I. Background Information

The SBA programs affected by the rescission of the Express IFR are:

1. The 7(a) Loan Program authorized pursuant to section 7(a) of the Small Business Act (the Act) (15 U.S.C. 636(a));

2. The Business Disaster Loan Programs (collectively, Economic Injury Disaster Loans, Military Reservist Economic Injury Disaster Loans, and Physical Disaster Business Loans) authorized pursuant to section 7(b) of the Act (15 U.S.C. 636(b));

3. The Microloan Program authorized pursuant to section 7(m) of the Act (15 U.S.C. 636(m));

4. The Intermediary Lending Pilot (ILP) Program authorized pursuant to section 7(l) of the Act (15 U.S.C. 636(l));

5. The Surety Bond Guarantee Program authorized pursuant to part B of title IV of the Small Business Investment Act of 1958 (15 U.S.C. 694b et seq. ); and

6. The Development Company Program (the 504 Loan Program) authorized pursuant to title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq. ).

(In this final rule, the 7(a), Microloan, ILP, and 504 Loan Programs are collectively referred to as the Business Loan Programs.)

On September 28, 2018, SBA published a proposed rule with request for comments in the Federal Register to incorporate the requirements related to the SBA Express and Export Express Loan Programs; add a regulation pertaining to the 7(a) and Development Company (504) loan programs regarding when the owners of a small business Applicant are required to inject excess liquid assets into the project; amend certain regulations setting forth the affiliation principles applicable to SBA financial assistance programs; limit certain fees payable by loan Applicants to amounts deemed reasonable by SBA; clarify the responsibility of a Lender for the contingent liabilities associated with 7(a) loans purchased from the Federal Deposit Insurance Corporation; and, finally, amend certain regulations governing the use of microloan grant funds by Microloan Intermediaries and the maximum maturity of a microloan. (83 FR 49001) The original comment period was scheduled to end November 27, 2018. On November 16, 2018, SBA announced an extension of the public comment period for an additional 15 business days to December 18, 2018. (83 FR 57693)

On February 10, 2020, SBA published the Express IFR with a request for comment to provide the public with an additional opportunity to comment on the modifications to the rule. (85 FR 7622). The interim final rule became effective on March 11, 2020, except that compliance with two of the regulatory provisions, 13 CFR 103.5(b) (Fees an Agent may charge a Borrower) and 13 CFR 120.221(a) (Fees a Lender may charge a Borrower) was delayed until October 1, 2020.

On March 27, 2020, President Trump signed into law, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136, 134 Stat 281). Section 1102(e) of that Act permanently rescinded the Express IFR effective March 27, 2020. In light of this rescission, SBA is issuing the amendments identified below to remove all of the regulations that were added by the interim final rule and restore the regulations that were in effect prior to the effective date of the Express IFR. For loans made between March 11, 2020, and March 27, 2020, SBA Lenders should have complied with the regulations in effect during that period.

Agencies ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the rule takes effect in accordance with the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). However, an agency can waive this notice and comment procedure if it finds, for good cause, that the notice and comment process is impracticable, unnecessary, or contrary to the public interest and incorporates a statement of its findings and reasons in the notice. 5 U.S.C. 553(b)(B).

This rule is rescinding an interim final rule that was developed using the APA notice and comment procedures. Because Congress has rescinded those regulations, they no longer have any legal effect, and their continued inclusion in the Code of Federal Regulations would not only be in violation of a statutory mandate, it would lead to public confusion as well. It is also unnecessary and contrary to the public interest to subject the regulations that will be reinstated to APA notice and comment procedures, since they too were already subject to public scrutiny when they were initially codified in the Code of Federal Regulations. Therefore, SBA finds that good cause exists to forgo public notice and comment procedures because they would be unnecessary and contrary to the public interest.

In addition, section 553(d) of the APA generally requires a 30-day delay in the effective date of a final rule after the date of its publication in the Federal Register . This 30-day delay in effective date can also be waived as provided by the agency for good cause found and published with the rule. 5 U.S.C. 553(d)(3). Based on the language in section 1102(e) of the CARES Act, the rescission of the Express IFR was effective as of March 27, 2020. Thus, the rule cannot be delayed for 30 days; to do so would be an unauthorized extension of the rescission date. This statutorily determined effective date provides the good cause to waive the 30-day delay in effective date.

OMB determined that the interim final rule, entitled Express Loan Programs; Affiliation Standards, was a significant rule for purposes of this Executive order. Accordingly, SBA prepared the requisite regulatory impact analysis, which was published with the rule. OMB has determined that this rescission of the interim final rule is also a “significant” rulemaking. Accordingly, the next section contains SBA's Regulatory Impact Analysis. However, this is not a major rule under the Congressional Review Act, 5 U.S.C. 800.

The rescission of the interim final rule removes the regulations that were added by the interim final rule, including those pertaining to the SBA Express and Export Express Loan Programs, in compliance with section 1102(e) of the CARES Act, which permanently rescinded the interim final rule effective March 27, 2020.

The primary objective of the interim final rule was to incorporate into the regulations governing the 7(a) Loan Program the requirements specifically applicable to the SBA Express and Export Express Loan Programs in order to provide additional clarity for SBA Express and Export Express Lenders. The interim final rule provided a bright-line test for SBA Lenders on how to adequately determine whether a small business had access to credit elsewhere based on personal liquid assets. It modified regulatory provisions related to allowable fees that a Lender or an Agent may collect from an Applicant for financial assistance. The interim final rule also revised affiliation principles for the financial assistance programs. SBA expected that the additional detailed clarity on the requirements for program delivery in the subject areas of the interim final rule would have increased understanding for program users, decreased time spent evaluating small business Applicants, and resulted in a reduction of overall cost to participants. SBA did not expect, however, that the interim final rule would affect loan volume significantly. The interim final rule changes for affiliation determinations provided detailed guidance for the SBA Lender charged with determining the size of a small business Applicant, with an expected benefit for the SBA Lender from the time savings in making the eligibility determination. These changes are rescinded with this rule.

This rescission rule transforms the benefits of the interim final rule into forgone benefits and the costs of the interim final rule into forgone costs.

The greatest benefit from the interim final rule to all program participants, including SBA Lenders, Applicants, and Agents, was clear regulatory guidance and bright-line tests to increase efficiency, including bright-line tests for making certain determinations about eligibility which would have eliminated the ambiguity and uncertainty that had hindered some SBA Lenders in recent years. SBA estimated that the reinstatement of the personal resources test at § 120.102 would have saved SBA Lenders a total of approximately 67,000 hours annually, monetized to $2,456,890 per year. This estimated annual benefit is forgone with the rescission of the interim final rule.

The interim final rule set clear limitations on fees that an Agent or Lender could have charged an Applicant and left no question as to what fees SBA considered to be reasonable. Further, the interim final rule's revisions to the definitions of Agents and Associates of Lenders and CDCs provided clarity for SBA's determination of an Agent and what services the different types of Agents may have performed for compensation by the Applicant or the SBA Lender. This would have saved SBA Lenders and Agents time in making these determinations for each loan. In addition, the rule changed requirements for 7(a) Lenders to itemize fees and submit the itemization to SBA, which also would have saved these Lenders time. Applicants would have benefitted from protection against impermissible or unreasonable costs for assistance with obtaining an SBA-guaranteed loan. Benefits from these changes are forgone with the rescission of the interim final rule.

The interim final rule modified principles of affiliation for the financial assistance programs, increasing efficiency for the Agency and SBA Lenders in providing financial assistance only to businesses determined to be small. The benefits from this modification are forgone with rescission of the interim final rule.

SBA expected these benefits to have been realized upon enactment of the interim final rule and to have remained the same each year thereafter, subject to changes in number of loans and hourly rates. These benefits are forgone with rescission of the interim final rule.

Like the program participants, SBA would have benefitted from the clear regulatory guidance and bright-line tests included in the interim final rule, especially when performing lender oversight activities. Specifically, the Office of Credit Risk Management (OCRM) would have realized increased efficiencies in conducting loan file reviews of SBA Lenders. With the reinstatement of the personal resources test, clear limitations on fees an Agent or Lender could have charged an Applicant, revised definitions of Agents and Associates of Lenders and CDCs, and revised affiliation principles, SBA had removed the subjectivity of a Lender's assessment of these issues in the interim final rule, which would have improved SBA Lenders' compliance and allowed OCRM to develop more efficient methods of testing SBA Lenders' compliance. In addition, the removal of the requirement that a Lender itemize fees charged to an Applicant when the fee is over $2,500 would have reduced the burden on OCRM of reviewing these additional documents.

SBA expected these benefits to be realized immediately upon enactment of the rule and to have remained the same each year thereafter, subject to changes in the number of loan files reviewed and hourly rates. These benefits are forgone with rescission of the interim final rule.

For purposes of the Regulatory Impact Analysis (RIA), the only costs to program participants and relevant stakeholders necessary to comply with the interim final rule were administrative costs. Administrative costs considered included estimations on reading and interpreting the regulation, developing and revising internal policies and procedures, and training. It is noted that program participants are presumed to incur such administrative costs continuously in order to maintain familiarity with SBA Loan Program Requirements, as required by 13 CFR 120.180, and to remain in good standing with SBA as defined in 13 CFR 120.420(f). The Table below shows the estimated administrative costs attributable to the interim final rule, which were expected to occur mainly in the first year of implementation, decrease by half in the second year, and be eliminated by the third year. These costs are forgone with rescission of the interim final rule.

There were no expected additional costs to the Agency required to achieve the outcomes of the interim final rule. The administrative costs considered for the loan program participants, including reading and interpreting the regulation, developing and revising internal policies and procedures, and training are already inherent requirements of SBA employees and therefore, the publication of this interim final rule had no additional bearing on the responsibilities of relevant SBA employees involved in the Agency's loan programs. SBA determines that the Agency bears no costs from rescission of the interim final rule.

SBA identified a transfer of costs, due to the limits on permissible fees charged to an Applicant by Agents and Lenders, as well as the prohibition against Agents providing services to both an Applicant and an SBA Lender in connection with the same SBA loan application. These changes in the interim final rule would have provided a cost savings to Applicants; however, the Agency acknowledged that this savings to the Applicant would have resulted in a cost (“transfer”) to the small number of Agents and Lenders that reported charging fees in excess of the limits imposed by the interim final rule. This transfer is forgone with the rescission of the interim final rule.

Below is a table showing an estimation of the total forgone costs and forgone benefits of the interim rule over three years.

Below is a table showing the annualized values of the forgone estimated costs and cost savings, as of 2016, over an infinite horizon, based on the interim final rule's estimates of these annualized values.

As published, Airworthiness Directive 2020-24-04, Amendment 39-21334 (85 FR 77991, December 3, 2020), requires revising the existing AFM to incorporate procedures for conducting an approach with a localizer-based navigation aid, monitoring localizer raw data, calling out any significant deviations, and performing an immediate go around if the airplane has not intercepted the final approach course as shown by the localizer deviation. AD 2020-24-04 applies to all The Boeing Company Model 787-8, 787-9, and 787-10 airplanes.

As published, the regulatory text included errors in certain references to the AFM that is required to be revised. The location of the AFM text to be revised is incorrectly identified as the “Limitations section”; the correct location is the “Operating Procedures chapter.” In addition, the figure incorrectly identified the heading of the AFM text as “Operating Instructions”; the correct heading is “Autopilot Flight Director System—Operating Instructions.”

This document corrects an error and correctly adds the AD as an amendment to 14 CFR 39.13. Although no other part of the preamble or regulatory information has been corrected, the FAA is publishing the entire rule in the Federal Register .

The effective date of this AD remains December 18, 2020.

Since this action only corrects errors in certain AFM references, it has no adverse economic impact and imposes no additional burden on any person. Therefore, the FAA has determined that notice and public comment procedures are unnecessary.

Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration amends part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2020-0228, dated December 3, 2020 (referred to after this as “the MCAI”), to address an unsafe condition for the specified products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-1117.

This product has been approved by EASA and is approved for operation in the United States. Pursuant to our bilateral agreement with the European Community, EASA has notified us of the unsafe condition described in the MCAI. The FAA is issuing this AD because the agency evaluated all the relevant information provided by EASA and has determined that the unsafe condition described previously is likely to exist or develop in other products of the same type design.

The FAA reviewed Continental Aerospace Technologies GmbH Service Bulletin (SB) No. CG 601-1014 P1, Revision 2, dated November 24, 2020 (SB CG 601-1014 P1), and Continental Aerospace Technologies GmbH SB No. CG 651-1009 P1, Revision 1, dated October 15, 2020 (SB CG 651-1009 P1). SB CG 601-1014 P1 and SB CG 651-1009 P1 describe procedures for removing and replacing the affected turbocharger hose and identifies the affected turbocharger hoses for certain TAE 125-02-99 and TAE 125-02-114 reciprocating engines installed on certain Textron Aviation, Inc. Model 172 and F172 airplanes. SB CG 651-1009 P1 describes procedures for removing and replacing the affected turbocharger hose and identifies the affected turbocharger hoses for certain TAE 125-02-114 reciprocating engines installed on Piper Aircraft, Inc. Model PA-28 airplanes.

This AD requires the removal and replacement of the affected turbocharger hose.

Continental Aerospace Technologies GmbH SB No. CG 601-1014 P1 and SB No. CG 651-1009 P1 instructs operators to return the affected turbocharger hose to Continental Aerospace Technologies GmbH, while this AD does not require returning the affected turbocharger hose.

EASA AD 2020-0228 references EASA Supplemental Type Certificate (STC) 10014287 (formerly EASA.A.S.01527, LBA EMZ SA1295) and EASA STC 10014364 (formerly EASA.A.S.01632, LBA EMZ SA1377), whereas this AD does not.

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

The FAA has found the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because no domestic operators use this product. It is unlikely that the FAA will receive any adverse comments or useful information about this AD from any U.S. operator. Accordingly, notice and opportunity for prior public comment are unnecessary, pursuant to 5 U.S.C. 553(b)(3)(B). In addition, for the foregoing reasons, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include the docket number FAA-2020-1117 and Project Identifier MCAI-2020-01429-E at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Kevin Clark, Aviation Safety Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

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

The FAA estimates that this AD affects 0 engines installed on airplanes of U.S. registry.

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

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

The FAA'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 D airspace, and removes Class E airspace at Homestead Air Reserve Base (ARB), Homestead, FL, to support IFR operations in the area.

The FAA published a notice of proposed rulemaking in the Federal Register (85 FR 59463, September 22, 2020) for Docket No. FAA-2020-0822 to amend Class D airspace, and remove at Class E airspace designated as an extension to a Class D surface area for Homestead Air Reserve Base, Homestead, FL, as the extensions are less than two miles, and thus are required to be Class D airspace, as per the FAA Order 7400.2, chapter 17-2-7, part D. In addition, the FAA proposed to update the geographic coordinates of the 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 pertaining to the proposal were received.

Class D and Class E airspace designations are published in Paragraphs 5000 and 6004, 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 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 D airspace, and removes Class E airspace designated as an extension to a Class D surface area for Homestead Air Reserve Base, Homestead, FL, as the extensions are less than two miles, and thus are required to be Class D airspace, as per the FAA Order 7400.2, chapter 17-2-7, part D. In addition, this amendment updates the geographic coordinates of the 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.

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 the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the route structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.

The FAA published a notice of proposed rulemaking for Docket No. FAA-2020-0735 in the Federal Register (85 FR 49327; August 13, 2020), amending VOR Federal airways V-141, and V-542, and removing VOR Federal airways V-151 and V-496 in the vicinity of Lebanon, NH. The proposed amendment and revocation actions were due to the planned decommissioning of the Lebanon, NH, VOR/DME. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

VOR Federal airways are published in paragraph 6010(a) 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 VOR Federal airways listed in this document will be subsequently published 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 action amends Title 14 Code of Federal Regulations (14 CFR) part 71 by amending VOR Federal airways V-141 and V-542, and removing airways V-151 and V-496, due to the planned decommissioning of the Lebanon, NH VOR/DME. An Area Navigation (RNAV) waypoint (WP) is being developed to be charted in the vicinity of the Lebanon VOR/DME location. The changes are described below.

V-141: V-141 currently consists of two parts: first, extending between the Nantucket, MA, VOR/DME and the Boston, MA, VOR/DME; and second, extending between the Manchester, NH, VOR/DME and the Massena, NY, VORTAC. This action removes the part between Manchester, NH, and Massena, NY. As amended, V-141 extends between Nantucket, MA, and Boston, MA.

V-151: V-151 currently extends between the intersection of the Nantucket, MA, VOR/DME 334°, and the Providence, RI, VOR/DME 079° radials, and the Burlington, VT, VOR/DME. This action removes the entire route. A low altitude RNAV route is being developed to replace V-151.

V-496: V-496 currently extends between the Lebanon, NH, VOR/DME, and the Kennebunk, ME, VOR/DME. This action removes the entire route.

V-542: V-542 currently extends between the Elmira, NY, VOR/DME, and the Lebanon, NH, VOR/DME. This action removes the route segments of V-542 that extend between the Rockdale, NY, VOR/DME, and the Lebanon, NH, VOR/DME. As amended, V-542 extends between Elmira, NY, and Rockdale, NY.

The NAVAID radials in the description of V-141, below, are unchanged and are stated in True degrees.

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

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

The FAA has determined that this action of amending VOR Federal airways V-141, and V-542, and revoking airways V-151 and V-496, due to the planned decommissioning of the Lebanon, NH, VOR/DME navigation aid, qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to cause any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of 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 the Class E airspace extending upward from 700 feet above the surface at Coffey County Airport, Burlington, KS, to support instrument flight rule operations at this airport.

The FAA published a notice of proposed rulemaking in the Federal Register (85 FR 53306; August 28, 2020) for Docket No. FAA-2020-0666 to amend the Class E airspace extending upward from 700 feet above the surface at Coffey County Airport, Burlington, KS. 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 service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 amends the Class E airspace extending upward from 700 feet above the surface to within a 6.5-mile radius of Coffey County Airport, Burlington, KS; and removes the Boyd NDB and the associated extensions from the airspace legal description.

This action is the result of an airspace review caused by the decommissioning of the Boyd NDB, which provided navigation information for the instrument procedures at this airport.

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 only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. 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 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 Glacier Park International Airport, Kalispell, MT, 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 62630, October 5, 2020) for Docket No. FAA-2020-0825 to modify Class D and Class E airspace at Glacier Park International Airport, Kalispell, MT. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. Two comments were received. The comments were not germane to the proposed airspace action.

Class D, E2, and E5 airspace designations are published in paragraphs 5000, 6002, 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 D airspace at Glacier Park International Airport, Kalispell, MT. To properly contain IFR aircraft, this action adds an extension to the airspace, northeast of the airport. This airspace area is described as follows: That airspace extending upward from the surface to and including 5,500 feet MSL within a 4.3-mile radius of the airport, and within 1.2 miles each side of the 032° bearing from the airport, extending from the 4.3-mile radius to 5.6 miles northeast of Glacier Park International Airport. This Class D airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.

This action also modifies the Class E airspace, designated as a surface area, to be coincident with the new Class D dimensions. This airspace area is part-time and this action adds the appropriate verbiage to the airspace legal description. This airspace area is described as follows: That airspace extending upward from the surface within a 4.3-mile radius of the airport, and within 1.2 miles each side of the 032° bearing from the airport, extending from the 4.3-mile radius to 5.6 miles northeast of Glacier Park International Airport. This Class E airspace area is effective during the specific dates and times established, in advance, by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.

Additionally, this action modifies the Class E airspace extending upward from 700 feet above the surface. The action properly sizes the airspace to contain IFR departures to 1,200 feet above the surface and IFR arrivals descending below 1,500 feet above the surface. This airspace area is described as follows: That airspace extending upward from 700 feet above the surface within a 7.5-mile radius of the airport, and within 2.3 miles each side of the 138° bearing from the airport, extending from the 7.5-mile radius to 13.4 miles southeast of the airport, and within 2 miles each side of the 215° bearing from the airport, extending from the 7.5-mile radius to 19.5 miles southwest of Glacier Park International Airport.

This action also 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 25-mile radius of the airport beginning at the 270° bearing from the airport, clockwise to the 090° bearing from the airport, thence along the 090° bearing to 45 miles east of the airport, thence within a 45-mile radius of the airport clockwise to the 270° bearing from the airport, thence along the 270° bearing to the point of beginning, 25 miles west of Glacier Park International Airport.

This action removes the Smith Lake NDB and all references to the NDB from the Class E2 and Class E5 text headers and the airspace legal descriptions. The navigational aid is not needed to define the airspace. Removal of the navigational aid allows the airspace to be defined from a single reference point which simplifies how the airspace is described.

Lastly, this action implements several administrative corrections to the airspaces' legal descriptions. In the Class D legal description, the last sentence contains the term “Airport/Facilities Directory” this action updates the term to “Chart Supplement”. This action removes the city name from the second line of the Class D, Class E2, and Class E5 text headers. The airport's geographic coordinates do not match the FAA database; this action updates the geographic coordinates in all of the airspace areas to “lat. 48°18′38″ N, long. 114°15′22″ 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 the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it supports modifying, removing, and establishing the air traffic service route structure in the western United States to maintain the efficient flow of air traffic.

The FAA published a notice of proposed rulemaking in the Federal Register for Docket No. FAA-2019-0660 (84 FR 50800; September 26, 2019), to amend two high altitude RNAV ATS routes (Q-13 and Q-15), establish one high altitude RNAV ATS route (Q-174), and establish five low altitude RNAV ATS routes (T-338, T-357, T-359, T-361, and T-363) in the western United States. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

United States Area Navigation Routes are published in paragraph 2006 and 6011, 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 RNAV routes listed in this document will be subsequently published 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 action amends Title 14 Code of Federal Regulations (14 CFR) part 71 by amending high altitude RNAV ATS routes Q-13 and Q-15; establishing high altitude RNAV ATS route Q-174, and establishing low altitude RNAV ATS routes T-338, T-357, T-359, T-361, and T-363. The route changes are outlined below.

Q-13: Q-13 is amended to begin at the El Paso, TX, VORTAC (ELP) and end at the PAWLI, OR, waypoint (WP). Moving Q-13 to the west and beginning the route at the El Paso, TX, VORTAC (ELP) segregates overflight traffic on Q-13 from McCarran International Airport (KLAS) arrival and departure traffic on the new KLAS COKTL Standard Terminal Arrival Route (STAR) and KLAS JOHKR Standard Instrument Departure (SID). By segregating the Q-route from inbound and outbound traffic, KLAS departures can be assigned requested altitudes sooner. This also allows Oakland Air Route Traffic Control Center (ARTCC) to deliver KLAS arrival traffic to Los Angeles ARTCC at higher altitudes than current state, and provides the opportunity for optimized profile descents.

Q-15: Q-15 is amended to add the SOTOO, NV, WP; the HOUZZ, NV, WP; FUULL, NV, WP; and the SKANN, NV, WP between the DOVEE, NV, WP and the LOMIA, NV, WP. The purpose of this routing is to segregate overflight traffic on Q-15 from Las Vegas McCarran (KLAS) arrival and departure traffic.

Q-174: Q-174 is established between the NTELL, CA, WP to the FLCHR, NV, WP. Q-174 provides connectivity from the California Bay Area airports to Las Vegas McCarran and North Las Vegas airports. This route also provides an efficient path to navigate around active special use airspace and facilitate arrival sequencing to Las Vegas McCarran and satellite airports.

T-338: T-338 is established between the DSIRE, NV, WP to the BOEGY, AZ, WP. T-338 provides a lateral path for arrivals and departures to the North Las Vegas Airport (KVGT), Boulder City Municipal Airport (KBVU) and KLAS. Additionally, it serves propeller aircraft arriving at KVGT and KLAS from points east or that are departing from KVGT and KLAS to points east.

T-357: T-357 is established between the KONNG, NV, WP to the DSIRE, NV, WP. T-357 provides a predictable and repeatable path for overflights through the Las Vegas TRACON airspace and serves as an arrival/departure airway for KVGT, Henderson Executive Airport (KHND), KBVU, and KLAS aircraft.

T-359: T-359 is established from the DANBY, CA, WP to the DSIRE, NV, WP. T-359 provides a predictable and repeatable path for overflights through the Las Vegas TRACON airspace and serve as an arrival/departure airway for KVGT, KHND, KBVU, and KLAS aircraft. T-359 reduces the current requirement for air traffic control facilities to issue radar vectors or itinerant routing for KVGT arrivals/departures or overflights.

T-361: T-361 is established from the BOEGY, AZ, WP to the Mormon Mesa, NV, VORTAC (MMM). T-361 provides a predictable and repeatable flight path for aircraft flying through the Las Vegas TRACON airspace and to serve as an arrival/departure airway for KLAS, KVGT, KBVU, and KHND. T-361 reduces the current requirement for air traffic control facilities to issue radar vectors or itinerant routing for KLAS and KHND.

T-363: T-363 is established from the DICSA, NV, FIX to the Mormon Mesa, NV, VORTAC (MMM). T-363 provides a predictable and repeatable path for propeller-driven arrivals and departures to and from KHND, KBVU, and KLAS to and from points north and northeast.

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

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

The FAA has determined that the actions of amending two high RNAV ATS routes (Q-13 and Q-15), establishing one high RNAV ATS route (Q-174) in the western United States qualify for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, these actions are not expected to cause any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed these actions for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist warranting preparation of an environmental assessment or environmental impact study for the amendments of RNAV ATS routes Q-13 and Q-15, or the establishment Q-174. Environmental impact review of these Q routes was separately conducted and documented in a Categorical Exclusion Declaration document signed on June 15, 2020. The establishment of five low altitude RNAV ATS routes (T-338, T-357, T-359, T-361, and T-363) in the western U.S. was reviewed and analyzed for potential environmental impacts in the FAA's Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) for The Las Vegas Metroplex Project, signed on July 7, 2020. The EA, FONSI, and Notice of Availability can be found at http://www.metroplexenvironmental.com/las_metroplex/las_docs.html.

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

I. Background of This Rulemaking

The Longshore and Harbor Workers' Compensation Act (LHWCA or Act), 33 U.S.C. 901-50, establishes a comprehensive federal workers' compensation system for an employee's disability or death arising in the course of covered maritime employment. Metro. Stevedore Co. v. Rambo, 515 U.S. 291, 294 (1995). The Act's provisions have been extended to (1) contractors working on military bases or U.S. government contracts outside the United States (Defense Base Act, 42 U.S.C. 1651-54); (2) employees of nonappropriated fund instrumentalities (Nonappropriated Fund Instrumentalities Act, 5 U.S.C. 8171-73); (3) employees engaged in operations that extract natural resources from the outer continental shelf (Outer Continental Shelf Lands Act, 43 U.S.C. 1333(b)); and (4) private employees in the District of Columbia injured prior to July 26, 1982 (District of Columbia Workers' Compensation Act of May 17, 1928, Public Law 70-419 (formerly codified at 36 DC Code 501 et seq. (1973) (repealed 1979)). Consequently, the Act and its extensions cover a broad range of claims for injuries that occur throughout the United States and around the world.

OWCP's sound administration of these programs involves periodic reexamination of the procedures used for claims processing and related issues. OWCP has identified three areas where improvements can be made. The first is expanding electronic filing and requiring private parties to transmit all documents and information to OWCP electronically, except when the individual does not have a computer, lacks access to the internet, or lacks the ability to utilize the internet. Receiving documents and information in electronic form speeds claims administration and simplifies recordkeeping requirements. The second is streamlining settlement procedures. This too should speed the settlement-approval process and lessen the parties' burdens to submit multiple documents to have a settlement considered. Finally, OWCP is updating its existing penalty regulations and filling a gap by proposing a procedural scheme for employers to challenge penalties assessed against them. These rules will better apprise employers of their obligations and give them a clear path to exercise their rights to challenge any penalty imposed by OWCP.

On April 28, 2020, OWCP hosted a public outreach webinar to solicit stakeholders' views on how OWCP could improve its processes in the three areas covered in this rulemaking. See E.O. 13563, sec. 2(c) (January 18, 2011) (requiring public consultation prior to issuing a regulation). OWCP has considered the feedback received during that session in developing these rules.

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

In addition to this direct final rule (DFR), OWCP is concurrently publishing a companion Notice of Proposed Rulemaking (NPRM) elsewhere in this issue of the Federal Register . In direct final rulemaking, an agency publishes a DFR in the Federal Register with a statement that the rule will go into effect unless the agency receives significant adverse comment within a specified period. The agency concurrently publishes an identical proposed rule. If the agency receives no significant adverse comment in response to the DFR, the rule goes into effect. If the agency receives significant adverse comment, the agency withdraws the DFR and treats such comment as submissions on the NPRM. An agency typically uses direct final rulemaking when it anticipates the rule will be non-controversial.

By simultaneously publishing this DFR with an NPRM, notice-and-comment rulemaking will be expedited if OWCP receives significant adverse comment and withdraws the DFR. The proposed and direct final rules are substantively identical, and their respective comment periods run concurrently. OWCP will treat comment received on the DFR as comment regarding the companion NPRM and vice versa. Thus, if OWCP receives significant adverse comment on either the DFR or the NPRM, OWCP will publish a Federal Register notice withdrawing this DFR and will proceed with the proposed rule.

For purposes of the DFR, a significant adverse comment is one that explains why the rule (1) is inappropriate, including challenges to the rule's underlying premise or approach; or (2) will be ineffective or unacceptable without a change. In determining whether a significant adverse comment necessitates withdrawal of the DFR, OWCP will consider whether the comment raises an issue serious enough to warrant a substantive response had it been submitted in a standard notice-and-comment process. A comment recommending an addition to the rule will not be considered significant and adverse unless the comment explains how the DFR would be ineffective without the addition. OWCP requests comments on all issues related to this rule, including economic or other regulatory impacts on the regulated community.

The Department's current regulations implementing the LHWCA at 20 CFR part 702 allow OWCP and private parties to exchange documents and information through certain electronic methods or in paper form, at the sender's option. 20 CFR 702.101. The Department added optional electronic transmission to the regulations in 2015. 80 FR 12917-33 (March 12, 2015). Since then, OWCP has continued to expand its use of electronic case files and is working towards a fully electronic case-file environment.

Electronic case files have many advantages, including allowing claims staff remote access to documents and information; efficient case file transmission to the Office of Administrative Law Judges, the Benefits Review Board, and other tribunals; elimination of possible mail-handling delays due to unforeseen weather or other events, safety restrictions, and the like; and cost savings in reduced copying, scanning, and storage of paper documents. Electronic filing methods are ubiquitous, and the public generally is very familiar with them. In addition to the substantial business conducted in a fully electronic environment, government agencies and court systems routinely use electronic transmission systems to receive documents and information. In fact, OWCP estimates that more than 80 percent of all documents it now receives in the Longshore program are transmitted electronically by the private parties.

For these reasons, the Department has revised the current regulations to require all private parties transmitting documents and information to OWCP to do so electronically except when a district director allows a different filing method because the individual does not have a computer, lacks access to the internet, or lacks the ability to utilize the internet. The exception is consistent with the E-Government Act of 2002's directive that agencies must ensure the continued availability of services for persons who do not have computers or internet access. Sec. 202(c), Public Law 107-347, 116 Stat. 2899, 2911 (44 U.S.C. 3501 note). OWCP envisions a simple process for requesting relief under the exception and will allow individuals to self-certify their inability to use electronic filing. OWCP is unaware of any law that prohibits it from making electronic filing mandatory for all other parties.

In promulgating this rule, OWCP has considered the principles underlying the Government Paperwork Elimination Act (GPEA), 44 U.S.C. 3504, and the Electronic Signatures in Global and National Commerce Act (E-SIGN), 15 U.S.C. 7001 et seq. GPEA requires agencies, when practicable, to store documents electronically and to allow individuals and entities to communicate with agencies electronically. The GPEA also provides that electronic documents and signatures will not be denied legal effect merely because of their electronic form. Similarly, E-SIGN generally provides that electronic documents have the same legal effect as their hard copy counterparts and allows electronic records to be used in place of hard copy documents with appropriate safeguards. 15 U.S.C. 7001. Under E-SIGN, federal agencies retain the authority to specify the means by which they receive documents, 15 U.S.C. 7004(a), and to modify the disclosures required by section 101(c), 15 U.S.C. 7001(c), under appropriate circumstances.

Moreover, by 2022, the National Archives and Records Administration (NARA) will, to the fullest extent possible, no longer accept temporary or permanent records from agencies in a non-electronic format. See National Archives and Records Administration, 2018-2022 Strategic Plan at 12 (Feb. 2018); Delivering Government Solutions in the 21st Century at 22, 100-102 (June 21, 2018). Requiring electronic filings now will make more efficient OWCP's compliance with NARA's recordkeeping directives.

The rule also includes new provisions allowing the use of electronically signed documents consistent with E-SIGN. In April 2020, the Longshore program began accepting documents signed using certain electronic methods. See Industry Notice No. 179 (April 20, 2020), https://www.dol.gov/owcp/dlhwc/lsindustrynotices/industrynotice179.pdf. This rule codifies that practice. Allowing the use of improvements in signature technology will facilitate an easier and faster exchange of documents between parties and OWCP. The use of electronic signatures is voluntary, and parties may continue to submit documents with “wet” ink signatures, so long as they are scanned and submitted electronically. At the same time, OWCP is conscious of the need to safeguard the integrity of electronic signatures and to ensure that each signature truthfully reflects the purported signatory's intent to sign. To that end, the rule establishes criteria to be followed by parties submitting electronically-signed documents.

Section 8(i) of the Act, 33 U.S.C. 908(i), allows parties to settle compensation cases. Parties may agree to settle amounts payable for disability compensation, death benefits, medical benefits, attorney's fees, and costs. An adjudicator—a district director or an administrative law judge—must review each settlement application. Unless the settlement amount is inadequate or was procured by duress, the adjudicator must approve it. Section 8(i) also provides that when all parties are represented by counsel, a settlement application is deemed approved 30 days after its submission if the adjudicator does not disapprove it.

The settlement application process should be easy for the parties to follow and lead to prompt resolution of compensation cases. However, in some instances, the settlement application process has become overly complicated. To justify the settlement application, parties submit large amounts of documentation ( e.g., all of the employee's medical treatment records) that is well beyond what is necessary for full consideration of the application in most cases. In addition to the extra burdens placed on parties, this practice creates unnecessary administrative burdens for OWCP and the Office of Administrative Law Judges (OALJ).

The revised settlement regulations at §§ 702.241-702.243 streamline the application process by focusing on the relevant information the parties must initially submit to properly adjudicate the settlement application. The adjudicator may then exercise his or her discretion and ask for additional documentation from the parties in those cases where necessary to determine whether the settlement is adequate in amount and procured without duress. The rules also allow the adjudicator to defer to the parties' representations regarding the adequacy of the settlement amount and whether the settlement was procured by duress. The Department believes these changes will make both the application and approval process more efficient, lessening the burden on parties and adjudicators alike. The Department has also taken this opportunity to reorganize, and in some cases simplify, much of the information contained in the current settlement regulations.

OWCP is amending the current regulations and promulgating new ones implementing the Act's civil money penalty provisions. The Act allows OWCP to impose a penalty when an employer or insurance carrier fails to timely report a work-related injury or death, 33 U.S.C. 930(e), or fails to timely report its final payment of compensation to a claimant, 33 U.S.C. 914(g). See 20 CFR 702.204, 702.236. An employer who discharges or discriminates against an employee because of that employee's attempt to claim compensation under the Act may also be penalized. 33 U.S.C. 948a; 20 CFR 702.271. The rule revises current § 702.204 to provide for graduated penalties for an entity's failure to file, or falsification of, the required report of an employee's work-related injury or death. See 33 U.S.C. 930(a); 20 CFR 702.201. The rule provides that the penalty assessed will increase for each additional violation the employer has committed over the prior two years. The current regulation states only the maximum penalty allowable, without providing further guidance.

The regulations also contain a new Subpart I setting out procedures for assessing and challenging penalties. These rules allow an entity against whom a penalty is assessed the opportunity for a hearing before an administrative law judge, and to petition the Secretary of Labor (Secretary) for further review. After receiving notice from the district director that the assessment of a penalty is being considered and a subsequent decision assessing the penalty, the respondent may request a hearing before an administrative law judge. The ensuing decision will address whether the respondent violated the statutory or regulatory provision under which the penalty was assessed, and whether the amount of the penalty assessed is correct. Any party aggrieved by the decision may petition for the Secretary's review, which will be discretionary and based on the record. These additional levels of review are consistent with Recommendation 93-1 of the Administrative Conference of the United States, which recommends that formal adjudication under the Administrative Procedure Act be made available where a civil money penalty is at issue. These procedures will fully protect employers' and insurance carriers' rights to challenge OWCP's action before any penalty becomes final and subject to collection, and ensure transparency and fairness in the enforcement proceedings. See generally Executive Order 13892, Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication (October 9, 2019).

This rule revises several parts of § 702.101 to require electronic submission of all documents and information to OWCP, permits the use of electronic signatures, and amends the title of the regulation to include electronic signatures. Paragraph (a) begins by excepting from the mandatory electronic submission and exchange requirements those instances where the statute either allows filings by mail or mandates service by mail: Sections 702.203 (employer's report of injury or death, implementing 33 U.S.C. 930(d)), 702.215 (notice of injury or death, implementing 33 U.S.C. 912(c)), and 702.349 (service of compensation orders, implementing 33 U.S.C. 919(e)). Although parties are not required to submit reports and notices of injury or death to OWCP electronically, OWCP encourages them to do so.

Paragraph (a) combines current paragraphs (a) and (b) and breaks the combined text into three subsections that address three categories of document and information exchanges. Paragraph (a)(1) provides that parties (and their representatives) sending documents and information to OWCP must submit them electronically through an OWCP-authorized system. OWCP's Secure Electronic Access Portal (SEAPortal) is an example of such a system. A district director may make an exception to this rule for parties who do not have computers or access to the internet, or who lack the ability to use the internet. When a district director authorizes a party to use an alternative submission method, the party may use any of the methods set forth in the current rule: Postal mail, commercial delivery service, hand delivery, or another method OWCP authorizes. In all instances, documents are considered filed when received by OWCP.

Paragraph (a)(2) provides that OWCP may send documents and information to parties and their representatives by a reliable electronic method ( e.g., email), postal mail, commercial delivery service, hand delivery, or electronically through an OWCP-authorized system. These methods are the same as those in the current regulation with one exception. For documents and information OWCP sends via a reliable electronic method, the rule eliminates the requirement that the party or representative must agree in writing to receive documents by that method. OWCP is now routinely obtaining electronic contact information, such as email addresses, from parties and representatives, and plans to increase its use of standard electronic business communication practices. Service of compensation orders, however, is still governed by § 702.349 and thus may be sent electronically only when a party or representative affirmatively waives their statutory right to registered or certified mail service.

Paragraph (a)(3) governs exchange of documents and information between opposing parties and representatives. Like the current rule, the revised provision allows the parties flexibility to choose the method of service they wish to use. They may use the same methods as OWCP, although parties must agree in writing to receive documents by a reliable electronic method. Requiring written confirmation from the recipient continues to protect all parties and representatives from any misunderstandings about service.

Paragraph 702.101(g) is a new provision that allows parties to submit electronically-signed documents to OWCP. The rule is intended to permit the widest possible use of electronic technology. Electronic signatures will be accepted on all submissions to OWCP that require a signature, not merely those non-exhaustive examples listed in the text of the rule.

Paragraph (g)(1) explains how key terms are used in the remainder of the paragraph. A “document” includes both paper and electronic writings. The documents listed in this definition—applications, claim forms, notices of payment, and reports of injury—are meant to serve as examples of the types of documents parties could electronically sign and submit to OWCP, but are not meant to be an exhaustive list. Electronic signatures on other types of documents not listed here will also be accepted by OWCP.

An “electronic signature” is a mark created by electronic means that shows an intent to sign the document. An electronic signature is binding on a business entity only if the signatory has appropriate legal authority to bind the entity.

“Electronic signature devices” are tools parties may use to create electronic signatures. As with documents, the examples of electronic signature devices provided in this paragraph are not an exhaustive list. Parties may utilize other types of electronic signature devices, as long as the device is uniquely usable by the signatory at the time the signature is made. The purpose of this limitation is to ensure the signature's trustworthiness. The definition of “electronic signature programs” is designed to permit the submission of documents electronically signed with third-party software programs such as—but not limited to—AdobeSign, DocuSign, and E-Sign.

The definition of “signatory” is limited to individual, human persons; a corporation or business cannot be a signatory, though a signatory can sign on behalf of a corporation or business. This definition is designed to ensure that if the validity of a signature is challenged, it will be possible for all parties involved to verify who created it.

Paragraph (g)(2) lists the allowable methods for creating and affixing electronic signatures and adds the proviso that OWCP can approve other methods.

Paragraph (g)(3) clarifies that all electronic signatures made on the same document need not be created by the same method; a document could, for example, contain a “/s” signature from a claimant (as specified in paragraph (g)(2)(iii)) and a separate signature from an employer's agent made by drawing a mark with a stylus on a touch-screen (as specified in paragraph (g)(2)(iv)). OWCP recognizes that some of the methods described in paragraph (g)(2) may overlap. For example, an electronic signature program may involve a signatory first logging in through the use of an electronic signature device such as a PIN number, and then typing their name following a “/s” mark. A signature that incorporates multiple acceptable methods is still an acceptable electronic signature. These provisions are designed to be as inclusive as possible while militating against the possibility of abuse or fraud.

Finally, paragraph (g)(4) imposes obligations on parties that submit electronically-signed documents. This subparagraph is designed to mitigate the possibility of a legal challenge to the integrity of a signature or the identity of the signatory. Paragraph (g)(4)(i) is designed to prevent the use of signatures that leave the actual identity of the signatory ambiguous; examples of such signatures might be those that indicate only a PIN, ambiguous username, or email address that is shared by multiple members of a business or other organization. Paragraphs (g)(4)(ii)-(iii) impose record-keeping obligations on parties. By requiring parties to keep information about how and when an electronic signature was created, OWCP ensures that some means of authenticating the signature exists if the document's validity is ever disputed.

The remaining revisions to § 702.101 are technical in nature. Existing paragraphs (c)-(f) are renumbered to (b)-(e), and cross-references to other paragraphs throughout the section have been updated. In addition, because paragraph (a)(2) does not require parties and representatives to consent in writing to receive documents and information from OWCP via reliable electronic methods, paragraph (c) removes the words “OWCP” and “as appropriate” from current paragraph (d). Even though much of § 702.101 remains unchanged, the Department has chosen to re-publish the section in full for the public's convenience.

Section 30 of the Longshore Act, 33 U.S.C. 930, governs how and when employers must report employee injuries and deaths. In general, employers must send reports within 10 days of the injury or death, or knowledge of an injury or death. The Act explicitly allows an employer to comply with the reporting requirement by “mailing” the report “in a stamped envelope, within the time prescribed.” 33 U.S.C. 930(d). Current § 702.203(b), which implements section 30(d), acknowledges this mailing provision and provides that employers may send the reports to OWCP by U.S. Postal mail, commercial delivery service, or electronically. To encourage electronic filing yet preserve the statutory mail provision, revised § 702.203(b) eliminates commercial delivery service as a submission option but retains the mailing provisions. If an employer chooses to mail the report, the rule places the burden on the employer to preserve evidence of the date the report is mailed to OWCP. This could easily be accomplished by using certified mail. Finally, to clarify electronic submission procedures, the rule requires submission via an OWCP-authorized system and includes a cross-reference to revised § 702.101(a)(1). This revision eliminates the use of other electronic transmission methods and the need to specify when filing is complete under those methods.

Section 12 of the Longshore Act, 33 U.S.C. 912, governs how and when employees and survivors give notices of injury or death to employers and OWCP. The Act requires that such notices be given to the district director “by delivering it to him or sending it by mail addressed to his office.” 33 U.S.C. 912(c). Without amendment of current § 702.215, the revisions to § 702.101 would effectively eliminate this statutory mailing option. Current § 702.215 provides that “[n]otice may be given to the district director by submitting a copy of the form supplied by OWCP to the district director, or orally in person or by telephone.” The “submitting” language brings to bear the transmission methods specified in § 702.101. See 20 CFR 702.101(e); 48 CFR 12921 (March 12, 2015). Since revised § 702.101(a) would require electronic filing of these notices, OWCP has amended § 702.215 to preserve the option of filing by mail in compliance with the Act. The rule makes clear that employees and survivors may also file these notices electronically through an OWCP-authorized system.

Revised § 702.241 contains basic information about settlements under section 8(i) of the Longshore Act, 33 U.S.C. 908(i). Paragraph (a) retains the current definition of the term “Adjudicator,” adds a definition for “Compensation case,” and includes the definition for “Counsel” located in current § 702.241(h). Paragraph (b) sets out several basic concepts: That an adjudicator must approve all settlements; the types of compensation, fees, and costs that a settlement may include; the “inadequate” and “procured by duress” standard applied in reviewing settlements; and, where all parties are represented by counsel, that the settlement is deemed approved 30 days after receipt of a completed application unless an adjudicator requests additional information or disapproves the application within that time period.

Paragraph (c) specifies when a settlement application is considered received by an adjudicator or higher tribunal. The rule eliminates the provision in current § 702.241(c) allowing settlement applications filed with an administrative law judge to be considered received “five days before the date on which the formal hearing is scheduled to be held.” In OWCP's experience, judges act quickly on settlement applications when received. Removing this provision helps eliminate any confusion parties may have over when a judge will consider their settlement proposal and promote prompt resolution. Paragraph (d) retains the provision in current § 702.241(f) regarding days that count towards the 30-day settlement period. And paragraph (e) retains the provision in current § 702.241(g) that limits settlements to claims in existence at the time of the settlement and provides that settlements for the injured employee do not affect survivors' claims for death benefits.

Additional note: Current § 702.241(b) has been moved to revised § 702.242(e) and revised. Current § 701.241(d) has been moved to revised § 702.243(f) and revised. Current § 701.241(e) has been moved to revised § 702.243(i) and revised.

Revised § 702.242 sets out the information parties must include in a settlement application and how parties must submit the application. Paragraph (a) simplifies the requirements in current § 702.242(a) by requiring that the parties use an application form prescribed by OWCP. The form is a self-sufficient document that requires all information necessary for a complete application and signatures necessary to indicate agreement to the settlement. The form also apprises claimants of the effect of the settlement ( e.g., waiver of rights to further compensation). Using a form should simplify the application process for the parties, who will no longer have to create their own documents. A form also has the advantage of allowing OWCP to adopt technology that will allow full online completion and submission of the settlement application.

Paragraph (a) also lists the components that must be included in the settlement application. In large part, this list reflects the requirements set forth in current § 702.242(a) and (b). Parties are required to include basic facts about the case, amounts to be paid under the settlement, the signatures of the parties agreeing to the settlement and attesting that the settlement is adequate and not procured by duress, and a statement regarding severability of the parts of the settlement, where appropriate.

Paragraph (b) provides that the adjudicator can request any additional information he or she deems necessary to decide whether the settlement is adequate or was procured by duress. This allows the adjudicator to tailor a request for additional information ( e.g., a medical report, projections of future medical treatment expenses) to the facts of the particular case. Paragraph (c) limits the adjudicator's consideration to the information in the application, any specific information the adjudicator requests from the parties, and information in the case record when the settlement application is filed.

Paragraphs (d) and (e) prescribe how parties submit completed settlement applications. These provisions require parties to submit applications to the district director except when the case is pending before the OALJ. In that instance, parties may either ask OALJ to remand the case to the district director and then submit the application to the district director after remand or submit the application to OALJ. Parties who submit settlement applications while a case is pending before a higher tribunal—the Benefits Review Board or a court—must submit them to the district director and ask the tribunal to return the case to the district director, who is an adjudicator with the authority to consider the application. These procedures reflect current practice.

Revised § 702.243 governs how settlement applications are reviewed and the consequences of that review. Paragraph (a) requires adjudicators to review the settlement application within 30 days of receipt. During that time period, the adjudicator must notify the parties if the application is incomplete and ask for any additional information as allowed under revised § 702.242(b). The notice must also inform the parties that the 30-day period in revised § 702.241(b) will not begin to run until the adjudicator receives the completed application and additional information. This formulation is consistent with current § 702.243(a), which states that an incomplete application tolls the 30-day time period for deeming the application approved.

Paragraph (b) combines two requirements in current § 702.243(b) and (c) regarding adjudicating a settlement. The adjudicator must issue a compensation order approving or disapproving the settlement application. If the application is disapproved in any part, the adjudicator must include a statement of the reasons for finding the settlement (or part thereof) inadequate or procured by duress. This provision also requires the adjudicator to file and serve the compensation order under the procedures set forth in § 702.349. Although OWCP already follows these procedures, adding a reference to § 702.349 ensures that parties will be able to choose to receive orders on settlements via electronic means rather than by registered or certified mail.

Paragraph (c) instructs adjudicators to consider the information in the settlement application, any additional information the adjudicator requested under revised § 702.242(b), and the parties' attestations in the application in determining whether the proposed settlement is adequate and was procured without duress. The rule also allows the adjudicator to defer to the parties' attestations regarding adequacy and duress. This provision replaces current § 702.243(f)'s more detailed standard for determining whether the settlement amount is adequate, allowing the adjudicator to consider only that information important to the particular case.

Like current § 702.243(e), revised paragraph (d) continues to provide that disapproval of any part of a settlement applies to the entire settlement unless the parties state in the application that they agree to settle various parts independently. OWCP will incorporate this question into the settlement application.

Paragraph (e) sets out the actions parties may take after an adjudicator disapproves a settlement application. When disapproved by a district director, the parties may submit an amended settlement application to the district director or request an administrative law judge hearing on the disapproval. Any party may also ask for an administrative law judge hearing on the merits of the case. Similarly, when disapproved by an administrative law judge, the parties may submit an amended settlement application to the judge, appeal to the Benefits Review Board, or proceed with a hearing on the merits.

Paragraph (f) sets out the circumstances when a settlement is deemed approved. Consistent with section 8(i)(1), 33 U.S.C. 908(i)(1), this regulation applies only when all parties are represented by counsel. If the adjudicator neither approves nor disapproves the settlement application within 30 days after an adjudicator receives a complete application and any additional information the adjudicator requests under revised § 702.242(b), the settlement will be deemed approved.

Paragraph (g) retains the provision in current § 702.243(b) that an employer's and insurance carrier's liability for a compensation case is not discharged until the settlement application is approved. This includes both approvals issued by an adjudicator and those settlements deemed approved under the provisions of this section.

Paragraph (h) addresses the effect of settling attorney fees. The revised rule retains the thrust of the provision in current § 702.241(e): Approval of a settlement application that includes attorney fees constitutes approval of fees for all purposes. Paragraph (h) adds that fees in a settlement application may include fees for services rendered before a different adjudicator or tribunal. This will allow one adjudicator to resolve all fee maters, eliminating any need for the parties to seek fee resolutions from any other adjudicator or tribunal.

Paragraph (i) revises current § 702.243(g) regarding how adjudicators consider settlements in cases being paid under a final compensation order. The current regulation requires adjudicators to disapprove any settlement amount that falls below the present value of compensation payments commuted (as prescribed in the regulation) unless the parties show that the amount is adequate. Revised paragraph (i) expands the adjudicator's discretion by making the comparison between the settlement and commuted amounts permissible rather than mandatory. This will allow the adjudicator more flexibility to ratify the parties' agreement as to the settlement amount. OWCP also has removed from current § 702.243(g) the reference to the U.S. Life Table developed by the Department of Health and Human Services. This table is insufficient because it does not provide life expectancies for people in foreign countries that could be covered by the Longshore Act or its extensions, particularly the Defense Base Act. Revised paragraph (i) instead allows OWCP to specify the life expectancy tables or calculators to be used under this provision.

Revised § 702.204 revises the current regulation in several ways. First, paragraph (a)(1) defines a knowing or willful violation sufficient to impose a penalty. Paragraph (c) provides that the number of penalties assessed in the prior two years against an entity- including its parent company, subsidiaries, or related entities-will be considered in assessing further penalties. Paragraph (c) also lists the penalty amounts that will be imposed, beginning at two percent of the maximum penalty amount for a first violation, with the penalty doubling for each subsequent violation through the sixth violation. The seventh violation will result in the maximum penalty. OWCP has adopted a percentage scheme because the maximum penalty amount will be adjusted every year under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Public Law 114-74, 701.

OWCP has substituted the phrase “additional compensation” for the word “penalty” in current § 702.233's title ( i.e., “Penalty for failure to pay an award”). Section 702.233 implements section 14(e) of the Act, 33 U.S.C. 914(e), which provides that claimants are entitled to an additional 10 percent of any compensation payable without an award when not paid within 14 days of when it is due. The Board has held that payments under section 14(e) are “compensation” and not “penalties.” Robirds v. ICTSI Oregon, Inc., 52 BRBS 79 (2019) (en banc); appeal docketed Ninth Cir. No. 19-1634. In reaching its conclusion, the Board relied on the Federal Circuit's decision in Ingalls Shipbuilding, Inc. v. Dalton, 119 F.3d 972, 979 (Fed. Cir. 1997), which held that payments under section 14(e) are compensation. The majority of courts have also construed the similar language in section 14(f) of the Act, 33 U.S.C. 914(f) (requiring payment of additional 20 percent for late payments under terms of an award), as payments of “compensation” rather than a penalty. See Newport News Shipbuilding and Dry Dock Co. v. Brown, 376 F.3d 245, 251 (4th Cir. 2004) (“[I]t is plain that an award for late payment under [section] 14(f) is compensation.”); Tahara v. Matson Terminals, Inc., 511 F.3d 950, 953-54 (9th Cir. 2007) (same); but see Burgo v. General Dynamics Corp., 122 F.3d 140, 145-46 (2d Cir. 1997). Using “additional compensation” in the title of § 702.233 promotes accuracy and clarifies the instances in which the new penalty procedures apply.

Current § 702.236 has been revised to incorporate the penalty procedural rules in new Subpart I.

Current § 702.271 has been revised by dividing paragraph (a) into paragraphs (a) and (b), and renumbering the subdivisions of paragraph (a), for clarity. Current paragraph (a)(2) is deleted and replaced by revised § 702.273, which sets forth the range of penalties to be assessed and incorporates the penalty procedural rules in new Subpart I. Given this change, the words “and penalty” have been deleted from the section's title and the punctuation has been altered. Current paragraphs (b), (c), and (d) are redesignated (c), (d), and (e).

Revised § 702.273 replaces current § 702.271(a)(2). It sets forth the range of penalties for discharge or discrimination, and incorporates the penalty procedural rules in new Subpart I. The rule also stays proceedings on any penalty assessed by the district director prior to a hearing until the Administrative Law Judge or higher tribunal resolves the underlying discrimination complaint.

New § 702.901 provides that the procedures set forth in Subpart I apply when the district director imposes civil monetary penalties under §§ 702.204, 702.236, or 702.273, and that any penalties collected are to be deposited into the special fund described in 33 U.S.C. 944.

New § 702.902 defines “respondent” as the employer, insurance carrier, or self-insured employer against whom the district director is seeking to assess a penalty.

New § 702.903 governs OWCP's notice of any penalty assessed and the respondent's response. Paragraph (a) requires OWCP to serve a written notice on the respondent by a method that verifies the delivery date because date of receipt triggers the respondent's response period. Paragraph (b) prescribes the contents of the notice, which include the consequences of not responding to the notice or supplying an inadequate response. Paragraph (c) gives the respondent 30 days to respond with documentation regarding any facts relevant to the reason for the penalty, as well as any documentation that may lead to mitigation of the penalty amount under the Small Business Regulatory Enforcement Fairness Act, 5 U.S.C. 601 (note), if the penalty arises under § 702.236. Paragraph (d) provides that, if there are further proceedings before an administrative law judge, that judge may consider only the evidence submitted to the district director, unless exceptional circumstances prevented the respondent from submitting it to the district director. OWCP has adopted this restriction so that OWCP can evaluate all evidence the respondent wishes to introduce in assessing the penalty. Finally, paragraph (e) provides that if the respondent does not respond within 30 days, the assessment of the penalty and its amount becomes final and collection may begin under § 702.912.

New § 702.904 addresses the district director's decision and any appeal to an administrative law judge. Paragraph (a) provides that the district director's decision must state the reasons for the assessment of the penalty and its amount, and set forth the consequences of a respondent's failure to timely respond. Paragraph (b) provides that the respondent may request a hearing before an administrative law judge within 15 days of receiving the decision by filing a request with the district director, and sets forth the requirements the request must meet. Paragraph (c) provides that a timely hearing request will stay the collection of a penalty until final resolution of the penalty by the administrative law judge or the Secretary. Paragraph (d) provides that, if the respondent does not request a hearing within 15 days, the assessment and penalty become final, and collection of the penalty may be instituted under § 702.912.

New § 702.905 addresses referral of an assessment and penalty for a hearing before an administrative law judge. Paragraph (a) provides that, when the district director receives a request for hearing, the district director will immediately notify the Chief Administrative Law Judge, who will assign the case to an administrative law judge. The district director will also forward the administrative record, which consists of the district director's decision, the documentation the district director relied on in making the decision, all written responses and documentation filed by the respondent with the district director, and a statement of the issues referred for hearing. Paragraph (b) provides that the rules set forth in 29 CFR part 18 apply to any hearing before an administrative law judge.

New § 702.906 governs the contents, issuance, service, and finality of the administrative law judge's decision. Paragraph (a) provides that the administrative law judge may consider only the issues referred for hearing by the district director. Paragraph (b) limits the administrative law judge's determinations on those issues to whether the respondent has violated the provision under which the penalty was assessed, and whether the penalty is appropriate under the standards set forth in §§ 702.204, 702.236, 702.271, and 702.903(c)(2). Limiting the judge's consideration to these issues will help streamline the hearing and decision process. Paragraph (c) requires the administrative law judge's decision to include a statement of findings and conclusions on each issue referred, with the reasons and bases for those findings and conclusions. Paragraph (d) requires the administrative law judge to serve both the respondent and the district director with the decision on the day it is issued through a trackable delivery method. Paragraph (e) provides that any party may move for reconsideration of the decision within 30 days of its issuance, and that any such motion will suspend the running of time to file a petition for review under § 702.908. Paragraph (f) provides that, absent a timely request for reconsideration or petition for review, the administrative law judge's decision will be deemed final, and recovery of the penalty may be instituted under § 702.912.

New § 702.908 allows any party aggrieved by an administrative law judge's decision to petition the Secretary for review. Paragraph (a) requires that any petition be filed within 30 days. Under paragraph (b), a timely motion for reconsideration filed with the administrative law judge tolls the time for filing a petition with the Secretary; the 30-day period will not begin to run until the judge issues a decision on reconsideration. Paragraph (c) sets out the requirements for the petition for review. And paragraph (d) provides the mailing address for sending the petition but allows the Secretary to designate alternative filing methods, such as an electronic filing system. Documents are not considered filed until actually received by the Secretary.

New § 702.909(a) provides that the Secretary's review of a timely petition is discretionary. Paragraph (a)(1) provides that, if the Secretary declines review, the administrative law judge's decision will be considered the final agency decision. Under paragraph (b)(2), if the Secretary chooses to review the decision, the Secretary will notify the parties of the issues to be reviewed and set a schedule for the parties to submit written arguments. Paragraph (b) requires the district director to forward the administrative record to the Secretary if the Secretary decides to review the administrative law judge's decision.

New § 702.910 limits the Secretary's review to the hearing record. The Secretary will review findings of fact under a substantial evidence standard and conclusions of law de novo. The Secretary may affirm, reverse, modify, or vacate the decision, and may remand to the Office of Administrative Law Judges for further review. The Secretary's decision must be served on all parties and the Chief Administrative Law Judge.

New § 702.911 provides that the respondent and the district director may enter into a settlement at any time during proceedings before the administrative law judge or the Secretary. This provision is meant to allow flexibility and forestall further litigation if the district director and the respondent reach agreement at any point during the proceedings.

Paragraph (a) of new § 702.912 provides that, when a penalty becomes final under §§ 702.903(e), 702.904(d), or 702.906(f), the penalty is immediately due and payable to the Department on behalf of the special fund described in 33 U.S.C. 944. Paragraph (b) provides that, if payment is not received within 30 days after it becomes due and payable, it may be recovered by a civil action brought by the Secretary.

Section 39(a) of the LHWCA, 33 U.S.C. 939(a)(1), authorizes the Secretary of Labor to prescribe rules and regulations necessary for the administration of the Act. The LHWCA also grants the Secretary authority to determine by regulation how certain statutory notice and filing requirements are met. See 33 U.S.C. 907(j)(1) (the Secretary is authorized to “make rules and regulations and to establish procedures” regarding debarment of physicians and health care providers under 33 U.S.C. 907(c)); 33 U.S.C. 912(c) (employer must notify employees of the official designated to receive notices of injury “in a manner prescribed by the Secretary in regulations”); 33 U.S.C. 919(a) (claim for compensation may be filed “in accordance with regulations prescribed by the Secretary”); 33 U.S.C. 919(b) (notice of claim to be made “in accordance with regulations prescribed by the Secretary”); 33 U.S.C. 935 (“the Secretary shall by regulation provide for the discharge, by the carrier,” of the employer's liabilities under the Act). This rule falls well within these statutory grants of authority.

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its attendant regulations, 5 CFR part 1320, require that the Department consider the impact of paperwork and other information collection burdens imposed on the public. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the Office of Management and Budget (OMB) under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number. See 5 CFR 1320.5(a) and 1320.6.

All forms and documents currently approved by OMB are subject to electronic submission except when a party obtains permission from OWCP to use a different submission method or otherwise provided by statute. The Department has submitted an Information Collection Request (ICR) for all of these forms under the procedures for review and clearance contained in 5 CFR 1320.13. The Exchange of Documents and Information; Electronic Signatures Rule ( see new § 702.101) does not materially change any other ICR with regard to the information collected, but does change the manner in which forms that collect information may be submitted. The Department is requiring private parties to use an electronic method for the transmission of information to OWCP.

The collection of information requirements are contained within ICRs assigned the following OMB control numbers: 1240-0003, 1240-0004, 1240-0005, 1240-0008, 1240-0012, 1240-0014, 1240-0025, 1240-0026, 1240-0029, 1240-0036, 1240-0040, 1240-0041, 1240-0042, 1240-0045 1240-0053, and 1240-0058. The regulatory sections specifying the submission procedures are found in the following sections: 20 CFR 702.111, 702.121, 702.132, 702.162, 702.174, 702.175, 702.201, 702.202, 702.221, 702.234, 702.235, 702.236, 702.242, 702.243, 702.251, 702.285, 702.317, 702.321, 702.349, 702.407, 702.419, 703.116, 703.203, 703.204, 703.205, 703.209, 703.210, 703.212, 703.303 and 703.310. See also 42 U.S.C. 1652.

Although the rule does not eliminate current methods of submission for these collections by mail where consistent with statute, the parties will have to submit more documents electronically. OWCP anticipates electronic submission will lead to cost savings in hours and mailing costs (envelopes and postage) for the parties. Given the response rate for each of the existing collections, current combined mailing costs are estimated at $118,657. Under this new rule, the Department anticipates a 97 percent rate of electronic submission, an accompanying reduction in postal mail submission, and a resulting cost savings of $115,097. The Department has submitted a request to OMB for a non-substantive change for each existing ICR cited above to obtain approval for the changed cost estimate resulting from electronic submission.

This rule imposes two new information collections. First, revised § 702.201(a)(1)(i) generally requires parties and their representatives to submit documents and information electronically to OWCP. But the rule allows an OWCP district director to allow an alternative filing method for individuals who do not have a computer, access to the internet, or the ability to use the internet. OWCP plans to use a new form that will allow individuals to self-certify that they qualify for this exception. For this form, OWCP estimates 3,048 respondents with an annual time burden of 254 hours. Because this form will only be used when other documents are being submitted, there is no additional cost burden. Second, revised § 702.242 requires parties to apply for approval of a settlement using an application form prescribed by OWCP. As explained in the section-by-section analysis above, OWCP believes use of a comprehensive form will lessen the burdens on the parties and the adjudicators who must review the settlements. Although OWCP already has an approved settlement application form ( see OMB control number 1240-0058, Form LS-8), the new form will collect some additional information in a substantially revised format. For this form, OWCP estimates 5,400 respondents with an annual time burden of 1,782 hours and other costs burden of $289.17. The Department has submitted a request to OMB for approval of both new information collections.

The submitted ICRs for the new collections imposed by this rule will be available for public inspection for at least 30 days under the “Currently Under Review” portion of the Information Collection Review section on the reginfo.gov website, available at: http://www.reginfo.gov/public/do/PRAMain. Currently approved information collections are available for public inspection under the “Current Inventory” portion of the same website.

Request for Comments: As part of its continuing effort to reduce paperwork and respondent burden, the Department conducts a pre-clearance consultation program to provide the general public and Federal agencies an opportunity to comment on proposed and/or continuing collections of information. This program helps to ensure requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements can be properly assessed. Comments on the information collection requirements may be submitted to the Department in the same manner as for any other portion of this rule.

In addition to having an opportunity to file comments with the agency, the PRA provides that an interested party may file comments on the information collection requirements directly with the Office of Management and Budget, at Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-OWCP Office of Management and Budget, Room 10235, 725 17th Street NW, Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email: OIRA_submission@omb.eop.gov. Commenters are encouraged, but not required, to send a courtesy copy of any comments to the general addressee for this rulemaking. The OMB will consider all written comments it receives within 30 days of publication of this DFR in the Federal Register . To help ensure appropriate consideration, comments should mention at least one of the OMB control numbers noted in this section.

The OMB and the Department are particularly interested in comments that address the following:

• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

• Enhance the quality, utility, and clarity of the information to be collected; and

• Minimize the burden of the collection of information on those who are to respond, through the use of appropriate automated, electronic, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

The information collections in this rule may be summarized as follows:

1. Title of Collection: Employer's First Report of Injury or Occupational Disease, Employer's Supplementary Report of Accident or Occupational Illness.

OMB Control Number: 1240-0003.

Total Estimated Number of Responses: 24,631.

Total Estimated Annual Time Burden: 6,158 hours.

Total Estimated Annual Other Costs Burden: $232.76.

2. Title of Collection: Carrier's Report of Issuance of Policy.

OMB Control Number: 1240-0004.

Total Estimated Number of Responses: 1,500.

Estimated Annual Time Burden: 25 hours.

Total Estimated Annual Other Costs Burden: $0.47.

3. Title of Collection: Securing Financial Obligations Under the Longshore and Harbor Workers' Compensation Act and its Extensions.

OMB Control Number: 1240-0005.

Total Estimated Number of Responses: 695.

Estimated Annual Time Burden: 869 hours.

Total Estimated Annual Other Costs Burden: $12.08.

4. Title of Collection: Regulations Governing the Administration of the Longshore and Harbor Workers' Compensation Act.

OMB Control Number: 1240-0014.

Total Estimated Number of Responses: 90,759.

Estimated Annual Time Burden: 32,971 hours.

Estimated Annual Other Costs Burden: $786.09.

5. Title of Collection: Request for Earnings Information.

OMB Control Number: 1240-0025.

Total Estimated Number of Responses: 100.

Estimated Annual Time Burden: 25 hours.

Estimated Annual Other Costs Burden: $0.95.

6. Title of Collection: Application for Continuation of Death Benefit for Student.

OMB Control Number: 1240-0026.

Total Estimated Number of Responses: 20.

Total Estimated Annual Time Burden: 10 hours.

Total Estimated Annual Other Costs Burden: $0.19.

7. Title of Collection: Request for Examination and/or Treatment.

OMB Control Number: 1240-0029.

Total Estimated Number of Responses: 90,000.

Estimated Annual Time Burden: 48,750 hours.

Total Estimated Annual Other Costs Burden: $2,532,816.

8. Title of Collection: Longshore and Harbor Workers' Compensation Act Pre-Hearing Statement.

OMB Control Number: 1240-0036.

Total Est. Number of Responses: 3,513.

Estimated Annual Time Burden: 586 hours.

Total Estimated Annual Other Costs Burden: $61.13.

9. Title of Collection: Certification of Funeral Expenses.

OMB Control Number: 1240-0040.

Total Estimated Number of Responses: 75.

Total Estimated Annual Time Burden: 19 hours.

Total Estimated Annual Other Costs Burden: $0.71.

10. Title of Collection: Notice of Final Payment or Suspension of Compensation Benefits.

OMB Control Number: 1240-0041.

Total Estimated Number of Responses: 37,800.

Total Estimated Annual Time Burden: 6,300 hours.

Total Estimated Annual Other Costs Burden: $357.21.

11. Title of Collection: Notice of Controversion of Right to Compensation.

OMB Control Number: 1240-0042.

Total Estimated Number of Responses: 18,000.

Total Estimated Annual Time Burden: 4,500 hours.

Total Estimated Annual Other Costs Burden: $295.97.

12. Title of Collection: Request for Electronic Service of Orders—Waiver of Certified Mail Requirement.

OMB Control Number: 1240-0053.

Total Estimated Number of Responses: 14,000.

Estimated Annual Time Burden: 770 hours.

Estimated Annual Other Costs Burden: $0.00.

13. Title of Collection: Request for Intervention, Longshore and Harbor Workers' Compensation Act.

OMB Control Number: 1240-0058.

Total Estimated Number of Responses: 12,414.

Total Estimated Annual Time Burden: 3,189 hours.

Total Estimated Annual Other Costs Burden: $342.91.

14. Title of Collection: Rehabilitation Plan and Award.

OMB Control Number: 1240-0045.

Total Estimated Number of Responses: 3,913.

Estimated Annual Time Burden: 1,957 hours.

Estimated Annual Other Costs Burden: 0.00.

15. Title of Collection: Rehabilitation Maintenance Certificate.

OMB Control Number: 1240-0012.

Total Estimated Number of Responses: 3,452.

Estimated Annual Time Burden: 575 hours.

Estimated Annual Other Costs Burden: $0.00.

16. Title of Collection: Rehabilitation Action Report.

OMB Control Number: 1240-0008.

Total Estimated Number of Responses: 4,066.

Estimated Annual Time Burden: 678 hours.

Estimated Annual Other Costs Burden: $0.00.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The Department has considered this rule with these principles in mind and has concluded that the regulated community will benefit from this regulation for several reasons.

Requiring most parties and representatives to submit documents electronically to OWCP will speed claims processing and allow OWCP to be more responsive to requests for assistance. Currently, OWCP must scan paper submissions into digital format and add them to the electronic case file before claims staff can take any action on them. When coupled with the time to deliver paper submissions to OWCP, this can delay responding to a request by several days. In contrast, electronic submissions are immediately associated with the case file and available to claims staff. Codifying the use of digital signatures in the regulations will also simplify electronic and even paper submissions (when allowed).

Similarly, streamlining the settlement process by limiting the amount of information the parties must submit with every application will reduce administrative burdens on both the parties and OWCP. All of these changes will result in more expeditious resolution of disputes, thus furthering the “certain, prompt recovery for employees” the Act guarantees. Roberts v. Sea-Land Servs., Inc., 556 U.S. 93, 97; 132 S.Ct. 1350, 1354 (2012).

The Department does not believe parties will incur additional costs as a result of the revisions to the electronic submission of documents and information regulation and may see a small financial benefit. As noted, more than 80 percent of documents currently sent to OWCP are submitted electronically. For these parties and representatives, no change in their current practices will be needed. Although the parties and representatives who currently submit paper documents will have to alter their practice, these alterations may result in cost savings by reducing paper copying charges and mailing or delivery expenses. Even if parties and representatives incurred minimal additional costs, they would be outweighed by the benefits reaped—primarily more expeditious claims processing and delivery of compensation.

The Department also believes that promulgating procedural rules related to civil money penalties benefits employers (and their insurance carriers) against whom OWCP may assess penalties. Currently, the regulations contain no set procedures for employers to challenge penalties, which can lead to procedural decisions being made on a case-by-case basis. The new rules establish a transparent and consistent pathway for assessment and adjudication of penalties: Clear notice of the penalty and an opportunity to contest it before imposed by OWCP; hearing by an administrative law judge upon request; discretionary review by the Secretary; and a stay of payment for the penalty assessed until review is complete and the decision becomes final. These procedures clearly protect an employer's rights to be fully heard before having to pay a penalty.

Finally, because this is not a “significant regulatory action” within the meaning of Executive Order 12866, the Office of Management and Budget has not reviewed it prior to publication.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531 et seq. ) directs agencies to assess the effects of Federal regulatory actions on state, local, and tribal governments, and the private sector, “other than to the extent that such regulations incorporate requirements specifically set forth in law.” This rule does not include any Federal mandate that may result in increased expenditures by state, local, and tribal governments, or increased expenditures by the private sector of more than $100,000,000.

The Regulatory Flexibility Act of 1980, as amended (5 U.S.C. 601 et seq. ) (RFA), requires an agency to prepare a regulatory flexibility analysis when it proposes or adopts regulations that will have “a significant economic impact on a substantial number of small entities” or to certify that the regulations will have no such impact, and to make the analysis or certification available for public comment.

The Department has determined that a regulatory flexibility analysis under the RFA is not required for this rulemaking. While many longshore employers and a handful of insurance carriers may be small entities within the meaning of the RFA, see generally 77 FR 19471-72 (March 30, 2012), this rule will not have a significant economic impact on them. Most employers and insurance carriers already submit documents and information to OWCP electronically, and electronic filing is usually associated with slightly lower costs than traditional paper filings. Thus, mandating electronic submission will have little to no impact on these parties. Similarly, streamlining the settlement-application submission process will have no negative economic impact and a potentially small positive impact on employers and carriers. Finally, the regulations related to penalties generally set procedures with no economic impact. To the extent the rules affect the penalty amount assessed by OWCP, the rules explicitly take into account small entities by incorporating the mitigation provisions in section 223 of the Small Business Regulatory Enforcement Fairness Act, 5 U.S.C. 601 (note), where appropriate. See new § 702.903(c)(2).

Based on these facts, the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities. Thus, a regulatory flexibility analysis is not required. The Department, however, invites comments from members of the public who believe the regulations will have a significant economic impact on a substantial number of small longshore employers or insurers. The Department has provided the Chief Counsel for Advocacy of the Small Business Administration with a copy of this certification. See 5 U.S.C. 605.

The Department has reviewed this rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” The 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,” if promulgated as a final rule.

This rule meets the applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

For the reasons set forth in the preamble, the Department of Labor amends 20 CFR part 702 as follows:

In FR Doc. 2020-26194 appearing on page 78230 in the Federal Register on Friday, December 4, 2020, the following corrections are made:

1. On page 78230, in the third column, correct the docket number immediately below the CFR part number to read “[Docket No. FR-6215-F-03]”.

2. On page 78231, in the center column, under the heading “II. The Public Comments,” correct the first sentence to read “The public comment period for the interim rule closed on September 4, 2020.”

On March 5, 2020, (85 FR 12877), EPA published a notice of proposed rulemaking (NPRM) for the Commonwealth of Pennsylvania. In the NPRM, EPA proposed approval of two SIP revisions which were submitted by the Pennsylvania Department of Environmental Protection (PADEP) and were intended to address RACT requirements for sources of VOC emissions required by section 184(b)(l)(B) of the CAA and the implementing regulations for the 2008 ozone NAAQS (80 FR 12264, March 6, 2015; 40 CFR part 51, subpart AA). In addition, the submittals were intended to address certain parts of the finding EPA issued in 2017 that Pennsylvania failed to submit required SIP revisions. “Findings of Failure to Submit State Implementation Plan Submittals for the 2008 Ozone National Ambient Air Quality Standards,” (82 FR 9158; February 3, 2017). The formal SIP revisions were submitted by the Commonwealth of Pennsylvania on August 13, 2018.

Pennsylvania's August 13, 2018 SIP submissions are intended to meet the RACT requirements for VOCs under section 184(b)(1)(B) of the CAA and the implementing regulations for the 2008 ozone NAAQS found at 40 CFR part 51, subpart AA. These submittals are discussed in detail in sections II.A. and B. of this preamble. Additional information can be found in the NPRM and in EPA's Technical Support Document (TSD) in the docket for this action.

The first submittal is entitled: “Certification of Reasonably Available Control Technology for Control Techniques Guidelines Under the 2008 Ozone National Ambient Air Quality Standards and Incorporation of 25 Pa Code Chapter 122 (Relating to National Standards of Performance for New Stationary Sources) into the Commonwealth's State Implementation Plan.” This submittal: (1) Certifies that PADEP's adoption and implementation of regulations to control VOC emissions is consistent with EPA's CTGs and therefore represents RACT for these covered CTG sources for the 2008 ozone standard; (2) incorporates 25 Pa. Code Chapter 122 (relating to national standards of performance for new stationary sources) into the Pennsylvania SIP and certifies that those provisions represent RACT for certain facilities subject to such standards of performance; and (3) incorporates specific permit conditions for certain facilities for the purpose of establishing source-specific RACT-level controls for those facilities.

PADEP developed regulations consistent with each CTG addressed by the submittal and has determined that each represents RACT for the 2008 ozone NAAQS. A list of the CTGs for which Pennsylvania has adopted regulations that PADEP considered in making this determination is found in Table 1, beginning on page 12 of the August 13, 2018 submittal. PADEP based this certification on the following: (1) Certification that Pennsylvania's regulations meet the CAA RACT requirements, are based on the most currently available technically and economically feasible controls, and represent RACT for implementation purposes pertaining to the 2008 8-hour ozone NAAQS; (2) certification that PADEP has adopted and implemented provisions or regulations addressing applicable EPA CTG source categories and that these provisions or regulations represent RACT control levels or control levels more stringent than RACT under the 2008 ozone NAAQS; (3) certification that PADEP has implemented all CTG RACT controls indicated in this SIP revision, based on the EPA's guidance and standards, and that they represent current RACT control levels under the 2008 8-hour ozone NAAQS; and (4) certification that PADEP has determined that there is a CTG source category for which it has made a negative declaration because there are no existing sources for RACT purposes in Pennsylvania.

PADEP has determined that there are no sources in Pennsylvania (excluding Philadelphia County and Allegheny County) covered by EPA's CTG “Control of Volatile Organic Compound Emissions from Large Petroleum Dry Cleaners,” (EPA-450/3-82-009; September 1982) and therefore submitted a negative declaration for that CTG source type. 1

Pennsylvania has incorporated by reference and therefore adopted all of the New Source Performance Standards (NSPS) promulgated by EPA under section 111 of the CAA and found at 40 CFR part 60. 25 Pa. Code 122. PADEP determined that for certain source categories, the Federal requirements of 40 CFR part 60—Standards of Performance for New Stationary Sources, provide RACT level control. PADEP has submitted 25 Pa. Code 122 for inclusion into the SIP. PADEP's August 13, 2018 submittal specifically cites the requirements of 40 CFR part 60, subparts NNN (relating to synthetic organic chemical manufacturing industry (“SOCMI”) distillation operations), RRR (relating to SOCMI reactor processes), and subparts KKK, OOOO, and OOOOa (relating to natural gas processing facilities), and certifies that the requirements of these NSPS constitute VOC RACT for the 2008 ozone NAAQS for the affected source categories.

EPA's CTG entitled “Control of Volatile Organic Compound Emissions from Reactor Processes and Distillation Operations Processes in the Synthetic Organic Chemical Manufacturing Industry, EPA-450/4/-91-031, August 1993” provides that the NSPS requirements of subparts NNN and RRR meet the RACT level controls recommended by the CTG. The required control efficiency of the CTG (98% destruction by weight, or 20 parts per million by volume (ppmv) dry basis, corrected to 3% oxygen) is the same as required by the NSPS. 2 Essentially, any process vent that is controlled with a combustion device to meet the requirements of the NSPS would meet the RACT recommendations of the CTG. PADEP identified five facilities subject to subparts NNN and RRR. Four of these are subject to control requirements, while one is subject only to record keeping requirements based on a de minimis emissions exemption, consistent with the CTG.

25 Pa. Code 122 also incorporates the Federal NSPS requirements of 40 CFR part 60 subparts KKK, OOOO, OOOOa, and the cross-referenced equipment leak detection and repair (LDAR) requirements of subparts VV and VVa. The NSPS requirements from subpart KKK are equivalent to the 1983 CTG for the oil and natural gas industry (1983 CTG). 3 Subparts OOOO and OOOOa incorporate the requirements of subpart KKK. PADEP provided a comparison between the applicable provisions of the NSPS and EPA's 1983 CTG. 4 Based on this comparison, PADEP has determined that the NSPS rules in 40 CFR part 60, subparts KKK, OOOO, and OOOOa, with cross references to subparts VV and VVa, are at least as stringent as the requirements in the 1983 CTG for this source category. Therefore, the Federal NSPS provisions applicable to all of Pennsylvania's current natural gas processing facility sources are sufficient to meet the requirements of the 1983 Oil and Natural Gas CTG for purposes of the 2008 ozone NAAQS. EPA notes that PADEP's August 13, 2018 submittal did not address EPA's “Control Techniques Guidelines for the Oil and Natural Gas Industry, EPA-453/B-16-001, October 2016,” (2016 Oil and Gas CTG). Nothing in this action is intended to speak to SIP obligations related to the 2016 Oil and Gas CTG.

PADEP found only two sources covered by the “Shipbuilding/Repair ACT (EPA 453/R-94-032, April 1994)” and the EPA's “CTG for Shipbuilding and Ship Repair Operations (Surface Coating) (61 FR 44050, August 27, 1996)” and one source subject to “Control of Volatile Organic Compound Emissions from Air Oxidation Processes in Synthetic Organic Chemical Manufacturing Industry, EPA-450/3-84-015, December 1984” (SOCMI CTG). Rather than promulgate a rule to address the RACT requirements of those two CTGs for only three affected sources, PADEP has incorporated the control requirements of the CTGs into Federally enforceable permits and submitted the applicable permit terms for incorporation into the SIP.

Redacted versions of Permit Nos. 25-00930 (Donjon Shipbuilding) and 26-00545 (Heartland Fabrication) were submitted for incorporation into the Commonwealth's SIP. Generally, the control strategy is to limit the VOC content of the coatings and materials used. The relevant portions of the permits are consistent with the Shipbuilding and Ship Repair Operations (Surface coating) CTG and satisfy the RACT requirements for these sources. A redacted version of Permit No. 39-00024 (Geo. Specialty Chem. Trimet Div.) was also submitted for incorporation into the SIP. PADEP certified that this is the only source that falls within the SOCMI CTG. Pursuant to that CTG, “It is recommended that air oxidation facilities for which an existing combustion device is employed to control process VOC emissions should not be required to meet the 98 percent emissions limit until the combustion device is replaced for other reasons. In other words, no facility would be required to upgrade or replace an existing control device.”  5 PADEP determined that the facility's formaldehyde process and catalytic incinerator were installed in 1980, before the December 1984 applicability date of the CTG. PADEP further determined that neither the process nor the control device have been modified since the 1980 installation date. PADEP therefore certified that the existing control strategy and emission limitations in the permit constitute RACT for this particular source.

The changes proposed by PADEP in this second submittal, entitled “Control of Volatile Organic Compound Emissions from Industrial Cleaning Solvents; General Provisions; Aerospace Manufacturing and Rework; Additional RACT Requirements for Major Sources of NO X and VOCs,” (2006 ICS CTG) include: (1) The addition of 25 Pa. Code 129.63a (relating to the control of VOCs from industrial cleaning solvents (ICS)); (2) amendments to 25 Pa. Code sections 121.1 and 129.51 (definitions and “general” provisions, respectively) in order to support the addition and implementation of section 129.63a; (3) a correction to the VOC emission limit table in 25 Pa. Code section 129.73 (relating to aerospace manufacturing and re-work); and (4) amendments to 25 Pa. Code sections 129.96, 129.97, 129.99, and 129.100 to clarify certain requirements and to update the list of exemptions under RACT II because of previously adopted presumptive VOC RACT regulations.

PADEP determined that the recommendations in EPA's 2006 ICS CTG are technically and economically feasible for sources in this source category, and developed section 129.63a to adopt the relevant limits of the 2006 ICS CTG to implement VOC RACT for sources subject to this CTG in Pennsylvania. Pursuant to section 129.63a(a), the regulation applies to owners/operators of facilities in which industrial cleaning solvents are “used or applied in a cleaning activity at a cleaning unit operation, a work production-related work area, or a part, product, tool, machinery, equipment, vessel, floor or wall.” Facilities are subject to section 129.63a if the combined actual emissions of VOCs from all subject cleaning operations exceed 2.7 tons in any 12-month rolling period, before consideration of controls.

As previously discussed, EPA recently approved sections 129.96, 129.97, and 129.100, and conditionally approved sections 129.98 and 129.99 as part of the May 9, 2019 final action related to Pennsylvania's RACT II regulations. 6 The RACT II Rule applies statewide to existing major NO X and/or VOC sources in Pennsylvania, except those subject to other Pennsylvania regulations, as specified in 25 Pa. Code 129.96(a)-(b). The emission limits and substantive requirements of sections 129.96, 129.97, 129.99, and 129.100 were not amended. Other specific requirements of PADEP's August 13, 2018 submittals and the rationale for EPA's proposed action are explained in the NPRM and will not be restated here.

EPA received five sets of relevant comments on the March 5, 2020 NPRM (85 FR 12877). All comments received are in the docket for this action. A summary of the comments and EPA's responses are provided herein.

The first set of comments raised concerns about EPA's proposed approval based generally on the adequacy of PADEP's analysis of CTG RACT, and specifically on the analysis for natural gas processing plants. 7

Comment 1: The commenters first allege that PADEP's analysis is flawed because it hinges upon a determination that Pennsylvania's VOC controls are “. . . at least as stringent as” the CTGs. The commenters assert that equivalency with the CTGs is not the test that must be passed in a RACT analysis, but rather a starting point. The commenters contend that although CTGs are presumptive norms, EPA is not required to defer to states' reliance on them, nor do CTGs create a rebuttable presumption for the public to overcome. The commenters also take issue with PADEP's assertion that they are unaware of changes in control technology significant enough to generate different results in a RACT analysis. The commenters assert that it is not enough to be unaware, and further, that it is not the public's responsibility to raise such awareness. Additionally, the commenters assert that the absence of information regarding PADEP's review process makes it impossible to determine whether the submittal meets RACT requirements, and whether EPA properly reviewed the submittal in accordance with CAA sections 110(k)(3) and 110(l). Further, the commenters assert that RACT analyses are supposed to be “technology forcing,” and that it is implausible that a thorough and proper analysis of all forty-three CTGs, especially the very old ones, would find that they continue to represent RACT for the affected sources. Finally, the commenters assert that EPA has failed its statutory duty under CAA section 183(b) to review and revise the CTGs and must do so, particularly if limited state resources are to be considered a legitimate reason for failing to perform a more thorough analysis.

Response 1: States have primary responsibility for ensuring air quality within their jurisdictions by submitting SIPs that specify the manner by which the NAAQS will be achieved and maintained. Under the CAA, EPA is tasked with developing CTGs containing recommended presumptive RACT-level controls for certain categories of VOC sources, see CAA sections 108 and 183, while states with Moderate or above nonattainment areas or located in the Ozone Transport Region (OTR) are tasked with ensuring that sources subject to those CTGs adopt RACT-level controls for VOCs. As EPA stated in 1979 “. . . each CTG contains recommendations to the States of what EPA calls the “presumptive norm” for RACT, based on EPA's current evaluation of the capabilities and problems general to the industry.” State Implementation Plans; General Preamble for Proposed Rulemaking on Approval of Plan Revisions for Nonattainment Areas—Supplement (On Control Techniques Guidelines), 44 FR 53761, 53762 (September 17, 1979) (hereafter CTG Supplement). The CTG Supplement then states “[f]or emission limitations that are consistent with the information in the CTGs, therefore, the State may be able to rely solely on the information in the CTG to support its determination that the adopted requirements represent RACT.” For emission limitations that are not consistent with the CTGs, “EPA believes that the State must submit justification of its own, to support its determination.” Id. at 53762.

It is still EPA's view that CTGs represent the presumptive norm for RACT. In the October 20, 2016 memo entitled “Implementing [RACT] Requirements for Sources Covered by the 2016 Control Techniques Guidelines for the Oil and Natural Gas Industries,” EPA reiterated that “[t]he recommended controls in the 2016 Oil and Gas CTG are the `presumptive norm' based on general industry parameters and published assumptions.” Memo, p.2. 8 9 EPA has consistently made this claim that CTGs represent the presumptive norms for RACT. See Control of VOC Emissions from Coating Operations at Aerospace manufacturing and Rework Operations, (October 1996), p. 1-1; Control of [VOC] Emissions from Wood Furniture Manufacturing Operations (April 1996), pp. 1-1 to 1-2. 10

EPA's implementation rule for the 2008 ozone NAAQS allows an approach “. . .where states should refer to the existing CTGs and ACTs for purposes of meeting their RACT requirements, as well as all relevant information (including recent technical information and information received during the public comment period).”  11 The 2008 Ozone Implementation Rule also allowed states to conclude that CTG and ACT sources already addressed by RACT determinations for the 1-hour and/or 1997 ozone NAAQS do not need to implement additional controls to meet the 2008 ozone NAAQS RACT requirement, “. . . because the fundamental control techniques, as described in the CTGs and ACTs, are still applicable.”  12

In the absence of contrary information, Pennsylvania can rely on the equivalency of its existing CTG implementation regulations with the recommended RACT controls in the CTGs. If Pennsylvania has determined that their existing RACT-level controls for sources covered by certain CTGs are equivalent to controls recommended in the CTGs, and in the absence of countervailing information, Pennsylvania's determination is entitled to a certain amount of deference. If the state adopts a level of VOC control less than the recommended CTG level of VOC control, then the state must provide information supporting its determination that the CTG RACT level controls are not technically or economically feasible, and EPA must determine if that deviation is justified. Pennsylvania has not indicated that it is deviating from CTG levels of control for any of the sources currently subject to CTGs within its jurisdiction, and the commenters have not submitted any specific information suggesting otherwise for any CTG except the 1983 Oil and Gas CTG.

The commenters also claim that Pennsylvania must do more than be “unaware” of new control technologies by affirmatively searching for information about such technologies. However, Pennsylvania did conduct an assessment of the NSPS and NESHAPs applicable to CTG sources that could have shown new technological developments. As noted by the commenters, Section 6 of PADEP's submittal discusses the process that it followed to evaluate whether the regulations Pennsylvania adopted to implement the CTGs still contain RACT-level controls consistent with the 2008 ozone NAAQS. The submittal states: “PADEP staff began the certification process by reviewing the CAA RACT requirements and CTG recommendations, followed by the review of additional guidance or regulations currently implemented for the affected VOC sources, including but not limited to, EPA's Available Control Technology (ACT) documents, Federal NSPS in 40 CFR part 60, and National Emission Standards for Hazardous Air Pollutants in 40 CFR part 63 for the applicable source categories.” While PADEP did not explicitly state that it researched the availability of new VOC control technologies for sources subject to CTGs, a review of the NSPS and NESHAPS applicable to CTG-covered sources would likely turn up any new control technologies available for VOCs or control of Hazardous Air Pollutants (HAPs), some of which are also VOCs (e.g benzene, toulene, formaldehyde). See CAA section 112(b), 40 CFR 51.100(s).

Furthermore, while it is not necessarily the public's job to make Pennsylvania aware of new control technologies, EPA notes that an important reason for providing the opportunity for public comment at both the state and Federal level is to give the public and stakeholders the opportunity to identify technologies or control methods that the state or Federal government has not considered. Other than the 1983 Oil and Gas CTG, the commenters have not provided specific information challenging the recommended RACT level of controls in the other CTGs which Pennsylvania is certifying as still meeting the RACT requirements of the 2008 ozone NAAQS. Also, PADEP, as the primary CAA enforcement and permitting entity within most of Pennsylvania, is well-positioned to be aware of whether new control technologies exist which could be used by the many varied sources it regulates. In the absence of information provided by the commenters showing that there are new technologies available to control VOCs at the sources covered by the CTGs, and in light of Pennsylvania's statement that it reviewed the NSPS and NESHAPs applicable to CTG sources, EPA will not second-guess the validity of Pennsylvania's search effort.

Regarding the assertion that RACT must be “technology forcing,” EPA notes that RACT limits are not meant to be the lowest achievable emissions rate for each particular source. Rather, since the 1970's, EPA has consistently defined “RACT” as the lowest emission limit that a particular source is capable of meeting by the application of the control technology that is reasonably available considering technological and economic feasibility. See December 9, 1976 memorandum from Roger Strelow, Assistant Administrator for Air and Waste Management, to Regional Administrators, “Guidance for Determining Acceptability of SIP Regulations in Non-Attainment Areas,” and 44 FR 53761 at 53762 (September 17, 1979). As noted in this long-standing definition, technical and economic feasibility must also be considered when assessing whether a new technology should be adopted as the presumptive norm of RACT level control for CTG sources. After reciting the above definition of RACT, the Strelow memo goes on to state: “Thus, RACT encompasses stringent, or even `technology forcing,' requirement that goes beyond simple `off-the-shelf' technology.” Strelow Memo, p. 2. 13 In the paragraph following this statement, the Strelow memo also states that other factors should be considered in determining RACT: “The determination of RACT and the corresponding emission rate, ensuring the proper application and operation of RACT, may vary from source to source due to source configuration, retrofit feasibility, operation procedures, raw materials, and other technical or economic characteristics of an individual source or group of sources.” Id. Thus, RACT is not necessarily a “one-size-fits-all” technology. The commenter quotes the following from EPA's discussion of RACT in the 1977 CAA amendments “In many cases appropriate controls would be more or less stringent.” See Comment of Air Law for All, p. 6, citing EPA's CTG Supplement, 44 FR 53761, 53762 (September 17, 1979).

EPA's role is to review the SIP or SIP revision. EPA cannot disapprove of state regulations that form a SIP or SIP revision because EPA decides that the regulations are not stringent enough, as long as the SIP meets the CAA requirements. The commenters assert that it is “implausible” that a thorough review of all 43 CTGs would find that all still meet RACT requirements for the affected sources, and that PADEP and EPA have neglected to look for information to the contrary. However, with the exception of the 1983 Oil and Gas CTG discussed under “Response 2,” the commenters have not provided any available information allegedly overlooked or ignored by PADEP, nor identified any applicable CAA requirements lacking in PADEP's submittal and EPA's proposed approval.

EPA also does not agree that Pennsylvania's submittal lacked enough information to determine whether Pennsylvania's current regulations still meet RACT requirements. As noted by the commenters, Section 6 of PADEP's submittal discusses the process that it used to evaluate whether the regulations Pennsylvania adopted to implement the CTGs still contain RACT-level controls consistent with the 2008 ozone NAAQS. The submittal states: “PADEP staff began the certification process by reviewing the CAA RACT requirements and CTG recommendations, followed by the review of additional guidance or regulations currently implemented for the affected VOC sources, including but not limited to, EPA's Available Control Technology (ACT) documents, Federal NSPS in 40 CFR part 60, and National Emission Standards for Hazardous Air Pollutants in 40 CFR part 63 for the applicable source categories. Each regulation adopted by Pennsylvania has been evaluated against applicable CTGs, and were found to continue to meet RACT for the applicable source categories.” Table 1 in the submittal then lists each CTG and the citation for the Pennsylvania regulation adopted to implement each CTG, with a brief description of how the CTG limits emissions of VOCs. This allows for a straight-forward comparison of Pennsylvania's adopted regulation with the presumptive RACT set forth in the applicable CTG or CTGs. Again, the commenters also did not identify new technologies or updated limits that should have been considered for any CTG other than the 1983 Oil and Gas CTG. Pennsylvania's failure to “show [its'] work” did not in this instance prevent the commenters from doing its own work ( i.e. search for newer control technologies) in response.

Finally, with regard to the commenters' claim that EPA has failed to comply with its statutory obligation under CAA section 183(b) to review and revise the CTGs, EPA notes that this comment is beyond the scope of this action. EPA's role in this action is to review the SIP submitted by Pennsylvania and, if it meets the applicable requirements of the CAA, approve the SIP. See CAA section 110(k)(3) (“In the case of any submittal on which the Administrator is required to act. . ., the Administrator shall approve such submittal as a whole if it meets all of the applicable requirements of this chapter.”). If the commenters believe that EPA has an outstanding obligation to review and revise existing CTGs, the commenters may petition the Agency to do so.

EPA evaluated PADEP's submittal, as described in the NPRM, and reiterated in this document. In accordance with CAA section 110(l), EPA believes approval of the August 13, 2018 submittal will not interfere with any applicable requirement concerning attainment and/or reasonable further progress, or any other applicable CAA requirements. The net effect of the continued operation of controls already implemented in accordance with the CTGs, the addition of new controls via the newly adopted permit requirements, and the newly adopted CTG for Industrial Cleaning Solvents, will be to maintain the current level of reduction of VOCs for many sources while reducing VOC emissions from newly covered sources. Therefore, EPA asserts that approval of this certification for section 182(b)(2) will not interfere with attainment or reasonable further progress for the 2008 ozone NAAQS, or any other identified CAA requirement. For these reasons, EPA disagrees with the commenters and is finalizing approval of PADEP's submittal, in accordance with CAA section 110(k)(3).

Comment 2: The commenters assert that EPA's 2008 ozone implementation rule required that states refer to existing CTGs and alternative control techniques (ACTs) for purposes of meeting their RACT requirements, as well as all relevant information available at the time they are developing the SIP. The commenters allege that PADEP failed to evaluate a number of available control technologies or strategies related to leak detection and repair (LDAR) requirements at natural gas processing facilities, instead relying on a conclusory determination that applicable new source performance standards (NSPS) are at least as stringent as the requirements of the 1983 CTG. 14 The commenters point out that PADEP's submittal identifies fourteen natural gas processing facilities subject to VOC RACT under the 1983 CTG. Ten of these are older gas processing plants that are also subject to the NSPS of 40 CFR part 60, subpart KKK (and thus the LDAR requirements of subpart VV, which is incorporated by reference into subpart KKK), by the applicability criteria of subpart KKK. The other four are newer gas processing plants that are subject to NSPS OOOO because they were constructed or reconstructed after August 23, 2011, which is one of the applicability criteria for subpart OOOO. Subpart OOOO incorporates by reference the more stringent LDAR requirements of subpart VVa. The commenters assert that EPA should disapprove PADEP's submittal because they did not evaluate whether applying the LDAR requirements of VVa to the older facilities was cost effective.

In addition, because EPA initially evaluated the cost effectiveness of subparts VV and VVa as part of the best system of emissions reduction (BSER) analysis for the NSPS, then re-evaluated cost-effectiveness as part of the promulgation of subpart OOOO, and did so again for the 2016 Oil and Gas CTG, the commenters contend that the LDAR requirements of VVa are “available,” and should have been evaluated for control of VOCs at the ten older facilities. The commenters further assert that although the cost analysis performed during the promulgation of subpart OOOO only addressed new/reconstructed sources, there are no retrofit costs associated with the older plants switching from following VV to following VVa, and therefore VVa should have been considered and required for the older facilities.

The commenters also identify the Texas Commission on Environmental Quality's (TCEQ) “28LAER” program as being an additional available control technology which could and should have been evaluated by PADEP. Additionally, the commenters note that the 2016 Oil and Gas CTG identifies optical gas imaging (OGI) as an alternate work practice which is another available control option, but PADEP failed to consider OGI in its analysis.

To support their argument that the LDAR program required by VVa is both available and economically reasonable, the commenters performed a cost effectiveness analysis and determined that VVa's cost of removal is $3766/ton of VOC removed. The commenters assert that EPA determined in the 2016 Oil and Gas CTG that $4400-$5000/ton of VOC removed was reasonable, and that DEP's own analysis in their 2006 RACT submittal for the 1997 ozone NAAQS determined that $3000-$5000/ton was reasonable. Therefore, the commenters assert that the LDAR requirements of VVa are technically and economically reasonable and should have been evaluated and applied. In sum, the commenters assert that PADEP's submittal fails to adequately justify its RACT determination and should therefore be disapproved.

Finally, the commenters identify an error in EPA's approval of PADEP's 2006 VOC RACT submittal as it pertains to natural gas processing plants. PADEP's 2006 RACT submittal included a negative declaration that there were no sources covered by the 1983 CTG, but the commenters allege that PADEP's 2018 submittal identifies six plants that were constructed before 2006 and therefore subject. Additionally, EPA didn't approve the submittal until 2017, by which time all 14 plants had been constructed. The commenters assert that EPA must now correct that error. To the extent EPA believes this is beyond the scope, the commenters state that this comment should be considered a petition under section 553(e) of the Administrative Procedures Act (APA).

Response 2: As clearly stated in the NPRM for this SIP, Pennsylvania's SIP submission is only certifying for the 1983 Oil and Gas CTG, and is not intended to be a certification for the 2016 Oil and Gas CTG. 15 85 FR 12877, 12880, March 5, 2020. This has two ramifications. First, when developing this SIP submission, Pennsylvania only evaluated whether existing natural gas processing plants were meeting the recommended RACT standards of the 1983 CTG. Nothing in Pennsylvania's SIP submission claims to address whether these plants meet the control levels recommended by the 2016 Oil and Gas CTG. Pennsylvania has published a proposed regulation to address the 2016 Oil and Gas CTG, and the proposal states that when the regulation is final, it will be submitted to EPA as a revision to the State's SIP. 50 Pa B. 2633 (May 23, 2020). The second ramification is that EPA does not have before it in this SIP the question of whether these natural gas processing plants have adopted the RACT level controls recommended in the 2016 Oil and Gas CTG. Therefore, nothing in EPA's action on this SIP should be interpreted as a decision concerning the adequacy of Pennsylvania's future SIP submittal(s) for the 2016 Oil and Gas CTG.

Moreover, the 2016 Oil and Gas CTG explicitly states that it replaces the 1983 Oil & Gas CTG. Section 8 of the CTG, entitled “Equipment Leaks from Natural Gas Processing Plants,” says: “This CTG and the recommended RACT included in this CTG replaces the following: Guideline Series. Control of Volatile Organic Compound Equipment Leaks from Natural Gas/Gasoline Processing Plants. December 1983. EPA-450/3-83-007.” 2016 Oil & Gas CTG, p.8-1. At the time Pennsylvania submitted this SIP in August 2018, the 1983 Oil and Gas CTG had been superseded by the 2016 CTG, but Pennsylvania had not yet adopted new regulations for the 2016 CTG. Given those circumstances, Pennsylvania decided to certify for the 1983 CTG rather than include no certification at all for natural gas processing plants.

The main concern of the commenters seems to be that in certifying for the 1983 CTG, Pennsylvania should have evaluated other and newer sources of information, including the 2016 CTG, in order to determine whether the control measures in the 1983 CTG still constitute RACT levels of control. However, EPA already has done much of this work in updating the 2016 CTG, and Pennsylvania is not certifying in its SIP submission that the control measures they have in place for the 1983 CTG meet the 2016 CTG. Moreover, when Pennsylvania submitted this SIP, an updated SIP addressing the 2016 CTG was not yet due because the 2016 CTG gave affected states two years from the date of publication of the 2016 CTG (October 27, 2016, 81 FR 74798) to submit a SIP addressing the CTG. Therefore, EPA thinks that these concerns and comments are better directed to Pennsylvania's future SIP submission(s) for the 2016 Oil and Gas CTG and any certification contained therein for the purpose of meeting section 182(b)(2) of the CAA. Asking Pennsylvania to re-evaluate RACT level controls for the oil and gas industry in this SIP submittal, for the purpose of certifying for a superseded 1983 CTG, seems like an unnecessary exercise for the state, and EPA declines to require it as part of our consideration of this SIP.

In reaching this conclusion, EPA is not drawing any further conclusions about other claims made by the commenters, such as what the 2008 ozone implementation rule requires, whether newer leak detection and repair (LDAR) technologies are available for gas processing plants, the cost-effectiveness of applying NSPS subpart VVa to older gas processing plants, or the cost analysis submitted by the commenters. EPA is merely saying that in the context of the specific facts of Pennsylvania's certification for the 1983 Oil and Gas CTG, it does not make sense to analyze these issues until Pennsylvania submits its SIP revision addressing the 2016 Oil and Gas CTG. At that time, the issues identified by the commenters should be addressed in Pennsylvania's SIP submission, and if not addressed, raised again by the commenters in any action EPA takes to approve that SIP.

The commenters' concern that many of the CTGs have not been reviewed and updated for many years is noted, but this concern for the 1983 Oil and Gas CTG has been addressed by EPA with the 2016 CTG, and PADEP is in the process of updating its regulations to address the 2016 CTG. PADEP submitted this revision with the intention of meeting the requirements of the old CTG. EPA notes that PADEP has published a notice of proposed rulemaking in order to adopt the requirements of the 2016 CTG. 16 When the provisions of that action are effective and submitted to EPA as a revision to the SIP, they will be evaluated for consistency with the 2016 CTG and RACT. In the meantime, EPA is finalizing approval of the August 13, 2018 submittal.

With respect to the commenters' assertion that EPA must correct the erroneous approval of a 2006 submittal from PADEP, that is beyond the scope of this action, which is only evaluating whether the particular provisions of Pennsylvania's August 13, 2018 SIP meet the requirements of the CAA. Nevertheless, EPA acknowledges that, based on the information in Table A1 of Appendix A in Pennsylvania's August 13, 2008 submittal, EPA's 2017 approval of Pennsylvania's negative declaration for the 1983 Oil and Gas CTG under the 1997 ozone NAAQS may have been in error. 17 According to Table A1, there were six sources which were constructed prior to Pennsylvania's September 25, 2006 submittal, but for which PADEP declared that there were no sources subject to the 1983 Oil and Gas CTG. However, EPA disagrees that the remedy for this error is to now disapprove the 2006 submittal with respect to 1983 CTG RACT requirements for natural gas processing plants. The sources at issue did not escape regulation, and were subject to the same RACT level controls via the NSPS which Pennsylvania has certified are consistent with the 1983 CTG. Even if EPA were now to disapprove PADEP's 2006 submittal, the remedy would be for Pennsylvania to acknowledge that those sources existed in 2006, and that they are subject to RACT level controls consistent with the 1983 CTG, which they have already done in their August 13, 2018 submittal.

Comment 3: The commenter expresses uncertainty and sought clarification on the interplay between the CTGs and the NSPS, specifically as it pertains to applicability. The commenter asks whether PADEP's reliance on NSPS requirements to implement RACT for certain CTG categories has the effect of applying NSPS requirements to any source subject to such a CTG, regardless of the effective date of the NSPS, or whether the source had undergone modifications.

Response 3: NSPS are Federal regulations that are applicable to sources nationwide, regardless of an area's status with respect to an ozone NAAQS or whether the state has adopted the NSPS as part of its SIP. In some cases, such as with subpart KKK discussed previously, EPA and some states (including Pennsylvania) have determined that the control requirements of a particular NSPS are both equivalent to the control requirements of a particular CTG and constitute RACT-level controls. A source that is subject to the CTG can therefore meet RACT control requirements by meeting the NSPS control requirements, and the state can meet its obligation under CAA section 182(b)(2) for that particular CTG so long as the NSPS is incorporated into the SIP (as Pennsylvania is doing here). In the case where the NSPS control requirements also constitute RACT for the CTG sources, if all sources subject to the particular CTG in the state are also subject to the NSPS (that is, meet all the applicability criteria for the NSPS and are in compliance), then the state would not have to adopt separate, stand-alone regulations to implement the CTG requirements because these sources would already be meeting RACT via the NSPS. As discussed in Section II of this preamble, and in response to Comment 2, PADEP identified all sources which were subject to the 1983 Oil and Gas CTG, identified the various NSPS provisions to which each source is already subject, and determined that the NSPS control requirements are at least as stringent as the controls required by the 1983 CTG, which are presumed to be RACT-level controls. Similarly, PADEP identified all sources to which EPA's CTG entitled “Control of Volatile Organic Compound Emissions from Reactor Processes and Distillation Operations Processes in the Synthetic Organic Chemical Manufacturing Industry, EPA-450/4/-91-031, August 1993” apply, and identified how the NSPS requirements applicable to those same sources are at least as stringent as the CTG, which are presumed to be RACT-level controls. PADEP's incorporation by reference of the NSPS, and the incorporation of 25 Pa Code 122 into the Pennsylvania SIP, does not confer NSPS applicability upon sources that are otherwise not subject to that NSPS because the source does not meet the applicability criteria of the NSPS. Rather, PADEP has determined that all of the sources subject to the 1983 Oil and Gas CTG, and the SOCMI CTG are also currently subject to NSPS provisions, and that these NSPS control requirements are at least equivalent to RACT level controls. The incorporation of 25 Pa 122 into the SIP is the vehicle through which PADEP and EPA are ensuring that the Pennsylvania SIP contains federally enforceable RACT control measures for the subject sources. Incorporation of the NSPS into the SIP does not mean that when a source covered by a CTG is exempt from a NSPS due to, for example, being constructed before the NSPS applicability date, that source is automatically subject to the NSPS. In that instance, Pennsylvania would need to find another mechanism for incorporating Federally enforceable RACT level control measures into the SIP, such as adopting a stand-alone regulation (as Pennsylvania did with 25 Pa Code 29.163a, discussed in Section II.B of this preamble), or submitting a permit with source specific RACT determinations (as Pennsylvania did with the permits discussed in Section II.A.3 of this preamble). Therefore, the commenter's assertion that “. . . the EPA and PADEP are now requiring any source that falls under the CTG category, regardless of modifications and repairs to the source, to now be subject to the NSPS,” is incorrect.

Comment 4: The commenter asserts that EPA cannot approve provisions related to subparts OOOO and OOOOa as RACT for the 1983 Oil and Gas CTG, because the Agency has proposed significant revisions to both subparts. The commenter asserts that EPA will have to re-evaluate whether these NSPS, if modified, continue to represent RACT, and therefore must wait until completion of any revisions before asserting that they meet RACT requirements.

Response 4: EPA disagrees with the commenter. EPA's analysis in the 1983 CTG determined that the existing levels of NSPS control were those that were economically and technologically feasible and thereby met the definition of RACT for this category of sources. Pennsylvania's incorporation by reference of the NSPS automatically updates to include new or revised NSPS. However, the adoption of any new or expanded control requirements in these NSPS would not automatically become presumptive RACT for these two CTGs and may require additional analysis to determine whether the costs of the revised NSPS controls meet the economic feasibility portion of EPA's longstanding definition of RACT. Therefore, EPA is finalizing approval of PADEP's submittal.

Comment 5: The commenter asserts that EPA cannot approve subparts NNN and RRR as RACT for sources subject to the CTG for reactor and distillation processes in the synthetic organic chemical manufacturing industry (SOCMI). 18 According to the commenter, hundreds of chemical compounds are not subject to subparts NNN or RRR. Because PADEP attempted to identify sources subject to the CTG by searching for sources subject to the NSPS, commenter asserts that the entire universe of sources subject to the CTG was not captured.

Response 5: EPA disagrees with the commenter's assertions. First, PADEP searched for sources known to be operating in the SOCMI sector using, at a minimum, their “Air Information Management System,” or “AIMS.” Pennsylvania's SIP submittal notes, in response to a similar comment made during the state public notice period, that any sources that were not identified by this search would likely be operating in violation of the NSPS, as well as Pennsylvania's permitting regulations. EPA thinks that PADEP, using both the information at its disposal and its knowledge of the sources of VOC emissions gained from years of inspections, enforcement, and SIP development, has likely identified all the sources potentially subject to this CTG. Those sources not identified are still subject to the CTG, and as noted in Pennsylvania's submission, are likely in violation of multiple Pennsylvania requirements and Federal NSPS. The commenter has not provided any evidence to the contrary, and in the absence of such evidence, EPA believes that PADEP made a reasonable and rational effort to identify sources potentially subject to the SOCMI CTG.

Second, it would be very difficult, if not impossible, for an air agency to search for sources subject to the CTG or NSPS based solely on its use of a particular VOC. The list of chemicals covered by the 1993 CTG for Control of Volatile Organic Compound Emissions from Reactor Processes and Distillation Operations Processes in the Synthetic Organic Chemical Manufacturing Industry (the “SOCMI CTG”) is extensive. 19 Also, some of the NSPS applicable to the SOCMI industry regulate the listed chemicals if they are a product, by-product, co-product, or intermediary. SOCMI CTG, pp. 7-3 to 7-11. EPA is not aware of any database which would identify sources potentially subject to the SOCMI CTG based on the list of chemicals covered, particularly when the chemicals covered include some chemicals used as intermediaries or produced as co-products. As EPA noted in the CTG, “. . . there are different regulations that can apply to the same SOCMI facility, process unit, or process vent. For example, a given SOCMI facility could be subject to all three NSPS (air oxidation, 20 distillation, 21 reactor processes  22 ), to the Hazardous Organic NESHAP (HON)  23 (for process vents), and to regulations developed in accordance with this CTG. The required control efficiency for a combustion control device is the same in all these various regulations. Thus, any process vent that is controlled with a combustion device to meet the requirements of the HON, NSPS, or regulations in accordance with the air oxidation CTG would meet recommended RACT in this CTG, and it is unnecessary to test for applicability for VOC regulation developed in accordance with this CTG (emphasis added).”  24 A review of Table A-1 in the CTG (cited by the commenter) indicates that there are very few, if any, compounds covered by the CTG that are not also covered by one or more of the NSPS/NESHAP regulations which the CTG identifies as providing RACT level controls. Therefore, EPA is approving PADEP's submittal.

Comment 6: Additionally, two commenters asserted that EPA should extend the public comment period due to the extenuating circumstances resulting from the COVID-19 pandemic. One of the commenters additionally requested a 15-day extension, based on the complexity and size of Pennsylvania's submittal.

Response 6: EPA acknowledges the many and varied challenges presented by the pandemic. However, the NPRM for this action was published prior to any interruptions in normal business activities. The supporting materials associated with the NPRM were available online, without interruption, for the entire 30-day public comment period. Additionally, the Regional staff, listed in the FOR FURTHER INFORMATION CONTACT section of the NPRM, were working and available throughout the entire comment period. Furthermore, neither commenter identified a specific limitation arising from the pandemic that prevented them or anyone else from being able to adequately review the proposed approval and submit comments. With respect to commenter's assertion that the size and complexity of the submittal warrant a 15-day extension, EPA disagrees. While EPA acknowledges that the action is complex and addresses two submittals concurrently, large portions of the submittals are included as background information and/or supporting documentation. For example, there are approximately sixty-five pages of documentation related to Pennsylvania's public notices. Consequently, EPA finds that the size and complexity of the actual analysis in Pennsylvania's submittals is not extraordinary, and therefore does not require an extraordinary or extended comment period. Therefore, EPA disagrees with the commenters, and is denying the request for an extended public comment period.

EPA is approving Pennsylvania's August 13, 2018 submittals as a revision to the Pennsylvania SIP.

In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the Pennsylvania rules regarding definitions and permitting requirements discussed in section II of this preamble. EPA has made, and will continue to make, these materials generally available through https://www.regulations.gov and at the EPA Region III Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by EPA for inclusion in the SIP, have been incorporated by reference by EPA into that plan, are fully Federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 25

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

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 12, 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 relating to VOC RACT measures in Pennsylvania may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

The EPA finalized procedures to allow certain facilities to request approval to use an alternate liner for CCR surface impoundments (85 FR 72506, November 12, 2020), but after publication the Agency identified a typographical error in one of the amendatory instructions. Specifically, instruction 6 directed that paragraphs (f)(14) through (23) be added to § 257.105. However, an additional paragraph (f)(24) was also set out under § 257.105 that the Agency failed to include in instruction 6. See 85 FR 72543. That is, EPA intended instruction 6 to read “Amend § 257.105 by adding paragraphs (f)(14) through (24) to read as follows:” This document corrects instruction 6 by directing that paragraphs (f)(14) through (24) be added to § 257.105 as intended.

In FR Doc. 2020-23327, appearing on page 72506 in the Federal Register of Thursday, November 12, 2020, on page 72543, in the first column, correct instruction 6 to read as follows:

I. Background

Section 602 of Public Law 102-585, the “Veterans Health Care Act of 1992,” enacted section 340B of the PHSA entitled “Limitation on Prices of Drugs Purchased by Covered Entities,” which was codified at 42 U.S.C. 256b. The 340B Program permits covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. Rep. No. 102-384(II), at 12 (1992). The Secretary of Health and Human Services (Secretary) delegated the authority to establish and administer the 340B Program to the Administrator of HRSA. Eligible covered entity types are defined in section 340B(a)(4) of the PHSA, as amended. Section 340B(a)(1) of the PHSA instructs HHS to enter into pharmaceutical pricing agreements (PPAs) with manufacturers of covered outpatient drugs. Under section 1927(a)(5)(A) of the Social Security Act, a manufacturer must enter into an agreement with the Secretary that complies with section 340B of the PHSA “[i]n order for payment to be available under section 1903(a) or under part B of title XVIII for covered outpatient drugs of a manufacturer.” When a drug manufacturer signs a PPA, it agrees that the prices charged for covered outpatient drugs to covered entities will not exceed defined 340B ceiling prices. Those prices are based on quarterly pricing reports that manufacturers must provide to the Secretary through the Centers for Medicare & Medicaid Services (CMS).

Section 7102 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by section 2302 of the Health Care and Education Reconciliation Act (Pub. L. 111-152), jointly referred to as the “Affordable Care Act,” added section 340B(d)(3) to the PHSA, which requires the Secretary to promulgate regulations establishing and implementing a binding ADR process for certain disputes arising under the 340B Program. The purpose of the ADR process is to resolve (1) claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers and (2) claims by manufacturers, after a manufacturer has conducted an audit as authorized by section 340B(a)(5)(C) of the PHSA, that a covered entity has violated the prohibition on diversion or duplicate discounts. The ADR process is an administrative process designed to assist covered entities and manufacturers in resolving disputes regarding overcharging, duplicate discounts, or diversion. To resolve these disputes, a panel charged with resolving the dispute may find it necessary to resolve related issues such as whether someone is a “patient” or whether a pharmacy is part of a “covered entity.” Historically, HHS has encouraged manufacturers and covered entities to work with each other to attempt to resolve disputes in good faith. The ADR process is not intended to replace these good faith efforts, but should be considered as a last resort in the event good faith efforts to resolve disputes have failed. In addition, covered entities and manufacturers should carefully evaluate whether the ADR process is appropriate for minor claims given the investment of the time and resources required of the parties involved and the government.

In 2010, HHS issued an advanced notice of proposed rulemaking (ANPRM) that requested comments on the development of an ADR process (75 FR 57233, Sept. 20, 2010). HHS received 14 comments. In 2016, HHS issued a Notice of Proposed Rulemaking (NPRM) and received 31 comments. The NPRM was removed from the HHS Regulatory Agenda in accordance with a January 20, 2017, memorandum from the Assistant to the President and Chief of Staff, titled “Regulatory Freeze Pending Review,”  1 which had the effect of pausing action on the proposed rule. The Secretary, however, did not formally withdraw the NPRM, but rather left it open as a viable option. HHS considered the comments received on the NPRM in the development of this final rule. This final rule will replace the 340B Program's guidelines on the informal dispute resolution process developed to resolve disputes between covered entities and manufacturers, which were published on December 12, 1996 (61 FR 65406). Finally, we note that in order to fairly, efficiently, and expeditiously resolve claims pursuant to the ADR process described in this final rule, the Secretary hereby delegates to each 340B ADR Panel, constituted from members of the 340B Administrative Dispute Resolution Board, the authority to make final agency decisions as set forth under 42 U.S.C. 256b(d)(3)(C) and codified in 42 CFR part 10, as amended by this final rule.

Part 10 of title 42 of the Code of Federal Regulations has been amended to incorporate the ADR process, which is described below in conjunction with comments received to each such section.

Comments received during the comment period addressed general issues. We have summarized those comments and have provided a response below.

Comment: Commenters recommend that, before HRSA develops the ADR process, HRSA should establish foundational guidance on key issues, as the conditions for creating such a process are not in place. Specifically, commenters suggest that HRSA reform its guidelines regarding manufacturer audits of covered entities as they are outdated and do not allow for a functioning ADR process; develop manufacturer refund procedures for cases where 340B ceiling prices change due to restated Medicaid rebate metrics; finalize the process for calculating 340B ceiling prices and imposing civil monetary penalties; and finalize the 340B mega-guidance.

Response: HHS finalized the 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties (CMP) Regulation on January 5, 2017 (82 FR 1211). That regulation addressed the calculation of the 340B ceiling price, and imposition of CMPs on manufacturers who knowingly and intentionally overcharge a covered entity. Neither updated manufacturer audit guidelines nor the finalization of the 340B mega-guidance is needed to finalize the ADR process. The 340B statute empowers the 340B ADR Panel reviewing a claim, as set forth in this final rule, to determine when there have been statutory violations concerning overcharges, diversion, and duplicate discounts.

Comment: Several commenters urge HRSA to adopt those conventions for ascertaining deadlines that are commonly used by other administrative bodies and courts. Commenters suggested that HRSA should use calendar days for deadlines rather than business days as misunderstandings about correct deadlines and due dates can be avoided if HRSA were to adopt these commonly used conventions.

Response: HHS agrees with these comments. The ADR process will be governed, to the extent applicable, by the Federal Rules of Civil Procedure and Federal Rules of Evidence, unless the parties agree otherwise and the 340B ADR Panel concurs. Rule 6 of the Federal Rules of Civil Procedure sets out the rules for computing any time period specified in the Rules and that Rule will govern time computation under this regulation.

Comment: Commenters urge HRSA to clarify what would constitute a de minimis claim given the investment of time and resources required of the parties involved. Commenters argue that while the parties may be able to assess what would constitute a reasonable materiality threshold that would warrant pursuing the ADR process, having a standardized threshold could ensure a more uniform and judicious use of the ADR process. Commenters recommend that covered entities could use a threshold of 5 percent of total 340B savings for establishing a de minimis claim.

Response: HHS agrees that some disputes may be too small to warrant the expenditure necessary to conduct a hearing on the matter. Recognizing that petitioners can file jointly as warranted and that claims can be aggregated or consolidated, we do not believe that setting a jurisdictional threshold, whexwhex ere money damages are sought, should adversely affect any covered entity or manufacturer. We believe that an appropriate threshold for a claim or claims for money damages should be $25,000; where equitable relief is sought, however, there will be no threshold for past damages provided that the relief sought will be the equivalent of $25,000 in the twelve months following the 340B ADR Panel's decision. HHS is finalizing the jurisdictional threshold for filing a claim in paragraph (b) of § 10.21.

In the proposed rule, HHS sought to establish a decision-making body to review and resolve claims in an unbiased and fair manner, ensure fairness and objectiveness by avoiding conflicts of interest, and set forth the duties of the panel. In this final rule, HHS is finalizing that proposal with some modifications. In this final rule, the Secretary shall establish a 340B Administrative Dispute Resolution Board (Board) consisting of at least six members appointed by the Secretary with equal numbers from the Health Resources and Service Administration (HRSA), the Centers for Medicare & Medicaid Services (CMS), and the HHS Office of the General Counsel (OGC). Administrative Dispute Resolution Panels (340B ADR Panel) of three Board members shall be selected by the HRSA Administrator to review claims and, pursuant to authority expressly delegated through this rule by the Secretary, make precedential and binding final agency decisions regarding claims filed by covered entities and manufacturers. HRSA and CMS Board members shall have relevant expertise and experience in drug pricing or drug distribution. OGC Board members shall have expertise and experience in handling complex litigation.

(a) Members of the 340B ADR Panel.

HHS proposed that HRSA select a 340B ADR Panel to include three members, chosen from a roster of eligible individuals, and one ex-officio, non-voting member chosen from the staff of the HRSA Office of Pharmacy Affairs (OPA) to facilitate the review and resolution of claims within a reasonable timeframe. HHS is modifying that proposal. In this final rule, the HRSA Administrator is empowered to select and convene three-member 340B ADR Panels, constituted from the above-referenced Board, with one member from HRSA, CMS, and OGC with relevant expertise to review claims and make final agency decisions. HHS proposed that individuals serving on a 340B ADR Panel may be removed for cause. HHS is finalizing that proposal. In this final rule, if there is a conflict of interest, as described in paragraph (b), with respect to a claim, the 340B ADR Panel member will be removed from the 340B ADR Panel and replaced by another individual from the Board.

Finally, HHS solicited specific comments on the proposed size and composition of the 340B ADR Panel, in particular whether the 340B ADR Panel should be comprised of a set number of voting members to maintain consistency and transparency across each claim that is reviewed, whether HHS should retain the flexibility to appoint a requisite number of voting members based on the complexity of the claim and other factors, and whether the 340B ADR Panel should include at least one OPA staff member as a voting member or whether the inclusion of an OPA staff member as an ex-officio, non-voting member would be sufficient to ensure adherence to 340B policies and procedures.

HHS received comments related to the composition of the 340B ADR Panel and after consideration of the comments received, HHS has determined that each 340B ADR Panel must include one attorney from OGC with complex litigation expertise, along with one member from HRSA and one member CMS, each with drug pricing, drug distribution, and other relevant 340B expertise. A non-voting, ex-officio member from OPA will assist each three-member 340B ADR Panel.

Comment: Some commenters suggest that given that the 340B ADR Panel will likely review claims submitted by manufacturers that involve audits conducted of covered entities, the 340B ADR Panel members should also have demonstrated expertise or familiarity with the Government Audit Standards and expertise or familiarity with the 340B Program, in order to properly assess the quality of the audit conducted.

Response: HHS believes the requirements set forth in the final rule allow for 340B ADR Panels with a wide breadth of experience that will ensure an equitable review and fair outcome. In addition, each 340B ADR Panel will include a non-voting member of OPA who would bring additional 340B Program expertise to the ADR proceedings.

Comment: Several commenters support the 340B ADR Panel's composition as proposed, specifically with respect to limiting the 340B ADR Panel to three members to maintain consistency and transparency across each claim reviewed while asserting that a rotation of members will lead to conflicting decisions and inconsistency in dispute decisions. Some commenters recommend that the final rule establish a fixed pool of seven potential 340B ADR Panel members who would serve on the pool for a defined term. In addition, the commenters explain that 340B ADR Panel members would not develop expertise in the details of 340B policies if they only occasionally served on the 340B ADR Panel.

Response: HHS disagrees that appointing a permanent board rather than alternating individuals is the best course. The United States Courts of Appeals operate in panels of three and intra-circuit splits are rare. We are concerned that a single permanent panel may be unable to fairly, efficiently, and expeditiously hear and resolve cases.

Comment: Commenters support the inclusion of at least one OPA staff member as an ex-officio, non-voting member to ensure adherence to 340B policies and procedures. However, other commenters argue that OPA staff cannot be impartial due to their day-to-day involvement with the 340B Program. These commenters argue that even a non-voting member would exercise too much influence over the voting members, particularly if the voting members serve only part-time on the 340B ADR Panel.

Response: HHS appreciates the comments outlining both support and concern with OPA's participation in the process. HHS believes that participation of an OPA staff member as a non-voting, ex officio member is beneficial to the 340B ADR Panel to allow for quick and efficient responses to questions regarding the 340B statute, regulations, and policy and that an OPA staff member would not exercise undue influence over the three voting members. The OPA staff member or members, as the case may be, will be appointed by the Secretary to serve as a non-voting, ex officio member or members. See Federal Election Comm'n v. NRA Political Victory Fund, 6 F.3d 821 (D.C. Cir. 1993), cert. dismissed for want of jurisdiction, 513 U.S. 88 (1994).

Comment: Commenters opposing OPA staff being involved or participating on the 340B ADR Panel suggest that HRSA designate HHS Administrative Law Judges (ALJs) to decide 340B disputes. They argue that ALJs would be in the best position to resolve 340B disputes as ALJs have training to decide administrative law issues correctly, and using an ALJ would ensure an objective evaluation of each dispute by separating the dispute resolution function from HRSA's day-to-day activities and duties.

Response: The involvement of an OPA staff member as a non-voting, ex officio has been addressed above. HHS disagrees that ALJ's are best positioned to resolve 340B disputes. The Department's established cadre of ALJs to resolve disputes between the Department and private entities involving federal funds whether through grants, contracts, or under benefit programs such as Medicare. Here, the 340B ADR Panels are more akin to an arbitration panel focusing on complex commercial arrangements between private actors, where Federal funds may not be directly involved. In this final rule, HHS is establishing 340B ADR Panels, which are uniquely situated to handle the complexities of the 340B Program and related disputes.

Comment: Commenters recommend that the final rule include a provision that allows either party to object to a particular 340B ADR Panel member.

Response: HHS appreciates the comment but believes this is unnecessary as 340B ADR Panel members will be screened for conflicts of interest before reviewing a claim.

(b) Conflicts of interest.

To ensure fairness and objectiveness, HHS proposed that each 340B ADR Panel member be screened prior to reviewing a claim and not be allowed to conduct a review if any conflicts of interest exist. For example, the individual would not review a claim if he or she has a conflict of interest with respect to the parties involved in the claim or the subject matter of the claim. HHS proposed that individuals be screened for conflicts of interest in accordance with U.S. Office of Government Ethics policies and procedures applicable to Federal employees. Conflicts of interest may include the following: (1) Financial interest; (2) family or close relation to a party involved; and (3) current or former business or employment relation to a party. HHS received comments in support of the provision to review for conflicts of interest and is finalizing this section as proposed. Below is a summary of the comments received and HHS' responses.

Comment: Several commenters agree that the 340B ADR Panel members should have demonstrated expertise or familiarity with the 340B Program. These commenters also agree that the 340B ADR Panel members be screened for potential conflicts of interest. Commenters suggest that the final rule include flexibility to expand the 340B ADR Panel beyond the three members to ensure expeditious review of complex 340B claims.

Response: HHS appreciates the comments regarding the expansion of 340B ADR Panel members; however, it does not believe adding more members would expedite the review process.

(c) Duties of the 340B ADR Panel.

HHS proposed that once the 340B ADR Panel receives a claim, the 340B ADR Panel would consider all documentation provided by the parties and may request additional information or clarification from any party involved with the claim.

After further consideration, HHS has determined that a 340B ADR Panel reviewing a claim may consult with OPA subject matter experts regarding 340B program requirements, may entertain motions to dismiss pursuant to Rule 12 of the Federal Rules of Civil Procedure, may permit limited discovery, as necessary, may entertain motions for summary judgment ( see Fed. R. Civ.P. 56), and may hold evidentiary hearings as necessary. The 340B ADR Panel's final agency decision must represent the decision of a majority of the 340B ADR Panel members, but need not be unanimous. The 340B ADR Panel's final agency decision shall be precedential and binding on the parties to the claim. HHS did not receive any comments related to the duties of the 340B ADR Panel. This final rule provides the 340B ADR Panel significant discretion in determining relevant material to consider and the manner to conduct its evaluation.

As with typical administrative hearings, the petitioner in an ADR proceeding would bear the burden of persuasion by a preponderance of the evidence. See Administrative Procedure Act, 5 U.S.C. 556(d) (“the proponent of a rule or order shall have the burden of proof.”); Director, OWCP v. Greenwich Collieries, 512 U.S. 267 (1994).

(a) Initiating an action. In the NPRM, HHS proposed deadlines and procedures for filing a claim in § 10.21(f). To address some redundancies, HHS is consolidating and finalizing the requirements for initiating an ADR action in a new paragraph (a) of § 10.21. Correspondingly, the comments received on the proposals in the NPRM regarding deadlines and procedures for filing a claim are addressed here in paragraph (a).

In the NPRM, HHS proposed that covered entities and manufacturers file a claim demonstrating that they satisfy certain threshold requirements and that the party filing a claim must send written notice to the opposing party regarding the claim within 3 business days of submitting the claim and the party must submit confirmation of the opposing party's receipt or acknowledgement of receipt. HHS also proposed that the written notice to the opposing party must include a summary of the documents submitted as part of the claim. HHS proposed that information will be reviewed that is submitted as part of the claim to verify that the requirements for filing a claim have been met. The initiating party would then be contacted once the claim has been received and may request additional information before accepting a claim for review by the 340B ADR Panel. If HRSA requests additional information, the party filing the claim would have 20 business days of receipt of the request to respond. Claims would not move forward for review by the 340B ADR Panel if a party files a claim for any purpose other than those specified in the statute ( i.e., overcharging, duplicate discount, or diversion), or if the alleged violation occurred more than 3 years before the date of filing the claim.

HHS proposed that a determination will be made as to whether all requirements are met and provide written notice to all parties within 20 business days after receiving the claim and any subsequently requested information. If it is determined the claim includes all necessary documentation and meets the requirements for filing a claim, the claim would be forwarded to the 340B ADR Panel for review. Additional information would be provided on the 340B ADR process to all parties at that time, including contact information for requested follow-up communications and an approximate timeframe for the 340B ADR Panel's review.

HHS proposed that if the claim does not move forward for review by the 340B ADR Panel, written notice would be sent to the parties involved that includes the basis for the determination and would advise the party that they may revise and refile the claim if the party had new information to support the alleged statutory violation.

HHS is finalizing these filing requirements with some changes. Any covered entity or manufacturer may initiate an action for monetary damages or equitable relief against a manufacturer or covered entity, as the case may be, by filing a written petition for relief with HRSA that satisfies all of the requirements set forth in this section. The parties may voluntarily submit additional information to substantiate a claim. In this final rule, HHS also clarifies that the party filing a claim must mail a copy of its petition, along with any attachments, to the General Counsel or other senior official ( e.g., Executive Director) opposing party or legal counsel for the opposing party, if applicable, at its principal place of business by certified mail, return receipt requested, within three days of filing the claim with HRSA. HHS intends for the 340B ADR Panel to have wide latitude to define the proper course of conduct, scope of the process, and any additional instructions necessary or desirable for the ADR proceedings. HHS underscores that the 340B ADR Panel may in its sole judgment request additional information from the parties to ensure that it will be able to conduct a fair, efficient, and expeditious review of a claim. Our summary of the comments and responses follow.

Comment: Some commenters request that just as covered entities have advance notice of potential claims due to a prior audit, manufacturers should also know about a potential covered entity's claim so that the parties can make good faith efforts to resolve the claim. These commenters explain that such an early notification requirement for covered entities would reinforce HHS' efforts to limit the ADR process to disputes that cannot be resolved informally and would be consistent with the requirement suggested earlier in this letter that any claim (whether asserted by a manufacturer or covered entity) must be accompanied by documentation of prior good faith efforts to resolve the dispute. Advance notification of potential claims and the opportunity to resolve them are crucial. Accordingly, manufacturers should have the same advance notice of potential claims as covered entities that learn of such claims due to a prior audit.

Response: While HHS appreciates the comments regarding advance notification to manufacturers of claims, it does not agree with the assertion that a manufacturer audit constitutes notification of a manufacturer filing an ADR claim. If a manufacturer engages in ADR after an audit of a covered entity, the manufacturer must provide written notice. Further, HHS believes there is already a process in place for good faith negotiations between manufacturers and covered entities that occurs before filing an ADR claim.

Comment: When reviewing the sufficiency of a claim, HHS proposed that HRSA will decide whether a claim will move forward for review. Commenters request that HRSA include an additional safeguard clarifying that the individual or individuals who review the sufficiency of a claim should not be involved further in the process. The 340B ADR Panel should receive the claim (including any supporting documentation and response) as one complete package. That way, the 340B ADR Panel would be able to review the claim as a matter of first impression. The 340B ADR Panel could remain impartial, and would not be prejudiced by any claims that are initially deemed inadequate or that are further refined through additional documentation.

Response: HHS disagrees that the 340B ADR Panel could not remain impartial or would be prejudiced by claims that are initially deemed inadequate or that are further refined through additional documentation. In any event, HHS anticipates that the 340B ADR Panel will receive a complete package with all of the supporting documentation that is submitted by the parties for ADR review and resolution.

(b) 340B ADR Panel's jurisdiction. In response to comments received as discussed above (General Comments), HHS is finalizing this new paragraph (b), which provides that the 340B ADR Panel shall have jurisdiction to entertain any petition where the damages sought exceed $25,000 or where the equitable relief sought will likely have a value of more than $25,000 during the twelve-month period after the 340B ADR Panel's final agency decision, provided the petition asserts claims of the type set forth below.

(c) Claims permitted.

Section 7102 of the Affordable Care Act added section 340B(d)(3) of the PHSA, which instructs the Secretary to establish and implement a binding ADR process to resolve certain 340B Program statutory violations. Section 340B(d)(3)(A) of the PHSA specifies that the ADR process is to be used to resolve: (1) Claims by covered entities that they have been overcharged by manufacturers for drugs purchased under this section, and (2) claims by manufacturers, after a manufacturer has conducted an audit of a covered entity, as authorized by section 340B(a)(5)(C) of the PHSA, that a covered entity has violated the prohibitions against duplicate discounts and diversion (sections 340B(a)(5)(A) and (B) of the PHSA). This includes covered entity eligibility, patient eligibility, or manufacturer restrictions on 340B sales that the 340B ADR Panel deems relevant for resolving an overcharge, diversion, or duplicate discount claim. Each 340B ADR Panel will necessarily have jurisdiction to resolve all issues underlying any claim or defense, including, by way of example, those having to do with covered entity eligibility, patient eligibility, or manufacturer restrictions on 340B sales that the 340B ADR Panel deems relevant for resolving an overcharge, diversion, or duplicate discount claim in a fair, efficient, and expeditious manner.

Comment: Some commenters suggest that the proposed rule's requirement that permits claims by a manufacturer only after it has conducted an audit of a covered entity pursuant to section 340B(a)(5)(c) of the PHSA is overly burdensome. These commenters claim that in addition to audits being costly and time-consuming, there are instances where an audit of a covered entity is not possible, but a legitimate basis for a dispute exists. For example, a covered entity may reasonably or unreasonably withhold audit information or behave in a manner that would make an audit ineffective.

Response: HHS disagrees that the process for conducting an audit of a covered entity is improperly burdensome. More important, HHS does not have the authority to waive this statutory requirement. Section 340B(d)(3)(B)(iv) of the PHSA states that the ADR process requires “that a manufacturer conduct an audit of a covered entity pursuant to subsection (a)(5)(C) as a prerequisite to initiating administrative dispute resolution proceedings against a covered entity.”

Comment: Some commenters recommend that HHS clarify that it is outside of the jurisdiction of the ADR process for a covered entity to pursue claims which challenge a manufacturer's Average Manufacturer Price (AMP) or best price (BP) calculations as a covered entity's claims are limited to the allegation that they were overcharged relative to the statutory 340B ceiling price as calculated using the manufacturer's current “as submitted” AMP and BP data.

Response: Section 340B(d)(3)(A) of the PHSA states, in part, that the ADR process is to resolve claims of alleged 340B overcharges. HHS believes that to do so, the 340B ADR Panel may find it necessary to assess whether the manufacturer's claimed “ceiling price” is in fact accurate. Even though a challenge to the claimed ceiling price is within the 340B ADR Panel's jurisdiction and any potential overcharges that may have resulted from an incorrect ceiling price, a challenge to a manufacturer's AMP or BP calculations is beyond the scope of this jurisdiction.

Comment: A few commenters recommend that HRSA consider allowing the parties the opportunity to voluntarily select mediation, as opposed to arbitration, as a mechanism for resolving disputes. Only after the attempt at mediation proves unsuccessful or if the parties do not agree to meditation, then the process should move to binding arbitration before the 340B ADR Panel.

Response: HHS appreciates the comments regarding the ability of the parties to select mediation as opposed to arbitration. HHS notes that there is already an informal process in place for good faith negotiations between covered entities and manufacturers to attempt to resolve 340B disputes before pursuing ADR.

(d) Limitations of actions.

In the NPRM, HHS proposed that the covered entity and the manufacturer meet certain requirements for filing an ADR claim set forth in proposed paragraph (d). The proposed requirements would ensure that a claim of the type specified in section 340B(d)(3)(A) of the PHSA is the subject of the dispute.

The Department proposed that covered entities and manufacturers file a written claim, based on the facts available, or that should have been available, within 3 years of the date of the sale at issue in the alleged violation and that any claim not filed within 3 years would be time barred. The proposed requirement that a claim be filed within 3 years is consistent with the record retention expectations for the 340B Program and would ensure that covered entities and manufacturers have access to relevant records needed to review and respond to claims. The party filing the ADR claim would need to submit documents with each claim to verify that the alleged violation is not time barred. This proposed requirement would prevent a party from asserting a claim that is stale.

HHS also proposed that any file, document, or record associated with a claim be maintained by the covered entity or manufacturer until the 340B ADR Panel's final agency decision is issued unless the 340B ADR Panel provides otherwise. HHS received comments both agreeing with and questioning the timeframe proposed. HHS is finalizing this provision of the rule as proposed, with some modifications, to ensure consistency with requirements set forth in 340B PPAs setting record retention for 3 years for both manufacturers and covered entities. Below is a summary of the comments received and HHS' responses.

Comment: While many commenters agree with the effort to establish a timeframe by which the parties should file a claim, many disagree with the proposed 3-year requirement and suggest a period of at least 5 years. Certain commenters urge HHS to extend the document retention period to take into account the length of manufacturer audits and the time it may take to work with manufacturers on potential solutions ( e.g., which could include beginning the 3-year period on the date that the required covered entity audit is concluded, or other similar solutions). Other commenters urge HHS to adopt a different start date based on when a manufacturer restates the 340B ceiling price or when a covered entity discovers that the manufacturer should have restated the 340B ceiling price.

Response: HHS is changing the title of paragraph (d) to “Limitation of Actions” in this final rule. HHS appreciates comments regarding the requisite record retention period. HHS plans to finalize the 3-year period to be consistent with the PPA record retention requirements that apply to both covered entities and manufacturers. However, the three-year time limit would be subject to normal rules governing statutes of limitations that are not jurisdictional, including the doctrine of equitable tolling. See United States v. Wong, 575 U.S. 402, No. 13-1074 (2015); United States v. June, 575 U.S. 402, No. 13-1075 (2015).

In the NPRM, HHS proposed that to be eligible for the ADR process, each claim filed by a covered entity must include documents sufficient to demonstrate a covered entity's claim that it has been overcharged by a manufacturer, along with any such documentation as may be requested to evaluate the veracity of the claim. Such documentation may include: (1) A 340B purchasing account invoice which shows the purchase price by national drug code (NDC), less any taxes and fees; (2) the 340B ceiling price for the drug during the quarter(s) corresponding to the time period(s) of the claim; and (3) documentation of the attempts made to purchase the drug via a 340B account at the ceiling price, which resulted in the instance of overcharging. HHS believes that these documents are readily available to a covered entity through the usual course of business and should not be overly burdensome to produce. HHS, however, recognizes that in some cases, a covered entity or manufacturer may not have access to all needed documentation. HHS may also request that a party in need of information provide it with a written summary of attempts to work in good faith to resolve issues with the other party. In cases where documents are essential to a case, but not in the possession of one party and are not provided voluntarily by the other party, the 340B ADR Panel may request the documents and ensure that they become a part of the administrative record and that in most cases, summary judgment would not be entertained where there are outstanding documents in the possession of the party seeking summary judgment but not in the possession of the other party. HHS received comments recommending additional instructions on how to file claims and the type of information requested, which are addressed below. HHS clarifies in this final rule that notwithstanding Rules 8 and 10 of the Federal Rules of Civil Procedure, a covered entity filing a claim described in paragraph (c)(1) of this section must provide documents sufficient to demonstrate in its claim that it has been overcharged by a manufacturer, along with any such other documentation as may be requested by the 340B ADR Panel.

Comment: Some commenters recommend that HHS should separate covered entity documentation requirements for the different types of illustrative overcharge claims: (1) Claims that the initial purchase price of a drug purchased by the covered entity exceeded the ceiling price at that time; and (2) claims that the purchase price of a drug should have been adjusted downward later and a refund should have been issued at a specified later point in time, but was not issued within the time period required under HRSA's yet-to-be-developed refund procedure.

Response: HHS disagrees and believes the documentation requirements set forth in this final rule will provide, in most cases, the necessary information to ascertain the type of overcharge a covered entity is alleging in its claim. Where that is not the case, the petitioner would be entitled to limited discovery, in the case of a covered entity, or an opportunity to make an information request to the 340B ADR Panel, in the case of a manufacturer.

Comment: Commenters object to the requirement that covered entities would need to submit 340B ceiling price information when initiating a claim. According to those commenters, the proposed rule did not consider that covered entities do not have access to 340B ceiling prices, and this information is central to proving that a manufacturer overcharged for a drug. These commenters suggest that HRSA fast-track the development of the ceiling price system that would ensure a level playing field in the ADR process.

Response: HHS has acted to ensure that covered entities have access to the 340B ceiling price, through its launch of the pricing component of the 340B Office of Pharmacy Affairs Information System in January 2019. Every active covered entity has access to the pricing component of 340B OPAIS and can view the prices of all active National Drug Codes (NDC) in the 340B Program. A covered entity's authorizing official and primary contact have secure access through an account and two-factor authentication. A manufacturer's authorizing official and primary contact also have access to this secure, online system to view the prices of their company's NDCs.

In the NPRM, HHS proposed that, to be eligible for the 340B ADR process, each manufacturer claim must include documents sufficient to demonstrate that a covered entity has violated the prohibition on diversion or duplicate discount. After receiving such a claim, HRSA may request the following documentation for an initial screening of the claim: (1) A final audit report to indicate that the manufacturer audited the covered entity for compliance with the prohibition on diversion (section 340B(a)(5)(B) of the PHSA) or duplicate discounts (section 340B(a)(5)(A) of the PHSA), and (2) the covered entity's written response to the manufacturer's audit finding(s). HRSA may also request that the manufacturer submit a written summary of attempts to work in good faith to resolve the claim with the covered entity. In this final rule, HHS clarifies that it is the 340B ADR Panel that is reviewing a claim that is responsible for making a request for documents or other information from a party, and not HRSA. We further note that notwithstanding Rules 8 and 10 of the Federal Rules of Civil Procedure, a manufacturer filing a claim under paragraph (c)(2) of this section must provide documents sufficient to demonstrate its claim that a covered entity has violated the prohibition on diversion or duplicate discount, along with any such documentation as may be requested by the 340B ADR Panel.

Comment: Commenters express concern that the causes of actions for manufacturers to file a claim are limited to two instances (diversion and duplicate discounts) and recommend that they be broadened to include other legitimate claims, particularly for other unforeseen examples that may emerge. The commenters recommend an inclusion of “catch-all” language that would allow the 340B ADR Panel to accept other legitimate claims, such as a dispute of the covered entity's eligibility that led the manufacturer to grant the 340B ceiling price, or a dispute concerning the dollar amount attributable to a violation.

Response: HHS agrees that in adjudicating claims of duplicate discounts and diversion, it may be necessary for a 340B ADR Panel to address issues such as covered entity eligibility in making its decisions. HHS is clarifying in this final rule that a 340B ADR Panel's review of diversion and duplicate discounts may include a review of issues such as whether an individual does not qualify as a patient for 340B Program purposes and claims that a covered entity is not eligible for the 340B Program. These issues, although they may appear ancillary, would be entertained because they may determine the outcome of any claim by the manufacturer that the covered entity has engaged in diversion.

Comment: Commenters recommend that HHS exclude specific types of allegations involving duplicate discounts, including the following: (1) The allegation involves duplicate discounts on claims submitted to Medicaid managed care organizations (MCOs); (2) the covered entity incorrectly elected Medicaid carve-out status on the OPA database or failed to include state-mandated modifiers on its claims, but the state Medicaid agency did not claim rebates on the 340B drugs purchased by the covered entity; and (3) a covered entity has correctly listed its carve-in status on the OPA database and has included state-mandated modifiers on its claims, or otherwise followed state requirements to identify 340B drugs, but the state Medicaid agency claimed rebates on the 340B drugs purchased by the covered entity nonetheless.

Response: HHS appreciates these comments, and 340B ADR Panels will consider the first and third types of claims listed above as section 340B(d)(3)(B) of the PHSA states that the decision-making body or official shall be responsible for considering manufacturer duplicate discount claims (violations of section 340B(a)(5)(A) of the PHSA). 340B ADR Panels will not consider claims where the covered entity incorrectly elected Medicaid carve-out status on the OPA database or failed to include state-mandated modifiers on its claims, but the state Medicaid agency did not claim rebates on the 340B drugs purchased by the covered entity, as manufacturers would have not demonstrated that the drugs at issue were subject to duplicate discounts under the Medicaid Drug Rebate and the 340B Programs.

(e) Combining claims.

In the NPRM, HHS proposed that, if requested, covered entities or manufacturers may be permitted to combine their individual claims. Section 340B(d)(3)(B)(vi) of the PHSA permits “multiple covered entities to jointly assert claims of overcharges by the same manufacturer for the same drug or drugs in one administrative proceeding . . . .” HHS proposed that for joint claims, the claim must list each covered entity and include documentation or information from each covered entity demonstrating that the covered entity meets all of the requirements for filing a claim with HHS and that a letter requesting consolidation of claims must also accompany the claim and must document that each covered entity consents to the consolidation of the claims.

Pursuant to section 340B(d)(3)(B)(vi) of the PHSA, joint claims are also permitted on behalf of covered entities by associations or organizations representing their interests. Therefore, HHS proposed that the covered entities must be members of the association or the organization representing them and that each covered entity must meet the requirements listed in paragraph (d) for filing a claim. The proposed joint claim must assert overcharging by the same manufacturer for the same drug(s), and the organization or association will be responsible for filing the claim. HHS also proposed requiring that a letter requesting consolidation of claims must accompany the claim and must document that each covered entity consents to the organization or association asserting a claim on its behalf.

Similarly, at the request of two or more manufacturers, section 340B(d)(3)(B)(v) of the PHSA permits the consolidation of claims brought by more than one manufacturer against the same covered entity if consolidation is appropriate and consistent with the statutory goals of fairness and economy of resources. HHS proposed that the claim must list each manufacturer and include documentation or information from each manufacturer demonstrating that the manufacturer meets the requirements listed in paragraph (d) for filing a claim. HHS also proposed that a letter requesting consolidation of claims must be submitted with the claim and must document that each manufacturer consents to the consolidation of the claims. The statutory authority for implementing the 340B ADR process does not permit consolidated claims on behalf of manufacturers by associations or organizations representing their interests. Therefore, HHS did not propose this option in the NPRM.

With regard to the consolidation of claims by manufacturers against a covered entity, HHS sought specific comment on the grounds under which consolidation would be consistent with the statutory goals of fairness and economy of resources, as required by section 340B(d)(3)(B)(v) of the PHSA. In addition, while HHS proposed, as required by the 340B statute, an ADR process that allows manufacturers to consolidate claims against a covered entity, we recognized the operational challenges presented by the statutory requirement for a manufacturer to first audit the covered entity. HHS, therefore, sought comment on how manufacturers requesting a consolidated claim against a covered entity could satisfy the audit requirement. HHS received comments regarding the combining of claims for both manufacturers and covered entities. Both covered entities and manufacturers request the same drugs and alleged violations be present when making a request for combining claims and entering into the dispute process. HHS is finalizing this section as proposed as it did not receive specific comments on how to address the operational challenges set forth in the proposed rule and believes the process proposed to be sound, fair, and equitable to both parties. However, it should be noted that consolidation of claims by manufacturers against a single covered entity, or joint claims by multiple covered entities against one manufacturer shall be governed by this section guided by the relevant Rules of the Federal Rules of Civil Procedure (Rules), including Rules that contemplate multiple petitioners. Additionally, joinder, consolidation, and other third-party practice not referenced in this subsection (e) shall be governed by the Rules, as relevant, unless the parties and 340B ADR Panel agree otherwise. Below is a summary of the comments received and HHS' responses.

Comment: For consolidated manufacturer claims, commenters request that HHS should add a requirement that: (1) All manufacturers assert covered entity duplicate discount violations, diversion violations, or both arising out of the same policy or practice by the covered entity; and (2) all manufacturers assert these violations during the same time period. HHS must also recognize manufacturers' right to pursue claims (consolidated or otherwise) through a trade association or other agent of their choice.

Response: HHS disagrees. HHS believes that the above proposal would unnecessarily limit the scope of claims that could be brought against a covered entity, when the 340B statute provides only that the claim be based on a duplicate discount or diversion. The statutory ADR provisions allow associations to file joint ADR claims on behalf of covered entities; however, it does not include similar language for associations to file consolidated claims filed on behalf of manufacturers. Therefore, HHS will not alter the final rule to permit joint claims by associations representing manufacturers.

Comment: While the proposed rule outlines that covered entities must submit a letter requesting consolidation of claims, some commenters suggest that HHS further require covered entities to provide proof of consent of an organization or association asserting a claim on the covered entities' behalf. These commenters argue that the proposed rule implies that a covered entity would have to request and be granted permission in order to combine claims, which is not consistent with the statute.

Response: Section 340B(d)(3)(vi) allows for the combining of claims by a covered entities and does require proof of consent. HHS has outlined a process for resolving 340B disputes and has given the 340B ADR Panels wide latitude to establish the proper course of conduct and scope of the process including any additional deadlines, procedures, or instructions that may be necessary or desirable for a fair, efficient, and expeditious ADR proceeding.

Comment: Commenters recommend that HHS clarify that multiple covered entities may combine claims as long as they have in common an overcharge allegation relating to at least one of the same NDCs. For example, if one covered entity alleges overcharges against a manufacturer for three NDCs and another covered entity alleges overcharges against the same manufacturer for two out of three of those NDCs (potentially because the second covered entity only purchased two of the three drugs), these commenters suggest that covered entities should be permitted to combine their claims.

Response: Section 10.21(e) allows for the combining of covered entities' overcharge claims against the same manufacturer for the same drug or drugs. The 340B statute does not require that joint claims contain overcharge claims for the identical set of NDCs. Section 340B(d)(3)(B)(vi) states that “multiple covered entities . . . (may) jointly assert claims of claims of overcharges by the same manufacturer for the same drug or drugs in one administrative proceeding[.]”

(f) Responding to a submitted claim.

In the NPRM, HHS proposed that once the parties have been notified that the claim has met the filing requirements (subsection (b) of the NPRM) and will move forward for review by the 340B ADR Panel, the opposing party will have 20 business days to submit a written response to the allegation to the 340B ADR Panel. The 340B ADR Panel may make subsequent requests for information regarding the claim as needed, and will consider any additional information provided by the named parties involved. However, if an opposing party does not respond to the ADR Panel's request for information or otherwise elects not to participate in the 340B ADR process, the 340B ADR Panel will issue its decision on the claim based on the information submitted in the claim. Commenters raised concerns regarding the lack of detail as it relates to timeframes and recommends set timeframes.

After consideration of the comments received, HHS is finalizing this section with some changes. In this final rule, HHS is extending the timeframe for responding to a claim. After an initiating party (or Petitioner) has received notification from HRSA that its claim will move forward to a 340B ADR Panel for review, the opposing party (or Respondent) will have 30 days to submit a written response to the 340B ADR Panel that may be of the type authorized by Rules 12, 13, or 56 of the Federal Rules of Civil Procedure. The 340B ADR Panel may issue additional instructions as may be necessary or desirable governing the conduct of ADR proceedings, including instructions pertaining to deadlines for submission of additional information that it may request. If the opposing party does not respond to the claim from the Petitioner, the 340B ADR Panel may enter a final agency decision by default in favor of the Petitioner. HHS believes that in a proceeding for damages, the Petitioner must still introduce evidence sufficient to support its claim for damages even though the merits have been resolved through default.

Comment: Several commenters raise concerns about the proposed rule's lack of detail regarding the timeframes for the 340B ADR Panel. They suggest that to better ensure predictability of the ADR process, HRSA should establish discreet timeframes for each of the steps in the ADR process for which HRSA is responsible. They explain that identifying these timeframes in the final rule will improve transparency of the process for all parties involved.

Response: HHS disagrees with the assertion that detailed timeframes must be established at this juncture for each step in the ADR process. Flexibility is needed as each dispute will be evaluated on its merits and the documents presented, and some disputes may take longer than others based on the level of complexity. The 340B ADR Panel is empowered to utilize the deadlines set forth in the Federal Rules of Civil Procedure as necessary.

Comment: Some commenters recommend that HRSA change the period to respond to claims to 60 days as opposed to 20 business days, with potential extensions if needed. These commenters urge HRSA to provide more flexibility, especially as those involved in the process may not have had adequate prior notice of the subject of the claim. The commenters claim that the proposed 20 business day response time frame does not provide manufacturers sufficient time to review the data underlying a claim, assess the factual or legal questions raised by the claim, and prepare a response.

Response: HHS recognizes that there will be instances that require time beyond the stated deadlines. HHS has included in the final rule a provision that the “340B ADR Panel may issue additional instructions as may be necessary or desirable governing the conduct of ADR proceedings, including instructions pertaining to deadlines for submission of additional information.”

Pursuant to section 340B(d)(3)(B)(iii) of the PHSA, regulations promulgated by the Secretary for the 340B ADR process will establish procedures by which a covered entity may discover and obtain information and documents from manufacturers and third parties as may be relevant to a claim that the manufacturer has overcharged the covered entity. The NPRM proposed that such covered entity information requests be facilitated by the 340B ADR Panel. HHS proposed that a covered entity must submit a written request for information to the 340B ADR Panel no later than 20 business days after the entity was notified that the claim would move forward for the 340B ADR Panel's review. The 340B ADR Panel will review the information/document request to ensure that it is reasonable and within the scope of the asserted claim. The 340B ADR Panel will notify the covered entity in writing if its request is deemed as such and permit the covered entity to submit a revised information/document request, if it is not.

In this section, HHS proposed that the 340B ADR Panel will consider relevant factors, such as the scope of the information/document request, whether there are consolidated claims, or the involvement of one or more third parties in distributing drugs on behalf of the manufacturer and that once reviewed, the 340B ADR Panel will submit the information/document request to the manufacturer, which must respond within 20 business days.

HHS also proposed that the manufacturer must fully respond in writing to the information request and submit its response to the 340B ADR Panel by the stated deadline and that the manufacturer is responsible for obtaining relevant information/documents from wholesalers or other third parties that may facilitate sales or distribution of its drugs to covered entities. HHS proposed that if a manufacturer anticipates it will not be able to fully respond by the deadline, the manufacturer may request one extension in writing within 15 business days. The extension request that is submitted to the 340B ADR Panel must include any available information, the reason why the deadline is not feasible, and outline a proposed timeline for fully responding to the information request. The 340B ADR Panel will review the extension request and notify both the manufacturer and the covered entity in writing as to whether the request for an extension is granted and the date of the new deadline. If a manufacturer does not respond to a request for information, HHS proposed that the 340B ADR Panel will issue its decision on the claim based on the information submitted in the submitted claim package. Many of the commenters recommended changes to the ability of parties to request and receive information during the course of the ADR proceedings including allowing a manufacturer to submit an information request, which was not addressed in the NPRM.

HHS has decided to broaden the scope of this section to include information requests from the 340B ADR Panel. To provide further guidance to the parties involved, HHS has also decided that covered entities' discovery shall be governed by the Federal Rules of Civil Procedure. While HHS limited the scope of these information requests to covered entities in the NPRM, consistent with the limited discovery requirements of the statute pertaining to covered entities, this final rule allows the 340B ADR Panel to request additional information from a party if deemed necessary to ensure that claims shall be resolved fairly, efficiently, and expeditiously. This leaves open the possibility that a drug manufacturer could petition the 340B ADR Panel to request further information from a covered entity. If the 340B ADR Panel determines that such a request would enhance its deliberations, the 340B ADR Panel could make the request to the covered entity. Based on comments received, HHS has also added (c) to this section to address actions the 340B ADR Panel may take if a party fails to fully respond to the information request.

Comment: Some commenters recommend that a covered entity should be afforded an opportunity to review the manufacturer's response before crafting and submitting its request for additional information. Once the covered entity has seen the manufacturer's position, it can better tailor its information request to the dispute, and request only those documents it needs to pursue its overcharge claim. HHS should allow covered entities 30 calendar days from the date on which it receives the manufacturer's response to submit an information request.

Response: The 340B ADR Panel is given wide latitude to determine the proper course of conduct in an ADR proceeding and may issue additional instructions as may be necessary or desirable governing the conduct of ADR proceedings including instructions pertaining to submission of additional information.

Comment: Some commenters recommend that HHS allow manufacturers to submit information requests regarding disputes just as covered entities can. They argue that manufacturers must have the right to submit information requests in the event that they are unable to obtain all relevant information during an audit or new information relevant to the dispute arises.

Response: Section 340B(d)(3)(B)(iii) of the PHSA expressly authorizes covered entities to “discover and obtain such information and documents from manufacturers” as may be relevant to their filed claims. As the statute does not provide similar authorization for manufacturer document requests, HHS declines to alter the final rule in this area. However, to the extent that a manufacturer believes an information request to a covered entity is necessary for the 340B ADR Panel's deliberations, it may petition the 340B ADR Panel to make the request to the covered entity.

Comment: The proposed rule allows 340B covered entities to request information relevant to their claim from manufacturers and third parties; however, commenters argue that the proposed rule does not hold a manufacturer accountable for actually producing the requested information. These commenters recommend that if a manufacturer fails to comply with the information request, the 340B ADR panel should rely on the information contained in the original submitted claim and issue a finding in favor of the covered entity due to lack of information obtained from the manufacturer.

Response: HHS agrees. Section 10.22(c) has been added to address sanction for failure to respond or failure to respond fully to an information request.

Comment: Some commenters urge HHS to consider that the filing party should be required to share with the responding party all of the documents it has filed with HRSA to ensure that the ADR process benefits from the full and open exchange of information. These commenters explain that full disclosure of the filing documents also might prevent some parties from seeking judicial review of 340B ADR Panel final agency decisions. A party dissatisfied with a 340B ADR Panel final agency decision might be more prone to seek judicial review if it has not had the opportunity to review the evidence on which the 340B ADR Panel relied.

Response: HHS agrees. Section 10.22(b) allows the 340B ADR Panel to take into account the possibility that a manufacturer would need additional information in order to respond appropriately to the dispute in question. While it is expected that a manufacturer would have all the information needed through its audit of a covered entity, this section would allow the 340B ADR Panel to make an information request of any party and to share that information with the opposing party if necessary for the fair, efficient, and expeditious conduct of the ADR proceeding.

HHS has added this section to address comments received regarding the needs of the parties as it relates to the conduct of these proceedings. HHS recognizes there are instances, sometimes beyond the control of the parties that warrant flexibility in how it conducts the proceedings and that may warrant additional instructions. This new section will allow for ADR proceedings to take place in the most fair, efficient, and expeditious manner, which could include video conference, in-person, or through other means. It will also allow the 340B ADR Panel discretion in admitting evidence and testimony during the course of a proceeding as well as provide the 340B ADR Panel with the additional flexibility to provide instructions during the proceeding in order to achieve a fair, efficient, and expeditious review. HHS has also decided that unless the parties agree otherwise and the 340B ADR Panel concurs, the Federal Rules of Civil Procedure ( https://www.uscourts.gov/sites/default/files/federal_rules_of_civil_procedure_-_dec_1_2019_0.pdf ) and the Federal Rules of Evidence ( https://www.uscourts.gov/sites/default/files/federal_rules_of_evidence_-_dec_1_2019_0.pdf ), to the extent applicable, shall apply to proceedings. HHS has summarized and responded to comments received below.

Comment: Some commenters recommend HHS provide the parties with the opportunity to present evidence live in front of the 340B ADR Panel. The commenters explain that relying exclusively on a paper record could potentially lengthen the ADR process if the documents were interpreted differently by the parties and further clarification were needed before proceeding. A live process could allow for questions arising from paper records to be answered efficiently. These commenters explain that by enabling parties to present evidence and respond to questions from the 340B ADR Panel orally, HHS can provide a forum where information is shared among affected parties.

Response: HHS agrees that there may be instances where portions of the ADR may need to be conducted by telephone or video conference, or through other means. Therefore, HHS has clarified the means by which the process may be conducted in this final rule.

Comment: Several commenters suggest that HHS detail in the final rule how it plans to establish safeguards and protections to ensure that proprietary information submitted on behalf of either party is kept confidential by the 340B ADR Panel in order to minimize risk of harm.

Response: HHS appreciates the suggestion on addressing safeguards to ensure confidentiality and minimize disclosure risk. HHS believes adequate safeguards are in place to ensure that confidential, proprietary information is not disclosed.

In the NPRM, HHS proposed that the 340B ADR Panel would review the documents submitted by the parties to determine if there is adequate support to conclude that a violation occurred. HHS proposed a process whereby the 340B ADR Panel's draft agency decision letter would be sent to all parties, and the parties involved would have 20 business days to respond to the 340B ADR Panel. HHS sought specific comments on this process and whether this proposed process would facilitate or hinder the fair, efficient, and timely resolution of claims.

HHS also proposed that once the parties have reviewed and submitted comments in response to the draft agency decision letter, the 340B ADR Panel would prepare and submit its final agency decision letter to all parties in the dispute. In issuing a final agency decision letter, the 340B ADR Panel will be operating under an express, written delegation of authority from the Secretary of HHS to make such final agency decisions. This Regulation constitutes that ex officio delegation. The final agency decision made by the 340B ADR Panel would conclude the administrative resolution process; however, HHS proposed that the final agency decision letter also be submitted to HRSA to provide remedies and enforcement of determinations through mechanisms and sanctions as described section 340B(d)(1)(B) or (d)(2)(B), as appropriate.

HHS proposed that the 340B ADR Panel's final agency decision letter would be binding upon the parties involved, unless invalidated by an order of a court of competent jurisdiction, acting under Section 10 of the Administrative Procedure Act (5 U.S.C. 706), and in accordance with section 340B(d)(3)(C) of the PHSA. HHS is finalizing the rule as proposed with modifications. First, in this final rule, HHS is replacing “HSB” with “HRSA Administrator,” in order to elevate the responsibilities conducted under the ADR process. Second, this final rule adds section 10.24(d), which states the final agency decision will be precedential and binding on the parties. Lastly, given that HHS has added procedural protections and more clearly defined the ADR process, HHS does not feel that it is necessary to provide the parties an opportunity to respond to a draft agency decision.

Comment: Commenters explain that the proposed rule does not incorporate an appeals process and recommend that an appeals process be made available to all parties. These commenters also suggest that HHS publish all findings and decisions by the 340B ADR Panel to enable all parties to be informed and more compliant. These commenters suggest that publication of the ADR's decisions will also prevent inconsistent decisions and unsupported rulings.

Response: HHS agrees, as these ADR decisions will be precedential. Therefore, HHS will ensure that the final agency decisions are publically available ( e.g., by publication on the HRSA website). HHS does not believe that an appeals process is necessary given that an aggrieved party has a right to seek judicial review under section 10 of the Administrative Procedure Act (5 U.S.C. 706).

Comment: When deciding disputes, some commenters suggest that the 340B ADR Panel use a “preponderance of the evidence” standard. Once the 340B ADR Panel reaches its decision, HHS should mandate the issuance of a summary that includes a transparent analysis of the reasons for the decision, without disclosing any proprietary or otherwise confidential information. HHS should also recognize that the 340B ADR Panel decision is binding on the parties involved in the dispute (unless otherwise overturned by a court acting pursuant to the Administrative Procedure Act), but is not binding on third parties.

Response: HHS agrees, as the final agency decisions will be precedential and binding on the named parties in the dispute. As such, HHS will ensure that all final agency decisions are publically available. HHS also agrees that the 340B ADR Panel use a “preponderance of the evidence” standard when making its determinations and has adjusted the final rule accordingly in section § 10.24(a).

Comment: Commenters suggest that HHS clarify that it will not impose sanctions on a party as a result of a 340B ADR Panel decision until the party has been given an opportunity to complete corrective action with respect to the 340B ADR Panel's findings.

Response: Section 340B(d)(3)(A) includes a requirement that the ADR process include the “appropriate procedures for the provision of remedies and enforcement of determinations made pursuant to such process through mechanisms and sanctions described in paragraphs (1)(B) and (2)(B) (of 340B(d))” Therefore, when appropriate, the 340B ADR Panel may make recommendations to HRSA for sanctions, including referrals to the HHS Office of Inspector General for its consideration of civil monetary penalties, as appropriate. Whether sanctions or remedial action is appropriate will be dependent on the type of violation that occurred.

Comment: A few commenters were concerned that the proposed rule does not address how HRSA will enforce the findings of the 340B ADR panel or any underlying manufacturer audit. These commenters explain that the NPRM does not address if, or how, HRSA will go about enforcing the findings of the 340B ADR Panel or the underlying manufacturer audits. For example, if the 340B ADR Panel's final agency decision requires covered entities to make any applicable repayments to manufacturers, timeframes should be established around such payment and, at a minimum, HRSA should permit affected manufacturers to withhold future discounts until HRSA, the manufacturer, and the covered entity have resolved the findings noted in the manufacturer's audits.

Response: Wide varieties of covered entities participate in the 340B Program, from small, rural health care facilities to large academic medical centers. HHS expects that the 340B ADR Panel will review violations ranging from minor and inadvertent to systematic and intentional. Given the wide variety of 340B Program participants and varying types of violations, HHS believes that the form of enforcement should be left open to permit HHS maximum flexibility in determining what is appropriate given the specific facts of each situation.

Comment: Some commenters urge HRSA to incorporate a timeframe for the issuance of 340B ADR Panel's final agency decisions. They recommend that the final agency decision should be issued 30 business days from the date when the submission of all requested information is complete and in complex cases, the process should be extended 15 business days, so that the final agency decision would be issued within 45 business days. The commenters argue that this approach would be consistent with Medicare where the deadline for initial determination decisions is 45 days and for redetermination decisions is 60 days.

Response: HHS disagrees. The 340B ADR Panel has been given wide latitude to determine the scope of the process and should not be held to a timeframe that does not allow for thorough and thoughtful consideration of all materials presented.

Comment: Some commenters state that the ADR process should be governed by the Administrative Procedure Act (APA), 5 U.S.C. 551 et seq. They explain that a reviewing court should be authorized to hold unlawful and set aside ADR Panel decisions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or unsupported by substantial evidence. The commenters request that HRSA clarify that the APA will apply to the ADR Process, including judicial review.

Response: The form of judicial review for 340B ADR Panel decisions is beyond the scope of this final rule.

Comment: Commenters support the proposal that HRSA has the sole authority to enforce the 340B ADR Panel's decision. The commenters explain that the 340B ADR Panel may not fully appreciate HRSA's historical enforcement practices, and the NPRM will ensure that HRSA retains responsibility for compliance with 340B statutory requirements.

Response: While HHS appreciates the support of HRSA having sole enforcement authority, this final rule contemplates and allows HRSA to take appropriate action, which could include enforcement action or referral to another HHS Operating Division or to another Federal agency. For example, if the 340B ADR Panel's final agency decision is that an overcharge did occur, HRSA could recommend the OIG review the overcharge to determine if it was knowing and intentional and should be assessed a civil monetary penalty.

Comment: Commenters express concern that HRSA should not use its enforcement authority to transform a 340B ADR Panel decision into a broad 340B policy decision. The commenters explain that enforcement should be limited to the parties to the ADR proceeding. 340B ADR Panel decisions should not have general applicability.

Response: As set forth in section 10.23(b)(2), 340B ADR Panel decisions will be final agency decisions, binding on the parties, and precedential.

HHS has examined the effects of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 8, 2011), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review as established in Executive Order 12866, emphasizing the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year), and a “significant” regulatory action is subject to review by the Office of Management and Budget (OMB).

HHS does not believe that this final rule will have an economic impact of $100 million or more in any 1 year, and is therefore not designated as an “economically significant” final rule under section 3(f)(1) of Executive Order 12866. This rule creates a framework for the Department to resolve certain disputed claims regarding manufacturers overcharging covered entities and disputed claims of diversion and duplicate discounts by covered entities audited by manufacturers under the 340B Program. HHS does not anticipate the introduction of an ADR process to result in significant economic impacts.

Executive Order 13771 (January 30, 2017) requires that the costs associated with significant new regulations “to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” This final rule is not expected to be an E.O. 13771 regulatory action because this final rule is not significant under E.O. 12866.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) (RFA) and the Small Business Regulatory Enforcement and Fairness Act of 1996, which amended the RFA, require HHS to analyze options for regulatory relief of small businesses. If a rule has a significant economic effect on a substantial number of small entities, the Secretary must specifically consider the economic effect of the rule on small entities and analyze regulatory options that could lessen the impact of the rule. HHS will use an RFA threshold of at least a three percent impact on at least five percent of small entities.

The rule would affect drug manufacturers (North American Industry Classification System code 325412: Pharmaceutical Preparation Manufacturing). The small business size standard for drug manufacturers is 750 employees. Approximately 600 drug manufacturers participate in the 340B Program. While it is possible to estimate the impact of the final rule on the industry as a whole, the data necessary to project changes for specific manufacturers or groups of manufacturers is not available, as HRSA does not collect the information necessary to assess the size of an individual manufacturer that participates in the 340B Program. The rule would also affect health care providers. For purposes of the RFA, HHS considers all health care providers to be small entities either by virtue of meeting the Small Business Administration (SBA) size standard for a small business, or for being a nonprofit organization that is not dominant in its market. The current SBA size standard for health care providers ranges from annual receipts of $7.5 million to $38.5 million. Currently, in 2020,, 12,500 covered entities participate in the 340B Program, which represent safety-net healthcare providers across the country.

The final rule introduces an ADR mechanism to review manufacturer claims that covered entities have violated certain statutory obligations and covered entities claims that they have been overcharged for covered outpatient drugs by manufacturers. The documentation required as part of this administrative process are documents that manufacturers and covered entities are already required to maintain as part of their participation in the 340B Program. HHS expects that this documentation would be sufficiently available prior to submitting a claim. Therefore, the collection of this information would not result in an economic impact or create additional administrative burden on these businesses.

HHS believes the ADR process will provide a cost-effective option for resolving claims that would otherwise remain unresolved or prompt litigation. The final rule provides an option to consolidate claims by similar situated entities, and covered entities may have claims asserted on their behalf by associations or organizations, which could reduce costs. HHS has determined, and the Secretary certifies that this final rule will not have a significant economic impact on a substantial number of small health care providers or a significant impact on the operations of a substantial number of small manufacturers; therefore, it is not preparing an impact analysis for the purposes of the RFA. HHS estimates that the economic impact on small entities and small manufacturers will be minimal and less than 3 percent.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year.” In 2020, that threshold is approximately $156 million. HHS does not expect this rule to exceed the $156 million threshold.

HHS has reviewed this final rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” This rule would not “have substantial direct effects on the States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This rule would not adversely affect the following family elements: Family safety, family stability, marital commitment; parental rights in the education, nurture, and supervision of their children; family functioning, disposable income or poverty; or the behavior and personal responsibility of youth, as determined under Section 654(c) of the Treasury and General Government Appropriations Act of 1999.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that OMB approve all collections of information by a Federal agency from the public before they can be implemented. Given the small number of requests for the informal dispute resolution process, HHS asserted in the proposed rule that the ADR process would not have a significant impact on the current reporting and recordkeeping burden for manufacturers or covered entities under the 340B Program. HHS solicited comments on the accuracy of this statement. No comments were received challenging the accuracy of this statement. Moreover, HHS believes that the 340B ADR Process is exempt from the Paperwork Reduction Act requirements as it provides the mechanism and procedures for “an administrative action or investigation involving an agency against specific individuals or entities” pursuant to 44 U.S.C. 3518(c).

For the reasons set forth in the preamble, the Department of Health and Human Services amends 42 CFR part 10 as follows:

The DBE program for DOT-assisted contracts is a statutory program intended to ensure nondiscriminatory contracting opportunities for small business concerns owned and controlled by socially and economically disadvantaged individuals in the Department's highway, mass transit, and airport financial assistance programs. The statutory provision governing the DBE program in the highway and mass transit financial assistance programs is section 1101(b) of the Fixing America's Surface Transportation (FAST) Act (Pub. L. 114-94, Dec. 4, 2015), and the statutory provision governing the DBE program as it relates to airport financial assistance programs is 49 U.S.C. 47113.

Under the Department's existing rules, to qualify as an eligible DBE firm, a firm's average annual gross receipts over the preceding three fiscal years cannot exceed a DOT-specific gross receipts cap. On April 2, 2007, in response to direction in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub. L. 109-59, August 10, 2005) to adjust this gross receipts cap annually for inflation, the Department published a final rule adjusting the gross receipts cap for its DBE program in 49 CFR part 26 from $19,570,000 to $20,410,000 (72 FR 15614). On April 3, 2009, the Department published another final rule adjusting the gross receipts cap for its DBE program from $20,410,000 to $22,410,000 (74 FR 15222). The Moving Ahead for Progress in the 21st Century (MAP-21) Act (Pub. L. 112-141, July 6, 2012) maintained the $22,410,000 gross receipts cap amount set by the April 2009 final rule. On October 2, 2014, the Department issued a final rule that increased the gross receipts cap to $23,980,000 (79 FR 59565). In 2015, The FAST Act maintained the $23,980,000 gross receipts cap set by the October 2014 rule. Section 1101(b)(2)(A)(ii) of the FAST Act reaffirms the Secretary of Transportation's requirement to adjust this amount annually for inflation. Accordingly, this final rule adjusts the gross receipts cap for inflation by increasing the gross receipts cap applicable to firms for purposes of Federal Highway Administration (FHWA)—and Federal Transit Administration (FTA)—assisted work to $26,290,000.

The Federal Aviation Administration (FAA) Reauthorization Act of 2018 (Pub. L. 115-254) removed the gross receipts cap for purposes of eligibility for FAA-assisted work. Therefore, the revised rule reflects that the gross receipts cap does not apply for purposes of determining a firm's eligibility for FAA-assisted work.

To make an inflation adjustment to the gross receipts figures, DOT uses the Department of Commerce's price index for State and local consumption expenditures (gross output of general government). The Bureau of Economic Analysis at the Department of Commerce prepares constant dollar estimates of State and local government purchases of goods and services by deflating current dollar estimates by suitable price indexes. These indexes include purchases of durable and non-durable goods, and other services. Using these price deflators enables the Department to adjust dollar figures for inflation from past years.

The current inflation rate on purchases by State and local governments is calculated by dividing the price deflator for the fourth quarter of 2019 (116.030) by 2015's fourth quarter price deflator (105.829). See Bureau of Economic Analysis Table 3.10.4, Price Indexes for Government Consumption Expenditures and General Government Gross Output (January 30, 2020). The result of the calculation is 1.09639, which represents an inflation rate of 10.9639% from the fourth quarter of 2015. Multiplying the FAST Act's $23,980,000 standard for disadvantaged business enterprises in DOT financial assistance programs by 1.09639 equals $26,291,465, which will be rounded off to the nearest $10,000 is $26,290,000. Therefore, if a firm's gross receipts averaged over the firm's previous three fiscal years exceeds $26,290,000, it exceeds the small business size limit for participation in FHWA and FTA-assisted work under the Department's DBE program. The Department will adjust this amount for inflation on an annual basis. In subsequent years, the revised amount will be published on the Departmental Office of Civil Rights' website.

Under the Administrative Procedure Act (5 U.S.C. 553(b)(B)), an agency may waive notice and comment procedures if it finds good cause that such procedures are impracticable, unnecessary, or contrary to the public interest. The Department finds that notice and comment for this rule is unnecessary because it only relates to ministerial updates of business size standards and gross receipts caps to account for inflation, which does not change the standards or caps in real dollar terms. Accordingly, the Department finds good cause under 5 U.S.C. 553(b)(B) to waive notice and opportunity for public comment.

This rule is not a significant regulatory action under Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review. It is also not significant within the meaning of DOT regulatory policies and procedures. This rule is issued in accordance with the Department's rulemaking procedures found in 49 CFR part 5 and DOT Order 2100.6.

The Department does not anticipate that this rulemaking will have an economic impact on regulated entities. The rule is a ministerial adjustment for inflation of a statutory small business size standard. It will not impose burdens on any regulated parties.

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

In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601-612), DOT has evaluated the effects of this action on small entities and have determined that the action will not have a significant economic impact on a substantial number of small entities. The rule is a ministerial update to the size limits to define small businesses for the Department's Financial Assistance Program for Disadvantaged Business Enterprises. The only effect of the rule on small entities is to allow some small businesses to continue to participate in the DBE programs by adjusting for inflation, and to align the regulation with a change to the part 26 size standard for FAA-assisted work pursuant to the FAA Reauthorization Act of 2018. Therefore, the Department certifies that this rule would not have a significant economic impact on a substantial number of small entities.

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (Federalism), and the Department has determined that this action will not have sufficient federalism implications to warrant the preparation of a federalism assessment. The Department has also determined that this action will not preempt any State law or State regulation or affect the States' ability to discharge traditional State governmental functions.

This rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments). Because this rule will not significantly or uniquely affect the Indian tribal communities, and will not impose substantial direct compliance costs, the funding and consultation requirements of the Executive Order do not apply.

This rule does not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4; 109 Stat. 48). This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $148.1 million or more in any one year (2 U.S.C. 1532). The definition of “Federal mandate” in the Unfunded Mandates Reform Act excludes financial assistance of the type in which State, local, or tribal governments have authority to adjust their participation in the program in accordance with changes made in the program by the Federal Government. Since this rule pertains to a nondiscrimination requirement and affects only Federal financial assistance programs, the Unfunded Mandates Reform Act does not apply.

The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this program.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct, sponsor, or require through regulations. The Department has determined that this rule does not contain collection of information requirements for the purposes of the PRA.

The agency has analyzed the environmental impacts of this action pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321, et seq. ) and has determined that it is categorically excluded pursuant to DOT Order 5610.1C, “Procedures for Considering Environmental Impacts” (44 FR 56420, October 1, 1979). Categorical exclusions are actions identified in an agency's NEPA implementing procedures that do not normally have a significant impact on the environment and therefore do not require either an environmental assessment or environmental impact statement. The purpose of this rulemaking is to make an inflation adjustment of the size limit on small businesses participating in the DBE program. The agency does not anticipate any environmental impacts, and there are no extraordinary circumstances pertaining to this rulemaking.

For the reasons stated in the preamble, the Department of Transportation amends 49 CFR part 26 as follows:

This final rule revises FRA's regulation (49 CFR 234.11) on State highway-rail grade crossing action plans (Action Plans) to require 40 States and the District of Columbia (DC) to develop and implement FRA-approved Action Plans. The final rule also requires ten States that were previously required to develop Action Plans by the Rail Safety Improvement Act of 2008  1 (RSIA) and FRA's implementing regulation at 49 CFR 234.11 to update their plans and submit reports describing the actions they have taken to implement their plans.

This final rule is intended to implement the Fixing America's Surface Transportation Act (FAST Act) mandate that the FRA Administrator promulgate a regulation requiring States to develop, implement (and update, if applicable) Action Plans. 2 In RSIA, Congress directed the Secretary of Transportation (Secretary) to identify the ten States that had the most highway-rail grade crossing (GX) collisions, on average, over the previous three years, and require those States to develop Action Plans for the Secretary's approval. 3 RSIA required the Action Plans to “identify specific solutions for improving” grade crossing safety and to “focus on crossings that have experienced multiple accidents or are at high risk” for accidents. Using FRA's database of reported GX accidents/incidents that occurred at public and private grade crossings, FRA determined the following ten States had the most reported GX accidents/incidents at public and private grade crossings during the three-year period from 2006 through 2008: Alabama, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Ohio, and Texas. Therefore, on June 28, 2010, FRA issued a final rule (2010 final rule) requiring these ten States to develop Action Plans and submit them to FRA for approval (based on the Secretary's delegation of authority to the Federal Railroad Administrator in 49 CFR 1.89). 4

Section 11401 of the FAST Act (Section 11401)  5 tasks the FRA Administrator with promulgating a regulation requiring these ten States to update the Action Plans they previously submitted to FRA under 49 CFR 234.11. This statutory mandate also directs FRA to include a regulatory provision that requires each of these ten States to submit a report to FRA describing: (a) What the State did to implement its previous Action Plan; and (b) how the State will continue to reduce GX safety risks. As for the other 40 States and DC, Section 11401(b)(1)(B) requires the FRA Administrator to promulgate a regulation requiring them to develop and implement State Action Plans.

The FAST Act mandate contains specific requirements for the contents of the Action Plans. As set forth in Section 11401(b)(2), each Action Plan must identify GXs that: (a) Have experienced recent GX accidents or incidents; (b) have experienced multiple GX accidents or incidents; or (c) are at high-risk for accidents or incidents. Section 11401(b)(2) further provides that each Action Plan must identify specific strategies for improving safety at GXs, including GX closures or grade separations, and that each State Action Plan must designate a State official responsible for managing implementation of the plan.

In addition, the FAST Act mandate contains requirements related to FRA's review and approval of State Action Plans, as well as requirements related to the publication of FRA-approved plans. For example, when FRA approves a State's Action Plan, Section 11401(b)(4) requires FRA to make the approved plan publicly available on an “official internet website.”

If a State submits an Action Plan FRA deems incomplete or deficient, Section 11401(b)(6) requires FRA to notify the State of the specific areas in which the plan is deficient. In addition, Section 11401(b)(6) requires States to correct any identified deficiencies and resubmit their corrected plans to FRA within 60 days from FRA's notification of the deficiency. If a State fails to meet this 60-day deadline for correcting deficiencies identified by FRA, Section 11401(b)(8) requires FRA to post a notice on an “official internet website” that the State has an incomplete or deficient Action Plan. FRA personnel, including FRA regional grade crossing managers, inspectors, and specialists and experts from FRA's Highway-Rail Crossing and Trespasser Programs Division, are available to assist States with developing, implementing, and updating their Action Plans. For example, as further explained in the Section-by-Section Analysis below, FRA will offer webinars as well as provide GX accident/incident data to States upon request. FRA will also assist State agencies that wish to use FRA's Office of Safety Analysis website ( https://railroads.dot.gov/safety-data ) to generate customized reports of GX accident/incident data.

FRA received comments recommending that Federal funding should be available to offset the costs associated with State efforts to develop and update Action Plans, as required by this final rule. Delaware DOT (DelDOT) commented that dedicated funding should be available for States to develop and implement their Action Plans as required by FRA, while the Vermont Agency of Transportation (VTrans) submitted comments encouraging FRA to include funding to States in carrying out this requirement. Otherwise, DelDOT asserted that the costs associated with developing and implementing an Action Plan would prohibit or delay the State's implementation of safety improvements.

The statutory mandate for this rulemaking did not contain any provision that would authorize dedicated Federal funding for the Action Plans. However, Section 11401(d) allows for States to use Federal funds allocated through the Federal Highway Administration's (FHWA) Railway-Highway Crossings (Section 130) Program to develop and update their Action Plans as required by this final rule. In addition, the two percent limitation on the use of Section 130 funds apportioned to a State allowed by 23 U.S.C. 130(k) for the compilation and analysis of data in support of the Rail-Highway Crossings Program annual reports does not restrict the use of Section 130 funds to develop or update Action Plans. However, FRA recommends States contact their local FHWA Division Office for more information, if they have questions about the use of Section 130 funds or any other FHWA-administered funds to develop or update their Action Plans.

Minnesota DOT (MNDOT) submitted comments requesting specific guidance on how States may use Section 130 funds to develop their Action Plans. In particular, MNDOT asked if States may use Section 130 funds to offset the cost of developing Action Plans at 100 percent funding, or whether States will be required to come up with a 10 percent match. In addition, if States will be required to come up with a 10 percent match, MNDOT asked if the State of Minnesota can use funds in its Grade Crossing Safety Account as the 10 percent match. Under 23 U.S.C. 130(f)(3), the Federal share of rail-highway crossing projects using Section 130 set-aside funds is 90 percent. The question regarding State of Minnesota Grade Crossing Safety Account funds falls outside the scope of this rulemaking, as the State of Minnesota administers the distribution of State funding. As such, FRA recommends that MNDOT coordinate with the appropriate agency to obtain guidance on that issue.

This section discusses the scope of part 234. As proposed in the notice of proposed rulemaking (NPRM), 6 FRA is revising paragraph (a)(3) to reflect the revised requirements contained in 49 CFR 234.11 as a result of the FAST Act mandate and indicate that these revised requirements are within the scope of this part.

Although FRA proposed no new definitions in the NPRM, after reviewing the comments received in response to the NPRM, in this final rule, FRA is adding definitions for three terms used in § 234.11 to the list of definitions in § 234.5.

The first definition FRA is adding is the definition of the term “accident/incident,” which FRA is adopting, in part, from the definition of the term in 49 CFR 225.5. Specifically, this final rule defines “accident/incident” as any impact between railroad on-track equipment and a highway user at a GX or pathway grade crossing (PX). The definition further notes that the term “highway user” includes automobiles, buses, trucks, motorcycles, bicycles, farm vehicles, pedestrians, and all other modes of surface transportation, motorized and un-motorized.

FRA received a number of comments on its proposal to replace the term “collisions” in § 234.11(a) with the term “accidents,” and to use the term “accident or incident” in § 234.11(e) when describing required Action Plan elements. MNDOT and the Oregon Department of Transportation (ODOT) commented that use of the terms “accidents” (used in proposed paragraph (a)) and “accident or incident” (used in proposed paragraph (e)) would be confusing. MNDOT recommended that FRA define these terms in the final rule. ODOT recommended that FRA use a single word or word combination consistently throughout the final rule, instead of switching back and forth between “accident” and the word combination “accident or incident.” A resident of Chicago, Illinois also commented that the phrase “accident or incident” is too vague.

In addition, FRA received comments from one or more unnamed individuals calling themselves the “State Program Managers Section 130/State [GX] Program Office,” and self-described as having a combined 50 years of public service experience and over 25 years of experience managing Section 130 programs. FRA refers to this commenter as the “130 Group” to distinguish them from official comments submitted on behalf of Section 130 Program Managers for one or more State departments of transportation. In their comments, the 130 Group recommended FRA use the term “collision” or the term “crash” in this final rule for consistency with other highway safety programs that seek to mitigate the frequency and severity of incidents. The 130 Group explained that use of the term “accident” has been discouraged because a train always has the right of way and a vehicle must always stop or approach a grade crossing prepared to stop.

The Alaska Department of Transportation and Public Facilities (Alaska DOT&PF) also prefers the word “crashes.” Alaska DOT&PF asserted in its comments that “crashes” is the terminology more commonly recognized by traffic safety practitioners and interest groups and recommended that FRA at least explain why the term is not used, if not adopted in the final rule.

After considering these comments, in this final rule, FRA is adopting a slightly revised term, “accident/incident.” In making this decision, FRA relied heavily on the plain language of Section 11401(b), which specifically refers to “[GX] accidents or incidents” as one of the primary factors for identifying GXs that must be addressed by States in their Action Plans. FRA notes that the word combination “accidents or incidents” used in Section 11401(b) is essentially the same as the term “accident/incidents,” which has been used for years in FRA's accident reporting regulations in 49 CFR part 225.

This final rule also moves the existing definition of “pathway grade crossing” from § 234.301 (which applies only to FRA's Emergency Notification System regulations in subpart C to 49 CFR part 234) to § 234.5. Although FRA did not propose to move this definition in the NPRM, by moving it to § 234.5 in this final rule, the definition will now apply to all of FRA's grade crossing regulations in 49 CFR part 234. For purposes of this final rule, including the definition in § 234.5 will make clear the term's meaning as it is used in § 234.11, which as revised, requires States to address safety at PXs, as well as GXs, in their Action Plans. This change is consistent with the mandate of Section 11401(e), which defines “highway-rail grade crossing” to include locations where “a pathway explicitly authorized by a public authority or a railroad carrier . . . crosses one or more railroad tracks either at grade or grade-separated.” Specifically, in this final rule, FRA is defining the term “pathway grade crossing” in § 234.5 to mean a pathway that crosses one or more railroad tracks at grade and that is: (1) Explicitly authorized by a public authority or a railroad; (2) dedicated for the use of non-vehicular traffic, including pedestrians, bicyclists, and others; and (3) not associated with a public highway, road, or street, or a private roadway.

Pathways that are contiguous with, or separate but adjacent to, GXs are part of the GX and are not separate crossings. However, as explained in FRA's Guide for Preparing U.S. DOT Crossing Inventory Forms, pathways that intersect with one or more railroad tracks more than 25 feet from the location where a highway, road, or street intersects with one or more railroad tracks are generally separate PXs. The comments regarding this term and FRA's responses are further discussed below in the discussion regarding § 234.11.

FRA is also adding a definition of “State highway-rail grade crossing action plan” or “Action Plan.” This definition is being added in response to multiple comments from State agencies, including Alaska DOT&PF, Washington Utilities and Transportation Commission staff (Washington UTC staff), the South Dakota Department of Transportation (SDDOT) and the departments of transportation for Idaho, Montana, North Dakota, and Wyoming, recommending that FRA allow States the flexibility to coordinate, integrate, or incorporate their Action Plans with other reports, such as the Strategic Highway Safety Program (SHSP) or the State Transportation Improvement Program. Specifically, this final rule defines “State highway-rail grade crossing action plan” or “Action Plan” as a document submitted to FRA for review and approval by a State of the United States (or DC), which contains the elements required by § 234.11(e) to address safety at highway-rail and pathway grade crossings. Therefore, a State may comply with this final rule by submitting an existing document to FRA that addresses GX and PX safety, provided the existing document contains (or is amended to include) all the required elements in § 234.11(e).

Currently, paragraph (a) of this section indicates that the purpose of this section is to reduce “collisions” at GXs in the ten States that had the most GX collisions from 2006-2008 (the “initial ten States”). Existing paragraph (a) also makes clear that this section does not restrict any other entity from adopting an Action Plan, nor would it restrict any State or DC from adopting an Action Plan with additional or more stringent requirements not inconsistent with this regulation. In the NPRM, FRA proposed to replace the word “collisions” with the word “accidents” for consistency with the language of Section 11401(b). For the reasons discussed above, in this final rule, FRA is revising paragraph (a) to state that the purpose of the section is to reduce “accident/incidents” at GXs and PXs nationwide by requiring States and DC to develop or update and implement Action Plans.

As revised, paragraph (a) reiterates the existing language clarifying that this section does not restrict any entity from adopting an Action Plan with additional or more stringent requirements, nor does it restrict any State or DC from adopting an Action Plan with additional or more stringent requirements not inconsistent with this regulation. For purposes of this section, unless otherwise stated, the term “State” refers to any one of the 50 States in the United States of America or DC; FRA also separately refers to or identifies DC within part 234 for clarity in some instances.

Consistent with the NPRM, paragraph (b) of this section requires 40 States (the States other than the initial ten States) and DC to develop individual Action Plans that address each of the required elements listed in paragraph (e) of this section, and to submit their individual plans to FRA for review and approval no later than 14 months after the final rule publication date. For the reasons discussed below, in this final rule, FRA is adding a definition of “State highway-rail grade crossing action plan” to § 234.11 to clarify that a State may prepare and submit a document specifically designed to satisfy the requirements of this section or submit an existing document that contains (or is amended to include) all the required elements in § 234.11(e).

For example, to satisfy the requirements of this final rule, a State may choose to update its SHSP and provide the updated SHSP to FRA for review and approval as its Action Plan. However, States should be mindful that updating an existing document to include all the required elements in § 234.11(e) does not change the underlying nature of the document. Accordingly, if a State chooses to update an existing document to include all the required elements in § 234.11(e), this final rule does not relieve the State from complying with all applicable State or Federal requirements that govern the existing document.

Also, if a State chooses to update an existing document, the State is strongly encouraged to add a separate chapter or appendix to address the required elements in paragraph (e) of this section. In the alternative, the State may add an index to the updated document that clearly identifies the specific pages on which the required elements in paragraph (e) of this section are addressed.

Paragraph (b) also requires 40 States (the States other than the initial ten States) and DC to submit their Action Plans electronically through FRA's website in Portable Document Format (PDF). FRA will provide a secure document submission site for States and DC to use to upload their Action Plans for FRA review and approval.

DelDOT, MNDOT, the 130 Group, and the departments of transportation for Idaho, North Dakota, South Dakota, and Wyoming submitted comments on the proposed requirement in paragraph (b) to submit individual Action Plans to FRA for review and approval. DelDOT noted that the State of Delaware currently experiences an extremely low number of train-related crashes and asserted that developing an Action Plan would draw resources away from other ongoing efforts to make a positive safety impact on the State and its communities. Accordingly, DelDOT recommended that FRA establish guidelines that, if met, would exempt a State from the requirement to develop an Action Plan.

The 130 Group also recommended that FRA establish a threshold that, if met, would exempt a State from the requirement to develop an Action Plan. Specifically, the 130 Group recommended that FRA establish a national car-train crash ratio threshold that would exempt States with car-train crash ratios lower than the threshold from the requirement to develop and submit an Action Plan to FRA for review and approval.

Another commenter, identified as the Chicagoland Rail Safety Team (CRST), similarly recommended that FRA conduct an “almost perfunctory” review of the Action Plans submitted by States with the lowest number of grade crossing fatalities. In addition, CRST recommended that FRA allow States with the lowest number of grade crossing fatalities simply to complete an FRA-prepared questionnaire.

FRA also received multiple comments from State agencies, including Alaska DOT&PF, Washington UTC staff, SDDOT and the departments of transportation for Idaho, Montana, North Dakota, and Wyoming, recommending that FRA include a provision in this final rule allowing States the flexibility to coordinate, integrate, or incorporate their Action Plans with other reports, such as the SHSP or the State Transportation Improvement Program. The departments of transportation for Idaho, Montana, North Dakota, South Dakota, and Wyoming asserted that integrating the Action Plans required by this rulemaking with other plans may improve implementation, facilitate and simplify coordination, and promote synergy with other plans.

Section 11401(b) specifically directed FRA to issue implementing regulations requiring each State (except for the initial ten States) to develop and implement an Action Plan. Therefore, this final rule does not exempt any State from the requirement to develop a written plan to improve safety at GXs and PXs. However, recognizing that a number of States may have already developed written plans or other documents addressing GX and PX safety, as noted above, FRA has added a definition of “Action Plan” to this final rule that allows States to submit existing documents that address GX and PX safety, if the documents contain (or are amended to include) all the required elements listed in paragraph (e) of this section. As explained above, if a State chooses to update an existing document, the document must address all the required elements listed in paragraph (e) in a separate chapter or appendix so that it is clear how it complies with the requirements for an Action Plan. If a State decides to submit an existing document as its Action Plan to FRA for review and approval, without adding a separate chapter or appendix, the State should include an index that shows where the document addresses each required element listed in paragraph (e).

MNDOT commented that the 14-month period within which States are required to develop Action Plans is extremely aggressive. However, FRA does not have the flexibility to extend the 14-month period for States to develop and update Action Plans because FRA is required by Section 11401 to review and approve the Action Plans and then report to Congress information about the Action Plans and their implementation within three years of the date of this final rule. Therefore, FRA will work closely with States that seek FRA's assistance in preparing their Action Plans, and allow flexibility to submit existing documents that contain (or are amended to include) all the required elements listed in paragraph (e) of this section.

DelDOT urged FRA to clarify that the requirement in paragraph (b) to develop Action Plans does not contain a duty to update Action Plans after they have been approved by FRA. Except for the initial ten States, the statutory mandate in Section 11401(b) does not direct FRA to require States to update their Action Plans. Therefore, except for the initial ten States that are required to submit updated Action Plans this one time, this final rule does not require States to update their Action Plans after they are approved by FRA.

FRA recommends that States update their Action Plans even though they are not required to do so. The actions States must take to develop Action Plans and, more specifically, to develop specific strategies for improving grade crossing safety can, if done properly, significantly improve safety and complement other efforts by States to improve transportation safety generally, by focusing attention on the State's GX and PX safety needs. In this regard, Action Plans can supplement existing State efforts to increase the effectiveness of grade crossing improvements by adding a planning component to identify GXs and PXs that have experienced recent (or multiple) accident/incidents or are considered “high-risk” for having one or more accident/incidents in the future.

Currently, paragraph (c) of this section outlines requirements for the Action Plans that the initial ten States were required to submit to FRA by August 27, 2011. As proposed in the NPRM and in response to the statutory mandate in Section 11401(b), this final rule revises paragraph (c) to require each of the initial ten States to update their existing Action Plans and to provide individual reports on their efforts to implement their existing plans and on the continuation of their strategies to reduce GX and PX safety risks.

As also proposed in the NPRM, paragraph (c)(1) of this section requires each of the initial ten States to update their existing Action Plans to address each of the required elements listed in paragraph (e) of this section within 14 months of the final rule publication date. (Action Plans developed by the other 40 States and DC will be required to address these elements as well.) Paragraph (c)(1) also requires each of the initial ten States to submit their updated Action Plans to FRA for review and approval.

The list of required elements in paragraph (e) incorporates many of the elements that the initial ten States were required to address in their existing plans. However, as discussed below, there are new requirements that the initial ten States will need to address in their updated plans. For example, for consistency with Section 11401(b), States will need to address PX safety and States will need to identify the data sources used to classify PXs and GXs in one of the categories set forth in paragraph (e)(1). Below is a more detailed discussion of paragraph (e) requirements.

As proposed in the NPRM, paragraph (c)(2) requires each of the initial ten States to submit a report to FRA describing how the State implemented the Action Plan that it previously submitted to FRA under 49 CFR 234.11. Each of these initial ten States is also required by paragraph (c)(2) to describe in its report how the State will continue to reduce GX and PX safety risks. These requirements are derived from Section 11401(b).

This report, which must address each proposed initiative or solution contained in the State's Action Plan originally submitted to FRA under 49 CFR 234.11, can be submitted as an appendix to the State's updated Action Plan. As CRST recommends in its comments, FRA intends to use these implementation reports to identify States that have effective Action Plans in place, as well as States with Action Plans that need to be improved, so FRA can provide additional assistance that may be needed through focused outreach efforts.

Paragraph (c)(3) has been added to the final rule, in order to move the list of the initial ten States from paragraph (d), as proposed, into paragraph (c) for ease of reference. This change is not substantive.

Paragraph (d) of this section requires the initial ten States to submit their updated Action Plans and individual implementation reports electronically in PDF form. FRA will provide a secure document submission site for these States to use to upload their updated Action Plans and implementation reports for FRA review.

As proposed in the NPRM, paragraph (e) of this section contains a list of required elements for new and updated State Action Plans. These elements are derived from Section 11401(b)(2), which mandates that each State Action Plan “identify [GXs] that have experienced recent [GX] accidents or incidents or multiple [GX] accidents or incidents, or are at high-risk for accidents or incidents.”

As noted in the section-by-section discussion of § 234.5 above, States are required to address both GXs and PXs in their Action Plans. Congress specifically included PXs in Section 11401(b). Therefore, although not proposed in the NPRM, in deference to Congressional intent to require States to address both GXs and PXs, FRA is requiring States to address PXs in their Action Plans.

FRA received comments from the 130 Group expressing concern that this final rule might require States to address private grade crossings in their Action Plans. The 130 Group asserted that State efforts to regulate private crossings (especially when combined with the complications of access to private property) would require significantly more staff and would open “a myriad of legal issues regarding government oversight of private infrastructure and operations.” Therefore, the 130 Group recommended that paragraph (e)(1) be limited to public GXs.

Section 11401(b) specifically includes private GXs in its definition of the term “GX.” Therefore, FRA has not revised this final rule to limit its scope to public GXs. However, FRA recognizes that not all States exercise jurisdiction over private grade crossings. Accordingly, while this final rule requires States to assess risk levels at private grade crossings, and to address private grade crossings that present significant levels of risk, FRA recognizes that the ability of States to address risks at private grade crossings will depend on the level of the authority individual States exercise over those crossings (and, in some cases, the public/private nature of the roadway leading to the crossing).

In addition, FRA received comments from a resident of Chicago, Illinois and the CRST, urging FRA to encourage States to use an expanded definition of the term “GX” that would include 1,000 feet on either side of the actual intersection of the roadway with railroad tracks. CRST also recommended, in the alternative, that FRA send a letter to members of Congress seeking additional information about the Congressional intent underlying Section 11401. Specifically, CRST recommended that FRA confirm whether Congress intended States to focus their Action Plans on GXs as currently defined in 49 CFR 234.5, or whether Congress intends States to utilize a more expansive definition, such as CRST's proposed definition, which would include more trespassing casualties. In support of its recommendation, CRST pointed to data included in FRA's National Strategy to Prevent Trespassing on Railroad Property, which indicates that 74 percent of trespasser deaths and injuries occurred within 1,000 feet of a grade crossing. Similarly, the resident of Chicago, Illinois asserted that trespassing injuries and fatalities should not be excluded simply because they do not occur where pavement and rails intersect. This commenter urged FRA to require States to differentiate uniformly between trespasser and vehicle incidents in their Action Plans, so that States will collect and categorize this information separately as incidents occur.

FRA encourages States in their Action Plans to evaluate potential risks posed by trespassing within 1,000 feet of the actual intersection of the roadway with the railroad tracks.

Similarly, FRA encourages States to differentiate between motor vehicle crashes and pedestrian fatalities and injuries that occur at GXs and PXs in their Action Plans and to assess whether they need to take specific actions to address pedestrian safety at GXs and PXs. Nonetheless, FRA received multiple comments from States, including the Washington Utilities and Transportation Commission staff, SDDOT, and the State departments of transportation for Idaho, Montana, North Dakota, and Wyoming, expressing concern that this rulemaking should support State efforts to develop simple, straightforward and low-cost Action Plans and should not impose additional regulatory requirements that were not specifically included in the language of the FAST Act. Therefore, FRA strongly recommends that States with GXs and PXs located near locations identified as trespasser “hot spots” include strategies in their Action Plans to address trespassing, as some GXs and PXs may be used by individuals to gain access to the railroad right-of-way. However, in recognition of the fact that not all States have significant pedestrian safety concerns at their highway-rail and pathway crossings, FRA is not revising the definition of “GX” in § 234.5 to include the railroad right-of-way within 1,000 feet of the intersection of the roadway with the railroad tracks, nor is FRA requiring States to assume the additional burden of collecting and categorizing information about motor vehicle crashes and pedestrian fatalities and injuries separately. FRA is addressing the trespassing issue through implementation of its National Strategy to Prevent Trespassing on Railroad Property (available online at https://railroads.dot.gov/national-strategy-prevent-trespassing ).

As proposed in the NPRM, paragraph (e)(1) would require States to identify in their Action Plans GXs that: (1) Have experienced at least one accident or incident within the previous three years; (2) have experienced more than one accident or incident within the previous five years; or (3) are at “high-risk” for accidents or incidents as defined by the relevant State or DC.

FRA received comments on the proposed three-year period in paragraph (e)(1)(i) from ODOT, which recommended that the time period be made consistent with the proposed five-year time period in proposed paragraph (e)(1)(ii). Asserting three years of accident or incident data may not be enough to make a determination, ODOT recommended that a consistent five-year period would be most appropriate.

However, as noted in the NPRM, FRA intended to use different time periods in paragraphs (e)(1)(i) and (e)(1)(ii) to differentiate between grade crossings that have experienced “recent” accident/incidents and grade crossings that have experienced “multiple” accident/incidents as Section 11401(b) requires. As explained in the NPRM, the three-year time period in paragraph (e)(1)(i) is intended to enable States to identify which individual GXs and PXs have experienced “recent” accident/incidents. The five-year time period in paragraph (e)(1)(ii) is intended to enable States to identify which individual GXs and PXs have experienced “multiple” GX accidents/incidents. This five-year timeframe is consistent with the five-year timeframe used by the initial ten States when they prepared their Action Plans pursuant to existing § 234.11.

FRA received comments on this 5-year period in paragraph (e)(1)(ii) from MNDOT, in which MNDOT noted the State of Minnesota has a very low number of GXs that have experienced more than one accident or incident in the previous five years. Therefore, MNDOT asked whether it would be permissible for a State to look back over a longer period to improve its analysis.

Thankfully, as MNDOT points out, some States have a very low number of GXs which have experienced more than one accident/incident in the previous five years. FRA suggests that States with very low grade crossing accident/incident numbers should consider defining what constitutes a GX or PX with a “high-risk for accidents or incidents” in accordance with paragraph (e)(1)(iii) and addressing those crossings in their Action Plans. As proposed in the NPRM, paragraph (e)(1)(iii) allows a State to define what constitutes grade crossings with a “high-risk for accidents or incidents” and focus its Action Plan on those crossings. By choosing this option, as opposed to trying to identify GXs and PXs that have experienced previous accidents/incidents in accordance with paragraph (e)(1)(i) or (ii), States with low grade crossing accident/incident numbers can, within the constraints of paragraph (e)(1)(iii), use a different set of criteria to identify GXs and PXs to address in their Action Plans.

MNDOT also submitted comments on the proposed paragraph (e)(1)(iii), noting that the State of Minnesota has done significant work developing a risk ranking system for project selection. Therefore, MNDOT expressed optimism that, given FRA's proposal in the proposed rule to allow States the flexibility to define “high risk” GXs, MNDOT may be able to use their existing risk ranking system to define “high risk” GXs within the State of Minnesota and thereby reduce plan development costs.

However, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the Association of American Railroads (AAR), and an individual commenter submitted comments expressing concern with the proposed language in paragraph (e)(1)(iii) that would allow States to define what constitutes a “high risk” GX. AFL-CIO asserted that the proposed language in paragraph (e)(1)(iii) would allow States to limit their efforts to grade crossings where an accident has already taken place, which it asserted would be inconsistent with the spirit of the underlying statutory mandate. Similarly, while noting that some level of risk standardization would likely benefit the nation as a whole, Mr. Gregory James submitted comments recommending that FRA disseminate minimum guidelines for identifying potentially problematic grade crossings.

AAR expressed concern that if FRA does not define what constitutes “high risk” of an incident occurring at a GX, the result would be 51 different definitions of what constitutes “high risk.” Therefore, AAR recommended that, at a minimum, FRA should include factors that States should consider when designating a grade crossing as “high risk.” For example, AAR recommended States consider factors such as profile deficiencies, skew, inadequate sight distances due to fixed obstructions, and the density of neighborhood development along the corridor near a crossing.

After considering all the comments received and evaluating the potential benefits and consequences of allowing States to define “high risk” grade crossings for themselves, FRA determined that the comments provided by AFL-CIO, Mr. James, and AAR have merit. Accordingly, in this final rule, FRA has revised proposed paragraph (e)(1)(iii) of this section to include a list of key factors that States are required to consider in their Action Plans when identifying “high-risk” crossings under paragraph (e)(1)(iii) of this section. These key factors in paragraph (e)(1)(iii) include the average annual daily traffic, the total number of trains per day that travel through the crossing, the total number of motor vehicle collisions that have occurred at the crossing during the previous 5-year period, the number of main railroad tracks at the crossing, the number of roadway lanes at the crossing, sight distance and roadway geometry at the crossing, and maximum timetable speed at the crossing.

FRA notes that the key factors listed in paragraph (e)(1)(iii) are minimum factors a State must consider if defining high-risk crossings under paragraph (e)(1)(iii). Therefore, FRA encourages States to consider any other factors that may be present at a particular crossing that may increase the risk of an accident/incident. Examples of potential additional factors a State may find useful to consider include: The volume and nature of any hazardous materials transported through the crossing, the frequency of any passenger trains traveling through the crossing, and the proximity of a school or emergency service provider, which could cause a high number of school buses or emergency service vehicles to travel through the grade crossing. AFL-CIO asserted in its comments that increased pedestrian volume may increase opportunities for an accident, while AAR identified the density of neighborhood development along the corridor near the crossing as a factor that can contribute to high risk levels at a GX.

When evaluating these risk factors and the overall risk levels at individual GXs and PXs under paragraph (e)(1)(iii), FRA recommends States consider the definition of “risk” provided in 49 CFR 270.5 and 271.5, in which the term “risk” is defined as “the combination of the probability (or frequency of occurrence) and the consequence (or severity) of a hazard.” FRA also recommends that States describe the process or formula used to assess risk at each crossing in their Action Plans. However, to obtain information about all the factors considered by States when identifying GXs and PXs in their Action Plans as “high risk,” paragraph (e)(1)(iii) requires States that identify “high risk” crossings under paragraph (e)(1)(iii) to include in their Action Plans the complete list of factors considered in making this determination.

As proposed in the NPRM, paragraph (e)(2) requires States to identify the data sources used to categorize the GXs and PXs in their Action Plans. To help States identify GXs and PXs that have experienced recent accident/incidents, multiple accident/incidents, or are at high-risk for accident/incidents, FRA will provide GX and PX accident/incident data to States upon request. FRA will also assist State agencies electing to use FRA's Office of Safety Analysis website to generate customized reports of GX accident/incident data.

In the NPRM, paragraph (e)(3) would require States to discuss specific strategies to improve safety at the identified crossings over a period of at least five years. FRA received a number of comments on this proposed minimum five-year time period, and for the reasons discussed below, FRA is revising proposed paragraph (e)(3) to provide for a minimum time period of four years.

The departments of transportation for Idaho, Montana, North Dakota, South Dakota, and Wyoming submitted comments noting that Congress established planning requirements in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), the Transportation Equity Act for the 21st Century (TEA-21), and the Safe Accountable Flexible Efficient Transportation Equity: A Legacy for Users Act (SAFETEA-LU) directing the State Transportation Improvement Program (STIP) to span four years. Accordingly, these State DOTs recommended that FRA allow States to align the time frame covered by their Action Plans with the four-year STIP time frame, but not require them to do so. The Alaska DOT&PF, on the other hand, submitted comments supporting the proposed five-year minimum time period. Alaska DOT&PF noted that some States are not able to insert grade separations or rail realignment projects into fiscally constrained STIPs.

After consideration of these comments, FRA has concluded that providing the flexibility for State Action Plans to cover a minimum four-year time period for consistency with other surface transportation planning requirements is justified. Accordingly, FRA is revising proposed paragraph (e)(3) to provide that State Action Plans must discuss specific strategies to improve safety at the identified crossings over a period of “at least four years.” FRA intends this change to facilitate integration of the Action Plans required by this final rule with existing State planning mechanisms and documents ( e.g., STIPs, SHSPs, and State Rail Plans). However, nothing in this final rule restricts States from including specific strategies to improve crossing safety in their Action Plans for a period longer than four years.

AAR also submitted comments on paragraph (e)(3), recommending FRA clarify that, prior to making any changes to address blocked crossing concerns that could impact train operations, States must consult with the railroad primarily responsible for dispatching trains through the crossing as indicated by the name of the railroad on the Emergency Notification System (ENS) sign. FRA expects that States seeking to make changes to address blocked crossing concerns will, at a minimum, coordinate with the railroad primarily responsible for dispatching trains through the highway-rail or pathway grade crossing prior to making any changes that could impact train operations. Depending on the type of change envisioned, the State should contact the railroad primarily responsible for maintaining the highway-rail or pathway grade crossing (if different from the railroad primarily responsible for dispatching trains through the crossing) as well. However, a requirement that States must consult with railroads prior to implementing certain types of strategies in their Action Plans to address blocked crossing concerns falls beyond the scope of this rulemaking.

FRA also received comments on paragraph (e)(3) from Washington UTC staff, SDDOT, as well as the departments of transportation for Idaho, Montana, North Dakota, and Wyoming. In their comments, these State agencies recommended that the final rule include language allowing States to discuss the types of grade crossing improvement projects they will address and emphasize, as opposed to requiring States to identify specific projects to be undertaken. The departments of transportation for Idaho, Montana, North Dakota, South Dakota, and Wyoming asserted that this approach would allow States to set forth policy priorities in their Action Plans. FRA agrees that States should not be required to identify specific projects to be undertaken. Therefore, while FRA encourages States to identify specific projects that they may wish to highlight in their Action Plans, FRA would like to clarify that this final rule does not require project identification.

Given Section 11401's mandate that FRA prepare and submit a report to Congress within three years of issuing this final rule, FRA notes that it intends to evaluate each Action Plan to assess whether it provides sufficient information to inform Congress of specific strategies that will be implemented (or continue to be implemented) by individual States to improve GX safety. To this end, FRA agrees with CRST's comments that FRA should anticipate its reporting obligations to Congress, and during FRA's review of Action Plans, disapprove any plans that are not objective, observable, and measurable.

FRA received comments from multiple State agencies, including Washington UTC staff, SDDOT, and departments of transportation for Idaho, Montana, North Dakota, and Wyoming, recommending that the final rule include language providing for Action Plans to be considered deficient only if they are inconsistent with statutory requirements, so that modest deficiencies in regulatory planning or paperwork will not prohibit safety investments. While de minimis deficiencies in paperwork should not lead to an Action Plan being rejected, FRA disagrees with the recommendation to consider Action Plans deficient only if they are inconsistent with statutory requirements. Section 11401 specifically mandates that FRA issue a rule requiring States to develop and implement Action Plans that meet certain requirements. The regulatory requirements in this final rule respond to that mandate and enable the effective and consistent implementation of the statutory requirements in Section 11401. For example, paragraph (e)(4) of this section requires States to provide an implementation timeline for the strategies identified in their Action Plans. Although not specifically required by Section 11401, this requirement is designed to help ensure States implement the strategies identified in their Action Plans effectively.

As for the requirement in paragraph (e)(3) of this section, which requires States discuss specific strategies for improving GX and PX safety, CRST submitted comments recommending that FRA insist that States incorporate the safety of pedestrians (at crossings and along the railroad right-of-way) into their Action Plans. In support of this recommendation, CRST asserted that over the long term, pedestrian fatalities at grade crossings have not demonstrated a decreasing trend like vehicle occupant fatalities at GXs. Similarly, with respect to proposed crossing closure projects, CRST stated that care must be taken to ensure that closure of the grade crossing will not result in increased trespassing along the railroad right-of-way.

FRA agrees that States should incorporate the safety of pedestrians at GXs and PXs into their Action Plans. For example, the FAST Act requires States to consider crossing closures and grade separation projects. Therefore, to avoid introducing new or increased risk, FRA expects any State contemplating crossing-closure and/or grade-separation projects will evaluate not only the potential reduction in risk to motor vehicle occupants from the closure or separation project, but also the potential impact on trespassing at the location of any crossing slated for closure.

CRST also urged FRA to consider making additional changes in this final rule to address suicides that occur at crossings and along railroad rights-of-way. For example, CRST recommended that FRA insist that State Action Plans include efforts to reduce suicides at grade crossings, as well as along the railroad right-of-way, in areas in which suicides appear to be a significant problem. If a State has experienced a high number of suicides at one or more GXs or PXs, this final rule provides the flexibility for that State to develop and include in its Action Plan specific strategies to address the issue. FRA encourages any State that has experienced a high number of suicides at particular grade crossings to include specific strategies in its Action Plan to address suicides at those crossings.

CRST asserted that FRA's decision not to include suicide data in FRA's periodic summaries of rail-related injuries and illnesses associated with railroad operations may dissuade States from addressing suicides that occur at crossings and along the railroad right-of-way. Therefore, CRST recommended that FRA amend 49 CFR 225.41 (Suicide data) to allow (or require) FRA to report all deaths in FRA's summaries of “total fatalities.” In addition, a resident of Chicago, Illinois urged FRA to develop a mechanism in the final rule that would require railroads to release video obtained from their outward-facing locomotive cameras to State coroners and law enforcement officials upon request, to facilitate State efforts to determine accurately the cause of death. Although FRA appreciates these comments and suggestions, both are outside the scope of the statutory authority for this rulemaking. FRA does, however, maintain several online resources that provide access to FRA's railroad trespassing data, including certain data related to suicides. One such resource, FRA's Trespass and Suicide Dashboard, allows users to interact visually with trespass and suicide data collected by FRA. Therefore, FRA encourages entities seeking to view FRA data on fatalities that occur at GXs (as defined in 49 CFR 234.5), as well as fatalities that occur along railroad rights-of-way, to visit our Trespass and Suicide Dashboard, which is accessible online through FRA's website. In addition, FRA notes that it has an ongoing rulemaking on Locomotive Image and Audio Recording Devices for Passenger Trains to implement a Congressional mandate. 7

In adopting paragraph (e)(4), FRA has corrected a typographical error in the proposed rule. Paragraph (e)(4) requires States to provide an implementation timeline for the specific strategies they develop to improve safety at the GXs identified in their Action Plans. In the proposed rule, FRA erroneously indicated that the proposed requirement to discuss these specific strategies in the State Action Plans was contained in paragraph (d)(2) of this section. To correct this error, paragraph (e)(4) in the final rule requires States to provide an implementation timeline for “the strategies discussed in paragraph (e)(3) of this section.”

As proposed in the NPRM, paragraph (e)(5) requires each State and DC to designate an official responsible for managing implementation of the Action Plan. As noted earlier, FRA will create a secure document submission site that States can use to upload Action Plans. The official designated under this paragraph will be given primary user access to the secure document submission site, as well as the authority to grant access to secondary users. Accordingly, the designated State official will need to register with FRA to gain primary user access to the secure document submission site.

Paragraph (f) of this section requires States and DC to provide contact information for their designated officials, so they can be invited to set up primary user accounts.

Paragraph (f)(2) also requires each State and DC to notify FRA if a new official is subsequently designated to manage implementation of its Action Plan and to provide contact information for the new designated official. FRA has modified paragraph (f)(2) from that proposed in the NPRM in response to comments submitted by the Alaska DOT&PF recommending that FRA not adopt the proposed requirement for States to maintain updated contact information. Alaska DOT&PF asserted that the proposed requirement was too onerous, especially for a one-time plan with no ongoing reporting requirement.

FRA agrees that an ongoing requirement to maintain current contact information for State Action Plans for many years seems unnecessary, given the absence of any requirement to update the plan. Therefore, FRA has modified paragraph (f)(2) from that proposed in the NPRM to limit the period of time States are required to maintain current contact information for their Action Plans to a four-year period after publication of this final rule. This requirement will help ensure FRA has current contact information while States implement their Action Plan strategies in accordance with their implementation timelines. This requirement will also help ensure FRA has current contact information available when FRA prepares the required report to Congress, while limiting the burden on States.

Paragraph (g) of this section sets forth FRA's review and approval process for Action Plans. As provided in paragraph (g)(1), FRA will update its website to reflect receipt of each new, updated, or corrected Action Plan. FRA encourages States to work with FRA staff as they develop their Action Plans. FRA will also offer webinars to assist States in developing and updating their Plans. As indicated in comments submitted by CRST, FRA's ability to provide technical assistance to States will help ensure States develop Action Plans that can be effectively evaluated and implemented.

To avoid delaying implementation of needed grade crossing safety improvements, paragraph (g)(2)(i) states that FRA will conduct a preliminary review of each new, updated, and corrected Action Plan within sixty (60) days of receipt. During this 60-day review period, FRA will determine whether a submitted plan has adequately addressed the elements prescribed in paragraph (e) of this section.

FRA acknowledges comments received on ways to improve the proposed review process for Action Plans. Washington UTC staff, and the departments of transportation for Idaho, Montana, North Dakota, South Dakota, and Wyoming recommended that FRA establish a staggered timeline for States to submit their Action Plans, in which States with the highest number of grade crossing accidents would be required to submit their plans first. Similarly, VTrans submitted comments recommending that the final rule allow States to submit their Action Plans at the same time that they submit their SHSPs (which are generally submitted in staggered, 5-year cycles).

FRA does not have the flexibility to allow for a staggered timeline or cycle for submitting Action Plans to FRA for review and approval because Section 11401 requires FRA to report to Congress information about the Action Plans and their implementation within three years. However, as noted above, FRA will offer webinars and work closely with any State that desires the Agency's assistance in developing its Action Plan. This involvement from FRA should help ensure the efficiency of the plan review process.

FRA anticipates that States with a high number of grade crossing accident/incidents will submit Action Plans that are more detailed than those of States with a low number of grade crossing accident/incidents. In this regard, FRA agrees with comments submitted by CRST and all Action Plans submitted under this regulation will be carefully reviewed. DelDOT commented that FRA's proposed review process would create confusion among State officials who may not feel confident implementing their Action Plans until more than 120 days have passed from the date of FRA's receipt of their plans. Alaska DOT&PF recommended that FRA include FHWA in the review and approval process for Action Plans, given the potential need for Federal aid highway funding to implement the strategies identified by States in their Action Plans.

Accordingly, in adopting paragraph (g)(2)(ii), FRA is clarifying that Action Plans will be considered conditionally approved sixty (60) days after receipt by FRA unless FRA notifies the State's designated point of contact that the Action Plan is incomplete or deficient. Therefore, if a State has not been notified that its Action Plan is incomplete or deficient, a State may proceed with implementation of its Action Plan after 60 days have elapsed from the date of FRA's receipt of its plan. In addition, States may verify the review status of their Action Plans by checking FRA's website or contacting FRA.

Paragraph (g)(2)(iii) states that FRA reserves the right to conduct a more comprehensive review of each “new, updated, or corrected” Action Plan, which may take up to 120 days to complete. In addition, FRA will continue to consult and coordinate with FHWA during FRA's review of Action Plans.

Paragraph (g)(3) specifically addresses Action Plans that FRA determines to be incomplete or deficient. As reflected in paragraph (g)(3)(i), if FRA finds a submitted Action Plan is incomplete or deficient, it will notify the appropriate designated official via email of the specific areas in which the plan is deficient or incomplete.

Paragraph (g)(3)(ii) requires States and DC to complete, correct, and resubmit within 60 days any Action Plan that FRA deems incomplete or deficient. This 60-day timeframe is derived from Section 11401(b)(7), which directs States to complete their Action Plans and correct deficiencies identified within 60 days of the date of FRA notification.

FRA received a number of comments from State agencies on the 60-day correction period contained in paragraph (g)(3)(ii), including comments from SDDOT, Washington UTC staff, and the departments of transportation for Idaho, Montana, North Dakota, and Wyoming, recommending that FRA include a provision in the final rule to allow States to request an extension of time to correct any deficiencies identified during FRA's review of their Action Plans, if additional time is needed to rectify them. Similarly, Alaska DOT&PF submitted comments recommending that the final rule allow at least 120 days for States to correct any deficiencies identified during FRA's review of their Action Plans.

FRA has not, however, established a separate process in this final rule that would allow a State to request additional time to correct deficiencies identified during FRA's review of its Action Plan. While FRA is sympathetic to the concerns expressed by these State agencies, Section 11401(b) directs States to correct deficiencies identified and resubmit their Action Plans within 60 days from the date on which FRA notifies them of the deficiencies. In addition, this 60-day correction period is twice as long as the 30-day period within which the initial ten States were required to correct any deficiencies identified in their Action Plans. Therefore, FRA has not expanded the 60-day correction period mandated by Section 11401(b). Nonetheless, as previously discussed, FRA intends to provide webinars and technical assistance to State agencies during the 14-month period between the publication date of this final rule and the submission deadline for State Action Plans to help ensure efficiency in their development and review.

As provided in paragraph (g)(4)(i), after FRA has completed its review and approves a new, updated, or corrected Action Plan, FRA will notify the State's designated official described in paragraph (e)(5) by email that the Action Plan has been fully approved.

Paragraph (g)(4)(ii) states that FRA will make each fully-approved Action Plan publicly available for online viewing. This provision is intended to comply with Section 11401(b)(4)'s requirement that the FRA Administrator make each approved Action Plan publicly available on “an official internet website.” In addition, to avoid confusion, FHWA will remove the original Action Plans submitted by the initial ten States from its website.

As provided in paragraph (g)(4)(iii), each State and DC are required to implement their Action Plans.

Paragraph (h) of this section provides that the Secretary may condition the awarding of a rail improvement grant to a State or DC on the submission of an FRA-approved Action Plan under this section. This language reflects the authority specifically granted to the Secretary in Section 11401(b)(5).

FRA received comments on the language in this paragraph from multiple State agencies. Washington UTC staff, SDDOT, and the departments of transportation for Idaho, Montana, North Dakota, and Wyoming submitted joint comments expressing concern that conditioning the awarding of highway-rail crossing funding or grants on having an approved plan is a risky approach that may impede important safety improvements that can save lives and reduce collisions. The departments of transportation for Idaho, Montana, North Dakota, South Dakota, and Wyoming also noted that State highway-rail crossing project selection should not be restricted solely by a State's FRA-approved Action Plan because safety, feasibility, engineering judgment, and other factors must also be considered.

FRA agrees that a State's selection of highway-rail crossing improvement projects should not be exclusively limited to the highway-rail crossing improvement projects that are specifically identified in the State's FRA-approved Action Plan. However, FRA believes a properly prepared Action Plan identifying GXs and PXs where recent accidents have occurred, or that a State characterizes as “high-risk,” can inform project selection. During FRA's review of applications for grant funding, FRA often looks for evidence of advance planning and identification of crossing safety needs through data-based risk analysis. Therefore, by discussing specific projects in their Action Plans, as well as the data sources used to identify safety needs that will be addressed by these projects, States can use their Action Plans as a vehicle for providing evidence of advance planning and data-based crossing risk analysis.

As noted in the discussion of § 234.5 above, in this final rule, FRA is removing the definition of “pathway grade crossing” from the list of definitions in § 234.301 (which applies only to FRA's Emergency Notification System regulations in subpart C to 49 CFR part 234). As previously discussed, by removing the definition of “pathway grade crossing” from § 234.301 and moving it to § 234.5, the definition of “pathway grade crossing” will now apply to all of FRA's grade crossing regulations in 49 CFR part 234.

This final rule is not a significant regulatory action within the meaning of Executive Order 12866, “Regulatory Planning and Review,” and DOT's Administrative Rulemaking, Guidance, and Enforcement Procedures in 49 CFR part 5. Pursuant to the Congressional Review Act, 8 the Office of Information and Regulatory Affairs designated this rule as not a “major rule,” as defined by 5 U.S.C. 804(2). Details on the estimated cost of this rule can be found in the Regulatory Evaluation, which FRA has prepared and placed in the docket (docket number FRA-2018-0096).

The purpose of the final rule is to reduce accident/incidents at GXs and PXs nationwide. The final rule requires each State and DC to submit or re-submit to FRA an Action Plan. The final rule also requires each of the 10 States that previously created an FRA-approved Action Plan to submit a report to FRA that describes how the State implemented its existing Plan and how the State will continue to reduce GX and PX safety risks.

The final rule specifically lists the required elements for Plans. To minimize the compliance costs, the final rule affords each State the flexibility to develop or update an Action Plan based upon the individual State's hazard assessment.

Section 11401(a) required FRA to develop and distribute a model State Action Plan. In conjunction with FHWA, FRA developed a “Highway-Railway Grade Crossing Action Plan and Project Prioritization Noteworthy Practices Guide.” FRA shared this guide with States via letters that included the data requirements as discussed in Section 11401. The guide is currently available on DOT's website. In addition, previous Action Plans from the 2010 final rule have also been made available to the public on DOT's website. After issuing this final rule, FRA will provide States with assistance in developing their Action Plans.

Table 1 shows the costs associated with the final rule. The largest costs for the 10 States that have already developed an FRA-approved Action Plan are: Updating and submitting an Action Plan to FRA; submitting a report to FRA that describes how the previously approved Action Plan was implemented; and resubmitting (if necessary) an Action Plan if FRA determines the State's updated Action Plan submission to be incomplete. Collectively, the largest costs for the other 40 States and DC are: Developing and submitting an Action Plan to FRA; and resubmitting (if necessary) an Action Plan if FRA determines the State's previous Action Plan submission to be incomplete.

As shown in Table 1, the final rule will result in a total cost of $1.0 million (PV, 7%), and $1.1 million (PV, 3%).

FRA assumes that all costs will be incurred in the first year of analysis. The costs that are derived from the analysis do not include the costs of voluntary changes in investments or operations that States will make when implementing their Action Plans.

This analysis discusses the non-quantifiable benefits associated with this final rule. FRA expects that States developing and implementing Action Plans may improve the way they allocate resources for GX and PX mitigation efforts. The final rule's primary benefit will come from a reduction in the number of GX and PX accident/incidents and the associated decrease in fatalities, injuries, and property damage, as well as diminished environmental impacts. Last, FRA anticipates that Action Plans may also reduce accident severity, as some States may develop and implement Action Plans that focus efforts on mitigating accident/incidents that are more likely to result in fatalities.

The Regulatory Flexibility Act of 1980  10 (RFA) and Executive Order 13272  11 require agency review of proposed and final rules to assess their impacts on small entities. When an agency issues a rulemaking proposal, the RFA requires the agency to “prepare and make available for public comment an initial regulatory flexibility analysis” that will “describe the impact of the proposed rule on small entities.”  12 Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

In the proposed rule, FRA identified 51 entities (the 50 States and DC) that will be affected by the rule. Each of the 50 States and DC have a population greater than 50,000. Therefore, FRA certified that the rule would not have a significant economic impact on a substantial number of small entities. FRA received no comments regarding the certification.

The Administrator of FRA hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

Executive Order 13132, “Federalism,”  13 requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive order to include regulations that 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.” Under Executive Order 13132, the Agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal Government provides the funds necessary to pay the direct compliance costs incurred by State and local governments or the Agency consults with State and local governments early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the Agency seeks to consult with State and local officials in the process of developing the regulation.

FRA has analyzed this final rule in accordance with the principles and criteria contained in Executive Order 13132. FRA has determined that the final rule will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. In addition, FRA has determined that this final rule, which complies with a statutory mandate, will not have federalism implications that impose substantial direct compliance costs on State and local governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply, and preparation of a federalism summary impact statement for this final rule is not required.

The information collection requirements in this rule are being submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995. 14 The sections that contain the information collection requirements and the estimated time to fulfill each requirement are as follows:

All estimates include the time for reviewing instructions; searching existing data sources; gathering or maintaining the needed data; and reviewing the information. For information or a copy of the paperwork package submitted to OMB, contact Ms. Hodan Wells, Information Collection Clearance Officer, at 202-493-0440. Organizations and individuals desiring to submit comments on the collection of information requirements should direct them via email to Ms. Wells at Hodan.Wells@dot.gov.

OMB is required to make a decision concerning the collection of information requirements contained in this rule between 30 and 60 days after publication of this document in the Federal Register . Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. FRA is not authorized to impose a penalty on persons for violating information collection requirements that do not display a current OMB control number, if required. The current OMB control number for 49 CFR 234.11 is 2130-0589.

FRA has evaluated this final rule consistent with the National Environmental Policy Act (NEPA), 18 the Council of Environmental Quality's NEPA implementing regulations, 19 and FRA's NEPA implementing regulations  20 and determined that it is categorically excluded from environmental review and therefore does not require the preparation of an environmental assessment (EA) or environmental impact statement (EIS). Categorical exclusions (CEs) are actions identified in an agency's NEPA implementing regulations that do not normally have a significant impact on the environment and therefore do not require either an EA or EIS. 21 Specifically, FRA has determined that this final rule is categorically excluded from detailed environmental review pursuant to 23 CFR 771.116(c)(15), “[p]romulgation of rules, the issuance of policy statements, the waiver or modification of existing regulatory requirements, or discretionary approvals that do not result in significantly increased emissions of air or water pollutants or noise.”

The purpose of this rulemaking is to revise FRA's State Action Plan requirements as mandated by the FAST Act. This rule does not directly or indirectly impact any environmental resources and will not result in significantly increased emissions of air or water pollutants or noise. Instead, the final rule is likely to result in safety benefits. In analyzing the applicability of a CE, FRA must also consider whether unusual circumstances are present that would warrant a more detailed environmental review. 22 FRA has concluded that no such unusual circumstances exist with respect to this final regulation and it meets the requirements for categorical exclusion under 23 CFR 771.116(c)(15).

Pursuant to Section 106 of the National Historic Preservation Act and its implementing regulations, FRA has determined this undertaking has no potential to affect historic properties. 23 FRA has also determined that this rulemaking does not approve a project resulting in a use of a resource protected by Section 4(f). 24

Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, and DOT Order 5610.2(a)  25 require DOT agencies to achieve environmental justice as part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects, including interrelated social and economic effects, of their programs, policies, and activities on minority populations and low-income populations.

The DOT Order instructs DOT agencies to address compliance with Executive Order 12898 and requirements within the DOT Order in rulemaking activities, as appropriate. FRA has evaluated this final rule under Executive Order 12898 and the DOT Order and has determined it would not cause disproportionately high and adverse human health and environmental effects on minority populations or low-income populations.

Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995, 26 each Federal agency shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent such regulations incorporate requirements specifically set forth in law.) Section 202 of the Act  27 further requires that before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement detailing the effect on State, local, and tribal governments and the private sector. This final rule will not result in the expenditure, in the aggregate, of $100,000,000 or more in any one year and thus preparation of such a statement is not required.

Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.”  28 FRA evaluated this final rule in accordance with Executive Order 13211 and determined that this regulatory action is not a “significant energy action” within the meaning of the Executive order.

Executive Order 13783, “Promoting Energy Independence and Economic Growth,” requires Federal agencies to review regulations to determine whether they potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources. 29 FRA determined this final rule will not burden the development or use of domestically produced energy resources.

For the reasons discussed in the preamble, FRA is amending part 234 of chapter II, subtitle B of title 49, Code of Federal Regulations, as follows:

The Mid-Atlantic Fishery Management Council and the Atlantic States Marine Fisheries Commission cooperatively manage summer flounder under the provisions of the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP). The joint FMP became effective in 1988, establishing measures to manage summer flounder fisheries. Summer flounder is an important commercial and recreational species. Currently, 60 percent of the total allowable landings limit (TAL) is allocated to the commercial fishery (coastwide annual commercial quota), with the remaining 40 percent allocated to the recreational fishery. Available quotas are fully utilized by both sectors in most fishing years. The coastwide annual commercial quota is allocated to each of the states in the management unit (Maine-North Carolina) on a percentage basis. The existing commercial state-by-state allocations were last modified in 1993.

Amendment 21 was approved by the Council and Commission in March 2019. A notice of availability (NOA) for the amendment published in the Federal Register on July 29, 2020 (85 FR 45571), with a comment period ending on September 28, 2020. We published a proposed rule in the Federal Register on August 12, 2020 (85 FR 48660), with a comment period ending on September 11, 2020.

The Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) allows us to approve, partially approve, or disapprove measures recommended by the Council in an amendment based on whether the measures are consistent with the fishery management plan, plan amendment, the Magnuson-Stevens Act and its National Standards, and other applicable law. After considering public comment on the NOA and proposed rule, we approved Amendment 21 on October 19, 2020. This rule implements the management measures in Amendment 21. The details of the development of the measures in Amendment 21 were described in the NOA and proposed rule, and are not repeated here.

Amendment 21 changes the state-by-state commercial quota allocations for summer flounder when the coastwide quota exceeds 9.55 million lb (4,332 mt). When the coastwide quota is 9.55 million lb (4,332 mt) or less, the quota will be distributed according to the current allocation percentages. In years when the coastwide quota exceeds 9.55 million lb (4,332 mt), any additional quota, beyond this threshold, will be distributed in equal shares to all states except Maine, Delaware, and New Hampshire, which would split 1 percent of the additional quota. The Council and Board selected this allocation alternative to balance preservation of historical state access and infrastructure at recent quota levels, while providing equitability among states when the stock and quota are at high levels.

Concurrent to this action we are considering changes to the 2021 specifications for summer flounder, scup, and black sea bass (85 FR 73253; November 17, 2020). If the revised 2021 summer flounder acceptable biological catch and corresponding specifications are approved, state allocations of summer flounder would be initially distributed as shown in Table 2. Final 2021 allocations, which will take into account any 2019 or 2020 overages through October 31, 2020, will be provided in the final rule establishing the 2021 specifications.

The original FMP objectives were adopted via Amendment 2 to the Summer Flounder FMP in 1993 and have remained unchanged since that time. Amendment 21 revises the FMP goals and objectives. The FMP previously contained only management objectives, while the revision contains three overarching goals linked to more specific objectives. The goals are: (1) Ensuring sustainability of both the summer flounder stock and fishery; (2) increasing the effectiveness of management measures through partnerships, enforcement, and data collection; and, (3) optimization of the social and economic benefits from the summer flounder stock. Additional information on these changes can be found in the Amendment 21 FEIS.

We received seven comment letters on the NOA and the proposed rule. Four comments were received on the proposed rule and three comments were received on the NOA. The state of New York and the New York Department of Environmental Conservation jointly submitted the same comment in response to the proposed rule and NOA (hereinafter referenced as “New York”), resulting in six unique comments on the proposed rule and NOA. Three comments, one from an industry group in Rhode Island and two from members of the public, supported the revised allocation system. The only comment that did not support approval of the revised allocation system was from New York. The comment submitted by New York consisted of a letter and nine supporting attachments, which ultimately requested that we disapprove Amendment 21. Similar to arguments made in ongoing and past litigation and its comments on the Draft EIS, New York contends that the revised allocations and resulting quotas are not in accordance with Magnuson-Stevens Act's National Standards 2, 4, 5, and 7. See comments 5-7, below, for more information.

Two comments on the proposed rule were not relevant to the proposed measures. One of these comments was related to the allocation split between the commercial and recreational sectors, and the perceived inequity of current recreational management. These issues are currently being considered by the Council and Commission in a separate joint action to address commercial/recreational sector allocations. The other comment, from a member of the public, stated that the total quota should be reduced below 9.5 million lb (4,332 mt), to 6.5 million lb (2,971 mt) because the current quota levels are unsustainable. Amendment 21, as an action, does not set summer flounder quotas. However, the process used to set quotas does so in a manner that ensures that catch levels are sustainable and overfishing is prevented. These comments were not related to the proposed commercial state allocation changes or management objective revisions, and, therefore, are not discussed further.

Comment 1: An industry group in Rhode Island commented on the proposed rule in support of the proposed allocation changes because the revised allocations allow states to keep their existing shares of summer flounder, which they greatly depend on, but also provide those states allocated a lower quota with an increased share when the summer flounder quota reaches the threshold.

Response 1: We agree and have approved the Council's proposed allocation changes. The Council and Board selected the approved approach to balance the historical distribution of allocations with the need to equitably provide additional quota to states with lower quotas when summer flounder is abundant.

Comment 2: One comment on the NOA supported the approval of Amendment 21. This commenter also misunderstood the proposed measures, and stated support for 9.55 million lb (4,332 mt) cap on summer flounder catch.

Response 2: We agree with this commenter's support of Amendment 21 and have approved the amendment as recommended by the Council and Commission. However, we note that Amendment 21 does not constrain future commercial summer flounder catch limits to 9.55 million lb (4,332 mt). This is the threshold level for the change in the allocation formula.

Comment 3: One comment on the NOA supported the approval of Amendment 21. Specifically, this commenter supported the Council's updates to the management objectives. This commenter also supported the allocation change because it adapts to changing population levels.

Response 3: We agree and have approved Amendment 21.

Comment 4: One commenter asked why Maine, Delaware, and New Hampshire do not get distributed shares of the excess quota.

Response 4: Under this amendment, Maine, Delaware, and New Hampshire do get distributed additional shares of commercial summer flounder quota. The distribution of the baseline 9.55 million lb (4,332 mt) quota remains unchanged by this action. In years when the coastwide quota exceeds 9.55 million lb (4,332 mt), any additional quota beyond this threshold will be distributed in equal shares to all states except Maine, Delaware, and New Hampshire, which would split 1 percent of the additional quota. These states receive a smaller portion of the additional quota because they have a very limited fishery for summer flounder. To date, Maine and New Hampshire have no reported commercial summer flounder landings in 2020, and none for the 2019 fishing year. Delaware also has no reported 2020 landings, and 2019 landings were less than 1,300 lb (0.59 mt).

Comment 5: New York contends that the revised allocation system in the amendment is inconsistent with National Standard 2 because it is not based upon the best scientific information available. Specifically, New York states that it is not based on current, reliable information about the summer flounder fishery; the continuation of the 1993 formula is based upon flawed, outdated information from the 1980s; and the amendment's proposed method to evenly distribute excess landings appears to be based upon no scientific information whatsoever.

Response 5: We disagree with New York's position that the current and the revised allocation approaches are not based on relevant data sources or the best available scientific information. The 1980-1989 landings data used in the base allocation formula represent the best scientific information available for commercial landings, by state, from that time period, which was prior to imposing state-based allocations. Landings since 1993 have been constrained by the allocation formulas, so more recent data would simply reflect the same percentages as the 1980-1989 data or would be skewed toward states that exceeded their quota allocations. The 1980-1989 base years were originally selected because they represented a period of relatively unrestricted fishing effort and, therefore, could serve as a proxy for state level effort and interest in the fishery absent management controls.

New York has long asserted that a different accounting method ( i.e., a “box method” rather than weigh-out data) was used for tracking New York's landings during the 1980s, and that this method would account for a higher level of landings than shown in current dealer data. However, despite numerous opportunities to provide this information, it appears that records of these alternative landings do not exist or are not readily available for review, and it is not clear that these data would be comparable to existing landings data if they were available.

More recently, New York has claimed that its summer flounder fishery during that period was infiltrated by organized crime, resulting in unreported landings and making it impossible to to collect accurate landings information in New York for that timeframe.

After the initial state allocations were developed, Connecticut made similar arguments about inaccuracies in landings data and was able to document the higher levels of landings in that state. As a result, the Council revised Connecticut's allocation through Amendment 4 to the FMP. In contrast, New York has not presented any additional basis for similar adjustments to its historical landings data and, in fact, has suggested that there is not a way to gather more accurate data for New York landings during that timeframe.

Comment 6: New York contends that the revised allocation system should be based on recent trends in the distribution of summer flounder, and that because the revised allocation does not address the shift in stock distribution, the resulting allocation is not fair or efficient and results in excessive costs for New York fishermen, contrary to National Standard 5.

Response 6: The Council and Board did consider revising allocations based on recent summer flounder stock distribution information (alternative 2B), but ultimately did not select that alternative. While a reallocation scheme based only on proximity to the center of summer flounder biomass might allow for more efficient access for states with fleets targeting summer flounder that are closer to the center of biomass, it would also disadvantage states with traditionally more long-distance fleets and fleets historically dependent on summer flounder by reducing their allocation. While National Standard 5 directs that management measures should consider efficiency in the utilization of fishery resources when practicable, the NMFS National Standard 5 Guidelines recognize that pure efficiency considerations should not prevent the attainment of other social or biological objectives. 50 CFR 600.330(b)(2)(ii). Of relevance here, National Standard 8 directs that management measures take into account the importance of fishery resources to fishing communities to allow for the sustained participation of such communities. 50 CFR 600.345. Substantial reductions in allocation, resulting in quotas below historical averages for states that have historically depended on the summer flounder fishery would increase their operation costs, and the cost of the infrastructure relative to the value of the fishery overall. Along the coast, there is substantial variability in the mobility of each state's fleet, the traditional areas of operation for each state's fleet, the targeted species of each state's fleet, and economic dependence on summer flounder within each state. The Council selected the proposed allocation formula to balance preservation of historical state access and infrastructure at recent quota levels, with the intent to provide equitability among states when the stock and quota are at higher levels.

We disagree that the revised allocation formula does not address the shift in stock distribution. While the formula is not based on the biomass distribution, it does generally reduce the proportion of quota for states at the southern end of summer flounder distribution (North Carolina, Virginia, and New Jersey) and increase allocation for many northern states, including New York, reflecting the shift of the center of summer flounder biomass. Increased allocations during years with higher biomass levels, may allow these states to liberalize management measures, such as possession limits, increasing the efficiency of vessels landing in their ports. Had the revised allocation formula been used when setting 2020 state-by-state quotas, New York's quota would have been 10.61 percent higher than under status quo allocations. While there is no guarantee that summer flounder quotas will remain above 9.55 million lb (4,332 mt), the trigger was based on the average of quotas from 2014-2018 and 2009-2018. The proposed 2021 quota is higher than the 2020 quota, at 12.49 million lb (5,665 mt).

Comment 7: New York contends that the revised allocation is inconsistent with National Standard 4 because it would allocate fishing privileges in the commercial summer flounder fishery between the states in a manner that is neither fair and equitable, reasonably calculated to promote conservation, nor carried out in a manner to prevent any entity from acquiring an excessive share. Specifically, New York states that “. . . the outdated 1993 Allocation regime is unfair to fishermen and other market participants in New York, to the benefit of fishermen and other market participants in North Carolina and Virginia, without any rational conservation basis. The Proposed Amendment would substantially retain this model with only incremental relief for New York in abundant years, making it inconsistent with Magnuson Standard 4.”

Response 7: The new allocation was specifically developed to balance historical allocations and access with equitability across states. When the quota is above the threshold the remaining quota is distributed equally to all states (with the exception of Maine, New Hampshire and Delaware). New York's comments suggest that a significant portion of the quota should have been reallocated to New York, due to the stock distribution and resulting fishery dynamics. While this type of reallocation scheme would have been favorable for New York fishermen, it would have disadvantaged other states that have a historical dependence on this fishery. The National Standard 4 Guidelines specifically state that the Council should consider other factors relevant to the FMP's objectives, including the dependence on the fishery by present participants and coastal communities when considering allocation changes.

Additionally, according to the Guidelines, an allocation of fishing privileges should be rationally connected to the achievement of optimal yield (OY) or with the furtherance of a legitimate FMP objective. Inherent in an allocation is the advantaging of one group to the detriment of another. The motive for making a particular allocation should be justified in terms of the objectives of the FMP; otherwise, the disadvantaged user groups or individuals would suffer without cause. Objective 3.1 of the FMP states that reasonable access to the fishery throughout the management unit should be provided and that fishery allocations and other management measures should balance responsiveness to changing social, economic, and ecological conditions with historic and current importance to various user groups and communities. By balancing between historic participants from southern states and New York's desire for increased quota based on shifts in summer flounder distribution Amendment 21 reflects this objective of the FMP.

New York also contends that the new allocation will not prevent excessive shares from being accumulated. Specifically New York states that “. . . the Proposed Amendment would provide the fishing industries in North Carolina and Virginia an excessive share of fishing privileges.” The National Standard 4 Guidelines state that “an allocation scheme must be designed to deter any person or other entity from acquiring an excessive share of fishing privileges, and to avoid creating conditions fostering inordinate control, by buyers or sellers, that would not otherwise exist.” 50 CFR 600.235(c)(3)(iii) (emphasis added). The new allocation formula will, in years when the quota exceeds 9.55 million lb (4,332 mt), reduce the proportion of quota that both North Carolina and Virginia will receive, compared to the status quo. Approval of the new allocation formula does not, in fact, increase these states' quota shares in a manner that would not otherwise exist. Moreover, state landings quotas do not result in excessive shares in the summer flounder fishery. The concept of excessive shares refers to individuals and/or corporations having market control. This Amendment revises the allocation of landings among the states. Within and among the states there are hundreds of Federal and state permitted vessels in the fishery, which prevents any individual from exercising market power in a manner that would be considered an excessive share.

National Standard 4 guidelines state that allocations should be reasonably calculated to promote conservation. Numerous methods of allocating fishing privileges can be considered “conservation and management” measures under section 303 of the Magnuson-Stevens Act. State allocations promote conservation by reducing the potential for a “race to fish” that can result from coastwide allocations, allowing for a more orderly prosecution of the fishery through management at the state landings level. Inherent in such a state allocation system is a division of the quota among the states. The new allocation formula is designed to provide equitable access to the resource compared to the status quo. When the stock biomass is high, as it is currently, quota above 9.55 million lb (4,332 mt) is distributed evenly to states with an active summer flounder fishery, including New York. This results in a shift of quota from states with historically higher quotas to northern states such as New York, Connecticut, and Massachusetts. These states receive additional access to the stock when it is healthy, which should increase the economic and social benefits to these communities without unfairly disadvantaging states and communities that have historically relied on the quota.

There are no changes to the measures from the proposed rule.

Pursuant to section 304(b)(3) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this final rule is consistent with the Summer Flounder, Scup, and Black Sea Bass FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

For the reasons discussed below, the Assistant Administrator for Fisheries finds that the need to implement these measures in a timely manner constitutes good cause, under the authority contained in 5 U.S.C. 553(d)(3), to waive the 30-day delay in effective date of this action. This action implements a new state-by-state allocation formula for the commercial summer flounder fishery, which should be effective by the start of the summer flounder fishing year on January 1, 2021.

This rule is being issued at the earliest possible date. Preparation of the proposed rule was dependent on the submission of the FEIS, in support of the Amendment, that is developed by the Council. An initial draft was received by NMFS in March 2020, and a final draft was submitted in May 2020. A NOA for the FEIS was prepared for Amendment 21, as required by the National Environmental Policy Act, and published on July 31, 2020 (85 FR 46094) with a comment period ending on August 31, 2020. In addition, as required by the Magnuson-Stevens Act, an NOA for Amendment 21 published on July 29, 2020 (85 FR 45571), with a comment period ending on September 28, 2020. A proposed rule was published on August 12, 2020 (85 FR 48660), with a comment period ending on September 11, 2020.

The summer flounder fishery operates on the calendar year. Annual publication of the summer flounder quotas is required prior to the start of the fishing year, by December 31. Amendment 21 has already been approved (October 19, 2020), and this final rule must be effective as soon as possible to enable the use of the new allocation formula in the 2021 summer flounder specifications. If this rule were not effective prior to the start of the fishing year, the resulting mid-year change to the allocations and state quotas would cause unnecessary harm to the fishery and would be contrary to the public interest. Based on historic participation and harvest patterns, the summer flounder fishery is expected to be very active at the start of the fishing season in 2021. If this rule is not effective on January 1 and interim specifications go into effect, it would create unnecessary challenges for individual states when setting commercial possession and/or trip limits, which apportion the catch over the entire calendar year. Moreover, if the current formula were used to develop the state quotas at the beginning of the year, there is the potential for a “race to fish” for states whose quotas would be lower using the new formulas, which could ultimately result in landings overages.

Furthermore, the revised allocation formula is intended to create a more equitable distribution of quota and provide relief for states that have had lower quotas relative to their fleet's reliance on the summer flounder fishery in recent years.

The 30-day delay in implementation of this rule is also unnecessary because this rule contains no new measures ( e.g., requiring new nets or equipment) for which regulated entities need time to prepare or revise their current practices.

The Council prepared a FEIS for this FMP amendment. The FEIS was filed with the Environmental Protection Agency on July 23, 2020. A notice of availability was published on July 31, 2020 (85 FR 46094). In approving the FMP amendment on October 19, 2020, NMFS issued a ROD identifying the selected alternative. A copy of the ROD is available from NMFS (see ADDRESSES ).

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

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

A final regulatory flexibility analysis (FRFA) was prepared for this action. The FRFA incorporates the IRFA and a summary of the analyses completed to support the action. NMFS did not receive any comments that were specifically in response to the IRFA. The FRFA incorporates sections of the preamble ( SUPPLEMENTARY INFORMATION ) and analyses supporting this rulemaking, including the Amendment 21 EIS (see ADDRESSES ). A description of the action, why it is being considered, and the objectives of and the legal basis for this rule are contained in the supplemental information report and preamble to the proposed rule, and are not repeated here.

Our responses to all of the comments received on the proposed rule, including those that raised significant issues with the proposed action can be found in the Comments and Responses section of this rule. In the proposed rule, we solicited comments on a revised allocation formula for distributing commercial summer flounder quota to states, and updated FMP goals and objectives. The majority of comments supported the proposed measures. There were no comments that specifically addressed the IRFA.

The entities ( i.e., the small and large businesses) that may be affected by this action include fishing operations with summer flounder moratorium (commercial) permits. The recreational fishery is not impacted by this action, and therefore entities with recreational party/charter permits are not considered here, nor are private recreational anglers which are not considered “entities” under the Regulatory Flexibility Act (RFA). For RFA purposes only, NMFS established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (50 CFR 200.2). A business primarily engaged in commercial fishing is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million, for all its affiliated operations worldwide.

Vessel ownership data were used to identify all individuals who own commercial fishing vessels. Vessels were then grouped according to common owners. The resulting groupings were then treated as entities, or affiliates, for purposes of identifying small and large businesses, which may be affected by this action. Based on this grouping, a total of 607 affiliates reported revenues from commercial summer flounder landings during the 2016-2018 period, with 601 of those business affiliates categorized as small businesses and 6 categorized as large businesses.

There are no reporting, recordkeeping, or other compliance requirements.

The action does not duplicate, overlap, or conflict with other Federal rules.

The approved measures ( i.e., the suite of preferred alternatives) includes implementation of revised commercial quota allocation system for the summer flounder fishery. Specifically, this action creates state allocations that vary with overall stock abundance. For all years when the annual commercial quota is at or below 9.55 million lb (4,332 mt), the state allocations will remain status quo. In years when the annual coastwide quota exceeds this trigger, the first 9.55 million lb (4,332 mt) will be distributed according to status quo allocations, and the additional quota, beyond 9.55 million lb (4,332 mt), will be distributed by equal shares (with the exception of Maine, New Hampshire, and Delaware, which would split 1 percent of the additional quota).

Additional non-preferred alternatives were also considered. For the purposes of the RFA, only the preferred alternatives and those non-preferred alternatives which would minimize negative impacts to small businesses are required to be considered. Economic impacts would vary by state and community under all alternatives, but alternatives 2A (status quo) and alternatives 2C (the preferred alternative) are likely to have fewer negative impacts overall compared to other alternatives. Therefore, the preferred alternative (2C) is compared to the status quo (alternative 2A) in the quantitative analysis. Although not required, we also provide a brief summary of the relative impacts of the two additional non-preferred options (2B and 2D).

The analysis was conducted assuming full utilization of the 2020 commercial quota of 11.53 million lb (5,230 mt). Results indicate that the proposed action of a quota reallocation threshold of 9.55 million lb (4,332 mt) increases fleetwide revenue by $400,000 relative to No Action, and ex-vessel price by $0.04 per pound relative to No Action. The proposed action is estimated to yield a decrease in fishery-wide revenue of $150,000 as compared to the quota reallocation threshold of 8.4 million lb (3,810 mt) (Alternative 2C-1). This slight decrease in revenue under the proposed action, relative to the highest revenue-generating alternative, is not expected to disproportionately impact small entities.

Additional alternatives, 2B and 2D, were considered but not recommended by the Council. Alternatives 2B and 2D had more negative impacts on small businesses than the selected alternative. Alternative 2B considered revisions to the quota allocation based on recent summer flounder biomass distribution, while alternative 2D (the “scup model”), considered a significant change in summer flounder management by creating a winter season that was open to any vessel with a summer flounder permit.

Compared to the other allocation alternatives, the impacts of alternative 2D are the most difficult to determine, as this alternative is associated with the highest uncertainty regarding impacts on vessel participation, fishing effort, landings patterns, and market responses. Relative to alternative 2A, alternative 2D is expected to have a higher magnitude of positive or negative impacts to states and businesses, due to the substantial change in the management system that will benefit some and negatively impact others. Shoreside communities would also be impacted by alternative 2D. Many states have invested heavily in shoreside infrastructure to support their fleets. Under alternative 2D, the distribution of landings in the winter would be driven more by vessel preference and market factors, which would positively impact some shoreside businesses and negatively impact others.

Alternative 2B would shift quota allocation from the Southern region of the management unit (North Carolina through New Jersey) to the Northern region (New York through Maine). Compared to alternative 2C, alternative 2B is more likely to have a higher magnitude of positive or negative impacts (depending on the state), as allocation changes would be permanently revised from status quo, while under 2C there is the potential for status quo allocation. Additionally, option 2C has a higher likelihood of costs and benefits being shared more equally over time as the quota fluctuates above and below the trigger point.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a fishery bulletin that serves as a small entity compliance guide was prepared. Copies of this final rule are available from the Greater Atlantic Regional Fisheries Office (GARFO) (see ADDRESSES ), and fishery bulletin ( i.e., compliance guide) will be sent to all holders of commercial permits for the summer flounder fishery. The fishery bulletin and this final rule will be posted on the GARFO website.

This final rule contains no information collection requirements under the Paperwork Reduction Act of 1995.

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