under section 3402(f) or in effect under the corresponding section of prior law, except that if no such certificate was in effect, the number of withholding exemptions claimed was considered zero. See TCJA section 11041(c)(2)(A).

TCJA modified section 3402(f), and defined a “withholding allowance,” which is determined based on the factors listed in section 3402(f)(1). See TCJA section 11041(c)(2)(B). TCJA further changed the list of factors on which the withholding allowance is based and added that the withholding allowance is determined based on rules determined by the Secretary. See TCJA section 11041(c)(2)(B). This change to section 3402(f)(1) revised section 3402(f)(1)(C), entitling an employee to take into account the number of individuals for which the employee expects to take an income tax credit under section 24 instead of the number of individuals with respect to whom the employee reasonably expects to claim a deduction under section 151. Section 3402(f)(1)(D) also changed an employee's entitlement to take into account the standard deduction from an amount generally equal to one withholding exemption to the standard deduction allowable to such employee (one-half of the standard deduction in the case of an employee who is married and whose spouse is an employee receiving wages subject to withholding). Finally, TCJA added section 3402(f)(1)(F), which provides that the employee's withholding allowance also takes into account “whether the employee has withholding allowance certificates in effect with respect to more than one employer.” See TCJA section 11041(c)(2)(B).

TCJA also made conforming changes to the “change of status” rules in section 3402(f)(2), changing “withholding exemptions” to “withholding allowance” and striking out “exemption” and inserting “allowance” in various subsections of section 3402. This resulted in a conforming change to the statutory name of the withholding exemption certificate in section 3402(f)(5) to the withholding allowance certificate. See TCJA sections 11041(c)(2)(B) and (C).

TCJA amended section 3402(m) by changing the reference from “withholding allowances” to “withholding allowance.” See TCJA sections 11041(c)(2)(D) and (E). TCJA added the section 199A deduction to the list of deductions in section 3402(m)(1) that an employee may take into account in determining the additional withholding allowance that the employee is entitled to claim on Form W-4, and struck the reference to section 62(a)(10) in section 3402(m)(1) with respect to certain payments made under divorce or separation instruments previously described in section 62(a)(10). See TCJA sections 11011(b)(4) and 11051(b)(2)(B).

The legislative history of TCJA states that “the Secretary of the Treasury is to develop rules to determine the amount of tax required to be withheld by employers from a taxpayer's wages.” H.R. Rep. No. 115-466, at 203 (2017).

TCJA allowed the Secretary of the Treasury to administer section 3402 before January 1, 2019, without regard to the changes described above. See TCJA section 11041(f)(2). Nevertheless, on January 11, 2018, the Treasury Department and the IRS released Notice 1036, “Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding,” which implemented TCJA's tax rate changes, standard deduction, and suspension of the deduction under section 151. The Treasury Department and the IRS designed the 2018 withholding tables to work with the Forms W-4 that employees had already furnished their employers. On February 28, 2018, the Treasury Department and the IRS updated Form W-4, “Employee's Withholding Allowance Certificate,” incorporating TCJA's changes in the 2018 Form W-4's worksheets and updated the online withholding calculator (now called the Tax Withholding Estimator) to reflect TCJA changes. Notice 2018-14, 2018-7 I.R.B. 353, published February 12, 2018, allowed continued use of the 2017 Form W-4 temporarily in 2018 and included a relief provision for employees who experienced changes in their tax circumstances solely attributable to TCJA.

Notice 2018-92, 2018-51 I.R.B. 1038, published December 17, 2018, addressed some of TCJA's changes to section 3402 and provided interim rules for the 2019 calendar year. Section 3 of Notice 2018-92 addressed TCJA's use of “withholding allowance” (singular) and provided that withholding allowances (plural) were to be used for wage withholding computational procedures in 2019. Under section 3 of Notice 2018-92, any reference to a withholding exemption in the regulations and other guidance under section 3402 was to be applied as if it were a reference to a withholding allowance. Section 4 of Notice 2018-92 extended the relief provided in Notice 2018-14 for changes in tax circumstances solely attributable to TCJA. Section 5 of Notice 2018-92 addressed the repeal of section 3401(e) and provided rules for employees who fail to furnish a valid Form W-4. Section 6 of Notice 2018-92 allowed employees to include the employee's estimated deduction under section 199A in determining the additional withholding allowance under section 3402(m) that the employee is entitled to claim on Form W-4. Section 7 of Notice 2018-92 allowed taxpayers to use the online withholding calculator (now called the Tax Withholding Estimator) or Publication 505, “Tax Withholding and Estimated Tax,” in lieu of the Form W-4 worksheets. Section 8 of Notice 2018-92 requested comments on alternative withholding methods under section 3402(h) and announced that the IRS and the Treasury Department intended to eliminate the combined income tax withholding and employee Federal Insurance Contributions Act (FICA) tax withholding tables under § 31.3402(h)(4)-1(b). Section 9 of Notice 2018-92 confirmed that an employer in receipt of a lock-in letter should not send a response to the IRS when the employer no longer employs the employee (within the meaning of § 31.3402(f)(2)-1(g)(2)(iii)).

In June 2018, the Treasury Department and the IRS released a draft 2019 Form W-4 and draft instructions for public comment. The 2019 draft Form W-4 and instructions incorporated significant changes intended to improve the accuracy of income tax withholding and make the withholding system more transparent for employees. Many comments were received on the draft form and instructions. In response to comments received from stakeholders, the Treasury Department and the IRS announced on September 20, 2018, that implementation of the redesigned form would be postponed until 2020, and that the Treasury Department and the IRS would continue working closely with stakeholders as additional changes were made to the form for 2020. For 2019, however, Notice 2018-92 announced that the 2019 Form W-4 would include minimal changes to the 2018 Form W-4 and would continue to apply section 3402 by using the existing withholding system under which employees claimed a number of withholding allowances on a valid Form W-4.

In addition, the amount of each withholding allowance for 2019, like for the years before it, was set to what would have been the value of a personal or dependency exemption under section 151(b) prior to enactment of TCJA. See Rev. Proc. 2018-57, 2018-49 I.R.B. 827, sections 2.03 and 3.25. For calendar years 2018 through 2025, however, the exemption amount is zero. See section 151(d)(5)(A). Moreover, the high value of each withholding allowance ($4,050 for 2017, $4,150 for 2018, and $4,200 for 2019) led to rounding errors that made it difficult for some employees to have their withholding equal their tax liability for the year. Accuracy was even more difficult to achieve for employees claiming tax credits, as these amounts first had to be converted into tax deductions and then expressed as a number of withholding allowances. In addition to limiting accuracy, the use of withholding allowances to compute withholding is not intuitive, given that wages, deductions, credits, and taxes are all expressed as dollar amounts, rather than as a number of withholding allowances. Although the 2019 or earlier Forms W-4 allowed an employee to achieve a high degree of accuracy if the employee requested an additional dollar amount to be withheld and/or used the online withholding calculator (now called the Tax Withholding Estimator) or Publication 505 in completing the Form W-4, most employees did not use these options.

To address the limitations of the 2019 Form W-4, on May 31, 2019, a draft of a redesigned 2020 Form W-4 was released for public comment. The redesigned Form W-4 was intended to reduce the combined complexity of the form, instructions, and worksheets and to increase the transparency and accuracy of the withholding system. The redesigned Form W-4 uses the same underlying information as the 2019 Form W-4 but replaces complex worksheets with more straightforward questions. The redesigned Form W-4 was released on December 4, 2019, and then was rereleased on December 31, 2019, to reflect a change in the medical expense deduction threshold under section 213 for 2020 made by the Further Consolidated Appropriations Act, 2020, Public Law 116-94, 133 Stat. 2534, 3228 (2019).

The redesigned Form W-4 does not use withholding allowances. An employee selects a filing status (single, married filing separately, head of household, married filing jointly, or qualifying widow(er)) on the Form W-4, and this entry generally results in the basic standard deduction relating to the filing status being taken into account in determining the amount of tax withheld from the employee's pay. In addition, the redesigned Form W-4 streamlines the multiple jobs procedures and gives employees three options to account for a working spouse or multiple jobs held concurrently. Specifically, employees may (1) use the Tax Withholding Estimator to achieve accurate withholding; (2) complete the Multiple Jobs Worksheet and enter an additional amount to withhold from pay for each pay period; or (3) check the box in Step 2(c) on the redesigned Form W-4 to request withholding using higher withholding rate tables. For married taxpayers filing jointly with two jobs held concurrently, the effect of checking the box in Step 2(c) is similar to selecting “Married, but withhold at higher Single rate” on a 2019 or earlier Form W-4. The redesigned Form W-4 also allows an employee to enter dollar amounts for tax credits, other income, and deductions the employee expects to claim on his or her income tax return to reflect the permitted allowance under sections 3402(f)(1)(C) and (f)(1)(D) and the increase in the amount of withholding under section 3402(i).

On June 7, 2019, the IRS released for public comment a draft of Publication 15-T, “Federal Income Tax Withholding Methods,” which provided percentage method tables, wage bracket withholding tables, and other computational procedures for employers to use to compute withholding for employees for the 2020 calendar year, including for employees who furnished a redesigned Form W-4 to be effective for 2020. After stakeholder feedback, Publication 15-T was revised and rereleased on August 13, 2019, and was rereleased on November 4, 2019. Publication 15-T was finalized and released on December 24, 2019.

Publication 15-T prescribes percentage method tables, wage bracket withholding tables, discussion on alternative withholding methods, and Tables for Withholding on Distributions of Indian Gaming Profits to Tribal Members. These tables and discussions, which were formerly published in Publication 15 (Circular E), “Employer's Tax Guide,” Publication 15-A, “Employer's Supplemental Tax Guide,” and Publication 51, “Agricultural Employer's Tax Guide,” are now published only in Publication 15-T, “Federal Income Tax Withholding Methods.” However, in 2020, the IRS discontinued publishing Formula Tables for Percentage Method Withholding (for Automated Payroll Systems), Wage Bracket Percentage Method Tables (for Automated Payroll Systems), and Combined Federal Income Tax, Employee Social Security Tax, and Employee Medicare Tax Withholding Tables. In addition, the IRS has discontinued publishing Notice 1036, “Early Release Copies of the Percentage Method Tables for Income Tax Withholding,” effective beginning with calendar year 2020, and instead will post information previously included in Notice 1036 in early release drafts of Publication 15 ( www.irs.gov/Pub15 ) and Publication 15-T ( www.irs.gov/Pub15T ) for use by employers and the payroll community. For percentage method and wage bracket withholding tables, Publication 15-T describes different withholding computational procedures and different tables for 2019 or earlier Forms W-4 than for Forms W-4 from 2020 or later (the redesigned Forms W-4).

On February 13, 2020, a notice of proposed rulemaking (proposed regulations) (REG-132741-17) was published in the Federal Register (85 FR 8344) to update the regulations under sections 3401 and 3402 for legislative changes, including TCJA, and expand the rules in the regulations to accommodate the changes necessary to fully implement the redesigned Form W-4 and its related computational procedures, along with most existing computational procedures applicable to 2019 or earlier Forms W-4. These changes are explained in detail in the preamble to the proposed regulations.

The IRS did not receive any requests for a public hearing on the proposed regulations, and therefore no public hearing was held. Written comments responding to the proposed regulations were received and are available for public inspection and copying at http://www.regulations.gov or upon request. After full consideration of the comments received on the proposed regulations, this Treasury decision adopts the proposed regulations with revisions as described in the Summary of Comments and Explanation of Revisions.

The Treasury Department and the IRS received seven written comments in response to the proposed regulations. Some of the comments propose changes to the Form W-4 or related instructions, publications, or other guidance that would not require a change to the proposed regulations themselves. One commenter made a general comment about the complexity of income tax withholding from wages but did not offer any comments specific to the proposed regulations. Except to the extent that the comments raise issues related to the proposed regulations, the comments are beyond the scope of the proposed regulations, and therefore are not addressed in this Summary of Comments and Explanation of Revisions. However, the comments will remain under consideration for future revisions to forms, instructions, publications, and other guidance relating to income tax withholding from wages, including revisions to the Form W-4.

Two commenters expressed concern that the proposed regulations and the related forms, instructions, publications, and other guidance require maintenance of two different systems for computing income tax withholding from wages: One system for 2019 or earlier Forms W-4, and another system for redesigned Forms W-4. According to these commenters, these two systems complicate computer programming and exacerbate inaccuracy of employees' withholding determined using 2019 or earlier Forms W-4. These commenters requested that all employees should be required to furnish a redesigned Form W-4. One commenter stated that requiring all employees to furnish a redesigned Form W-4 would simplify computer programming and make employees more aware of TCJA changes to the wage withholding rules. The other commenter stated that not requiring employees to furnish a redesigned Form W-4 would increase burden on employers and would confuse employees who commence employment with a second or third employer that pays wages subject to income tax withholding for which the employee has to complete a redesigned Form W-4 while the employee still has 2019 or earlier Form(s) W-4 in effect with one or more employers.

The Treasury Department and the IRS note that section 3402(f)(4) generally requires that a Form W-4 continue in effect with respect to an employer until another Form W-4, furnished by the employee, takes effect under the rules in section 3402. Thus, an employer must continue withholding according to the Form W-4 submitted by an employee until the employee furnishes the employer a new Form W-4. In addition, section 11041 of TCJA does not require all employees to submit new Forms W-4 to conform to changes to the wage withholding rules in TCJA. In contrast, section 1581 of the Tax Reform Act of 1986, Public Law 99-514, 100 Stat. 2085, 2101 (1987), explicitly required all employees to furnish new Forms W-4 as a result of the changes made to the statute. In other words, although TCJA and the Tax Reform Act of 1986 both enacted significant changes to the income tax withholding rules in chapter 1, only the Tax Reform Act of 1986 mandated that employees furnish new Forms W-4. Therefore, the final regulations do not require all employees with a 2019 or earlier Form W-4 in effect to furnish a redesigned Form W-4.

Nevertheless, the Treasury Department and the IRS acknowledge the commenters' concerns and address them in two ways: (1) Through instructions to the redesigned Form W-4 for employees with multiple jobs and (2) through optional computational “bridge” entries permitted under these regulations and described in Publication 15-T.

First, in redesigning the Form W-4, the Treasury Department and the IRS were aware of the challenges facing employees who have multiple employers paying wages subject to withholding and who have 2019 or earlier Form(s) W-4 in effect in completing the redesigned Form W-4. The redesigned 2020 Form W-4 includes instructions advising employees that, “[t]o be accurate, submit a 2020 Form W-4 for all other jobs.” The IRS intends to continue providing an updated version of this instruction on Forms W-4 for future years.

Second, to address commenters' concerns relating to employers maintaining separate withholding systems, these regulations adopt optional computational bridge entries that will allow employers to continue in effect 2019 or earlier Forms W-4 as if the employees had furnished redesigned Forms W-4. This will allow employers to use one process for both 2019 and earlier Forms W-4 and 2020 and later Forms W-4 and free employers from the need to use the number of allowances data field from 2019 and earlier Forms W-4 once the employers apply the appropriate computational bridge entries for their employees. Accordingly, starting for calendar year 2021, the IRS intends to include instructions in Publication 15-T for these optional computational bridge entries. The computational bridge entries will allow employers to use the computational procedures and data fields for the redesigned Form W-4 to arrive at the equivalent withholding for an employee that would have applied using the computational procedures and data fields related to a 2019 or earlier Form W-4 furnished by the employee.

Specifically, Publication 15-T will provide for four adjustments to accurately implement the computational bridge entries. First, Publication 15-T will provide for treating an employee as having made an entry on line 1(c) (filing status) of the redesigned Form W-4 that most accurately reflects the employee's entry on line 3 (marital status) of a 2019 or earlier Form W-4. In this regard, an employee will be treated as having selected “single or married filing separately” on the redesigned form if the employee selected either “single” or “married, but withhold at higher single rate” on a 2019 or prior Form W-4. An employee will be treated as having selected “married filing jointly” on the redesigned form if the employee selected “married” on a 2019 or prior Form W-4.

Second, Publication 15-T will provide for treating an employee as also having made an entry in step 4(a) (other income (not from jobs)) on the redesigned Form W-4 based on the marital status on line 3 of a 2019 or earlier Form W-4 to help offset the full basic standard deduction that has otherwise been incorporated in tables related to the various filing statuses in step 1(c) of the redesigned Form W-4. In particular, the employer would treat the employee as having entered the value of two allowances corresponding to a single employee's filing status and the value of three allowances corresponding to a married employee's filing status in Step 4(a) of the redesigned Form W-4.

Third, Publication 15-T will provide for treating an employee as having made an entry in step 4(b) (deductions) of the redesigned Form W-4 to replicate the effect of allowances claimed on line 5 (number of allowances) of a 2019 or earlier Form W-4. In particular, the employer would multiply the number of allowances claimed on line 5 of a 2019 or earlier Form W-4 by $4,300 and treat the employee as having entered the product in Step 4(b) of the redesigned Form W-4.

Finally, fourth, Publication 15-T will provide for treating an employee as having made an entry in step 4(c) (extra withholding) of the redesigned Form W-4 to replicate the effect of any additional amount that the employee requested to have withheld using line 6 (additional amount withheld from each paycheck) on a 2019 or earlier Form W-4. In particular, the employer would treat the employee as having entered any additional amount the employee requested to have withheld from each paycheck on line 6 of a 2019 or earlier Form W-4 in Step 4(c) of the redesigned Form W-4. 2

To facilitate the use of the computational bridge entries, starting in 2021, the IRS will no longer index the withholding allowance to reflect cost-of-living adjustments to what would have been the value of a personal or dependency exemption in section 151(b) prior to enactment of TCJA. The withholding allowance will be fixed at $4,300 in 2021. Thus, employers that choose to implement the computational bridge entries starting in 2021 will not have to make any adjustments to employees' withholding entries that the employee is treated as having made on the redesigned Form W-4 within their system unless the employee furnishes a new, redesigned Form W-4.

For example, for the year 2021 and its withholding allowance of $4,300, an employer determining withholding from wages for an employee with a 2019 Form W-4 in effect on which the employee reported a marital status of single (or married, but withhold at a higher single rate) and one withholding allowance would compute withholding for the employee as if the employee had made the following entries on a 2021 Form W-4: Single or married filing separately in Step 1(c) (filing status), an entry of $8,600 in Step 4(a) (other income (not from jobs)) and an entry of $4,300 in Step 4(b) (deductions) to determine withholding from wages for this employee. In this case, the computational bridge entries that the employee is treated as having made in Step 1(c), Step 4(a), and Step 4(b) of the 2021 Form W-4 replicate the effect of selecting single and one withholding allowance on the 2019 Form W-4.

Use of the computational bridge entries will be optional; the IRS intends to continue publishing withholding tables and procedures for employers that choose to continue computing withholding using the computational procedures related to 2019 or earlier Forms W-4 furnished by employees. The computational bridge entries apply only for Forms W-4 that were properly put in effect on or before December 31, 2019, and that continue in effect under section 3402(f)(4). The computational bridge entries are not intended to continue 2019 or earlier computational procedures, including the use of a number of withholding allowances, for redesigned Forms W-4. Furthermore, if an employee is either required, or chooses, to furnish a new Form W-4, the use of the computational bridge entries by an employer does not change the requirement that the employee must use the current year's revision of the Form W-4 when furnishing a new Form W-4 to his or her employer. 3

Accordingly, these final regulations revise § 31.3402(f)(4)-1(a) to provide that an employer's use of the computational bridge entries to adapt a 2019 or earlier Form W-4 to the redesigned computational procedures as if using entries on a redesigned Form W-4 will continue in effect, within the meaning of section 3402(f)(4), a 2019 or earlier Form W-4 that was properly in effect on or before December 31, 2019.

One commenter expressed concern about whether a lock-in letter under which an employer is required to withhold based on instructions using 2019 or earlier Form W-4 computational procedures ceases to be effective because of the redesign of the Form W-4 until a new lock-in letter using redesigned Form W-4 computational procedures is issued to the employer. Under current regulations, once an employer is required to furnish the employee a copy of the lock-in letter, the lock-in letter becomes effective. It remains effective until the IRS issues the employer a modification notice, including a modification notice releasing the employee from a lock-in letter or a prior modification notice, or until the employee furnishes the employer a Form W-4 that requests more withholding than required under the lock-in letter or modification notice. If the employee is no longer employed by the employer, the lock-in letter generally does not apply because the employer generally is not paying wages subject to withholding. Under the proposed regulations and these final regulations, employers are no longer required to notify the IRS that they no longer employ an employee for whom a lock-in letter was issued.

These final regulations follow the proposed regulations and do not require the IRS to reissue lock-in letters or modification notices solely because of the redesign of the Form W-4. Employers may not assume that a lock-in letter or modification notice ceases to be effective because of changes resulting from the redesigned Form W-4 and related withholding procedures. Unless the employee furnishes the employer a Form W-4 that results in more withholding than under the lock-in letter or modification notice, the employer must continue following any lock-in letter or modification notice until the IRS releases the employee from the program.

For ease of administering the withholding instructions in lock-in letters or modification notices that were based on 2019 or earlier Forms W-4, employers may use the optional computational bridge entries discussed in section 1 of this Summary of Comments and Explanation of Revisions to comply with the requirement to withhold based on the maximum withholding allowance and filing status permitted in a lock-in letter or modification notice and to adapt to the redesigned Form W-4 and computational procedures. For example, for calendar year 2021, based on a withholding allowance of $4,300, an employer that is determining withholding from wages for an employee subject to a lock-in letter that uses 2019 computational procedures and instructs the employer use a filing status of single and a maximum withholding allowance of zero allowances, may comply with the lock-in letter by using the following computational bridge entries on a 2021 Form W-4: An entry of single or married filing separately in Step 1(c), an entry of $8,600 in Step 4(a) (other income (not from jobs)) to further account for the effect of the withholding instructions directing an employer to withhold from the employee using the single filing status, and an entry of $0 in Step 4(b) (deductions) to replicate the effect of the employee's maximum withholding allowance of zero withholding allowances.

These final regulations revise the rules in § 31.3402(f)(2)-1(g)(2)(iv) (relating to lock-in letters) and (vii) (relating to modification notices) to provide that an employer may comply with a lock-in letter or modification notice that is based on a 2019 or earlier Form W-4, as required by the regulations, if the employer implements the maximum withholding allowance and filing status permitted in a lock-in letter or modification notice by using the computational bridge entries as set forth in forms, instructions, publications, and other guidance prescribed by the Commissioner to calculate withholding for a 2019 or earlier Form W-4.

Another commenter stated that lock-in letters and modification notices should be revised in such a way that makes it easier for employers to compare withholding based on a lock-in letter or modification notice to withholding based on the redesigned Form W-4. Specifically, this commenter notes that the new entries on the redesigned Form W-4 make it more difficult for employers to determine whether a newly furnished Form W-4 results in more withholding than a lock-in letter or modification notice that the employer was required to put in effect. The commenter's suggestions regarding the contents of the lock-in letters or modifications notices do not require changes to the proposed regulations because the language of the proposed regulations is broad enough to accommodate the commenter's suggestions to the letters and notices. Accordingly, the proposed regulations regarding the contents of the lock-in letter or modification notice will be adopted as final without change. However, these comments will be considered in future revisions of the lock-in letter and modification notice.

Furthermore, to ease the employer's burden in determining whether a Form W-4 furnished by an employee for whom a lock-in letter or modification notice is in effect results in more withholding (and thus may be put into effect), the Treasury Department and the IRS note that employers may use the Income Tax Withholding Assistant for employers available on www.irs.gov. The Income Tax Withholding Assistant can aid in estimating the amount of tax to be withheld from employee's wages based on a Form W-4 furnished by the employee, which can be compared to the withholding required pursuant to a lock-in letter or modification notice. The Income Tax Withholding Assistant is a software tool that is designed to help small employers with manual payroll systems compute the amount of income tax to withhold from employees' wages. Employers enter the employees' pay frequency, wages, and Form W-4 entries, and the software tool computes the amount of income tax that is required to be withheld from employees' wages. This software tool is compatible with 2019 or earlier Forms W-4, as well as with the 2020 Form W-4, and is designed to be used by employers that use the income tax withholding tables in Publication 15-T.

The same commenter also suggested that employees who are subject to a lock-in letter or modification notice be restricted from making certain entries on a Form W-4 that they furnish to an employer that must withhold pursuant to a lock-in letter or modification notice. However, because each entry on Form W-4 is intended to foster accuracy and simplicity in income tax withholding, an employee who is subject to a lock-in letter or modification notice should be able to use all entries on Form W-4 when appropriate. Due to the circumstances under which a lock-in letter or modification notice is issued ( i.e., the employee's history of noncompliance with withholding requirements), and that any decrease in withholding from a lock-in letter or modification notice may only be accomplished by seeking a modification notice from the IRS, the employee would be furnishing a redesigned Form W-4 only to request an increase in withholding.

The proposed regulations provide that when an employee is released from a lock-in letter or modification notice, the employee would generally be required to furnish a new Form W-4, and if the employee fails to do so, the employee would be treated as single but having the withholding allowance provided in forms, instructions, publications, and other guidance prescribed by the Commissioner that applies to other employees who fail to furnish a new Form W-4. 4 Under the redesigned computational procedures, this means that the employee would be treated as single or married filing separately in Step 1(c) of the 2020 Form W-4 with no entries in Step 2, Step 3, or Step 4.

One commenter recommended that this rule be modified to require an employee to furnish a new Form W-4, but, in the event the employee fails to do so, the withholding according to the lock-in letter or modification notice would continue. The commenter recommended this approach to reduce the administrative burden on employers in administering lock-in letters and modification notices, especially upon the employee's release from a lock-in letter or modification notice. After careful consideration of the comment, the Treasury Department and the IRS do not agree that this approach is appropriate. To foster accuracy, the Treasury Department and IRS are of the view that an employee released from a lock-in letter should be subject to the normal default rule until the employee furnishes a new Form W-4. Accordingly, these final regulations adopt the rule in § 31.3402(f)(4)-1 as set forth in the proposed regulations.

One commenter questioned whether employees who were eligible for the head of household filing status but claimed single filing status on a 2019 or earlier Form W-4 must be withheld as head of household using tables applicable to redesigned Forms W-4. Under the proposed regulations, the adoption of the head of household filing status and the use of related tables is limited to redesigned Forms W-4. The head of household filing status and related tables are not available for 2019 or earlier Forms W-4. These final regulations adopt the filing status rules set forth in the proposed regulations.

One commenter noted that in processing 2020 Forms W-4 for employees, it appeared that no tax would be withheld from employees' pay, in certain circumstances, such as when employees enter an amount in Step 3 to reflect the child or other dependent credits. The commenter further noted that it appeared that no tax would be withheld in these circumstances despite the Tax Withholding Estimator showing that the employee would have a tax liability. The Treasury Department and the IRS cannot comment on specific factual situations; however, the Treasury Department and the IRS note that the redesigned Form W-4 is intended to result in more accurate withholding.

Prior to the redesign of the Form W-4, approximately 30% of income tax returns that reported gross income from wages did not report any income tax liability, yet approximately 93% of these taxpayers with no income tax liability still had federal income tax withheld from wages. Accordingly, the redesigned Form W-4 was designed to consider all the deductions and credits an employee is entitled to, which often results in no income tax withholding from the employee's wages. This is consistent with the goal of increased accuracy in withholding, which includes minimizing overwithholding from employees who owe little or no income tax, especially after tax credits reduce the employees' income tax liability.

Under the proposed regulations, employees who are not subject to a lock-in letter or modification notice may take into account estimated tax payments already made, provided that they take into account nonwage income and follow the instructions to the Tax Withholding Estimator. Although no comments were received on this issue, the Treasury Department and the IRS have determined that certain employees, especially those employees with a higher amount of nonwage income relative to wage income, should also be able to take into account planned estimated tax payments not yet made provided that the employee (1) takes into account all wage and nonwage income in determining withholding, (2) follows the instructions to the Tax Withholding Estimator, and (3) does not use planned estimated tax payments to reduce income tax withholding from wages below the pro-rata share of chapter 1 income tax attributable to the estimated annual wages. The pro-rata share of chapter 1 tax attributable to estimated annual wages will be determined under forms, instructions, publications, and other guidance prescribed by the Commissioner. The Treasury Department and the IRS have determined that this rule furthers accuracy in withholding without encouraging inappropriate underwithholding on wages by shifting withholding from wages to estimated tax payments.

In addition, the Treasury Department and the IRS have determined that employees who do not use the Tax Withholding Estimator and instead use IRS Publication 505 to determine their withholding should be able to take into account estimated tax payments subject to the applicable requirements, provided that the employees use Publication 505 instructions. Accordingly, these final regulations revise § 31.3402(m)-1(d) to allow employees to take into account estimated tax payments provided that the employee (1) follows the instructions to the Tax Withholding Estimator or Publication 505, (2) is not subject to a lock-in letter or modification notice, and (3) does not request withholding from wages that falls below the pro rata share of chapter 1 taxes attributable to wages as determined under forms, instructions, publications, and other guidance prescribed by the Commissioner. The IRS intends to update the Tax Withholding Estimator and Publication 505 to reflect this rule.

Consistent with the applicability date provisions in the proposed regulations, these final regulations generally apply on and after October 6, 2020. However, as in the proposed regulations, § 31.3402(f)(2)-1(g), relating to withholding compliance, applies as of February 13, 2020, the date the notice of proposed rulemaking was published in the Federal Register ; § 31.3402(f)(5)-1(a)(3), regarding the requirement to use the current version of Form W-4, applies as of March 16, 2020, 30 days after the date the notice of proposed rulemaking was published in the Federal Register ; and the removal of §  31.3402(h)(4)-1(b), relating to the combined income tax withholding and employee FICA tax withholding tables, applies on and after January 1, 2020. Except with regard to the removal of §  31.3402(h)(4)-1(b), taxpayers may also choose to apply the final regulations, on and after January 1, 2020 and before their applicability date as set forth in the regulations. See section 7805(b)(7).

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

Under the Regulatory Flexibility Act (RFA) (5 U.S.C. chapter 6), it is hereby certified that these final regulations do not have a significant economic impact on a substantial number of small entities that are directly affected by these final regulations. These final regulations will apply to all employers that have an income tax withholding obligation and, therefore, are likely to affect a substantial number of small entities. Although these final regulations are likely to affect a substantial number of small entities, the economic impact of these final regulations will not be significant.

These final regulations do not independently impact employers or employees because these final regulations support both the 2019 and 2020 Form W-4 and related withholding procedures, and employees are not required to furnish a new Form W-4 solely because of the redesign of the Form W-4. Employees who have a Form W-4 on file with their employer from years prior to 2020 generally will continue to have their withholding determined based on that form. These final regulations incorporate the changes made by TCJA to sections 3401 and 3402 and provide flexible and administrable rules for income tax withholding from wages to implement the 2020 Form W-4 and its related tables and computational procedures described in Publication 15-T and to work with 2019 or earlier Forms W-4. Any economic impact on small entities that have an income tax withholding obligation is generally a result of the change in underlying substantive tax rules which led to revisions in the method of computing withholding, not these final regulations. Because the final regulations preserve the option of continuing to use old Forms W-4 for existing employees who have not had significantly changed circumstances, and provide for optional computational bridge entries for employers to facilitate continued use of Forms W-4 provided in 2019 or earlier years that eliminates the need for employers to maintain separate withholding systems, these final regulations minimize impact of the statutory changes on employers, including small entities. Accordingly, the Treasury Department and the IRS certify that these final regulations will not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6).

Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.

Any collection of information associated with these final regulations has been submitted to the Office of Management and Budget for review under OMB control number 1545-0074 in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). In general, the collection of information is required under section 3402 of the Internal Revenue Code. The Treasury Department and the IRS request comments on all aspects of information collection burdens related to these final regulations, including estimates for how much time it would take to comply with the paperwork burdens described in OMB control number 1545-0074 and ways for the IRS to minimize the paperwork burden. An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a valid OMB control number.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a state, local, or tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. This rule does not include any Federal mandate that may result in expenditures by state, local, or tribal governments, or by the private sector in excess of that threshold.

Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on state and local governments, and is not required by statute, or preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This final rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive order.

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

The principal author of these final regulations is Mikhail Zhidkov, Office of the Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). Other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 31 is amended as follows:

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

The 2020 TAC of Pacific ocean perch, in the CAI, allocated to vessels participating in the BSAI trawl limited access sector fishery was established as a directed fishing allowance of 717 metric tons by the final 2020 and 2021 harvest specifications for groundfish in the BSAI (85 FR 13553, March 9, 2020).

In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific ocean perch in the CAI by vessels participating in the BSAI trawl limited access sector fishery. While this closure is effective, the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the Pacific ocean perch directed fishery in the CAI for vessels participating in the BSAI trawl limited access sector fishery. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 30, 2020.

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

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

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

The 2020 TAC of Atka mackerel, in the CAI, allocated to vessels participating in the BSAI trawl limited access sector fishery was established as a directed fishing allowance of 1,307 metric tons by the final 2020 and 2021 harvest specifications for groundfish in the BSAI (85 FR 13553, March 9, 2020).

In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Atka mackerel in the CAI by vessels participating in the BSAI trawl limited access sector fishery. While this closure is effective, the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the Atka mackerel directed fishing in the CAI for vessels participating in the BSAI trawl limited access sector fishery. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 30, 2020.

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

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

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

The 2020 TAC of Pacific cod allocated to catcher vessels using trawl gear in the Central Regulatory Area of the GOA is 1,567 metric tons (mt) as established by the final 2020 and 2021 harvest specifications for groundfish of the GOA (85 FR 13802, March 10, 2020).

In accordance with § 679.20(d)(2), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2020 TAC of Pacific cod allocated to catcher vessels using trawl gear in the Central Regulatory Area of the GOA has been reached. Therefore, NMFS is requiring that Pacific cod caught by catcher vessels using trawl gear in the Central Regulatory Area of the GOA be treated as prohibited species in accordance with § 679.21(a)(2). This closure does not apply to fishing by vessels participating in the cooperative fishery in the Rockfish Program for the Central GOA.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay prohibiting the retention of Pacific cod by catcher vessels using trawl gear in the Central Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 29, 2020.