The Food, Conservation, and Energy Act of 2008 amended the Food Security Act of 1985 to establish CSP and the Agricultural Act of 2014 (2014 Farm Bill) reauthorized and revised CSP through fiscal year (FY 2018). The Agriculture Improvement Act of 2018 (2018 Farm Bill) moved CSP from subchapter B of chapter 2 of subtitle D of title XII of the Food Security Act of 1985 to a new subchapter B of chapter 4 of subtitle D of title XII of the Food Security Act of 1985, reauthorized CSP through FY 2023, and then repealed subchapter B of chapter 2 as amended. On November 12, 2019, NRCS published an interim rule with request for comments in the Federal Register (84 FR 60883-60900; referred to below as the interim rule) that implemented mandatory changes made by the 2018 Farm Bill or that were required to implement administrative improvements and clarifications. This final rule adopts, with minor changes, the interim rule.

CSP encourages producers to address priority resource concerns and improve and conserve the quality and condition of natural resources in a comprehensive manner by:

(1) Undertaking additional conservation activities and

(2) Improving, maintaining, and managing existing conservation activities.

The Secretary of Agriculture delegated authority to the Chief, NRCS, to administer CSP.

Through CSP, NRCS provides financial and technical assistance to eligible producers to conserve and enhance soil, water, air, and related natural resources on their land. Eligible lands include private or Tribal cropland, grassland, pastureland, rangeland, nonindustrial private forest lands, and other land in agricultural areas (including cropped woodland, marshes, and agricultural land or land capable of being used for the production of livestock) on which resource concerns related to agricultural production could be addressed. Eligible lands also include lands associated with these private or Tribal agricultural lands on which a priority resource concern can be addressed through a CSP contract. Participation in CSP is voluntary. NRCS accepts applications for classic CSP at any time, with one cutoff period in the first quarter of each fiscal year. NRCS may also accept applications for renewal from a participant in the first half of the fifth year of the contract period. NRCS then ranks and makes funding decisions based on the applications received on or before the established cutoff date. Depending upon the availability of funds and the number of high-quality applications received during the first ranking and selection period, NRCS may establish additional ranking and selection periods during the remainder of the fiscal year.

The interim rule:

• Removed text that addressed CSP implementation under the Regional Conservation Partnership Program (RCPP) since the 2018 Farm Bill removed the requirement that RCPP be implemented through CSP and the other “covered programs.”

• Removed reference to the CSP acreage cap and dollar-amount-per-acre limit.

• Added definitions to reflect 2018 Farm Bill changes: Advanced grazing management, comprehensive conservation plan, and management-intensive rotational grazing.

• Addressed State organic allocations, which will be based on the number of organic and transitioning-to-organic operations in a State and the number of organic and transitioning-to-organic acres in a State.

• Required that if two or more applications receive the same ranking, they be ranked on the extent to which actual and anticipated conservation benefits from each contract are provided at the lowest cost relative to the other similar offers.

• Added advanced grazing management as a type of supplemental payment.

• Included text for the one-time payment option for development of a comprehensive conservation plan.

• Incorporated text about opportunity for participants to renew their contracts in the first half of the fifth year of the 5-year contract.

• Outlined implementation of the new CSP-Grassland Conservation Initiative (GCI).

In addition to incorporating the changes made by the 2018 Farm Bill, the interim rule incorporated the following programmatic changes:

• Removed identification of the NRCS Chief as a Vice President of the Commodity Credit Corporation.

• Modified existing terms to reflect changes in terminology, to more closely align CSP administration with the Environmental Quality Incentives Program (EQIP), and for clarity. These include, but are not limited to—

○ Modifying “eligible land” to include public land when the land is a working component of the participant's agricultural or forestry operation.

○ Modifying the definition of “veteran farmers or ranchers” to cite the statutory reference as modified by the 2018 Farm Bill.

○ Clarifying “enhancement,” “participant,” and “stewardship threshold.”

• Specified eligibility requirements for all applicants sharing in the risk and participating in day-to-day activities.

• Expanded the potential scope of bundles and provides NRCS with discretionary authority for offering bundles.

• Removed certain requirements for applicants who cross ranking pool boundaries to increase applicant flexibility.

• Added organic producers and producers transitioning to organic as a category of producer with a targeted ranking pool.

• Clarified the annual payment structure and adjusted the timeframe for implementing an applicant's first conservation activity to align with EQIP.

• Stated that, unless a waiver is granted, participants will not receive payment for conservation activities initiated or implemented prior to contract approval.

• Expanded the regulatory $400,000 contract limit for all joint operations.

• Added text to allow for contract increases due to minor adjustments made to conservation activities at the discretion of NRCS.

• Provided greater consideration to a participant's circumstances with respect to changes made to their agricultural operations.

• Addressed contract changes that arise due to the death, incompetence, or disappearance of a CSP participant.

• Included an eligibility restriction for renewal-eligible participants who choose not to renew in favor of competing for a new contract.

• Removed text related to training NRCS staff.

• Adjusted definitions to conform to those in other NRCS or Department regulations.

The interim rule 60-day comment period ended January 13, 2020. NRCS received 615 comments from 110 commenters in response to the rule. NRCS reviewed these 615 comments and categorized and summarized them according to the topics identified below. The topics that generated the greatest response were on payments, contract renewals and extensions, and ranking.

In this rule, the comments have been organized in alphabetic order by topic. The topics include:

• Administration—Timing, Training, and Streamlining and Flexibility;

• Conservation Activities;

• Contract Renewals and Extensions—Incentives for Renewal, Ranking, and Single Renewal;

• Definitions;

• Eligibility—Activities, Land, and Producer;

• Funding;

• Grassland Conservation Initiative;

• Local and Regional Priorities;

• Organic and Transitioning to Organic;

• Outreach;

• Payment and Contract Limits;

• Payments—Comprehensive Conservation Plan Payment, Early Start Waiver, Land Use Requirements, Minimum Payment, Payment Factors, Payment Rates, Payment Schedules, Stewardship Threshold, and Supplemental Payment;

• Ranking—Criteria, Ranking Pools, and Timing;

• Soil Health;

• Source Water Protection; and

• Technology.

Of the 615 comments raised by the commenters, 45 were general in nature and most expressed support for CSP or how CSP has benefitted particular operations. NRCS also received 54 comments raised by the commenters that were either outside the scope of the changes that NRCS made in the interim rule, expressed specific support for various provisions in the rule, or did not advocate for any changes.

Overall, the commenters supported the changes made by the interim rule. This final rule responds to the comments received by the public comment deadline and makes minor clarifying and related changes.

Comment: NRCS received comment that urged the agency to continue to provide timely announcement of funding opportunities and consistently make payments on time.

Response: NRCS remains committed to providing timely information and payment for involvement in all our programs, including CSP. Timeliness of information and payments are integral to maintaining public trust and NRCS will continue to emphasize this importance in CSP implementation. No changes in the final rule are necessary to address this concern.

Comment: NRCS received comment that encouraged NRCS to continue to provide appropriate training to NRCS field staff. This was in response to a change to § 1470.8(c). The interim rule removed the text that specifies that in providing technical assistance to specialty crop and organic producers, NRCS will provide appropriate training to field staff to enable them to work with producers and to utilize cooperative agreements and contracts with nongovernmental organizations with expertise in delivering technical assistance to these producers.

Response: As explained in the interim rule, NRCS modified paragraph (c) to remove text related to training NRCS staff as this is an internal agency administrative matter. NRCS will continue to provide training to field staff for all aspects of work performed. No changes were made in this final rule in response to this comment.

Comment: NRCS received comment urging NRCS to further streamline the processes for participation in CSP. Specifically, comment cited an abundance of paperwork and regulations that were cumbersome and difficult for participants to understand or navigate. The comment also sought an increased level of flexibility in how NRCS approaches CSP implementation.

Response: NRCS understands that navigating Federal programs can at times be difficult and complex. NRCS is streamlining application and contract processes, which will reduce the number and intensity of participant tasks required for CSP participation. While the interim rule and this final rule make strides in this direction, the vast majority of recommendations regard changes to the internal administration of NRCS personnel.

Comment: NRCS received comment recommending changes to conservation activities. These comments included discussion of: Bundles, criteria, environmental benefits, renewals, and recommendations for particular enhancements.

Response: NRCS appreciates the level of commitment and interest of our stakeholders in the details of the conservation activities for CSP. While specific conservation activities are not the purview of the rule, NRCS shared these comments with the staff who develop the guidance and standards related to conservation activities and will be taken into consideration as updates are made. NRCS maintains a National Handbook of Conservation Practices and Field Office Technical Guides, which provide the requirements for individual conservation practices. Requirements for other conservation activities, including enhancements and bundles, are provided in guide sheets available on the NRCS website. The process for managing conservation practice standards can be found in the NRCS General Manual, Title 450, Part 401, “Technical Guides.”

Comment: NRCS received comment about incentives and other items associated with contract renewal.

• Several comments recommended that NRCS make renewing a CSP contract more appealing and straightforward, such as by offering higher contract rates than in the initial contract.

• Others suggested that a participant could exhaust the available enhancements needed to qualify for renewal, recommended renewal offers be made in year four, and urged that NRCS simply renew existing contracts without requiring additional enhancements (additionality).

• Additional comments requested that more emphasis be placed on work completed in the initial CSP contract when determining payment rates for the renewal contract.

• Another comment recommended that applications for renewal contracts compete along with the applications for new contracts in the classic signup.

Response: Renewal payment rates are determined based on the payment factors identified in the regulation and are evaluated annually to determine whether adjustments are needed. NRCS will continue to evaluate costs associated with managing and maintaining existing activities and implementing new activities and work to adjust the rates accordingly.

Additionality is required by the law. NRCS will revisit the role that additionality plays for renewal contracts as it pertains to ranking and scheduling additional activities. The agency will address these issues in more detail in subsequent topics.

NRCS has flexibility in adjusting the specific ranking criteria for each ranking pool, including between new and renewal ranking pools. Greater equity occurs when both renewal applicants and new applicants compete with other like applications. This ensures continued participation by the best stewards and offers opportunities for new producers to participate in CSP.

Comment: NRCS received comment recommending that renewal be based mostly or completely on the environmental benefits of renewal contracts, especially those benefits obtained from implementation of existing activities.

Response: CSP renewals were automatic in the past if the participant met basic compliance and threshold requirements. The 2018 Farm Bill modified renewal criteria and required that renewals be based upon a competitive process using the same ranking factors as used for new CSP signups. Although the ranking criteria were simplified in the 2018 Farm Bill and in the interim rule, NRCS will continue to give more weight to additional conservation than existing conservation in the ranking for both renewal and new signup contracts. NRCS's goal is to increase conservation and we will adjust weighting to create the correct balance in CSP through internal guidance without any change to the final rule. NRCS will continue to monitor CSP and ensure that it remains competitive.

Comment: NRCS received comment recommending that NRCS remove the “one-time only” text from the renewal options and allow participants to renew numerous times.

Response: The 2018 Farm Bill removed the specific one-time renewal text that had been in the 2014 Farm Bill; however, the expectation is that participants will fully incorporate adopted CSP activities as part of their standard operation management. These producers should see the value in their conservation activities over time and no longer require payments they receive through CSP as an incentive to maintain these activities. This was the concept supporting the interim rule's addition of the 2-year ineligibility period in § 1470.26(c). NRCS removed the “one-time” renewal text in this final rule, but also revised the provision related to the 2-year ineligibility period to include those who apply for renewal and are not selected. As comments point out, with each renewal, fewer and fewer enhancements remain available for an operation to qualify for renewal, and the competitive nature of the renewal process means that those enhancements that remain are likely not to have as much conservation benefit as existing activities on the operations seeking renewals beyond the first renewal contact. If situations change after 2 years, the operation will be eligible to once again compete in the classic CSP signup.

Comment: NRCS received comment related to definitions in the interim rule, including conservation activities, eligible land, enhancement, management intensive rotational grazing, and resource-conserving crop.

Response: The comments suggested minor, technical edits or gave general praise for specific definitions. The suggested minor edits are adopted.

Comment: NRCS received comment about the eligibility of certain activities. First, comment sought to make eligible annual payments for existing activities regardless of any enhancements or additional activities, looking at two basic scenarios:

(a) Where an operation or land use on an operation had exhausted the opportunities for additional activities, and they wanted CSP to serve as a reward for ongoing stewardship despite this lack of opportunity; or

(b) Where a producer has started an activity before the contract is executed.

Second, comment criticized the interim rule as not remaining size-neutral, claiming this unfairly excluded larger operations where, as the comment argues, there is a greater opportunity for conservation benefits.

Response: The CSP authorizing law mandates additional activities. By definition, a new conservation activity started before the contract is executed is not an “additional” activity under the contract.

CSP requires participants to enroll their entire operation. NRCS only considers the size of the operation when calculating the per-acre payment-rate component of the existing activity payment, which is exclusively based on the actual acres of each land use enrolled in the contract. The only size-relevant limitation on CSP contracts is the $200,000 payment limit mandated by statute and incorporated in the CSP regulation and the associated regulatory contract limit that mirrors the payment limit for individuals and legal entities. In 2010, NRCS increased the contract limit to $400,000 for joint operations, which may benefit certain larger operations (through the final rule published in the Federal Register on June 3, 2010, 75 FR 31610-31661, referred to below as the 2010 CSP final rule). In addition, participants in CSP are also subject to a $900,000 average Adjusted Gross Income limitation.

Comment: NRCS received comment about land eligibility. Generally, these comments supported the changes made in the interim rule, especially the expansion of land eligibility to public land components of agricultural operations. Several comments recommended that NRCS do more to ensure that participants understand the provisions of their CSP contracts. Comments also addressed heirs' property, employee training, and other areas of interest that commenters would like NRCS to make eligible.

Response: The types of publicly held land mentioned in comments all fall within the scope of public lands identified in the interim rule. Heirs' property issues fall within the scope of “other instances in which NRCS determines under § 1466.6(b)(3) that there is sufficient assurance of control” when NRCS is making determinations of eligibility and no change was needed to address this concern. NRCS employee training and ensuring that participants understand their CSP contracts are necessary for NRCS to provide the highest-quality customer service; they are a priority for NRCS.

Comment: NRCS received comment about producer eligibility requirements and how such may be affected by cash rent situations and tenant-landlord situations where:

(a) The lease may terminate within the prospective contract period;

(b) Control of land is ambiguous between tenant and landlord; and

(c) The interests of tenant and landlord may be incongruous.

Response: CCC regulations in 7 CFR part 1400 addresses cash-rent landlords and applies to CSP. This final rule reiterates that the producer must demonstrate control of the land and meet all applicant eligibility requirements for the producer to participate in CSP.

Comment: NRCS received comment about how fund allocations are addressed in the regulation, including both support for and against the changes made. Some commenters recommended exchanging dollars for acres allocated to each State (that is, a proportional allocation of dollars based on the ratio of each State's agricultural land, weighted by land use type, relative to national totals). Other comment raised that different challenges and conservation opportunities for Western landowners should be considered in fund allocations to achieve more equitable geographic distribution of CSP funds. Some comment suggested using especially sensitive areas, such as critical conservation areas (CCAs), to prioritize allocations. Comment also recommended increasing set asides for historically underserved producers.

Response: NRCS appreciates the suggestions made, but the text in the regulation about fund allocations mirrors the text in the law, and therefore no changes have been made in response to most of this comment. However, to provide clarity, NRCS adjusted text related to the set-aside for historically underserved producers in § 1470.4(c).

Comment: NRCS received comment that recommended either prohibiting crops on land covered by a Grassland Conservation Initiative (GCI) contract or limiting the types of crops and other planted species by type and area on land enrolled in GCI.

Response: This concern is addressed by the conservation stewardship threshold requirement in the interim rule. Any crops planted on land covered by a GCI contract must implement conservation activities that achieve conservation stewardship levels analogous to the land being planted or maintained in grass. This requirement will be fleshed out on a State-by-State basis using the methods defined in the regulation for stewardship thresholds, including analytics tools or models and other methods that measure conservation and improvement in priority resource concerns.

Comment: NRCS received comment requesting that NRCS address prioritization of conservation practices and activities according to local and regional needs, including seeking additional State-level flexibility and responsiveness to local resource concerns. Other comment requested that NRCS incorporate language that require consideration of local priority resource concerns when evaluating applications and to identify the prioritization process for States to select priority resource concerns. Comment also recommended that NRCS reference locally-led conservation in the rule, similar to what is in the EQIP rule.

Response: NRCS has modified § 1470.2(d) to more closely align with EQIP text, which addresses comments focused on flexibility and responsiveness to local and regional needs. NRCS involvement of State technical committees, Tribal Conservation Advisory Councils, and local working groups is identified in 7 CFR part 610, subpart C and in the NRCS standard operating procedures, which were published in the Federal Register on April 7, 2009 (74 FR 15673-15677). NRCS is not including these aspects in the CSP regulation.

Comment: NRCS received comment recommending modifications that assist organic producers or those transitioning to organic production, such as restoration of the full complement of organic-specific enhancements (citing the “2017 reinvention of CSP”), weighting allocations more in the direction of farm numbers (as organic farms are smaller on average), using outside data to determine the number of operations transitioning to organic, and establishment of a separate ranking pool in each State for organic and transitioning to organic applicants.

Response: Most CSP enhancement activities can be used on transitioning and certified organic operations. NRCS provides an organic crosswalk on its website, allowing transitioning and certified organic producers to see how various conservation activities can fit their operations. Though specific practices, activities, and enhancements are outside the scope of this rule, NRCS shared the comments with those who develop conservation standards and guidance to consider whether adjustments should be made. Similarly, with respect to weighting of allocations, § 1470.4(b) states that NRCS will allocate funding based on both the number of operations and the number of acres. NRCS will continue to seek an equitable balance between these two criteria. Nothing in the rule prohibits the use of outside data to determine the status of an operation as transitioning to organic. NRCS addresses establishment of ranking pools, including those needed to support organic and transitioning to organic production, with the input of the State Technical Committee.

Comment: NRCS received comment recommending additional outreach efforts, such as targeting forested lands, cover crop activities, and public lands.

Response: NRCS appreciates this feedback and will continue to evaluate which aspects of CSP are underutilized to maximize the impact of outreach efforts.

Comment: NRCS received comment related to the higher contract limitation for joint operations. Most comment recommended keeping the contract limit at $200,000 regardless of the participant type suggesting that allowing the higher contract limit for joint operations reduces the availability of funds for individuals and small farms. Other comment suggested the contract limitation itself is a violation of the law and large operations provide more conservation benefits.

Response: By law, CSP has an aggregate $200,000 payment limitation for persons and legal entities, directly or indirectly, for all contracts entered into during FYs 2019 through 2023. Under payment limitation requirements that are applicable to NRCS and Farm Service Agency programs, joint operations are able to receive a payment up to the maximum payment amount specified for a person or legal entity multiplied by the number of persons or legal entities that comprise ownership of that joint operation (see 7 CFR part 1400). Without a contract limit, joint operations could receive very large payments under a CSP contract.

To address concerns related to large contracts with joint operations, NRCS decided in 2009 to impose a regulatory contract limit that corresponded with the CSP payment limitation. For the 2009 interim rule, the contract limit did not adjust for joint operations, but in response to public comment, the 2010 final rule doubled the contract limit for joint operations to $400,000. This system was maintained in the CSP regulation through the 2014 Farm Bill, was continued in the 2019 interim rule, and is maintained in this final rule.

The overall CSP payment limitation may not be waived. No member of a joint operation may receive more than $200,000 in payment through CSP for FYs 2019 through 2023. But, when a joint operation of two or more members enters into a CSP contract, the CSP contract with the joint operation may receive funding of up to $400,000. Note that large operations do not necessarily have the best stewardship and will not necessarily or automatically receive a higher payment. Payment is based on the manner in which the operation is managed.

Comment: NRCS received comment supporting the inclusion of the one-time payment for development of a comprehensive conservation plan, including consideration of source water protection and the use of this option for development of forest management plans.

Response: NRCS appreciates acknowledgement of the 2018 Farm Bill's inclusion of the one-time payment for development of a comprehensive conservation plan.

Comment: NRCS received comment about early start waivers. Comment expressed concern that this provision could prevent producers from earning payments for existing activities and recommended NRCS be required to grant waivers when administrative actions delay contract obligation and implementation of conservation activities until the following crop year.

Response: In the interim rule, NRCS added text in § 1470.24(f)(4) to allow an “early start waiver” for CSP, which provides alignment with EQIP. Additionally, NRCS adjusted the final rule text in § 1470.24(f)(4) to reflect that the provision applies only to new conservation activities. NRCS awards early start waivers on a case-by-case basis and does not believe that adding text requiring waivers in specific situations is needed.

Comment: NRCS received comment recommending changes to requirements for payments tied to land use, including:

(1) A change to § 1470.24(a)(3) regarding the requirement that a participant implement at least one additional conservation activity on one land use within the first 12 months of the contract; and

(2) A change to § 1470.24(a)(2) requesting removal of the requirement that in order to receive an annual payment for a land use, the participant must adopt at least one additional conservation activity on that land use.

Response: With respect to the requirement that a participant implement at least one additional conservation activity on one land use type, NRCS has adjusted the text in § 1470.24(a)(3) to remove the phrase “on one land use.”

To address the comment focused on annual payment eligibility, the CSP statute requires adoption of new conservation activities and management and maintenance of existing activities. Past policy set the requirement that the applicant had to schedule an additional activity on each land use within the operation in order to receive payments. NRCS will address this concern in a manner that conforms to the existing regulatory text.

Comment: NRCS received comment related to minimum payments recommending that the rule require that NRCS provide a minimum payment and that the minimum payment increase from $1,500 to at least $2,000.

Response: Although NRCS has provided a minimum contract payment in the past, there may be reasons in the future where a minimum contract payment may not be warranted. As such, NRCS is retaining “may” in the final rule. The actual rate for minimum contract payments is not set in regulation but determined based upon estimated costs incurred by a participant for participation in the planning process that are not otherwise compensated under CSP. The NRCS Chief retains the discretion to adjust as appropriate to reflect costs incurred by a participant for which the participant is not otherwise compensated.

Comment: NRCS received comment that encouraged NRCS to use as the primary means for determining payment levels the degree to which the conservation activities are integrated across the entire agricultural operation for all State-identified priority resource concerns over the term of the contract.

Response: CSP statutory provisions require NRCS to make payments based, to the maximum extent practicable, on the following seven factors:

(1) Cost incurred by the producer associated with planning, design, materials, installation, labor, management, maintenance, or training;

(2) Income forgone by the producer;

(3) Expected conservation benefits;

(4) The extent to which priority resource concerns will be addressed through the installation and adoption of conservation activities on the agricultural operation;

(5) The level of stewardship in place at the time of application and maintained over the term of the contract;

(6) The degree to which the conservation activities will be integrated across the entire agricultural operation for all applicable priority resource concerns over the term of the contract; and

(7) Such other factors as determined appropriate by the Secretary.

NRCS incorporates all statutory payment factors into the regulatory text, which are used to develop payment rates for both the existing activity payment and the additional activity payment. NRCS determines how to weight the various payment factors with input from State technical committees as appropriate.

Comment: NRCS received comment related to payment rates recommending that NRCS evaluate the balance between payment for existing conservation activities versus payment for new conservation activities.

Response: CSP participants are eligible to receive annual payments for maintaining existing conservation levels and implementing additional conservation activities.

Since the CSP reinvention in 2017, annual payments for maintaining existing stewardship levels on the operation have been comprised of $300 to $350 per resource concern met at the time of application and a per-acre payment rate based on land use. Per-acre payment rates are based on estimated costs of existing conservation practices per acre on each land use. Cropland generally has received the highest payment rate, with range and forestland at the lower end, and pasture in the middle. As NRCS develops its digital tools, the agency will evaluate how to make payments more reflective of on-the-ground benefits using information available through the Conservation Assessment and Ranking Tool (CART). Based on the agency's goal to gain increased conservation benefits through CSP, NRCS will continue to give more weight to additional conservation over existing conservation in both ranking and payment.

Comment: NRCS received comment recommending that State Conservationists seek input from State technical committees in the development of the payment schedules; also, comment sought standardization of payment schedules between CSP and EQIP and increased public availability of those payment schedules.

Response: Payment schedules are, and have been, consistent between CSP and EQIP. Payment schedules are posted on NRCS State websites and input from State technical committees is sought in the development of those schedules.

Comment: NRCS received comment expressing concern about the requirement to adopt new conservation activities when a producer has already met the stewardship threshold.

Response: As specified in the law, NRCS must continue to require that producers both maintain their existing activities and adopt additional activities.

Comment: NRCS received comment commending the interim rule's inclusion of supplemental payments for advanced grazing management and resource-conserving crop rotations; comment also offered a specific means of calculating the supplemental payment.

Response: NRCS appreciates the positive feedback. The comment recommending calculation of the supplemental payment may be considered in the development of the payment schedules.

Comment: NRCS received comment related to ranking criteria including that existing activities receive either equal or greater priority in ranking applications and emphasizing that environmental benefits should be the sole basis for the evaluation regardless of whether they result from existing or new activities. In addition, comment requested specific emphasis for certain resource concerns or target areas, such as forestry, water management, grazing management, cover crops, highly erodible land management, natural or ancient heritage sites, and participation in sustainability programs. The remaining comments requested NRCS:

(a) Align CSP more with EQIP regarding input from State technical committees and local work groups;

(b) Provide additional assistance to landowners with environmentally sensitive lands;

(c) Allow for the continued use of basic cover crops in CSP; and

(d) Broaden and simplify ranking criteria.

Response: The text in § 1470.20(c) in the interim rule mirrors text in the 2018 Farm Bill. The changes made there broaden the scope of NRCS discretion in ranking applications and building out the ranking factors within the final rule limits the discretion provided by the 2018 Farm Bill. Regarding § 1470.20(c)(iii), NRCS will use its discretion to maximize its ability to achieve CSP goals and objectives, including ensuring that producers enroll in CSP through a thoroughly competitive process. The goal is for CSP contracts to be awarded to applicants who propose activities with the greatest conservation benefits.

Comment: NRCS received comment related to ranking pools, including recommending that the advice of the State technical committee in determining the appropriate ranking pools for the State, with a concern that focus on geographic areas, watersheds, or other high priority areas would detract from other priority resource concerns that were State-wide. Other comments request that NRCS include more specific language requiring the establishment of separate ranking pools for beginning farmers and ranchers, socially disadvantaged farmers and ranchers, and organic and transitioning-to-organic producers.

Response: NRCS has historically provided policy guidance that requires States to establish separate fund pools for beginning farmers and ranchers and socially disadvantaged farmers and ranchers. Changes to the suite of NRCS business tools have allowed States new flexibility in managing applications from these historically underserved groups. As a result, NRCS is not incorporating requirements specifying these ranking pools in the final rule. NRCS will, however, continue to ensure that historically underserved groups continue to have access to CSP.

Comment: NRCS received comment on the timing of the ranking process, both supporting and recommending removal of the discretionary phrase “to the extent practicable” in § 1470.2(c)(1). Other comments recommend expansion of the timing of the first ranking period.

Response: NRCS appreciates the comments received on the timing of ranking periods. NRCS is retaining the discretionary text in the interim rule, which addresses unforeseen circumstances that may delay the agency's ability to hold a ranking period within the timeframe provided.

Comment: NRCS received comment expressing that the interim rule failed to identify how NRCS will address soil health as a priority?

Response: This comment refers to the new requirement that the Secretary “[t]o the maximum extent feasible . . . manage [CSP] to enhance soil health.” To address this concern, NRCS has added a paragraph to § 1470.2 that identifies how NRCS will address soil health as a priority.

Comment: NRCS received comment recommending that NRCS should specifically address source water and drinking water protection in the final rule. While acknowledging the interim rule addressed water quality and quantity, comment urged NRCS to distinguish such resource concerns from source water protection, and to prioritize source water protection in the National Water Quality Initiative (NWQI) watersheds or other high priority sites.

Response: NRCS will continue to implement CSP to address source water protection. The 2018 Farm Bill contained specific text regarding source water protection in the EQIP provisions and, as CSP moves toward greater alignment with EQIP, NRCS will consider adding source water protection criteria to existing and new conservation activity guide sheets. Further, within the interim rule's provisions, States retain the authority to target CSP funds toward source water protection through the establishment of ranking pools, including prioritization of conservation activities within the ranking templates.

Comment: NRCS received comment recommending greater producer accessibility to online tools, including access for rural communities without consistent online access. Other comment sought a way to calculate potential economic incentives for enrollment in CSP and another requested increased producer access to sustainability data in CART.

Response: Digital tools and processes are outside the scope of the final rule. However, NRCS remains committed to providing excellent customer service, which includes providing a user-friendly interface with our public-facing digital tools. Future changes will likely take place on Farmers.gov or through other digital media.

In addition to the changes discussed above, this rule is making two corrections, both correct cross references to other regulations. There is a typo in the cross reference to a paragraph in another section of the regulation. One correction simply revises the cross reference to point to the accurate paragraph where the original contract limit is outlined. The other correction updates the cross reference to the USDA debt management rules in 7 CFR part 3. In the UDSA rule published on June 17, 2020, (85 FR 36670-36714) USDA revised part 3 to eliminate the debt collection regulations of the following USDA agencies: The Commodity Credit Corporation (CCC); the Federal Crop Insurance Corporation (FCIC), and the Farm Service Agency (FSA). This rule updates the cross-reference in the CSP regulation, which previously pointed to the former CCC debt management regulations.

In general, the Administrative Procedure Act (APA) (5 U.S.C. 553) requires that a notice of proposed rulemaking be published in the Federal Register and interested persons be given an opportunity to participate in the rulemaking through submission of written data, views, or arguments with or without opportunity for oral presentation, except when the rule involves a matter relating to public property, loans, grants, benefits, or contracts. This rule involves matters relating to benefits and therefore is exempt from the APA requirements. Further, the regulations to implement the programs of chapter 58 of title 16 of the U.S. Code, as specified in 16 U.S.C. 3846, and the administration of those programs, are—

• To be made as an interim rule effective on publication, with an opportunity for notice and comment,

• Exempt from the Paperwork Reduction Act (44 U.S.C. ch. 35), and

• To use the authority under 5 U.S.C. 808 related to Congressional review.

Consistent with the use of the authority under 5 U.S.C. 808 related to Congressional review for the immediate effective date of the interim rule, this rule is also effective on the date of publication in the Federal Register .

Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The requirements in Executive Orders 12866 and 13573 for the analysis of costs and benefits apply to rules that are determined to be significant. Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” established a Federal policy to alleviate unnecessary regulatory burdens on the American people.

The Office of Management and Budget (OMB) designated this final rule as economically significant under Executive Order 12866, and therefore, OMB has reviewed this rule. The costs, benefits, and transfers of this rule are summarized in the section below in this rule. The full regulatory impact analysis is available on https://www.regulations.gov/.

Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” requires that, to manage the private costs required to comply with Federal regulations, for every new significant or economically significant regulation issued, the new costs must be offset by savings from deregulatory actions. This rule involves transfer payments and does not rise to the level required to comply with Executive Order 13771.

In general response to the requirements of Executive Order 13777, USDA created a Regulatory Reform Task Force, and USDA agencies were directed to remove barriers, reduce burdens, and provide better customer service both as part of the regulatory reform of existing regulations and as an on-going approach. NRCS reviews regulations and makes changes to improve any provision that was determined to be outdated, unnecessary, or ineffective.

Compared to CSP as authorized under the 2014 Farm Bill, Congress significantly reduced CSP's size in the 2018 Farm Bill—from $9 billion to $3.975 billion over 5 years—but left much of CSP's underlying structure intact. With fewer dollars available, fewer contracts will be funded under the 2018 Farm Bill. However, CSP will continue to fund high-ranking applications across all States, with the aim of improving cost effectiveness based on dollars per additional unit of conservation effect.

The 2018 Farm Bill eliminated the 10-million-acre cap on enrollment and the annual $18 per acre cap on CSP costs, moving to an annual funding level for new contracts, similar to EQIP. NRCS will now obligate funds for all activities conducted under a new or renewed CSP contract up front. NRCS will also allocate a portion of the annually available funds for contract renewals.

Regarding changes beyond funding and the elimination of the acreage cap, only the revised contract renewal conditions are expected to generate impacts that are moderately different from the 2014 Farm Bill. CSP contracts continue to run for 5 years and include the potential for participants to compete for a renewal contract for an additional 5 years. Under the 2014 Farm Bill, renewals were non-competitive and as long as the participant met eligibility and CSP requirements, NRCS would approve a renewal contract for one additional 5-year period. Under the 2018 Farm Bill, NRCS ranks contract renewals against other contract renewals and funds the highest ranked renewal applications. NRCS provides funding for renewals using approximately 40 percent of the total funds allocated for CSP in a given fiscal year, not including the funds set aside for the CSP Grassland Conservation Initiative. NRCS uses the remaining 60 percent of the allocation to fund the highest ranked new applications. The overall decrease in program funding will reduce the funding available for both renewal and new contracts, reducing the total number of acres treated and the amount of conservation achieved through CSP. Cost-effectiveness of overall CSP may increase as lower ranked applications will not be funded.

The 2018 Farm Bill also mandates the establishment of the CSP Grassland Conservation Initiative for eligible producers with base acres where the entire farm was planted to grass or pasture, or was idle or fallow, from January 1, 2009 to December 31, 2017. Beginning in FY 2019, the Secretary started providing signups for producers' to make a one-time election to enroll eligible land in the initiative. NRCS will continue to provide signups until all eligible producers are enrolled or the authority for CSP expires, which is currently in FY 2023. Enrollment is for a 5-year non-renewable term. Participants must meet CSP eligibility conditions, but do not go through the ranking process.

Participating producers must agree to meet or exceed the stewardship threshold for not less than one priority resource concern by the date on which the contract expires. The annual payment is limited to $18 per acre, and enrolled acreage cannot exceed the number of base acres on a farm.

An estimated 2.4 million acres meet the 2009 through 2017 criterion noted above and are eligible for the Grassland Conservation Initiative. Although these eligible acres are concentrated in Texas, Oklahoma and Kansas, there are eligible acreages throughout most of the country. The Grassland Conservation Initiative is expected to cost $214.9 million over 5 years, representing 5.5-percent of total authorized CSP funding under the 2018 Farm Bill. Through March 2020, a total of 1.2 million acres had been enrolled with obligated funds totaling $106.8 million. Cost-effectiveness may be affected marginally as fewer funds will be available.

The 2018 Farm Bill established a $200,000 CSP payment limit per person or legal entity which carried over into the 2014 and 2018 Farm Bills. To address concerns related to potentially large contracts with joint operations, NRCS initially set a contract limit of $200,000 for all contracts but increased the contract limit to $400,000 for joint operations in the 2010 CSP final rule. NRCS indicated in the interim rule that the higher contract limit for joint operations would continue for the duration of the 2018 Farm Bill (2019 through 2023). In response, NRCS received comments on contract limits, most of which recommended keeping the contract limit at $200,000 regardless of the participant type. To evaluate these comments, NRCS considered the impact of eliminating higher contract limit on potential CSP participants and the demand for CSP funds. Analysis of data found that reducing the contract limit to $200,000 for all contracts would increase funding available for additional contracts on average by $43.7 million per signup. The maximum increase in acres that could be treated with this additional funding—about 658,000 acres—represents 9.1 percent of the 7.2 million acres enrolled on average per signup since 2014. Reduced participation by joint operations and other factors, however, could lead to substantially fewer additional acres being treated than expected. Joint operations enrolled in CSP with contract costs exceeding the $200,000 limit are on average three times as large, in terms of acres, as operations enrolled in CSP with contract costs below the contract limit. However, the average per acre costs of the joint operations with contract costs exceeding the contract limit are only 1.34 times larger than the average per acre costs of operations enrolled in CSP that have contract costs below the contract limit. Based on these findings, NRCS is making no change to the existing $400,000 contract limit.

Conservation activities funded through CSP contribute to improvements in soil health and reductions in water and wind erosion on cropland, pasture, forest and rangeland; reduce nutrient losses to streams, rivers, lakes and estuaries; increase wildlife habitat, including providing habitat for pollinators; and provide other environmental benefits. Environmental benefits resulting from CSP's conservation activities are difficult to quantify at this time. Partial estimates made by NRCS (see Benefits section in the full analysis) indicate the positive benefits of CSP.

As explained above, beginning in FY 2020, NRCS began using a new software tool, CART, to assess and rank all program applications. Per the statutory requirements outlined in section 2308C(1) of the 2018 Farm Bill, CART allows NRCS to rank CSP applications based on (1) the natural resource conservation and environmental benefits that result from the conservation treatment on all applicable priority resource concerns at the time of submission of the application; (2) the degree to which the proposed conservation activities increase natural resource conservation and environmental benefits; and (3) other consistent criteria, as determined by the Secretary. Additionally, CART creates the framework to better facilitate, and integrate, the potential costs with environmental benefits (outcomes). Through data collected in CART, NRCS will be better prepared to conduct future analysis of the environmental benefits achieved through CSP.

NRCS estimates that the total cost (Table 1) of accessing the program over 5 years is $2.5 million with total transfers over 5-years equaling $3.795 billion. Given a 3 percent discount rate, this translates into a projected annualized cost to producers of accessing CSP of $414.4 thousand in constant 2019 dollars and projected annualized transfers (NRCS funds) of $759 million in constant 2019 dollars.

In implementing the 2018 Farm Bill, USDA is following legislative intent to maximize conservation impacts, address natural resource concerns, establish an open participatory process, and provide flexible assistance to producers who apply appropriate conservation measures to comply with Federal, State, and Tribal environmental requirements. Participation in CSP is voluntary. Hence, CSP participation is not expected to negatively impact CSP participants and nonparticipants.

Executive Order 12866, as supplemented by Executive Order 13563, requires each agency to write all rules in plain language. In addition to the substantive comments NRCS received on the interim rule, NRCS invited public comments on how to make the rule easier to understand. NRCS has incorporated these recommendations for improvement where appropriate. NRCS responses to public comment are described in more detail above.

The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), generally requires an agency to prepare a regulatory analysis of any rule whenever an agency is required by APA or any other law to publish a proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule is not subject to the Regulatory Flexibility Act because this rule is exempt from notice and comment rulemaking requirements of the APA and no other law requires that a proposed rule be published for this rulemaking initiative.

The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA) (42 U.S.C. 4321-4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the NRCS regulations for compliance with NEPA (7 CFR part 650). NRCS conducted an analysis of the CSP interim rule and the analysis has determined there will not be a significant impact to the human environment and as a result, an environmental impact statement (EIS) is not required to be prepared (40 CFR 1508.13). While OMB has designated this rule as “economically significant” under Executive Order 12866, “. . . economic or social effects are not intended by themselves to require preparation of an environmental impact statement” (40 CFR 1508.14), when not interrelated to natural or physical environmental effects. The Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) were available for review and comment for 30 days from the date of publication of the interim rule in the Federal Register . NRCS has considered this input and determined that supplementing or revising the current available draft of the CSP EA was warranted. NRCS has made the following changes:

3.1—Added info on comments received on interim rule and EA and addressed comment on EA.

4.4—Updated description of “Affected Environment” when new data were available, including using 2017 Census of Agriculture data.

Appendix C—Updated with 2019 CSP enhancement examples.

Figure 7 (Socially Disadvantaged Farmers and Ranchers)—Updated map using the most recent census data.

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

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

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

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

The USDA's Office of Tribal Relations (OTR) has assessed the impact of this rule on Indian Tribes and determined that this rule does not have significant tribal implication that require further tribal consultation under Executive Order 13175 at this time. If a Tribe requests consultation, NRCS and CCC will work with OTR to ensure meaningful consultation is provided where changes, additions, and modifications identified in this rule are not expressly mandated by the 2018 Farm Bill. Tribal consultation for this rule was included in the 2018 Farm Bill Tribal consultation held on May 1, 2019, at the National museum of the American Indian, in Washington, DC. The portion of the Tribal consultation relative to this rule was conducted by Bill Northey, USDA Under Secretary for the Farm Production and Conservation mission area, as part of the Title I session. There were no specific comments from Tribes on CSP during this Tribal consultation.

Additionally, NRCS held sessions with Indian Tribes and Tribal entities across the country in the spring of FY 2019 to describe the 2018 Farm Bill changes to NRCS conservation programs, obtain input about how to improve Tribal and Tribal member access to NRCS conservation assistance, and make any appropriate adjustments to the regulations that will foster such improved access. NRCS invited State leaders for the Farm Service Agency (FSA) and Rural Development (RD), as well as Regional Directors for the Risk Management Agency (RMA) to discuss their programs also.

As a result, approximately 50 percent of the comments received as a result of these sessions were directed to FSA, RMA, RD, and other USDA agencies, with many comments specific to hemp production and the surrounding regulations. Over 40 percent of the feedback pertained to NRCS programs. A handful of those comments were specific to CSP. Feedback included general requests for alternative funding arrangement opportunities under CSP, consideration of economic hardship of Tribes regarding financial assistance rates, and a more extensive list of culturally-significant plants for the subject state or region. Other comments included interest in establishing a separate funding pool for Tribes and an explanation of why CSP went from an acre-based program to a dollar-based program. Comments also listed challenges specific to Tribes that impact eligibility and inhibit access to USDA programs. None of the feedback received necessitated a change to the regulation.

NRCS will continue to work with our Tribal stakeholders to address the issues raised in order to facilitate greater technical assistance and program delivery to Indian country.

Separate from Tribal consultation and the sessions discussed above, communication and outreach efforts are in place to assure that all producers, including Tribes (or their members), are provided information about the regulation changes. Specifically, NRCS obtains input through Tribal Conservation Advisory Councils. A Tribal Conservation Advisory Council may be an existing Tribal committee or department and may also constitute an association of member Tribes organized to provide direct consultation to NRCS at the State, regional, and national levels to provide input on NRCS rules, policies, programs, and impacts on Tribes. Tribal Conservation Advisory Councils provide a venue for agency leaders to gather input on Tribal interests.

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

The title and number of the Federal Domestic Assistance Programs in the Catalog of Federal Domestic Assistance to which this rule applies is 10.924—Conservation Stewardship Program.

NRCS and CCC are 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.

Accordingly, the interim rule published November 12, 2019, at 84 FR 60883, is adopted as final with the following changes:

The community bank leverage ratio framework provides a simple measure of capital adequacy for community banking organizations that meet certain qualifying criteria. The community bank leverage ratio framework implements section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which requires the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) to establish a community bank leverage ratio of not less than 8 percent and not more than 10 percent for a qualifying community banking organization. 1 Under section 201(c) of EGRRCPA, a qualifying community banking organization whose leverage ratio exceeds the community bank leverage ratio, as established by the agencies, shall be considered to have met the generally applicable risk-based and leverage capital requirements in the capital rule (generally applicable rule), any other applicable capital or leverage requirements, and, if applicable, the “well capitalized” capital ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act. Section 201(b) of EGRRCPA also requires the agencies to establish procedures for the treatment of a qualifying community banking organization whose leverage ratio falls below the community bank leverage ratio requirement as established by the agencies.

In November 2019, the agencies issued a final rule establishing the community bank leverage ratio framework, which became effective January 1, 2020 (2019 final rule). 2 Under the 2019 final rule, the agencies established a community bank leverage ratio of 9 percent using the existing leverage ratio calculation. A qualifying community banking organization that maintained a leverage ratio of greater than 9 percent and elected to use the community bank leverage ratio framework would have been considered to have satisfied the generally applicable rule, any other applicable capital or leverage requirements, and, if applicable, the capital ratio requirements to be considered well capitalized. 3

Under the 2019 final rule, a qualifying community banking organization is any depository institution or depository institution holding company that has less than $10 billion in total consolidated assets, off-balance sheet exposures (excluding derivatives other than sold credit derivatives and unconditionally cancelable commitments) of 25 percent or less of total consolidated assets, and trading assets and liabilities of 5 percent or less of total consolidated assets. The banking organization also cannot be an advanced approaches banking organization. 4

In addition, the 2019 final rule established a two-quarter grace period during which a qualifying community banking organization that temporarily failed to meet any of the qualifying criteria, including the leverage ratio requirement, generally would still have been considered well capitalized so long as the banking organization maintained a leverage ratio of greater than 8 percent during that grace period. A banking organization that either failed to meet all the qualifying criteria within the grace period or failed to maintain a leverage ratio of greater than 8 percent would have been required to comply with the generally applicable rule and file the appropriate regulatory reports.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law. 5 Section 4012 of the CARES Act directs the agencies to issue an interim final rule providing that, for purposes of section 201 of EGRRCPA, the community bank leverage ratio shall be 8 percent, and a qualifying community banking organization whose leverage ratio falls below the community bank leverage ratio requirement established under the CARES Act shall have a reasonable grace period to satisfy that requirement. Section 4012 of the CARES Act specifies that the interim final rule is effective during the period beginning on the date on which the agencies issue the interim final rule and ending on the sooner of the termination date of the national emergency concerning the coronavirus disease (COVID-19) outbreak declared by the President on March 13, 2020, under the National Emergencies Act, or December 31, 2020 (termination date).

Accordingly, the agencies issued an interim final rule that implements a temporary 8-percent community bank leverage ratio requirement, as mandated under section 4012 of the CARES Act (statutory interim final rule). 6 In addition, under the statutory interim final rule, a community banking organization that temporarily fails to meet any of the qualifying criteria, including the 8-percent community bank leverage ratio requirement, generally will still be considered well capitalized provided that the banking organization maintains a leverage ratio equal to 7 percent or greater. A banking organization that fails to meet the qualifying criteria after the end of the grace period or reports a leverage ratio of less than 7 percent must comply with the generally applicable rule and file the appropriate regulatory reports.

Since the statutory interim final rule could cease to be effective at any time before December 31, 2020, the agencies issued a separate interim final rule pursuant to section 201(b) of EGRRCPA that provides a graduated transition from the temporary 8-percent community bank leverage ratio requirement to the 9-percent community bank leverage ratio requirement as established under the 2019 final rule (transition interim final rule). 7 Specifically, the transition interim final rule provides that, once the statutory interim final rule ceases to apply, the community bank leverage ratio will be 8 percent in the second quarter through fourth quarter of calendar year 2020, 8.5 percent in calendar year 2021, and 9 percent thereafter. The transition interim final rule also modifies the two-quarter grace period for a qualifying community banking organization to account for the graduated increase in the community bank leverage ratio requirement. The interim final rules do not make any changes to the other qualifying criteria in the community bank leverage ratio framework.

The transition interim final rule extends the 8-percent community bank leverage ratio through December 31, 2020, in the event the statutory interim final rule terminates before December 31, 2020. Thus, even if the statutory interim final rule were to terminate prior to December 31, 2020, the community bank leverage ratio would continue to be set at 8 percent for the remainder of 2020. Section 201 of EGRRCPA requires a qualifying community banking organization to exceed the community bank leverage ratio established by the agencies in order to be considered to have met the generally applicable rule, any other applicable capital or leverage requirements, and, if applicable, the “well capitalized” capital ratio requirements, whereas section 4012 of the CARES Act requires that a qualifying community banking organization meet or exceed an 8 percent community bank leverage ratio to be considered the same.

In the 2019 final rule, the agencies adopted a 9-percent community bank leverage ratio requirement on the basis that this threshold, with complementary qualifying criteria, generally maintains the current level of regulatory capital held by qualifying banking organizations and supports the agencies' goals of reducing regulatory burden while maintaining safety and soundness. The agencies intend for the graduated approach under the transition interim final rule to provide community banking organizations with sufficient time to meet a 9-percent community bank leverage ratio requirement while they also focus on supporting lending to creditworthy households and businesses. This latter goal is particularly critical given the recent strain on the U.S. economy caused by COVID-19.

Consistent with section 201(c) of EGRRCPA, under the transition interim final rule, a qualifying community banking organization that temporarily fails to meet any of the qualifying criteria, including the applicable community bank leverage ratio requirement, generally would still be deemed well capitalized during a two-quarter grace period so long as the banking organization maintains a leverage ratio of the following: Greater than 7 percent in the second quarter through fourth quarter of calendar year 2020, greater than 7.5 percent in calendar year 2021, and greater than 8 percent thereafter. 8 A banking organization that fails to meet the qualifying criteria by the end of the grace period or reports a leverage ratio of equal to or less than 7 percent in the second through fourth quarters of calendar year 2020, equal to or less than 7.5 percent in calendar year 2021, or equal to or less than 8 percent thereafter, would be required to comply immediately with the generally applicable rule and file the appropriate regulatory reports.

The agencies adopted in the 2019 final rule a two-quarter grace period with a leverage ratio requirement that is 1 percentage point below the community bank leverage ratio on the basis that this grace period would appropriately mitigate potential volatility in capital and associated regulatory reporting requirements based on temporary changes in a banking organization's risk profile from quarter to quarter, while capturing more permanent changes in a banking organization's risk profile. The agencies maintained this approach in the interim final rules because they believed that this approach is appropriate and provides a qualifying community banking organization whose leverage ratio falls below the applicable community bank leverage ratio requirement a reasonable amount of time to once again satisfy that requirement. This approach is consistent with section 201(b)(2) of EGRRCPA, which directs the agencies to establish procedures for the treatment of a qualifying community bank whose leverage ratio falls below the community bank leverage ratio requirement as established by the agencies.

The agencies received one public comment that addressed the substance of the interim final rules. The commenter urged the agencies to revert to a 9 percent community bank leverage ratio by January 1, 2022, which is consistent with the transition interim final rule. The agencies are adopting as final the interim final rules with no changes.

Under the final rule, a qualifying community banking organization must have a leverage ratio equal to or greater than 8 percent beginning in the second quarter of calendar year 2020. If the national emergency is terminated during 2020, under the final rule, a qualifying community banking organization must have a leverage ratio greater than 8 percent for the remainder of calendar year 2020. Subsequently, a qualifying community banking organization must have a leverage ratio greater than 8.5 percent through calendar year 2021 and greater than 9 percent thereafter. 9

The final rule also includes the modified two-quarter grace period for a qualifying community banking organization to take into account the graduated increase in the community bank leverage ratio requirement. 10 Specifically, a qualifying community banking organization that temporarily fails to meet any of the qualifying criteria, including the applicable community bank leverage ratio requirement, will generally still be deemed well capitalized during a two-quarter grace period so long as the banking organization maintains a leverage ratio of the following: greater than 7 percent in the second quarter through fourth quarter of calendar year 2020, greater than 7.5 percent in calendar year 2021, and greater than 8 percent thereafter. 11

The final rule does not make any changes to the other qualifying criteria in the community bank leverage ratio framework.

The agencies are maintaining the 2019 final rule's requirement that the grace period will begin as of the end of the calendar quarter in which the electing banking organization ceases to satisfy any of the qualifying criteria (so long as the banking organization maintains a leverage ratio of greater than the requirement for the applicable grace period) and will end after two consecutive calendar quarters. For example, if an electing banking organization, which had met all qualifying criteria as of March 31, 2020, no longer met one of the qualifying criteria as of May 15, 2020, and still had not met the criteria as of the end of that quarter, the grace period for the banking organization would have begun as of the end of the quarter ending June 30, 2020. The banking organization may continue to use the community bank leverage ratio framework as of September 30, 2020 (so long as the banking organization maintains a leverage ratio of greater than the requirement for the applicable grace period), but would need to comply fully with the generally applicable rule and associated reporting requirements as of December 31, 2020, unless the banking organization once again meets all qualifying criteria by that date.

If an electing banking organization is in the grace period when the community bank leverage ratio increases, the banking organization would be subject, as of the date of the change, to both the higher community bank leverage ratio requirement and higher grace period leverage ratio requirement. For example, if the electing banking organization that were to meet all qualifying criteria as of September 30, 2020, but reports a 7.2 percent leverage ratio as of December 31, 2020, and meets all the other qualifying criteria, the grace period for such a banking organization would begin as of the end of the fourth quarter 2020. The banking organization may continue to use the community bank leverage ratio framework as of March 31, 2021, if the banking organization reports a leverage ratio of greater than 7.5 percent, and would need to comply fully with the generally applicable rule and associated reporting requirements as of June 30, 2021, unless the banking organization reports a leverage ratio of greater than 8.5 percent (and meets all the other qualifying criteria) by that date. In this example, if the banking organization has a leverage ratio equal to or less than 7.5 percent as of March 31, 2021, it would not be eligible to use the community bank leverage ratio framework and would be subject to the requirements of the generally applicable rule and associated reporting requirements as of March 31, 2021.

As mentioned above, the grace period for an electing community banking organization is limited to two consecutive calendar quarters. For example, if an electing banking organization were to meet all qualifying criteria as of June 30, 2021, but reports a 8.3 percent leverage ratio (while meeting all the other qualifying criteria) as of the end of September 30, 2021, the grace period for such a banking organization would begin as of the end of the third quarter 2021. The banking organization may continue to use the community bank leverage ratio framework as of December 31, 2021, if the banking organization reports a leverage ratio of greater than 7.5 percent, and would need to comply fully with the generally applicable rule and associated reporting requirements as of March 31, 2022, unless the banking organization reports a leverage ratio of greater than 9.0 percent (and meets all the other qualifying criteria) by that date.

The final rule will affect all banking organizations ( i.e., depository institutions and depository institution holding companies) that qualify for the community bank leverage ratio framework and elect to adopt it. Based on data as of March 31, 2020, there are 5,189 banking organizations with less than $10 billion in total consolidated assets. 12 The agencies estimate that approximately 96 percent of these banking organizations qualify to use the community bank leverage ratio framework under the 8 percent requirement in effect for the remainder of calendar year 2020. As of March 31, 2020, the temporary reduction in the community bank leverage ratio requirement during the remainder of calendar year 2020 from 9 percent to 8 percent will increase the scope of qualifying community banks by approximately 480 depository institutions and approximately 20 depository institution holding companies (holding companies).

As of March 31, 2020, approximately 39 percent of qualifying banking organizations have elected to use the community bank leverage ratio framework. Approximately 92 percent of these banking organizations have total assets of less than $1 billion. As of March 31, 2020, 1,709 depository institutions have elected to use the community bank leverage ratio framework. As of the same period, 29 holding companies have elected to use the community bank leverage ratio framework. The agencies anticipate that banking organizations that have elected to use the community bank leverage ratio framework should be able to manage the transition in the leverage ratio requirement under the final rule in a prudent manner, given that the final rule provides a graduated transition back to a 9 percent leverage ratio requirement by 2022.

For purposes of the Congressional Review Act, the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a “major” rule. 13 If a rule is deemed a “major rule” by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication. 14

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 15

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

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid OMB control number. This final rule does not contain any information collection requirements. However, in connection with the transition interim final rule, the Board temporarily revised the Financial Statements for Holding Companies (FR Y-9 reports; OMB No. 7100-0128) and invited comment on a proposal to extend that collection of information for three years, with revision. No comments were received regarding this proposal under the PRA. The Board has now extended, with revision, the FR Y-9 reports, as proposed, to align the reporting instructions with this final rule. The Board will submit information collection burden estimates to OMB to finalize the revisions. All of the updates to the FR Y-9C noted in the transition interim final rule should be minimal and result in zero net change in hourly burden.

Additionally, in connection with the transition interim final rule, the agencies made revisions to the Call Reports (OCC OMB Control No. 1557-0081; Board OMB Control No. 7100-0036; and FDIC OMB Control No. 3064-0052) and the FFIEC 101 (OCC OMB Control No. 1557-0239; Board OMB Control No. 7100-0319; FDIC OMB Control No. 3064-0159). The final changes to the Call Reports, the FFIEC 101, and their related instructions are addressed in a separate Federal Register notice. 16

(1) Report Title: Financial Statements for Holding Companies.

Agency form number: FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR Y-9CS.

OMB control number: 7100-0128.

Effective date: Currently effective.

Frequency: Quarterly, semiannually, and annually.

Respondents: Bank holding companies, savings and loan holding companies, 17 securities holding companies, and U.S. intermediate holding companies (collectively, HCs).

Estimated number of respondents: FR Y-9C (non-advanced approaches CBLR HCs with less than $5 billion in total assets): 71; FR Y-9C (non-advanced approaches CBLR HCs with $5 billion or more in total assets): 35; FR Y-9C (non-advanced approaches, non CBLR, HCs with less than $5 billion in total assets): 84; FR Y-9C (non-advanced approaches, non CBLR HCs, with $5 billion or more in total assets): 154; FR Y-9C (advanced approaches HCs): 19; FR Y-9LP: 434; FR Y-9SP: 3,960; FR Y-9ES: 83; FR Y-9CS: 236.

Estimated average hours per response:

FR Y-9C (non-advanced approaches CBLR HCs with less than $5 billion in total assets): 29.17 hours; FR Y-9C (non-advanced approaches CBLR HCs with $5 billion or more in total assets): 35.14; FR Y-9C (non-advanced approaches, non CBLR HCs, with less than $5 billion in total assets): 41.01; FR Y-9C (non-advanced approaches, non CBLR, HCs with $5 billion or more in total assets): 46.98 hours; FR Y-9C (advanced approaches HCs): 48.80 hours; FR Y-9LP: 5.27 hours; FR Y-9SP: 5.40 hours; FR Y-9ES: 0.50 hours; FR Y-9CS: 0.50 hours.

FR Y-9C (non-advanced approaches HCs with less than $5 billion in total assets), FR Y-9C (non-advanced approaches HCs with $5 billion or more in total assets), FR Y-9C (advanced approaches HCs), and FR Y-9LP: 1.00 hour; FR Y-9SP, FR Y-9ES, and FR Y-9CS: 0.50 hours.

Estimated annual burden hours:

FR Y-9C (non-advanced approaches CBLR HCs with less than $5 billion in total assets): 8,284 hours; FR Y-9C (non-advanced approaches CBLR HCs with $5 billion or more in total assets): 4,920; FR Y-9C (non-advanced approaches non CBLR HCs with less than $5 billion in total assets): 13,779; FR Y-9C (non-advanced approaches non CBLR HCs with $5 billion or more in total assets): 28,940 hours; FR Y-9C (advanced approaches HCs): 3,709 hours; FR Y-9LP: 9,149 hours; FR Y-9SP: 42,768 hours; FR Y-9ES: 42 hours; FR Y-9CS: 472 hours.

FR Y-9C: 1,452 hours; FR Y-9LP: 1,736 hours; FR Y-9SP: 3,960 hours; FR Y-9ES: 42 hours; FR Y-9CS: 472 hours.

General description of report:

The FR Y-9C consists of standardized financial statements similar to the Call Reports filed by commercial banks. 18 The FR Y-9C collects consolidated data from HCs and is filed quarterly by top-tier HCs with total consolidated assets of $3 billion or more. 19 The FR Y-9LP, which collects parent company only financial data, must be submitted by each HC that files the FR Y-9C, as well as by each of its subsidiary HCs. 20 The report consists of standardized financial statements.

The FR Y-9SP is a parent company only financial statement filed semiannually by HCs with total consolidated assets of less than $3 billion. In a banking organization with total consolidated assets of less than $3 billion that has tiered HCs, each HC in the organization must submit, or have the top-tier HC submit on its behalf, a separate FR Y-9SP. This report is designed to obtain basic balance sheet and income data for the parent company, and data on its intangible assets and intercompany transactions.

The FR Y-9ES is filed annually by each employee stock ownership plan (ESOP) that is also an HC. The report collects financial data on the ESOP's benefit plan activities. The FR Y-9ES consists of four schedules: A Statement of Changes in Net Assets Available for Benefits, a Statement of Net Assets Available for Benefits, Memoranda, and Notes to the Financial Statements.

The FR Y-9CS is a free-form supplemental report that the Board may utilize to collect critical additional data deemed to be needed in an expedited manner from HCs on a voluntary basis. The data are used to assess and monitor emerging issues related to HCs, and the report is intended to supplement the other FR Y-9 reports. The data items included on the FR Y-9CS may change as needed.

Legal authorization and confidentiality: The Board has the authority to impose the reporting and recordkeeping requirements associated with the FR Y 9 family of reports on bank holding companies pursuant to section 5 of the Bank Holding Company Act of 1956 (BHC Act) (12 U.S.C. 1844); on savings and loan holding companies pursuant to section 10(b)(2) and (3) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2) and (3)), as amended by sections 369(8) and 604(h)(2) of the Dodd-Frank Wall Street and Consumer Protection Act (Dodd-Frank Act); on U.S. intermediate holding companies pursuant to section 5 of the BHC Act (12 U.S.C. 1844), as well as pursuant to sections 102(a)(1) and 165 of the Dodd-Frank Act (12 U.S.C. 511(a)(1) and 5365); and on securities holding companies pursuant to section 618 of the Dodd-Frank Act (12 U.S.C. 1850a(c)(1)(A)). The obligation to submit the FR Y 9 series of reports, and the recordkeeping requirements set forth in the respective instructions to each report, are mandatory, except for the FR Y-9CS, which is voluntary.

With respect to the FR Y 9C report, Schedule HI's data item 7(g) “FDIC deposit insurance assessments,” Schedule HC P's data item 7(a) “Representation and warranty reserves for 1 4 family residential mortgage loans sold to U.S. government agencies and government sponsored agencies,” and Schedule HC P's data item 7(b) “Representation and warranty reserves for 1 4 family residential mortgage loans sold to other parties” are considered confidential commercial and financial information. Such treatment is appropriate under exemption 4 of the Freedom of Information Act (FOIA) (5 U.S.C. 552(b)(4)) because these data items reflect commercial and financial information that is both customarily and actually treated as private by the submitter, and which the Board has previously assured submitters will be treated as confidential. It also appears that disclosing these data items may reveal confidential examination and supervisory information, and in such instances, this information would also be withheld pursuant to exemption 8 of the FOIA (5 U.S.C. 552(b)(8)), which protects information related to the supervision or examination of a regulated financial institution.

In addition, for both the FR Y 9C report, Schedule HC's memorandum item 2.b. and the FR Y 9SP report, Schedule SC's memorandum item 2.b., the name and email address of the external auditing firm's engagement partner, is considered confidential commercial information and protected by exemption 4 of the FOIA (5 U.S.C. 552(b)(4)) if the identity of the engagement partner is treated as private information by HCs. The Board has assured respondents that this information will be treated as confidential since the collection of this data item was proposed in 2004.

Additionally, items on the FR Y-9C, Schedule HC-C for loans modified under Section 4013, data items Memorandum items 16.a, “Number of Section 4013 loans outstanding”; and Memorandum items 16.b, “Outstanding balance of Section 4013 loans” are considered confidential. While the Board generally makes institution-level FR Y-9C report data publicly available, the Board is collecting Section 4013 loan information as part of condition reports for the impacted HCs and the Board considers disclosure of these items at the HC level would not be in the public interest. Such information is permitted to be collected on a confidential basis, consistent with 5 U.S.C. 552(b)(8). In addition, holding companies may be reluctant to offer modifications under Section 4013 if information on these modifications made by each holding company is publicly available, as analysts, investors, and other users of public FR Y-9C report information may penalize an institution for using the relief provided by the CARES Act. The Board may disclose Section 4013 loan data on an aggregated basis, consistent with confidentiality.

Aside from the data items described above, the remaining data items on the FR Y-9C report and the FR-Y 9SP report are generally not accorded confidential treatment. The data items collected on FR Y-9LP, FR Y-9ES, and FR Y-9CS reports, are also generally not accorded confidential treatment. As provided in the Board's Rules Regarding Availability of Information (12 CFR part 261), however, a respondent may request confidential treatment for any data items the respondent believes should be withheld pursuant to a FOIA exemption. The Board will review any such request to determine if confidential treatment is appropriate, and will inform the respondent if the request for confidential treatment has been denied.

To the extent the instructions to the FR Y-9C, FR Y-9LP, FR Y-9SP, and FR Y-9ES reports each respectively direct the financial institution to retain the work papers and related materials used in preparation of each report, such material would only be obtained by the Board as part of the examination or supervision of the financial institution. Accordingly, such information is considered confidential pursuant to exemption 8 of the FOIA (5 U.S.C. 552(b)(8)). In addition, the financial institution's work papers and related materials may also be protected by exemption 4 of the FOIA, to the extent such financial information is treated as confidential by the respondent (5 U.S.C. 552(b)(4)).

The Regulatory Flexibility Act (RFA) requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities. 21 The RFA requires an agency to prepare a final regulatory flexibility analysis when it promulgates a final rule after being required to publish a general notice of proposed rulemaking. 22 As discussed previously, the agencies have decided to adopt, without changes, revisions to the community bank leverage ratio framework made under the statutory interim final rule and the transition interim final rule. There is no general notice of proposed rulemaking associated with this final rule. Accordingly, the agencies have concluded that the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply to the promulgation of this final rule.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), 23 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, each Federal banking agency must consider, consistent with the principle of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 24 Each Federal banking agency has determined that the final rule would not impose additional reporting, disclosure, or other requirements; therefore the requirements of the RCDRIA do not apply.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede the following ADs:

• AD 2015-14-07, Amendment 39-18205 (80 FR 42014, July 16, 2015) (“AD 2015-14-07”). AD 2015-14-07 applied to certain Model 787-8 airplanes.

• AD 2016-07-10, Amendment 39-18455 (81 FR 18741, April 1, 2016) (“AD 2016-07-10”). AD 2016-07-10 applied to all Model 787-8 and 787-9 airplanes.

• AD 2016-24-09, Amendment 39-18726 (81 FR 86912, December 2, 2016) (“AD 2016-24-09”). AD 2016-24-09 applied to all Model 787-8 and 787-9 airplanes.

The NPRM published in the Federal Register on January 2, 2020 (85 FR 23). The NPRM was prompted by deficiencies in the FCM software, including reports that, in certain weather conditions, erroneous low airspeed data may be displayed to the flightcrew before detection and annunciation via engine-indicating and crew alerting system (EICAS) messages, a report indicating that all three FCMs might simultaneously reset if continuously powered on for 22 days, and one report of unannunciated dual symmetric inboard slat skew. The NPRM proposed to require installing FCE CBP5 software, which would also address the identified unsafe conditions and terminate the requirements of the ADs superseded by this AD. The FAA is issuing this AD to address deficiencies in the FCM software that could prevent continued safe flight and landing; to prevent unrealistic, sudden drops in displayed airspeed at high actual airspeed, which could lead to pilot control inputs that could exceed the structural capability of the airplane; to prevent simultaneous resets of all three FCMs, which could result in flight control surfaces not moving in response to flight crew inputs for a short time and consequent temporary loss of controllability; and to address potential unannunciated dual symmetric inboard slat skew, which can result in adverse handling characteristics of the aircraft.

The FAA has reviewed Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 002, dated July 7, 2020 (the FAA referred to Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 001, dated December 18, 2018, as an appropriate source of service information for accomplishing the actions specified in the NPRM) and has revised this AD to refer to Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 002, dated July 7, 2020. This service information removes a certain airplane line number from the effectivity; otherwise, there is no substantive change from Issue 001, dated December 18, 2018. The FAA has added paragraph (p) to this AD to provide credit for actions done prior to the effective date of this AD using Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 001, dated December 18, 2018. Subsequent paragraphs have been redesignated accordingly.

This AD requires the accomplishment of Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 002, dated March 8, 2018, prior to or concurrently with the software installation specified in paragraph (n)(1) of this AD. AD 2019-08-05, Amendment 39-19626 (84 FR 18707, May 2, 2019) (“AD 2019-08-05”) also requires the accomplishment of Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 002, dated March 8, 2018, prior to or concurrently with the installation of hydraulic tubing and a pressure-operated check valve, which corrects a different unsafe condition; so the concurrent requirement is in both ADs. The compliance time for this AD is shorter than the compliance time for AD 2019-08-05.

The FAA revised paragraph (n)(3) of this AD and removed paragraph (n)(4) of this AD. This revision clarifies the compliance time for installation of a new displays and crew alerting (DCA) system and maintenance system (MS) software, clarifies “later-approved version” in regard to DCA MS software, and clarifies that this action applies only to certain airplanes. The FAA also revised the introductory text to paragraph (n) of this AD to clarify the applicable actions.

The FAA also revised paragraphs (o)(1) and (2) of this AD which clarify “later-approved version” in regard to CBP5 and DCA MS CBP4 software.

The FAA revised paragraph (q)(3) of this AD to clarify the terminating action. The intent of paragraph (q)(3) of this AD is to require the removal of figure 1 to paragraph (k) of this AD after the actions required by paragraph (n) or (o) of this AD have been accomplished on all affected airplanes in an operator's fleet. Accomplishment of these actions then terminates paragraph (k) of this AD for all affected airplanes in an operator's fleet.

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.

The Air Line Pilots Association, International (ALPA) stated its support for the NPRM. United Airlines indicated no objection to the NPRM.

Boeing asked that a clarification of the number of occurrences of unannunciated dual symmetric inboard slat skew events be added to the relevant sections in the proposed AD. Boeing stated that there has only been a single unannunciated dual symmetric inboard slat skew event.

The FAA agrees with the commenter's request for clarification, because there has only been one occurrence of an unannunciated dual symmetric inboard slat skew. The FAA has revised the SUMMARY , Discussion section, and paragraph (e) of this AD accordingly. However, the section titled “Actions Since ADs 2015-14-07, 2016-07-10, and 2016-24-09 Were Issued,” which was included in the proposed AD, is not carried over in this final rule.

Boeing also asked that the FAA differentiate the number of occurrences of unannunciated dual symmetric inboard slat skew from the outboard slat skew issue, which is the subject of AD 2019-20-07. Boeing noted that the potential for unannunciated dual symmetric inboard slat skew, addressed by this AD, is not related to the outboard slat skew issue that is the subject of that AD.

Although the FAA agrees that the issues are not related, that clarification is not required in the content of this AD. Therefore, the FAA has not changed this AD in this regard.

Boeing asked that the FAA allow installation of later-approved FCE software in lieu of the “FCM CBP5” software identified in Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 001, dated December 18, 2018. Boeing stated that the use of “later-approved software” language was used in AD 2019-08-05, Amendment 39-19626 (84 FR 18707, May 2, 2019) (“AD 2019-08-05”) (referenced in the proposed AD), and will reduce the need for alternative method of compliance (AMOC) requests for future FCM software updates.

The FAA disagrees with the commenter's request because the Actions Required for Compliance section in Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 001, dated December 18, 2018, already includes an allowance for installation of a later-approved software part number. Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 002, dated July 7, 2020, also includes that allowance. Therefore, the FAA has not changed this AD in this regard.

Boeing asked that the FAA revise paragraph (n)(2) of the proposed AD to specify accomplishment of only the concurrent or prior actions identified as RC in the service bulletin. Boeing stated that installation of the “CMCF LDI DB” [central maintenance computer function (CMCF) loadable diagnostic information (LDI) database (DB)] software is not required to correct the unsafe condition. Boeing added that AD 2019-08-05 specifies the applicable service bulletin actions identified as RC.

The FAA agrees with the commenter's request, because installation of the CMCF LDI DB software is not required to correct the unsafe condition. If that software were cited in the requirements of this AD, any update to this software would require approval of an AMOC. The FAA has changed paragraph (n)(2) of this AD to specify doing only the applicable actions (including software installation) that are identified as RC.

Boeing asked that the FAA change paragraph (e) of the proposed AD to clarify that the AD is also prompted by the need to provide terminating action for the three ADs that are superseded by this AD. Boeing stated that this change clarifies the intent of the AD.

The FAA agrees with the commenter's request to change the text in paragraph (e) of this AD. The FAA agrees that this AD is terminating action for the interim actions identified in two of the superseded ADs: 2016-07-10 and 2016-24-09. The superseding of those prior ADs implies that this AD mitigates the unsafe condition of those prior ADs. This AD was prompted by reports of an identified unsafe condition that this AD is intended to correct. The FAA has revised the SUMMARY , Discussion section, and paragraph (e) of this AD to include the unsafe conditions that prompted the superseded ADs, since this AD also addresses those unsafe conditions.

American Airlines (AA) asked for the addition of credit for previous software installations done using the following service information.

• Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 001, dated July 31, 2017.

• Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 001, dated July 31, 2017, in conjunction with Boeing Information Notice B787-A-27-00-0039-01A-931E-D, Issue 001, dated September 7, 2017.

AA stated that equivalent credit was granted in paragraphs (i)(3) and (4) of AD 2019-08-05 (which the FAA notes also requires the concurrent installation of certain software in accordance with Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 002, dated March 8, 2018), although AD 2019-08-05 is unrelated to the NPRM.

The FAA does not agree with the commenter's request. The latest version of the CMCF software specified in Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 002, dated March 8, 2018, must be installed concurrently with the FCE CBP5 software in order for the maintenance system to work properly. Therefore, the FAA has not changed this AD in this regard.

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

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

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

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

The FAA reviewed Boeing Alert Requirements Bulletin B787-81205-SB270044-00 RB, Issue 002, dated July 7, 2020. This service information describes procedures for installing FCE CBP5 software, and applicable concurrent requirements (installing certain software).

The FAA also reviewed Boeing Alert Service Bulletin B787-81205-SB310014, Issue 002, dated June 14, 2017. This service information describes procedures for installing new DCA system and MS software and doing a software check.

This AD also requires Boeing Alert Service Bulletin B787-81205-SB270039-00, Issue 002, dated March 8, 2018, which the Director of the Federal Register approved for incorporation by reference as of June 6, 2019 (84 FR 18707, May 2, 2019).

This AD also requires Boeing Alert Service Bulletin B787-81205-SB270040-00, Issue 001, dated November 25, 2016, which the Director of the Federal Register approved for incorporation by reference as of December 2, 2016 (81 FR 86912, December 2, 2016).

This AD also requires the following service information, which the Director of the Federal Register approved for incorporation by reference as of August 20, 2015 (80 FR 42014, July 16, 2015).

• Boeing Alert Service Bulletin B787-81205-SB270017-00, Issue 001, dated September 18, 2013.

• Boeing Alert Service Bulletin B787-81205-SB270020-00, Issue 002, dated February 12, 2015.

• Boeing Service Bulletin B787-81205-SB270023-00, Issue 001, dated July 24, 2014.

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 78 airplanes of U.S. registry.

The compliance time has passed for the retained requirements in this AD, so all affected airplanes should already be in compliance with those requirements. Therefore, this AD imposes no additional financial burden on any U.S. operator.

However, if a noncompliant airplane is imported and placed on the U.S. Register in the future, the FAA estimates the following costs to comply with the retained actions:

The Unverified List (UVL), found in Supplement No. 6 to part 744 of the Export Administration Regulations (15 CFR parts 730 through 774) (EAR), contains the names and addresses of foreign persons who are or have been parties to a transaction, as such parties are described in § 748.5 of the EAR, involving the export, reexport, or transfer (in-country) of items subject to the EAR, and whose bona fides the Bureau of Industry and Security (BIS) has been unable to verify through an end-use check. BIS may add persons to the UVL when BIS or federal officials acting on BIS's behalf have been unable to verify a foreign person's bona fides because an end-use check, such as a pre-license check (PLC) or a post-shipment verification (PSV), cannot be completed satisfactorily for such purposes for reasons outside the U.S. Government's control.

There are a number of reasons why end-use checks cannot be completed. These include but are not limited to reasons unrelated to the cooperation of the foreign party subject to the end-use check. For example, BIS sometimes initiates end-use checks and cannot find a foreign party at the address indicated on export documents and cannot locate the party by telephone or email. Additionally, BIS sometimes is unable to conduct end-use checks when host government agencies do not respond to requests to conduct end-use checks, prevent the scheduling of such checks, or refuse to schedule them in a timely manner. Under these circumstances, although BIS has an interest in informing the public of its inability to verify the foreign party's bona fides, there may not be sufficient information to add the foreign person at issue to the Entity List (Supplement No. 4 to part 744 of the EAR) under § 744.11 of the EAR (Criteria for revising the Entity List). In such circumstances, BIS may add the foreign person to the UVL.

Furthermore, BIS sometimes conducts end-use checks but cannot verify the bona fides of a foreign party. For example, BIS may be unable to verify bona fides if, during the conduct of an end-use check, a recipient of items subject to the EAR is unable to produce the items that are the subject of the end-use check for visual inspection or provide sufficient documentation or other evidence to confirm the disposition of the items. The inability of foreign persons subject to end-use checks to demonstrate their bona fides raises concerns about the suitability of such persons as participants in future exports, reexports, or transfers (in-country) of items subject to the EAR and indicates a risk that such items may be diverted to prohibited end uses and/or end users. However, in such circumstances, BIS may not have sufficient information to establish that such persons are involved in activities described in parts 744 or 746 of the EAR, therefore preventing the placement of the persons on the Entity List. In such circumstances, the foreign persons may be added to the Unverified List.

As provided in § 740.2(a)(17) of the EAR, the use of license exceptions for exports, reexports, and transfers (in-country) involving a party or parties to the transaction who are listed on the UVL is suspended. Additionally, under § 744.15(b) of the EAR, there is a requirement for exporters, reexporters, and transferors to obtain (and keep a record of) a UVL statement from a party or parties to the transaction who are listed on the UVL before proceeding with exports, reexports, and transfers (in-country) to such persons, when the exports, reexports and transfers (in-country) are not subject to a license requirement.

Requests for removal of a UVL entry must be made in accordance with § 744.15(d) of the EAR. Decisions regarding the removal or modification of UVL listings will be made by the Deputy Assistant Secretary for Export Enforcement, based on a demonstration by the listed person of its bona fides.

This rule adds 26 persons to the UVL by amending Supplement No. 6 to Part 744 of the EAR to include their names and addresses. BIS adds these persons in accordance with the criteria for revising the UVL set forth in § 744.15(c) of the EAR, on the basis that BIS could not verify their bona fides because an end-use check could not be completed satisfactorily for reasons outside the U.S. Government's control. The new entries consist of three persons located in Armenia, two in Finland, three in Germany, five in Hong Kong, three in Pakistan, two in Turkey, six in the United Arab Emirates (UAE), and one person located in each of the following countries: China and Mexico. Each listing is grouped within the UVL by country with each party's name(s) listed in alphabetical order under the country and each entry includes available alias(es) and address(es), as well as the Federal Register citation and the date the person was added to the UVL. The UVL is included in the Consolidated Screening List, available at www.export.gov.

Additionally, this rule removes 40 persons from the UVL. BIS is removing these persons pursuant to § 744.15(c)(2) of the EAR or based on a determination that the companies are no longer registered to do business in the listed country and are no longer involved in U.S. exports. This final rule implements the decision to remove the following 40 persons located in China, Hong Kong, Indonesia, and the UAE from the UVL:

• Aisin Nantong Technical Center, No 11 Chen Yang Road, Nantong Development Zone Nantong, China;

• Beijing Institute of Nanoenergy and Nanosystems, 30 Xue YuanLu HaiDianQu, Beijing, China 100083;

• Changchun Institute of Applied Chemistry, Chinese Academy of Sciences, 5625 Renmin Street, Changchun City, China 130022;

• Institute of Geology, Chinese Academy of Geological Sciences, No. 26, Baiwanzhuang Street, Beijing, 100037, China;

• Ningbo Zhongxian Optoelectronic Technology Co, Ltd., Floor 11 Technology Innovation Center, No. 1188 Binhai 2nd Road, Hangzhou Bay New District, Ningbo, Zheijiang, China 315336;

• Renmin University, No. 59 Zhongguancun Street, Haidian District, Beijing, China 100872;

• Shanghai Institute of Technical Physics, Chinese Academy of Sciences, 500 Yu Tian Road, Shanghai, China 200083;

• Shanghai SKEQI Automation Engineering Co., Bldg 8, No. 650 Guanghua Road, Songjiang District, Shanghai, China;

• Shi Jia Zhuang Suin Instruments, A-2 No. 99 Yuyuan Road, LuQuan District, Shijiazhuang, China 050000;

• Termei Torch & Tip Company, No. 9 Huanbao 3rd Road, Xinbei District, Changzhou, Jiangsu, China 213034;

• Tongji University, 1239 Siping Road, Shanghai, China 200092;

• Xi'an Caijing Opto-Electronics, Science & Technology Co., Ltd, No. 168, East Zhangba Road, Shaanxi Province, Xi'an City, China;

• Xi'an Jiaotong University, School of Electrical Engineering, No. 28 Xianning West Road, Xi'an, Shaanxi, China 710049;

• Xi'an Jiaotong University, No. 99 Yanxiang Road, Qujiang, Xi'an, China 71000;

• Xi'an Micromach Photon Manufacture Technology, No. 60 Western Road, New High Tech Park, Xi'an, China, 710000;

• Yunnan Observatories, Chinese Academy of Sciences (CAS), No. 396 Yangfangwang, Kunming, Yunnan, China 650216;

• Advent International, Room 1303 Goldfield Tower, 53-59 Wuhu Street, Kung Hom, Kowloon, Hong Kong; and Flat F, 13/F, Block 1, Hong Sing Garden, Tsuen Kwan O, New Territories, Hong Kong;

• AST Technology Group (HK) Ltd., Flat 6, 20/F, Mega Trade Centre, 1-9 Mei Wan Street, Tsuen Wan, Hong Kong; and Unit 2209, 22/F, Wu Chung House, 213 Queen's Road East, Wan Chai, Hong Kong; and Unit 2103, 21/F, Sino Centre, 582-592 Nathan Road, Mong Kok, Kowloon, Hong Kong;

• CITI Hong Kong Ltd., Unit F, 7/F, Haribest Industry Building, 45-47 Au Pui Wan Street, Fo Tan, New Territories, Hong Kong;

• Foot Electronics Co. Ltd., Unit 2103, 21/F, Sino Centre, 582-592 Nathan Road, Mong Kok, Kowloon, Hong Kong; and Rm. 19C, Lockhart Centre, 301-307 Lockhart Road, Wan Chai, Hong Kong;

• Fuiyen Technology Ltd., 6/F, Block H, East Sun Industrial Centre, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong; and Room 1405, Lucky Centre, 165-171 Wan Chai Road, Wan Chai, Hong Kong;

• GA Industry Co. Ltd., Room 1103, Hang Seng Mong Kok Building, 677 Nathan Road, Kowloon, Hong Kong;

• Global Sourcing Electronics (HK) Ltd., Unit 4, 7/F, Bright Way Tower, No. 33 Mong Kok Road, Mong Kok, Kowloon, Hong Kong;

• GS Technology Ltd, a.k.a. GS Technology Group Ltd., Flat 6, 20/F, Mega Trade Centre, 1-9 Mei Wan Street, Tsuen Wan, New Territories, Hong Kong; and Unit D, 16/F, Cheuk Nang Plaza, 250 Hennessy Road, Wanchai, Hong Kong;

• Hi-Shine Technology (HK) Limited, Flat D12, 11/F, King Yip Factory Bldg, 59 King Yip Street, Kwun Tong, Kowloon, Hong Kong; and Room 603, 6/F, Hang Pont Commercial Building, 31 Tonking Street, Cheung Sha Wan, Kowloon, Hong Kong;

• Hong Kong U.Star Electronics Technology Co., Ltd., Room 28, 8/F, Shing Yip Industrial Building, 19-21 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong; and Unit 5, 27/F, Richmong Commercial Building, 109 Argyle Street, Mong Kok, Kowloon, Hong Kong; and Room 704, 7/F, Bright Way Tower, 33 Mong Kok Road, Mong Kog, Kowloon, Hong Kong;

• Hua Fu Technology Co. Ltd., Rm 1209, 12/F, Workingbond Commercial Centre, 162 Prince Edward Road West, Mong Kok, Kowloon, Hong Kong;

• Microlink Communication Ltd., Room 806, 8/F, Kenbo Commercial Building, No. 335-339 Queen's Road West, Hong Kong;

• Milectronic Communication Ltd., Room 2912, Tower 2, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong;

• Newplus Equipment Ltd., 12/F, Chinachem Johnston Plaza, 178-186 Johnston Road, Wan Chai, Hong Kong;

• People Tele-com Group, Flat A, 11/F, Adolfo Mansion, 114-116 Austin Road, Tsim Sha Tsui, Kowloon, Hong Kong;

• Runtop Circuits Technology Co., Room D9, 67/F, Block 2, Camel Paint Building, 62 Hoi Yuen Road, Kwun Tong, Hong Kong; and Flat 8-11, 16/F, New Trend Centre, 704 Prince Edward Road East, San Po Kong, Kowloon, Hong Kong;

• Team Kingdom Limited, Unit 526, 5/F, Advanced Technology Centre, 2 Choi Fat Street, Sheung Shui, New Territories, Hong Kong;

• Tianao Electronics Limited, Rm 9, 7/F, Block G, East Sun Industrial Ctr, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong;

• Top-Rank Int Trade (HK), Room 201-202, Westin Centre, 26 Hung To Road, Kwun Tong, Hong Kong; and Units A&B, 15/F, Neich Tower, 128 Gloucester Road, Wanchai, Hong Kong;

• Vessel Technology Limited, Rm 2309, 23/F, Ho King Comm Ctr, 2-16 Fayuen St., Mongkok, Kowloon, Hong Kong;

• Win Electronics Limited, G/F, 26 Pau Chung Street, Tokwawan, Kowloon, Hong Kong; and Rm 2309, 23/F, Ho King Comm Ctr, 2-16 Fayuen St., Mongkok, Kowloon, Hong Kong;

• Win-Semi International Ltd, Flat 6, 20/F, Mega Trade Centre, 1-9 Mei Wan Street, Tsuen Wan, Hong Kong; and Unit 503, 5/F, Silvercord Tower 2, 30 Canton Road, Tsimshatsui, Hong Kong;

• PetroChina International Jabung Ltd., Menara Kuningan, 25th Floor, JL. HR Rusuna, Said Block X-7, Kav. 5, Jakarta, Indonesia; and

• Chepstow FZE, Office No. 12, Y Block, P.O. Box 121227, Sharjah Airport International Free Zone, Sharjah, UAE.

Shipments removed from license exception eligibility or that are now subject to requirements in § 744.15 of the EAR as a result of this regulatory action; and on the dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on October 9, 2020, pursuant to actual orders, may proceed to that UVL-listed person under the previous license exception eligibility or without a license so long as the items have been exported from the United States, reexported or transferred (in-country) before November 9, 2020. Any such items not actually exported, reexported or transferred (in-country) before midnight on November 9, 2020 are subject to the requirements in § 744.15 of the EAR in accordance with this regulation.

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 through 4852). ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

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, distributive 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 rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866. This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

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

Pursuant to Section 1762 of the Export Control Reform Act of 2018 (title XVII, subtitle B of Pub. L. 115-232), which was included in the John S. McCain National Defense Authorization Act for Fiscal Year 2019, 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. The analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et. seq.) are not applicable because no general notice of proposed rulemaking was required for this action. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

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 Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by OMB under the following control numbers: 0694-0088, 0694-0122, 0694-0134, and 0694-0137. Collection 0694-0088 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.

This rule will not change public burden in a collection of information approved by OMB under control number 0694-0088. The restoration of license exceptions for listed persons on the Unverified List will result in decreased license applications being submitted to BIS by exporters. The removal of license exceptions for listed persons on the Unverified List will potentially result in increased license applications being submitted to BIS by exporters. Total burden hours associated with the Paperwork Reduction Act and OMB control number 0694-0088 are expected not to change, as the restoration of some license exceptions and the restriction of other license exceptions will only affect transactions involving persons removed from or added to the Unverified List and not all export transactions. Because license exception eligibility is restored for these entities removed from the UVL, this rule increases public burden in a collection of information approved by OMB under control number 0694-0137 minimally, as this will only affect specifically listed individual persons. Additionally, because license exceptions are restricted for the entities added to the UVL, this rule decreases public burden in a collection of information approved by OMB under control number 0694-0137 minimally, as this will only affect specifically listed individual persons. The decreased burden under 0694-0088 is reciprocal to the increased burden under 0694-0137, and results in little or no change of burden to the public. This rule also decreases public burden in a collection of information under OMB control number 0694-0122, as a result of the exchange of UVL statements between private parties, and under OMB control number 0694-0134, as a result of appeals from persons listed on the UVL for removal of their listing. The total change in burden hours associated with both of these collections is expected to be minimal, as it involves a limited number of persons listed on the UVL.

Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730 through 774) is amended as follows:

The Convention on Cultural Property Implementation Act, Public Law 97-446, 19 U.S.C. 2601 et seq. (hereinafter, “the Cultural Property Implementation Act”) implements the 1970 United Nations Educational, Scientific and Cultural Organization (UNESCO) Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property (hereinafter, “the Convention” (823 U.N.T.S. 231 (1972)). Pursuant to the Cultural Property Implementation Act, the United States entered into a bilateral agreement with Chile to impose import restrictions on certain Chilean archaeological material. This rule announces that the United States is now imposing import restrictions on certain archaeological material from Chile.

Under 19 U.S.C. 2602(a)(1), the United States must make certain determinations before entering into an agreement to impose import restrictions under 19 U.S.C. 2602(a)(2). On June 12, 2019, the Assistant Secretary for Educational and Cultural Affairs, United States Department of State, after consultation with and recommendation by the Cultural Property Advisory Committee, made the determinations required under the statute with respect to certain archaeological material originating in Chile that is described in the Designated List set forth below in this document.

These determinations include the following: (1) That the cultural patrimony of Chile is in jeopardy from the pillage of archaeological material representing Chile's cultural heritage dating from approximately 31,000 B.C. to 250 years before the signing of the Agreement; (2) that the Chilean government has taken measures consistent with the Convention to protect its cultural patrimony (19 U.S.C. 2602(a)(1)(B)); (3) that import restrictions imposed by the United States would be of substantial benefit in deterring a serious situation of pillage and remedies less drastic are not available (19 U.S.C. 2602(a)(1)(C)); and (4) that the application of import restrictions as set forth in this final rule is consistent with the general interests of the international community in the interchange of cultural property among nations for scientific, cultural, and educational purposes (19 U.S.C. 2602(a)(1)(D)). The Assistant Secretary also found that the material described in the determinations meets the statutory definition of “archaeological or ethnological material of the State Party” (19 U.S.C. 2601(2)).

On May 7, 2020, the United States and Chile signed a bilateral agreement, “Memorandum of Understanding between the Government of the United States of America and the Government of Chile Concerning the Imposition of Import Restrictions on Categories of Archaeological Material of Chile” (“the Agreement”), pursuant to the provisions of 19 U.S.C. 2602(a)(2). The Agreement enters into force on September 30, 2020, and enables the promulgation of import restrictions on categories of archaeological material representing Chile's cultural heritage ranging in date from the Paleoindian period (approximately 31,000-8000 B.C.) to the Huri Moai phase in Chile (A.D. 1680-1868). A list of the categories of archaeological material subject to the import restrictions is set forth later in this document.

In accordance with the Agreement, importation of material designated below is subject to the restrictions of 19 U.S.C. 2606 and § 12.104g(a) of title 19 of the Code of Federal Regulations (19 CFR 12.104g(a)) and will be restricted from entry into the United States unless the conditions set forth in 19 U.S.C. 2606 and § 12.104c of the CBP Regulations (19 CFR 12.104c) are met. CBP is amending § 12.104g(a) of the CBP Regulations (19 CFR 12.104g(a)) to indicate that these import restrictions have been imposed.

Import restrictions listed at 19 CFR 12.104g(a) are effective for no more than five years beginning on the date on which the Agreement enters into force with respect to the United States. This period may be extended for additional periods of not more than five years if it is determined that the factors which justified the Agreement still pertain and no cause for suspension of the Agreement exists. The import restrictions will expire on September 30, 2025, unless extended.

The Agreement between the United States and Chile includes, but is not limited to, the categories of objects described in the Designated List set forth below. Importation of material on this list is restricted unless the material is accompanied by documentation certifying that the material left Chile legally and not in violation of the export laws of Chile.

The Designated List includes archaeological material in stone, metal, ceramic, and organic tissue ranging in date from approximately 31,000 B.C. to 1868 A.D.

Approximate chronology of well-known archaeological sites, traditions, and cultures: Archaeological material covered by the Agreement is associated with the diverse cultural groups that resided in Chile's five cultural zones on the mainland: the Arid North, the Semi-arid North, Central Chile, Southern Chile, and the Far South; and on Rapa Nui (formerly Easter Island) in Polynesia.

Prehistoric archaeological material from the Arid North, the Semi-arid North, Central Chile, and Southern Chile dates from the earliest human presence, currently dated to approximately 31,000 B.C., to the end of the Arauco war in A.D. 1772.

(a) Paleoindian period: Groups of terminal Pleistocene terrestrial hunter-gatherers: Monteverde and Pilauco (c. 31,000-8000 B.C.); Santa Julia (10,000 B.C.); Quebrada de Mani-12 (11,000-9000 B.C.); Tagua Tagua 1 and 2 (13,500-10,800 B.C.); and Austral hunters (before 10,000 B.C.).

(b) Early Archaic period: Groups of land and sea Holocene hunter-gatherers: San Pedro Viejo de Pichasca Tradition (8000 B.C.); Alero Marifilo 1 (10,000-2000 B.C.); Huentelauquén Complex (11,500-8000 B.C.); Piuquenes Cavern (10,076-9373 B.C.); Alero El Manzano (10,140-8564 B.C.).

(c) Middle Archaic period: Chinchorro (8500-2000 B.C.); Talcahuense coastal hunter-gatherers (4500-2000 B.C.); Papudo and Morrillos Complex (7000-3000 B.C.); Cuchipuy site (7291-6643 B.C.); El Manzano 3, La Batea 1 and Tagua Tagua 2 sites (7000-3000 B.C.).

(d) Late Archaic period: Caleta Huelén-42 (4780-3780 B.C.); Caramucho-3 (4030 B.C.); Alero Punta Colorada (3,000-1 B.C.); and Guanaqueros Complex (3000 B.C.).

(e) Early Pottery period: Alto Ramírez and Faldas del Morro Phases (500 B.C.-A.D 200); El Molle Culture (300 B.C.-A.D. 800); Caleta Huelén-7, 10, 20 and 43 (450 B.C.-A.D. 820); Guatacondo-1 (900 B.C.-A.D. 200); Ramaditas (900 B.C.-A.D. 200); Pitrén Complex (A.D. 350-1000); Llolleo Complex (A.D. 200-1200); and Bato Groups (A.D. 200-1200).

(f) Middle Pottery period: Tiwanaku-influenced cultures (A.D. 600-1000); Caserones-1 (350 B.C.-A.D. 900); and San Pedro de Atacama Culture (500 B.C.-A.D. 1470).

(g) Late Intermediate Pottery period: Arica Culture (A.D. 1000-1450); Pica-Tarapacá Complex (A.D. 900-1450); Camiña (A.D. 1200-1400); Diaguita Culture (A.D. 1200-1536); and Aconcagua Cultural Complex (A.D. 900-1470).

(h) Late Pottery period: Inka-influenced cultures (A.D. 1200-1450); El Vergel Complex (A.D. 1000-1550); and Valdivia Ceramics (A.D. 1400-1800).

Archaeological material in the Far South is associated with hunter-gatherers living in the region from the beginning of the Holocene through the 19th century A.D.

(a) Early Holocene: Hunter-gatherers sites of El Chueco 1, Baño Nuevo 1, Fell, and Pali Aike sites (10,000-8000 B.C.).

(b) Middle Holocene: Hunter-gatherers from the Fell III cultural tradition (8000-5000 B.C.); early Austral canoe nomads Englefield tradition (6500-5000 B.C.); Northern canoe nomads (6000-5000 B.C.).

(c) Late Holocene: Austral hunter-gatherers and canoe nomads (5,000 B.C.-A.D. 19th century).

Archaeological material from Rapa Nui dates from the earliest settlers around A.D. 400 to 1868.

(a) Ahu Moroki phase: Rapa Nui Culture (A.D. 400-1100).

(b) Ahu Moai phase: Rapa Nui Culture (A.D. 1100-1680).

(c) Huri Moai phase: Rapa Nui Culture (A.D. 1680-1868).

Stone tools marked the arrival of the first people to each region of Chile and continued to be used throughout history. Examples of archaeological stone material covered in the Agreement include the following objects.

A. Chipped stone tools —Projectile points and tools for scraping, cutting, or perforating are made primarily from quartz crystal, quartz, basalt, silicate, and obsidian. Stone tools from the Arid North may be attached to wooden handles. A mata'a is a multifunctional Rapa Nui obsidian biface with a stem about 10 cm long.

B. Hoes, axes, and shovels —Rough and unpolished medium-sized hoes, axes, and shovels first appeared in the Early Pottery period and continued to be used throughout the Arid North, the Semi-arid North, Central Chile, and Southern Chile. In Rapa Nui, basalt or obsidian chisels ( toki ) are carved or polished bifaces in rectangular, trapezoidal, cylindrical, or irregular shapes with a pointed end. Dimensions range from 5 cm to 25 cm.

C. Bolas (boleadoras) —Round, oval, or pear-shaped stone balls have an equatorial groove where a string was tied.

D. Pestles and mortars —A pestle is a hand-held stone used with a bottom mortar stone to grind grains. Late Archaic period conical hollowed pestles were used with flat grinding stones. Llolleo Culture long and rounded pestles were used with concave mortars with a defined grinding channel. Female figure Pre-Mapuche stone mortars have a cavity in the abdomen.

E. Cup-marked stones —Large granite stones with one to dozens of carved cylindrical or oval cavities about 20 cm deep are associated with several cultures including the Papudo and Morrillos Complex.

F. Perforated stones and spindle whorls (torteras) —Perforated stones are cylindrical, spherical, or ovoid stones perforated through the center. Spindle whorls are smaller stones of similar shape used to spin yarn. Diaguita culture polished stone spindle whorls are shaped like double axes.

G. Stone pipes —Carved and polished stone pipes are for consuming hallucinogenic drugs. El Molle, Llolleo, and Pitrén culture pipes are T-shaped with small cylindrical bowls and two lateral tubular extensions, one with a closed end and one with an open end. Bowls sometimes have mamiform decorations. Mapuche culture pipes and their predecessors ( kitras ) have cylindrical bodies with a small bowl in the center and short stem or are anthropomorphic with the bowl in the torso and stem at the foot. Pipes may also have zoomorphic shapes.

H. Fishing tools —Weights for fishing lines, hooks, harpoon heads, and shellfish hooks from northern and central coastal archaeological sites are made from stone. Austral canoe nomad fishing line weights are made from coarse-grained pebbles with notches or grooves. Rapa Nui hooks are 3-10 cm long and made from black basalt, sometimes mixed with bone. They are elongated and curved with a semi-flat section and a pointed edge; the shaft is longer than the stem.

I. Geometric stones —Early Archaic period geometric stones associated with Huentalauquén and San Pedro Viejo de Pichasca Complexes are igneous stone or granite carved and polished into circles, triangles, rectangles, and polygons. The stones are sometimes covered with red, orange, gray, or black pigment. Rapa Nui geometric stones are manufactured mainly from basalt.

J. Toqui mano —Llolleo and Mapuche style toqui manos are cylindrical polished stone objects with a flat and beveled distal end, similar in shape to an axe head. Some have vertical incisions along the edge of the blade.

K. Beads —Necklaces and bracelets are often made of stone beads. Beads from the Arid and Semi-arid North are made from malachite, white quartz, silicate, and obsidian beginning in the Early Pottery period. Llolleo culture discoidal basalt beads (0.3 to 0.7 cm in diameter) are often mixed with malachite and greenish apatite tubular beads (about 0.5 cm long and 0.4 cm in diameter).

L. Labrets (tembetás) —Tembetás are stone ornaments worn in a perforation of the lower lip. They may be discoidal with wings, cylindrical with wings, or conical with wings. Some are fusiform in shape, including straight or curved bottle-shapes. Diaguita culture tembetás are button-shaped with small wings. Tembetás are also associated with the LLolleo culture and Bato groups.

M. Moai —Moai are Rapa Nui anthropomorphic figures carved in basalt, lapilli tuff, trachyte, or red scoria. Dimensions range from 30 cm to several meters in height. Some have high or low relief petroglyphs or incisions on the back and front of the figure.

N. Rock art —Rock art includes petroglyphs (engravings) and pictographs (paintings) that may have been removed from large boulders or outcrops. Rock art from the Arid North and Semi-arid North depicts humans, camelids, felines, snakes, lizards, spiders, sea mammals, fish, turtles, other animal figures, and geometric motifs. Cave art in the Far South includes geometric figures, handprints, and camelids painted in red, black, and ochre pigments.

O. Other polished stone objects —Late Pottery period cultures, including those with Inka influence, made anthropomorphic and zoomorphic figures (llamas, condors, snakes, etc.). Diaguita and Aconcagua style stone panpipes ( antaras ) are musical instruments consisting of multiple tubes. Mapuche and pre-Mapuche pendants from Central Chile are shaped like axe heads with a drilled hole to suspend the ornament. Mapuche scepters ( clavas ) are polished stone objects with a handle and head in the shape of a bird.

The earliest-known pottery in Chile dates to about 3,000 years ago. Potters in the Arid North, Semi-arid North, Central Chile, and Southern Chile created vessels, body ornaments, pipes, and other utilitarian and ceremonial items. Cultures in the Far South and Rapa Nui did not manufacture ceramics. Examples of archaeological ceramics covered in the Agreement include the following objects.

A. Early undecorated pottery —includes Faldas de Morro style large jars with restricted necks (on average 26 cm tall and 18 cm in diameter); small, shallow undecorated bowls about 4 cm tall; and large, deep undecorated bowls about 10 cm tall. Alto Ramirez style globular jars are undecorated.

B. San Pedro de Atacama style—polished black, dark brown, or red pottery may be decorated with modeled faces or geometric patterns of incised lines. Forms include bowls about 10 cm tall; anthropomorphic bottles about 18 cm tall; and tall, narrow jars with straight walls and flat bases about 12 cm tall.

C. Tiwanaku-influenced pottery —includes Cabuza-style lightly polished red ware decorated with black, or sometimes white, painted bands of lines, triangles, and wavy lines. Forms include jars with one handle, bowls, and keros (beakers). Imported fine polychrome Tiwanaku ceramics include jars, bowls, and keros with geometric, zoomorphic, or anthropomorphic painted or modeled decorations.

D. Maytas-Chiribaya style pottery —includes bowls, jars with one handle, and cántaros (very large jars with small necks) decorated with elaborate geometric designs in white, black, and red paint on red slip, often arranged into bands.

E. Arica culture ceramics —include San Miguel style large globular jars with narrow necks, keros, and smaller jars with one handle with white slip and black and red painted geometric figures, zigzag lines, and spirals. Pocoma-Gentilar style polished unslipped jars, cántaros, and cups have black, white, and red painted geometric figures, crosses, anthropomorphic designs, and zoomorphic designs on orange or white surfaces.

F. Inka-influenced ceramics —include locally produced Inka style jars that are monochrome polished red or orange or have painted black and red geometric designs. Imported Saxamar or Inka Pacajes pottery includes polished red ware plates and shallow bowls with fine lines, dots, or small llamas painted on the interior. Imported Inka polychrome pottery includes plates and jars with black, red, white, and cream painted geometric decorations.

G. Early pottery —includes El Molle style ceramics such as polished red, brown, and black cups, bottles, and jars with modeled decorations on the handles including animals and cultivated plants. Some cups are shaped like anthropomorphic kneeling figures. Some vessels are decorated with finely incised zones created by parallel lines, steps, and zigzags or with white, red and black paint. Some vessels have a metallic appearance created by applying pulverized hematite to the surface. Other Early ceramics include rough or polished red, black, or gray undecorated vessels. Styles include Loa, Quillagua, and Caleta Huelén.

H. Pica-Tarapacá Complex ceramics—include upright bottles, sometimes in anthropomorphic or zoomorphic shapes; bottles shaped like reclining anthropomorphic or zoomorphic figures; and asymmetrical or boot-shaped jars. Pottery is smoothed or polished red or black.

I. Late Intermediate Pottery period —Altiplano black-on-red ceramics are decorated with black paint over red slip creating lines, wavy lines, and steps on the outside of jars and bottles and inside of bowls. Styles include Isluga Black-on-Red and Chilpe Black-on-Red.

J. Diaguita style pottery —includes bowls with straight walls and round bases, often with modeled faces; bell-shaped bowls; anthropomorphic jars; boot-shaped jars with excised decoration; boot-shaped anthropomorphic or zoomorphic jars; and duck-shaped vessels. Red, white, and black painted designs on the exterior of finely burnished vessels include bell-shapes, rhombuses, crosses, felines, dots, and crosshatching, often organized into four equal segments.

K. Diaguita pottery with Inka influence —mixes Diaguita and Inka forms and designs. For example, Diaguita style straight-walled bowls are decorated on the interior with Inka motifs; Inka style bird-shaped plates have Diaguita decoration, sometimes divided into four sections; Inka style aríbalos have white slip and Diaguita decoration; and duck-shaped vessels painted with Inka designs. Some pottery closely imitates Cusco forms and designs, including flat or bird-shaped plates and aríbalos decorated with checkered patterns, hourglasses, double crosses, zoomorphic designs, and abstract plant motifs. Imported Inka polychrome pottery includes plates and jars with black, red, white, and cream painted geometric decorations.

L. Early pottery —includes smoothed or polished black or dark brown Bato and Llolleo style bridge-handle vessels, long-neck jars, and vessels shaped like squashes. Anthropomorphic jars are monochrome polished vessels with a thick strap handle connecting the neck to a molded human head with coffee bean eyes and prominent eyebrows and noses in a T-shape. Small, fine jars are decorated with wavy lines of hematite paint alternating with red areas. T-shaped ceramic pipes, ear plugs, and discoidal lip ornaments with wings ( tembetás ) were also made from ceramic.

M. Aconcagua style pottery —includes semispherical bowls and globular cups decorated with black painted lines on orange clay forming geometric decorations, zigzags, straight lines, triangles with pestañas, and trinacrio motifs.

N. Pitrén style pottery— includes a wide variety of forms ranging from simple globular bottles to strap-handle jars in the form of animals, plants, or humans. Ketru metawe are asymmetrical or duck-shaped jars. Most vessels are monochrome brown or red. Some have modeled decorations, incision, or negative paint. Ceramic pipes are T-shaped and 3-5 cm long.

O. Late red-on-white pottery, including pre-Hispanic El Vergel and Colonial period Valdivia styles —includes large open vessels used as funerary urns and ketru metawe. Vessels may be monochrome red or decorated with red, and sometimes black, paint over white slip creating geometric designs. Other forms include jars, bottles, plates, bowls, cups, mugs with handles, and urns. Common designs include triangles filled with parallel lines, horizontal bands of chevrons, bands of nested zigzags, vertical bands of crosshatching and diamonds, and hourglasses.

P. Mapuche style pottery —includes jars with one handle (metawe), plates, bottles, pots ( challa ), bowls, large bowls, and mugs. Pottery is typically coarse and may be monochrome black, brown, or red-slipped. Asymmetrical jars are frequently painted with red or black geometric designs on white slip. Painted designs may be in two horizontal bands of opposing triangles. Some jars are duck-shaped. Later forms include dogs, horses, and pigs.

Cultures in the Arid North, the Semi-arid North, Central Chile, and Southern Chile developed metallurgy and manufactured artifacts in copper, silver, and gold. There is no record of metallurgy among cultures in the Far South or Rapa Nui. Most metal artifacts from Chile were used for ritual and personal adornment. Examples of archaeological metal objects covered in the Agreement include the following objects.

A. Personal ornaments —Several cultures made metal earrings and rings from copper (El Molle, San Pedro de Atacama, Llolleo, Aconcagua, Pitrén, El Vergel), gold (Arica, Tiwanaku, Inka, San Pedro de Atacama), or silver (Arica, Inka, San Pedro de Atacama). Notable types include Diaguita earrings that may have quadrangular or spiral shaped bodies and/or stone or metal appendices. San Pedro de Atacama rings may be made from smooth laminar sheets or wires. Some rings have appendices or heads. Other San Pedro de Atacama ornaments include metal plaques, small bells, gold and silver disks, imitation feathers, diadems, headbands, ear plugs, and bracelets. Diaguita and El Vergel bracelets are made from copper. Arica and Aconcagua cultures made copper hooks. Arica and San Pedro de Atacama cultures made ornamental clothing pins ( tupus ). Mapuche tupus were made from copper and silver.

B. Domestic and ceremonial tools —Functional metal axes are associated with Diaguita and San Pedro de Atacama cultures. Inka and Inka-influenced Diaguita tumis are ceremonial axes with a long handle and a semicircular or rectilinear blade. San Pedro, Diaguita, and Inka copper chisels are long copper tools with quadrangular cross-sections that are beveled on one end. San Pedro de Atacama mace heads are ellipsoidal. Inka copper or bronze mace heads are star-shaped. Metal tools from the Arid North may be attached to wooden handles. San Pedro de Atacama and Inka tweezers are made from copper or copper alloy. San Pedro de Atacama culture also made circular or ovoid punches. Knuckles ( manoplas ) are fist-sized semicircular tools with a pointed protrusion that may have been used to tighten bowstrings or as “brass knuckles.”

C. Vessels —Gold or silver San Pedro de Atacama style cups with embossed decorations include gold keros with Tiwanaku designs and portrait vessels. Inka and Diaguita cultures made copper plates.

D. Psychotropic paraphernalia —San Pedro de Atacama culture snuff tubes are wrapped with tape-like strips of gold and/or silver with ends made of gold. The distal end may have a Tiwanaku design such as a camelid head. The Diaguita culture used copper snuff spoons.

E. Figurines —Small Inka style figurines depict male, female, and animal figures in solid gold or silver. Diaguita figurines were made from copper.

Preservation of human remains, including through mummification, is common in the Arid North due to the dry desert climate. In contrast, very few human remains preserve in the Far South or Rapa Nui, with the exception of manufactured items that incorporate human skeletal elements. Examples of archaeological human remains covered in the Agreement include the following objects.

A. Naturally mummified human remains —Early Archaic period mummified human remains from the Arid North are in extended positions on mats. Late Archaic period mummified human remains are in flexed positions. Early Pottery period mummified human bodies in flexed positions wear wool clothing and are placed on mats. Middle to late Pottery period mummy bundles contain flexed mummified human remains wrapped in layers of basketry and textiles.

B. Artificially mummified human remains —Chinchorro culture mummified human remains have wood and plant fibers replacing removed bones and organs. Red or black clay covers the faces and extended bodies. Their wigs are made of human hair.

C. Tools and jewelry —Rapa Nui culture needles, pendants, beads, punches and hooks are made from human skeletal remains.

D. Incised skulls —Rapa Nui culture incised skulls have incised designs in the frontal or parietal bone. Incised designs may be filled with yellow or red pigment.

Most archaeological textiles are from the Arid North and Semi-arid North where dry conditions lead to excellent preservation. The earliest preserved textiles are from the Early Pottery period in the Arid North. Clothing and items for domestic use are made from camelid wool and cotton. Examples of archaeological textiles covered in the Agreement include the following objects.

A. Tunics, shirts, shawls, and girdles —Early Pottery period clothing from the Arid North includes shawls and shirts woven on looms from thick woolen fibers. The tunic ( unku ) is a sleeveless male garment that sometimes reaches to the knees. Early Pottery period tunics are often decorated with polychrome vertical lines in natural colors and/or embroidery on the edges of collars and sleeves. Alto Ramirez culture tunics and girdles made from polychrome and figurative tapestries stand out. Middle Pottery period Cabuza and Tiwanaku textiles include wool tunics, shirts, girdles, and other garments made predominantly of green, blue, and red fibers with complex geometric designs made with techniques of weft-faced weave, floating warp, and embroidered finishes. In the Late Pottery period, cotton fibers are introduced along with new decorative techniques such as tie-dye, tapestry, and feather applications. Atacama tradition plain or striped tunics are warp-faced with embroidered edges. Tapestry tunics and bags have red, blue, and white designs including networks of rhombuses, triangles, or squares accompanied by a zoomorphic figure with three fingers resembling a lizard.

B. Hats —Tiwanaku-influenced four-corner hats are monochrome or polychrome with geometric and figurative designs. Varied Middle to Late Pottery period turbans, caps, helmets, and hoods are made from wool, basketry, and leather. Some have attached metal, feather, or wood ornaments. For example, Atacama style crown-type hats were made of braided plant fibers covered by leather strips.

C. Mats and skirts —Mats are made from a series of reeds or branches joined by plant fibers to form a flexible plane in one direction. Chinchorro culture plant fiber skirts ( faldellines ) are made from fibers twisted like strings and tied to a main cord.

D. Bags —Ceremonial bags ( chuspas ) are trapezoidal, square, or rectangular and hang by a string. They are decorated on both sides with thin lines of dyed yarn with woven designs. Belt-bags are long rectangular girdles folded lengthwise to create a bag. They are decorated on one side. Bags and belt-bags have geometric, anthropomorphic, and zoometric designs made from yarn died dark red, orange, terracotta, purple, ochre, green, and blue. Small square or rectangular domestic-use bags are decorated with thin lines of natural colors. Atacama style bags are made from cut-pile weave similar to velvet and have checkerboard designs. Middle Pottery period Arica culture textiles use fewer decorative techniques and colors, but have increased diversity of anthropomorphic and zoomorphic designs.

E. Panels —Panels ( inkuñas ) are small rectangular textiles about 45 x 50 cm in size. Panels often have weft finishings creating dangling cords that serve as handles. Panels may hold burial bundles, household items, coca leaves, or agricultural products.

F. Khipus —Inka khipus are recording devices made of cotton and wool knotted cords hanging from a central cord.

Archaeological wooden objects are rare. Few were produced in the Arid North due to a scarcity of raw material. Wood was available in Central Chile, Southern Chile, and the Far South, but environmental conditions in those areas do not favor wood preservation. Examples of archaeological wooden objects covered in the Agreement include the following objects.

A. Snuff tablets —Snuff tablets are shallow rectangular trays that may be decorated with geometric or zoo-anthropomorphic figures associated with cultures of Northern Chile, San Pedro de Atacama Complex, the Diaguita Culture, and other cultures influenced by the Inka.

B. Keros —Keros are vase-shaped beakers with elaborate carved geometric or zoomorphic designs associated with the Arica Culture, San Pedro de Atacama Complex, Diaguita Culture, and others influenced by Inka culture.

C. Domestic tools —Combs, boxes, spindle shafts, and spindle whorls are made from wood. Mapuche Culture rafts, plates, spoons, spindle whorls, and other items are made from oak, bay laurel, ralí, alerce, and coihue.

D. Navigation items —Oars from the Arid North and Semi-arid North are made from wood, and rafts are made from wood and inflated sea lion skins. Dugout canoes ( wampos ) from Central Chile and Southern Chile are carved from a single tree trunk.

Preservation of bone, shell, and other organic material is best in the Arid and Semi-arid North. Very little bone or shell has been recovered in the Far South or Rapa Nui. Various artefacts were made for domestic, recreational, decorative, and ritual use. Examples of archaeological objects covered in the Agreement include the following objects.

A. Hooks and harpoons —Middle and Late Archaic period hooks from the Arid North are made from mollusk shells and cactus thorns. Harpoons are made from bone. Rapa Nui culture spear tips and fishhooks are made from bone and shell.

B. Bone and shell tools —Bone tools from the Arid North include awls, punches, pressure flakers, darts, shovels, hoes, and two-headed anthropomorphic bone spindle whorls. Most tools are made from camelid bones. Hoes are made from whale bones. Cutting tools are made from sharpened marine mollusks. Bone awls, spears, and tubes date to the Paleoindian period in Southern Chile. Austral canoe nomad awls, beads, chisels, pressure flakers, smoothers, and harpoon and spear points with serrated edges are made from terrestrial mammals, marine mammals, and birds. Some harpoons have geometric engravings and occasional animal motifs. Rapa Nui culture needles are made from bird bones.

C. Body ornaments —Earrings from the Arid North are made from shell. Necklaces and other jewelry are made from bone beads. Austral canoe nomad pendants are made from sea lion canine teeth and engraved albatross bone. Rapa Nui culture ornaments include bone pendants, bone necklaces, tooth beads, small black or white shell beads, medium brown shell beads, and bone ear plugs. Inka shell ornaments are made from Spondylus princeps, or mullu.

D. Spatulas and snuff tubes —Snuff tubes are small bones that have been hollowed out, polished, and decorated on the exterior. Spatulas have rounded tips for inhaling snuff and are decorated with carved zoomorphic designs.

E. Combs —Middle and Late Pottery period combs are made from cactus thorns joined by interlaced fibers.

F. Gourd containers —Gourd containers have pyro-engraved geometric, anthropomorphic, and zoomorphic designs.

G. Basketry and rope —Early Pottery period basketry includes miniatures and large baskets or plates. Middle and Late Pottery period baskets are medium size. Ropes are made from vegetable fiber.

H. Musical instruments —Panpipes are made of reeds lashed together with cords or carved from a single piece of wood. Rattles are made from gourds and wood with seeds or pebbles inside. Chajchas or cahschas are camelid hoofs held together with a fabric strap.

I. Moai eyes —The eyes of moai are made from coral and may have either red scoria or black obsidian pupils.

National Cultural Heritage Service, Chile, digital collections: https://www.patrimoniocultural.gob.cl/portal/Contenido/Colecciones-digitales/.

Heritage Assets Documentation Center, Chile, Regional Heritage Thesaurus: http://www.tesauroregional.cl/linea-de-tiempo.

This amendment involves a foreign affairs function of the United States and is, therefore, being made without notice or public procedure (5 U.S.C. 553(a)(1)). For the same reason, a delayed effective date is not required under 5 U.S.C. 553(d)(3).

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply.

CBP has determined that this document is not a regulation or rule subject to the provisions of Executive Order 12866 or Executive Order 13771 because it pertains to a foreign affairs function of the United States, as described above, and therefore is specifically exempted by section 3(d)(2) of Executive Order 12866 and section 4(a) of Executive Order 13771.

This regulation is being issued in accordance with 19 CFR 0.1(a)(1) pertaining to the Secretary of the Treasury's authority (or that of his/her delegate) to approve regulations related to customs revenue functions.

For the reasons set forth above, part 12 of title 19 of the Code of Federal Regulations (19 CFR part 12), is amended as set forth below:

On September 24, 2020 (85 FR 60288), HUD published a final rule that amended HUD's disparate impact standard regulation and included minor revisions to § 100.70. In the revision of § 100.70, HUD's amendatory instructions in the final rule included an incorrect instruction to add a new paragraph (d)(5). HUD intended, consistent with the proposed rule (84 FR 42854), to revise the already-existing paragraph (d)(5). This document corrects this instruction.

Accordingly, FR Rule Doc. 2020-19887, HUD's Implementation of the Fair Housing Act's Disparate Impact Standard (FR-6111-F-03), published in the Federal Register on September 24, 2020 (85 FR 60288) is corrected as follows:

This document contains final regulations under section 274 of the Code that amend the Income Tax Regulations (26 CFR part 1). In general, section 274 limits or disallows deductions for certain meal and entertainment expenditures that otherwise would be allowable under chapter 1 of the Code (chapter 1), primarily under section 162(a), which allows a deduction for ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.

On December 22, 2017, section 274 was amended by section 13304 of Public Law 115-97 (131 Stat. 2054), commonly referred to as the Tax Cuts and Jobs Act, (TCJA) to revise the rules for deducting expenditures for meals and entertainment, effective for amounts paid or incurred after December 31, 2017.

On February 26, 2020, the Department of the Treasury (Treasury Department) and the IRS published a notice of proposed rulemaking (REG-100814-19) in the Federal Register (85 FR 11020) containing proposed regulations under section 274 to implement certain of the TCJA's amendments to section 274 (proposed regulations). The proposed regulations would update existing regulations in § 1.274-2 by adding a new section at § 1.274-11 for entertainment expenditures. The proposed regulations would also add a new section at § 1.274-12 to address the limitations on food or beverage expenses under section 274(k) and (n), including the application of the exceptions in section 274(e)(2), (3), (4), (7), (8), and (9). Pending the issuance of these final regulations, taxpayers were permitted to rely upon the proposed regulations for entertainment and food or beverage expenses, as applicable, paid or incurred after December 31, 2017.

The Treasury Department and the IRS did not receive any requests to speak at a public hearing on the proposed regulations. Therefore, the scheduled public hearing was cancelled. The Treasury Department and the IRS received 14 written and electronic comments in response to the proposed regulations. All comments were considered and are available at https://www.regulations.gov or upon request. The comments addressing the proposed regulations are summarized in the Summary of Comments and Explanation of Revisions section. However, comments recommending statutory revisions or addressing issues outside the scope of these final regulations are not discussed in this preamble. After full consideration of the comments, this Treasury decision adopts the proposed regulations with modifications in response to certain comments, as described in the Summary of Comments and Explanation of Revisions section.

Section 274(a)(1)(A) generally disallows a deduction for any item with respect to an activity of a type considered to constitute entertainment, amusement, or recreation (entertainment expenditures). However, prior to the amendment by the TCJA, section 274(a)(1)(A) provided exceptions to that disallowance if the taxpayer established that: (1) The item was directly related to the active conduct of the taxpayer's trade or business (directly related exception); or (2) in the case of an item directly preceding or following a substantial and bona fide business discussion (including business meetings at a convention or otherwise), the item was associated with the active conduct of the taxpayer's trade or business (business discussion exception). Section 274(e)(1) through (9) also provide exceptions to the rule in section 274(a) that disallows a deduction for entertainment expenditures. The TCJA did not change the application of the section 274(e) exceptions to entertainment expenditures.

Section 274(a)(1)(B) disallows a deduction for any item with respect to a facility used in connection with an activity referred to in section 274(a)(1)(A). Section 274(a)(2) provides that, for purposes of applying section 274(a)(1), dues or fees to any social, athletic, or sporting club or organization shall be treated as items with respect to facilities. Section 274(a)(3) disallows a deduction for amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or other social purpose.

Prior to amendment by the TCJA, section 274(n)(1) generally limited the deduction of food or beverage expenses and entertainment expenditures to 50 percent of the amount that otherwise would have been allowable. Thus, under prior law, taxpayers could deduct 50 percent of meal expenses, and 50 percent of entertainment expenditures that met the directly related or business discussion exception. Distinguishing between meal expenses and entertainment expenditures was unnecessary for purposes of the 50 percent limitation.

Section 13304(a)(1) of the TCJA repealed the directly related and business discussion exceptions to the general prohibition on deducting entertainment expenditures in section 274(a)(1)(A). Also, section 13304(a)(2)(D) of the TCJA amended the 50 percent limitation in section 274(n)(1) to remove the reference to entertainment expenditures. Thus, entertainment expenditures are no longer deductible unless one of the nine exceptions to section 274(a) in section 274(e) applies.

While the TCJA eliminated the deduction for entertainment expenses, Congress did not amend the provisions relating to the deductibility of business meals. Thus, taxpayers generally may continue to deduct 50 percent of the food and beverage expenses associated with operating their trade or business, including meals consumed by employees on work travel. See H.R. Rep. No. 115-466, at 407 (2017) (Conf. Rep.). However, as before the TCJA, no deduction is allowed for the expense of any food or beverages unless (a) the expense is not lavish or extravagant under the circumstances, and (b) the taxpayer (or an employee of the taxpayer) is present at the furnishing of the food or beverages. See section 274(k).

Prior to amendment by the TCJA, section 274(d) provided substantiation requirements for deductions under section 162 or 212 for any traveling expense (including meals and lodging while away from home), and for any item with respect to an activity of a type considered to constitute entertainment, amusement, or recreation or with respect to a facility used in connection with such activity. Section 13304(a)(2)(A) of the TCJA repealed the substantiation requirements for entertainment expenditures. Traveling expenses (including meals and lodging while away from home), however, remain subject to the section 274(d) substantiation requirements. Food and beverage expenses are subject to the substantiation requirements under section 162 and the requirement to maintain books and records under section 6001.

On October 15, 2018, the Treasury Department and the IRS published Notice 2018-76, 2018-42 I.R.B. 599, providing transitional guidance on the deductibility of expenses for certain business meals and requesting comments for future guidance to further clarify the treatment of business meal expenses and entertainment expenditures under section 274. Under the notice, taxpayers may deduct 50 percent of an otherwise allowable business meal expense if: (1) The expense is an ordinary and necessary expense under section 162(a) paid or incurred during the taxable year in carrying on any trade or business; (2) the expense is not lavish or extravagant under the circumstances; (3) the taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages; (4) the food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and (5) in the case of food and beverages provided at or during an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The notice provides that the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

Section 274(n)(1) generally limits the deduction of food or beverage expenses, including expenses for food or beverages consumed while away from home, to 50 percent of the amount that otherwise would have been allowable, unless one of the six exceptions to section 274(n) in section 274(e) applies. However, no deduction is allowed for the expense of any food or beverages unless: (1) The expense is not lavish or extravagant under the circumstances; and (2) the taxpayer (or an employee of the taxpayer) is present at the furnishing of the food or beverages. See section 274(k). Section 274(d) provides substantiation requirements for traveling expenses, including food and beverage expenses incurred while on business travel away from home.

Section 274(m) provides additional limitations on travel expenses, including expenses for meals consumed while away from home. Section 274(m)(1) generally limits the deduction for luxury water transportation expenses to twice the highest federal per diem rate allowable at the time of travel, and section 274(m)(2) generally disallows a deduction for expenses for travel as a form of education. Section 274(m)(3) provides that no deduction is allowed under chapter 1 (other than section 217) for travel expenses paid or incurred with respect to a spouse, dependent, or other individual accompanying the taxpayer (or an officer or employee of the taxpayer) on business travel, unless: (1) The spouse, dependent, or other individual is an employee of the taxpayer; (2) the travel of the spouse, dependent, or other individual is for a bona fide business purpose; and (3) such expenses would otherwise be deductible by the spouse, dependent, or other individual.

Prior to amendment by the TCJA, section 274(n)(1) generally limited the deduction for food or beverage expenses to 50 percent of the amount that otherwise would have been allowable, subject to an exception in section 274(n)(2)(B) in the case of an expense for food or beverages that is excludable from the gross income of the recipient under section 132 by reason of section 132(e), relating to de minimis fringes. Section 132(e)(1) defines “ de minimis fringe” as any property or service the value of which is, after taking into account the frequency with which similar fringes are provided by the employer to its employees, so small as to make accounting for it unreasonable or administratively impracticable. Section 132(e)(2) provides that the operation by an employer of any eating facility for employees is treated as a de minimis fringe if (1) the facility is located on or near the business premises of the employer, and (2) revenue derived from the facility normally equals or exceeds the direct operating costs of the facility. Thus, under prior law, employers generally were allowed to fully deduct an expense for food or beverages provided to their employees if the amount was excludable from the gross income of the employee as a de minimis fringe. However, the TCJA repealed section 274(n)(2)(B), meaning that expenses for food or beverages that are de minimis fringes under section 132(e) are no longer excepted from section 274(n)(1). As a result, these expenses, like other food or beverage expenses generally, are subject to the 50 percent limitation unless one of the six exceptions to section 274(n) in section 274(e) applies.

The TCJA also added section 274(o) that, effective for amounts paid or incurred after December 31, 2025, disallows a deduction for (1) any expense for the operation of an employer-operated facility described in section 132(e)(2), and any expense for food or beverages, including under section 132(e)(1), associated with such facility, or (2) any expense for meals provided to an employee for the convenience of the employer, as described in section 119(a). Thus, beginning with amounts paid or incurred in 2026, expenses for food or beverages provided to employees, as well as expenses for the operation of certain eating facilities for employees, will be fully nondeductible.

Section 274(k)(2)(A) and (n)(2)(A) provide that the limitations on the deduction of food or beverage expenses in section 274(k)(1) and (n)(1), respectively, do not apply if the expense is described in paragraph (2), (3), (4), (7), (8), or (9) of section 274(e). Expenses described in paragraph (1), (5), and (6) of section 274(e) are not exceptions to the limitations on the deduction of food or beverage expenses in section 274(k)(1) and (n)(1). However, they are exceptions to the disallowance of the deduction of entertainment expenses in section 274(a).

Section 274(e)(2) applies to expenses for goods, services, and facilities to the extent that the expenses are treated as compensation to the recipient. Section 274(e)(3) applies to expenses incurred by a taxpayer in connection with the performance of services for an employer or other person under a reimbursement or other expense allowance arrangement. Section 274(e)(4) applies to expenses for recreational, social, or similar activities for employees. Section 274(e)(7) applies to expenses for goods, services, and facilities made available to the general public. Section 274(e)(8) applies to expenses for goods or services that are sold by the taxpayer in a bona fide transaction for an adequate and full consideration in money or money's worth. Section 274(e)(9) applies to expenses for goods, services, and facilities to the extent that the expenses are treated as income to a person other than an employee.

The final regulations restate the statutory rules under section 274(a), at § 1.274-11(a), including the application of the entertainment deduction disallowance rule to dues or fees to any social, athletic, or sporting club or organization. The existing definition of entertainment in § 1.274-2(b)(1), with minor modifications to remove outdated language, is incorporated into the final regulations, at § 1.274-11(b)(1). The final regulations provide that for purposes of section 274(a), the term “entertainment” does not include food or beverages unless the food or beverages are provided at or during an entertainment activity and the costs of the food or beverages are not separately stated from the entertainment costs. The final regulations do not affect the application of the special rules in § 1.274-10 to expenses related to aircraft used for entertainment.

The final regulations, at § 1.274-11(c), confirm the continued application of the nine exceptions in section 274(e) to entertainment expenditures otherwise disallowed by section 274(a). The application of section 274(e) to food or beverage expenses is discussed in part 2.E. of this Summary of Comments and Explanation of Revisions section, which discusses the exceptions under section 274(e) to section 274(k) and (n).

A commenter on the proposed regulations requested that the Treasury Department and the IRS clarify that for purposes of the section 274(e)(8) exception to the entertainment deduction limitations in section 274(a) for goods or services sold by the taxpayer, the goods or services may be sold to an employee of the taxpayer in a bona fide transaction for an adequate and full consideration in money or money's worth. The Treasury Department and the IRS decline to adopt this suggestion because the section 274(e)(8) exception to the entertainment disallowance is outside the scope of these regulations. The proposed regulations and these final regulations were initiated in response to the changes made to section 274 by the TCJA and generally are limited to addressing those changes. In particular, with regard to entertainment expenditures, the final regulations under § 1.274-11 primarily distinguish between meals and entertainment, as that distinction is now relevant, for purposes of determining whether the deduction of a particular expense is disallowed entirely or is limited to 50 percent. However, the TCJA did not change the application of the section 274(e) exceptions to entertainment expenditures. Thus, other than confirming that the section 274(e) exceptions continue to apply to entertainment expenditures, the final regulations do not provide rules addressing how the section 274(e) exceptions apply to entertainment expenditures. Taxpayers may, however, continue to rely upon the existing rules and examples in § 1.274-2 to the extent they are not superseded by the TCJA or other legislation and are not inconsistent with the final regulations.

The final regulations substantially incorporate the guidance in Notice 2018-76 to distinguish between entertainment expenditures and food or beverage expenses in the context of business meals provided at or during an entertainment activity. In addition, the final regulations generally apply the guidance in Notice 2018-76 to all food or beverages, including travel meals and employer-provided meals, provided at or during an entertainment activity. The final regulations also clarify the rules applicable to food or beverages provided at or during an entertainment activity.

Notice 2018-76 explains that in the case of food and beverages provided at or during an entertainment activity, the taxpayer may deduct 50 percent of an otherwise allowable business expense if the food and beverages are purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The notice provides that the entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages. The final regulations clarify this requirement by providing that the amount charged for food or beverages on a bill, invoice, or receipt must reflect the venue's usual selling cost for those items if they were to be purchased separately from the entertainment, or must approximate the reasonable value of those items.

The final regulations provide that in cases where the food or beverages provided at or during an entertainment activity are not purchased separately from the entertainment, and where the cost of the food or beverages is not stated separately from the cost of the entertainment on one or more bills, invoices, or receipts, no allocation can be made and the entire amount is a nondeductible entertainment expenditure. Finally, in accordance with the TCJA's amendments to section 274(a)(1) specifically repealing the “directly related” and “business discussion” exceptions to the general disallowance rule for entertainment expenditures, the final regulations clarify that the entertainment disallowance rule applies whether or not the expenditure for the activity is related to or associated with the active conduct of the taxpayer's trade or business.

A commenter suggested that the final regulations provide that the consumption of food and beverages is not entertainment in the case of both business and nonbusiness activities and include an example of a specified individual consuming food and beverages while traveling on an employer-provided aircraft to visit family members for nonbusiness purposes. The specific question presented in this comment relates to whether air travel is an entertainment activity and is addressed in the existing rules in § 1.274-10. Therefore, this question is not addressed in the final regulations. In addition, § 1.274-11(b)(1)(ii) provides that the term entertainment does not include food or beverages unless the food or beverages are provided at or during an entertainment activity and are not purchased separately from the entertainment.

The final regulations substantially incorporate the guidance in Notice 2018-76 addressing business meals provided at or during an entertainment activity. The final regulations also incorporate other statutory requirements taxpayers must meet to deduct 50 percent of an otherwise allowable food or beverage expense. Specifically, the expense must not be lavish or extravagant under the circumstances, and the taxpayer, or an employee of the taxpayer, must be present at the furnishing of the food or beverages.

The final regulations also address the general requirement in Notice 2018-76 that the food and beverages be provided to a business contact, which was described in the notice as a “current or potential business customer, client, consultant, or similar business contact.” This requirement is to ensure that the meal expenses are directly connected with or pertaining to the taxpayer's trade or business, as required under section 162. One commenter on Notice 2018-76 requested a definition of “potential business contact,” suggesting that the term could be interpreted broadly to include almost anyone. In response to the comment, and to conform the rule more closely to the trade or business requirement in section 162, the proposed regulations follow the definition of “business associate” as currently provided in § 1.274-2(b)(2)(iii). The final regulations adopt this definition of “business associate” in § 1.274-12(b)(3). Thus, the final regulations provide that the food or beverages must be provided to a “person with whom the taxpayer could reasonably expect to engage or deal in the active conduct of the taxpayer's trade or business such as the taxpayer's customer, client, supplier, employee, agent, partner, or professional adviser, whether established or prospective.” Accordingly, the final regulations apply this definition to employer-provided food or beverage expenses by considering employees as a type of business associate as well as to the deduction for expenses for meals provided by a taxpayer to both employees and non-employee business associates at the same event.

A commenter on the proposed regulations asked whether the Treasury Department and the IRS have legal authority to allow taxpayers to claim deductions for business meal expenses that have been considered part of entertainment since the enactment of section 274. The commenter acknowledged that the legislative history of the TCJA provides that taxpayers may still generally deduct 50 percent of the food and beverage expenses associated with operating their trade or business ( e.g., meals consumed by employees on work travel). H.R. Rep No. 115-466 at 407. However, the commenter argued that the legislative history merely recognizes that travel meals remain 50 percent deductible. The commenter further argued that the term “entertainment” clearly encompasses many business meals and that the proposed regulations unsettle the longstanding position that expenditures for the personal enjoyment of an individual fall within the ordinary meaning of “entertainment.”

The Treasury Department and the IRS believe that Congress, in amending section 274 in the TCJA, intended that expenses for business meals be considered food or beverage expenses associated with operating a taxpayer's trade or business, and therefore generally remain 50 percent deductible. The Treasury Department and the IRS acknowledge that, prior to the TCJA, some meals were considered to be entertainment. However, prior to the TCJA, neither section 274 nor the regulations under section 274 attempted to define meal expenses or to distinguish meal expenses from entertainment expenses. In considering the comment, the Treasury Department and the IRS believe that the proposed regulations are consistent with the plain reading of section 274 after the TCJA, which clearly contemplates different treatment for meal expenses and entertainment expenses. In addition, the existing regulatory definition of entertainment relies upon an objective test to determine whether an activity is of a type generally considered to constitute entertainment. Providing that business meals are not of a type generally considered to constitute entertainment results in an administrable rule that does not depend on subjective factors such as whether the taxpayer enjoys the business meal. Thus, the final regulations adopt the proposed rule providing that business meals generally remain 50 percent deductible. The Treasury Department and the IRS believe that the final regulations provide a rule that is legally supportable and that draws a clear line between meals and entertainment that taxpayers can understand and the IRS can administer.

One commenter also asked whether the proposed regulations were intended to provide new guidance under section 162(a), specifically as to the definition of “ordinary and necessary expense.” The proposed regulations provide guidance only under section 274 and are not intended to provide guidance under section 162. In response to the comment, the final regulations modify Examples 1 and 2 in proposed § 1.274-12(a)(3) by removing any mention of a discussion that takes place during lunch because the facts already explain that in each example, the food or beverage expenses are assumed to be ordinary and necessary expenses under section 162(a). In addition, the final regulations clarify, as necessary, in the introductory language to the examples in § 1.274-11 and § 1.274-12 that the examples assume that the underlying expenses are deductible under section 162.

Two commenters requested that the final regulations add an example addressing the treatment of expenses for food and beverages provided to attendees at a business meeting, such as a conference for clients or a training seminar for employees. In response to these comments, the final regulations add two new examples to § 1.274-12(a)(3) to address these scenarios.

A commenter also asked whether under proposed § 1.274-12(a), a taxpayer may claim a 50 percent deduction for food or beverages provided to the taxpayer (or an employee of the taxpayer), as well as food or beverages provided to a business associate. The commenter noted that proposed § 1.274-12(a)(1) refers to “food or beverages provided to a business associate,” raising a question about whether the rule applies to food or beverages provided to the taxpayer or the taxpayer's employees. In addition, § 1.274-12(a)(1) of the proposed regulations refers to food or beverages provided “to another person or persons.” It was intended that the 50 percent deduction applies to food and beverages provided to the taxpayer (or an employee of the taxpayer), as well as a business associate or another person. In response to the comment, the final regulations revise § 1.274-12(a)(1) to remove the reference to food or beverages being provided “to another person or persons.” In addition, as discussed in part 2.A. of this Summary of Comments and Explanation of Revisions, the final regulations include employees in the definition of “business associate” (as defined in § 1.274-12(b)(3)). Finally, to make clear that the rules in § 1.274-12(a)(1) also apply to food or beverages provided to a taxpayer such as a sole proprietor or other business owner, the final regulations revise § 1.274-12(a)(1)(iii) to refer to food or beverages provided “to the taxpayer or a business associate.”

One commenter asked whether a sole proprietor can deduct the cost of meals when working throughout the day. As explained in the Background section of this preamble, section 274 limits or disallows deductions for certain meal and entertainment expenditures that otherwise would be allowable under chapter 1, primarily under section 162(a), which allows a deduction for ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. The requirements imposed by section 274 are in addition to the requirements for deductibility imposed by other provisions of the Code. If a taxpayer intends to claim a deduction for an expenditure for meals or entertainment, the taxpayer must first establish that the expenditure is otherwise allowable as a deduction under chapter 1 before the provisions of section 274 become applicable. Therefore, the sole proprietor must first establish that the food or beverage expense is deductible under chapter 1 before section 274 would apply. For example, if the sole proprietor can establish that the food or beverage expenses are ordinary and necessary expenses under section 162(a) that are paid or incurred during the taxable year in carrying on a trade or business, the sole proprietor may deduct 50 percent of the food or beverage expenses under section 274(k) and (n) and § 1.274-12(a) of the final regulations if: (1) The expenses are not lavish or extravagant; (2) the sole proprietor, or an employee of the sole proprietor, is present at the furnishing of the food or beverages; and (3) the food or beverages are provided to the sole proprietor or a business associate (as defined in § 1.274-12(b)(3)).

Although the TCJA did not specifically amend the rules for travel expenses, the final regulations are intended to provide comprehensive rules for food and beverage expenses and thus, apply the general rules for meal expenses from Notice 2018-76 and the proposed regulations, to travel meals. In addition, the final regulations incorporate the substantiation requirements in section 274(d), unchanged by the TCJA, to travel meals. Finally, the final regulations apply the limitations in section 274(m)(3) to expenses for food or beverages paid or incurred while on travel for spouses, dependents or other individuals accompanying the taxpayer (or an officer or employee of the taxpayer) on business travel. These limitations do not apply to deductions for moving expenses under section 217. However, the TCJA amended section 217 to suspend the deduction for moving expenses for taxable years beginning after December 31, 2017, and before January 1, 2026, except with respect to certain members of the Armed Forces. Thus, the final regulations revise the reference to section 217 to reflect that amendment.

One commenter asked how the proposed regulations affect employees that are paid a per diem rate for travel expenses and are subject to the hours of service limitations of the Department of Transportation. The proposed regulations describe and clarify the statutory requirements of section 274(a), 274(k), and 274(n) for entertainment and food or beverage expenses, as well as the applicability of certain exceptions under section 274(e) to food or beverage expenses. The TCJA did not change the rules for using a per diem rate to substantiate, under section 274(d), the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Thus, neither the proposed regulations nor the final regulations address the substantiation rules.

The final regulations apply the business meal guidance in Notice 2018-76, as revised in the proposed regulations, to food or beverage expenses generally. Under section 274(n)(1), the deduction for food or beverage expenses generally is limited to 50 percent of the amount that would otherwise be allowable. Prior to the TCJA, under section 274(n)(2)(B), expenses for food or beverages that were excludable from employee income as de minimis fringe benefits under section 132(e) were not subject to the 50 percent deduction limitation under section 274(n)(1) and could be fully deducted. The TCJA repealed section 274(n)(2)(B) so that expenses for food or beverages excludable from employee income under section 132(e) are subject to the section 274(n)(1) deduction limitation unless another exception under section 274(n)(2) applies.

Under section 274(k)(1), in order for food or beverage expenses to be deductible the food or beverages must not be lavish or extravagant under the circumstances and the taxpayer or an employee of the taxpayer must be present at the furnishing of the food or beverages. However, as discussed in the Background section of this preamble, section 274(e) provides six exceptions to the limitations on the deduction of food or beverages in section 274(k)(1) and (n)(1). The final regulations explain how those exceptions apply. The Background section of this preamble also explains that the exceptions in section 274(e)(1), (e)(5), and (e)(6) do not apply to food or beverages expenses. Section 1.274-12(a)(3) of the final regulations adds an example illustrating that the exception in section 274(e)(5) does not apply to food or beverage expenses that are directly related to business meetings of a taxpayer's employees.

In response to comments that the Treasury Department and the IRS received after enactment of the TCJA, the final regulations address several scenarios involving the deductibility of food or beverage expenses. For example, commenters requested guidance on the deductibility of expenses for: (1) Food or beverages provided to food service workers who consume the food or beverages while working in a restaurant or catering business; (2) snacks available to employees in a pantry, break room, or copy room; (3) refreshments provided by a real estate agent at an open house; (4) food or beverages provided by a seasonal camp to camp counselors; (5) food or beverages provided to employees at a company cafeteria; and (6) food or beverages provided at company holiday parties and picnics.

The final regulations provide that the deduction limitation rules generally apply to all food and beverages, whether characterized as meals, snacks, or other types of food or beverage items. In addition, unless one of six exceptions under section 274(e) applies, the deduction limitations apply regardless of whether the food or beverages are treated as de minimis fringe benefits under section 132(e).

The final regulations define food or beverage expenses to mean the cost of food or beverages, including any delivery fees, tips, and sales tax. In the case of employer-provided meals at an eating facility, food or beverage expenses do not include expenses for the operation of the eating facility such as salaries of employees preparing and serving meals and other overhead costs.

A commenter requested clarification that the cost of transportation to a meal is not included in food or beverage expenses. The Treasury Department and the IRS considered this comment and note that food or beverage expenses under § 1.274-12(b)(2) of the final regulations means the full cost of food or beverages, including any delivery fees, tips, and sales tax. Indirect expenses, including the cost of transportation to a meal, are not included in the definition.

Section 274(k)(2)(A) and (n)(2)(A) provide that the limitations on deductions in section 274(k)(1) and (n)(1), respectively, do not apply to any expense described in section 274(e)(2), (3), (4), (7), (8), and (9). Section 1.274-12(c) of the final regulations, therefore, provides that the deduction limitations are not applicable to expenditures for business meals, travel meals, or other food or beverages that fall within one of these exceptions.

Pursuant to section 274(e)(2), the final regulations provide that the limitations in section 274(k)(1) and (n)(1) do not apply to expenditures for food or beverages provided to an employee of the taxpayer to the extent the taxpayer treats the expenses as compensation to the employee on the taxpayer's income tax return as originally filed, and as wages to the employee for purposes of withholding under chapter 24 of the Code, relating to collection of income tax at source on wages.

Pursuant to section 274(e)(9), the final regulations provide that the limitations in section 274(k)(1) and (n)(1) do not apply to expenses for food or beverages provided to a person who is not an employee of the taxpayer to the extent the expenses are includible in the gross income of the recipient of the food or beverages as compensation for services rendered or as a prize or award under section 74.

The exceptions in section 274(e)(2) related to employees and in section 274(e)(9) related to non-employees have been interpreted as allowing a taxpayer to deduct the full amount of an expense if the expense has properly been included in the compensation and wages of the employee, or gross income of the recipient, even if the amount of the expense exceeds the amount included in compensation or income. See Sutherland Lumber-Southwest Inc. v. Commissioner, 114 T.C. 197 (2000), affd., 255 F.3d 495 (8th Cir. 2001), acq., AOD 2002-02 (February 11, 2002). In 2004, Congress reversed the result in the Sutherland Lumber-Southwest case by enacting section 274(e)(2)(B) with regard to specified individuals. Thus, with regard to employees or non-employees who are specified individuals, section 274(e)(2)(B) provides an exception to the section 274(n) limitation only “to the extent that the expenses do not exceed the amount of the expenses which” are treated as compensation and wages to the employee or as income to a non-employee. This methodology is also referred to in this preamble as the “dollar-for-dollar” methodology.

The Treasury Department and the IRS are aware that some taxpayers may attempt to claim a full deduction under section 274(e)(2) or (e)(9) by including a value that is less than the amount required to be included under § 1.61-21, which provides the rules for valuation of fringe benefits, or by purportedly including a value of zero, as compensation and wages to the employee, or as includible in gross income by a person who is not an employee of the taxpayer. As a result, the proposed regulations provide that expenses for food or beverages for which the taxpayer calculates a value that is less than the amount required to be included in gross income under § 1.61-21, or for which the amount required to be included in gross income is zero, will not be considered as having been treated as compensation and as wages to the employee, or as includible in gross income by a recipient of the food or beverages who is not an employee of the taxpayer, for purposes of section 274(e)(2) and (e)(9).

Commenters argued that the proposed rule disallowing the application of section 274(e)(2) and (e)(9) to expenses for which an improper amount is included in compensation and wages or in gross income, as applicable, is unduly harsh given the difficulty in determining the value of food or beverages under § 1.61-21 and the possibility of good faith errors. In addition, a commenter noted that neither the “to the extent that” language in section 274(e)(2)(A) nor the holding in Sutherland Lumber-Southwest support applying an “all or nothing” rule against the taxpayer.

The Treasury Department and the IRS agree that the “all or nothing” rule included in the proposed regulations may lead to unduly harsh results. Therefore, in response to these comments, the Treasury Department and the IRS revised the rules in proposed § 1.274-12(c)(2)(i) to allow a taxpayer to apply section 274(e)(2) and (e)(9), as applicable, in cases where the taxpayer includes an improper amount in compensation and wages, or gross income, of the recipient. However, if a taxpayer includes less than the proper amount in compensation and wages or gross income, the final regulations provide that the taxpayer must apply the dollar-for-dollar methodology that applies in the case of a specified individual. Under that dollar-for-dollar methodology, the taxpayer may deduct meal expenses to the extent that the expenses do not exceed the amount of the expenses that are treated as compensation and wages, or gross income, as applicable.

The Treasury Department and the IRS believe the rules provided in the final regulations avoid the unduly harsh result that could arise by prohibiting application of section 274(e)(2) or (e)(9) in cases where the taxpayer includes some, but not all, of the value of a food or beverage expense in the recipient's income. In addition, the rules maintain consistency with the IRS's acquiescence in Sutherland Lumber, which provides that the IRS will no longer litigate application of section 274(e)(2) in cases in which a taxpayer demonstrates that it has “properly” included in compensation and wages the value of an employee vacation flight in accordance with § 1.61-21(g). See AOD-2002-02. The rules are also consistent with § 1.274-10(a)(2)(ii)(A), which applies the section 274(e)(2) exception to entertainment air travel and provides that a taxpayer must “properly” treat expenses as compensation and wages to an employee and treat the proper amount as compensation under § 1.61-21.

For administrability, a commenter suggested that the rule apply to the amounts included on the employee's Form W-2 or other recipient's Form 1099-MISC instead of amounts reported as compensation on the service provider's return. The language in the proposed regulations refers to the treatment of the amount on the “taxpayer's income tax return as originally filed,” meaning the tax return of the employer, not the employee or service provider. However, to further clarify the rule, § 1.274-12(c)(2)(i)(A) of the final regulations no longer references the treatment of the amount on the taxpayer's income tax return, but instead refers to the treatment of the expense as compensation and wages, consistent with the language in § 1.274-10(a)(2)(ii)(A).

A commenter suggested the final regulations address the effect of reimbursements by employees, specified individuals, or other recipients of the food or beverages on the amount excepted from the limitations under section 274(k)(1) and (n)(1) by section 274(e)(2) and (e)(9). The commenter explained that § 1.274-10(a)(2)(ii)(C)(2) treats reimbursements in the same manner as compensation and wages for specified individuals, and a similar rule should be provided for reimbursements from non-specified individuals. The commenter pointed out that without a similar rule, expenses for food or beverages provided to specified individuals may be accorded more favorable treatment than expenses provided to non-specified individuals. The Treasury Department and the IRS agree that in cases in which expenditures for food and beverages are reimbursed to the taxpayer, similar treatment should be provided under section 274, regardless of whether the food or beverages are provided to a specified or non-specified individual.

With regard to non-specified individuals, the final regulations provide that a taxpayer may deduct its food or beverage expenses under the exception in section 274(e)(2)(A) or section 274(e)(9) if the taxpayer includes the proper amount in compensation and wages, or gross income, as applicable. Section 1.61-21(b)(1) provides rules for the valuation of fringe benefits and requires that an employee must include in gross income the amount by which the fair market value of the fringe benefit exceeds the sum of the amount paid for the benefit by or on behalf of the recipient and the amount, if any, specifically excluded from gross income under the Code. Thus, in the case of reimbursements by a recipient, the amount of the reimbursement is taken into account in determining the amount properly includible in the recipient's income and does not affect the taxpayer's ability to use the exception in section 274(e)(2)(A) or section 274(e)(9).

With regard to improper inclusions in compensation and wages or gross income, the final regulations provide that the taxpayer must apply the dollar-for-dollar methodology as described in § 1.274-12(c)(2)(i)(D). Under that rule, food and beverage expenses are deductible to the extent that the expenses do not exceed the sum of the amount of the expenses that are treated as compensation and wages or gross income, and any amount the recipient reimburses the taxpayer. This dollar-for-dollar rule is the same methodology that applies under section 274(e)(2)(B) for food or beverages provided to specified individuals.

The final regulations also include a provision for specified individuals providing that the exceptions of section 274(e)(2) and (e)(9) generally apply only to the extent that the food or beverage expenses do not exceed the amount of the food or beverage expenses treated as compensation (under section 274(e)(2)) or as income (under section 274(e)(9)) to the specified individual. The final regulations provide, however, that amounts reimbursed to the taxpayer by the specified individual, will reduce the amount subject to the limitations under section 274(k)(1) and (n)(1). This rule conforms to the statutory language in section 274(e)(2)(B) and the regulatory language in § 1.274-10. Thus, the final regulations address the comment asking for clarification of the effect of reimbursements by employees, specified individuals, and other recipients of the food or beverages on the amount excepted from the limitations under section 274(k)(1) and (n)(1) by section 274(e)(2) and (e)(9).

The Treasury Department and the IRS continue to believe that if the amount to be included in compensation and wages or gross income is zero, whether zero is a proper or improper amount, the exceptions in section 274(e)(2) and section 274(e)(9) do not apply because no amount has been included in compensation and wages or gross income. For example, if the amount to be included is zero because the value of the food or beverages is excluded as a fringe benefit under section 132, the exceptions in section 274(e)(2) and (e)(9) do not apply. Similarly, the exceptions in section 274(e)(2) and (e)(9) do not apply if the amount to be included is zero solely because the recipient has fully reimbursed the taxpayer for the food or beverages. In that case, however, the exception in section 274(e)(8) may apply if the food or beverages are sold to the recipient in a bona fide transaction for an adequate and full consideration in money or money's worth.

Pursuant to section 274(e)(3), the final regulations provide that in the case of expenses for food or beverages paid or incurred by one person in connection with the performance of services for another person (whether or not the other person is an employer) under a reimbursement or other expense allowance arrangement, the limitations on deductions in section 274(k)(1) and (n)(1) apply either to the person who makes the expenditure or to the person who actually bears the expense, but not to both. Section 274(e)(3)(B) provides that if the services are performed for a person other than an employer, such as by an independent contractor, the exception in section 274(e)(3) applies only if the taxpayer, in this case, the independent contractor, accounts, to the extent provided by section 274(d), to such person. The final regulations therefore provide that the deduction limitations in section 274(k)(1) and (n)(1) apply to an independent contractor unless, under a reimbursement or other expense allowance arrangement, the contractor accounts to its client or customer with substantiation that satisfies the requirements of section 274(d).

Pursuant to section 274(e)(4), the final regulations provide that any food or beverage expense paid or incurred by a taxpayer for a recreational, social, or similar activity, primarily for the benefit of the taxpayer's employees, is not subject to the deduction limitations in section 274(k)(1) and (n)(1). However, activities that discriminate in favor of highly compensated employees, officers, shareholders or others who own a 10-percent or greater interest in the business are not considered paid or incurred primarily for the benefit of employees.

Many of the comments received after enactment of the TCJA requested confirmation that food or beverage expenses for company holiday parties and picnics that do not discriminate in favor of highly compensated employees are not subject to the deduction limitations in section 274(k)(1) and (n)(1) because the exception in section 274(e)(4) applies. These comments also suggested that expenses for snacks and beverages available to all employees in a pantry, break room, or copy room are not subject to the deduction limitations in section 274(k)(1) and (n)(1) because the exception in section 274(e)(4) applies.

In response to the questions and comments received, the proposed regulations confirm the rules in the existing regulations at § 1.274-2(f)(2)(v) that the exception in section 274(e)(4) applies to food or beverage expenses for company holiday parties, annual picnics, or summer outings that do not discriminate in favor of highly compensated employees. However, an example in the proposed regulations demonstrates that the section 274(e)(4) exception does not apply to free food or beverages available to all employees in a pantry, break room, or copy room because the mere provision or availability of food or beverages is not a recreational, social, or similar activity, despite the fact that employees may incidentally socialize while they are in the break room. The final regulations adopt the proposed regulations with respect to the application of section 274(e)(4) in this context.

In addition, the final regulations provide that the exception in section 274(e)(4) does not apply to food or beverage expenses that are excludable from employees' income under section 119 as meals provided for the convenience of the employer. Because these food or beverages are, by definition, furnished for the employer's convenience, they cannot also be primarily for the benefit of the employees, even if some social activity occurs during the provision of the food or beverages.

Pursuant to section 274(e)(7), the final regulations provide that food or beverage expenses of a taxpayer are not subject to the deduction limitations in section 274(k)(1) and (n)(1) to the extent the food or beverages are made available to the general public. In addition, the final regulations provide that this exception applies to expenses for food or beverages provided to employees if similar food or beverages are provided by the employer to, and are primarily consumed by, the general public. For this purpose, “primarily consumed” means greater than 50 percent of actual or reasonably estimated consumption, and “general public” includes, but is not limited to, customers, clients, and visitors. The final regulations also provide that the general public does not include employees, partners, 2-percent shareholders of S corporations (as defined in section 1372(b)), or independent contractors of the taxpayer. Further, an exclusive list of guests also is not considered the general public. See Churchill Downs, Inc. v. Commissioner, 307 F.3d 423 (6th Cir. 2002).

Comments received in response to Notice 2018-76 requested guidance as to whether the exception in section 274(e)(7) for food or beverages made available by the taxpayer to the general public applies in various situations. The Treasury Department and the IRS considered these comments and included examples in the proposed regulations to illustrate that the exception in section 274(e)(7) generally applies to the entire food or beverage expense if the food or beverages are primarily consumed by the general public. The final regulations retain these examples.

Pursuant to section 274(e)(8), the final regulations provide that any expense for food or beverages that are sold to customers in a bona fide transaction for an adequate and full consideration in money or money's worth is not subject to the deduction limitations in section 274(k)(1) and (n)(1). The final regulations clarify that money or money's worth does not include payment through services provided.

The Treasury Department and the IRS are aware of concerns raised by commenters that it is a common business practice for employers of restaurant and food service workers to provide food or beverages at no cost or at a discount to their employees. The Joint Committee on Taxation's Bluebook on the TCJA explains that amendments made by the TCJA to limit the deduction for expenses of the employer associated with providing food or beverages to employees through an employer-operated eating facility that meets the requirements of section 132(e)(2) do not affect other exceptions to the 50-percent limitation on deductions for food or beverage expenses. For example, a restaurant or catering business may continue to deduct 100 percent of its costs for food or beverage items, purchased in connection with preparing and providing meals to its paying customers, which are also consumed at the worksite by employees who work in the employer's restaurant or catering business. Joint Committee on Taxation, General Explanation of Public Law 115-97 (JCS-1-18), at 186 n.940 and at 188 n.956, December 2018. The final regulations adopt this interpretation of the exception in section 274(e)(8).

Finally, the final regulations provide that for purposes of the section 274(e)(8) exception to the deduction limitations in section 274(k)(1) and (n)(1), the term “customer” includes anyone who is sold food or beverages in a bona fide transaction for an adequate and full consideration in money or money's worth. For example, employees of the taxpayer are customers when they purchase food or beverages from the taxpayer in a bona fide transaction for arm's length, fair market value prices.

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.

These regulations apply to taxable years that begin on or after October 9, 2020.

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.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this final rule will not have a significant economic impact on a substantial number of small entities. Although the rule may affect a substantial number of small entities, the economic impact of the regulations is not likely to be significant. Data are not readily available about the number of taxpayers affected, but the number is likely to be substantial for both large and small entities because the rule may affect entities that incur meal and entertainment expenses. The economic impact of these regulations is not likely to be significant, however, because these final regulations substantially incorporate prior guidance and otherwise clarify the application of the TCJA changes to section 274 related to meals and entertainment. These final regulations will assist taxpayers in understanding the changes to section 274 and make it easier for taxpayers to comply with those changes. Accordingly, the Secretary of the Treasury's delegate certifies that the rule will not have a significant economic impact on a substantial number of small entities. Notwithstanding this certification, the Treasury Department and the IRS welcome comments on the impact of these regulations on small entities.

Pursuant to section 7805(f), these final regulations have been submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on their impact on small business. No comments on the proposed regulations were received from the Chief Counsel for the Office of Advocacy of the Small Business Administration.

The following publications are obsolete as of October 9, 2020.

Notice 2018-76 (2018-42 I.R.B. 599).

The principal author of these final regulations is Patrick Clinton, Office of the Associate Chief Counsel (Income Tax & Accounting). Other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

The final regulations (TD 9902) that are the subject of this correction are issued under section 951A of the Code.

As published, the final regulations (TD 9902) contain errors that need to be corrected.

Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:

In accordance with section 5701 of title 38 United States Code (U.S.C.), records and files maintained by VA on veterans and beneficiaries, including medical records, are generally confidential, and VA may not disclose or release these materials except as provided by law. Moreover, records of the identity, diagnosis, prognosis, or treatment by or for VA of any patient related to drug abuse, alcoholism or alcohol abuse, infection with the human immunodeficiency virus (HIV), or sickle cell anemia as prescribed by 38 U.S.C. 7332(a)(1) are confidential and subject to special protection against disclosure. These records may only be disclosed for the specific purposes and under the circumstances expressly authorized under 38 U.S.C. 7332(b), where section (b)(1) authorizes disclosure with the prior written consent of the patient to the extent, circumstances, and purposes allowed by VA regulations, and section (b)(2) authorizes disclosure under certain circumstances with or without the written consent of the patient.

Section 3 of Public Law (Pub. L.) 115-26 (April 19, 2017) amended 38 U.S.C. 7332 by adding a new paragraph (b)(2)(H), authorizing disclosure of 7332-protected records without the written consent of the patient or subject of the record to a non-VA entity (including private entities and other Federal agencies) that provides VA-authorized hospital care or medical services to veterans. It also provided that any non-VA entity receiving such records may not redisclose or use those record for a purpose other than that for which the disclosure was made.

Subsequently, section 132 of Public Law 115-182, the John S. McCain III, Daniel K. Akaka, and Samuel R. Johnson VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018, or the VA MISSION Act of 2018 (June 6, 2018) amended 38 U.S.C. 7332(b)(2) by striking paragraph (H) and inserting new paragraphs (H) and (I). Paragraph (H)(i) authorizes disclosure of 7332-protected records without the written consent of the patient to a non-VA entity (including private entities and other Federal agencies) for purposes of providing health care, including hospital care, medical services, and extended care services to patients or performing other health care-related activities or functions. Thus, the scope of permissible disclosures of 7332-protected records was expanded from non-VA entities providing hospital care or medical services authorized by the VA to non-VA entities providing health care or other health care-related activities or functions. Further, paragraph (H)(ii) was amended in 2017 to provide that any entity to which a record is disclosed under this paragraph may not disclose or use such record for a purpose other than that for which the disclosure was made or as permitted by law. The amendment under the MISSION Act replaced the term redisclose with the term disclose and added that entities who receive 7332-protected records may also make disclosures as permitted by law. Additionally, paragraph (I) was added to authorize disclosure to a third party in order to recover or collect reasonable charges for care furnished to, or paid on behalf of, a patient in connection with a non-service connected disability as permitted by section 1729 of this title, or for a condition for which recovery is authorized, or with respect to which the United States is deemed to be a third-party beneficiary under the Federal Medical Care Recovery Act.

VA has published regulations implementing release of information from VA records protected by one or more confidentiality provisions in 38 CFR part 1. General rules on release of information related to alcohol or other drug use disorder, HIV infection, or sickle cell anemia are at 38 CFR 1.460 through 1.469. In particular, § 1.460 contains the definitions for §§ 1.460 through 1.499 of this part. Disclosure with patient consent is addressed in §§ 1.475 through 1.479, while disclosures that do not require patient consent are addressed in §§ 1.483 through 1.489. The focus of §§ 1.490 through 1.499 is release of information in response to a court order.

In a document published in the Federal Register on December 13, 2019 (84 FR 68065), VA proposed, among other things, to amend part 1 to conform to these statutory changes by adding the terms health care and health care related activities or functions to § 1.460; and adding two new sections at 38 CFR 1.481 and 1.482 titled Disclosure of medical records of veterans who receive non-VA health care, and Disclosure of medical records to recover or collect reasonable charges, respectively. Furthermore, we proposed a technical correction to §§ 1.460 through 1.499 by moving the authority citations for these sections and moving them to the beginning of part 1 to comply with the Office of Federal Register direction that statutory authorities should be listed in the introductory portion of each CFR part.

VA provided a 60-day comment period that ended on February 11, 2020, and we received two comments. The first comment stated that VA should obtain permission from veterans and that every effort should be made to contact a veteran's family for the release of records if the veteran is deceased (we note that, although the comment used the word decided, based on the content of the comment, we believe that the intended word was deceased). To address the first portion of the comment related to obtaining permission from veterans, as previously explained, section 3 of Public Law 115-26 and section 132 of the VA MISSION Act of 2018, amended 38 U.S.C. 7332(b)(2) by allowing VA to disclose certain protected records to non-VA entities (including private entities and other Federal agencies) for purposes of providing health care or performing other health care-related activities or functions. Also, VA may disclose these protected records to a third party for the purpose of recovering or collecting reasonable charges for care furnished to, or paid on behalf of, a patient in connection with a non-service connected disability or to which the United States is deemed to be a third-party beneficiary. Therefore, VA may now disclose certain protected records with or without consent for the aforementioned reasons. Also, adding a consent mandate to the regulation would negate the intent of the statutory amendment. To address the portion of the comment related to the records of a deceased individual, such records continue to be protected under 38 U.S.C. 7332; however, we note that over time, certain disclosures ( e.g., disclosures to a provider for treatment purposes, disclosures to a third-party to recover or collect reasonable charges) would no longer be made for a deceased individual because the deceased individual would no longer receive treatment. Furthermore, the family members of a deceased individual cannot consent to a disclosure unless such disclosure is necessary to obtain benefits to which the family member may be entitled. 38 U.S.C. 7332(b)(3). We are not making any changes based on this comment.

The second comment raised multiple concerns and recommendations regarding: (1) Definition for treatment and health care; (2) external treatment records; (3) restriction requests; and (4) the Privacy Act of 1974 (the Privacy Act)).

1. Definition for treatment and health care. The comment asked why VA would use the same definition for treatment and health care as the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule. We proposed to use treatment as defined by 45 CFR 164.501 as part of our proposed definition for the term health care-related activities or functions. VA has chosen to use the same definition for treatment to maintain consistency with the HIPAA Privacy Rule. Likewise, we have chosen to define health care to have the same meaning as defined in the HIPAA Privacy Rule and to align with industry standard and practice. Therefore, we believe it is reasonable to maintain consistency with HIPAA to allow community providers to rely on the same definition when using and disclosing VA records, and we are not making any changes based on this portion of the comment.

2. External treatment records. The comment expressed concern regarding the creation of external treatment records when VA refers veterans to community providers, and further asked VA to revise § 1.481(b) as proposed to include, at the end, a phrase that reads including via any health information exchange or organization. When VA refers patients to community providers for treatment, those community providers create their own treatment records and VA does not have the authority to restrict the records created and owned by an external entity. However, if VA provides a copy of VA medical records to a community provider then VA may restrict the use of the medical record provided and the language proposed in 1.481(b) provides this restriction by stating that an entity to which a record is disclosed under this section may not disclose or use such record for a purpose other than that for which the disclosure was made or as permitted by law. This language is consistent with our authorizing statute under 38 U.S.C. 7332(b)(2)(H)(i) and we do not believe it is necessary to add the additional phrase as suggested by the commenter because the restriction that is already present in § 1.418(b) as proposed captures all entity types to include health information exchanges or organizations when applicable. We are not making any changes based on this portion of the comment.

3. Restriction requests. The comment raised a concern that the proposed rule did not address requests for restrictions on the disclosure of medical records under the HIPAA Privacy Rule, and specifically, restrictions with regard to information sharing through a health information exchange. The comment addressed both the issues of restriction on the use and disclosure of protected health information, and the means under which protected health information is shared. To address both issues raised in the comment, we first note that the purpose of the proposed rule and this final rule is to align VA's regulations with recent changes in law that now authorize VA to disclose 7332-protected records to a third party for the purpose of providing health care or performing other health care-related activities or functions, and to a third party for the purpose of recovering or collecting reasonable charges for care furnished to, or paid on behalf of, a patient in connection with a non-service connected disability or to which the United States is deemed to be a third-party beneficiary. This authority does not negate an individual's ability to request a restriction on the use and disclosure of their protected health information under 45 CFR 164.522, nor does it negate VA's obligation to uphold a request if VA agrees to a restriction. We note that under the HIPAA Privacy Rule, VA may still use or disclose restricted protected health information for emergency treatment. 45 CFR 164.522(a)(1)(iii). Additionally, under the HIPAA Privacy Rule a covered entity is not required to agree to a restriction unless the disclosure is for the purpose of carrying out payment or health care operations and is not otherwise required by law and the protected health information pertains solely to a health care item or service for which the individual, or person other than the health plan on behalf of the individual, has paid the covered entity in full. 45 CFR 164.522(a)(1)(ii) and (vi). Thus, this final rule does not affect an individual's ability to request restrictions on the disclosure of medical records. We next clarify this final rule does not impede an individual's ability to opt-out of health information exchanges. VA provides individuals the opportunity to opt-out of sharing protected health information through health information exchanges (HIE). Therefore, if an individual chooses to opt-out, VA will uphold this request by not sharing protected health information through an HIE. However, protected health information will continue to be shared on paper, fax, or other legally allowed means. We are not making any changes based on this portion of the comment.

4. The Privacy Act. The comment asked if the Privacy Act applies to medical records and whether the routine use exemption applies. We clarify that this rule does not impact protections under the Privacy Act because VA is authorized to disclose 7332-protected records without consent under routine use when such disclosure is authorized by 38 U.S.C. 7332. The Privacy Act requires Federal agencies to not disclose any record which is contained in a system of records . . . without the prior written consent of, the individual to whom the record pertains, unless the disclosure of the record would be . . . for routine use. 5 U.S.C. 552a(b) and (b)(3). Routine use, with respect to the disclosure of records, means the use of such record for a purpose which is compatible with the purpose for which it was collected. 5 U.S.C. 552a(a)(7). In accordance with 5 U.S.C. 552a(e), VA publishes a Federal Register Notice outlining the routine use disclosures of records from a Privacy Act system of records to a person or entity outside of VA without the prior signed written consent authorization of the individual who is the subject of the information. For example, published routine use disclosure statements in the Privacy Act system of records, “Patient Medical Records-VA”, 24VA10P2 permits the release of protected health information when a disclosure is also authorized by other applicable legal authorities, including the HIPAA Privacy Rule; and disclosure of 7332-proteced records when the disclosure is also authorized by 38 U.S.C. 7332. Furthermore, this rule aligns VA's regulations with recent changes in our statutory authority under 7332. We are not making any changes based on this portion of the comment.

Based on the rationale set forth in the proposed rule and in this document, we are adopting the proposed rule as final without changes.

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

The final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This final rule will directly affect health and medical insurance companies, some of which are small entities. VA has determined that this final rule will not have a significant economic impact because VA estimates the cost of this rulemaking to be no more than 1 percent of average annual receipts, and thus not significant. In the proposed rule, VA estimated the cost of this rulemaking to be $41.7 per year using FY2020 estimates. VA now estimates the cost of this rulemaking to be $43.8 million per year using FY2021 estimates for health and medical insurance carriers due to an increase in potential revenue received by VA from health and medical insurance firms for billed claims. This $43.8 million dollars per year will be distributed among 815, of which 312 are small, medical and health insurance firms that provide benefits to veterans treated for non-service connected conditions and whose records are protected under 38 U.S.C. 7332. We are uncertain if any small entity will be impacted so we assume that all small entities will be impacted in addition to large entities. The cost to each of the 312 small entities will be $53,779 per year, which is 1 percent of average annual receipts for the smallest potentially affected small entities. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The Office of Information and Regulatory Affairs has determined this rule is not a significant regulatory action under Executive Order 12866.

VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's website at http://www.va.gov/orpm by following the link for VA Regulations Published from FY 2004 through FYTD.

This rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule 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 one year. This final rule will have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.008—Veterans Domiciliary Care; 64.011—Veterans Dental Care; 64.012—Veterans Prescription Service; 64.013—Veterans Prosthetic Appliances; 64.014—Veterans State Domiciliary Care; 64.015—Veterans State Nursing Home Care; 64.026—Veterans State Adult Day Health Care; 64.029—Purchase Care Program; 64.033—VA Supportive Services for Veteran Families Program; 64.039—CHAMPVA; 64.040—VHA Inpatient Medicine; 64.041—VHA Outpatient Specialty Care; 64.042—VHA Inpatient Surgery; 64.043—VHA Mental Health Residential; 64.044—VHA Home Care; 64.045—VHA Outpatient Ancillary Services; 64.046—VHA Inpatient Psychiatry; 64.047—VHA Primary Care; 64.048—VHA Mental Health clinics; 64.049—VHA Community Living Center; 64.050—VHA Diagnostic Care; 64.054—Research and Development.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Brooks D. Tucker, Acting Chief of Staff, Department of Veterans Affairs, approved this document on August 26, 2020, for publication.

For the reasons set forth in the preamble, Department of Veterans Affairs amends 38 CFR part 1 as follows:

On July 6, 2020 (85 FR 40160), EPA published a notice of proposed rulemaking (NPRM) for the State of West Virginia. In the NPRM, EPA proposed approval of West Virginia's plan for maintaining the 1997 8-hour ozone NAAQS through June 7, 2027, in accordance with CAA section 175A. The formal SIP revision was submitted by WVDEP on December 10, 2019.

On May 8, 2007 (72 FR 25967, effective June 7, 2007), EPA approved a redesignation request (and maintenance plan) from WVDEP for the Parkersburg-Marietta Area. Section 175A(b) of the CAA requires that at the end of the eighth year after the effective date of the redesignation, the state must also submit a second maintenance plan to ensure ongoing maintenance of the standard for an additional 10 years, and in South Coast Air Quality Management District v. EPA , 1 the D.C. Circuit held that this requirement cannot be waived for areas, like Parkersburg, that had been redesignated to maintenance for the 1997 8-hour ozone NAAQS prior to revocation and that were designated attainment for the 2008 ozone NAAQS. CAA section 175A sets forth the criteria for adequate maintenance plans. In addition, EPA has published longstanding guidance that provides further insight on the content of an approvable maintenance plan, explaining that a maintenance plan should address five elements: (1) An attainment emissions inventory; (2) a maintenance demonstration; (3) a commitment for continued air quality monitoring; (4) a process for verification of continued attainment; and (5) a contingency plan. 2 WVDEP's December 10, 2019 SIP submittal fulfills West Virginia's obligation to submit a second maintenance plan and adequately addresses each of the five necessary elements.

As discussed in the July 6, 2020 NPRM, consistent with longstanding EPA guidance, 3 areas that meet certain criteria may be eligible to submit a limited maintenance plan (LMP) to meet the requirements of CAA section 175A. Specifically, states may meet CAA section 175A's requirement to “provide for maintenance” by demonstrating that an area's design values  4 are well below the NAAQS and that it has had historical stability attaining the NAAQS. EPA evaluated WVDEP's December 10, 2019 submittal for consistency with all applicable EPA guidance and CAA requirements. EPA found that the submittal met CAA section 175A and all CAA requirements, and proposed approval of the LMP for the Parkersburg-Marietta, WV-OH Area comprising Wood County as a revision to the West Virginia SIP. The effect of this action makes certain commitments related to the maintenance of the 1997 8-hour ozone NAAQS Federally enforceable as part of the West Virginia SIP.

Other specific requirements of WVDEP's December 10, 2019 submittal and the rationale for EPA's proposed action are explained in the NPRM and will not be restated here.

EPA received three comments on the July 6, 2020 NPRM, only two of which related to air quality issues. All comments received are in the docket for this rulemaking action. A summary of the two comments and EPA's responses are provided herein.

Comment 1: The commenter alleges that the plan should not be approved due to “a well-documented history of excessive emissions, including particulates,” in Parker County. The commenter asserts that the concentration of PM 10   5 in Parker County is one of the highest in the nation and that “if there were pollution control measures in place for Parker County, Parker County would be able to meet its air quality standards.” In addition, the commenter raises a number of issues related to road improvement plans, including a request for EPA's position on the “Parker County Road Improvement Plan.”

Response 1: As stated in the NPRM, the state's submission addresses the Parkersburg-Marietta Area's maintenance of the 1997 8-hour ozone NAAQS. Therefore, the commenter's concerns about particulate matter pollution and emissions are beyond the scope of this action. Particulate matter is regulated under a separate NAAQS. 6 Emissions of particulate matter and concentrations of PM 10 particulates are not relevant to whether the Parkersburg-Marietta Area continues to attain and has a plan for maintaining the 1997 8-hour ozone NAAQS for an additional 10 years. Similarly, road projects in an unspecified Parker County Road Improvement Plan are not relevant to whether the LMP for the 1997 8-hour ozone NAAQS is approvable. EPA set forth in the NPRM the criteria relevant to approvability of the LMP. EPA has determined that the December 10, 2019 SIP revision includes adequate information to support West Virginia's LMP. As set forth in the NPRM, EPA has determined that the State provided sufficient assurances in the LMP for EPA to approve West Virginia's 1997 8-hour ozone second maintenance plan for the Parkersburg-Marietta Area. EPA's evaluation of the West Virginia's December 10, 2019 SIP revision and the rationale for taking rulemaking action on this submission was discussed in detail in the NPRM. EPA continues to believe that it has considered the correct criteria and that the LMP meets the criteria for approvability. Concerns about particulate matter and road projects raised by the commenter are not relevant with respect to EPA's decision to approve the LMP.

Comment 2: The commenter claims that EPA must disapprove West Virginia's LMP because “the proposed rule will not ensure that the communities in this area will be well served in terms of its electrical needs and its water needs,” and “will not address the potential problems with drinking water supplies nor the environmental damage from increased air pollution this plan allows.” The commenter alleges that EPA “will not allow” the LMP go into effect without evaluating the impact it could have on the state and communities, because Federal agencies are required under the National Environmental Policy Act (NEPA) to assess impacts from proposed Federal actions on the environment, health and safety. Further the commenter contends that the LMP proposal includes an increase of “the amount of gas extraction that would require pumping water deep underground,” which will potentially harm the drinking water supplies in communities, including Parkersburg.

Response 2: The commenter raised several issues with respect to EPA's proposed approval of West Virginia's second 10-year maintenance plan for the Parkersburg-Marietta Area for the 1997 8-hour ozone NAAQS, but EPA disagrees that any of them provide a basis for disapproving the state's submission. The commenter first raises concern about the plan's “failure to ensure that the community will be well served in terms of its electrical needs and its water needs.” However, these issues are beyond the scope of EPA's action, which address only CAA requirements for the Parkersburg-Marietta Area with respect to the 1997 8-hour ozone NAAQS. Second, the commenter's allegation that the EPA is required under NEPA to assess the impacts of its maintenance plan approval is incorrect; section 7(c) of the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 793(c)(1)) exempts all EPA actions under the CAA from the requirements of NEPA, and this action is an approval of a SIP under the CAA. Third, the commenter's allegation that “the plan proposes to increase the amount of gas extraction that would require pumping water deep underground” and her concern that the “plan also lacks mitigation measures . . . related to the increased use of water and gas to extract shale gas in the area” appears to be referring to a different action. The SIP submission at issue in this action does not affect in any way gas extraction in West Virginia, much less propose to increase the amount of extraction, and therefore it appropriately does not address mitigation measures related to that subject. Finally, EPA does not agree with the commenter's allegation that the plan allows for increased air pollution. The state's submission maintains the same controls and contingency measures that were adopted into the SIP to attain and maintain the 1997 8-hour ozone NAAQS and any potential future violations of that standard.

As noted in the NPRM, CAA section 175A requires only that the State of West Virginia make adequate demonstration that the Parkersburg-Marietta Area will continue to maintain the 1997 8-hour ozone NAAQS until 2027 (20 years after redesignation). EPA has considered the appropriate statutory criteria and believes the record supports approval of the LMP. Concerns regarding electricity supply and water supply raised by the commenter are not relevant with respect to EPA's decision to approve the LMP.

EPA is approving the 1997 8-hour ozone NAAQS second 10-year maintenance plan for the Parkersburg-Marietta, WV-OH Area comprising Wood County as a revision to the West Virginia SIP.

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

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

• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because it is not a significant regulatory action under Executive Order 12866.

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the State, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 8, 2020. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action pertaining to West Virginia's limited maintenance plan for the Parkersburg-Marietta, WV-OH Area comprising Wood County may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble the EPA amends 40 CFR part 52 as follows:

The EPA is publishing this direct final rule without a prior proposed rule because the agency views this as a noncontroversial action. The EPA anticipates no adverse comment because this final action codifies the EPA's factual findings that certain areas attained the revoked 1997 ozone NAAQS by the applicable attainment dates. In the “Proposed Rules” section of this Federal Register , the EPA is publishing the parallel proposed rule to update part 52. If adverse comments are received on the proposed rule, the EPA will not institute a second comment period on this action. Any parties interested in commenting on the proposed rule must do so at this time. For further information about commenting on the proposed rule, see the DATES and ADDRESSES section of the proposed rule.

If the EPA receives relevant adverse comment on all or a distinct portion of the proposed rule, the Agency will publish a timely withdrawal in the Federal Register . The withdrawal notice will inform the public of the direct final rule provisions that will become effective and which provisions are being withdrawn. In the event the EPA receives relevant adverse comment on the proposed rule, the EPA will respond in writing to comments and include the written responses in any subsequent final rule based on the proposed rule.

Publishing these determinations in part 52 will document for the public and state air agencies that these areas factually attained the revoked 1997 ozone NAAQS by the applicable attainment dates and are therefore not subject to anti-backsliding consequences for failure to timely attain the standards. The scope of the rule is narrow, and the EPA had previously informed the affected states' air agencies of these determinations by way of letter in February 2019. The direct final rule will not create any new requirements for any affected state. Nonetheless, the public is invited to comment on the proposed rule.

On July 18, 1997, the EPA established standards for the 8-hour average ozone concentrations at a level of 0.08 parts per million (ppm)  1 for both the primary and secondary NAAQS  2 (herein referred to as the 1997 ozone NAAQS). 3 Subsequently, the EPA designated areas around the country as either attaining (“attainment”) or not attaining (“nonattainment”) the 1997 ozone NAAQS. Effective on June 15, 2004, 4 the EPA established the nonattainment area designations, classifications, and attainment dates  5 that applied to the 1997 ozone NAAQS nonattainment areas, and included attainment dates for Early Action Compact (EAC) areas. 6 The EPA then issued a rule for implementing the 1997 ozone NAAQS that was published in a separate Federal Register notice effective on the same date, June 15, 2004. 7

Four years later, on March 27, 2008, the EPA revised the 8-hour ozone standards to a more protective level of 0.075 ppm for both the primary and secondary standards (herein referred to as the 2008 ozone NAAQS)  8 and issued implementing regulations for the revised NAAQS (herein referred to as the 2008 ozone SIP Requirements Rule)  9 in April 2015. In that rule, the EPA revoked the 1997 ozone NAAQS and established requirements to ensure that progress toward clean air in those areas would not “backslide.” The EPA also stated that it would no longer make determinations of attainment by the attainment date except to trigger relevant anti-backsliding obligations, as the designations and classifications for 1997 ozone NAAQS areas were no longer in effect following revocation.

Subsequently, in South Coast Air Quality Management District v. EPA (882 F.3d 1138 (D.C. Cir. 2018)) (known as the South Coast II decision), 10 the U.S. Circuit Court of Appeals for the District of Columbia vacated, among other things, certain portions of the 2008 ozone SIP Requirements Rule, in part effectively re-establishing a requirement for EPA to reclassify areas that failed to attain the revoked 1997 ozone NAAQS by the area's applicable attainment date. 11 The EPA does not interpret the South Coast II decision to compel the Agency to issue determinations of attainment by the attainment date or to make these updates to part 52 for areas that timely attained the revoked 1997 ozone NAAQS. Rather the EPA views these discretionary actions as helpful to clarify the status of the affected areas after the court decision.

To clarify the status of areas that attained the 1997 ozone NAAQS by the applicable attainment dates, in February 2019, four EPA Regional Offices issued letters to four states identifying nine areas that had attained the standards by the applicable attainment dates. 12 13 14 15 The findings were based on certified quality-assured air quality monitoring data from the 3 calendar years preceding the respective attainment dates. This direct final rule updates the regulations at 40 CFR part 52 to reflect these earlier findings. The information contained in the letters is summarized in Table 1, 16 including the de sign values (DVs) for the applicable attainment dates. 17

This direct final rule updates the regulations at 40 CFR part 52 to reflect the earlier findings of determinations of attainment by the attainment date for the revoked 1997 ozone NAAQS. Publishing these determinations in part 52 will document for the public and state air agencies that these areas attained the standards by the applicable attainment dates and are therefore not subject to anti-backsliding consequences for failure to timely attain the standards.

This direct final rule requires no environmental justice considerations.

This action is not a significant regulatory action and, therefore, was not submitted to the Office of Management and Budget for review.

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

This action does not impose an information collection burden under the PRA.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities.

This action does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538. 18 The action imposes no enforceable duty on any state, local or tribal governments or the private sector.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications as specified in Executive Order 13175. This action will neither impose substantial direct compliance costs on federally recognized tribal governments, nor preempt tribal law. Thus, Executive Order 13175 does not apply to this action.

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

This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 ( see 59 FR 7629, February 16, 1994). The documentation for this decision is contained in Section IV of this document titled, “Environmental Justice Considerations.”

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

Under section 307(b)(1) of the CAA, petitions for judicial review of final actions that are locally and regionally applicable may be filed only in the United States Court of Appeals for the appropriate circuit by December 8, 2020. However, the statute also provides that notwithstanding that general rule, “a petition for review of any action . . . may be filed only in the United States Court of Appeals for the District of Columbia if such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.” Because this final action makes findings regarding the attainment status of areas across the country, in multiple EPA regions and within the jurisdictions over multiple U.S. Circuit Courts of Appeal, the Administrator finds that this action has nationwide scope and effect. Therefore, in accordance with CAA section 307(b)(1), petitions for review of this final action may be filed only in the United States Court of Appeals for the District of Columbia Circuit. Under CAA section 307(b)(2), the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings for enforcement.

For the reasons stated in the preamble, part 52, title 40, chapter 1 of the Code of Federal Regulations are amended as follows:

Throughout this document “we,” “us,” and “our” means the EPA.

Under the Regional Haze Rule, states are required to submit progress reports that evaluate progress towards the reasonable progress goals for each mandatory federal Class I area within the state and in each Class I area outside the state that may be affected by emissions from within the state. 1 In addition, the provisions also require states to submit, at the same time as the progress report, a determination of the adequacy of the state's existing regional haze plan. The first progress report must be in the form of a SIP revision and is due 5 years after submittal of the initial regional haze SIP.

On March 7, 2016, Utah submitted a Progress Report SIP revision which: (1) detailed the progress made toward achieving progress for improving visibility at Class I areas;  2 and (2) declared a determination of adequacy of the State's regional haze plan to meet reasonable progress goals.

On June 16, 2020, the EPA published a proposed rulemaking titled “Approval and Promulgation of Implementation Plans; Utah; Regional Haze 5-Year Progress Report State Implementation Plan” proposing to approve Utah's Progress Report SIP revision. 3 The rationale for the EPA's proposed action is explained in the proposed rulemaking and will not be restated here. The EPA is finalizing its proposed approval of the Progress Report as meeting the applicable regional haze requirements set forth in 40 CFR 51.309(d)(10).

We received three comments on our proposed rulemaking during the public comment period. The EPA determined that some of these comments, or portions thereof, are outside the scope of our proposed action and fail to identify any material issue necessitating a response.

Comment: The commenter stated that part of the approval is based on 7-year old data noting that key visibility metrics described previously show improvement in visibility conditions between the baseline (2000-2004) and current conditions (2009-2013).

Response: We agree with the commenter that Utah provided data from 2009-2013 (current period) to compare visibility progress with the 2000-2004 (baseline period). The Regional Haze Rule required that the first progress reports be submitted in 2013 and include an assessment of changes in visibility conditions between the baseline period and the “past five years.”  4 Additionally, the EPA's April 2013 General Principles for the 5-Year Regional Haze Progress Reports for the Initial Regional Haze State Implementation Plans states that “[f]or `current visibility conditions,' the reports should include the 5-year average that includes the most recent quality assured public data available at the time the state submits its 5-year progress report for public review.”  5 Thus, Utah's report, which was submitted for public review in 2014 and to the EPA in 2016, 6 appropriately compared 2009-2013 data to the baseline period. Additionally, we note that Utah's progress report and the proposed rule also assessed Utah's progress in comparison to the Western Regional Air Partnership (WRAP) 2018 Preliminary Reasonable Progress projections. 7

Comment: The commenter argues that private universities have CO 2 emissions and should be regulated. In addition, the commenter states that the definition of haze should be broadened to include light emissions.

Response: This action is limited to the visibility impairing pollutants that Utah considered during the initial 10-year regional haze implementation period as required for regional haze progress reports, which included sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and particulate matter (PM). 8 Therefore, an EPA assessment of CO 2 and anthropogenic light emissions is beyond the scope of this action as CO 2 and anthropogenic light emissions are not included in Utah's initial regional haze SIP.

Comment: The commenter expressed support for the rulemaking and noted that reductions in visibility impairing emissions will benefit people residing in Utah, as well as the entire ecosystem.

Response: We acknowledge the commenter's support for this action.

The EPA is finalizing approval of Utah's March 7, 2016, Regional Haze Progress Report as meeting the applicable regional haze requirements set forth in 40 CFR 51.309(d)(10).

In this document, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Utah State Air Quality Rules described in amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 8 Office (please email the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by the EPA for inclusion in the SIP, have been incorporated by reference by the EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 9

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

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

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

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 8, 2020. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

40 CFR part 52 is amended as follows:

The State of Wyoming received primacy enforcement responsibility (primacy) for Class I, III, IV, and V injection wells under the SDWA section 1422 on August 17, 1983, and Class II injection wells under the SDWA section 1425 on December 23, 1982. Wyoming has applied to EPA under section 1422 of the SDWA, 42 U.S.C. 300h-1, for primacy for Class VI injection wells, except those located on Indian lands. The UIC program revision package from Wyoming includes a description of the State Underground Injection Control program for Class VI injection wells, copies of all applicable rules and forms, a statement of legal authority, a summary and results of Wyoming's public participation activities, and a Memorandum of Agreement between Wyoming and EPA's Regional Administrator for Region 8.

This action is based on a legal and technical review of the State of Wyoming's application as directed in the Code of Federal Regulations (CFR) at 40 CFR part 145. As a result of this review, EPA is approving Wyoming's application because it meets or exceeds all applicable requirements for approval under the SDWA section 1422 and the Agency has determined that the state is capable of administering a Class VI UIC program in a manner consistent with the terms and purposes of the SDWA and all applicable regulations to protect underground sources of drinking water (USDWs).

This regulation is being promulgated under authority of the SDWA sections 1422 and 1450, 42 U.S.C. 300h-1 and 300j-9.

SDWA section 1421 requires the Administrator of EPA to promulgate minimum requirements for effective state UIC programs to prevent underground injection activities that endanger USDWs. SDWA section 1422 establishes requirements for states seeking EPA approval of state UIC programs.

For states that seek approval for UIC programs under SDWA section 1422, EPA has promulgated a regulation setting forth the applicable procedures and substantive requirements, codified at 40 CFR part 145. It includes requirements for state permitting programs (by referencing certain provisions of 40 CFR parts 124 and 144), compliance evaluation programs, enforcement authority, and information sharing.

On January 31, 2020, Wyoming submitted a program revision application to add Class VI injection wells to the state's SDWA section 1422 UIC program. The UIC program revision package from Wyoming includes a description of the state UIC program for Class VI injection wells, copies of all applicable rules and forms, a statement of legal authority, a summary and results of Wyoming's public participation activities, and a Memorandum of Agreement between Wyoming and EPA's Regional Administrator for Region 8. EPA reviewed the application for completeness and simultaneously performed a technical evaluation of the application materials.

On April 14, 2020, EPA published a Federal Register document announcing Wyoming's submittal of a complete UIC program revision application to the Agency. In that document, EPA proposed to approve the application from Wyoming under the SDWA section 1422 to implement a UIC program for Class VI injection wells located within the state, except those on Indian country; sought public comments on the Agency's intent to approve Wyoming's application; and provided an opportunity to request a public hearing.

In 2019, Wyoming held two public hearings with public comment periods on the state's intent to adopt its Class VI UIC regulations. The Wyoming Water and Waste Advisory Board (WWAB) held the first public hearing on June 25, 2019, in Casper, Wyoming. The WWAB accepted public comments beginning on May 17, 2019, through the adjournment of the public hearing. The Wyoming Environmental Quality Council held the second public hearing on November 19, 2019, in Cheyenne, Wyoming. The Wyoming Environmental Quality Council accepted comments on proposed revisions from September 13, 2019, through October 30, 2019. The Wyoming Class VI regulations were signed by the Governor of Wyoming on January 23, 2020. Documentation of all public participation activities, including those associated with Class VI UIC regulations and subsequent revisions that the state proposed before 2019 can be found in EPA's Docket ID No. EPA-HQ-OW-2020-0123.

On April 14, 2020, EPA issued a proposed rule (85 FR 20621), proposing to approve Wyoming's application to implement a UIC program for Class VI injection wells. This proposed rule provided that a public hearing would be held if requested. EPA did not receive any requests for a public hearing.

As previously noted, on April 14, 2020, EPA issued a proposal to approve the Wyoming application to implement the Class VI UIC program within the state (85 FR 20621) and requested public comments. The public comment period was open for 45 days and ended on May 29, 2020. EPA received seven public comment submissions. Of the seven commenters, all submitted comments in support of the rule and one requested clarification on certain aspects of Wyoming's UIC Class VI Program. After close consideration of the comments and coordination with the Wyoming Department of Environmental Quality, EPA provided clarification on the areas where the commenter requested clarification. The comments received and EPA's responses are available in EPA's Docket No. EPA-HQ-OW-2020-0123.

In this action, EPA is approving the State of Wyoming's Class VI UIC program; whereby the state will assume primacy for regulating Class VI injection wells in the state, except within Indian lands. Wyoming's statutes and supporting documentation are publicly available in EPA's Docket No. EPA-HQ-OW-2020-0123. This action amends 40 CFR part 147 and incorporates by reference EPA-approved state statutes and regulations. EPA will continue to administer the UIC program for all well classes within Indian lands.

The provisions of the State of Wyoming's statutes and regulations that contain standards, requirements, and procedures applicable to owners or operators of UIC Class VI wells are incorporated by reference into 40 CFR 147.2250 by this rule. Provisions of the State of Wyoming's statutes and regulations that contain standards, requirements, and procedures applicable to owners or operators of Class I, III, IV, and V injection wells have already been incorporated by reference into 40 CFR 147.2250 through prior EPA rules. Any provisions incorporated by reference, as well as all permit conditions or permit denials issued pursuant to such provisions, will be enforceable by EPA pursuant to the SDWA section 1423 and 40 CFR 147.1(e).

In order to better serve the public, EPA is reformatting the codification of EPA-approved Wyoming SDWA section 1422 UIC program statutes and regulations for well Classes I, III, IV, V and VI. Instead of codifying the Wyoming statutes and regulations as separate paragraphs, EPA is now incorporating by reference a compilation that contains EPA-approved Wyoming statutes and regulations for well Classes I, III, IV, V, and VI. This compilation is incorporated by reference into 40 CFR 147.2250 and is available at https://www.regulations.gov in the docket for this rule. A complete list of the Wyoming statutes and regulations contained in the compilation, titled “EPA-approved Wyoming SDWA §  1422 Underground Injection Control Program Statutes and Regulations for Well Classes I, III, IV, V and VI,” is codified as Table 1 to paragraph (a) in that section.

EPA will continue to oversee the State of Wyoming's administration of the SDWA Class VI program. As part of EPA's oversight responsibility, EPA will require Wyoming to submit semi-annual reports of non-compliance and annual UIC performance reports pursuant to 40 CFR 144.8. The Memorandum of Agreement between EPA and the State of Wyoming, signed by the Regional Administrator on March 20, 2020, makes available to EPA any information obtained or used by Wyoming's Class VI UIC program, without restriction.

This final rule is effective immediately upon publication. Section 553(d) of the Administrative Procedure Act (“APA”), 5 U.S.C. 553(d), provides that final rules shall not become effective until 30 days after publication in the Federal Register , “except . . . as otherwise provided by the agency for good cause,” among other exceptions. The purpose of this provision is to “give affected parties a reasonable time to adjust their behavior before the final rule takes effect.” Omnipoint Corp. v. FCC , 78 F.3d 620, 630 (D.C. Cir. 1996); see also United States v. Gavrilovic , 551 F.2d 1099, 1104 (8th Cir. 1977) (quoting legislative history). Thus, in determining whether good cause exists to waive the 30-day delay, an agency should “balance the necessity for immediate implementation against principles of fundamental fairness which require that all affected persons be afforded a reasonable amount of time to prepare for the effective date of its ruling.” Gavrilovic, 551 F.2d at 1105. EPA has determined that there is good cause for making this final rule effective immediately because this action will simply provide that the State of Wyoming has primacy under the SDWA for the UIC Class VI program, pursuant to which the State of Wyoming will be implementing and enforcing a state regulatory program that is as stringent as the existing federal program. At this time, there are no federally permitted Class VI wells in Wyoming. As a result, there are no current permittees that need time to prepare for this rule and any prospective permittees will benefit from the regulatory certainty that an immediate effective date will provide. This final rule will not require affected persons to take action or change behavior to come into compliance within the next 30 days. For these reasons, EPA finds that good cause exists under section 5 U.S.C. 553(d)(3) to make this rule effective immediately upon publication.

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

This action is exempt from review by the Office of Management and Budget (OMB) because it is an approval of a state UIC program.

This action is not an Executive Order 13771 regulatory action because this action is exempt under Executive Order 12866.

This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control number 2040-0042. Reporting or recordkeeping requirements will be based on Wyoming's UIC Regulations, and the State of Wyoming is not subject to the PRA.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the small entities subject to the rule. This action does not impose any requirements or burden on small entities as this action approves a state program.

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local, or tribal governments or the private sector. EPA's approval of Wyoming's program will not constitute a federal mandate because there is no requirement that a state establish UIC regulatory programs and because the program is a state, rather than a federal program.

EPA has concluded that this action has federalism implications. Although federalism concerns were implicated by this action, on the distribution of power and responsibilities among the state and federal government, the other criteria identified in Executive Order (E.O.) 13132 do not apply. See E.O. 13132(6)(b)&(c). For example, this action does not impose substantial direct compliance costs on the state, which voluntarily sought primacy. Moreover, EPA is required by statute to approve a primacy application that meets applicable requirements. Finally, this action does not preempt state law.

This action does not have tribal implications as specified in Executive Order 13175. This action contains no federal mandates for tribal governments and does not impose any enforceable duties on tribal governments. Thus, Executive Order 13175 does not apply to this action.

EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it approves a state program.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This action does not involve technical standards.

EPA has determined that this action is not subject to Executive Order 12898 (59 FR 7629, February 16, 1994) because it does not establish an environmental health or safety standard. This action is simply approving primacy for Wyoming under the SDWA for the Class VI UIC program, pursuant to which Wyoming will be implementing and enforcing a state regulatory program that is as stringent as the existing federal program.

This action is subject to the CRA, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. The CRA allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and comment rulemaking procedures are impracticable, unnecessary, or contrary to the public interest (5 U.S.C. 808(2)). EPA has made a good cause finding for this rule for an immediate effective date as discussed in Section VII of this document, which includes the basis for that finding.

For the reasons set forth in the preamble, EPA amends 40 CFR part 147 as follows:

The BLM has specific authority to charge fees for processing applications and other documents relating to public lands under section 304 of the Federal Land Policy and Management Act of 1976 (FLPMA), 43 U.S.C. 1734. In 2005, the BLM published a final cost recovery rule (70 FR 58854) that established new fees or revised fees and service charges for processing documents related to its minerals programs (“2005 Cost Recovery Rule”). In addition, the 2005 Cost Recovery Rule also established the method the BLM would use to adjust those fees and service charges on an annual basis.

The regulations at 43 CFR 3000.12(a) provide that the BLM will annually adjust fees established in Subchapter C (43 CFR parts 3000-3900) according to changes in the Implicit Price Deflator for Gross Domestic Product (IPD-GDP), which is published quarterly by the U.S. Department of Commerce. See also 43 CFR 3000.10. This final rule updates those fees and service charges consistent with that direction. The fee adjustments in this final rule are based on the mathematical formula set forth in the 2005 Cost Recovery Rule. The public had an opportunity to comment on that adjustment procedure as part of the 2005 rulemaking. Accordingly, the Department of the Interior for good cause finds under 5 U.S.C. 553(b)(B) and (d)(3) that notice and public comment procedures are unnecessary and that the fee adjustments in this final rule may be effective less than 30 days after publication. See 43 CFR 3000.10(c).

As set forth in the 2005 Cost Recovery Rule, the fee updates are based on the change in the IPD-GDP. The BLM's minerals program publishes the updated cost recovery fees annually, at the start of each fiscal year (FY).

This final rule updates the current (FY 2020) cost recovery fees for use in FY 2021. The current fees were set by the cost recovery fee rule published on November 6, 2019 (84 FR 59730), effective November 6, 2019. The update in this final rule adjusts the FY 2020 fees based on the change in the IPD-GDP from the 4th Quarter of 2018 to the 4th Quarter of 2019.

Under this final rule, 30 fees will remain the same and 18 fees will increase. Of the 18 fees that are being increased by this final rule, 11 will increase by $5 each, and five will increase by $10 each. The largest increase, $50, will be applied to the fee for adjudicating a mineral patent application containing more than 10 claims, which will increase from $3,290 to $3,340. The fee for adjudicating a patent application containing 10 or fewer claims will increase by $25, from $1,645 to $1,670. It is important to note that the “real” values of the fees are not actually increasing, since real values account for the effect of inflation. In real terms, the values of the fees are simply being adjusted to account for the changes in the prices of goods and services produced in the United States.

The calculations that resulted in the new fees are included in the table below:

The BLM took the base values (or “existing values”) upon which it derived the FY 2020 cost recovery fees (or “existing fees”) and multiplied them by the percent change in the IPD-GDP (1.61 percent for this update) to generate the “IPD-GDP increases” (in dollars). The BLM then added the “IPD-GDP increases” to the “existing values” to generate the “new values.” The BLM then calculated the “new fees” by rounding the “new values” to the closest multiple of $5 for fees equal to or greater than $1, or to the nearest cent for fees under $1. The “new fees” are the updated cost recovery fees for FY 2021.

The source for IDP-GDP data is the U.S. Department of Commerce, Bureau of Economic Analysis, specifically, “Table 1.1.9. Implicit Price Deflators for Gross Domestic Product,” which the BLM accessed on July 6, 2020, on the web at https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=3&isuri=1&1921=survey&1903=13.

This document is not a significant rule, and the Office of Management and Budget has not reviewed this final rule under Executive Order 12866.

The BLM has determined that this final rule will not have an annual effect on the economy of $100 million or more. It will not adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. The changes in today's rule are much smaller than those in the 2005 Cost Recovery Rule, which did not approach the threshold in Executive Order 12866. For instructions on how to view a copy of the analysis prepared in conjunction with the 2005 Cost Recovery Rule, please contact one of the persons listed in the FOR FURTHER INFORMATION CONTACT section above.

This final rule will not create inconsistencies or otherwise interfere with an action taken or planned by another agency. This rule does not change the relationships of the onshore minerals programs with other agencies' actions. These relationships are included in agreements and memoranda of understanding that will not change with this rule.

In addition, this final rule does not materially affect the budgetary impact of entitlements, grants, or loan programs, or the rights and obligations of their recipients. This rule applies an inflationary adjustment factor to existing user fees for processing certain actions associated with the onshore minerals programs.

Finally, this final rule will not raise novel legal or policy issues. As explained above, this rule simply implements an annual process to account for inflation that was adopted by and explained in the 2005 Cost Recovery Rule.

This action is not an E.O. 13771 regulatory action because it is not significant under E.O. 12866.

This final rule will not have a significant economic effect on a substantial number of small entities as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). As a result, a Regulatory Flexibility Analysis is not required. The Small Business Administration defines small entities as individual, limited partnerships, or small companies considered to be at arm's length from the control of any parent companies if they meet the following size requirements as established for each North American Industry Classification System (NAICS) code:

The SBA would consider many, if not most, of the operators with whom the BLM works in the onshore minerals programs to be small entities. The BLM notes that this final rule does not affect service industries, for which the SBA has a different definition of “small entity.”

The final rule may affect a large number of small entities because 18 fees for activities on public lands will be increased. The adjustments result in no increase in the fees for processing 30 actions relating to the BLM's minerals programs. The highest adjustment, in dollar terms, is for adjudications of mineral patent applications involving more than 10 mining claims; that fee will increase by $50. It is important to note that the “real” values of the fees are not actually increasing, since real values account for the effect of inflation. In real terms, the values of the fees are simply being adjusted to account for the changes in the prices of goods and services produced in the United States. Accordingly, the BLM has concluded that the economic effect of the rule's changes will not be significant, even for small entities.

For the 2005 Cost Recovery Rule, the BLM completed a Regulatory Flexibility Act threshold analysis, which is available for public review in the administrative record for that rule. For instructions on how to view a copy of that analysis, please contact one of the persons listed in the FOR FURTHER INFORMATION CONTACT section above. The analysis for the 2005 Cost Recovery Rule concluded that the fees would not have a significant economic effect on a substantial number of small entities. The fee increases implemented in this rule are substantially smaller than those provided for in the 2005 Cost Recovery Rule.

This final rule is not a “major rule” as defined at 5 U.S.C. 804(2). The final rule will not have an annual effect on the economy greater than $100 million; it will not result in major cost or price increases for consumers, industries, government agencies, or regions; and it will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. Accordingly, a Small Entity Compliance Guide is not required.

This final rule 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. In accordance with Executive Order 13132, the BLM therefore finds that the final rule does not have federalism implications, and a federalism assessment is not required.

This final rule does not contain information collection requirements that require a control number from the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). After the effective date of this rule, the new fees may affect the non-hour burdens associated with the following control numbers:

(1) 1004-0034 which expires June 30, 2021;

(2) 1004-0137 which expires October 31, 2021

(3) 1004-0162 which expires October 31, 2021;

(4) 1004-0185 which expires December 31, 2021;

(5) 1004-0132 which expires July 31, 2020;  6

(6) 1004-0073 which expires April 30, 2023;

(7) 1004-0025 which expires February 28, 2022;

(8) 1004-0114 which expires April 30, 2023; and

(9) 1004-0121 which expires October 31, 2022.

As required by Executive Order 12630, the BLM has determined that this final rule will not cause a taking of private property. No private property rights will be affected by a rule that merely updates fees. The BLM therefore certifies that this final rule does not represent a governmental action capable of interference with constitutionally protected property rights.

In accordance with Executive Order 12988, the BLM finds that this final rule will not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Executive Order.

The BLM has determined that this final rule qualifies as a routine financial transaction and a regulation of an administrative, financial, legal, or procedural nature that is categorically excluded from environmental review under NEPA pursuant to 43 CFR 46.205 and 46.210(c) and (i). The final rule does not meet any of the 12 criteria for exceptions to categorical exclusions listed at 43 CFR 46.215. Therefore, neither an environmental assessment nor an environmental impact statement is required in connection with the rule (40 CFR 1508.4).

The BLM has determined that this final rule is not significant under the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq., because it will not result in State, local, private sector, or tribal government expenditures of $100 million or more in any one year, 2 U.S.C. 1532. This rule will not significantly or uniquely affect small governments. Therefore, the BLM is not required to prepare a statement containing the information required by the Unfunded Mandates Reform Act.

In accordance with Executive Order 13175, the BLM has determined that this final rule does not include policies that have tribal implications. Specifically, the rule would not have substantial direct effects on one or more Indian tribes. Consequently, the BLM did not utilize the consultation process set forth in Section 5 of the Executive Order.

In developing this final rule, the BLM did not conduct or use a study, experiment, or survey requiring peer review under the Information Quality Act (Pub. L. 106-554).

In accordance with Executive Order 13211, the BLM has determined that this final rule is not likely to have a significant adverse effect on the supply, distribution, or use of energy. It merely adjusts certain administrative cost recovery fees to account for inflation.

The principal author of this final rule is Faith Bremner of the Division of Regulatory Affairs, Bureau of Land Management.

For reasons stated in the preamble, the Bureau of Land Management amends 43 CFR part 3000 as follows:

The FCC published a rule in the September 14, 2018 edition of the Federal Register at 83 FR 46812 entitled “Accelerating Wireline and Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment.” That rule contained an error in a cross-reference in § 1.1413(b). The FCC is publishing this correcting amendment to fix the cross-reference to prevent any confusion among the regulated community and the general public.

For the reasons set forth in the preamble, the FCC amends 47 CFR part 1 as follows:

This is a summary of the Report and Order in WT Docket No. 19-348, FCC 20-138, adopted September 30, 2020, and released October 2, 2020. The full text of the Report and Order is available for public inspection at the following internet address: https://docs.fcc.gov/public/attachments/FCC-20-138A1.pdf. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to FCC504@fcc.gov or calling the Consumer and Governmental Affairs Bureau at 202-418-0530 (voice) or 202-418-0432 (TTY).

The Regulatory Flexibility Act of 1980, as amended (RFA), requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” Accordingly, the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) concerning the possible impact of the rule changes contained in this Report and Order on small entities. As required by the Regulatory Flexibility Act, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rulemaking ( NPRM ) released in December 2019 in this proceeding (85 FR 3579, January 22, 2020). The Commission sought written public comment on the proposals in the NPRM, including comments on the IRFA. No comments were filed addressing the IRFA. This FRFA conforms to the RFA. The Commission will send a copy of the Report and Order, Order of Proposed Modification, and Orders, including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

The Commission will send a copy of the Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

1. In the Report and Order the Commission continues to execute its comprehensive strategy to Facilitate America's Superiority in 5G Technology (the 5G FAST Plan). It builds on efforts to unleash additional much-needed mid-band spectrum for flexible use, focusing on the 3100-3550 MHz band. Continued technological developments make 3 GHz spectrum ideal for next generation wireless services, including 5G, and the repurposing of 3.5 GHz and 3.7 GHz band spectrum presents an opportunity to make a large contiguous block of mid-band spectrum available for commercial use. Collectively, the 3.45-3.55 GHz band and neighboring 3.5 GHz and 3.7 GHz bands could offer 530 megahertz of mid-band spectrum for flexible use.

2. The Commission therefore acts now to prepare the 3.45-3.55 GHz band for such future use. The Report and Orde r adopts the Commission's 2019 proposal to remove the secondary, non-federal allocations from the 3.3-3.55 GHz band as a first step toward future sharing between federal incumbents and commercial operations. It expects that this action, in tandem with continued work by the Department of Defense (DoD) and other federal partners, will allow for agencies to file transition plans no later than April 2021, and for commercial operations to begin in early 2022.

3. The lower 3 GHz band—and the 3450 MHz to 3550 MHz portion of the band (3.45-3.55 GHz band) in particular—has been targeted as spectrum to support 5G both here and abroad, and assessed within the federal government, across the legislative and executive branches, as well as within the Commission. The National Telecommunications and Information Administration (NTIA) identified the 3450-3550 MHz spectrum band as a potential candidate for shared use between federal incumbents and commercial services two years ago. In 2018, Congress passed the Fiscal Year 2018 omnibus spending bill, which directed NTIA to work with the Commission on identifying sharing opportunities in the 3.1-3.55 GHz band.

4. In December 2019, the Commission adopted a Notice of Proposed Rulemaking that proposed to clear non-federal secondary allocations from the 3.3-3.5 GHz band as a preliminary step toward potential future shared use between federal incumbents and commercial users of the band. In June 2020, pursuant to its obligations under the Commercial Spectrum Enhancement Act, the Commission notified the NTIA of its plan to commence an auction in December 2021 for licenses in 100 megahertz of the 3400-3550 MHz band. There has also been a broad and consistent effort by international governing bodies and global standards setting organizations to review the suitability of several frequency bands for next generation 5G wireless services, including the lower 3 GHz band. The Commission's continued efforts to promote flexible use licensing in the band will help to promote international harmonization.

5. In 2020, the White House and the DoD formed America's Mid-Band Initiative Team (AMBIT) with the goal of making 100 megahertz of contiguous mid-band spectrum available in the 3.45-3.55 GHz band for full commercial use. Under the agreement that was reached as part of the AMBIT study process, the DoD expects to enable commercial 5G systems to operate at full power throughout almost all the contiguous United States. The DoD would also require access to the spectrum during times of national emergency.

6. Currently, the entire 3.1-3.55 GHz band is allocated for both federal and non-federal radiolocation services, with non-federal users operating on a secondary basis to primary federal radiolocation services. The DoD operates high-powered defense radar systems on fixed, mobile, shipborne, and airborne platforms in this band. From 3.1-3.3 GHz, the band is also allocated for federal and non-federal space research (active) and earth exploration satellite (active) in addition to radiolocation services.

7. There are 17 non-federal radiolocation licenses in the portion of the band below 3.3 GHz, which are held by power companies and municipalities. Between 3.3 GHz and 3.55 GHz, there are only eight active non-federal radiolocation licenses, which are being used for a variety of commercial and industrial radiolocation services. In addition, non-federal amateur services operate in the 3.3-3.5 GHz portion of the band pursuant to a secondary allocation and must not cause harmful interference to operations such as radio astronomy stations and stations authorized by other nations for radiolocation service. The 3.5-3.55 GHz portion of the band is also allocated for federal aeronautical radionavigation services. In addition, the Radio Astronomy Service makes use of 3260-3267 MHz, 3332-3339 MHz, and 3345.8-3352.5 MHz. Also among the non-federal users operating in the 3.1-3.55 GHz band are holders of hundreds of non-federal experimental licenses, including special temporary authorizations (STAs). These experimental licenses and STAs are issued pursuant to part 5 of the Commission's rules and may be granted for a broad range of research and experimentation purposes, but experimental licenses and STAs must operate on a non-interference basis.

8. The band immediately above 3.1-3.55 GHz is authorized for commercial wireless operations. In 2015, the Commission established the Citizens Broadband Radio Service in the 3.55-3.7 GHz band (3.5 GHz band) for shared use between new commercial wireless operations and incumbent operations—including military radar systems, non-federal FSS earth stations, and, for a limited time, grandfathered wireless broadband licensees in the 3.65-3.7 GHz band. The primary allocation for federal radiolocation operations continues below 3.1 GHz, with secondary non-federal radiolocation operations in this spectrum as well.

9. In its December 2019 Notice of Proposed Rulemaking, the Commission proposed to eliminate the non-federal radiolocation service allocations in the 3.3-3.55 GHz band, as well as the non-federal amateur allocation in the 3.3-3.5 GHz band. Both are secondary users of the band. The Commission finds that removing the existing secondary non-federal allocations from the 3.3-3.55 GHz band and clearing these non-federal operations from the band is in the public interest, and therefore adopts this proposal. Because the DoD and NTIA agree that commercial users operating pursuant to flexible use licenses can be accommodated in the 3.45-3.55 GHz band at full power, and given continued interest in the 3.3-3.45 GHz band for future sharing for flexible use licenses, retaining the secondary non-federal allocations across this spectrum would hinder the Commission's ability to offer flexible use licensing in the future and would undermine the intensive and efficient use of valuable mid-band spectrum. The Commission will allow secondary non-federal licensees operating as of the effective date of this Report and Order to continue to operate in the 3.45-3.55 GHz band while it finalizes plans to reallocate spectrum in the band. Authorization for these operations will sunset on a date consistent with the first possible grant of flexible use authorizations to new users in that portion of the band. The Commission revises the Table of Allocations accordingly.

10. The Commission considers clearing spectrum for flexible use to be a priority when it is feasible to do so. Spectrum that has been cleared to the greatest extent possible provides maximum flexibility in future uses, ensuring intensive and efficient use of that spectrum going forward. Spectrum encumbrances, on the other hand, constrain the potential of future uses of that spectrum, deter investment in the band, and undermine the public interest benefits of the relicensing process. Given the ever-increasing demand for wireless spectrum for broadband access and the particular need for additional mid-band spectrum for those services, such spectrum should be made available for exclusive, as opposed to shared, non-federal use where possible.

11. The Commission has broad authority under the Communications Act to modify its rules governing use of radio spectrum, and specific authority to allocate spectrum so as to provide flexibility of use. Under the Commission's rules, secondary spectrum users cannot claim protection from primary operations, including those subsequently licensed by the Commission, and they are subject to losing their spectrum rights if the primary operations in the band change at a later date.

12. From a technical perspective, the removal of secondary, non-federal licensees from the 3.3-3.55 GHz band is necessary given the incompatibility of radiolocation and amateur operations with ubiquitous mobile and fixed broadband services, which are likely the primary uses pursuant to flexible use licenses. Existing federal use of this band is sporadic and geographically localized, which has created a spectral environment well-suited to the coexistence of radiolocation and amateur operations. By contrast, nationwide broadband services operate at all times in virtually all areas and would provide these secondary operations with little opportunity for meaningful, interference-free operations. Further, we expect that, if the incumbents were to try to maintain some degree of secondary operations, the dense and growing deployment of base stations providing wide area mobile services on a primary basis using all frequencies in the band would make such efforts on the part of secondary, co-channel systems too tenuous. Commenters agree that we should not permit continued secondary operations if flexible use licenses are to be used for 5G and other forms of nationwide wireless broadband. The Commission concludes that such secondary. Secondary systems could not operate without creating significant interference risks both to their own operations and to primary flexible use services.

13. Clearing this band of encumbrances will ensure that it is used intensely and efficiently, create a spectral environment that will support wireless broadband operations, and promote commercial interest and investment in the band. Current non-federal secondary radiolocation uses—particularly high-power weather radar systems—are incompatible with the anticipated future use of the band, so our actions today are a necessary predicate to repurposing the 3.45-3.55 GHz band for flexible use services. Sunsetting the secondary non-federal allocations will prevent adjacent-channel issues and preserve the possibility of additional clearing for flexible use licensing below 3.45 GHz, furthering the public interest. Deciding to relocate these non-federal users at this time will facilitate timely advance planning to accommodate the needs of all existing and future federal and non-federal users—a complex undertaking posing technical and financial issues that the Commission will need to work with relevant stakeholders to resolve. This action will increase investment in communications services and systems and technological development by providing maximum opportunities for deployment of flexible use services, while continuing to provide spectrum for these secondary operations.

14. This decision notwithstanding, secondary non-federal radiolocation licensees and amateur license holders operating as of the effective date of this Report and Order may continue operating while the Commission finalizes plans to reallocate spectrum in the 3.45-3.55 GHz band. Authorization for these operations will sunset on a date consistent with the first possible grant of flexible use authorizations to new users in that portion of the band. For example, if we adopt a licensing scheme that will result in an auction to assign licenses, secondary use would sunset within 90 days of the close of the auction. The Table of Allocations is revised accordingly. There are hundreds of experimental licenses, including experimental STAs, active throughout the 3.1-3.55 GHz band at any given time. Going forward, these operations will be permitted here under the same limitations as they are in other bands licensed for flexible use—including that they must operate on a non-interference basis.

15. The Commission removes the secondary, non-federal radiolocation allocation in the 3.3-3.55 GHz band. In relocating these operations, their current 50-megahertz allocation will be continued, along with their secondary status. Secondary, non-federal radiolocation licensees operating as of the effective date of this Report and Order may, however, continue to operate in this band until authorization for such operations are sunset as described above. Radiolocation authorization will sunset on a date consistent with the first possible grant of flexible use authorizations to new users in that portion of the band ( e.g., 90 days from the close of the auction if the Commission adopts a licensing scheme that will result in an auction to assign licenses).

16. Although spectrum above 3.45 GHz is the current focus for flexible use operations, secondary non-federal radiolocation operations will not be allowed to continue in the spectrum between 3.3 GHz and 3.45 GHz. Rather, in order to prevent cross-service, adjacent channel interference to new operations and to prepare the band for future relicensing, all secondary radiolocation operations in the 3.3-3.55 GHz band will be required to relocate to the 2.9-3.0 GHz band by a date certain that will be set by subsequent Commission action in this proceeding. Spectrum below 3.0 GHz is the preferable location for these operations, and will allow radiolocation operators to provide the same S-band (2-4 GHz) radar services as they do at 3.3-3.55 GHz and will minimize adjacent channel interference to potential future flexible use licenses.

17. Commenters currently holding these radiolocation licenses agree with relocation below 3.1 GHz, and no commenters object or offer any alternative means by which flexible use licensing could move forward in this band. Given the ongoing consideration of the entire 3.1-3.55 GHz band for future flexible use licenses, the Commission finds it is unwise to relocate secondary radiolocation operations to the lower portion of this band, i.e., 3.1-3.3 GHz. We also agree with commenters that identified spectrum below 3.1 GHz as a preferable location for these operations. In order to minimize adjacent channel interference to potential future flexible use licenses, however, we find that moving these operations to spectrum below 3.0 GHz is preferable to placing them in the 3.0-3.1 GHz band. Since the 2.9-3.0 GHz band already hosts non-federal radiolocation operations on a secondary basis, including the NEXRAD weather radar system operated by the National Weather Service, the band should be able to accommodate these relocated operations without running the risk of causing adjacent channel interference to flexible use licenses. NBCUniversal agrees with this conclusion, and no commenter disagrees. There is also no dispute in the record that existing equipment can be upgraded to support operations in this lower S-band spectrum, which should reduce the expense and complexity involved in the relocation. In relocating these operations, we will preserve their current 50-megahertz allocation and retain their secondary status.

18. The Commission removes the amateur allocation from the 3.3-3.5 GHz band. As it did with radiolocation operations, the Commission adopts changes to its rules today that provide for the sunset of the secondary amateur allocation in the band, but allow continued use of the band for amateur operations, pending resolution of the issues raised in the Further Notice. Secondary non-federal amateur licensees operating in this band as of the effective date of this Report and Order may continue while the Commission finalizes plans to reallocate spectrum in the 3.45-3.55 GHz band. Authorizations will sunset on a date consistent with the first possible grant of flexible use authorizations to new users in that portion of the band—for example, 90 days after the close of the auction if the Commission adopt a licensing scheme that will result in an auction to assign licenses. The Table of Allocations is revised accordingly.

19. Clearing all secondary operations, including amateur operations, from this spectrum will allow us to maximize the band for potential flexible use operations in the future. Further, to prevent adjacent-channel issues and to preserve the possibility of additional clearing for flexible use licensing below 3.45 GHz, sunsetting the secondary amateur allocation from the entire 3.3-3.5 GHz portion of the band is in the public interest. Amateur stations in this band are licensed on a shared basis. However, only amateur service operators with privileges for transmitting in this band based on their license class may operate stations on this spectrum. The class of a given operator's license determines on which of the many amateur frequencies it may operate, and amateurs with access to the 3.3-3.5 GHz band also have access to a large number of other bands. These include bands with similar characteristics and operations such as the 2.39-2.45 GHz and 5.65-5.925 GHz bands, as well as dozens of others. Due to the unique nature of the licensing of the amateur service, the Commission does not provide for relocation of these operations in the same way as for radiolocation operations. Instead, amateur operators may choose for themselves whether to continue these operations in alternate spectrum, and which available spectrum to use.

20. Notwithstanding the utility of amateur operations in this band, operators that chose to construct networks in this band did so despite the fact that the amateur allocation was secondary and entirely subject to current or future primary operations. As part 97 of our rules makes clear, amateur operations are a noncommercial, voluntary service. Amateur stations are permitted to operate in many different bands; amateur stations operating in the 3 GHz band have several other nearby bands available to them with similar propagation characteristics, such as the nearby 2 GHz band and the 5 GHz band. After the authorization to operate sunsets for secondary amateur licensees here, amateur stations will continue to have available these and other bands that are allocated for amateur use.

21. It is ordered , pursuant to sections 1, 4(i), 157, 301, 303, 307, 308, 309, 310, and 316, of the Communications Act of 1934, as amended, as well as the mobile now Act, Public Law 115-141, 132 Stat. 1098, Div. P, Title VI, § 603 (Mar. 23, 2018), 47 U.S.C. 151, 154(i), 157, 301, 303, 307, 308, 309, 310,

22. It is further ordered that the amendments of parts 2, 90, and 97 of the Commission's rules, as set forth in Appendix A, are adopted , effective thirty (30) days after publication in the Federal Register .

23. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order and Further Notice of Proposed Rulemaking, including the Final and Initial Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small Business Administration.

24. It is further ordered that the Commission shall send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

NFS Part 1845.301-71 Use of Government property for commercial work, contains procedures and criteria related to the approval of non-government use of NASA equipment on commercial contracts that affect only the internal Agency administrative procedures and have no cost or administrative impact on contractors or prospective contractors. Pursuant to Executive Order 13563, Improving Regulation and Regulatory Review, and Executive Order 13777, Enforcing the Regulatory Reform Agenda, NASA is continually reviewing existing regulations with the objective of reducing or removing any unnecessary, outdated and burdensome requirements that have outlived their intended purpose. Because the 1845.301-71 affect only the internal Agency administrative procedures it can be removed from the regulatory section of the NFS.

NASA does not anticipate opposition to the changes or significant adverse comments. However, if the Agency receives significant adverse comment, it will withdraw this final rule by publishing a notice in the Federal Register . A significant adverse comment is one that explains: (1) Why the final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the final rule will be ineffective or unacceptable without change. In determining whether a comment necessitates withdrawal of this final rule, NASA will consider whether it warrants a substantive response in a notice and comment process.

Publication of proposed regulations, 41 U.S.C. 1707, is the statute which applies to the publication of the Federal Acquisition Regulation (FAR). Paragraph (a)(1) of the statute requires that a procurement policy, regulation, procedure or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure or from, or has a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment because it makes non-substantive changes to Agency regulations that has no impact on contractors or prospective offerors as the definitions being removed affect only the internal Agency administrative procedures.

Executive Orders (E.O.s) 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This rule is not subject to Executive Order (E.O.) 13771, Reducing Regulation and Controlling Regulatory Costs, because this rule is not a significant regulatory action under E.O. 12866.

The Regulatory Flexibility Act does not apply to this rule because this final rule does not constitute a significant NFS revision within the meaning of FAR 1.501-1 and 41 U.S.C. 1707 and therefore does not require publication for public comment.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Accordingly, 48 CFR part 1845 is amended as follows:

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 D season allowance of the 2020 TAC of pollock in Statistical Area 610 of the GOA is 9,070 metric tons (mt) as established by the final 2020 and 2021 harvest specifications for groundfish in the GOA (85 FR 13802, March 10, 2020).

In accordance with § 679.20(d)(1)(i), the Regional Administrator has determined that the D season allowance of the 2020 TAC of pollock in Statistical Area 610 of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 8,970 mt and is setting aside the remaining 100 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for pollock in Statistical Area 610 of the GOA.

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

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 the closure of directed fishing for pollock in Statistical Area 610 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 October 5, 2020.