On December 12, 2018, the Food and Nutrition Service (FNS) published a final rule titled, “Child Nutrition Programs: Flexibilities for Milk, Whole Grains, and Sodium Requirements,” (2018 Final Rule) (83 FR 63775). The 2018 Final Rule codified three menu planning flexibilities, with some extensions, temporarily established by the interim final rule of the same title published November 30, 2017, (82 FR 56703). First, the 2018 Final Rule broadened the milk options in the National School Lunch Program and School Breakfast Program by allowing local operators to permanently offer flavored, low-fat milk. For consistency across nutrition programs, it also allowed flavored, low-fat milk in the Special Milk Program for Children and in the Child and Adult Care Food Program for participants ages 6 and older. Second, the 2018 Final Rule allowed for half of the weekly grains in the school lunch and breakfast menus to be whole grain-rich, thus ending the need for an exemption process to serve enriched grains. Third, it provided schools in the lunch and breakfast programs more time for gradual sodium reduction by retaining Sodium Target 1 through the end of school year (SY) 2023-2024, continuing to Target 2 in SY 2024-2025, and eliminating the Final Target that would have gone into effect in SY 2022-2023. By codifying those flexibilities, USDA acknowledged the persistent menu planning challenges experienced by some schools, and affirmed its commitment to giving schools more control over food service decisions and greater ability to offer wholesome and appealing meals that reflect local preferences.

In an April 13, 2020, decision in the Center for Science in the Public Interest et al., v. Sonny Perdue, Secretary, et al., No. 8:19-cv-01004-GLS (D. Md. 2019), the U.S. District Court for the District of Maryland found a procedural error with the promulgation of the 2018 Final Rule, and therefore, vacated the regulation.

This rule is not subject to the requirement to provide notice and an opportunity for public comment because it falls under the good cause exception at 5 U.S.C. 553(b)(B). The good cause exception is satisfied when notice and comment is “impracticable, unnecessary, or contrary to the public interest.” Id. This rule is an administrative step that implements the court's order vacating the 2018 Final Rule. Additionally, because this rule implements a court order already in effect, FNS has good cause to waive the 30-day effective date under 5 U.S.C. 553(d).

Accordingly, 7 CFR parts 210, 215, 220, and 226 are amended as follows:

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies Class D and Class E airspace at Truckee-Tahoe Airport, Truckee, CA, to ensure the safety and management of Instrument Flight Rules (IFR) operations at the airport.

The FAA published a notice of proposed rulemaking in the Federal Register (85 FR 53713; August 31, 2020) for Docket No. FAA-2020-0768 to modify Class D and Class E airspace at Truckee-Tahoe Airport, Truckee, CA. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. One comment, that is not germane to the proposed airspace action, was received.

Subsequent to publication, the FAA identified a technical error in the NPRM. The error is located in the description of the Class E airspace designated as an extension to a Class D or Class E surface area. The correction does not alter the external boundaries of the airspace area. The NPRM listed the area as follows: That airspace extending upward from the surface within 1.2 miles west and 0.9 miles east of the 316° bearing from the airport, extending from the 4.2-mile radius of the airport to 8.3 miles northwest of Truckee-Tahoe Airport. The airspace area is corrected to read as follows: That airspace extending upward from the surface within 1.1 miles west and 1 mile east of the 315° bearing from the airport, extending from the 4.2-mile radius of the airport to 8.3 miles northwest of Truckee-Tahoe Airport.

Class D, E2, E4, and E5 airspace designations are published in paragraphs 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11E, dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class D and Class E airspace designation listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11E, Airspace Designations and Reporting Points, dated July 21, 2020, and effective September 15, 2020. FAA Order 7400.11E is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11E lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations part 71 modifies the Class E airspace area designated as an extension to a Class D or Class E surface area at Truckee-Tahoe Airport. The airspace has been reduced and is described as follows: That airspace extending upward from the surface within 1 mile each side of the 017° bearing from the airport, extending from the 4.2-mile radius of the airport to 9.7 miles north of the airport; and within 1.1 miles west and 1 mile east of the 315° bearing from the airport, extending from the 4.2-mile radius of the airport to 8.3 miles northwest of Truckee-Tahoe Airport.

This action also modifies the Class E airspace extending upward from 700 feet above the surface. This airspace is designed to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. The airspace is described as follows: That airspace extending upward from 700 feet above the surface within a 4.2-mile radius of the airport, and within 2 miles each side of the 018° bearing from the airport, extending from 9.7 miles to 11.6 miles north of the airport, and within 1.1 miles each side of the 266° bearing from the airport, extending from the 4.2-mile radius to 13.5 miles west of the airport, and within 2.7 miles west and 1.9 miles east of the 321° bearing from the airport, extending from 8.3 miles to 14.8 miles northwest of the airport, and within an area beginning at 4.2 miles on the 324° bearing from the airport, then to 6.5 miles on the 324° bearing from the airport, then clockwise within a 6.5-mile radius of the airport to the 008° bearing from the airport, then along the 008° bearing to 4.2 miles, then counterclockwise within a 4.2-mile radius of the airport to the 324° bearing northwest of Truckee-Tahoe Airport.

Lastly, this action implements an administrative amendment to all of the airspaces' legal descriptions for Truckee-Tahoe Airport. To match the FAA aeronautical database, the airport's geographical coordinates are updated to Lat. 39°19′12″ N, long. 120°08′23″ W.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace in the Toccoa, GA, area to support IFR operations.

The FAA published a notice of prosed rulemaking in the Federal Register (85 FR 46015, July 31, 2020) for Docket No. FAA-2020-0645 to amend Class E airspace extending upward from 700 feet above the surface at Toccoa RG Letourneau Field Airport, Toccoa, GA, by eliminating the extension. In addition, the FAA proposed to update the geographic coordinates of the airport and Habersham County Airport, to coincide with the FAA's aeronautical database.

Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in Paragraph 6005, of FAA Order 7400.11E, dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11E, Airspace Designations and Reporting Points, dated July 21, 2020, and effective September 15, 2020. FAA Order 7400.11E is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11E lists Class A, B, C, D, and E airspace areas, air traffic routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 amends Class E airspace extending upward from 700 feet above the surface at Toccoa RG Letourneau Field Airport, Toccoa, GA, by eliminating the Foothills VOR/DME and the associated extension. In addition, the FAA updates the geographic coordinates of the airport and Habersham County Airport, to coincide with the FAA's aeronautical database. These changes are necessary for continued safety and management of IFR operations in the area.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies Class D and Class E airspace at Fallon NAS (Van Voorhis Field) Airport, Fallon, NV, to ensure the safety and management of Instrument Flight Rules (IFR) operations at the airport.

The FAA published a notice of proposed rulemaking in the Federal Register (85 FR 49983; August 17, 2020) for Docket No. FAA-2020-0741 to modify Class D and Class E at Fallon NAS (Van Voorhis Field) Airport, Fallon, NV. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class D, E2, E4, and E5 airspace designations are published in paragraphs 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11E, dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class D and Class E airspace designation listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11E, Airspace Designations and Reporting Points, dated July 21, 2020, and effective September 15, 2020. FAA Order 7400.11E is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11E lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations part 71 modifies Class E airspace at Fallon NAS (Van Voorhis Field). The Class E airspace that is designated as an extension to a Class D or Class E surface area is not required and is revoked.

This action also modifies the Class E airspace extending upward from 700 feet above the surface. This area is designed to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. This airspace area is described as follows: That airspace extending upward from 700 feet above the surface within an 8-mile radius of the airport, and within 2.5 miles each side of the 143° bearing from the airport, extending from the 8-mile radius to 11.5 miles southeast of the airport, and within 2.5 miles each side of the 270° bearing from the airport, extending from the 8-mile radius to 11.5 miles west of the airport, and within 2.5 miles each side of the 327° bearing from the airport, extending from the 8-mile radius to 11.5 miles northwest of Fallon NAS (Van Voorhis Field) Airport.

Further, this action modifies the Class E airspace extending upward from 1,200 feet above the surface. This area is designed to contain IFR aircraft transitioning to/from the terminal and en route environments. This airspace area is described as follows: That airspace extending upward from 1,200 feet above the surface within a 30-mile radius of the Fallon NAS (Van Voorhis Field) Airport.

Lastly, this action implements numerous administrative amendments to the airspaces' legal descriptions. To match the FAA database, the geographic coordinates in the Class D and Class E2 text headers for Fallon NAS (Van Voorhis Field) Airport and Fallon Municipal Airport have been updated. For Fallon NAS (Van Voorhis Field) Airport, the coordinates now read lat. 39°25′04″ N, long. 118°41′55″ W. For Fallon Municipal Airport the coordinates now read lat. 39°29′57″ N, long. 118°44′56″ W. The last two sentences in the Class D and Class E surface area legal descriptions are updated to read: “This Class D (or E, as appropriate) airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.” For the Class E airspace areas extending upward from 700 feet or more above the surface, the Fallon Navy TACAN, Mustang VORTAC, and all radials and distances from the navigational aids are removed from the text header and the airspace description.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

The FAA's authority to issue rule regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes Class E airspace at Norway Heliport, Norway, ME, to support IFR operations in the area.

The FAA published a notice of prosed rulemaking in the Federal Register (85 FR 47322, August 5, 2020) for Docket No. FAA-2020-0669 to establish Class E airspace extending upward from 700 feet above the surface at Norway Heliport, Norway, ME. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in Paragraph 6005, of FAA Order 7400.11E, dated July 21, 2020, and effective September 15, 2020, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11E, Airspace Designations and Reporting Points, dated July 21, 2020, and effective September 15, 2020. FAA Order 7400.11E is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 700 feet above the surface within a 6-mile radius at Norway Heliport, Norway, ME. These changes are necessary for continued safety and management of IFR operations in the area. Subsequent to publication of the NPRM, the FAA found excessive verbiage in the airport's description. The words `or more' and `of the earth' are not necessary to describe the airspace. This action makes the correction.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

This rule amends 14 CFR part 97 by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary. This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, CFR part 97, (is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

This rule amends 14 CFR part 97 by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, 8260-15B, when required by an entry on 8260-15A, and 8260-15C.

The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers or aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the typed of SIAPS, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flights safety relating directly to published aeronautical charts.

The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CRF part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

The Commission has issued the following Order:

Commission Regulations governing the offer and sale of commodity futures and option contracts traded on or subject to the regulations of a foreign board of trade to customers located in the U.S. are contained in Part 30 of the Commission's regulations. 1 These regulations include requirements for intermediaries with respect to registration, disclosure, capital adequacy, protection of customer funds, recordkeeping and reporting, and sales practice and compliance procedures that are generally comparable to those applicable to transactions on U.S. markets.

In formulating a regulatory program to govern the offer and sale of foreign futures and option products to customers located in the U.S., the Commission, among other things, considered the desirability of ameliorating the potential impact of such a program. Based upon these considerations, the Commission determined to permit persons located outside the U.S. and subject to a comparable regulatory structure in the jurisdiction in which they were located to seek an exemption from certain of the requirements under Part 30 of the Commission's regulations based upon substituted compliance with the regulatory requirements of the foreign jurisdiction. 2

Appendix A to Part 30, “Interpretative Statement With Respect to the Commission's Exemptive Authority Under § 30.10 of Its Rules” (Appendix A), generally sets forth the elements the Commission will evaluate in determining whether a particular regulatory program may be found to be comparable for purposes of exemptive relief pursuant to Regulation 30.10. 3 These elements include: (1) Registration, authorization or other form of licensing, fitness review or qualification of persons that solicit and accept customer orders; (2) minimum financial requirements for those persons who accept customer funds; (3) protection of customer funds from misapplication; (4) recordkeeping and reporting requirements; (5) sales practice standards; and (6) procedures to audit for compliance with, and to take action against those persons who violate, the requirements of the program. In addition, Appendix A to Part 30 further provides that any exemption of a general nature based on comparability requires appropriate information sharing arrangements between the Commission and the appropriate governmental agency and/or self-regulatory organization to ensure Commission access on an “as needed” basis to information essential to maintaining standards of customer and market protection within the U.S.

Moreover, the Commission specifically stated in adopting Regulation 30.10 that no exemption of a general nature would be granted unless the persons to whom the exemption is to be applied: (1) Submit to jurisdiction in the U.S. by designating an agent for service of process in the U.S. with respect to transactions subject to Part 30 and filing a copy of the agency agreement with the National Futures Association (NFA); (2) agree to provide access to their books and records in the U.S. to the Commission and Department of Justice representatives; and (3) notify NFA of the commencement of business in the U.S. 4 Appendix A also specifically states that in considering an exemption request, the Commission will take into account the extent to which United States persons or contracts regulated by the Commission are permitted to engage in futures-related activities or be offered in the country from which an exemption is sought. 5

On November 26, 2018, NSE IFSC petitioned the Commission on behalf of its member firms, located and conducting a financial investment business in the Republic of India, for an exemption from the application of the Commission's Part 30 Regulations to those firms. NSE IFSC amended its petition on various occasions with additional information. In support of its petition, NSE IFSC stated that granting such an exemption with respect to such firms that it has authorized to conduct foreign futures and option transactions on behalf of customers located in the U.S. would not be contrary to the public interest or to the purposes of the provisions from which the exemption is sought because such firms are subject to a regulatory framework comparable to that imposed by the Act and the regulations thereunder.

Based upon a review of the petition and supplementary materials filed by NSE IFSC, the Commission has concluded that NSE IFSC has demonstrated to the Commission's satisfaction that the exemption for relief pursuant to § 30.10(a) is not otherwise contrary to the public interest or to the purposes of the provisions from which exemption is sought. Accordingly, the Commission has determined that compliance with applicable Indian law and NSE IFSC rules may be substituted for compliance with those sections of the Act and regulations thereunder more particularly set forth herein.

By this Order, the Commission hereby exempts, subject to specified conditions, those firms identified to the Commission by NSE IFSC as eligible for the relief granted herein from:

• Registration with the Commission for firms and for firm representatives;

• The requirement in Commission Regulation 30.6(a) and (d), 17 CFR 30.6(a) and (d), that firms provide customers located in the U.S. with the risk disclosure statements in Commission Regulation 1.55(b), 17 CFR 1.55(b), and Commission Regulation 33.7, 17 CFR 33.7, or as otherwise approved under Commission Regulation 1.55(c), 17 CFR 1.55(c);

• The separate account requirement contained in Commission Regulation 30.7, 17 CFR 30.7;

• Those sections of Part 1 of the Commission's regulations that apply to foreign futures and options sold in the U.S. as set forth in Part 30; and

• Those sections of Part 1 of the Commission's regulations relating to books and records which apply to transactions subject to Part 30,

This determination to permit substituted compliance is based on, among other things, the Commission's finding that the regulatory framework governing persons in India who would be exempted hereunder provides:

(1) A system of qualification or authorization of firms who deal in transactions subject to regulation under Part 30 that includes, for example, criteria and procedures for granting, monitoring, suspending and revoking licenses, and provisions for requiring and obtaining access to information about authorized firms and persons who act on behalf of such firms;

(2) Financial requirements for firms including, without limitation, a requirement for a minimum level of working capital and daily mark-to- market settlement and/or accounting procedures;

(3) A system for the protection of customer assets that is designed to preclude the use of customer assets to satisfy house obligations and requires separate accounting for such assets;

(4) Recordkeeping and reporting requirements pertaining to financial and trade information;

(5) Sales practice standards for authorized firms and persons acting on their behalf that include, for example, required disclosures to prospective customers and prohibitions on improper trading advice;

(6) Procedures to audit for compliance with, and to redress violations of, the customer protection and sales practice requirements referred to above, including, without limitation, an affirmative surveillance program designed to detect trading activities that take advantage of customers, and the existence of broad powers of investigation relating to sales practice abuses; and

(7) Mechanisms for sharing of information between the Commission, NSE IFSC and the Indian regulatory authorities on an “as needed” basis including, without limitation, confirmation data, data necessary to trace funds related to trading futures products subject to regulation in India, position data, and data on firms' standing to do business and financial condition.

Commission staff has concluded, upon review of the petition of NSE IFSC and accompanying exhibits, that NSE IFSC's regulation of futures and options intermediaries is comparable to that of the U.S. in the areas specified in Appendix A of Part 30, as described above.

This Order does not provide an exemption from any provision of the Act or regulations thereunder not specified herein, such as the antifraud provision in Regulation 30.9. Moreover, the relief granted is limited to brokerage activities undertaken on behalf of customers located in the U.S. with respect to transactions entered on or subject to the rules of NSE IFSC for products that customers located in the U.S. may trade. 6 The relief does not extend to regulations relating to trading, directly or indirectly, on U.S. exchanges, and does not pertain to any transaction in swaps, as defined in Section 1a(47) of the Act. For example, a NSE IFSC member trading in U.S. markets for its own account would be subject to the Commission's large trader reporting requirements. 7 Similarly, if such a firm were carrying positions on a U.S. exchange on behalf of foreign clients and submitted such transactions for clearing on an omnibus basis through a firm registered as a futures commission merchant under the Act, it would be subject to the reporting requirements applicable to foreign brokers. 8 The relief herein is inapplicable where the firm solicits or accepts orders from customers located in the U.S. for transactions on U.S. markets. In that case, the firm must comply with all applicable U.S. laws and regulations, including the requirement to register in the appropriate capacity.

The eligibility of any firm to seek relief under this exemptive Order is subject to the following conditions:

(1) The NSE IFSC, as the self-regulatory organization responsible for monitoring the compliance of such firms with the regulatory requirements described in the Regulation 30.10 petition, must represent in writing to the Commission that:

(a) Each firm for which relief is sought is registered, licensed or authorized, as appropriate, and is otherwise in good standing under the standards in place in India; such firm is engaged in business with customers located in India as well as in the U.S.; and such firm and its principals and employees who engage in activities subject to Part 30 would not be statutorily disqualified from registration under Section 8a(2) of the Act, 7 U.S.C. 12a(2);

(b) It will monitor firms to which relief is granted for compliance with the regulatory requirements for which substituted compliance is accepted and will promptly notify the Commission or NFA of any change in status of a firm that would affect its continued eligibility for the exemption granted hereunder, including the termination of its activities in the U.S.;

(c) All transactions with respect to customers located in the U.S. will be made subject to the regulations of NSE IFSC;

(d) Customers located in the U.S. will be provided no less stringent regulatory protection than India customers under all relevant provisions of Indian law; and

(e) It will cooperate with the Commission with respect to any inquiries concerning any activity subject to regulation under the Part 30 Regulations, including sharing the information specified in Appendix A on an “as needed” basis and will use its best efforts to notify the Commission if it becomes aware of any information that in its judgment affects the financial or operational viability of a member firm doing business in the U.S. under the exemption granted by this Order.

(2) Each firm seeking relief hereunder must represent in writing that it:

(a) Is located outside the U.S., its territories and possessions and, where applicable, has subsidiaries or affiliates domiciled in the U.S. with a related business ( e.g., banks and broker/dealer affiliates) along with a brief description of each subsidiary's or affiliate's identity and principal business in the U.S.;

(b) Consents to jurisdiction in the U.S. under the Act by filing a valid and binding appointment of an agent in the U.S. for service of process in accordance with the requirements set forth in Regulation 30.5;

(c) Agrees to provide access to its books and records related to transactions under Part 30 required to be maintained under the applicable statutes and regulations in effect in India upon the request of any representative of the Commission or U.S. Department of Justice at the place in the U.S. designated by such representative, within 72 hours, or such lesser period of time as specified by that representative as may be reasonable under the circumstances after notice of the request;

(d) Has no principal or employee who solicits or accepts orders from customers located in the U.S. who would be disqualified under Section 8a(2) of the Act, 7 U.S.C. 12a(2), from doing business in the U.S.;

(e) Consents to participate in any NFA arbitration program that offers a procedure for resolving customer disputes on the papers where such disputes involve representations or activities with respect to transactions under Part 30, and consents to notify customers located in the U.S. of the availability of such a program; provided, however, that the firm may require its customers located in the U.S. to execute a consent concerning the exhaustion of certain mediation or conciliation procedures made available by NSE IFSC prior to bringing an NFA arbitration proceeding; and

(f) Undertakes to comply with the applicable provisions of Indian laws and NSE IFSC rules that form the basis upon which this exemption from certain provisions of the Act and regulations thereunder is granted.

As set forth in the Commission's September 11, 1997 Order delegating to NFA certain responsibilities, the written representations set forth in paragraph (2) shall be filed with NFA. 9 Each firm seeking relief hereunder has an ongoing obligation to notify NFA should there be a material change to any of the representations required in the firm's application for relief.

This Order will become effective as to any designated NSE IFSC firm the later of the date of publication of the Order in the Federal Register or the filing of the consents set forth in paragraphs (2)(a)-(f). Upon filing of the notice required under paragraph (1)(b) as to any such firm, the relief granted by this Order may be suspended immediately as to that firm. That suspension will remain in effect pending further notice by the Commission, or the Commission's designee, to the firm and NSE IFSC.

This Order is issued pursuant to Regulation 30.10 based on the representations made and supporting material provided to the Commission and the recommendation of the staff, and is made effective as to any firm granted relief hereunder based upon the filings and representations of such firms required hereunder. Any material changes or omissions in the facts and circumstances pursuant to which this Order is granted might require the Commission to reconsider its finding that the exemption is not otherwise contrary to the public interest or to the purposes of the provision from which exemption is sought. Further, if experience demonstrates that the continued effectiveness of this Order in general, or with respect to a particular firm, would be contrary to the public interest, or that the systems in place for the exchange of information or other circumstances do not warrant continuation of the exemptive relief granted herein, the Commission may, after appropriate notice and opportunity to respond, condition, modify, suspend, terminate, withhold as to a specific firm, or otherwise restrict the exemptive relief granted in this Order, as appropriate and as permitted by law, on its own motion. The process by which the Commission may terminate relief is set forth in § 30.10(c). 10

The Commission will continue to monitor the implementation of its program to exempt firms located in jurisdictions generally deemed to have a comparable regulatory program from the application of certain of the foreign futures and option regulations and will make necessary adjustments if appropriate.

The Commission has issued the following Order:

Commission Regulations governing the offer and sale of commodity futures and option contracts traded on or subject to the regulations of a foreign board of trade to customers located in the U.S. are contained in Part 30 of the Commission's regulations. 1 These regulations include requirements for intermediaries with respect to registration, disclosure, capital adequacy, protection of customer funds, recordkeeping and reporting, and sales practice and compliance procedures that are generally comparable to those applicable to transactions on U.S. markets.

In formulating a regulatory program to govern the offer and sale of foreign futures and option products to customers located in the U.S., the Commission, among other things, considered the desirability of ameliorating the potential impact of such a program. Based upon these considerations, the Commission determined to permit persons located outside the U.S. and subject to a comparable regulatory structure in the jurisdiction in which they were located to seek an exemption from certain of the requirements under Part 30 of the Commission's regulations based upon substituted compliance with the regulatory requirements of the foreign jurisdiction. 2

Appendix A to Part 30, “Interpretative Statement With Respect to the Commission's Exemptive Authority Under § 30.10 of Its Rules” (Appendix A), generally sets forth the elements the Commission will evaluate in determining whether a particular regulatory program may be found to be comparable for purposes of exemptive relief pursuant to Regulation 30.10. 3 These elements include: (1) Registration, authorization or other form of licensing, fitness review or qualification of persons that solicit and accept customer orders; (2) minimum financial requirements for those persons who accept customer funds; (3) protection of customer funds from misapplication; (4) recordkeeping and reporting requirements; (5) sales practice standards; and (6) procedures to audit for compliance with, and to take action against those persons who violate, the requirements of the program. In addition, Appendix A to Part 30 further provides that any exemption of a general nature based on comparability requires appropriate information sharing arrangements between the Commission and the appropriate governmental agency and/or self-regulatory organization to ensure Commission access on an “as needed” basis to information essential to maintaining standards of customer and market protection within the U.S.

Moreover, the Commission specifically stated in adopting Regulation 30.10 that no exemption of a general nature would be granted unless the persons to whom the exemption is to be applied: (1) Submit to jurisdiction in the U.S. by designating an agent for service of process in the U.S. with respect to transactions subject to Part 30 and filing a copy of the agency agreement with the National Futures Association (NFA); (2) agree to provide access to their books and records in the U.S. to the Commission and Department of Justice representatives; and (3) notify NFA of the commencement of business in the U.S. 4 Appendix A also specifically states that in considering an exemption request, the Commission will take into account the extent to which United States persons or contracts regulated by the Commission are permitted to engage in futures-related activities or be offered in the country from which an exemption is sought. 5

On May 25, 2017, NZX petitioned the Commission on behalf of its member firms, located and conducting a financial investment business in New Zealand, for an exemption from the application of the Commission's Part 30 Regulations to those firms. NZX supplemented its petition on various occasions with additional information. In support of its petition, NZX stated that granting such an exemption with respect to such firms that it has authorized to conduct foreign futures and option transactions on behalf of customers located in the U.S. would not be contrary to the public interest or to the purposes of the provisions from which the exemption is sought because such firms are subject to a regulatory framework comparable to that imposed by the Act and the regulations thereunder.

Based upon a review of the petition and supplementary materials filed by NZX, the Commission has concluded that NZX has demonstrated to the Commission's satisfaction that the exemption for relief pursuant to § 30.10(a) is not otherwise contrary to the public interest or to the purposes of the provisions from which exemption is sought. Accordingly, the Commission has determined that compliance with applicable New Zealand law and NZX rules may be substituted for compliance with those sections of the Act and regulations thereunder more particularly set forth herein.

By this Order, the Commission hereby exempts, subject to specified conditions, those firms identified to the Commission by NZX as eligible for the relief granted herein from:

• Registration with the Commission for firms and for firm representatives;

• The requirement in Commission Regulation 30.6(a) and (d), 17 CFR 30.6(a) and (d), that firms provide customers located in the U.S. with the risk disclosure statements in Commission Regulation 1.55(b), 17 CFR 1.55(b), and Commission Regulation 33.7, 17 CFR 33.7, or as otherwise approved under Commission Regulation 1.55(c), 17 CFR 1.55(c);

• The separate account requirement contained in Commission Regulation 30.7, 17 CFR 30.7;

• Those sections of Part 1 of the Commission's regulations that apply to foreign futures and options sold in the U.S. as set forth in Part 30; and

• Those sections of Part 1 of the Commission's regulations relating to books and records which apply to transactions subject to Part 30,

This determination to permit substituted compliance is based on, among other things, the Commission's finding that the regulatory framework governing persons in New Zealand who would be exempted hereunder provides:

(1) A system of qualification or authorization of firms who deal in transactions subject to regulation under Part 30 that includes, for example, criteria and procedures for granting, monitoring, suspending and revoking licenses, and provisions for requiring and obtaining access to information about authorized firms and persons who act on behalf of such firms;

(2) Financial requirements for firms including, without limitation, a requirement for a minimum level of working capital and daily mark-to-market settlement and/or accounting procedures;

(3) A system for the protection of customer assets that is designed to preclude the use of customer assets to satisfy house obligations and requires separate accounting for such assets;

(4) Recordkeeping and reporting requirements pertaining to financial and trade information;

(5) Sales practice standards for authorized firms and persons acting on their behalf that include, for example, required disclosures to prospective customers and prohibitions on improper trading advice;

(6) Procedures to audit for compliance with, and to redress violations of, the customer protection and sales practice requirements referred to above, including, without limitation, an affirmative surveillance program designed to detect trading activities that take advantage of customers, and the existence of broad powers of investigation relating to sales practice abuses; and

(7) Mechanisms for sharing of information between the Commission, NZX and the New Zealand regulatory authorities on an “as needed” basis including, without limitation, confirmation data, data necessary to trace funds related to trading futures products subject to regulation in New Zealand, position data, and data on firms' standing to do business and financial condition.

Commission staff has concluded, upon review of the petition of NZX and accompanying exhibits, that NZX's regulation of futures and options intermediaries is comparable to that of the U.S. in the areas specified in Appendix A of Part 30, as described above.

This Order does not provide an exemption from any provision of the Act or regulations thereunder not specified herein, such as the antifraud provision in Regulation 30.9. Moreover, the relief granted is limited to brokerage activities undertaken on behalf of customers located in the U.S. with respect to transactions entered on or subject to the rules of NZX for products that customers located in the U.S. may trade. 6 The relief does not extend to regulations relating to trading, directly or indirectly, on U.S. exchanges, and does not pertain to any transaction in swaps, as defined in Section 1a(47) of the Act. For example, a NZX member trading in U.S. markets for its own account would be subject to the Commission's large trader reporting requirements. 7 Similarly, if such a firm were carrying positions on a U.S. exchange on behalf of foreign clients and submitted such transactions for clearing on an omnibus basis through a firm registered as a futures commission merchant under the Act, it would be subject to the reporting requirements applicable to foreign brokers. 8 The relief herein is inapplicable where the firm solicits or accepts orders from customers located in the U.S. for transactions on U.S. markets. In that case, the firm must comply with all applicable U.S. laws and regulations, including the requirement to register in the appropriate capacity.

The eligibility of any firm to seek relief under this exemptive Order is subject to the following conditions:

(1) The NZX, as the self-regulatory organization responsible for monitoring the compliance of such firms with the regulatory requirements described in the Regulation 30.10 petition, must represent in writing to the Commission that:

(a) Each firm for which relief is sought is registered, licensed or authorized, as appropriate, and is otherwise in good standing under the standards in place in New Zealand; such firm is engaged in business with customers located in New Zealand as well as in the U.S.; and such firm and its principals and employees who engage in activities subject to Part 30 would not be statutorily disqualified from registration under Section 8a(2) of the Act, 7 U.S.C. 12a(2);

(b) It will monitor firms to which relief is granted for compliance with the regulatory requirements for which substituted compliance is accepted and will promptly notify the Commission or NFA of any change in status of a firm that would affect its continued eligibility for the exemption granted hereunder, including the termination of its activities in the U.S.;

(c) All transactions with respect to customers located in the U.S. will be made subject to the regulations of NZX;

(d) Customers located in the U.S. will be provided no less stringent regulatory protection than New Zealand customers under all relevant provisions of New Zealand law; and

(e) It will cooperate with the Commission with respect to any inquiries concerning any activity subject to regulation under the Part 30 Regulations, including sharing the information specified in Appendix A on an “as needed” basis and will use its best efforts to notify the Commission if it becomes aware of any information that in its judgment affects the financial or operational viability of a member firm doing business in the U.S. under the exemption granted by this Order.

(2) Each firm seeking relief hereunder must represent in writing that it:

(a) Is located outside the U.S., its territories and possessions and, where applicable, has subsidiaries or affiliates domiciled in the U.S. with a related business ( e.g., banks and broker/dealer affiliates) along with a brief description of each subsidiary's or affiliate's identity and principal business in the U.S.;

(b) Consents to jurisdiction in the U.S. under the Act by filing a valid and binding appointment of an agent in the U.S. for service of process in accordance with the requirements set forth in Regulation 30.5;

(c) Agrees to provide access to its books and records related to transactions under Part 30 required to be maintained under the applicable statutes and regulations in effect in New Zealand upon the request of any representative of the Commission or U.S. Department of Justice at the place in the U.S. designated by such representative, within 72 hours, or such lesser period of time as specified by that representative as may be reasonable under the circumstances after notice of the request;

(d) Has no principal or employee who solicits or accepts orders from customers located in the U.S. who would be disqualified under Section 8a(2) of the Act, 7 U.S.C. 12a(2), from doing business in the U.S.;

(e) Consents to participate in any NFA arbitration program that offers a procedure for resolving customer disputes on the papers where such disputes involve representations or activities with respect to transactions under Part 30, and consents to notify customers located in the U.S. of the availability of such a program; provided, however, that the firm may require its customers located in the U.S. to execute a consent concerning the exhaustion of certain mediation or conciliation procedures made available by NZX prior to bringing an NFA arbitration proceeding; and

(f) Undertakes to comply with the applicable provisions of New Zealand laws and NZX rules that form the basis upon which this exemption from certain provisions of the Act and regulations thereunder is granted.

As set forth in the Commission's September 11, 1997 Order delegating to NFA certain responsibilities, the written representations set forth in paragraph (2) shall be filed with NFA. 9 Each firm seeking relief hereunder has an ongoing obligation to notify NFA should there be a material change to any of the representations required in the firm's application for relief.

This Order will become effective as to any designated NZX firm the later of the date of publication of the Order in the Federal Register or the filing of the consents set forth in paragraphs (2)(a)-(f). Upon filing of the notice required under paragraph (1)(b) as to any such firm, the relief granted by this Order may be suspended immediately as to that firm. That suspension will remain in effect pending further notice by the Commission, or the Commission's designee, to the firm and NZX.

This Order is issued pursuant to Regulation 30.10 based on the representations made and supporting material provided to the Commission and the recommendation of the staff, and is made effective as to any firm granted relief hereunder based upon the filings and representations of such firms required hereunder. Any material changes or omissions in the facts and circumstances pursuant to which this Order is granted might require the Commission to reconsider its finding that the exemption is not otherwise contrary to the public interest or to the purposes of the provision from which exemption is sought. Further, if experience demonstrates that the continued effectiveness of this Order in general, or with respect to a particular firm, would be contrary to the public interest, or that the systems in place for the exchange of information or other circumstances do not warrant continuation of the exemptive relief granted herein, the Commission may, after appropriate notice and opportunity to respond, condition, modify, suspend, terminate, withhold as to a specific firm, or otherwise restrict the exemptive relief granted in this Order, as appropriate and as permitted by law, on its own motion. The process by which the Commission may terminate relief is set forth in § 30.10(c). 10

The Commission will continue to monitor the implementation of its program to exempt firms located in jurisdictions generally deemed to have a comparable regulatory program from the application of certain of the foreign futures and option regulations and will make necessary adjustments if appropriate.

The Commission has issued the following Order:

Commission Regulations governing the offer and sale of commodity futures and option contracts traded on or subject to the regulations of a foreign board of trade to customers located in the U.S. are contained in Part 30 of the Commission's regulations. 1 These regulations include requirements for intermediaries with respect to registration, disclosure, capital adequacy, protection of customer funds, recordkeeping and reporting, and sales practice and compliance procedures that are generally comparable to those applicable to transactions on U.S. markets. In formulating a regulatory program to govern the offer and sale of foreign futures and option products to customers located in the U.S., the Commission, among other things, considered the desirability of ameliorating the potential impact of such a program. Based upon these considerations, the Commission determined to permit persons located outside the U.S. and subject to a comparable regulatory structure in the jurisdiction in which they were located to seek an exemption from certain of the requirements under Part 30 of the Commission's regulations based upon substituted compliance with the regulatory requirements of the foreign jurisdiction. 2

Pursuant to § 30.10(a), persons located outside the U.S. and subject to a comparable regulatory structure in the jurisdiction in which they are located may seek an exemption from certain of the requirements under Part 30 of the Commission's regulations based upon compliance with the regulatory requirements of the person's home jurisdiction. 3 Although a petition for exemption pursuant to § 30.10(a) typically is filed on behalf of persons located and doing business outside the U.S. that seek access to U.S. customers by a governmental agency responsible for implementing and enforcing the foreign regulatory program, or a self-regulatory organization (SRO) of which such persons are members, there is nothing to prevent an individual or firm from submitting a petition on its own behalf. A petitioner who seeks an exemption pursuant to § 30.10(a) must set forth with particularity the comparable regulations applicable in the jurisdiction in which that person is located. Appendix A to Part 30, “Interpretative Statement With Respect to the Commission's Exemptive Authority Under § 30.10 of Its Rules” (Appendix A), generally sets forth the elements the Commission will evaluate in determining whether a particular regulatory program may be found to be comparable for purposes of exemptive relief pursuant to § 30.10. 4 These elements include: (1) Registration, authorization or other form of licensing, fitness review or qualification of persons that solicit and accept customer orders; (2) minimum financial requirements for those persons who accept customer funds; (3) protection of customer funds from misapplication; (4) recordkeeping and reporting requirements; (5) sales practice standards; and (6) procedures to audit for compliance with, and to take action against those persons who violate, the requirements of the program. In addition, Appendix A to Part 30 further provides that any exemption of a general nature based on comparability requires appropriate information sharing arrangements between the Commission and the appropriate governmental agency and/or self-regulatory organization to ensure Commission access on an “as needed” basis to information essential to maintaining standards of customer and market protection within the U.S.

The Commission specifically stated in adopting § 30.10 that no exemption of a general nature would be granted unless the persons to whom the exemption is to be applied: (1) Submit to jurisdiction in the U.S. by designating an agent for service of process in the U.S. with respect to transactions subject to Part 30 and filing a copy of the agency agreement with the National Futures Association (NFA); (2) agree to provide access to their books and records in the U.S. to the Commission and Department of Justice representatives; and (3) notify NFA of the commencement of business in the U.S. 5 Appendix A specifically states that in considering an exemption request, the Commission will take into account the extent to which United States persons or contracts regulated by the Commission are permitted to engage in futures-related activities or be offered in the country from which an exemption is sought. 6

On May 24, 2019, UBS, a financial investment business organized and located in Switzerland, petitioned the Commission for an exemption from the application of the Commission's Part 30 Regulations. In support of its petition, UBS stated that granting such an exemption to conduct foreign futures and option transactions on behalf of customers located in the U.S. without having to register as a futures commission merchant would not be contrary to the public interest or to the purposes of the provisions from which the exemption is sought because UBS is subject to a regulatory framework comparable to that imposed by the Act and the regulations thereunder. Based upon a review of the UBS petition, the Commission has concluded that UBS has demonstrated to the Commission's satisfaction that the exemption for relief pursuant to § 30.10(a) is not otherwise contrary to the public interest or to the purposes of the provisions from which exemption is sought. Accordingly, the Commission has determined that compliance with applicable Swiss law may be substituted for compliance with those sections of the Act and regulations thereunder more particularly set forth herein.

By this Order, the Commission hereby exempts UBS, subject to specified conditions, from the following regulatory requirements:

• Registration with the Commission for firm and for firm representatives;

• The requirement in Commission § 30.6(a) and (d), 17 CFR 30.6(a) and (d), that the firm provide customers located in the U.S. with the risk disclosure statements in Commission Regulation 1.55(b), 17 CFR 1.55(b), and Commission Regulation 33.7, 17 CFR 33.7, or as otherwise approved under Commission Regulation 1.55(c), 17 CFR 1.55(c);

• The separate account requirement contained in Commission § 30.7, 17 CFR 30.7;

• Those sections of Part 1 of the Commission's regulations that apply to foreign futures and options sold in the U.S. as set forth in Part 30; and

• Those sections of Part 1 of the Commission's regulations relating to books and records which apply to transactions subject to Part 30,

This determination to permit substituted compliance is based on, among other things, the Commission's finding that the regulatory framework governing UBS hereunder provides:

(1) A system of qualification or authorization of firms who deal in transactions subject to regulation under Part 30 that includes, for example, criteria and procedures for granting, monitoring, suspending and revoking licenses, and provisions for requiring and obtaining access to information about authorized firms and persons who act on behalf of such firms;

(2) Financial requirements for firms including, without limitation, a requirement for a minimum level of working capital and daily mark-to-market settlement and/or accounting procedures;

(3) A system for the protection of customer assets that is designed to preclude the use of customer assets to satisfy house obligations and requires separate accounting for such assets;

(4) Recordkeeping and reporting requirements pertaining to financial and trade information;

(5) Sales practice standards for authorized firms and persons acting on their behalf that include, for example, required disclosures to prospective customers and prohibitions on improper trading advice;

(6) Procedures to audit for compliance with, and to redress violations of, the customer protection and sales practice requirements referred to above, including, without limitation, an affirmative surveillance program designed to detect trading activities that take advantage of customers, and the existence of broad powers of investigation relating to sales practice abuses; and

(7) Mechanisms for sharing of information between the Commission, UBS, and the Swiss regulatory authority on an “as needed” basis including, without limitation, confirmation data, data necessary to trace funds related to trading futures products subject to regulation in Switzerland, position data, and data on firms' standing to do business and financial condition.

In particular, Commission staff has concluded, upon review of the petition of UBS and accompanying exhibits, that FINMA's regulation of financial futures and options intermediaries is comparable to that of the U.S. in the areas specified in Appendix A of Part 30, as described above.

This Order does not provide an exemption from any provision of the Act or regulations thereunder not specified herein, such as the antifraud provision in § 30.9. Moreover, the relief granted is limited to brokerage activities undertaken on behalf of customers located in the U.S. with respect to otherwise permitted transactions on or subject to the rules of any other non-U.S. market where UBS is authorized by Swiss law to conduct brokerage activities. The relief does not extend to regulations relating to trading, directly or indirectly, on U.S. exchanges, and does not pertain to any transaction in swaps, as defined in Section 1a(47) of the Act. For example, UBS trading for its own account in U.S. markets would be subject to the Commission's large trader reporting requirements. 7 Similarly, if UBS were carrying positions on a U.S. exchange on behalf of foreign clients and submitted such transactions for clearing on an omnibus basis through a firm registered as a futures commission merchant under the Act, it would be subject to the reporting requirements applicable to foreign brokers. 8 The relief herein is inapplicable where UBS solicits or accepts orders from customers located in the U.S. for transactions on U.S. markets. In that case, UBS must comply with all applicable U.S. laws and regulations, including the requirement to register in the appropriate capacity.

The eligibility of UBS to seek relief under this exemptive Order is subject to certain conditions. Specifically, UBS must represent in writing to the Commission that it:

(1) Is licensed as a financial investment business and is otherwise in good standing under the standards in place in Switzerland; and it will notify the Commission and NFA promptly of any change in its status as a financial investment business that would affect its continued eligibility for the exemption granted hereunder, including the termination of its activities in the U.S., and of any information that affects its financial or operational viability under the exemption granted by this Order;

(2) Consents to jurisdiction in the U.S. under the Act by filing a valid and binding appointment of an agent in the U.S. for service of process in accordance with the requirements set forth in Commission § 30.5;

(3) Is located outside the U.S., its territories and possessions and, where applicable, has subsidiaries or affiliates domiciled in the U.S. with a related business ( e.g., banks and broker/dealer affiliates) along with a brief description of each subsidiary's or affiliate's identity and principal business in the U.S.;

(4) Has no principal or employee who solicits or accepts orders from customers located in the U.S. who would be disqualified under Section 8a(2) of the Act, 7 U.S.C. 12a(2), from doing business in the U.S.;

(5) Undertakes to comply with the applicable provisions of Swiss laws and FINMA rules that form the basis upon which this exemption from certain provisions of the Act and regulations thereunder is granted, and will notify the Commission promptly of all material changes to the relevant laws in Switzerland, any rules promulgated thereunder and FINMA rules;

(6) Will provide customers located in the U.S. no less stringent regulatory protection than Switzerland customers under all relevant provisions of Swiss law;

(7) Will cooperate with the Commission with respect to any inquiries concerning any activity subject to regulation under the Part 30 Regulations, and agrees to provide access to its books and records related to transactions under Part 30 required to be maintained under the applicable statutes and regulations in effect in Switzerland upon the request of any representative of the Commission or U.S. Department of Justice at the place in the U.S. designated by such representative, within 72 hours, or such lesser period of time as specified by that representative as may be reasonable under the circumstances after notice of the request; and

(8) Consents to participate in any NFA arbitration program that offers a procedure for resolving customer disputes on the papers where such disputes involve representations or activities with respect to transactions under Part 30, and consents to notify customers located in the U.S. of the availability of such a program; provided, however, that the firm may require its customers located in the U.S. to execute a consent concerning the exhaustion of certain mediation or conciliation procedures made available by FINMA prior to bringing an NFA arbitration proceeding.

As set forth in the Commission's September 11, 1997 Order delegating to NFA certain responsibilities, the written representations set forth in paragraphs (1)-(8) above shall be filed with NFA. 9

This Order will become effective as to UBS the later of the date of publication of the Order in the Federal Register or the filing of the consents set forth above. Should the Commission receive written notice from FINMA or UBS that any change in status of UBS affects its continued eligibility for the exemption granted hereunder, including the termination of its activities in the U.S., the relief granted by this Order may be suspended immediately as to UBS. That suspension will remain in effect pending further notice by the Commission, or the Commission's designee, to UBS and FINMA.

This Order is issued pursuant to Regulation 30.10 based on the representations made and supporting material provided to the Commission and the recommendation of the staff, and is made effective as to UBS granted relief hereunder based upon the filing and representations of UBS required hereunder. Any material changes or omissions in the facts and circumstances pursuant to which this Order is granted might require the Commission to reconsider its finding that the exemption is not otherwise contrary to the public interest or to the purposes of the provision from which exemption is sought. Further, if experience demonstrates that the continued effectiveness of this Order in general would be contrary to public policy or the public interest, or that the systems in place for the exchange of information or other circumstances do not warrant continuation of the exemptive relief granted herein, the Commission may, after appropriate notice and opportunity to respond, condition, modify, suspend, terminate, withhold as to UBS, or otherwise restrict the exemptive relief granted in this Order, as appropriate and as permitted by law, on its own motion. The process by which the Commission may terminate relief is set forth in § 30.10(c). 10

The Commission will continue to monitor the implementation of its program to exempt firms located in jurisdictions generally deemed to have a comparable regulatory program from the application of certain of the foreign futures and option regulations and will make necessary adjustments if appropriate.

The Commission has issued the following Order:

Commission Regulations governing the offer and sale of commodity futures and option contracts traded on or subject to the regulations of a foreign board of trade to customers located in the U.S. are contained in Part 30 of the Commission's regulations. 1 These regulations include requirements for intermediaries with respect to registration, disclosure, capital adequacy, protection of customer funds, recordkeeping and reporting, and sales practice and compliance procedures that are generally comparable to those applicable to transactions on U.S. markets.

In formulating a regulatory program to govern the offer and sale of foreign futures and option products to customers located in the U.S., the Commission, among other things, considered the desirability of ameliorating the potential impact of such a program. Based upon these considerations, the Commission determined to permit persons located outside the U.S. and subject to a comparable regulatory structure in the jurisdiction in which they were located to seek an exemption from certain of the requirements under Part 30 of the Commission's regulations based upon substituted compliance with the regulatory requirements of the foreign jurisdiction. 2

Appendix A to Part 30, “Interpretative Statement With Respect to the Commission's Exemptive Authority Under § 30.10 of Its Rules” (Appendix A), generally sets forth the elements the Commission will evaluate in determining whether a particular regulatory program may be found to be comparable for purposes of exemptive relief pursuant to Regulation 30.10. 3 These elements include: (1) Registration, authorization or other form of licensing, fitness review or qualification of persons that solicit and accept customer orders; (2) minimum financial requirements for those persons who accept customer funds; (3) protection of customer funds from misapplication; (4) recordkeeping and reporting requirements; (5) sales practice standards; and (6) procedures to audit for compliance with, and to take action against those persons who violate, the requirements of the program. In addition, Appendix A to Part 30 further provides that any exemption of a general nature based on comparability requires appropriate information sharing arrangements between the Commission and the appropriate governmental agency and/or self-regulatory organization to ensure Commission access on an “as needed” basis to information essential to maintaining standards of customer and market protection within the U.S.

Moreover, the Commission specifically stated in adopting Regulation 30.10 that no exemption of a general nature would be granted unless the persons to whom the exemption is to be applied: (1) Submit to jurisdiction in the U.S. by designating an agent for service of process in the U.S. with respect to transactions subject to Part 30 and filing a copy of the agency agreement with the National Futures Association (NFA); (2) agree to provide access to their books and records in the U.S. to the Commission and Department of Justice representatives; and (3) notify NFA of the commencement of business in the U.S. 4 Appendix A also specifically states that in considering an exemption request, the Commission will take into account the extent to which United States persons or contracts regulated by the Commission are permitted to engage in futures-related activities or be offered in the country from which an exemption is sought. 5

On February 26, 2016, BSE petitioned the Commission on behalf of its member firms, located and conducting a financial investment business in the Republic of India, for an exemption from the application of the Commission's Part 30 Regulations to those firms. BSE amended its petition on various occasions with additional information. In support of its petition, BSE stated that granting such an exemption with respect to such firms that it has authorized to conduct foreign futures and option transactions on behalf of customers located in the U.S. would not be contrary to the public interest or to the purposes of the provisions from which the exemption is sought because such firms are subject to a regulatory framework comparable to that imposed by the Act and the regulations thereunder.

Based upon a review of the petition and supplementary materials filed by BSE, the Commission has concluded that BSE has demonstrated to the Commission's satisfaction that the exemption for relief pursuant to § 30.10(a) is not otherwise contrary to the public interest or to the purposes of the provisions from which exemption is sought. Accordingly, the Commission has determined that compliance with applicable Indian law and BSE rules may be substituted for compliance with those sections of the Act and regulations thereunder more particularly set forth herein.

By this Order, the Commission hereby exempts, subject to specified conditions, those firms identified to the Commission by BSE as eligible for the relief granted herein from:

• Registration with the Commission for firms and for firm representatives;

• The requirement in Commission Regulation 30.6(a) and (d), 17 CFR 30.6(a) and (d), that firms provide customers located in the U.S. with the risk disclosure statements in Commission Regulation 1.55(b), 17 CFR 1.55(b), and Commission Regulation 33.7, 17 CFR 33.7, or as otherwise approved under Commission Regulation 1.55(c), 17 CFR 1.55(c);

• The separate account requirement contained in Commission Regulation 30.7, 17 CFR 30.7;

• Those sections of Part 1 of the Commission's regulations that apply to foreign futures and options sold in the U.S. as set forth in Part 30; and

• Those sections of Part 1 of the Commission's regulations relating to books and records which apply to transactions subject to Part 30,

This determination to permit substituted compliance is based on, among other things, the Commission's finding that the regulatory framework governing persons in India who would be exempted hereunder provides:

(1) A system of qualification or authorization of firms who deal in transactions subject to regulation under Part 30 that includes, for example, criteria and procedures for granting, monitoring, suspending and revoking licenses, and provisions for requiring and obtaining access to information about authorized firms and persons who act on behalf of such firms;

(2) Financial requirements for firms including, without limitation, a requirement for a minimum level of working capital and daily mark-to-market settlement and/or accounting procedures;

(3) A system for the protection of customer assets that is designed to preclude the use of customer assets to satisfy house obligations and requires separate accounting for such assets;

(4) Recordkeeping and reporting requirements pertaining to financial and trade information;

(5) Sales practice standards for authorized firms and persons acting on their behalf that include, for example, required disclosures to prospective customers and prohibitions on improper trading advice;

(6) Procedures to audit for compliance with, and to redress violations of, the customer protection and sales practice requirements referred to above, including, without limitation, an affirmative surveillance program designed to detect trading activities that take advantage of customers, and the existence of broad powers of investigation relating to sales practice abuses; and

(7) Mechanisms for sharing of information between the Commission, BSE and the Indian regulatory authorities on an “as needed” basis including, without limitation, confirmation data, data necessary to trace funds related to trading futures products subject to regulation in India, position data, and data on firms' standing to do business and financial condition.

Commission staff has concluded, upon review of the petition of BSE and accompanying exhibits, that BSE's regulation of futures and options intermediaries is comparable to that of the U.S. in the areas specified in Appendix A of Part 30, as described above.

This Order does not provide an exemption from any provision of the Act or regulations thereunder not specified herein, such as the antifraud provision in Regulation 30.9. Moreover, the relief granted is limited to brokerage activities undertaken on behalf of customers located in the U.S. with respect to transactions entered on or subject to the rules of BSE for products that customers located in the U.S. may trade. 6 The relief does not extend to regulations relating to trading, directly or indirectly, on U.S. exchanges, and does not pertain to any transaction in swaps, as defined in Section 1a(47) of the Act. For example, a BSE member trading in U.S. markets for its own account would be subject to the Commission's large trader reporting requirements. 7 Similarly, if such a firm were carrying positions on a U.S. exchange on behalf of foreign clients and submitted such transactions for clearing on an omnibus basis through a firm registered as a futures commission merchant under the Act, it would be subject to the reporting requirements applicable to foreign brokers. 8 The relief herein is inapplicable where the firm solicits or accepts orders from customers located in the U.S. for transactions on U.S. markets. In that case, the firm must comply with all applicable U.S. laws and regulations, including the requirement to register in the appropriate capacity.

The eligibility of any firm to seek relief under this exemptive Order is subject to the following conditions:

(1) The BSE, as the self-regulatory organization responsible for monitoring the compliance of such firms with the regulatory requirements described in the Regulation 30.10 petition, must represent in writing to the Commission that:

(a) Each firm for which relief is sought is registered, licensed or authorized, as appropriate, and is otherwise in good standing under the standards in place in India; such firm is engaged in business with customers located in India as well as in the U.S.; and such firm and its principals and employees who engage in activities subject to Part 30 would not be statutorily disqualified from registration under Section 8a(2) of the Act, 7 U.S.C. 12a(2);

(b) It will monitor firms to which relief is granted for compliance with the regulatory requirements for which substituted compliance is accepted and will promptly notify the Commission or NFA of any change in status of a firm that would affect its continued eligibility for the exemption granted hereunder, including the termination of its activities in the U.S.;

(c) All transactions with respect to customers located in the U.S. will be made subject to the regulations of BSE;

(d) Customers located in the U.S. will be provided no less stringent regulatory protection than India customers under all relevant provisions of Indian law; and

(e) It will cooperate with the Commission with respect to any inquiries concerning any activity subject to regulation under the Part 30 Regulations, including sharing the information specified in Appendix A on an “as needed” basis and will use its best efforts to notify the Commission if it becomes aware of any information that in its judgment affects the financial or operational viability of a member firm doing business in the U.S. under the exemption granted by this Order.

(2) Each firm seeking relief hereunder must represent in writing that it:

(a) Is located outside the U.S., its territories and possessions and, where applicable, has subsidiaries or affiliates domiciled in the U.S. with a related business ( e.g., banks and broker/dealer affiliates) along with a brief description of each subsidiary's or affiliate's identity and principal business in the U.S.;

(b) Consents to jurisdiction in the U.S. under the Act by filing a valid and binding appointment of an agent in the U.S. for service of process in accordance with the requirements set forth in Regulation 30.5;

(c) Agrees to provide access to its books and records related to transactions under Part 30 required to be maintained under the applicable statutes and regulations in effect in India upon the request of any representative of the Commission or U.S. Department of Justice at the place in the U.S. designated by such representative, within 72 hours, or such lesser period of time as specified by that representative as may be reasonable under the circumstances after notice of the request;

(d) Has no principal or employee who solicits or accepts orders from customers located in the U.S. who would be disqualified under Section 8a(2) of the Act, 7 U.S.C. 12a(2), from doing business in the U.S.;

(e) Consents to participate in any NFA arbitration program that offers a procedure for resolving customer disputes on the papers where such disputes involve representations or activities with respect to transactions under Part 30, and consents to notify customers located in the U.S. of the availability of such a program; provided, however, that the firm may require its customers located in the U.S. to execute a consent concerning the exhaustion of certain mediation or conciliation procedures made available by BSE prior to bringing an NFA arbitration proceeding; and

(f) Undertakes to comply with the applicable provisions of Indian laws and BSE rules that form the basis upon which this exemption from certain provisions of the Act and regulations thereunder is granted.

As set forth in the Commission's September 11, 1997 Order delegating to NFA certain responsibilities, the written representations set forth in paragraph (2) shall be filed with NFA. 9 Each firm seeking relief hereunder has an ongoing obligation to notify NFA should there be a material change to any of the representations required in the firm's application for relief.

This Order will become effective as to any designated BSE firm the later of the date of publication of the Order in the Federal Register or the filing of the consents set forth in paragraphs (2)(a)-(f). Upon filing of the notice required under paragraph (1)(b) as to any such firm, the relief granted by this Order may be suspended immediately as to that firm. That suspension will remain in effect pending further notice by the Commission, or the Commission's designee, to the firm and BSE.

This Order is issued pursuant to Regulation 30.10 based on the representations made and supporting material provided to the Commission and the recommendation of the staff, and is made effective as to any firm granted relief hereunder based upon the filings and representations of such firms required hereunder. Any material changes or omissions in the facts and circumstances pursuant to which this Order is granted might require the Commission to reconsider its finding that the exemption is not otherwise contrary to the public interest or to the purposes of the provision from which exemption is sought. Further, if experience demonstrates that the continued effectiveness of this Order in general, or with respect to a particular firm, would be contrary to the public interest, or that the systems in place for the exchange of information or other circumstances do not warrant continuation of the exemptive relief granted herein, the Commission may, after appropriate notice and opportunity to respond, condition, modify, suspend, terminate, withhold as to a specific firm, or otherwise restrict the exemptive relief granted in this Order, as appropriate and as permitted by law, on its own motion. The process by which the Commission may terminate relief is set forth in § 30.10(c). 10

The Commission will continue to monitor the implementation of its program to exempt firms located in jurisdictions generally deemed to have a comparable regulatory program from the application of certain of the foreign futures and option regulations and will make necessary adjustments if appropriate.

The Commission has issued the following Order:

Part 30 of the Commission's regulations governs the offer and sale of futures and option contracts traded on or subject to the regulations of a foreign board of trade (foreign futures and options) to customers located in the U.S. 1 These regulations set forth requirements for foreign firms acting in the capacity of a futures commission merchant (FCM), introducing broker, commodity pool operator and commodity trading adviser with respect to the offer and sale of foreign futures and options to U.S. customers and are designed to ensure that such products offered and sold in the U.S. are subject to regulatory safeguards comparable to those applicable to transactions entered into on designated contract markets. Pursuant to § 30.10(a), persons located outside the U.S. and subject to a comparable regulatory structure in the jurisdiction in which they are located may seek an exemption from certain of the requirements under Part 30 of the Commission's regulations based upon compliance with the regulatory requirements of the person's jurisdiction. 2 If the Commission determines that relief pursuant to § 30.10(a) is not otherwise contrary to the public interest or to the purposes of the provisions from which exemption is sought, the Commission issues an Order to the petitioner—typically a foreign regulator or self-regulatory organization (SRO)—that sets forth conditions governing such relief. Persons subject to regulatory oversight by the foreign regulator or SRO granted an exemption, as appropriate, and located and doing business outside the U.S. may solicit or accept orders directly from U.S. customers for foreign futures or options transactions and, in the case of a person acting in the capacity of an FCM, accept customer money or other property, without registering under the Commodity Exchange Act (CEA or Act) in the appropriate capacity. 3

In 1989, the Commission issued an order to MX pursuant to § 30.10(a) permitting designated members of MX to intermediate on behalf of customers located in the U.S. foreign futures and options transactions executed on MX without having to register as FCMs with the Commission. 4 In 1997, the Commission issued another order expanding the exemptive relief for designated members to include foreign futures and options transactions on foreign boards of trade other than MX, as permitted by local law and regulation. 5 At the time that these orders were published, the local laws and regulations applicable to MX members did not require the segregation of customer funds consistent with those requirements applicable to FCMs set forth in Section 4d(f) of the CEA and those regulations promulgated thereunder, including § 30.7. 6 As a result, the Commission imposed a condition on each designated member of MX seeking confirmation of relief to comply with the secured amount requirement set forth in § 30.7. Specifically, among other representations, the 1989 Order stated that each MX member agrees to maintain, on behalf of customers located in the United States, funds equivalent to the “secured amount” described in Commission Rule 1.3(rr), 17 CFR 1.3(rr) (1988), in a separate account as set forth in Commission Rule 30.7, 17 CFR 30.7 (1988), and to treat those funds in the manner described by that rule. 7

On July 15, 2019, MX petitioned the Commission on behalf of its member firms to amend the conditions for relief set forth in the 1989 and 1997 Orders. In particular, MX requested that the Commission remove the condition set forth in subparagraph (f) of the 1989 Order requiring MX members to comply with the secured amount requirement set forth in § 30.7. In support of its request, MX provided supplementary materials demonstrating that the relevant laws and regulations governing MX members require the segregation of customer funds consistent with § 30.7's secured amount requirement applicable to registered FCMs.

Based upon a review of the petition and supplementary materials filed by MX, the Commission has concluded that MX has demonstrated to the Commission's satisfaction that the exemption for relief pursuant to § 30.10(a) is not otherwise contrary to the public interest or to the purposes of the provisions from which exemption is sought. Accordingly, the Commission has determined that compliance with applicable Québec law and MX rules may be substituted for compliance with those sections of the Act and regulations regarding the separate account requirement set forth in § 30.7.

By this Order, the Commission hereby exempts, subject to specified conditions, those firms identified to the Commission by MX as eligible for the relief granted herein from:

• Registration with the Commission for firms and for firm representatives;

• The requirement in Commission Regulation 30.6(a) and (d), 17 CFR 30.6(a) and (d), that firms provide customers located in the U.S. with the risk disclosure statements in Commission Regulation 1.55(b), 17 CFR 1.55(b), and Commission Regulation 33.7, 17 CFR 33.7, or as otherwise approved under Commission Regulation 1.55(c), 17 CFR 1.55(c);

• The separate account requirement contained in Commission Regulation 30.7, 17 CFR 30.7;

• Those sections of Part 1 of the Commission's regulations that apply to foreign futures and options sold in the U.S. as set forth in Part 30; and

• Those sections of Part 1 of the Commission's regulations relating to books and records which apply to transactions subject to Part 30,

This determination to permit substituted compliance is based on, among other things, the Commission's previous finding and the finding today that the regulatory framework governing persons in Québec who would be exempted hereunder provides:

(1) A system of qualification or authorization of firms who deal in transactions subject to regulation under Part 30 that includes, for example, criteria and procedures for granting, monitoring, suspending and revoking licenses, and provisions for requiring and obtaining access to information about authorized firms and persons who act on behalf of such firms;

(2) Financial requirements for firms including, without limitation, a requirement for a minimum level of working capital and daily mark-to-market settlement and/or accounting procedures;

(3) A system for the protection of customer assets that is designed to preclude the use of customer assets to satisfy house obligations and requires separate accounting for such assets;

(4) Recordkeeping and reporting requirements pertaining to financial and trade information;

(5) Sales practice standards for authorized firms and persons acting on their behalf that include, for example, required disclosures to prospective customers and prohibitions on improper trading advice;

(6) Procedures to audit for compliance with, and to redress violations of, the customer protection and sales practice requirements referred to above, including, without limitation, an affirmative surveillance program designed to detect trading activities that take advantage of customers, and the existence of broad powers of investigation relating to sales practice abuses; and

(7) Mechanisms for sharing of information between the Commission, MX and the Québec regulatory authorities on an “as needed” basis including, without limitation, confirmation data, data necessary to trace funds related to trading futures products subject to regulation in Québec, position data, and data on firms' standing to do business and financial condition.

The relief set forth in this Order permits designated MX members to solicit and accept orders from U.S. customers for otherwise permitted transactions  8 on all non-U.S. exchanges where such members are authorized under local law and regulation to transact in futures and options. The relief does not extend to regulations relating to trading, directly or indirectly, on U.S. exchanges, and does not pertain to any transaction in swaps, as defined in Section 1a(47) of the Act. This Order does not provide an exemption from any provision of the Act or regulations thereunder not specified herein, such as the antifraud provision in § 30.9. For example, a MX member trading in U.S. markets for its own account would be subject to the Commission's large trader reporting requirements. 9 Similarly, if such a firm were carrying positions on a U.S. exchange on behalf of foreign clients and submitted such transactions for clearing on an omnibus basis through a firm registered as an FCM under the Act, it would be subject to the reporting requirements applicable to foreign brokers. 10 The relief herein is inapplicable where the firm solicits or accepts orders from customers located in the U.S. for transactions on U.S. markets. In that case, the firm must comply with all applicable U.S. laws and regulations, including the requirement to register in the appropriate capacity.

The eligibility of any firm to seek relief under this exemptive Order is subject to the following conditions:

(1) MX, as the SRO responsible for monitoring the compliance of such firms with the regulatory requirements described in the § 30.10 petition, must represent in writing to the Commission that:

(a) Each firm for which relief is sought is registered, licensed or authorized, as appropriate, and is otherwise in good standing under the standards in place in Québec; such firm is engaged in business with customers located in Québec as well as in the U.S.; and such firm and its principals and employees who engage in activities subject to Part 30 would not be statutorily disqualified from registration under Section 8a(2) of the Act, 7 U.S.C. 12a(2);

(b) It will monitor firms to which relief is granted for compliance with the regulatory requirements for which substituted compliance is accepted and will promptly notify the Commission or NFA of any change in status of a firm that would affect its continued eligibility for the exemption granted hereunder, including the termination of its activities in the U.S.;

(c) It will carry out its compliance, surveillance, and rule enforcement activities with respect to any transactions on any non-MX exchange to the same extent it carries out such activities with respect to MX business;

(d) All transactions with respect to customers located in the U.S. will be made subject to the regulations of MX, and the Commission will receive prompt notice of all material changes to the relevant laws in Québec, any rules promulgated thereunder and MX rules;

(e) Customers located in the U.S. will be provided no less stringent regulatory protection than customers in Québec under all relevant provisions of Québec law;

(f) It will cooperate with the Commission with respect to any inquiries concerning any activity subject to regulation under the Part 30 Regulations, including sharing the information specified in Appendix A on an “as needed” basis and will use its best efforts to notify the Commission if it becomes aware of any information that in its judgment affects the financial or operational viability of a member firm doing business in the U.S. under the exemption granted by this Order.

(2) Each firm seeking relief hereunder must represent in writing that it:

(a) Is located outside the U.S., its territories and possessions and, where applicable, has subsidiaries or affiliates domiciled in the U.S. with a related business ( e.g., banks and broker/dealer affiliates) along with a brief description of each subsidiary's or affiliate's identity and principal business in the U.S.;

(b) Consents to jurisdiction in the U.S. under the Act by filing a valid and binding appointment of an agent in the U.S. for service of process in accordance with the requirements set forth in § 30.5;

(c) Agrees to provide access to its books and records related to transactions under Part 30, including those transactions undertaken on any non-U.S. exchange, required to be maintained under the applicable statutes and regulations in effect in Québec upon the request of any representative of the Commission or U.S. Department of Justice at the place in the U.S. designated by such representative, within 72 hours, or such lesser period of time as specified by that representative as may be reasonable under the circumstances after notice of the request;

(d) Has no principal or employee who solicits or accepts orders from customers located in the U.S. who would be disqualified under Section 8a(2) of the Act, 7 U.S.C. 12a(2), from doing business in the U.S.;

(e) Consents to participate in any NFA arbitration program that offers a procedure for resolving customer disputes on the papers where such disputes involve representations or activities with respect to transactions under Part 30, and consents to notify customers located in the U.S. of the availability of such a program;

(f) Undertakes to comply with the applicable provisions of Canadian laws and MX rules that form the basis upon which this exemption from certain provisions of the Act and regulations thereunder is granted; and

(g) Notwithstanding provisions of the Québec regulatory program, consents not to commingle the foreign futures and options funds or property of any customer located in the U.S. with funds of any account holders unrelated to trading foreign futures or foreign options; and refuse to any customer located in the U.S. the option of not segregating customer funds.

As set forth in the Commission's September 11, 1997 Order delegating to NFA certain responsibilities, the written representations set forth in paragraph (2) shall be filed with NFA. 11 Each firm seeking relief hereunder has an ongoing obligation to notify NFA should there be a material change to any of the representations required in the firm's application for relief.

This Order will become effective immediately as to any designated MX firm which currently operates under the 1989 and 1997 Orders, who will be deemed to have consented to the amended conditions by effecting transactions pursuant to this Order. With respect to any other designated MX firms, the relief will be become effective the later of the date of publication of the Order in the Federal Register or the filing of the consents set forth in paragraphs (2)(a)-(g). Upon filing of the notice required under paragraph (1)(b) as to any such firm, the relief granted by this Order may be suspended immediately as to that firm. That suspension will remain in effect pending further notice by the Commission, or the Commission's designee, to the firm and MX.

This Order is issued pursuant to Regulation 30.10 based on the representations made and supporting material provided to the Commission and the recommendation of the staff, and is made effective as to any firm granted relief hereunder based upon the filings and representations of such firms required hereunder. Any material changes or omissions in the facts and circumstances pursuant to which this Order is granted might require the Commission to reconsider its finding that the exemption is not otherwise contrary to the public interest or to the purposes of the provision from which exemption is sought. Further, if experience demonstrates that the continued effectiveness of this Order in general, or with respect to a particular firm, would be contrary to public policy or to the purposes of the provision from which exemption is sought, or that the systems in place for the exchange of information or other circumstances do not warrant continuation of the exemptive relief granted herein, the Commission may, after appropriate notice and opportunity to respond, condition, modify, suspend, terminate, withhold as to a specific firm, or otherwise restrict the exemptive relief granted in this Order, as appropriate and as permitted by law, on its own motion. The process by which the Commission may terminate relief is set forth in § 30.10(c). 12

The Commission will continue to monitor the implementation of its program to exempt firms located in jurisdictions generally deemed to have a comparable regulatory program from the application of certain of the foreign futures and option regulations and will make necessary adjustments if appropriate.

This temporary final rule establishes a Pilot Program under section 221(g)(3) of the Immigration and Nationality Act, as amended (INA) (8 U.S.C. 1201(g)(3)), which authorizes consular officers to require the posting of a Maintenance of Status and Departure Bond (visa bond) by an alien applying for, and otherwise eligible to receive, a business visitor/tourist (B-1/B-2) visa, when a visa bond is required “to insure that at the expiration of the time for which such alien has been admitted . . . or upon failure to maintain the status under which [the alien] was admitted, or to maintain any status subsequently acquired under section 1258 of this title (INA section 248), such alien will depart from the United States.” The Pilot Program will begin on December 24, 2020, and end on June 24, 2021.

Historically, Department guidance generally discouraged consular officers from exercising their authority to require visa bonds under INA section 221(g)(3), as reflected in guidance published in Volume 9 of the Foreign Affairs Manual (9 FAM), section 403.9-8(A) Bonds Should Rarely Be Used, 1 which states, “[t]he mechanics of posting, processing and discharging a bond are cumbersome,” and notes possible misperception of a bond requirement by the public. The Pilot Program will help the Department assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with DHS, to inform any future decision concerning the possible use of visa bonds to address overstays. The Pilot Program responds to the President's initiative to lower visa overstay rates, as reflected in the April 22, 2019, Presidential Memorandum on Combating High Nonimmigrant Overstay Rates   2 (the Presidential Memorandum ), the threat to U.S. interests described in the Presidential Memorandum; and the high nonimmigrant overstay rates for nationals of certain countries.

Under the Pilot Program, visa bonds may be required from certain applicants for B-1/B-2 visas who are nationals of listed countries that have overstay rates of ten percent or higher in the combined B-1/B-2 nonimmigrant visa category, as reported in the DHS Fiscal Year 2019 Entry/Exit Overstay Report (DHS FY 2019 Overstay Report), and who have been approved for a waiver of ineligibility by DHS under INA section 212(d)(3)(A) (8 U.S.C. 1182(d)(3)(A)). Visa bonds will be posted with U.S. Immigration and Customs Enforcement (ICE) via ICE Form I-352, Immigration Bond. DHS regulations at 8 CFR 103.6 currently provide for the posting, processing, and cancellation of such visa bonds. DHS/ICE will collect all bonds and retain all fees in the instance that a bond is breached.

The Department is publishing this temporary final rule (TFR) to establish the Pilot Program, including: (1) The criteria for identifying visa applicants who will be required to post visa bonds; (2) three levels for the amount of the bond, with the level to be selected by the consular officer based on an applicant's individual circumstances; and (3) the duration of the Pilot Program. The Pilot Program will help the Department assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with DHS, which will inform any future decision concerning the possible use of visa bonds to address the national security and foreign policy objectives articulated in the Presidential Memorandum, which declares the Administration's commitment “to securing the borders of the United States and fostering respect for the laws of our country, both of which are cornerstones of our Republic.”  3 The Presidential Memorandum highlights the fact that visa overstay rates are unacceptably high for nationals of certain countries and concludes that, “individuals who abuse the visa process and decline to abide by the terms and conditions of their visas, including their visa departure dates, undermine the integrity of our immigration system and harm the national interest.”  4

The Presidential Memorandum directs the Secretary of State, in consultation with the Attorney General and the Secretary of Homeland Security, to provide the President with recommendations to reduce B-1 and B-2 nonimmigrant visa overstay rates from countries with a total overstay rate greater than ten percent, and further directs the Secretary of State and the Secretary of Homeland Security to take, “appropriate actions that are within the scope of their respective authorities to reduce overstay rates for all classes of nonimmigrant visas.”  5 The Department intends to use the results of the Pilot Program to assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with DHS, which will inform any future decision concerning the possible use of visa bonds to address visa overstay rates, relative to operational considerations. Determining operational feasibility of posting, processing, and discharging visa bonds focuses on assessing the burdens such a program places on government agencies and identifying challenges that might arise from the interagency process for implementing visa bonds. The purpose does not include, and this Pilot Program is not designed for, determining the effectiveness of visa bonds at reducing overstays. This Pilot Program evaluates the operational challenges, rather than the outcome. The Department recognizes that, because of the limited scope of the Pilot Program, it cannot be used to assess the effectiveness of visa bonds for reducing overstays.

The Presidential Memorandum notes that the number of aliens who overstay their period of lawful admission is unacceptably high for nationals of certain countries and concludes that, “individuals who abuse the visa process and decline to abide by the terms and conditions of their visas, including their visa departure dates, undermine the integrity of our immigration system and harm the national interest.”  6 Furthermore, overstays “place significant strain on Department of Justice and Department of Homeland Security resources.”  7 The volume of overstays highlights this concern. DHS reported to Congress in the DHS FY 2019 Overstay Report that,“[a]t the end of FY 2019, there were 574,740 Suspected In-Country Overstays” (i.e., aliens who remained in the country past the end of their authorized stay and had yet to depart the country) among nonimmigrants admitted through air or sea ports of entry. 8

Studies reviewing data covering periods before DHS began publishing overstay data (the first DHS Overstay Report covered FY 2015) have suggested that the number of overstays has exceeded land border apprehensions for several years and that, over the past decade, unauthorized migration is attributable more to visa overstays than to unauthorized border crossings. 9 Furthermore, the number of total overstays annually among foreign nationals admitted to the United States at an air or sea port of entry as nonimmigrant visitors for business or pleasure on a B-1 or B-2 visa, excluding travelers from Mexico, Canada, and Visa Waiver Program (VWP) participating countries  10 has increased in recent years, based on statistics published by DHS. For fiscal years beginning with 2015, DHS has published an “Overstay Report” with a broad range of statistics relating to “overstays,” which DHS defines, for purposes of these reports, as “a nonimmigrant who was lawfully admitted to the United States for an authorized period but stayed in the United States beyond his or her authorized admission period.”  11 As explained in the report, if a nonimmigrant timely applies for an extension of the authorized period of admission or applies to change or adjust status, the authorized period of admission may be extended, thereby avoiding overstay status. The reports for fiscal years 2015 through 2019 include statistics on foreign nationals who entered the United States at an airport or seaport of entry as nonimmigrant visitors for business or pleasure on a B-1 or B-2 visa, excluding travelers from Mexico, Canada, and VWP participating countries. For fiscal year 2015, DHS reported a total of 228,783 overstays among this category of nonimmigrant visitors, including “out-of-country” overstays ( i.e., those who departed some time before the end of FY 2015) and in-country overstays ( i.e., those who remained in the United States at the end of FY 2015). 12 The number of such overstays grew in each of the consecutive years, to 287,107 for FY 2016, 13 to 301,716 for FY 2017, 14 to 305,215 for FY 2018, 15 and finally to 320,086 for FY 2019. 16

Section 2 of the Presidential Memorandum directed the Secretary of State to engage with the governments of countries with a total overstay rate greater than ten percent in the combined B-1 and B-2 nonimmigrant visa category, based on the DHS FY 2019 Overstay Report. By focusing the Pilot Program on certain countries identified in the DHS FY 2019 Overstay Report as having overstay rates of ten percent or higher among aliens admitted to the United States for business or pleasure (B-1/B-2) via air and sea ports of entry, 17 the U.S. Government sends a message to all countries that high overstay rates may result in measures that negatively affect broad categories of their nationals, thereby encouraging countries to take action to encourage their nationals to comply with U.S. immigration law. By establishing the Pilot Program, the U.S. Government focuses on travelers who are nationals of: Afghanistan, Angola, Bhutan, Burkina Faso, Burma, Burundi, Cabo Verde, Chad, Democratic Republic of the Congo (Kinshasa), Djibouti, Eritrea, the Gambia, Guinea-Bissau, Iran, Laos, Liberia, Libya, Mauritania, Papua New Guinea, Sao Tome and Principe, Sudan, Syria, and Yemen, 18 thereby sending a message to those countries in particular regarding the relevant overstay rates of their nationals. By its design and intention, the Pilot Program is a tool of diplomacy, intended to encourage foreign governments to take all appropriate actions to reduce the overstay rates of their nationals when traveling to the United States for temporary visits. As such, the rule properly is described as a component of U.S. foreign policy and involving a foreign affairs function.

As detailed below, the INA grants, and Department regulations implement, consular officer authority to require bonds in appropriate circumstances; however, historically, as a matter of policy, Department guidance has discouraged consular officers from exercising their authority to require bonds. See 9 FAM 403.9-8(A) Bonds Should Rarely Be Used.

Section 221(g)(3) of the INA (8 U.S.C. 1201(g)(3)), authorizes consular officers to require the posting of a bond by an alien applying for, and otherwise eligible to receive, a business/tourist (B-1/B-2) visa “to insure that at the expiration of the time for which such alien has been admitted . . . or upon failure to maintain the status under which [the alien] was admitted, or to maintain any status subsequently acquired under section 1258 of this title (INA section 248), such alien will depart from the United States.” INA section 221(g)(3) (8 U.S.C. 1201(g)(3)), implicitly recognizes that there is no guarantee that an alien will depart in a timely fashion, even when an applicant is found otherwise eligible for the visa. Consequently, this INA section contemplates that it may be appropriate to require a bond when an applicant is otherwise eligible for a visa.

Department regulations regarding visa bonds include 22 CFR 41.11(b)(2), which provides that, “[i]n a borderline case in which an alien appears to be otherwise entitled to receive a visa under INA section 101(a)(15)(B) or (F) but the consular officer concludes that the maintenance of the alien's status or the departure of the alien from the United States as required is not fully assured, a visa may nevertheless be issued upon the posting of a bond with the Secretary of Homeland Security under terms and conditions prescribed by the consular officer.” Additionally, 22 CFR 41.31(a)(1) references consular officer authority to require bonds from applicants for visas for temporary visits for business or pleasure (B-1/B-2) whose departure “does not seem fully assured.” These regulations reinforce the broad scope of the statutory authority of the Department and consular officers to require bonds to help ensure the timely departure from the United States of any visitor on a B-1/B-2 visa, when the alien is otherwise eligible for a visa, because an alien's departure after entering the United States can never be fully assured at the time of visa issuance or admission to this country.

Despite the regulatory foundation for consular officers to issue visa bonds, historically, as a matter of policy, the Department has discouraged consular officers from exercising their authority to require bonds, as reflected in volume 9 of the Foreign Affairs Manual at section 403.9-8(A), which provides, “[a]lthough 22 CFR 41.11(b)(2) permits consular officers, in certain cases, to require a maintenance of status and departure bond, it is Department policy that such bonds will rarely, if ever, be used.” The FAM section indicates that this policy relies, in part, on an assessment that “[t]he mechanics of posting, processing and discharging a bond are cumbersome.” The Pilot Program will help the Department assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with the Department of Homeland Security, and inform any future decision concerning the possible use of visa bonds to address overstays. The Pilot Program will constitute an exception to that general guidance with respect to the categories of aliens covered by the Pilot Program, during the six month duration of the Pilot Program.

The Pilot Program will last six months, beginning on the effective date of this TFR. The program will be limited to aliens who are: (1) Applying for B-1/B-2 nonimmigrant visas; (2) nationals of a listed country with an overstay rate of ten percent or higher per the DHS FY 2019 Overstay Report;  19 and (3) ineligible for a visa, but have been approved for a waiver of ineligibility by DHS under INA section 212(d)(3)(A), 8 U.S.C. 1182(d)(3)(A). Covered visa applicants will be required to post a bond in the amount of $5,000, $10,000, or $15,000, unless the bond requirement is waived. These parameters are explained below.

For purposes of the Pilot Program, the countries with visa overstay rates of ten percent or higher were determined based on the DHS FY 2019 Overstay Report, which was published May 13, 2020. 20 The Pilot Program focuses only on visa overstays by nonimmigrants of listed nationalities. Those countries of nationality were determined based on DHS published data on overstays by nationals of the country admitted to the United States for business or pleasure (B-1/B-2 nonimmigrant status) via air and sea ports of entry. The data set excluded Canada, Mexico, and countries participating in the VWP. 21 The countries covered by the Pilot Program are: Afghanistan, Angola, Bhutan, Burkina Faso, Burma, Burundi, Cabo Verde, Chad, Democratic Republic of the Congo (Kinshasa), Djibouti, Eritrea, the Gambia, Guinea-Bissau, Iran, Laos, Liberia, Libya, Mauritania, Papua New Guinea, Sao Tome and Principe, Sudan, Syria, and Yemen. 22 The DHS FY 2019 Overstay Report report provides data on departures and overstays, by country, for foreign visitors to the United States who were expected to depart in FY 2019 (October 1, 2018-September 30, 2019). For purposes of the DHS FY 2019 Overstay Report and this Pilot Program, a “visa overstay” is an alien who was lawfully admitted to the United States and remains in the United States beyond the period of admission authorized by DHS. The initial authorized admission period is a fixed period determined by DHS at the time B-1/B-2 visa holders apply for admission to the United States, but in some circumstances, admission periods may be extended by application to U.S. Citizenship and Immigration Services (USCIS) for an extension of stay or change or adjustment of status. The threshold of a ten percent overstay rate was based on Section 2 of the Presidential Memorandum, which directed the Secretary of State to engage with the governments of countries with a total overstay rate greater than ten percent in the combined B-1 and B-2 nonimmigrant visa category based on the DHS FY 2018 Overstay Report.

Before developing the parameters for this Pilot Program, the Department engaged with the governments of countries with high overstay rates in the combined B-1 and B-2 nonimmigrant visa category to identify conditions contributing to high overstay rates among nationals of those countries and considered methods to address those conditions, as required by the Presidential Memorandum. In countries where other tools are not sufficiently effective at reducing overstays, deployment of an additional tool, like a visa bond, may be warranted. In setting the ten percent threshold, the Department also considered the number of countries that would be implicated at the different overstay threshold levels, what impact their inclusion might have on the Pilot Program generally, and what impact alternative thresholds would have on the volume of bonds that would be required. For the Pilot Program, the Department wanted to be certain that, if the visa bond process does prove to be unduly cumbersome, the Pilot Program would not require a volume of bonds that might cripple consular sections overseas.

As noted above, the purpose of the Pilot Program is to assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with DHS, to inform any future decision concerning the possible use of visa bonds to address overstays. The Department estimates that the parameters selected for the Pilot Program would result in 200-300 visas being issued following the posting of visa bonds, under normal travel conditions, with the actual number likely to be lower if travel is limited due to executive actions or unusual and unpredictable circumstances. The Department believes the operational feasibility of the visa bond process, as described above, can be assessed on the basis of a relatively small number of cases. Furthermore, the Department believes even if the burden of requiring visa bonds makes doing so operationally nonfeasible, requiring bonds in the relatively small number of cases anticipated under this pilot program will allow the Department and DHS to complete the Pilot Program without causing significant disruption to day-to-day operations. Accordingly, the Department is limiting the Pilot Program to aliens for whom DHS has granted a waiver of inadmissibility, relative to the pending B-1/B-2 visa application, to help ensure the volume of cases covered by the Pilot Program remains relatively small. Furthermore, the applicants covered by the Pilot Program would not be eligible for visas unless a consular officer or the Department exercises discretion to recommend a waiver of inadmissibility and DHS, at its discretion, grants the waiver. Selecting this criterion for the Pilot Program is not arbitrary; the covered applicants (those requiring a DHS waiver of inadmissibility) are distinguishable from other applicants issued visas in accordance with U.S. law, because their actions or particular circumstances rendered them otherwise ineligible for visas.

Although INA section 221(g)(3) (8 U.S.C. 1201(g)(3)), authorizes consular officers to require visa bonds from applicants for B-1/B-2 visas and F (student) visas, the Pilot Program is limited to B-1/B-2 visa applicants, because their authorized period of stay after admission to the United States is fixed by DHS Customs and Border Protection (CBP) officers at the port of entry and typically lasts a matter of months, with a maximum of one year for business visitors pursuant to 8 CFR 214.2(b)(1), and typically six months for tourists, in accordance with 8 CFR 214.2(b)(2). In contrast, F visa applicants generally are admitted for the duration of their status, pursuant to 8 CFR 214.2(f)(5), which commonly is multiple years. Because the Pilot Program will last only six months, F-1 nonimmigrant students, who are in most cases likely to be authorized to remain in the United States for multiple years, would be unlikely to complete the bond cycle (which ends with cancellation or breach of the bond), during the six-month duration of the Pilot Program. To help assess whether the bond process is operationally feasible, the Department needs the results of State and DHS experience at all stages of the bond process. B-1/B-2 visas issued to applicants covered by the Pilot Program will be annotated to reflect the visa bond requirement. That annotation may be taken into account by CBP when considering the appropriate authorized period of admission.

Section 41.11(c)(3) of the Department's regulations in title 22 CFR grants the Deputy Assistant Secretary for Visa Services discretionary authority to waive the bond requirement, for an alien or a category of aliens, if the Deputy Assistant Secretary assesses that a waiver would not be contrary to the national interest. Waivers may be recommended by consular officers, if they believe a waiver would advance a humanitarian interest, based on the applicant's stated purpose of travel, or a national interest, based on the stated purpose of travel and the applicant's employment. Because all visa applicants will be presumed to want a waiver of the bond requirement, and because the only information that might be provided by an applicant that would be relevant to a waiver decision is the applicant's purpose of travel and possibly employment, which already is requested from all applicants, there will be no bond waiver application process.

In accordance with the statutory and regulatory framework described above, the Department, through consular officers, has broad authority to require a visa applicant to post a bond in such sum and with such conditions as would help ensure thealien's timely departure from the United States. To promote the efficiency of the Pilot Program and avoid arbitrary and inconsistent bond amounts, the Department is setting guidelines for the bond amount. Because INA section 221(g)(3) (8 U.S.C. 1201(g)(3)), indicates consular officers must consider each visa applicant's personal circumstances in setting the bond amount, by its reference to the consular officer prescribing a bond's sum and conditions to be sufficient to insure “such alien will depart from the United States” in a timely manner, the Department is providing consular officers three options for bond amounts: $5,000, $10,000, and $15,000. The Department believes these three levels will provide consular officers sufficient discretion to require, in each case, a bond in an amount that is sufficiently large to insure the applicant does not overstay, but not so burdensome as to be unpayable, taking into account the visa applicant's circumstances.

Consular officers will be expected to set the bond amount at $10,000, unless the officer has reason to believe the visa applicant's circumstances would render the applicant unable to pay that amount (but yet remain sufficiently financed to pay all travel expenses through the period of intended stay in the United States), in which case the bond would be set at $5,000. Alternatively, if the applicant's circumstances, including the nature and extent of the applicant's contacts in the United States, would suggest a $10,000 bond would not be sufficient to insure the applicant would timely depart the United States, the officer would require a $15,000 bond as a condition of visa issuance. In making such determinations, consular officers will take into account the totality of the circumstances, including any information provided by the visa applicant on the visa application or in the visa interview regarding the applicant's purpose of travel, current employment, income, skills, and education.

The consular officer's three options for bond amounts were set following consultations with DHS. In setting the amounts, the Department took into consideration costs associated with removal, including the full Immigration Enforcement Lifecycle cost (including mission support costs) ending with removal, as computed by DHS at approximately $14,000 per alien, and the total cost per alien associated with just the removal process, computed by DHS as $2,194. The Department viewed these costs as relevant, because an alien who overstays his or her visa and must be removed requires the U.S. government to incur immigration enforcement-related costs that otherwise would not be incurred. For the purposes of the Pilot Program, an alien who breaches a bond would generally forfeit the obligor's bond amount, which could be used, in part, to reimburse the U.S. government for expenses incurred in the collection of breached bonds and for expenses associated with the detention of illegal aliens, necessitated by the alien overstaying his or her visa. 23 DHS/ICE will collect all bonds and retain the funds, as appropriate, in the instance that a bond is breached.

The Department will conduct the Pilot Program for six months, beginning on December 24, 2020. The Department determined, in consultation with DHS, that six months is an adequate period to ensure that multiple visa applicants will have completed the full bond cycle, from the visa interview, through travel to the United States, to a final determination of bond cancellation or breach. Experience with each of the steps of the bond cycle is necessary to assess the operational feasibility of posting, processing and discharging a visa bond, in coordination with the Department of Homeland Security. Following the end of the six-month period of the Pilot Program, consular officers no longer will require the posting of bonds based on the guidance set out in this TFR; however, any visa bonds posted as part of the Pilot Program will remain in effect until either breached or cancelled, in accordance with terms and conditions set out on ICE Form I-352, Immigration Bond, even after the six-month period has ended.

Following a visa interview, a consular officer will determine if an applicant is otherwise eligible for a visa following the approval of a waiver of inadmissibility by DHS under INA section 212(d)(3) (8 U.S.C. 1182(d)(3)), and if the applicant falls within the scope of the Pilot Program. If the consular officer does not have reason to believe a waiver of the bond requirement would advance a significant national interest or humanitarian interest, based on the applicants purpose of travel and employment, as described in the visa application and during the visa interview, then the consular officer will inform the applicant of the bond requirement and the amount of the required bond, whether $5,000, $10,000, or $15,000. The officer will present to the applicant: (1) A notice generally explaining the bond requirement and procedures for posting a cash bond or arranging for a U.S. Government-approved surety company to post the bond on the applicant's behalf and (2) ICE Form I-352, Immigration Bond. DHS regulations at 8 CFR 103.6 currently provide for the posting, processing, and cancellation of such visa bonds.

After advising an applicant that he or she must post a bond, the consular officer will deny the visa under INA section 221(g) (8 U.S.C. 1201(g)), but that denial may be overcome if a bond in the required amount is duly posted with ICE on the visa applicant's behalf. After being informed by DHS that a bond has been posted, the consular section where the visa applicant applied will rely on contact information provided by the applicant to contact the applicant regarding the final process to complete the visa adjudication. If the consular officer subsequently determines the applicant remains otherwise eligible for a visa, taking into account the DHS approval of a waiver of inadmissibility under INA section 212(d)(3) (8 U.S.C. 1182(d)(3)), the officer will issue the visa, valid for a single entry within three months of the date of visa issuance, with an annotation indicating the posting of a visa bond. This limited visa validity period is necessary to increase the likelihood travel is completed within a time frame conducive to data gathering from the Pilot Program. The visa annotation will alert CBP officers at ports of entry that the applicant is covered by the Pilot Program. If, upon further review, the consular officer determines the applicant is not eligible for the requested visa for reasons not covered by the waiver granted by DHS relative to the current visa application, the consular officer will deny the visa and the obligor on the bond will be entitled to cancellation of the visa bond.

Following the timely departure from the United States of a visa holder for whom a bond was posted, the visa holder may pursue cancellation of the bond. A visa bond will be canceled if the visa holder substantially performs with respect to the terms and conditions of the bond as set forth in paragraph G(4) of Form I-352. Conversely, a visa bond will be breached when there has been a substantial violation of the terms and conditions set forth in paragraph G(4) of Form I-352. There are various ways a visa holder may demonstrate substantial performance of the terms and condition of the bond. For example, visa holders who present themselves to consular officials outside of the United States within 30 days of their departure from the United States, confirm their identify, and provide information demonstrating that they departed the United States on or before the expiration of their authorized period of stay will have substantially complied with the visa bond requirements, so long as they maintained the conditions of their status while admitted to the United States. Where a visa holder pursues that course, information received by the consular officer will be forwarded to ICE, which is responsible for determinations of whether a bond has been breached pursuant to 8 CFR 103.6(c)(3), based on whether there has been “substantial performance” of all the terms and conditions of the bond.

When presenting themselves to consular officials outside the United States, visa holders may confirm their identity by presenting a passport and responding to such questions as the consular officer deems necessary to confirm identity. There are no particular documents required to demonstrate timely departure from the United States. 24 An obligor on a visa bond also may request bond cancellation once the visa expires, if the visa holder did not travel to the United States. Generally, pursuant to 8 CFR 103.6(c)(3), the bond should be canceled when there has been “substantial performance of all conditions imposed by the terms of the bond.” The obligor on any canceled cash bond will be entitled to a full refund, along with any accrued interest. If a visa holder for whom a bond was posted fails to substantially comply with the terms and conditions set forth in paragraph G(4) of Form I-352, the bond will be considered breached, and the amount deposited as security for the bond with ICE will be forfeited. If the bond is breached, the bond obligor will still receive the amount of any accrued interest on the cash bond.

Following the end of the six-month period of the Pilot Program, consular officers no longer will require the posting of bonds based on the guidance set out in this TFR; however, any bonds posted under the Pilot Program will remain in effect until either breached or cancelled in accordance with their terms of issuance.

For visa applicants required to post a visa bond, an ICE Form I-352 must be submitted to, and approved by, ICE. All terms and conditions set out on ICE Form I-352 applicable to visa bonds shall apply. The obligor on the bond, whether a person who posts a cash bond on behalf of the visa applicant or a surety company that posts the bond, will be informed if the visa applicant fails to comply with the terms of the visa bond and, consequently, the bond has been breached. The procedures for determining and enforcing a breach are set out on ICE Form I-352 and in DHS regulations, including 8 CFR 103.6.

The rights relating to the appeal of an ICE determination of a bond breach, including which rights would accrue after ICE issues a breach determination on Form I-323, are detailed in the instructions on ICE Form I-352 and USCIS Form I-290B.

This temporary final rule is exempt from notice and comment under the foreign affairs exception of the Administrative Procedure Act (APA), 5 U.S.C. 553(a). This temporary final rule codifies a necessary change to U.S. foreign policy, including its visa policy. In the Presidential Memorandum, President Trump referred to countries with overstay rates greater than ten percent in the combined B-1 and B-2 nonimmigrant visa category, based on the DHS FY 2018 Overstay Report, as having high overstay rates and ordered the Secretary of State to take action to address those high overstay rates, in consultation with the Attorney General and the Secretary of Homeland Security. See Presidential Memorandum at Section 2. Reducing the incidence of aliens remaining in the United States beyond their authorized period of stay has, particularly since issuance of the Presidential Memorandum, involved worldwide diplomatic engagement between the United States and foreign governments. The subject matter of this temporary final rule directly involves a foreign affairs function of the United States, directly implicating relationships between the United States and the specific countries whose nationals may be subject to the Pilot Program. The Pilot Program is being studied as a potential diplomatic tool to encourage foreign governments to take all appropriate actions to ensure that their nationals timely depart the United States after making temporary visits. Therefore, this temporary final rule clearly and directly impacts the foreign affairs functions of the United States and “implicat[es] matters of diplomacy directly.” City of N.Y. v. Permanent Mission of India to the U.N., 618 F.3d 172, 202 (2d Cir. 2010).

The foreign-affairs exception covers the temporary final rule, as it is “linked intimately with the Government's overall political agenda concerning relations with another country.” Am. Ass'n of Exporters & Importers-Textile & Apparel Grp. v. United States, 751 F.2d 1239, 1249 (Fed. Cir. 1985).

The Pilot Program is a tool of diplomacy to influence actions by certain foreign governments that are a high priority of the President, as reflected in the Presidential Memorandum, and important to the relationship between the United States and those countries. By requiring visa bonds for certain visa applicants from the listed countries with overstay rates for B-1/B-2 visa holders that are ten percent or higher, the Pilot Program aims to encourage those countries to cooperate with the United States in ensuring timely departure of their citizens/nationals from the United States. The Department's focus on these countries will demonstrate the United States' intolerance of high overstay rates and encourage the foreign governments to cooperate in addressing overstays by their nationals. Accordingly, this temporary final rule is properly viewed as one that “clearly and directly involve[s] activities or actions characteristic to the conduct of international relations.” Capital Area Immigrants' Rights Coal. v. Trump, No. CV 19-2117, 2020 WL 3542481,*18 (D.D.C. June. 30, 2020).

Additionally, undesirable international consequences would follow if the temporary final rule were subjected to a notice and comment period, because a limited number of countries had an overstay rate of ten percent or higher in FY 2019, so notice and comment would invite those countries to publish views on matters that are sensitive and inherently governmental, and require a public response from the U.S. government to country-specific concerns. Thus, opening the temporary final rule to notice and comment would likely lead to “the public airing of matters that might enflame or embarrass relations with other countries.” Zhang v. Slattery, 55 F.3d 732, 744 (2d Cir. 1995), superseded on other grounds by statute, 8 U.S.C. 1101(a)(42).

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires agencies to perform an analysis of the potential impact of regulations on small entities when regulations are subject to the notice and comment procedures of the APA. Because this temporary final rule is exempt from notice and comment rulemaking requirements under 5 U.S.C. 553, it is exempt from the regulatory flexibility analysis requirements set forth by the Regulatory Flexibility Act (5 U.S.C. 603 and 604). Furthermore, this temporary final rule will not have a significant economic impact on a substantial number of small entities. Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act, as amended, is not required.

The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This temporary final rule does not require the Department to prepare a statement because it will not result in any such expenditure, nor will it significantly or directly affect small governments, including State, local, or tribal governments, or the private sector. This temporary final rule involves visas for aliens, and does not directly or substantially affect State, local, or tribal governments, or businesses.

The Office of Information and Regulatory Affairs has determined that this temporary final rule is not a major rule as defined in 5 U.S.C. 804, for purposes of congressional review of agency rulemaking. This temporary final rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign based companies in domestic and import markets.

The Department of State has reviewed this rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866. This rule allows the Department to set out the scope and procedures for a Pilot Program under which consular officers will require a visa bond in the amount of $5,000, $10,000, or $15,000, as determined appropriate by the consular officer as a condition of visa issuance for certain aliens applying for visas as temporary visitors for business or pleasure (B-1/B-2). The Pilot Program is designed to assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with the Department of Homeland Security (DHS), including the burden it will place on the government and the challenges associated with implementation of a bond program. It is not designed to assess the effectiveness of visa bonds in effectuating timely departure from the United States. The result will inform any future decision on the possible use of visa bonds for combatting high nonimmigrant visa overstays which is a priority announced in the Presidential Memorandum on Combating High Nonimmigrant Overstay Rates issued on April 22, 2019.

Based on a review of visa statistics from recent years, the Department has determined that the number of nonimmigrants expected to fall within the scope of the Pilot Program will not be greater than 200 to 300. That estimate is based on normal travel conditions, with the actual number likely to be lower if travel is limited due to executive actions or unusual and unpredictable circumstances. If visa bonds are required for 300 visa applicants, and the average bond is $10,000 (from options of $5,000, $10,000, and $15,000), the initial cost of bonds will be $3,000,000. However, assuming all nonimmigrants for whom bonds are posted comply with the terms and conditions of the bond, the actual bond amount is a temporary expenditure that will be fully refunded, with applicable interest, if cash bonds are posted. If surety bonds are posted, then the cost to nonimmigrants for whom bonds must be posted would depend on the contractual arrangements underlying each surety bond. Due to the lack of precedent for this visa bond program, the Department does not have data to substantiate any estimate of the cost to nonimmigrants for whom surety bonds are posted; however, the maximum possible amount likely would be the full amount of the average bond multiplied by the maximum estimated number of visa applicants subject to the bond, for a total of $3,000,000, if surety companies were to charge 100 percent of the bond amount and all applicants posted surety bonds, rather than cash bonds.

The estimated amount of time needed for an average respondent to complete ICE Form I-352 is thirty minutes (.50 hours) per response. See 84 FR 44913. The estimated additional time burden associated with this temporary final rule for visa applicants, who will have to complete an ICE Form I-352, arrange for the posting of a bond, and return to a consular section following their departure from the United States, is two hours. Using the average hourly wage for all private, non-farm, payrolls as calculated by the Bureau of Labor Statistics for March 2019, $27.70, multiplied by a factor of 1.479 (to account for overhead costs) gives a fully-loaded wage of $40.97. That wage multiplied by the estimated time burden of two hours per visa applicant for 300 applicants yields a total burden on applicants of $24,582 in time plus up to $3,000,000 for bond costs, for a total to applicants of $3,024,582.

During the time that this temporary final rule is in effect, surety companies will need to learn about the Pilot Program and its requirements. The Department consulted DHS representatives to benefit from their experience in this area and, based on that consultation, estimates and assumes that: each Treasury-certified surety company currently issuing immigration bonds will conduct a regulatory review; this task is equally likely to be performed by either an in-house attorney or by a non-attorney at each surety company; it will take eight hours for the regulatory review by either an in-house attorney or a non-attorney, such as an insurance agent (or equivalent), at each surety. To calculate the familiarization costs, the estimated review time of eight hours was multipled by the average hourly loaded wage rate of an attorney and an insurance agent, $73.26. 25 The familiarization cost per surety company was calculated to be $586.08 (8 hours × $73.26). For FY 2019, nine sureties posted immigration bonds with ICE. The total estimated regulatory familiarization cost for all sureties currently issuing immigration bonds was calculated to be $5,275 ($73.26 × 8 hours × 9 sureties).

The total Government cost associated with this rule is $70,911. That amount includes printing costs, the collection and processing burden for each form, and additional work from consular officers. The total printing costs equates to $225, which is estimated by multiplying the maximum number of aliens subject to the Pilot Program under the temporary rule (300) by the cost of printing two forms per response for $0.75. The collection and processing of each Form I-352 takes an average of 6 hours and will be conducted by a government employee with an average hourly wage plus overhead estimated to be $28.02. The total cost to the government of collecting and processing the ICE Form I-352 for bonds issued under this temporary final rule, including costs associated with appeals, cancellation or bond breach, is estimated to be $50,436 ($28.02 × six hours × 300 bonds). The estimated additional time a consular officer with an average hourly wage of $135 will expend for each case subject to a bond is 30 minutes. The total cost associated with additional work from consular officers is estimated to be $20,250. If a traveler breaches a surety bond posted pursuant to this temporary final rule, ICE will incur some cost in collecting on the bond. Because ICE has no reliable basis for estimating the number of travelers that will post surety bonds, as opposed to cash bonds, or the percentage of travelers posting bonds who will breach the terms of the bond, ICE is unable to estimate the cost associated with enforcing bond breaches. Each agency will bear the costs associated with the activities of its personnel.

The Office of Management and Budget (OMB) has determined that this is a significant, though not economically significant, regulatory action under Executive Order 12866. As such, OMB has reviewed this regulation accordingly.

Along with Executive Order 12866, Executive Order 13563 direct agencies to assess 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, distributed impacts, and equity). The Department has reviewed the temporary final rule under Executive Order 13563 and has determined that this rulemaking is consistent with the guidance therein.

This temporary final rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor will the temporary final rule have federalism implications warranting the application of Executive Orders 12372 and 13132.

The Department has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not pre-empt tribal law. Accordingly, the requirements of Section 5 of Executive Order 13175 do not apply to this rulemaking.

The Department has reviewed the temporary final rule in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

Executive Order 13771 directs all agencies to repeal at least two existing regulations for each new regulation issued in FY 2017 and thereafter. It further directs agencies that the “total incremental costs of all regulations should be no greater than zero” in FY 2017 and, for subsequent years, no greater than a total amount of incremental costs that the director of the Office of Management and Budget (OMB) determines. This temporary final rule is exempt from the Executive Order, however, because it is de minimis.

This temporary final rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. The Department of State will rely on form I-352 from the Department of Homeland Security, OMB Control Number 1653-0022, to implement the provisions of this rule. The Department of Homeland Security has accounted for this use of the form in its information collection requests to the Office of Management and Budget.

For the reasons stated in the preamble, the Department amends 22 CFR part 41 as follows:

Section 118 of the Copyright Act, title 17 of the United States Code, creates a statutory license for the use of published nondramatic musical works and published pictorial, graphic, and sculptural works in connection with noncommercial broadcasting.

On January 19, 2018, the Copyright Royalty Judges (Judges) adopted final regulations governing the rates and terms of copyright royalty payments under section 118 of the Copyright Act for the license period 2018-2022. See 83 FR 2743. Pursuant to these regulations, on or before December 1 of each year, the Judges shall publish in the Federal Register notice of the change in the cost of living and a revised schedule of the rates codified at § 381.5(c)(3) relating to compositions in the repertory of SESAC. The adjustment, fixed to the nearest dollar, shall be the greater of (1) the change in the cost of living as determined by the Consumer Price Index (all consumers, all items) (“CPI-U”) “during the period from the most recent index published prior to the previous notice to the most recent index published prior to December 1, of that year” or (2) 1.5%. 37 CFR 381.10.

The change in the cost of living as determined by the CPI-U during the period from the most recent index published prior to the previous notice, i.e., before December 1, 2019, to the most recent index published before December 1, 2020, is 1.2%. 1 In accordance with 37 CFR 381.10(b), the Judges announce that the COLA for calendar year 2021 shall be 1.5%. Application of the 1.5% COLA to the 2020 rate for the performance of published nondramatic musical compositions in the repertory of SESAC—$162 per station—results in an adjusted rate of $164 per station.

In consideration of the foregoing, the Judges amend part 381 of title 37 of the Code of Federal Regulations as follows:

The satellite carrier compulsory license establishes a statutory copyright licensing scheme for the distant retransmission of television programming by satellite carriers. 17 U.S.C. 119. Congress created the license in 1988 and reauthorized the license for additional five-year periods until 2019 when it made the license permanent. 1

On August 31, 2010, the Copyright Royalty Judges (Judges) adopted rates for the section 119 compulsory license for the 2010-2014 term. See 75 FR 53198. The rates were proposed by Copyright Owners and Satellite Carriers  2 and were unopposed. Id. Section 119(c)(2) of the Copyright Act provides that, effective January 1 of each year, the Judges shall adjust the royalty fee payable under Section 119(b)(1)(B) “to reflect any changes occurring in the cost of living as determined by the most recent Consumer Price Index (for all consumers and for all items) [CPI-U] published by the Secretary of Labor before December 1 of the preceding year.” Section 119 also requires that “[n]otification of the adjusted fees shall be published in the Federal Register at least 25 days before January 1.” 17 U.S.C. 119(c)(2).

The change in the cost of living as determined by the CPI-U during the period from the most recent index published before December 1, 2019, to the most recent index published before December 1, 2020, is 1.2%. 3 Application of the 1.2% COLA to the current rate for the secondary transmission of broadcast stations by satellite carriers for private home viewing—30 cents per subscriber per month—results in an unchanged rate of 30 cents per subscriber per month (rounded to the nearest cent). See 37 CFR 386.2(b)(1). Application of the 1.2% COLA to the current rate for viewing in commercial establishments—60 cents per subscriber per month—results in a rate of 61 cents per subscriber per month (rounded to the nearest cent). See 37 CFR 386.2(b)(2).

In consideration of the foregoing, the Judges amend part 386 of title 37 of the Code of Federal Regulations as follows:

On July 27, 2020 (85 FR 45154), EPA published a notice of proposed rulemaking (NPRM) for the City of Philadelphia, located in the Commonwealth of Pennsylvania, and the District of Columbia. In the NPRM, EPA proposed approval of negative declarations certifying that there are no existing municipal solid waste landfills in the City of Philadelphia or the District of Columbia that are subject to the requirements of 40 CFR part 60, subpart Cf. The negative declarations were submitted by The City of Philadelphia Air Management Services (AMS) and the District of Columbia Department of Energy and Environment (DOEE) on March 15, 2018 and November 15, 2019, respectively.

Section 111(d) of the Clean Air Act (CAA) establishes standards of performance for certain existing sources. Air pollutants included under this section are those which have not already been established as air quality criteria pollutants via 42 U.S.C. 7408(a) or hazardous air pollutants via 42 U.S.C. 7412. Section 111(d)(1) requires states to submit to EPA for approval a plan that establishes standards of performance. The plan must provide that the state will implement and enforce the standards of performance. A Federal plan is prescribed if a state does not submit a state-specific plan or the submitted plan is disapproved. If a state has no designated facilities for a standards of performance source category, it may submit a negative declaration in lieu of a state plan for that source category according to 40 CFR 60.23a(b) and 62.06.

A MSW landfill is defined in 40 CFR 60.41f as, “an entire disposal facility in a contiguous geographical space where household waste is placed in or on land.” Other substances may be placed in the landfill which are regulated under the Resource Conservation and Recovery Act (RCRA) subtitle D, 40 CFR 257.2. MSW landfills emit gases generated by the decomposition of organic compounds or evolution of new organic compounds from the deposited waste. EPA regulations specifically delineate measures to control methane and nonmethane organic compound (NMOC) emissions, which can adversely impact public health.

The Emission Guidelines and Compliance Times for Municipal Solid Waste Landfills, as codified at 40 CFR part 60, subpart Cf (subpart Cf, or Emission Guidelines), apply to states with MSW landfills that accepted waste after November 8, 1987 and commenced construction, reconstruction, or modification before July 17, 2014. Such landfills are considered to be “existing” landfills. In states with facilities meeting the applicability criteria of an existing MSW landfill, the Administrator of an air quality program must submit a state plan to EPA that implements the Emission Guidelines.

AMS and DOEE have determined that there are no MSW landfills in their respective jurisdictions subject to Federal CAA landfill regulations pursuant to 40 CFR part 60, subpart Cf. The aforementioned negative declarations were made pursuant to the requirements at 40 CFR 60.23a(b) and 62.06, certifying that there are no existing source MSW landfills in their respective jurisdictions subject to the requirements of 40 CFR part 60, subpart Cf. A typographical error in the letter from AMS was noted and clarified by Philadelphia AMS in an email on May 1, 2020. A notice of proposed rulemaking was published in the Federal Register on July 27, 2020 (85 FR 45154). Due to a clerical error, the email clarification sent by AMS was not included in the docket for this action at the time of NPRM publication; however, this email has now been included in the docket. This error was not substantive, did not affect the public's ability to provide comments and has no impact on the final disposition. One comment was received in support of this action.

In this final action, EPA is approving the City of Philadelphia and the District of Columbia's negative declarations submitted to EPA on March 15, 2018 and November 15, 2019 respectively. The negative declarations satisfy the requirements of 40 CFR 60.23a(b) and 62.06, serving in lieu of a CAA 111(d) state plan for existing MSW landfills.

EPA's role with regard to negative declarations for designated facilities received by EPA from states is to notify the public of the receipt of such negative declarations and revise 40 CFR part 62 accordingly. This action merely proposes to approve the state's negative declaration 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 regulatory action because this action is not significant 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 Clean Air Act; and

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

The 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 January 25, 2021. 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, approving the negative declarations submitted by the City of Philadelphia and the District of Columbia, certifying that there are no existing municipal solid waste landfills in the City of Philadelphia or the District of Columbia that are subject to the requirements of 40 CFR part 60 subpart Cf, 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 62 as follows:

Throughout this document, wherever “we,” “us,” or “our” is used, we mean the EPA and wherever “reviewing authorities,” or “air agencies” is used, we mean air pollution control agencies.

Entities potentially affected directly by this action include sources in all industry categories. Entities potentially affected directly by this action also include state, local and tribal air pollution control agencies responsible for permitting sources pursuant to the major NSR programs requirements.

In addition to being available in the docket, an electronic copy of this Federal Register document will be posted at https://www.epa.gov/nsr.

The information presented in this document is organized as follows:

On August 9, 2019, the EPA proposed  1 to revise its major NSR applicability regulations to clarify when the requirement to obtain a permit applies to an existing major stationary source proposing to undertake a physical change or change in the method of operation ( i.e., project) under the major NSR preconstruction permitting programs. More specifically, the EPA proposed to revise its NSR applicability regulations to make it clear that both emissions increases and decreases that result from a given proposed project are to be considered in Step 1 of the NSR major modification applicability test in a process known as project emissions accounting.

In the subsections that follow, the EPA introduces the NSR program and summarizes information from the proposal, including: (1) What constitutes a major modification under the major NSR programs, (2) the project emissions accounting process and its place in the major modification applicability test, and (3) the legal rationale for the regulatory revisions that were proposed. The history of the EPA's treatment of emissions increases and decreases in Step 1 of the major modification applicability test, including the March 2018 Memorandum titled “Project Emissions Accounting Under the New Source Review Preconstruction Permitting Program,”  2 was provided in the notice of proposed rulemaking and will not be restated here. The public comment period for this proposed rule ended on October 8, 2019.

As established under the Clean Air Act (CAA), the NSR program is a preconstruction permitting program that requires certain stationary sources of air pollution to obtain permits prior to beginning construction. The NSR permitting program applies to both new construction and to modifications of existing sources, regardless of whether the source is in an area where the national ambient air quality standards (NAAQS) have been exceeded (nonattainment area) or if the source is in an area where the NAAQS have not been exceeded (attainment or unclassifiable area). New construction and modifications that emit “regulated NSR pollutants”  3 over certain thresholds are subject to major NSR requirements, while smaller emitting sources and modifications may be subject to minor NSR requirements or be excluded from NSR altogether.

Major NSR permits for sources that are located in attainment or unclassifiable areas are referred to as Prevention of Significant Deterioration (PSD) permits. These permits can also cover pollutants for which there are no NAAQS. Major NSR permits for sources located in nonattainment areas and that emit pollutants above the specified thresholds for which the area is in nonattainment are referred to as nonattainment NSR (NNSR) permits. The pollutant(s) at issue and the air quality designation of the area where the facility is located or proposed to be built determine the specific permitting requirements. The CAA requires sources subject to PSD to meet emission limits based on Best Available Control Technology (BACT) as specified by CAA section 165(a)(4), and sources subject to NNSR to meet Lowest Achievable Emissions Rate (LAER) pursuant to CAA section 173(a)(2). Other requirements to obtain a major NSR permit vary depending on whether it is a PSD or NNSR permit.

A new stationary source is subject to major NSR requirements if its potential to emit (PTE) a regulated NSR pollutant exceeds statutory emission thresholds. 4 If it exceeds the applicable threshold, the NSR regulations define it as a “major stationary source.”  5

An existing major stationary source triggers major NSR permitting requirements when it undergoes a “major modification.” The EPA's implementing regulations for NSR establish a two-step process for determining major NSR applicability for projects at stationary sources. To be subject to major NSR requirements, the project must result in both (1) a significant emissions increase from the project (the determination of which is called “Step 1” of the NSR applicability analysis); and (2) a significant net emissions increase at the stationary source, taking account of emission increases and emission decreases attributable to other projects undertaken at the stationary source within a specific time frame (called “Step 2” of the NSR applicability analysis, or “contemporaneous netting”). For this two-step process, the NSR regulations define what emissions rate constitutes “significant” for each NSR pollutant. 6

In many cases, these requirements of the major NSR program (or equivalent requirements) are formally adopted by a state or local air agency, and the agency submits a revised state implementation plan (SIP) to the EPA for approval. The EPA's regulations provide for the minimum requirements of these programs. Upon the EPA approving the SIP, the air agency becomes the “reviewing authority” for major NSR permits for sources within its boundaries. When a state or local air agency is not the permitting authority, either the EPA issues the major NSR permits or a state or local air agency issues the major NSR permits on behalf of the EPA by way of a delegation agreement. For sources located in Indian country, the EPA is currently the only permitting authority for major NSR. Currently, state and local air agencies issue the vast majority of major NSR permits each year.

New sources and modifications that do not require a major NSR permit may instead require a minor NSR permit prior to construction. Minor NSR permits are almost exclusively issued by state and local air agencies, although the EPA issues minor NSR permits in some areas of Indian country. Minor NSR requirements are approved into a SIP in order to achieve and maintain the NAAQS. 7 The CAA and the EPA's regulations are less prescriptive regarding minimum requirements for minor NSR, thus, air agencies generally have more flexibility in designing their minor NSR programs.

In the proposal, the EPA explained that our NSR regulations define a major modification  8 as any physical change or change in the method of operation of an existing major stationary source that would result in a significant emissions increase of a regulated NSR pollutant  9 (as determined in Step 1 of the NSR major modification applicability test) and a significant net emissions increase of that pollutant (as determined in Step 2 of the major modification applicability test)  10 from the major stationary source. This two-step applicability test, which has been an element of the NSR programs since the 1980's, was codified by the 2002 NSR Reform Rule  11 to explicitly include the prior EPA practice of looking first at whether any emissions increase that would result from a project  12 by itself is significant before evaluating whether there would be a significant “net emission increase”  13 from the major stationary source. In other words, Step 1 considers the effect of the project alone and Step 2 considers the effect of the project and any other emissions changes at the major stationary source that are contemporaneous to the project ( i.e., generally within a 5-year period) and creditable.

An emissions increase of a regulated NSR pollutant is considered significant if the emissions increase in Step 1 or 2, would be equal to or greater than any of the pollutant-specific Significant Emissions Rates (SERs) listed under the definition of “significant” in the applicable PSD or NNSR regulations. 14 The SERs in the existing NSR regulations are based on an EPA determination that increases in emissions below these levels are de minimis and thus need not be subject to major NSR permitting. For those regulated NSR pollutants not specifically listed, any increase in emissions is significant. 15 In addition, the procedure for calculating whether a proposed project would result in a significant emissions increase depends upon the type of emissions unit(s)  16 that would be included in the proposed project. The emissions units involved in a project can be new, existing, or a combination of new and existing units ( i.e., multiple types of emissions units). 17 For new units, 18 the NSR regulations require the difference in pre- and post-project emissions to be calculated based on the difference between a unit's baseline actual emissions (as applicable to new emissions units)  19 and its potential to emit  20 after the project. For existing units, 21 the NSR regulations require that the difference in pre- and post-project emissions be calculated based on the difference between a unit's baseline actual emissions (as applicable to existing emissions units)  22 and its projected actual emissions  23 after the project. Baseline actual emissions for new units are based on the units' potential to emit before the project. 24 Potential to emit represents a unit's maximum capacity to emit a pollutant under its physical and operational design. Baseline actual emissions for existing units are determined based on the rate of actual emissions (in tons per year) a unit has emitted in the past. Projected actual emissions for existing units are determined based on the maximum rate of actual emissions (in tons per year) a unit is projected to emit in the future.

Once a source determines that a significant emissions increase would occur in Step 1, then the source may deem the project to be a major modification or perform the Step 2 contemporaneous netting analysis to determine if there would be a significant net emissions increase at the major source and thus be subject to major NSR permitting. 25 A net emissions increase means, with respect to any regulated NSR pollutant emitted at a major stationary source, the amount by which the sum of the following exceeds zero: (a) [t]he increase in emissions from a particular physical change or change in the method of operation at a stationary source as calculated pursuant to [40 CFR 52.21](a)(2)(iv); and (b) [a]ny other increases and decreases in actual emissions at the major stationary source that are contemporaneous with the particular change and are otherwise creditable. 26 The Step 2 contemporaneous netting analysis is conducted by adding the emissions increase  27 from the project as determined in Step 1 to all other increases and decreases in actual emissions at the major stationary source that are contemporaneous with the project and otherwise creditable.

Emissions increases and decreases are contemporaneous if they occur between “[t]he date 5 years before construction on the particular change commences; and [t]he date that the increase from a particular change occurs.”  28 An increase or decrease in actual emissions in Step 2 is creditable only if the EPA Administrator or other reviewing authority has not relied on it in issuing a PSD or NNSR permit for the source and the permit is still in effect at the time the major modification occurs. 29 Furthermore, emissions increases in Step 2 are only creditable if the new level of actual emissions exceeds the old level of actual emissions. 30 Emissions decreases in Step 2, on the other hand, are creditable only to the extent that the old level of actual emissions or the old level of allowable emissions, whichever is lower, exceeds the new level of actual emissions and the decrease in actual emissions is enforceable as a practical matter at and after the time that actual construction of the particular change begins. 31 In nonattainment areas, emissions reductions are also only creditable if they have not been relied upon for demonstrating attainment or reasonable further progress. 32

A project that results in a significant emissions increase in Step 1 and a significant net emissions increase in Step 2 of the NSR major modification applicability test is a major modification that requires a major NSR permit.

As we stated in the March 2018 Memorandum, in 2017 the EPA “identified certain elements of the NSR regulations and associated EPA policies that have been sources of confusion and uncertainty” for both permitting authorities and stakeholders alike. 33 One such element was “whether emissions decreases from a proposed project at an existing major stationary source may be taken into account under Step 1 of the major modification applicability process in the EPA NSR regulations.”  34 Thus, in the Memorandum, we communicated that after review of past regulatory interpretations and the existing regulations as whole, we interpret our “current NSR regulations [to] provide that emissions decreases as well as increases are to be considered at Step 1 of the NSR applicability process, provided they are part of a single project”  35 in the process known as “project emissions accounting.”

A project can involve new, existing, or a combination of new and existing units. Before the March 2018 Memorandum, there was uncertainty and confusion on whether both increases and decreases could be considered at Step 1 for all types of emissions units because of a slight variation in the regulatory text used for the NSR major modification applicability test that applies to projects that involve a combination of new and existing units ( i.e., hybrid test) as compared to the major modification applicability tests that apply to only new or only existing units. As we explained further in the March 2018 Memorandum and in this rule's proposal, the regulatory text for new units and existing units use the phrase “sum of the difference,” while the hybrid test used the phrase “sum of the increases.” In the March 2018 Memorandum, the EPA determined, after a review of past regulatory interpretations and the existing regulations as whole, that the best reading of our regulations is that both increases and decreases in emissions could be accounted for at Step 1 for all three types of emissions units under their respective NSR major modification applicability tests. However, recognizing the uncertainty described previously the proposal included revised regulatory text to clarify the regulations that define the major modification applicability test as it applies to projects involving multiple types of emissions units. 36 The proposed regulatory textmade clear that emissions increases and decreases for projects that involve multiple types of emissions units can be considered in the same manner as emissions increases and decreases for projects that only involve new units or only involve existing units in Step 1 of the NSR major modification applicability test. The regulatory text that governed this hybrid test prior to the finalization of this rule said that “a significant emissions increase of a regulated NSR pollutant is projected to occur if the sum of the emissions increases for each emissions unit, using the method specified in [40 CFR 52.21] (a)(2)(iv)( c )  37 through ( d )  38 . . . as applicable with respect to each emission unit, for each type of emissions unit equals or exceeds the significant amount of that pollutant.”  39 Thus, in the proposal, we proposed to revise the term “sum of the emissions increases” to “sum of the difference” to mirror the text in 40 CFR 52.21(a)(2)(iv)( c ) through ( d ) to help clarify that projects that involve multiple types of emissions units should treat the calculation of the change in emissions from the project in Step 1 of the NSR major modification applicability test in the same way as the calculations for projects that only involve new units or only involve existing units ( i.e., considering both emissions increases and decreases from the proposed project in Step 1). We also proposed to clarify that the revised term “sum of the difference” would apply to “all emissions units” instead of “for each emissions unit” to make clear that for projects that involve multiple types of emissions units, the source owner or operator will first calculate the “sum of the difference” for each existing unit and “sum of the difference” for each new unit according to 40 CFR 52.21(a)(2)(iv)( c ) and ( d ) respectively, and then, the owner or operator would proceed to add the “sum of the difference” from (c) and (d) according to 40 CFR 52.21(a)(2)(iv)( f ), the hybrid test. In the proposal, we also added regulatory text to clarify that the term “sum of the difference” as used in the referenced subparagraphs shall include both increases and decreases in emissions as calculated in accordance with those subparagraphs.

In the March 2018 Memorandum, we explained that “the CAA contains no statutory definition of the term “major modification.” The CAA does, however, define the term “modification” as “any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emission of any air pollutant not previously emitted.”  40 The major NSR applicability regulations discussed previously reflect an interpretation of the statutory phrase “increases the amount of any air pollutant emitted” that is contained in this definition of “modification” in section 111 of the CAA  41 and as cross referenced in both Part C (PSD) and Part D (NNSR) of Title I of the CAA. 42 The United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has recognized that the CAA “is silent on how to calculate such `increases' in emissions.”  43 Thus, the question of how to determine whether a physical change or change in the method of operation “increases” emissions is ambiguous. 44 Accordingly, because the statutory text does not itself dictate how to determine whether a physical change or change in the method of operation “increases” emissions, under principles established by the Supreme Court, 45 the “EPA has the authority to choose an interpretation” of the term “increases” in “administering the NSR program and filling in the gaps left by Congress.”  46 And in choosing an interpretation of the term “increases” in relation to the administration of the NSR program, “[t]here can be no doubt that the EPA is entitled to balance environmental concerns with economic and administrative concerns, at least to a point.”  47

The EPA believes that allowing for consideration of both emissions increases and decreases from a project is consistent with congressional intent for the PSD and NNSR preconstruction permitting programs to cover existing sources only when they undertake projects which result in a non- de minimis increase in emissions. 48 If the full scope of emissions changes from a project were not considered in Step 1, the regulations could subject a project to major NSR when the actual effect of that project would be to reduce emissions or result in a de minimis increase in emissions, which would be contrary to congressional intent for this program. 49 The EPA sees little policy support for such an outcome. Allowing the consideration of both increases and decreases in emissions in Step 1 allows sources to undertake projects that may be environmentally beneficial overall and that may be forgone if emissions decreases cannot be considered in Step 1. Therefore, the EPA continues to believe a two-step process—first determining the full scope of emissions changes, both increases and decreases, from the project under consideration and second, considering any increases or decreases from other projects at the source that are contemporaneous and creditable—is a reasonable and allowable interpretation of the phrase “increases the amount of any air pollutant emitted” within the definition of “modification.”

Furthermore, the EPA continues to believe this approach represents sound policy to the extent it encourages sources to undertake projects that may result in emissions decreases that might not otherwise occur or could be delayed. As stated in the proposal preamble, various sources have indicated to the EPA that they have either significantly delayed or abandoned altogether projects that could have resulted in overall emissions decreases  50 given the complexities that Step 2 contemporaneous netting can entail, and given past EPA statements  51 that emissions decreases could not be accounted for in Step 1. Several commenters on the proposal also provided descriptions of actual projects that produced both increases and decreases in emissions to illustrate the types of projects that may result in overall emissions decreases in Step 1 of the NSR major modification applicability test. 52

In this action, we are finalizing the proposed clarifications to the Step 1 provisions of the major modification applicability test at 40 CFR 52.21(a)(2)(iv). 53 More specifically, we are finalizing minor revisions to the regulations that apply to projects that involve multiple types of emissions units  54 to state that both emissions increases and decreases can be considered in Step 1 of the NSR major modification applicability test in the same manner as they are considered for projects that only involve existing emissions units  55 or only involve new emissions units. 56 These minor revisions include, but are not limited to, changing the term “sum of the emissions increase” to “sum of the difference” in the context of the hybrid test that applies to multiple types of emissions units and adding a provision that specifies that the term “sum of the difference” as used for all types of units (new, existing and the combination of new and existing units) shall include both increases and decreases in emissions as calculated in accordance with those subparagraphs.

The EPA is also concluding that it is appropriate to apply its “project aggregation” interpretation and policy, set forth in the 2018 final action that completed reconsideration of a 2009 action on this topic (“the 2018 final action on project aggregation”), 57 to Step 1 of the NSR major modification applicability test for projects that involve both increases and decreases in emissions. Application of this policy may assist sources that are responsible for determining the scope of a project to make that determination and avoid the over aggregation or under aggregation of activities that could subsequently be considered an effort to circumvent the NSR program. As discussed in the 2018 final action on project aggregation, the “substantially related” test in the project aggregation interpretation and policy calls for sources to aggregate emissions from nominally separate activities when there is an apparent technical or economical interconnection between those activities. This 2018 final action on project aggregation also includes a rebuttable presumption that activities that occur outside a 3-year period are not related and should not be grouped into one project.

Furthermore, the EPA is concluding that the provisions at 40 CFR 52.21(r)(6) are adequate to ensure sufficient monitoring, recordkeeping and reporting of emissions for projects determined not to trigger major NSR, after considering both emissions increases and decreases from the project in Step 1 of the NSR major modification applicability test. These requirements apply when there is a “reasonable possibility” that the project could still result in a significant emissions increase. Lastly, the EPA is not making the regulatory changes in this final rule mandatory for adoption by state and local air agencies with approved major NSR programs. Thus, state and local air agencies can adopt these changes at their discretion.

The EPA received approximately 36 detailed comments  58 on the project emissions accounting proposal, which included comments from industry and industry associations, state and local air agencies, other governmental agencies, environmental advocacy groups, and a policy advocacy group. The EPA also received several comments from individuals and more than 600 comments on the proposed rule from a mass mailer campaign.

The EPA's responses to these comments are provided in a separate Response to Comments (RTC) document included in the docket for this final action. This final rule preamble addresses the most significant comments received.

As we explained in Section II.C. of this final rule preamble, the EPA proposed to revise a portion of the major NSR major modification applicability regulations to provide needed clarity over whether project emissions accounting is allowed for all project categories, including projects that involve multiple types of emissions units. Specifically, the EPA proposed to revise the text “sum of the emissions increase” in 40 CFR 52.21(a)(2)(iv)( f ) to “sum of the difference,” as reflected in subparagraphs 40 CFR 52.21(a)(2)(iv)( c )-( d ), the applicability test that applies to only existing units or only new units respectively, to clarify that both emissions increases and decreases in emissions resulting from a proposed project can be considered in Step 1 of the NSR major modification applicability test.

We also proposed to clarify that the revised term “sum of the difference” would apply to “all emissions units” instead of “for each emissions unit” to make clear that for projects that involve multiple types of emissions units, the source owner or operator will first calculate the “sum of the difference” for each existing unit and “sum of the difference” for each new unit according to 40 CFR 52.21(a)(2)(iv)( c ) and ( d ) respectively, and then, the owner or operator would proceed to add the “sum of the difference” from ( c ) and ( d ) according to 40 CFR 52.21(a)(2)(iv)( f ), the hybrid test.

In addition, the EPA proposed to add to the regulation a provision that specifies that the term “sum of the difference,” as used in the referenced subparagraphs, shall include both increases and decreases in emissions as calculated in accordance with those subparagraphs. With these proposed revisions, we believe the regulations make clear that accounting for emissions decreases in Step 1 of the major modification applicability test is allowed for all projects, including projects that involve multiple types of emissions units.

Several commenters supported the proposal's premise of revising the regulatory text to provide clarity that both emissions increases and decreases can be considered in Step 1 of the NSR major modification applicability test for projects that involve multiple types of emissions units. A few of these commenters also supported the specific regulatory text revisions proposed. The commenters stated that the proposal, if finalized, would improve and streamline the permitting process, provide for the timely issuance of permits, and spark economic growth, while still protecting the environment because sources would be more likely to undertake projects that would reduce emissions if those projects were not subject to the NSR major modification requirements.

The EPA agrees with the commenters who believe that the revisions being finalized in this rule will add clarity to Step 1 of the NSR major modification applicability test and provide a more accurate accounting of a project's actual emissions impact. This clarity and accuracy could potentially incentivize energy efficiency and/or other environmentally beneficial projects, thereby furthering the Congressional purpose of the NSR program which is to ensure environmental protection while allowing for economic growth. 59 We also agree with the commenters who supported the specific regulatory text revisions we proposed that were mentioned previously.

On the other hand, several commenters argued that, by allowing sources to take credit for emissions decreases from a project in Step 1, facilities may be able to avoid major NSR permitting requirements including the installation of controls based upon BACT or LAER determinations, leading to an increase in emissions. The commenters stated that the proposed rule, if adopted, would potentially reverse air quality gains that have been accomplished over the last few decades, thereby increasing the likelihood of adverse impacts to human health and the environment. These commenters urged the EPA to withdraw the proposed rule and one commenter also urged the EPA to withdraw the March 13, 2018 Memorandum on the same subject.

These comments were echoed by the mass mailer campaign commenters who added that the proposed rule would have the effect of allowing sources to increase emissions without control requirements, thereby enabling coal-fired power plants to operate longer and emit more pollution, reversing the progress that has been achieved in reducing acid rain in the Adirondacks.

The EPA respectfully disagrees with these commenters, including the mass mailer campaign commenters. First, this rule does not directly pertain to or impact acid rain production in the Adirondacks. Second, we do not have a reason to believe that the clarifications to the NSR regulations reflected in this rule will lead to significant and overall emissions increases as a result of construction at stationary sources. Projects that cause emissions increases are already not subject to major NSR requirements if the increases in emissions are below the SERs, with or without considering the associated emissions decreases in Step 1 of the NSR major modification applicability test. Nothing in this rule alters those requirements. For many projects, when considering both emission increases and decreases in Step 1, the project will likely not result in a significant emissions increase and should be treated as de minimis. This rule is only a clarification of our existing regulations regarding how to conduct projections of project emissions changes by including emissions increases and decreases in this projection as part of Step 1 of the NSR major modification applicability test for projects that involve multiple types of emissions units to make those requirements consistent with the applicability test for projects that only involve new units or only involve existing units. Those clarifications are based on a logical reading of the statute and consistent with the congressional intent for the NSR program, which is to ensure environmental protection while allowing for economic growth. Finally, even though certain projects may not be subject to the NSR major modification requirements, they may still be subject to the applicable minor NSR program permitting requirements.

These commenters did not provide information that demonstrates that it would always be more environmentally beneficial for each project potentially affected by this rule to proceed through the major NSR permitting process and thereby become subject to the applicable NSR permitting requirements, including the installation of BACT or LAER air pollution control technology. There may be environmental benefits from allowing a source to consider decreases in Step 1 and, therefore, not trigger major NSR based on a more accurate accounting of the emissions from the project. By clarifying that decreases may be considered in Step 1, the rule provides an incentive for sources to design their projects to include emissions decreases and pollution controls. 60 In addition, projects that avoid major NSR because they include emission decreases in their calculation of the proposed project's emissions in Step 1 would not necessarily otherwise trigger major NSR because they may not result in a significant net emissions increase in Step 2. Furthermore, the EPA has been told by stakeholders that some projects may not even move forward if the applicant cannot include emissions decreases in its calculation of the proposed' project emissions in Step 1.

However, quantifying the environmental impacts of this rule, as with any NSR rule, is difficult because NSR permitting actions are case-by-case determinations that vary based on the characteristics of the source of emissions ( e.g., location, magnitude of emissions and stack heights), the attainment status of the area, and many other characteristics, including business decisions on whether to proceed with a particular project at a certain point in time. The EPA does not have sufficient permitting data to make this quantification and even if the EPA were to request that information through an Information Collection Request for the entire United States or a subset of states, the permit application data do not include information on many important considerations including, for example, the records of any business decisions on whether to proceed with a particular project. We also do not have access to, nor do we require, reporting of any information regarding decisions made for projects that were not pursued.

Thus, to address this information gap, the EPA requested in its August 2019 proposal any examples of the emissions and cost impacts of considering both emissions increases and decreases in Step 1 of the NSR major modification applicability test. Several commenters answered that information request by providing descriptions of projects that produced both increases and decreases in emissions to illustrate the types of projects that may result in overall emissions decreases in Step 1 of the NSR major modification applicability test. 61 Two other commenters provided examples highlighting how finalizing this action would achieve emissions reductions while also reducing the NSR regulatory burden in the electric utility sector. 62 Others provided various comments that suggest that this rule may promote emissions reductions by encouraging industry to seek emissions reduction opportunities in their planning processes that they might otherwise forego if they were subject to the major NSR program. However, the information provided did not fill all the data gaps (as explained previously, these include emissions characteristics, cost impacts, business decisions on whether to proceed with a particular project, etc.), and it also did not show that consideration of emissions decreases in Step 1 would necessarily result in more emissions than would be allowed if major NSR requirements are triggered based on emissions increases alone.

In the face of this uncertainty over whether the clarification reflected in this rule will increase emissions from construction at stationary source of air pollution, we have placed greater importance on ensuring that the NSR regulations are clear, logical, and consistent with Congressional intent. As explained in greater detail in Section III.B.3. of this final rule's preamble and in the Response to Comments document for this action, the EPA views allowing for project emissions accounting to be more consistent with the requirement in the Act that a physical change or change in the method of operation at an existing major stationary source is subject to major NSR if it results in a significant increase in emissions. If project emissions accounting were not allowed, a project that does not result in an overall significant increase in emissions or that actually decreases emissions into the ambient air could be subject to NSR. The EPA believes that allowing for the consideration of the full effect of a project, including any associated decreases, is consistent with the 2002 NSR Reform Rule and more faithfully implements the intent of Congress for the NSR programs, which is to ensure environmental protection while allowing for economic growth. That is because projects that, in total, would result in insignificant emissions increases or overall emissions reductions might be delayed or foregone due to the potential complexities of undergoing a Step 2 major modification applicability process or requiring a major NSR permit.

As noted in Background Section II.D. of this rule's preamble, the major NSR applicability regulations reflect an interpretation of the statutory phrase “increases the amount of any air pollutant emitted” contained in the definition of “modification.”  63 This definition is cross referenced in both Part C (PSD) and Part D (NNSR) of Title I of the CAA. 64 The D.C. Circuit has recognized that the CAA “is silent on how to calculate such `increases' in emissions.”  65 Thus, the question of how to determine whether a physical change or change in method of operation “increases” emissions is ambiguous. 66 Accordingly, because the statutory text does not itself dictate how to determine whether a physical change or change in the method of operation “increases” emissions, under principles established by the Supreme Court, 67 the “EPA has the authority to choose an interpretation” of the term “increases” in “administering the NSR program and filling in the gaps left by Congress.”  68 And in choosing an interpretation of the term “increases” in relation to the administration of the NSR program,”, “[t]here can be no doubt that [the] EPA is entitled to balance environmental concerns with economic and administrative concerns, at least to a point.”  69

After reviewing comments received on the proposal, the EPA continues to believe that when determining whether a physical change or change in the method of operation “increases” emissions, allowing for project emissions accounting at Step 1 of the NSR major modification applicability test is more consistent with the Clean Air Act, the 2002 NSR Reform Rule, and the statutory purpose of the NSR program. Not allowing for project emissions accounting could lead to a project that actually results in a decrease in emissions being subject to the major NSR permitting requirements. The EPA believes this would undermine the congressional intent of the NSR program of ensuring environmental protection while allowing for economic growth because projects that, in total, would result in insignificant emissions increases or overall emissions reductions might be delayed or foregone due to the potential complexities of undergoing a Step 2 contemporaneous netting process or the time and expense of major NSR permitting. The EPA explains this conclusion in more detail in the Response to Comments document for this final action.

Several commenters objected to the proposal, however, claiming that project emissions accounting would create an exemption from NSR such that not every physical change or change in method of operation would be considered in the NSR major modification applicability determination. These commenters cited to a D.C. Circuit decision  70 to argue that “any” in the statutory phrase “increases the amount of any air pollutant emitted” contained in the definition of “modification means “any” and the EPA was creating a “project exemption,” similar to the equipment replacement rule deemed unlawful in that D.C. Circuit decision, by allowing the source to include unrelated decreases in Step 1 to ensure a project did not result in a significant emissions increase. 71

The EPA does not agree that the proposal was intended to create a “project exemption” because, unlike the equipment replacement rule found to be unlawful in that decision, this rule merely clarifies pre-existing applicability requirements and does not provide an exemption from major NSR. This rule simply conforms the regulatory text for projects that involve multiple types of emissions units with the regulatory text that applies to projects that only involve new units or that only involve existing units, and also expressly articulates a meaning of the term “sum of the difference” that is inherent in the phrase. The EPA has already applied a similar approach following the March 2018 Memorandum, and this final rule merely clarifies the regulations.

The EPA also disagrees with commenters that argue that this rule precludes consideration of “any” physical change or change in method of operation under the NSR major modification applicability test. Although we proposed that taking account of emissions decreases at Step 1 did not present any reasonable concerns regarding NSR circumvention  72 under the EPA's project aggregation policy, 73 the EPA recognizes that certain aspects of the proposal could have led to the conclusion that the proposed rule change would allow sources to attempt to avoid NSR by allowing sources to include unrelated emissions decreases as part of the project under consideration. Thus, in response to the concerns raised by these and other commenters, the EPA has determined it is appropriate to limit the scope of emissions decreases that can be considered at Step 1 to only the project under review and to not allow sources to attempt to avoid NSR by expanding the scope of decreases to those that are not truly part of the project. As discussed in more detail in Section III.B.4 of this preamble, the EPA has concluded that it is appropriate to apply its project aggregation policy to both emissions increases and decreases to determine the scope of the project in Step 1 of the NSR applicability analysis. Many of the commenters' concerns regarding the review of “any” physical change or change in method of operation can be addressed by rationally defining the scope of a project, consistent with this policy. The application of the “substantially-related” test of the 2018 final action on project aggregation should be sufficient to prevent sources from arbitrarily grouping activities for the sole purpose of avoiding the NSR major modification requirements through project emissions accounting. That is because when applying the “substantially related” test to determine the scope of a project, sources should only aggregate emissions changes when there is an apparent technical or economical interconnection between the physical and operational changes. In addition, sources should include in a common project in Step 1 all activities (and only those activities) that meet this “substantially related” test.

Commenters also argued that the EPA had unlawfully not required that emissions decreases be contemporaneous or enforceable in Step 1 of the NSR major modification applicability test. However, the EPA believes that any emission decreases considered in Step 1 are and will need to be contemporaneous because, the “substantially related” test has a temporal component and, as discussed more in Section III.B.4 of this preamble and in the Response to Comments document for this final action, the decreases must be part of the same project.

Regarding the comments that emissions decreases are required to be enforceable, 74 the commenters correctly pointed to the requirement regarding the enforceability of Step 2 contemporaneous emissions decreases and the EPA is not changing those requirements as part of the rule. However, Step 2 contemporaneous netting is a distinct idea from project emissions accounting and parallel requirements are not necessarily warranted when the context is considered. Where a source is using emissions reductions from another project within a 5-year contemporaneous period to “net out” of major NSR permitting, it is important that decreases in emissions from another project that are used for this purpose be enforceable to ensure that the reduction is real and permanent. This is because a project that would result in a significant emissions increase is avoiding major NSR due to unrelated changes made at the facility. Project emissions accounting does not allow emissions reductions from another project to be used to avoid major NSR in this way. Rather, project emissions accounting is part of the process for projecting the actual emissions change at a facility resulting from a single project. In this distinct context, the EPA decided in 2002 against requiring that such a projection be enforceable. Instead, the EPA established recordkeeping and reporting requirements to help enforcement authorities hold sources accountable for their projections when there is a reasonable possibility the project could trigger major NSR. In addition, the NSR regulations provide that “[r]egardless of any such preconstruction projections, a major modification results if the project causes a significant emissions increase and a significant net emissions increase.”  75 Therefore, while the EPA is not requiring projections to be enforceable at Step 1 regardless of whether the source owner or operator projected increases or decreases in emissions, the NSR regulations do provide for an overall enforceable limitation on actual emission increases. If any emissions decreases are overstated, or any increases understated, the source may be subject to liability if its actual emissions due to the project exceed de minimis thresholds. Moreover, the EPA anticipates that even if, in accounting for the full impact of a project at Step 1, a source would not be required to obtain a major NSR permit, the vast majority of these projects would still be required to obtain a minor NSR permit under the state minor NSR permit program and the EPA anticipates that the emissions decrease(s) from the project would be documented in the permit record.

The EPA does not believe the policy rationale that the commenters provided for wanting the EPA to require that decreases in Step 1 be enforceable outweighs the EPA's policy rationale for not requiring projected actual emissions increases from a project to be enforceable and for treating emission decreases and increases in the same manner when calculating the proposed project emissions in Step 1. 76 As such, the EPA is not finalizing, as part of this action, a requirement that emissions increases or decreases be enforceable in Step 1 unless required by the applicable regulations. 77 As the EPA explained in the proposal, the EPA intends to treat projected actual emissions used in calculating emissions decreases from a project in the same manner as it does emissions increases since they are both part of the same project. Emission decreases should be considered simply part of the projected emissions for the project, not some discrete change from the project subject to different or additional requirements. A lower projected emission increase at an existing emissions unit involved in a project can have the same numerical effect on the result of the Step 1 applicability calculation by itself as a projected increase combined with a projected emissions decrease at another unit that is involved in the project. Therefore, we see no reason why enforceability of projected actual emissions should be required in one instance and not the other. Thus, the reasoning the EPA applied when declining to require that projected actual emissions be made enforceable as part of the 2002 NSR Reform rule continues to apply to projected actual emissions that are derived by combining increases and decreases from the same project in accordance with the clarification reflected in this rule. 78 As we explain in more detail in Section III.B 4 of this preamble, requiring that projected actual emissions decreases be enforceable in Step 1 could effectively replace the actual-to-projected-actual  79 applicability test for existing units with an actual-to-potential test, 80 or, more accurately, an actual-to-allowable test, 81 which would directly conflict with the EPA's reasoning for adopting the actual-to-projected-actual applicability test in 2002. Among other reasons, limiting projected actual emissions to allowable emissions (even if only for emissions decreases) could confiscate unused capacity of the source  82 and in some cases result in the source later retroactively becoming subject to major NSR requirements. 83 The EPA believes such an outcome would be unacceptable.

Another commenter added that the inclusion of emissions decreases in Step 1 in the NSR major modification applicability calculation must be enforceable, otherwise it would render Step 2 of the analysis meaningless. The commenter asserted that this rule would produce an absurd result by eviscerating Step 2's prohibition against crediting unenforceable emissions decreases for the purposes of netting out of NSR requirements.

The EPA disagrees that allowing for the consideration of emission decreases as part of the projected actual emissions from the project in Step 1 would render the contemporaneous netting provisions of the regulations superfluous or lead to absurd results. Allowing emissions decreases from the project under review to be considered in Step 1 does not mean that Step 2 is superfluous. Step 1 is limited to emissions increases and decreases from the same project. The source could still only account for emissions decreases from another project within the contemporaneous period in Step 2, subject to the other limitations of contemporaneous netting. In addition, the “substantially related” test mentioned previously, and further explained in Section III.B.4. of this preamble, applies to prevent aggregating into a single project those activities that do not represent such project, so decreases from activities that do not meet this test should not be considered in Step 1. Therefore, Step 2 is not superfluous because it clearly still serves a purpose of considering emissions increases and decreases from other projects that are contemporaneous with the proposed project and otherwise creditable. As discussed previously, if decreases from the project could not be considered in Step 1, that could potentially subject a project that decreases emissions overall to the major NSR permitting requirements. In addition, as noted previously, while the EPA is not requiring projections of decreases at Step 1 to be enforceable, the major NSR regulations contain a provision that “[r]egardless of any such preconstruction projections, a major modification results if the project causes a significant emissions increase and a significant net emissions increase.”  84 Therefore, there is an inherent enforceable limitation on increases of actual emissions.

Finally, an additional commenter asserted that the agency's proposal foregoes statutorily specified benefits—avoidance of air quality violations, improved pollution-control technologies, offsetting emission reductions—in a fashion that is incompatible with any lawful exercise of de minimis discretion. This contention is countered by other commenters, however, who stated that this final rule is not an exemption from NSR applicability and is instead a clarification of pre-existing regulatory text specifying how NSR applicability is to be determined for projects that involve multiple types of emissions units.

We agree with the latter commenters. The clarification reflected in this rule is not based on inherent de minimis exemption authority and does not alter the EPA's determination of the level of emissions that is significant for any pollutant. As stated previously, each physical change or change in method of operation must still be compared to the significance levels to determine whether or not the change results in an emissions increase that is de minimis. All this rule does is clarify that, in projecting whether a project will result in a non- de minimis increase in actual emissions, the source can quantify such an increase based on the full scope of the project, including any portions of the project that are projected to decrease actual emissions. The EPA believes that allowing a source to conduct projections of actual emissions in Step 1 for the full scope of the project, including any decreases in emissions caused by the project, is the best reading of CAA section 111(a)(4) because it will ensure that projects that overall decrease emissions or result in a de minimis increase in emissions will not be subject to the major NSR program.

In the proposal, we said that defining the scope of the project was within the discretion of the source. We also indicated that when a source is defining the scope of the project: (1) Separating activities into smaller projects ( i.e., under aggregation) to circumvent the NSR major modifications permitting requirements could be prevented by applying the interpretation and policy set forth in the 2018 final action on project aggregation and (2) adding multiple activities into bigger projects ( i.e., over aggregation) was not precluded by any prior interpretation or policy. 85 On this latter point, we added that separate activities which, when considered together, either decrease emissions or result in an increase that is not significant were not previously considered as part of the EPA's circumvention policy. However, we requested comment on whether we should instead apply the “substantially related” criteria to prevent over-aggregation in Step 1 and asked what the impact of applying such a standard would be. 86

Multiple commenters expressed support for the proposed concept that the scope of a project be at the discretion of the source and that the absence of a provision defining the scope of a project does not create an incentive to over-aggregate. 87 Commenters supported this proposed concept on the grounds that this discretion would allow sources to undertake activities that would reduce overall emissions in cases where a project is comprised of multiple emissions units.

Several commenters, however, expressed concerns that the scope of a project to which project emissions accounting is applied should be defined. 88 Otherwise, any ambiguity in defining the scope of the project would constrain a reviewing authority's ability to verify whether the source has reasonably exercised its discretion in applying project emissions accounting to a project. Other commenters added that the lack of criteria for determining the scope of a project would allow sources to circumvent NSR requirements by selectively considering emissions decreases with unrelated and non-contemporaneous increases. To this point, commenters expressed concern that, under the proposed rule, sources would be able to circumvent NSR requirements by finding contemporaneous emission reductions within the facility and considering them to be part of the project, while not incorporating similar contemporaneous emission increases in the scope of the project.

The EPA does not concur with the commenters who stated that circumvention of the NSR permitting requirements is a likely outcome of the proposed rule because, while not previously contemplated by our project aggregation policy, the EPA has concluded after review of the comments received on the proposal for this action that the “substantially related” test from our 2018 final action on project aggregation interpretation and policy provides the appropriate basis for sources to determine the scope of a project in Step 1 of the NSR applicability analysis. We believe that applying the 2018 final action on project aggregation interpretation and policy in this context alleviates concerns about potential NSR circumvention in Step 1 of the NSR major modification applicability test. The “substantially related” test, which is reflected in the 2018 final action on project aggregation, calls for sources to aggregate emissions from nominally separate activities when there is an apparent technical or economical interconnection between the physical and operational changes. This 2018 final action on project aggregation also includes a policy of applying a rebuttable presumption that project activities that occur outside a 3-year period are not related and should not be grouped into one project. The EPA has observed that “[w]hen activities are undertaken three or more years apart, there is less of a basis that they have a substantial technical or economic relationship because the activities are typically part of entirely different planning and capital funding cycles.”   89

Under this 2018 final action on project aggregation interpretation and policy, sources continue to have discretion in defining the scope of the project based on their business needs, but at the same time should not arbitrarily group project activities for the purpose of avoiding the NSR major modification requirements. Rather, in accordance with the 2018 final action on project aggregation, sources should define a project to include all activities, and only those activities, that meet the “substantially related” test.

Other commenters asserted that the EPA failed to address the possibility that facilities could circumvent NSR by proffering in Step 1 an emissions decrease that turns out to be nothing but a temporary reduction, thus avoiding the need to even modify equipment or install a pollution control device. A commenter added that some courts have imposed a statute of limitations that runs 5 years from the date of the modification and that the proposal, in conjunction with those rulings, invited a source to claim unenforceable decreases to avoid NSR, then simply avoid following through once the limitations period has passed.

We disagree with these commenters. The decrease in emissions in Step 1 will be calculated in most cases using the actual-to-projected-actual applicability test, and the projected actual emissions calculation in that test must be based on consideration of all relevant information. 90 If there is a “reasonable possibility” that the project may result in a significant emissions increase, as defined in the regulations at 40 CFR 52.21(r)(6), the source must meet applicable pre- and post-project recordkeeping, monitoring, and reporting requirements that apply for 5 or 10 years following the resumption of regular operation after the project, depending on the nature of the project. As such, the “reasonable possibility” provisions would provide the records necessary for reviewing authorities to ensure that the emissions reductions are not temporary and provide for enforcement of the major NSR program requirements, as necessary. The EPA also believes that the regulatory text at 40 CFR 52.21(a)(2)(iv)( b ) that states, “[r]egardless of any such preconstruction projections, a major modification results if the project causes a significant emissions increase and a significant net emissions increase” provides a safeguard that will ensure that the emissions reductions are not temporary or illusory. If a source, upon resuming regular operation after a project, fails to realize a reduction in emissions that was projected from a particular unit, or if that reduction is less than was projected, such that the overall emissions increase from the project exceeds the applicable significant emissions rates, then the source could be subject to NSR at that time and potentially an enforcement action. While a commenter expressed concern that some sources may claim unenforceable decreases to avoid NSR and then simply avoid following through with those decreases once the statute of limitations period has passed, the EPA views this possibility as remote because of the safeguard at 40 CFR 52.21(a)(2)(iv)( b ) and the potential for civil, or even criminal, enforcement. 91

Finally, several commenters questioned the EPA's decision to forgo a requirement that emissions reductions be enforceable and creditable in order to be used in project emissions accounting. These commenters stated that allowing sources to include uncreditable and unenforceable projected project emission decreases with the knowledge that the EPA will not second-guess those projections, referring to the Actual-to-Projected-Actual Applicability Test Memorandum issued by the EPA in December 2017, 92 readily invited NSR circumvention and increased air pollution with no ability for third-party enforcement.

The EPA disagrees with these commenters. First, as explained in the August 2019 proposal and in the legal rationale section of this final action (Section III.B.3), the EPA intends to treat the calculation of emissions decreases from a proposed project in the same manner as it does emissions increases from the same proposed project ( i.e., including emissions increases and decreases in Step 1 because both are necessary to determine the emissions resulting from the project). Second, requiring that projected actual emissions be made enforceable at the time of the project could effectively replace the actual-to-projected-actual applicability test with an actual-to-potential test, or, more accurately, an actual-to-allowable test, which would directly conflict with the EPA's reasoning for adopting the actual-to-projected-actual applicability test in 2002 and with what the EPA believes is the best reading of CAA section 111(a)(4). Third, the EPA believes that a requirement that projected actual emissions be made enforceable at the time of the project would effectively confiscate any unused capacity at the effected emissions unit and potentially require that any future project(s) that might increase emissions from that unit trigger major NSR retroactively. 93 In responding to comments on the actual-to-potential methodology in 2002, the EPA noted that the establishment of an enforceable permit limit “may restrict the ability of a source to increase its emissions in association with an increase in production or hours of operation, which when done alone are not normally considered as physical or operational changes.”  94 The EPA also stated “[w]e generally agree with commenters who have argued that existing emissions units in general (including replacement and reconstructed units) have ample track record such that the projection of the proposed project emissions alone is sufficiently reliable and enforceable and thus the burdens of up-front permit caps on emissions are unnecessary” and “[w]e disagree with the commenters who thought that the `actual-to-potential' test should be retained because, among other things, the recordkeeping requirements associated with the `actual-to-projected-actual' test would be burdensome . . . for most sources, the burden of recordkeeping [associated with use of the actual-to-projected-actual applicability test] is substantially less than the present burden of obtaining a permit containing an up-front cap on actual emissions.”  95 Thus, consistent with our reasoning in 2002, the EPA does not believe that these outcomes and making emissions reductions enforceable in Step 1 are necessary in order for sources evaluating projects that involve existing emissions units to reasonably determine whether such projects would result in a significant increase in actual emissions just because the project includes a calculated decrease in emissions at one or more emissions units.

In any event, the regulations provide that “[r]egardless of any such preconstruction projections, a major modification results if the project causes a significant emissions increase and a significant net emissions increase.”  96 Therefore, the EPA believes the NSR regulations do provide a mechanism for enforcement if a project is erroneously projected not to result in a significant emissions increase. In addition, many, if not most, of emissions decreases that result from a project will be due to the installation of controls or the removal of an emissions unit. The EPA still believes, as it did in 2002, that even if, in accounting for the full impact of a project in Step 1, a source would not be required to obtain a major NSR permit, the large majority of these projects would still be required, as noted earlier, to obtain a minor NSR permit under the state or local air agency minor NSR permitting program and, therefore, the project activities and any emissions decrease(s) accounted for would be documented in those permit records. 97 The EPA-approved implementation plans will also still need to include enforceable emission limits and other control measures intended to protect air quality and a program for “regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved, including a permit program as required in parts C and D of this subchapter.”  98 Nothing in this final rule conflicts with or diminishes these SIP requirements.

Finally, the December 2017 ATPA Memorandum is not within the scope of this rulemaking, nor does it have any bearing on this final rule. The December 2017 ATPA Memorandum communicated how the EPA intends to apply and exercise its enforcement discretion related to certain aspects of the applicability provisions of the NSR regulations. The policy contained in that Memorandum does not constitute a rule, regulation, or other legally binding requirement and it does not change or substitute for any law, rule or regulation, or other legally binding requirement. We, therefore, do not agree that this final rule or the December 2017 APTA Memorandum will place any limitations on third-party enforcement of the major NSR program. Nothing in this final rule changes the enforcement provisions available under the CAA to enforce the major NSR permitting requirements nor the ability of third parties to bring potential enforcement actions to the EPA's attention if they suspect that a source has avoided the major NSR permitting requirements.

The provisions of 40 CFR 52.21(r)(6) apply to projects involving existing emissions units at a major stationary source in circumstances where the owner or operator elects to use the actual-to-projected-actual applicability test for calculating projected actual emissions and there is a reasonable possibility (as defined in subparagraph (r)(6)(vi)) that a project that is not part of a major modification may result in a significant emissions increase. When the reasonable possibility criteria in subparagraph (r)(6)(vi) are triggered, specific pre- and post-project recordkeeping, monitoring and reporting requirements in paragraph (r)(6) must be met, depending on the circumstances. Those include the requirement that before beginning actual construction on the project, the owner or operator document and maintain a record including a description of the project, identification of the emissions unit(s) whose emissions of a regulated NSR pollutant could be affected by the project, and a description of the applicability test used to determine that the project is not a major modification for any regulated NSR pollutant (including certain specified information).

The requirements of 40 CFR 52.21(r)(6) also include pre-project reporting (for electric utility steam generating units) and post-project monitoring and reporting of emissions of any regulated NSR pollutant that could increase as a result of the project and that is emitted by any emissions unit identified in the pre-project record whose emissions could be “affected” by the project. Under these monitoring provisions, sources must calculate and maintain a record of the annual emissions, in tons per year on a calendar year basis, for a period of 5- or 10-years following resumption of regular operations after the change, depending on the type of change at the unit(s). Post-project reporting is required for electric utility steam generating units and is triggered when certain specific criteria that are applicable to all other categories of emissions units are met. In accordance with 40 CFR 52.21(r)(7), the information required to be documented and maintained pursuant to paragraph (r)(6) shall be available for review upon a request for inspection by the reviewing authority or the general public. As described in the proposal preamble, the requirements of 40 CFR 52.21(r)(6) apply equally to units with projected increases and projected decreases in emissions, as long as there is a reasonable possibility that the project could result in a significant emissions increase and those units are part of the project ( i.e., their emissions “could be affected” by the project).

Various commenters expressed that considering emissions increases and decreases in Step 1 of the NSR major modification applicability test would not necessitate any additional monitoring, recordkeeping, or reporting requirements to promote NSR compliance because the current requirements under 40 CFR 52.21(r)(6) are adequate for this purpose. A couple of these commenters came to this determination because, in the existing rules, the EPA has already determined that sources should not be required to track small projected increases that are well below the relevant significant emissions rates, and there is even less reason to track projected decreases, since the “possibility” of a significant increase is even more remote. Some of these commenters noted that existing monitoring, recordkeeping, and reporting provisions in state and federal laws that cover all NSR-affected “major sources,” and particularly the requirements for “. . . semiannual reporting, compliance reporting and certifications, and periodic emissions inventory reporting under Title V permits, are stringent and adequate to assure that NSR violations will not occur as a result” of considering emissions increases and decreases in Step 1. Another commenter added that minor source permitting requirements will often apply to projects that are not subject to major NSR permitting and that the reviewing authority will verify a source's rationale for determining that a project is minor.

Other commenters, however, felt that the “reasonable possibility” provisions of 40 CFR 52.21(r)(6) are insufficient to guard against potential circumvention of NSR requirements. Commenters in this group stated that sources would be able to forgo the reasonable possibility requirements by projecting that an emissions increase will be less than 50 percent of the significant emission increase level. A few commenters added that reliance on the provisions of 40 CFR 52.21(r)(6) would complicate enforcement actions because the calculations sources conduct to comply with these provisions often do not include all emissions units associated with a project, especially affected units that are not modified or constructed under a project. These commenters emphasized that while sources can explain if annual emissions from a project exceed the baseline emissions by an amount greater than the significant emission rate, assessing the validity of such explanations places an undue burden upon the reviewing authority.

Several commenters suggested that the problems related to the lack of monitoring, recordkeeping, and reporting requirements for sources whose emissions do not meet the “reasonable possibility” threshold is compounded by the EPA's decision to not require that emissions decreases considered in Step 1 be enforceable. According to these commenters, sources considering emissions increases and decreases in Step 1 of the NSR major modification applicability test would be able to pair an unenforceable emission decrease with an otherwise significant emission increase to avoid NSR, and can then avoid tracking the actual emission increase as a result of the changes by “projecting” that the Step 1 net emissions change would be less than 50 percent of the significant emissions increase level. These commenters asserted that the Administrator's directive that the EPA not question a source's NSR calculations (except in cases of “clear error”), referring to the December 2017 APTA Memorandum, means there is little chance that facilities' calculations will be audited and even less chance that the EPA will be able to check the actual emission increases resulting from changes.

The EPA agrees with the commenters that concluded that the regulations at 40 CFR 52.21(r)(6) are sufficient and appropriate to ensure that adequate records are maintained in circumstances where there is a reasonable possibility, as defined in the regulations, that a project determined not to constitute a major modification could result in a significant emissions increase. Those provisions apply equally to projects that trigger the reasonable possibility criteria, regardless of whether those projects include only increases, or increases and decreases in emissions, consistent with the clarifications in this final rule. We also agree that other records required to be maintained and reported under CAA programs will support compliance with the NSR applicability regulations and enforcement of those regulations as necessary. In imposing reasonable possibility recordkeeping requirements, the EPA “strove for a balance between ease of enforcement and avoidance of requirements that would be unnecessary or unduly burdensome on reviewing authorities or the regulated community.”  99 Beyond alleging potential NSR circumvention, the commenters who oppose the use of the reasonable possibility provisions did not provide any persuasive rationale for treating emissions increases and decreases differently for purposes of tracking emissions under those requirements. Since projected actual emissions must be based on all relevant information, sources may not arbitrarily project emissions below the applicability levels for these recordkeeping, monitoring, and reporting requirements.

We agree that in many or most cases, projects that involve both increases and decreases in emissions in Step 1 that do not trigger the reasonable possibility provisions will be subject to minor NSR permitting requirements. As such, records of the project activities, the emissions increases and any emissions decreases associated with those activities, the applicability test and the corresponding emissions calculations should be available or made available for review as part of the permit application and permit records for the project, which include the permit terms.

The EPA, however, disagrees that the “reasonable possibility” provisions at 40 CFR 52.21(r)(6) are insufficient to guard against NSR circumvention as a result of considering emissions increases and decreases in Step 1 and that reliance on those provisions would complicate enforcement and/or place undue burden on reviewing authorities for the reasons cited. First, as explained in Section III.B.4 of this final rule preamble, applying the EPA's 2018 final action on project aggregation interpretation and policy makes clear that any decreases from activities that are accounted for in Step 1 should be “substantially related” to any increases from activities that are part of the same project, meaning that those decreases in fact result from the project. Second, manipulating NSR major modification applicability calculations to circumvent NSR and/or avoid the “reasonable possibility” requirements in the regulations could subject a source to the NSR requirements, substantial civil penalties, and/or criminal liability. The regulations provide that “[r]egardless of any such preconstruction projections, a major modification results if the project causes a significant emissions increase and a significant net emissions increase.”  100 Thus, if any emissions decreases are overstated, and/or any increases understated, such that the emissions projection at the time shows a source is not subject to NSR or the reasonable possibility requirements, the source will be subject to NSR if and when the project actually results in a major modification. Finally, and as stated previously, we do not agree that the December 2017 APTA Memorandum will have any effect on third-party enforcement of the major NSR program. Nothing in this final rule changes the enforcement provisions available under the CAA to enforce the major NSR permitting requirements nor the ability of third parties to alert the EPA if they suspect that a source has improperly avoided the major NSR permitting requirements.

Other commenters challenged the EPA's reference to the reasonable possibility standard in the proposal on procedural grounds. These commenters stated that the reasonable possibility provisions are not only insufficient, but that they are “arbitrary and capricious” because the EPA failed in the proposal of this rule to specify how the provisions of 40 CFR 52.21(r)(6) are applicable to the consideration of emissions increases and decreases in Step 1 project emissions accounting. One commenter added that “at the outset, depending on how `the project' is defined by the source operator, the plain text of [40 CFR 52.21(r)(6)], on its face, does not apply to emissions decreases.”

The EPA disagrees with these commenters. The requirements of 40 CFR 52.21(r)(6) apply when there is a reasonable possibility that the project could result in a significant emissions increase and that those units are part of the project ( i.e., their emissions “could be affected” by the project). While practically-speaking this would only apply to a project resulting in an overall increase in emissions because an overall decrease would clearly not have a reasonable possibility of triggering NSR, this does not mean that decreases cannot be considered when determining whether a project would result in an overall increase sufficient to trigger these requirements. When the reasonable possibility criteria in subparagraph (r)(6)(vi) are triggered by an overall increase, specific pre- and post-project recordkeeping, monitoring and reporting requirements in paragraph (r)(6) must be met, as described previously.

Based on the regulations themselves and the comments received, the EPA is concluding that the provisions of 40 CFR 52.21(r)(6) are sufficient for purposes of enforcing the NSR major modification applicability requirements including the clarifying revisions to those applicability requirements in this final rule.

In the proposal, we indicated that if this rule was finalized, any revisions to the regulations at 40 CFR 52.21 would apply to the EPA and reviewing authorities that have been delegated federal authority by the EPA to issue PSD permits on behalf of the EPA (via a delegation agreement with an EPA Regional Office). 101 The EPA also indicated that for state and local air agencies that implement the NSR program through EPA-approved SIPs, 102 the EPA also proposed to revise the regulations for approval of such programs (40 CFR 51.165 and 40 CFR 51.166) to be consistent with the proposed revisions to 40 CFR 52.21(a)(2)(iv). 103 For these SIP-approved programs, the EPA also indicated that if the EPA were to finalize the clarifications being proposed, reviewing authorities may not need to revise their state regulations and submit SIP revisions if the current NSR major modification applicability provisions in those regulations can be interpreted to allow for project emissions accounting or if those state and local air agencies incorporate the federal NSR regulations by reference without a date restriction. Lastly, the EPA mentioned that it was currently aware of a few states and local programs where the applicable SIP-approved regulations expressly preclude project emissions accounting. Thus, we requested comment on whether the EPA should determine that the proposed revisions to 40 CFR 51.165(a)(2)(ii)(F) and (G) and 40 CFR 51.166(a)(7)(iv)( f ) and ( g ) constitute minimum program elements that must be included in order for state and local agency programs implementing part C or part D to be approvable under the SIP. 104

Commenters expressed various positions regarding whether the proposed revisions should constitute minimum program elements that must be included for state and local programs implementing parts C or D of Title I of the CAA to be approvable under a SIP. 105 A few commenters stated that this final rule should constitute minimum program elements that must be included in an EPA-approved SIP on the basis that the changes in this final rule are clarifications of the regulations adopted by the 2002 NSR Reform Rule. Another one of these commenters stated that requiring the proposed rule revisions to be minimum program elements for programs implementing part C or part D to be approvable under a SIP would ensure national consistency.

Various commenters, however, opposed the concept of making project emissions accounting a minimum program element for programs implementing part C or part D to be approvable under a SIP. Some of these commenters noted that under section 116 of the CAA, states can adopt SIP provisions that are more stringent than those required by the EPA's regulations. A couple of commenters added that requiring the implementation of project emissions accounting would run afoul of the sovereign authority of state governments.

After reviewing the comments received on this matter, the EPA has determined that the revisions to the regulations at 40 CFR 52.21 adopted in this final rule apply to the EPA and reviewing authorities that have been delegated federal authority from the EPA to issue major NSR permits on behalf of the EPA. 106 For state and local air agencies that implement the NSR program through EPA-approved SIPs, the EPA agrees with those commenters who argued that section 116 of the CAA allows these states and local air agencies to adopt more stringent SIP emission control requirements than required by the EPA's regulations. 107 Thus, the EPA is concluding that reviewing authorities that do not allow for project emissions accounting have applicability requirements that are at least as stringent as those required by the Act or the EPA's implementing regulations and, therefore, are not required to submit SIP revisions or stringency determinations to the EPA as a result of this action. This is because sources that are not allowed to use project emissions accounting may be subject to major NSR even where a more-complete accounting of their emissions ( i.e., accounting of both emissions increases and decreases in Step 1 of the NSR major modification applicability test) would reveal that the project produced either an emissions decrease or a de minimis increase in emissions.

For SIPs approved under 40 CFR 51.166, the EPA has determined that conforming state/local plan revisions will not be subject to the deadline by which a reviewing authority is typically required to revise its implementation plan in response to amendments to the federal regulations. 108 Similarly, because the EPA views not allowing project emissions accounting to be at least as stringent as the requirements under 40 CFR 51.165, plans already approved under the current version of that section of the CFR will continue to be at least as stringent as the revised regulations and states and local air agencies will not need to submit revisions to already approved plans. 109

Two commenters asserted that the EPA was required to evaluate the environmental impacts of the proposed rule. One of these commenters argued that the EPA's lack of permitting data does not excuse the agency from conducting an analysis of the environmental impacts of the rule and that the EPA must use data from its own records and/or request data from state and local reviewing authorities to conduct such an analysis.

In the proposal preamble we indicated that we are unable at this time to estimate any potential environmental or economic impacts or changes in emissions associated with project emissions accounting because most NSR permits are issued by state and local air agencies and the EPA generally lacks information on the economic and environmental impacts of NSR permits. NSR permitting is a case-by-case process and sources make permitting decisions based on many factors. Furthermore, neither the EPA nor state and local reviewing authorities have access to any records of decisions made by sources which would indicate whether a project was or was not undertaken in view of the unavailability of project emissions accounting. We do not, for example, require the reporting of any information concerning projects that are not pursued. Thus, in the proposal, we asked that commenters provide information on particular examples that could assist the EPA in providing some level of qualitative impacts analysis when finalizing this action.

In response to this solicitation, a few commenters noted that project emissions accounting is consistent with the CAA and with the congressional intent that the PSD and NNSR preconstruction permitting programs only apply when an existing source undertakes a project resulting in a significant increase in emissions. Several commenters, however, indicated that this final rule would result in negative environmental impacts by allowing sources to forgo major NSR permitting and the associated BACT or LAER requirement. Commenters stated that the emissions increases that would result from this final rule would contravene the purpose of the NSR program to require permits where changes at industrial facilities might increase air pollution. Other commenters noted that this final rule may have the potential of reducing overall emissions by removing a disincentive for sources seeking to undertake projects that would improve the energy efficiency of their operations.

After consideration of the comments received on this matter, we would like to reiterate that this final rule will not allow projects that themselves result in a significant emissions increase ( i.e., an increase greater than de minimis levels) and a significant net emissions increase to proceed without obtaining a major NSR permit. Rather, the final rule merely clarifies the NSR major modification applicability test to allow for a more accurate accounting of a project's impacts on air quality to the surrounding area by allowing a source to consider all changes in emissions—both increase and decreases—that result from a project in its calculation of the proposed project emissions. This is consistent, rather than contrary, to the congressional intent for the NSR program. Additionally, despite a commenter's assertion that this rule will allow sources to emit more by circumventing the BACT or LAER requirements, there is no evidence to suggest that the final rule will result in greater overall emissions increases than would otherwise be allowed from projects affected by the rule. For example, as the EPA noted in the proposed rule and as indicated by some commenters, it is equally conceivable that accounting for emissions decreases in Step 1 of the NSR major modification applicability test will incentivize sources to undertake energy efficiency and/or other environmentally beneficial projects that they might otherwise have forgone. In addition, just because a project might result in a significant increase in emissions in Step 1 without the accounting for emissions decreases from the project, does not mean that the project would be subject to the BACT or LAER requirements. Such a project could still result in a net emissions decrease, or a net emissions increase that is not significant and does not trigger the major NSR permitting requirements. It is therefore improper to compare the use of project emissions accounting to the application of BACT or LAER. These outcomes are not an either-or proposition for a project that would not result in a significant emissions increase when accounting for decreases but would result in a significant emissions increase when decreases from the project are not considered in Step 1.

Several commenters submitted examples of actual projects that involved emissions decreases that would be more likely to proceed with the availability of project emissions accounting. These examples included replacement projects, projects involving the installation of control equipment, and fuel changes—projects that may result in a reduction of overall emissions but may be forgone if decreases associated with the projects are not considered. For example commenters mentioned that, a source may forgo, the installation of an end-of-life replacement to avoid NSR permitting since the emissions would appear as an emissions increase in Step 1 of the applicability determination even when the replacement would have reduced the potential emissions. While the new unit in general may be larger in capacity, their design and material changes generally entail increased efficiency and lower emissions. Newer units may also generally contain inherent emissions controls ( e.g., heaters equipped with low NO X burners) that also lower the source's overall emissions. If the source can count emissions decreases from this project under project emissions accounting, then the source may be more likely to undertake the project, or the source owner might expedite it. However, the project may be foregone if the emission decreases could only be considered as part of a more complex Step 2 contemporaneous netting analysis. Furthermore, commenters noted that proposing a project ( e.g. expansion that results in increased tank throughput and cooling capacity) may also include the installation of emissions control equipment such as installing a geodesic dome to an external floating roof tank to control volatile organic content (VOC) emissions, retrofitting a cooling water tower with drift eliminators to reduce particulate matter emissions; and/or installing dual-seal pumps to reduce fugitive VOC emissions. If the consideration of emissions decreases as part of project emissions accounting at Step 1 were not available, a project that also involves the installation of emissions control equipment that reduces overall emissions could be foregone due to the complexities of Step 2 contemporaneous netting. Project emissions accounting may also expedite the environmental benefits associated with converting a unit to a lesser-emitting fuel source. For example, when emissions decreases are considered at Step 1, a source owner or operator proposing a project that replaces existing oil-fired boilers with lesser-emitting natural gas boilers might not trigger permitting at Step 1, but it would reduce its overall emissions. If project emissions accounting were not available, the source would likely trigger Step 1 and also undergo the Step 2 analysis to determine if it needs a major modification permit for its proposed project. Under Step 2, the source owner or operator would be required to consider all other contemporaneous emissions increases and decreases from the project, usually within a five-year time period, even though the project itself would have already resulted in a decrease in the actual emissions from the facility. Therefore, a source may decide to forgo transitioning to a lesser-emitting fuel to avoid going through some of the complexities of Step 2 contemporaneous netting or potentially having to receive a major NSR permit for a project that decreases emissions. The Response to Comments document for this final action contains more details about these projects. 110

Based on the information and examples provided, the EPA believes that considering the full scope of the impact of a project ensures that congressional intent for the NSR program, to ensure environmental protection while allowing for economic growth, is met. That is to say, this rule provides more clarity to sources and reviewing authorities applying the NSR applicability test and potentially reduces the permitting burden for sources undertaking economically-beneficial projects that do not produce a greater than de minimis increase in emissions. The EPA has provided a more complete discussion of the potential environmental impacts of the rule as well as the difficulties of accurately projecting such impacts in the Environmental Justice Considerations Section of this preamble and the same analysis is provided in the Response to Comments document for this final action.

In the proposal, the EPA stated that we did not believe that the proposed revisions to the NSR major modification applicability regulations would have any effect on environmental justice communities because the EPA's NSR regulations in place since the 2002 NSR Reform Rule was finalized to allow project emissions accounting. As such, the EPA expected no increase in the permitting burden for sources, reviewing authorities or environmental justice communities after finalization of the proposed rule revisions.

Nevertheless, one commenter argued that because the proposed revisions would alter how major modifications are determined under the NSR program, they would result in fewer modifications being subject to major NSR and, therefore, the environmental justice impacts of the rule must be considered accordingly. The commenter added that it is clear that the intention of this rulemaking is to reduce the number of projects that are considered major modifications under NSR and this will reduce public health and welfare protection. According to the commenter, this is because fewer facilities will be required to ensure that the changes they are making are protective of ambient air quality and fewer facilities will be required to install pollution controls on new or modified units because their changes will not trigger NSR. Moreover, the commenter stated that environmental justice initiatives stem from the fact that facilities with the worst environmental impact are more likely to be located in areas with higher poverty rates, communities of color, or tribal lands.

We continue to believe that these rule revisions will not impact environmental justice communities in a manner that is different than any impact this rule might have in any other area of the country. As we explained in the proposal preamble, and as stated elsewhere in this preamble, we interpret our regulations to already allow for project emissions accounting even in the absence of this rule. This rulemaking will only serve to provide greater clarity with respect to the major NSR applicability procedures and, thus, will incentivize states to implement project emissions accounting at their discretion. This improved clarity itself confers potential benefits to environmental justice communities by removing a disincentive to the implementation of energy efficiency improvements and other environmentally beneficial projects at industrial sources for sources that might have forgone these projects due to the complexity of the Step 2 contemporaneous netting analysis.

However, to aid stakeholders in their assessment of the potential impacts of this action and to be responsive to the comments received, we did perform a qualitative analysis of a few examples of actual projects that may reduce air emissions due to the availability of project emissions accounting at Step 1 of the NSR major modification applicability test. These examples are based on the comments received during the public comment period for this final action, are included as part of the Response to Comments document for this final action and are also summarized in the next few paragraphs of this section of the preamble. This analysis, however, does not provide a qualitative estimate of the potential environmental impacts of accounting for emissions decreases at Step 1 of the NSR major modification applicability test since the commenters did not provide information of any potential emissions increases or decreases that would have occurred in these examples based on the availability of project emissions accounting at Step 1. 111

Examples of replacement projects: A source may forgo, the installation of an end-of-life replacement to avoid NSR permitting since the emissions would appear as an emissions increase in Step 1 of the applicability determination even when the replacement would have reduced the potential emissions. While the new unit in general may be larger in capacity, their design and material changes generally entail increased efficiency and lower emissions. Newer units may also generally contain inherent emissions controls ( e.g., heaters equipped with low NO X burners) that also lower the source's overall emissions. If the source can count emissions decreases from this project under project emissions accounting, then the source may be more likely to undertake the project, or the source owner might expedite it. However, the project may be foregone if the emission decreases could only be considered as part of a more complex Step 2 contemporaneous netting analysis.

Examples of projects involving the installation of emissions control equipment: Proposing a project ( e.g. expansion that results in increased tank throughput and cooling capacity) may also include the installation of emissions control equipment such as installing a geodesic dome to an external floating roof tank to control volatile organic content (VOC) emissions, retrofitting a cooling water tower with drift eliminators to reduce particulate matter emissions; and/or installing dual-seal pumps to reduce fugitive VOC emissions. If the consideration of emissions decreases as part of project emissions accounting at Step 1 were not available, a project that also involves the installation of emissions control equipment that reduces overall emissions could be foregone due to the complexities of Step 2 contemporaneous netting.

Examples of projects involving fuel changes: Project emissions accounting may also expedite the environmental benefits associated with converting a unit to a lesser-emitting fuel source. For example, when emissions decreases are considered at Step 1, a source owner or operator proposing a project that replaces existing oil-fired boilers with lesser-emitting natural gas boilers might not trigger permitting at Step 1, but it would reduce its overall emissions. If project emissions accounting were not available, the source would likely trigger Step 1 and also undergo the Step 2 analysis to determine if it needs a major modification permit for its proposed project. Under Step 2, the source owner or operator would be required to consider all other contemporaneous emissions increases and decreases from the project, usually within a five-year time period, even though the project itself would have already resulted in a decrease in the actual emissions from the facility. Therefore, a source may decide to forgo transitioning to a lesser-emitting fuel to avoid going through some of the complexities of Step 2 contemporaneous netting or potentially having to receive a major NSR permit for a project that decreases emissions.

While this rule may allow projects that produce an overall de minimis increase in emissions to forgo the major NSR permitting process, the EPA believes that it is equally conceivable that the rule will create an incentive for sources to adopt emissions-reducing processes and technology (that may represent control beyond what would be required for BACT or LAER) that they would not have otherwise adopted if project emissions accounting were not available. At the very least, the final rule may expedite efficiency-enhancing projects that would have otherwise require a more complex and potentially burdensome Step 2 analysis to determine that the efficiency-enhancing projects would have “netted out” or not be subject to major NSR permitting. These efficiency improvements may have collateral benefits.

The EPA also notes that projects at existing major stationary sources that are determined not to trigger major NSR permitting requirements, will, in many or most cases, be subject to minor NSR permitting requirements, regardless of the accounting procedures used in determining major NSR applicability. Minor NSR permit actions require the opportunity for public comment, 112 which provides an opportunity for stakeholders to raise potential environmental justice concerns based on the characteristics of the project and the location of the project relative to any environmental justice communities within the vicinity of the source.

Furthermore, while the EPA shares the commenter's concerns regarding the potential impacts of air pollution on environmental justice communities, the EPA notes that the NSR program is but one of many programs that address air pollution under the Clean Air Act.

In addition, and as noted elsewhere in this preamble and in the Response to Comments document for this final action, the EPA views project emissions accounting as being fully consistent with the Act and the 2002 NSR Reform Rule. Allowing for project emissions accounting will ensure that a project that itself results in a de minimis increase in emissions, or even a decrease in emissions, will not be subject to major NSR. As stated previously, the NSR program was designed to ensure environmental protection while allowing for economic growth by managing increases in emissions from economic development. The EPA believes that project emissions accounting properly balances those interests. In addition, as noted elsewhere, reviewing authorities have the discretion to not allow project emissions accounting and to create or maintain requirements under their SIPs that are at least as stringent as the requirements specified in the EPA's regulations.

Finally, current analytical tools and methods do not allow for a more quantitative analysis of environmental and economic costs associated with the NSR applicability test at this time. However, the EPA will consider whether any newly developed analytical tools or methods would allow for such a quantitative analysis in connection with some future NSR regulatory action.

This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review since it raises policy issues arising from the President's priorities. Any changes made in response to OMB recommendations have been documented in the docket as required by section 6(a)(3)(E) of Executive Order 12866.

This action is considered an Executive Order 13771 deregulatory action. Before completing this rule, the EPA interpreted its NSR regulations to allow for project emissions accounting. To the extent the clarifications included in this rule influence the actions of sources and reviewing authorities to increase the use of project emissions accounting, this final rule will provide burden reduction.

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 numbers 2060-0003 for the PSD and NNSR permit programs. The burden associated with obtaining an NSR permit for a major stationary source undergoing a major modification is already accounted for under the approved information collection requests.

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. Before this rule was finalized, the EPA interpreted its NSR regulations to allow for project emissions accounting and, as such, no increased or decreased burden is expected for sources or reviewing authorities after the finalization of the clarifications included in this rule. Furthermore, the EPA is not making the regulatory changes in this final rule mandatory for adoption and, as such, only major stationary sources located in areas where reviewing authorities decide to newly implement project emissions accounting might see a burden reduction if the consideration of emissions increases and decreases in Step 1 does not trigger further permitting requirements that may have otherwise required these major stationary sources to obtain a major NSR permit.

This action does not contain any unfunded federal 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.

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. The EPA's NSR major modification applicability regulations in place after the 2002 NSR Reform Rule allow for the consideration of emissions increases and decreases in Step 1 of the NSR major modification applicability test and, as such, the clarifying revisions being proposed in this rule will not have exclusive tribal implications. Furthermore, the EPA is currently the reviewing authority for PSD and NNSR permits issued in tribal lands and, as such, the clarifying revisions being proposed will not impose direct burdens on tribal authorities. 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 a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution or use of energy. In addition, and before this rule was finalized, the EPA interpreted its NSR regulations to allow for project emissions accounting and, as such, no increased burden is expected for sources or reviewing authorities after the finalization of the clarifications included in this rule. Furthermore, the EPA is not making the regulatory changes in this final rule mandatory for adoption and, as such, only major stationary sources located in areas where state and local reviewing authorities decide to newly implement project emissions accounting might see a burden reduction if the consideration of emissions increases and decreases in Step 1 does not trigger further permitting requirements that may have otherwise required these major stationary sources to obtain a major NSR permit.

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 populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). Before this rule was finalized, the EPA interpreted its NSR regulations to allow for project emissions accounting and this action only finalized clarifying revisions to the NSR major modification applicability regulations. Further information on the Environmental Justice considerations are included in Section IV of this final action's preamble.

This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under CAA section 307(b)(1), petitions for judicial review of any nationally applicable regulation, or any action the Administrator “finds and publishes” as based on a determination of nationwide scope or effect must be filed in the United States Court of Appeals for the District of Columbia Circuit within 60 days of the date the promulgation, approval, or action appears in the Federal Register . 113 This action is nationally applicable, as it clarifies the applicability provisions that apply to Step 1 of the NSR major modification applicability test in 40 CFR 51.165, 51.166, 52, and appendix S to part 51. As a result, petitions for review of this final action must be filed in the United States Court of Appeals for the District of Columbia Circuit by January 25, 2021. Filing a petition for reconsideration by the Administrator of this final action 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 must be filed and shall not postpone the effectiveness of this action. 114

The statutory authority for this action is provided by 42 U.S.C. 7401, et seq.

For the reasons stated in the preamble, title 40, chapter I of the Code of Federal Regulations is amended as follows:

This IFR is organized as follows:

If you submit a comment, please include the docket number for this IFR (FMCSA-2018-0348), indicate the specific section of this document to which your comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.

To submit your comment online, go to: http://www.regulations.gov/#!docketDetail;D=FMCSA-2018-0348, click on the “Comment Now!” button, and type your comment into the text box on the following screen. Choose whether you are submitting your comment as an individual or on behalf of a third party and then submit.

If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they have reached the facility, please enclose a stamped, self-addressed postcard or envelope.

FMCSA will consider all comments and material received during the comment period and may change this IFR based on your comments. FMCSA may issue a final rule at any time after the close of the comment period.

Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA, 5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this IFR contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this IFR, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission that constitutes CBI as “PROPIN” to indicate it contains proprietary information. FMCSA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this IFR. Submissions containing CBI should be sent to Mr. Brian Dahlin, Chief, Regulatory Analysis Division, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE, Washington DC 20590. Any comments that FMCSA receives which are not specifically designated as CBI will be placed in the public docket for this rulemaking.

To view comments, as well as any documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov/#!docketDetail;D=FMCSA-2018-0348 and choose the document to review. If you do not have access to the internet, you may view the docket online by visiting Dockets Operations in Room W12-140 on the ground floor of the DOT West Building, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. To be sure someone is there to help you, please call (202) 366-9317 or (202) 366-9826 before visiting Dockets Operations.

In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice DOT/ALL-14 FDMS, which can be reviewed at https://www.transportation.gov/privacy.

Congress defined “agricultural commodity” as “any agricultural commodity, non-processed food, feed, fiber, or livestock (including livestock as defined in [7 U.S.C. 1471] and insects.)” The existing regulatory text in 49 CFR 395.2 adopts, without substantive change, the statutory definition of “agricultural commodity.” Currently, under Federal statute and regulation, commercial motor vehicle (CMV) drivers transporting agricultural commodities from the source of the commodities to a location within 150 air miles of the source, during harvest and planting seasons as defined by each State, are exempt from the HOS requirements (49 CFR 395.1(k)(1)). Furthermore, § 395.1(v) exempts drivers transporting livestock in interstate commerce from the 30-minute rest break requirement while the livestock are on the CMV. The definition of “livestock” in § 395.2 restates the definition in sec. 602 of the Emergency Livestock Feed Assistance Act of 1988 (the 1988 Act), as amended in 7 U.S.C. 1471.

In July 2019, FMCSA published an Advance Notice of Proposed Rulemaking (ANPRM) requesting assistance from stakeholders in determining whether, and to what extent, the Agency should clarify key terms used in the definition of “agricultural commodity” in § 395.2 (84 FR 36559 (July 29, 2019)). The Agency, noted, for example, that broad terms such as “any agricultural commodity” are subject to multiple interpretations, and have led to inconsistent application of the HOS exemption in § 395.1(k)(1). Based on comments to the ANPRM, discussed further below, as well as ongoing inquiries from the State enforcement partners, FMCSA codifies its interpretation of the meaning of the following terms in § 395.2: “any agricultural commodity,” “non-processed food,” and “livestock.” The purpose of the definitional clarifications is to ensure that the HOS exemptions in §§ 395.1(k)(1) and 395.1(v) are consistently understood and enforced. The definitional clarifications may affect the extent to which the HOS exemptions apply to transporters of certain agricultural commodities, including livestock. For reasons identified below, FMCSA currently does not have sufficient information to estimate the quantitative impact of these clarifications on carriers or drivers who use the exemptions or on the vehicle miles traveled (VMT). As discussed further below, the Agency asks stakeholders to address these issues when commenting on the impact of the IFR on their operations.

The ambiguity associated with the definitions of the exemptions in §§ 395.1(k)(1) and 395.1(v) currently may be hindering consistent enforcement practices, thereby impacting business-related decisions for the hauling of agricultural commodities and livestock, resulting in unnecessary costs and disbenefits. By clarifying the definitions of “agricultural commodity,” “non-processed food,” and “livestock,” the IFR will create a common understanding between FMCSA, motor carriers, drivers, and enforcement officials.

While this rule merely clarifies an ambiguous definition without changing any substantive requirements, some regulated entities and enforcement officials may change their behavior in response to this rule. In theory, there are two groups of CMV drivers whose behavior may be impacted by this IFR: (1) Those to whom the definitions of “agricultural commodity,” “non-processed food,” and “livestock” apply but who currently do not use an exemption due to the existing definitional ambiguity, and (2) those who currently use an exemption in §§ 395.1(k)(1) or 395.1(v), and may no longer do so as a result of the clarifications. Drivers who use these exemptions as a result of the clarification provided in this interpretative rule may potentially realize cost savings, and those who no longer use an exemption as a result of this clarification may incur costs.

The Agency does not collect information on the number of drivers currently using the agricultural commodity or livestock exemptions, nor do we know the extent to which State-based enforcement practices vary due to definitional ambiguity. There is uncertainty surrounding the number of drivers who are currently not utilizing an exemption due to definitional ambiguity and may therefore realize the associated cost savings as a result of this rule. The Agency does not, therefore, estimate quantitative impacts associated with this IFR, opting instead for a qualitative analysis. Specifically, FMCSA expects any increase in the number of exemptions used will be by transporters of perishable horticultural commodities, non-processed food, or livestock, including aquatic animals.

Section 204(a) of the Motor Carrier Act of 1935 (Pub. L. 74-255, 49 Stat. 543, 546, August 9, 1935), as codified at 49 U.S.C. 31502(b), authorizes the Secretary of Transportation (Secretary) to “prescribe requirements for—(1) qualifications and maximum hours of service of employees of, and safety of operation and equipment of, a motor carrier; and (2) qualifications and maximum hours of service of employees of, and standards of equipment of, a motor private carrier, when needed to promote safety of operation.” This IFR pertains to the maximum HOS of drivers transporting agricultural commodities by CMV.

The Motor Carrier Safety Act of 1984 provides concurrent authority to regulate drivers, motor carriers, CMVs, and vehicle equipment. Section 206(a) of the Act (98 Stat. 2834), codified at 49 U.S.C. 31136(a), grants the Secretary broad authority to issue regulations “on commercial motor vehicle safety.” The regulations must ensure that “(1) commercial motor vehicles are maintained, equipped, loaded, and operated safely; (2) the responsibilities imposed on operators of commercial motor vehicles do not impair their ability to operate the vehicles safely; (3) the physical condition of operators of commercial motor vehicles is adequate to enable them to operate the vehicles safely. . .; (4) the operation of commercial motor vehicles does not have a deleterious effect on the physical condition of the operators; and (5) an operator of a commercial motor vehicle is not coerced by a motor carrier, shipper, receiver, or transportation intermediary to operate a commercial motor vehicle in violation of a regulation promulgated under this section, or chapter 51 or chapter 313 of this title.” (49 U.S.C. 31136(a)(1)-(5)).

This IFR primarily addresses the safety of the vehicle and driver (49 U.S.C. 31136(a)(1)-(2)), and secondarily, the health of the driver (section 31136(a)(4)). This IFR does not directly address medical standards for drivers (section 31136(a)(3)). FMCSA does not anticipate that drivers would be coerced as a result of the proposed clarifying changes (section 31136(a)(5)).

More specifically, this IFR is based on a statutory exemption from HOS requirements for CMV drivers transporting “agricultural commodities . . . during planting and harvesting periods, as determined by each State.” The exemption was initially enacted as Sec. 345(a)(1) of the National Highway System (NHS) Designation Act of 1995 (Pub. L. 104-59, 109 Stat. 568, 613, November 28, 1995).

Section 4115 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU, Pub. L. 109-59, 119 Stat. 1144, 1726, August 10, 2005) retroactively amended the Motor Carrier Safety Improvement Act of 1999 (MCSIA, Pub. L. 106-159, 113 Stat. 1748, December 9, 1999) by transferring Sec. 345 to new Sec. 229 of MCSIA (113 Stat. 1773). Section 4130 of SAFETEA-LU then revised section 229, as transferred by section 4115, mainly by adding definitions of “agricultural commodity” and “farm supplies for agricultural purposes” (119 Stat. 1743), as discussed further below. These definitions are codified at 49 CFR 395.2. Section 32101(d) of the Moving Ahead for Progress in the 21st Century Act (MAP-21, Pub. L. 112-141, 126 Stat. 405, 778, July 6, 2012) revised section 229 again, mainly by expanding the 100 air-mile radius of the exemption to 150 air miles.

The IFR is also based on a statutory exemption from the HOS requirement for a 30-minute rest break for CMV drivers transporting livestock in interstate commerce, set forth in section 5206(b)(1)(C) of the Fixing America's Surface Transportation Act (FAST Act, Pub. L. 114-94, 129 Stat. 1312, 1537, December 4, 2015).

Before prescribing any regulations, FMCSA must also consider the “costs and benefits” of its proposal (49 U.S.C. 31136(c)(2)(A) and 31502(d)).

This IFR is consistent with DOT's regulations on rulemaking procedures set forth at 5 CFR part 5, subpart B. Specifically, the IFR embodies the regulatory policies that regulations should be straightforward and clear (49 CFR 5.5(d)) and that “[o]nce issued, regulations and other agency actions should be reviewed periodically and revised to ensure that they continue to meet the needs they were designed to address and remain cost-effective and cost-justified” (49 CFR 5.5(h)). This IFR also complies with the requirements that final rules shall be written in plain and understandable English (49 CFR 5.13(k)(3)(i)) and based on a reasonable and well-founded interpretation of relevant statutory text (49 CFR 5.13(k)(3)(ii)).

The Administrator of FMCSA is delegated authority under 49 CFR 1.87(f) and (i) to carry out the functions vested in the Secretary by 49 U.S.C. chapters 311 and 315, respectively, as they relate to CMV operators, programs, and safety.

The Administrative Procedure Act (APA) (Pub. L. 79-404, 60 Stat. 237), codified at 5 U.S.C. 553, provides that notice and public comment procedures are not applicable to “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice” (5 U.S.C. 553(b)(A)). Furthermore, DOT's rulemaking procedures provide that prior notice and an opportunity for comment are not required for rules of interpretation (49 CFR 5.13(j)(1)(i)). The APA defines “rule” as “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy” (5 U.S.C. 551(4)) (emphasis added). The Attorney General's Manual on the Administrative Procedure Act further defines interpretative rules as “rules or statements issued by an agency to advise the public of the agency's construction of the statutes and rules which it administers.”  1 Because this IFR is an interpretative rule within the meaning of the APA, prior notice and public comment are not required.

In determining whether a rule is “legislative” (and thus generally subject to the APA's notice and comment requirements) rather than “interpretative,” among the factors courts consider are whether, in the absence of a legislative rule, an agency has adequate basis for enforcement action; whether the rule leaves the agency with any discretion; and whether the rule repudiates or is irreconcilable with a prior legislative rule. Each of these factors is addressed briefly below.

As explained below in Section V. Discussion of Interim Final Rule, the IFR clarifies the terms “any agricultural commodity,” “non-processed food,” and “livestock,” currently included in the definition of “agricultural commodity” in 49 CFR 395.2. The IFR does not establish any new terms not already included in the existing statutory and regulatory definitions of “agricultural commodity,” and does not create any new rights or impose new regulatory burdens. 2 Nor does the IFR expand the Agency's existing authority to enforce the exemptions set forth in 49 CFR 395.1(k) and (v); as noted in the Legal Basis discussion above, FMCSA currently has delegated authority to determine and enforce compliance with the exemptions. 3 FMCSA codifies these definitional clarifications to promote more consistent understanding of existing terms so the exemptions are utilized and applied consistently. Because this IFR amends the regulatory text in 49 CFR 395.2, the IFR has “binding effect” in the same sense that the existing definitions have binding effect. The Agency notes, however, the clarifications set forth in the IFR are inclusive rather than exclusive, and therefore permit the Agency continued discretion to determine whether the exemptions apply in specific circumstances  4 as discussed further below in Section V. Lastly, the IFR does not contradict a prior legislative rule simply by clarifying the meaning of current definitional terms. 5

This IFR includes a 30-day post-publication comment period, and the Agency seeks input on specified issues. FMCSA will consider and address submitted comments in the final rule that will follow this IFR and may make changes to the rule in response to comments received.

In accordance with 5 U.S.C. 553(d)(2), this IFR will become effective less than 30 days after publication. As noted above, the effective date is December 9, 2020.

The HOS regulations, as set forth in 49 CFR part 395, limit property-carrying CMV drivers to 11 hours of driving time within a 14-hour period after coming on duty following 10 consecutive hours off duty. On June 1, 2020, the FMCSA published a final rule updating the HOS regulations for CMV drivers [85 FR 33396]. The rule, effective on September 29, 2020, revises the HOS requirements to provide greater flexibility for drivers without adversely affecting safety. The Agency expanded the short-haul exception to 150 air-miles and allows a 14-hour work shift to take place as part of the exception.

Under the HOS regulations, drivers may not drive after accumulating 60 hours of on-duty time in any 7 consecutive days, or 70 hours in any 8 consecutive days. Generally, drivers of property-carrying CMVs may restart the 60- or 70-hour clock by taking 34 consecutive hours off duty. As discussed further below, the time spent transporting an agricultural commodity within the 150 air-mile radius from the source does not count against the limits on maximum driving. On-duty time does not apply during harvest and planting periods, as determined by each State, to drivers transporting agricultural commodities (and farm supplies for agricultural purposes) from the source of the commodities to a location within a 150 air-mile radius of the source. In addition, the 30-minute rest break requirement does not apply, even outside of the 150-air-mile radius, to CMV drivers transporting livestock while the livestock are on the vehicle.

On June 7, 2018, FMCSA issued regulatory guidance on the transportation of agricultural commodities as defined in § 395.2 (83 FR 26374). The guidance addressed various issues related to the statutory term “source of the commodities,” but it did not directly address the scope or meaning of the term “agricultural commodity.” Specifically, the June 2018 guidance addressed: Drivers operating unladen CMVs en route to pick up an agricultural commodity or returning from a delivery point; drivers engaged in trips beyond the 150 air miles of the source of the commodity; determining the “source” of agricultural commodities for purposes of the exemption; and how the exemption applies when agricultural commodities are loaded at multiple sources during a trip.

As noted above in Section III. Legal Basis for the Rulemaking, Congress initially adopted the HOS exemption for the transportation of agricultural commodities, during harvesting and planting seasons as defined by each State, in 1995 as part of the NHS Designation Act. Congress did not, however, define the term “agricultural commodities” at that time. The Agency added, verbatim, the statutory exemption to its HOS regulations (61 FR 14677, April 3, 1996). In 2005, as part of SAFETEA-LU, Congress adopted the current definition of agricultural commodity: “The term ` agricultural commodity' means any agricultural commodity, food, feed, fiber, or livestock (including livestock as defined in sec. 602 of the Emergency Livestock Feed Assistance Act of 1988 [7 U.S.C. 1471] and insects), and any product thereof.”

The Agency subsequently added this statutory definition of “agricultural commodity,” verbatim, to § 395.2 (72 FR 36760, July 5, 2007). At that time, section 602 of the 1988 Act, cross-referenced in the SAFETEA-LU definition of “agricultural commodity,” defined “livestock” as “cattle, elk, reindeer, bison, horses, deer, sheep, goats, swine, poultry (including egg-producing poultry), fish used for food, and other animals designated by the Secretary of Agriculture that are part of a foundation herd (including dairy producing cattle) or offspring; or are purchased as part of a normal operation and not to obtain additional benefits under the 1988 Act, as amended.”

On July 22, 2016, the Agency amended § 395.2 by adding a free-standing definition for the term “livestock,” which restated, without substantive change, the definition of livestock set forth in the 1988 Act, referenced above (81 FR 47721). The addition of a separate definition of the term “livestock” to § 395.2 was part of FMCSA's final rule implementing certain requirements of the FAST Act. Section 5206(b)(1)(C) of the FAST Act made permanent a regulatory exemption  6 from the 30-minute rest break required under the HOS regulations (§ 395.3(a)(3)(ii)), for drivers transporting livestock. The 2016 final rule implemented this FAST Act requirement by adding new § 395.1(v).

In section 12104 of the Agricultural Improvement Act of 2018 (2018 farm bill, Pub. L. 115-334, 132 Stat. 4490, December 20, 2018), Congress amended the definition of “livestock” in the 1988 Act by removing the term “fish used for food” and adding “llamas, alpacas, live fish, crawfish, and other animals that” to the phrase “are part of a foundation herd (including dairy producing cattle) or offspring; or are purchased as part of a normal operation and not to obtain additional benefits [under the Act of 1988].” The 2018 farm bill also removed the Secretary of Agriculture's discretion to designate animals as livestock in addition to those specifically listed in the statute. On September 30, 2019, FMCSA conformed the text of the definition of “livestock” in § 395.2 to the change made to the 1988 Act by the 2018 farm bill (84 FR 51427, 51430). The Agency's conforming change added llamas, alpacas, live fish and crawfish, and deleted the term “fish used for food,” and removed the reference to the Secretary of Agriculture's discretion to designate additional animals.

As noted above, in July 2019, FMCSA issued an ANPRM requesting input from stakeholders in determining how the Agency could clarify the definitions of the terms “agricultural commodity” or “livestock” in the HOS regulations, while remaining consistent with the underlying statutory requirement for a limited exemption from the HOS requirements for CMV drivers transporting these commodities. The ANPRM posed questions specifically addressing the need for FMCSA to clarify the current definitions of the terms “agricultural commodity” or “livestock” in § 395.2, and the benefits and costs of clarifying or revising these definitions, including related impacts on highway safety. Additionally, FMCSA requested comment on the extent to which the current definitions (as understood or applied) conflict, or are otherwise inconsistent, with regulations administered by the U.S. Department of Agriculture (USDA), such as the Perishable Agricultural Commodities Act (PACA) (7 U.S.C. 449a(1)).

The Agency received 140 comments in response to the ANPRM. 7 Commenters represented the following industries/organizational types: 12 commenters represented State agricultural bureaus; six from State agricultural trade associations; eight represented haulers of sod; 10 represented private-sector agricultural trade associations; two were from trucking associations; one from a trade safety organization; another represented a private company; and 100 others responded as individual commenters.

In the ANPRM, FMCSA asked how specific commodities, such as sod or other types of horticulture, fit within the definition of the term “any agricultural commodity.”

Nearly half of the comments addressed Question 1, which asked whether specific products, such as sod or other types of horticulture, should be included in the definition of “agricultural commodity.” Commenters stated that various forms of horticulture, such as flowers, shrubs, sod, and Christmas trees, are agricultural commodities and that, due to the risk of perishability in transit, drivers transporting these products should be eligible for the HOS exemption in § 395.1(k)(1). Most commenters opposed including a finite list of types of agricultural commodities as part of the definition in § 395.2, though some favored cross-referencing the list of “perishable” commodities recognized by USDA under the PACA regulations.

The Agency received no information concerning the average and maximum length of trip for specific agricultural commodities, as requested in Question 5. Question 5 also asked whether the definition of “livestock ” should include specific animals in addition to those already identified in the 1988 Act (including those added by the 2018 farm bill). While some commenters supported the idea of including a finite list of animals in the definition of “livestock” (in addition to the species already identified in the 1988 Act, as amended), most who addressed this issue said that FMCSA should interpret the term comprehensively to include all living animals. The Agency received limited response to question 10, concerning a motor carrier's exposure to financial liability resulting directly from a driver's compliance with the HOS regulations.

Several commenters noted that confusion caused by the current definition of “agricultural commodity” impacts safety by undermining uniformity of enforcement and the underlying safety benefits of the HOS regulations. One commenter suggested that FMCSA adopt a more specific definition of the term, but not in a way that could adversely impact safety by increasing the number of drivers eligible for the HOS exemption in § 395.1(k)(1). FMCSA notes that additional comments to the ANPRM, addressing specific aspects of the terms the Agency clarifies, are discussed below.

Based on issues raised by commenters to the ANPRM, summarized above, as well as ongoing inquiries from FMCSA's State partners who enforce State HOS requirements compatible with the Federal rules, the Agency concludes that the definitions of “agricultural commodity” and “livestock,” as used in § 395.2, are not uniformly understood among stakeholders. To facilitate more consistent understanding of these terms, and therefore more consistent enforcement of the HOS exemption in § 395.1(k)(1) and the 30-minute rest break exemption in § 395.1(v), FMCSA codifies its interpretation of their meaning. The Agency notes that the current regulatory definitions of “agricultural commodity” and “livestock,” restate, without substantive change, the text of the underlying statutes identified above. The Agency's interpretation of these terms does not fundamentally alter that statutory framework.

As noted above, Congress adopted the current definition of “agricultural commodity” in 2005, as currently restated in § 395.2: “ Agricultural commodity means any agricultural commodity, non-processed food, feed, fiber, or livestock (including livestock as defined in sec. 602 of the Emergency Livestock Feed Assistance Act of 1988 [7 U.S.C. 1471] and insects).” The Agency notes that, in setting forth this statutory definition, Congress drew from existing references in Title 7 (Agriculture) of the United States Code (U.S.C.): (1) The Agricultural Trade Act of 1978 (7 U.S.C. 5602);  8 and (2) the Act of 1988 (7 U.S.C. 1471(2)). In seeking to clarify the meaning of three key terms used in the definition of “agricultural commodity,” FMCSA also looks to Title 7 for guidance, as discussed below.

In § 395.2, “agricultural commodity” is defined, in part, as “any agricultural commodity.” As noted in the ANPRM, this definition is ambiguous. On one hand, the term “any agricultural commodity” is broad. On the other hand, the term must be understood and interpreted within the context of the HOS requirements, which are intended to prevent CMV-involved crashes caused by driver fatigue due to working long hours. The exemption in § 395.1(k)(1), which allows additional driving and working hours for drivers transporting agricultural commodities, is intended to facilitate timely delivery of agricultural commodities during State-defined harvest and planting seasons. Because the statute includes the term “any agricultural commodity,” in the definition of “agricultural commodity,” the most direct reading of the statute is that the definition also covers agricultural products not otherwise considered to be “non-processed food, feed, fiber, or livestock.”  9 The IFR therefore clarifies the meaning of “any agricultural commodity” when determining whether a driver is eligible for the HOS exemption in § 395.1(k)(1).

In the ANPRM, FMCSA asked how specific commodities, such as sod or other types of horticulture, fit within the definition of the term “any agricultural commodity.” Most commenters addressing this question urged FMCSA to clarify that perishable horticultural products are included in the definition of “any agricultural commodity.” A number of commenters provided documentation that horticultural products not used for food or feed, and not sources of fiber, are nevertheless defined or considered as agricultural commodities in various statutes and programs administered by USDA, as well as by other Federal agencies ( e.g., the Internal Revenue Service, the Environmental Protection Agency). The New Jersey Department of Agriculture stated, for example, that “sod is defined as an agricultural product by State Departments of Agriculture across the country, including the New Jersey Department of Agriculture.”

In addition, some commenters provided information, as requested in the ANPRM, addressing the perishability, or degradation in quality, of certain horticultural products during transport by CMV. They explained the impact of post-harvest transportation on factors that determine plant health, such as temperature, exposure to light, and humidity levels. Industry groups noted that plant health largely dictates the commercial value of these products. According to the University of Georgia's College of Agriculture & Environmental Science, Department of Horticulture (the University), although certain horticultural products, such as ornamental plants, are typically transported in a refrigerated environment, reducing the temperature in the cargo container does not prevent damage to plant tissue caused by the release of ethylene, it merely slows that process. The University concluded that “[l]ive plants must be transported as quickly as possible from the producer to the consumer to mitigate damage.” The Agency also heard from industry groups documenting the importance of transporting and laying sod within 24 hours of harvest to ensure “quality establishment.”

The IFR clarifies that horticultural products subject to perishability or significant degradation in product quality during transport by CMV fall within the meaning of “any agricultural commodity,” as the term is used in the definition of “agricultural commodity” in § 395.2. For example, the Agency considers plants, including sod, flowers, ornamentals, seedlings, shrubs, live trees, and Christmas trees, within the scope of the definition. The definition does not include those horticultural products which are not sensitive to temperature and climate and do not risk perishability while in transit, such as timber harvested for lumber, or wood pulp or related products. FMCSA invites comment on whether this clarification, i.e., “horticultural products subject to perishability or significant degradation in product quality during transport by CMV,” sufficiently delineates which products fall within the definition of “any agricultural commodity” for purposes of the exemption in § 395.1(k)(1).

Additionally, the Agency requests assistance in determining the number of CMV drivers transporting perishable horticultural commodities who currently use the exemption in § 395.1(k); the extent to which that number would be higher or lower as a result of the clarification; and the average and maximum times CMV drivers travel when transporting specific perishable horticultural commodities, as described above.

The ANPRM requested comment on how the term “non-processed” as used in the definition of “agricultural commodity” in § 395.2, is currently understood and applied.

All commenters who addressed this issue stated or implied that, in their understanding, “non-processed” modifies only the term “food” and does not modify “feed, fiber, or livestock.” The Agency agrees with this interpretation, and with commenters who noted that, as a matter of grammatical construction, the placement of a comma after “non-processed food” separates it from the other items listed.

The ANPRM also asked commenters to address the distinction between “processed” and “non-processed,” and requested specific examples of “non-processed” products. In response, some commenters noted confusion and inconsistency among State enforcement personnel concerning the extent to which certain types of “processing” render a food commodity to be considered “processed” instead of “non-processed.” For example, in some areas fresh fruits or vegetables are considered “processed” if they are bagged or cut ( e.g., cut and bagged lettuce) while in other locations, commodities subject to this type of minimal processing are deemed “non-processed” for the purpose of applying the HOS exemption.

In the ANPRM, FMCSA noted that USDA statutes and regulations define “agricultural commodity” in a variety of ways, depending on the underlying statutory framework. We asked whether transporters subject to both the HOS and USDA regulations, such as PACA, 10 are impacted by not having consistent definitions of the term “agricultural commodity.” FMCSA also asked whether specific food commodities, such as fresh fruits and vegetables (in non-frozen form) individually identified in the PACA regulations, should be added to the definition of “agricultural commodity” in § 395.2. Most commenters who responded to these questions believed FMCSA should identify the categories of non-processed food included in the definition, rather than adopt, or incorporate by reference, a specific list of fruits and vegetables and other non-processed food commodities.

When considering this issue, FMCSA relied on the relevant statutory limitations: To use the HOS exemption in § 395.1(k)(1), the CMV driver must be transporting non-processed food products; and the transportation must occur within planting and harvesting seasons, as defined by each State. Harvest denotes the time of year that a crop is ripe, ready, and needs to be gathered or reaped, to avoid losses in quality and commercial value; the exemption is thus intended to accommodate the transportation of “harvested” food commodities. In keeping with the statutory parameters noted above, the Agency clarifies that “non-processed food” means food commodities in a raw or natural state and not subjected to significant post-harvest changes to enhance shelf life. For definitional purposes, it is difficult to determine precisely the point at which food commodities are no longer “non-processed” within the meaning of the exemption; indeed, that point may vary depending on the nature of the food product. Therefore, some degree of enforcement discretion must be expected in determining whether the exemption applies to CMV drivers transporting these products.

The guiding principle here is whether the product has been processed to the point that it loses its original post-harvest identity and becomes a different item. Accordingly, FMCSA clarifies that “non-processed food,” as the term is used in § 395.2, includes fruits, vegetables, and cereal and oilseed crops which have been minimally processed by cleaning, cooling, trimming, cutting, shucking, chopping, bagging, or packaging to facilitate transport by CMV. Products subject to post-harvest changes, such as jarring, canning, drying, or freezing, are not “non-processed food.” This clarification is consistent with FMCSA's regulatory guidance addressing application of the 150 air-mile exemption in § 395.1(k)(1), in which the Agency noted that a “source” of the commodity may be an intermediate storage or handling location away from the farm or field, “ provided the commodity retains its original form and is not significantly changed by any processing or packing.”   11

The Agency's interpretation of the term “non-processed food” is also generally consistent with the definition of fresh fruits and vegetables in the PACA regulations, except that frozen fruits and vegetables do not fall within the definition of “non-processed food”  12 described above. Accordingly, drivers transporting non-frozen fresh fruits and vegetables subject to the PACA regulations in 7 CFR part 46 are eligible for the exemption in § 395.1(k)(1), as long as the fruits and vegetables are “non-processed food” within the meaning of § 395.2.

The Agency requests comment on whether the clarification will result in more consistent application of the HOS exemption for drivers transporting “non-processed food.” If not, how could the meaning of the term be further clarified? FMCSA also seeks qualitative and quantitative data to determine whether the clarification will affect the number of CMV drivers transporting “non-processed food” who would use the HOS exemption in § 395.1(k)(1), and the average and maximum travel times when transporting “non-processed food,” as described above.

As previously discussed, the definition of “livestock” in § 395.2 restates, without substantive change the current definition of the term in Sec. 602 of the 1988 Act, as amended by the 2018 farm bill: “Livestock means cattle, elk, reindeer, bison, horses, deer, sheep, goats, swine, poultry (including egg-producing poultry), llamas, alpacas, live fish, crawfish, and other animals that are part of a foundation herd (including dairy producing cattle) or offspring; or are purchased as part of a normal operation and not to obtain additional benefits under the Emergency Livestock Feed Assistance Act of 1988, as amended.”

In the ANPRM, FMCSA noted that the definition of the term “livestock,” as used in the statutory definition of “agricultural commodity” and restated in § 395.2, includes, but is not limited to, the animals identified in the 1988 Act. In other words, when Congress adopted the statutory definition of “agricultural commodity” in 2005, it set a definitional floor for the term “livestock” by including the animals identified in the 1988 Act but did not limit the term only to those animals. Accordingly, FMCSA asked whether other animals, including aquatic animals, should be included within the definition of “livestock” in § 395.2. Most commenters who responded to this question supported the inclusion of aquatic animals, and rather than recommending additional species, suggested that all living animals be included in the definition of “livestock.”

The Agency notes the HOS exemptions in § 395.1(k)(1) and the 30-minute rest break exemption in § 395.1(v) recognize that live animals being transported in a CMV are a unique form of cargo, subject to distinct health and safety risks while in transit. Considering the expansive list of animals included in the definition of “livestock” in the 1988 Act, and the inclusive use of the term “livestock” in the statutory definition of “agricultural commodity,” codified in § 395.2, the most direct reading of the statute is that the exemptions be broadly applied when livestock are being transported. The Agency therefore interprets the term to include all living animals cultivated, grown, or raised for commercial purposes, including aquatic animals, in addition to those animals already identified in the 1988 Act, and amends the definition “livestock” in § 395.2 accordingly. Because the current list of animals in the 1988 Act already includes most animals likely to be transported by CMV, FMCSA anticipates that the revised definition will only minimally increase the number of CMV drivers using the exemptions, if at all. The Agency requests comment on this issue, particularly regarding the number of drivers transporting aquatic animals, including live shellfish, and as previously noted “crawfish,” and their average and maximum travel times.

When submitting comments, the Agency requests that commenters number their responses to correspond with the questions as stated below.

1. Will the clarifications of the terms “any agricultural commodity,” “non-processed food,” and “livestock” result in more consistent application of the HOS exemptions in §§ 395.1(k)(1) and 395.1(v)? Why or why not? Please address each term separately when answering this question.

2. Will the clarifications impact the number of drivers who would use the exemptions in § 395.1(k)(1) or 395.1(v)? If so, how and to what extent? For example, how, if at all, will including all living animals cultivated, grown, or raised for commercial purposes, including aquatic animals, within the definition of “livestock” impact the number of drivers? Please provide data to support your answer.

3. Will any of the clarifications result in higher or lower costs for the transportation of agricultural commodities and livestock? Please provide data to support your answer.

4. Will any of the clarifications result in other benefits to stakeholders, including consumers and State enforcement personnel? Please explain your answer by providing specific examples.

The FMCSRs, and any exceptions to the FMCSRs, apply only within the United States (and, in some cases, United States territories). Motor carriers and drivers are subject to the laws and regulations of the countries in which they operate, unless an international agreement states otherwise. Drivers and carriers should be aware of the regulatory differences among nations in which they operate. Canada- and Mexico-domiciled drivers must ensure compliance with U.S. HOS requirements while they are driving in the U.S.

A driver domiciled in the United States may comply with the Canadian hours of service regulations while driving in Canada. Upon re-entering the United States, however, the driver is subject to all the requirements of Part 395, including the 11- and 14-hour rules, and the 60- or 70-hour rules applicable to the previous 7 or 8 consecutive days. In other words, a driver who takes full advantage of Canadian requirements may have to stop driving for a time immediately after returning to the U.S. to restore compliance with Part 395. Despite its possible effect on decisions a U.S. driver must make while in Canada, this interpretation does not involve an exercise of extraterritorial jurisdiction (62 FR 16379, 16424 (Apr. 4, 1997)).

Currently, under Federal statute and regulation, CMV drivers transporting agricultural commodities from the source of the commodities to a location within 150 air miles of the source, during harvest and planting seasons as defined by each State, are exempt from the HOS requirements (49 CFR 395.1(k)(1)). Furthermore, § 395.1(v) exempts drivers transporting livestock in interstate commerce from the required 30-minute rest break requirement while the livestock are on the CMV.

FMCSA amends 49 CFR part 395 by revising the definition of “agricultural commodity” in § 395.2 by: (1) Deleting the parenthetical phrase after the word “livestock” and adding in its place the following: “as defined in this section.”; and (2) adding to the end of the definition of “agricultural commodity” the following: “As used in this definition, the term `any agricultural commodity' means horticultural products at risk of perishing, or degrading in quality, during transport by commercial motor vehicle, including plants, sod, flowers, shrubs, ornamentals, seedlings, live trees, and Christmas trees.”

FMCSA amends the definition of “livestock” in § 395.2 by deleting all text that appears after “livestock means” and adding in its place the following: “livestock as defined in sec. 602 of the Emergency Livestock Feed Assistance Act of 1988 [7 U.S.C. 1471], as amended, insects, and all other living animals cultivated, grown, or raised for commercial purposes, including aquatic animals.”

FMCSA adds the term “non-processed food” to § 395.2, to be defined as follows: “ Non-processed food means food commodities in a raw or natural state and not subjected to significant post-harvest changes to enhance shelf life, such as canning, jarring, freezing, or drying. The term `non-processed food' includes fresh fruits and vegetables, and cereal and oilseed crops which have been minimally processed by cleaning, cooling, trimming, cutting, chopping, shucking, bagging, or packaging to facilitate transport by commercial motor vehicle.”

OIRA has determined this rulemaking is a significant regulatory action under E.O. 12866 (58 FR 51735, Oct. 4, 1993), Regulatory Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, Jan. 21, 2011), Improving Regulation and Regulatory Review. This IFR is also significant within the meaning of DOT regulations (49 CFR 5.13(a)) because of the substantial Congressional and public interest concerning the transportation of agricultural commodities, including livestock.

Agriculture, food, and related industries contributed $1.053 trillion to U.S. gross domestic product (GDP) in 2017, a 5.4 percent share. Output from farms contributed $132.8 billion of this sum—about 1 percent of GDP. The overall contribution of the agriculture sector to GDP is larger than this because sectors related to agriculture—forestry, fishing, and related activities; food, beverages, textiles, and leather products; food and beverage stores; and food service—rely on agricultural inputs in order to contribute added value to the economy. 13 Truck transportation is an integral component of the supply chain for agricultural commodities and livestock, constituting the sole mode of transportation for 66.2 percent (715.9 million tons) of the 1,080.7 million tons of agricultural commodities and livestock transported annually as of 2012. 14

This IFR clarifies the definition of “agricultural commodity” to ensure carriers are aware that drivers transporting perishable horticultural commodities, non-processed food, or livestock, including aquatic animals, are eligible for the HOS exemptions in §§ 395.1(k)(1) and 395.1(v). The exemption in § 395.1(k)(1), which allows additional driving and working hours for drivers transporting agricultural commodities, is intended to facilitate timely delivery of such commodities during State-defined harvest and planting seasons. Section 395.1(v), which exempts drivers transporting livestock in interstate commerce from the 30-minute rest break requirement, is intended to protect the health and welfare of live animals.

This rule will help ensure that all affected entities understand how FMCSA interprets the terms “agricultural commodity” and “livestock,” and how the Agency applies the exemptions when these commodities are transported by CMV. The clarifications could provide additional flexibility to transporters of certain commodities.

Currently, during harvesting and planting seasons as determined by each State, drivers transporting agricultural commodities are exempt from the HOS requirements from the source of the commodities to a location within a 150 air-mile radius from the source. As noted above, the current definition in § 395.2 states that an “Agricultural commodity means any agricultural commodity, non-processed food, feed, fiber, or livestock . . . .” Commenters to the ANPRM confirmed that broad terms such as “any agricultural commodity” are not consistently understood or applied. Differences in interpretation between regulated entities and enforcement officials may be hindering consistent enforcement practices, thereby impacting business-related decisions for the hauling of agricultural commodities and livestock. The IFR will create a common understanding between FMCSA, motor carriers, drivers, and enforcement officials.

In theory, there are two groups of CMV drivers whose behavior will be affected by this IFR: (1) Those to whom the definitions of “agricultural commodity” and “livestock” apply, but who currently do not use an exemption due to the existing definitional ambiguity; and (2) those who currently use an exemption in §§ 395.1(k)(1) or 395.1(v), and may no longer do so as a result of the definitional clarifications. There is uncertainty surrounding the number of drivers who are, or are not, currently utilizing an exemption due to the current definitional ambiguity, as FMCSA does not collect quantitative data on the use of these exemptions. The Agency does not, therefore, estimate quantitative impacts associated with this IFR, opting instead for a qualitative analysis. FMCSA relies on the Motor Carrier Management Information System (MCMIS) database to obtain information on commercial motor carriers subject to the FMCSRs. While MCMIS does contain data on certain cargo classifications, it does not track individual cargo carried or hours traveled, nor whether cargo is transported during State-defined planting and harvesting seasons. Consequently, the Agency knows neither the degree to which CMV drivers are currently using the exemptions, nor the magnitude of the population that will be affected by this IFR. However, as noted above, the IFR clarifies that transporters of non-perishable horticultural commodities are not eligible for the exemption in § 395.1(k)(1). FMCSA is aware that at least one State includes “wood chips” within its definition of agricultural commodity, and several States categorize timber as an agricultural product. If these States currently permit transporters of those products to use the HOS exemption, they will no longer be permitted to do so under the IFR.

The Agency assumes that drivers will elect to utilize an agricultural commodity exemption only if the cost impact to them is less than or equal to zero. Moreover, these changes will not require new forms of training for enforcement personnel, as the HOS exemptions for agricultural commodities and livestock currently exist. The Agency expects that the definitional clarifications set forth in this IFR will be communicated to FMCSA personnel and the Agency's State-based enforcement partners through existing means, such as policy updates and ongoing training.

Though requested in the ANPRM, FMCSA did not receive relevant data related to average and maximum transportation times of specific commodities, nor did the Agency receive relevant information addressing financial liability resulting from HOS compliance. In Section VI. Questions, the Agency requests data on the number of drivers impacted by the clarifications.

The rule could conceivably impact the number of drivers utilizing the exemptions; however, as noted above, the Agency does not collect data regarding the use of these exemptions, nor can we predict whether the number of drivers using the exemption would increase or decrease as a result of the clarifications. FMCSA requests information on this issue in Section VI.

Congress, when enacting both exemptions, implicitly recognized the trade-off between the purpose of the HOS regulations—CMV safety—and other economic costs of transporting agricultural commodities and livestock by truck. On the one hand, the HOS requirements are intended to improve safety by preventing driver fatigue. On the other hand, there are certain circumstances, such as hauling live animals or transporting agricultural commodities during planting and harvesting seasons, where those requirements may pose significant additional costs. Congress determined that the exemptions, set forth in §§ 395.1(k)(1) and 395.1(v), are justified in these situations.

The rule may provide consumers with access to agricultural commodities of higher quality. For example, as discussed above in Section V. Discussion of Interim Final Rule, some commenters described perishability, or degradation in quality, of certain horticultural products during transport by CMV. The effects of post-harvest transportation such as exposure to changes in temperature, light, and humidity levels can impact plant health. Plant health significantly affects the commercial value of these products, and reduced time in transit from the producer to the consumer helps to mitigate damage. The Agency sought input from the USDA regarding these potential benefits. USDA does not have a model with which to quantify these impacts, but, in informal discussions with FMCSA, USDA confirmed that incrementally shorter transit times generally improve the freshness, quality, nutrition, and safety of food, reduce weight loss for livestock, and enhance animal welfare. If producers choose to adjust their behavior based on reduced travel times resulting from this IFR, there may be benefits to consumers from having access to higher quality products on the market; there may also be disbenefits from additional usage of the exemption due to possible longer drive times or limited breaks.

This IFR is neither a regulatory nor deregulatory action under E.O. 13771.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), OIRA designated this rule as not a “major rule,” as defined by 5 U.S.C. 804(2). 15

The Regulatory Flexibility Act (RFA) of 1980, Public Law 96-354, 94 Stat. 1164 (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857, March 29, 1996) and the Small Business Jobs Act of 2010 (Pub. L. 111-240, 124 Stat. 2504, September 27, 2010), requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of fewer than 50,000. In addition, the DOT policy requires an analysis of the impact of all regulations on small entities, and mandates that agencies strive to lessen any adverse effects on these businesses.

FMCSA is not required to complete a regulatory flexibility analysis, because, as discussed earlier in Section III. Legal Basis, this IFR is an interpretative rule not subject to prior notice and comment under section 553(b)(A) of the APA.

In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, FMCSA wants to assist small entities in understanding this IFR so that they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the IFR will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance; please consult the person listed under FOR FURTHER INFORMATION CONTACT .

Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business Administration's Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of FMCSA, call 1-888-REG-FAIR (1-888-734-3247). DOT has a policy regarding the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $168 million (which is the value equivalent of $100,000,000 in 1995, adjusted for inflation to 2019 levels) or more in any one year. Though this IFR will not result in such an expenditure, the Agency does discuss the effects of this rule elsewhere in this preamble.

This IFR does not call for any new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Part 395 of the Federal Motor Carrier Safety Regulations, “Hours of Service of Drivers,” requires drivers and motor carriers to collect, transmit and maintain information about driver daily activities. The part 395 ICR is assigned OMB Control Number 2126-0001. On July 31, 2019, OMB approved the Agency's estimate of 99.5 million burden hours as the annual IC burden of part 395. As explained earlier, there are two groups of CMV drivers whose behavior may change as a result of this IFR: (1) Those to whom the definitions of “agricultural commodity” and “livestock” apply, but who currently do not use an exemption due to the existing definitional ambiguity; and (2) those who currently use an exemption in §§ 395.1(k)(1) or 395.1(v), and may no longer do so as a result of the definitional clarifications. Those in the former group could see a reduction in their paperwork burden under this IFR, and those in the latter group could see an increase in their paperwork burden. As FMCSA does not have data on the number of drivers using the exemptions, or the extent to which their behavior will change as a result of this IFR, the Agency is not estimating any changes to the paperwork burden at this time. FMCSA will be in a better position to estimate the use of these exemptions when the currently approved collection is renewed in 2022.

A rule has implications for federalism under section 1(a) of E.O. 13132 if it has “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.” FMCSA determined that this IFR does not have substantial direct costs on or for States, nor would it limit the policymaking discretion of States. Nothing in this document preempts any State law or regulation; the HOS requirements do not have preemptive effect. As set forth in 49 U.S.C. 31102, States and other political jurisdictions are eligible to participate in the Motor Carrier Safety Assistance Program, by, among other things, adopting and enforcing State regulations, that are compatible with Federal regulations on CMV safety, including the HOS requirements in part 395, and the safe transportation of hazardous materials. Therefore, this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Impact Statement.

The Consolidated Appropriations Act, 2005, 16 requires the Agency to conduct a privacy impact assessment (PIA) of a regulation that will affect the privacy of individuals.

The Privacy Act (5 U.S.C. 552a) applies only to Federal agencies and any non-Federal agency which receives records contained in a system of records from a Federal agency for use in a matching program.

The E-Government Act of 2002  17 requires Federal agencies to conduct a PIA for new or substantially changed technology that collects, maintains, or disseminates information in an identifiable form.

No new or substantially changed technology would collect, maintain, or disseminate information as a result of this rule. Accordingly, FMCSA has not conducted a PIA.

In addition, the Agency submitted a Privacy Threshold Assessment to evaluate the risks and effects the IFR might have on collecting, storing, and sharing personally identifiable information. The DOT Privacy Office has determined that this rulemaking does not create privacy risk.

This rule does not have tribal implications under E.O. 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

FMCSA analyzed this IFR consistent with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and determined this action is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement under FMCSA Order 5610.1 (69 FR 9680, March 1, 2004), Appendix 2, paragraph (6)(b). The Categorical Exclusion (CE) in paragraph (6)(b) relates to regulations which are editorial or procedural, such as those updating addresses or establishing application procedures, and procedures for acting on petitions for waivers, exemptions and reconsiderations, including technical or other minor amendments to existing FMCSA regulations. The requirements in this rule are covered by this CE, there are no extraordinary circumstances present, and this action does not have the potential to affect the quality of the environment significantly. The CE determination is available from the person listed under FOR FURTHER INFORMATION CONTACT .

FMCSA amends 49 CFR chapter 3, part 395 as follows:

Regulations for the blueline tilefish fishery are at 50 CFR part 648. The regulations at § 648.295(b)(2)(ii) require that when NMFS projects that blueline tilefish catch will reach 100 percent of the total allowable landings (TAL), the Regional Administrator must close the commercial blueline tilefish fishery for the remainder of the fishing year. No vessel may retain or land blueline tilefish in or from the Tilefish Management Unit after the announced closure date. NMFS monitors the blueline tilefish fishery catch based on dealer reports, state data, and other available information. When 100 percent of the TAL is projected to be landed, NMFS must publish a notice in the Federal Register notifying blueline tilefish vessel and dealer permit holders of the closure date.

The Regional Administrator has determined, based on dealer reports and other available information, that the blueline tilefish commercial fishery will catch 100 percent of the TAL by November 21, 2020. Effective 0001 November 21, 2020, vessels may not retain or land blueline tilefish in or from the Tilefish Management Unit through December 31, 2020.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 648, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

NMFS finds good cause pursuant to 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3) to waive prior notice and the opportunity for public comment and the delayed effectiveness period because it would be contrary to the public interest and impracticable. Data and other information indicating the blueline tilefish commercial fishery will have landed 100 percent of the TAL have only recently become available. Landings data are updated by dealer reports dealers on a weekly basis, and NMFS monitors data as catch increases toward the limit. This action is routine and formulaic. The regulations at § 648.295(b)(2)(ii) require such action to ensure that blueline tilefish commercial vessels do not exceed the 2020 TAL. If implementation of this action is delayed, the TAL for the 2020 fishing year may be exceeded, thereby undermining the conservation objectives of the Tilefish Fishery Management Plan. Also, the public had prior notice and full opportunity to comment on this process when the provisions regarding closures and the 2020 quota levels were put in place.

At the request of the New England Fishery Management Council, NMFS published an emergency action on June 1, 2020, (85 FR 33027), for the Atlantic Sea Scallop Fishery Management Plan (FMP) that:

• Allowed limited access general category (LAGC) individual fishing quota (IFQ) vessels to carryover all fishing year 2019 unharvested quota into fishing year 2020;

• Allowed any access area carryover pounds and unharvested research set-aside (RSA) compensation pounds from fishing year 2019 to be available for harvest through August 31, 2020; and

• Closed the Nantucket Lightship-West Access Area (NLS-W) to scallop fishing beginning on September 1, 2020, to reduce bycatch.

These measures allowed for more flexibility to harvest 2019 carryover allocations and were intended to mitigate the negative impacts experienced by the scallop industry that began at the end of the 2019 fishing year (March 2020) due to ongoing health mandates and travel restrictions that made it difficult for vessels to make trips. These impacts include disruptions in getting supplies and the inability for crew to access ports.

This action extends portions of this emergency action to prevent the LAGC IFQ vessels from losing any carryover granted by this emergency action and to prevent NLS-W from opening on November 29, 2020, when the emergency action expires under the Magnuson-Stevens Fishery Conservation and Management Act's (Magnuson-Stevens Act) limitation on the duration of an emergency action. Therefore, this action would extend the following emergency action measures through June 1, 2021, or until replaced by a subsequent action, whichever comes first:

• Extend the ability of LAGC IFQ vessels to harvest any fishing year 2019 carryover granted by this emergency action through the end of the 2020 fishing year (March 31, 2021); and

• Maintain the closure of NLS-W for an additional 186 days unless it is opened or closed by the Council in another action.

The NLS-W closure extension is intended to minimize unwanted bycatch of flatfish and is not expected to adversely impact the scallop fleet because these vessels have flexibility to fish in other areas. There is no need to extend the access area and RSA compensation pounds from fishing year 2019 because the Council only requested to allow for that harvest through August 31, 2020.

NMFS's policy guidelines for the use of emergency rules (62 FR 44421; August 21, 1997) specify the following three criteria that define what an emergency situation is, and justification for final rulemaking: (1) The emergency results from recent, unforeseen events or recently discovered circumstances; (2) the emergency presents serious conservation or management problems in the fishery; and (3) the emergency can be addressed through emergency regulations for which the immediate benefits outweigh the value of advance notice, public comment, and deliberative consideration of the impacts on participants to the same extent as would be expected under the normal rulemaking process. NMFS's policy guidelines further provide that emergency action is justified for certain situations where emergency action would prevent significant direct economic loss, or to preserve a significant economic opportunity that otherwise might be foregone. As noted in the June 1, 2020, emergency rule, NMFS has determined that extending portions of the fishing year 2019 scallop carryover provisions meets the three criteria for emergency action.

The Council is developing Framework Adjustment 33 to the Scallop FMP, which we expect to implement in May 2021, prior to the expiration of the emergency action extension. Framework 33 will set specifications for the 2021 fishing year.

NMFS received two comments in response to the emergency action. The first comment was in opposition to the action due to concern that some fishermen may already be receiving additional aid because of their inability to fish. As described above, this action does not add any new allocation, it only extends the time period that carryover can be fished. Extending these carryover provisions will not cause any annual catch limits to be exceeded in the scallop fishery. The second comment was unrelated to this action.

The Assistant Administrator for Fisheries, NOAA, has determined that this rule is necessary to respond to an emergency situation and is consistent with the national standards and other provisions of the Magnuson-Stevens Act and other applicable laws.

The Assistant Administrator for Fisheries, NOAA, finds good cause under 5 U.S.C. 553(b)(B) that it is contrary to the public interest and impracticable to provide for prior notice and opportunity for the public to comment. As more fully explained above, the reasons justifying promulgation of this rule on an emergency basis, coupled with the fact that the public has had the opportunity to comment on NMFS' intent to extend this emergency, make solicitation of public comment unnecessary, impractical, and contrary to the public interest. In the interest of receiving public input on this action, the SIR analyzing this action was made available to the public and the original temporary final rule solicited public comment.

For these same reasons stated above, pursuant to 5 U.S.C. 553(d)(3), the Assistant Administrator finds good cause to waive the full 30-day delay in effectiveness for this rule. This rule extends some measures of the rule currently in place for an additional 186 days. The need for this extension was fully anticipated and announced to the public in the initial emergency rule which published on June 1, 2020. Accordingly, the entities affected by this rule and the public have no need to be made aware of or adjust to this rule by delaying its effectiveness for 30 days. The primary reason for delaying the effectiveness of Federal regulations is not present, and, therefore, such a delay would serve no public purpose. It would be contrary to the public interest if this rule does not become effective on November 29, 2020, because LAGC IFQ vessels would lose any carryover granted by this emergency action and the NLS-W would open to fishing. Moreover, failing to have the rule effective on November 29, 2020, may lead to confusion in the fishing community. For these reasons, there is good cause to waive the requirement for delayed effectiveness.

This action is being taken pursuant to the emergency provision of MSA and is exempt from OMB review.

Because notice and opportunity for comment are not required pursuant to 5 U.S.C. 553 or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are inapplicable. Therefore, a regulatory flexibility analysis is not required and has not been prepared.