The final rule, published June 10, 2021, at 86 FR 31006, amends Title 14 of the Code of Federal Regulations (14 CFR) by adding new part 111, Pilot Records Database (PRD). The amendment adding part 111 was intended to be effective on August 9, 2021, but was erroneously printed with an effective date of September 8, 2021.

Therefore, in FR Doc. 2021-11424 appearing on page 31006 in the Federal Register of Thursday, June 10, 2021, the following corrections are made:

Issued in Washington, DC, under the authority of 49 U.S.C. 106(f), U.S.C. 106(f), 106(g) 44701(a), 44703, 44711, 46105, and 46301 on or about June 11, 2021.

The final regulations (TD 9942) that are the subject of this correction are issued under sections 263A, 448, 460, and 471 of the Internal Revenue Code.

As published on January 5, 2021 (86 FR 254), the final regulations (TD 9942) contain errors that need to be corrected. In addition, a correction to Example 1 in § 1.263A-4(a)(5)(iii) is being made to conform to the statutory amendments made to section 263A by section 13102 of Public Law 115-97 (131 Stat. 2054), commonly referred to as the Tax Cuts and Jobs Act.

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

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

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

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

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

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

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

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

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

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

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

TTB received a petition from Kevin Pogue, on behalf of local winemakers and vineyard owners, proposing to establish the “White Bluffs” AVA. The proposed AVA is located in Franklin County, Washington, and lies entirely within the established Columbia Valley AVA (27 CFR 9.74). Within the 93,738-acre proposed AVA, there are 9 commercial vineyards covering a total of approximately 1,127 acres, along with 1 winery. The distinguishing features of the proposed White Bluffs AVA are its topography, geology, soils, and climate.

The proposed White Bluffs AVA is located on a broad plateau that rises, on average, 200 feet above the surrounding landscape. The Ringold and Koontz Coulees divide the plateau into two distinct areas capped by flat regions with relatively even surfaces and south-facing slope aspects. Elevations within the proposed AVA range from 700 feet in the coulees to approximately 1,200 feet in the northeastern section of the proposed AVA. The majority of the proposed AVA has elevations between 800 and 1,000 feet. By contrast, the regions surrounding the proposed AVA are on the floor of the Columbia Valley and have lower elevations. According to the petition, the relatively flat terrain of the proposed AVA provides gently sloping vineyard sites. Southern aspects allow vines to absorb more solar energy per unit area than regions without a southern aspect. Greater solar energy absorption promotes an earlier onset of bud break, flowering, veraison, and harvest. The petition also states that vineyards planted on the plateau have a longer growing season than vineyards on the valley floor, where cold air pools and increases the risk of frost.

Beneath the proposed White Bluffs AVA is a thick layer of sedimentary rocks called the Ringold Formation, which was formed in lakes and rivers between 8.5 and 3.4 million years ago. The Ringold Formation overlies Columbia River basalt bedrock. The upper part of the Ringold Formation contains an erosion-resistant layer commonly referred to as caliche. This layer reaches depths of at least 15 feet and limits root penetration and the water-holding capabilities of the soil. As a result, areas with thick layers of caliche must undergo ripping with bulldozers to break up the caliche before planting vineyards. By contrast, the Ringold Formation and the caliche layer are much thinner or entirely absent in the regions surrounding the proposed AVA, allowing roots to come into contact with the basalt bedrock and a variety of minerals including olivine and plagioclase feldspar.

The soils of the proposed AVA derive from wind-deposited silt and fine sand overlying sediment deposited by ice-age floods. Most of the flood sediment is a mixture of silt and sand that settled out of suspension in glacial Lake Lewis. The thickness of the flood sediment gradually increases with decreasing elevation, since there were multiple ice-age floods of varying intensity and the lower elevations were flooded more frequently. As a result, the soil depths on the plateau that comprises the proposed AVA are likely to be thinner than those of the surrounding valley floor. The thinness of the soils in the proposed AVA allows roots to reach the clay-rich Ringold Formation. High clay content allows the soils to release water more slowly than sandier soils, putting less stress on grapevines during dry conditions.

The petition states that the proposed White Bluffs AVA has a longer growing season than the surrounding regions. According to the petition, the longer growing season means that the proposed AVA is less prone to spring frosts that can damage the vines after bud break, and is also less likely to experience fall frosts that halt the ripening process and delay harvest. The growing season within the proposed AVA averages 237.5 days, while the region to the north averages 200 days. The region to the east averages 169 days, and the region to the south averages 191 days. Climate data was not available for the region to the west of the proposed AVA.

TTB published Notice No. 189 in the Federal Register on May 27, 2020 (85 FR 31723), proposing to establish the White Bluffs AVA. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed AVA. The notice also compared the distinguishing features of the proposed AVA to the surrounding areas. For a detailed description of the evidence relating to the name, boundary, and distinguishing features of the proposed AVA, and for a detailed comparison of the distinguishing features of the proposed AVA to the surrounding areas, see Notice No. 189.

In Notice No. 189, TTB solicited comments on the accuracy of the name, boundary, and other required information submitted in support of the petition. In addition, given the proposed White Bluff AVA's location within the Columbia Valley AVA, TTB solicited comments on whether the evidence submitted in the petition regarding the distinguishing features of the proposed AVA sufficiently differentiates it from the established AVA. TTB also requested comments on whether the geographic features of the proposed AVA are so distinguishable from the established Columbia Valley AVA that the proposed AVA should no longer be part of the established AVA. The comment period closed on July 27, 2020.

In response to Notice No. 189, TTB received a total of two comments. Both comments were from local wine industry members who supported the proposed AVA. The first comment reiterated the petition's claims of unique soil, geology, topography, and climate, which the commenter states makes the proposed AVA a “special area in Washington.” The second comment supported the proposed AVA due to its “distinctive micro-climate, soil, and ultimately unique grape growing character.” Neither comment addressed the question of whether the proposed White Bluffs AVA was so distinct that it should be removed from the established Columbia Valley AVA.

After careful review of the petition and the comments received in response to Notice No. 189, TTB finds that the evidence provided by the petitioner supports the establishment of the White Bluffs AVA. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and parts 4 and 9 of the TTB regulations, TTB establishes the “White Bluffs” AVA in Franklin County, Washington, effective 30 days from the publication date of this document.

TTB has also determined that the White Bluffs AVA will remain part of the established Columbia Valley AVA. As discussed in Notice No. 189, the White Bluffs AVA shares some broad characteristics with the established AVA. For example, the proposed AVA and the Columbia Valley AVA both have elevations that are generally below 2,000 feet and geologies that contain Columbia River basalt. However, the proposed AVA consists of an elevated plateau, whereas most of the Columbia Valley AVA is described as a broad plain. Within the proposed AVA, the Ringold Formation forms a layer over the basalt bedrock that is generally thinner or not present elsewhere in the Columbia Valley. Finally, because ice-age floods less frequently inundated the proposed AVA than the surrounding regions of the Columbia Valley AVA, the proposed White Bluffs AVA's soils are generally shallower than the soils in most of the Columbia Valley AVA.

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

The petitioners provided the required maps, and they are listed below in the regulatory text. You may also view the proposed White Bluffs Valley AVA boundary on the AVA Map Explorer on the TTB website, at https://www.ttb.gov/wine/ava-map-explorer.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TTB received a petition from James York, owner of Catalina View Wines, on behalf of the Palos Verdes Peninsula Winegrowers, proposing to establish the “Palos Verdes Peninsula” AVA. The proposed AVA is located in Los Angeles County, California, and includes the cities of Palos Verdes Estates, Rolling Hills Estates, Rancho Palos Verdes, and Rolling Hills, California. The proposed AVA is not located within, nor does it contain, any established AVA. Within the 15,900-acre proposed AVA, there are 7 acres of commercial vineyards. The distinguishing features of the proposed Palos Verdes Peninsula AVA are its geology, soils, topography, and climate.

The proposed Palos Verdes Peninsula AVA is located on an isolated upland peninsula created by tectonic uplift and volcanic activity. Periods of intense geologic activity subjected the region of the proposed AVA to repeated cycles of uplift, erosion, submersion, and deposition. The submersion process laid down significant amounts of marine deposits, which contributed to the soil composition. Uplift created new lands, while erosion wore away the newly-formed lands to create the series of marine terraces that characterize the region's topography today. The geology of the proposed AVA consists primarily of the Monterey Formation and ancient landslides, which formed the basis for two of the primary soils of the proposed AVA—Altamont Clay Adobe and Altamont Clay Loam. A third soil commonly found in the proposed AVA is the Diablo Clay Adobe. These three soils are rich in clays, adobe, and loamy clay and contain high amounts of calcium. The soils retain moisture in dry weather while allowing for good drainage. According to the petition, the levels of calcium in the soils produce thicker grape skins than are found on the same grape varietals grown in non-calcareous soils. The thicker grape skins increase the amount of color, flavor, and aromatics in the resulting wine.

The topography of the proposed Palos Verdes Peninsula AVA consists of a low altitude mountain of the Coast Range situated between the Los Angeles Plain and the Pacific Ocean. Rolling hills, incised canyons, and coastal bluffs and terraces cover the proposed AVA. Elevations range from sea level on the western and southern edges of the proposed AVA to about 1,460 feet above sea level at San Pedro Hill, which is located near the eastern/central area of the Palos Verdes Hills. The slope angles of the vineyards in the proposed AVA range from gentle to high (0-50%). Terracing the vineyards that are planted on steeper slopes allows for drainage/erosion control, equipment access, and optimal solar orientation. The moderate slopes within the proposed AVA promote air flow to minimize mildew and frost risk and also allow for drainage of excess water. The aspects of the vineyard slopes face south, southeast, and southwest, providing year-round solar exposure. South-facing and southwest-facing slopes promote earlier bud break, bloom, and harvest than other aspects. Southeast-facing slopes bring morning radiation for soil warmth and canopy growth.

The climate of the proposed Palos Verdes Peninsula AVA is “Mediterranean warm,” which is characterized by warm, dry summers and mild winters with limited rainfall. Average monthly high temperatures within the proposed AVA range from 63 to 74 degrees Fahrenheit (F), and average monthly low temperatures range from 48 to 62 degrees F. Extreme monthly highs range from 74 to 84 degrees F, and extreme monthly lows range from 46 to 60 degrees. Average annual rainfall within the proposed AVA is 14.03 inches. According to the petition, these climatic conditions are suitable for growing grape varietals such as Pinot Noir, Chardonnay, Merlot, and Cabernet Sauvignon.

To the south and west of the proposed Palos Verdes Peninsula AVA is the Pacific Ocean. To the north, northeast, and east of the proposed AVA are relatively flat lowland areas with elevations ranging from sea level to about 500 feet and slope angles of 25 percent or less. These lowland regions experienced less intense levels of tectonic uplift and volcanic activity, and the geology consists mainly of surficial sediments, older surficial sediments, and shallow marine sediments. Soils to the north, northeast, and east of the proposed AVA have lower levels of clay and calcium than the soils of the proposed AVA. Monthly average temperatures in the regions surrounding the proposed AVA are generally warmer, ranging between 4 and 6 degrees F higher in the colder months and between 5 and 8 degrees F higher in the warmer months. The average highest and lowest monthly temperatures in the surrounding regions are also more extreme than those within the proposed Palos Verdes Peninsula. Finally, the average annual rainfall amounts are generally lower in the regions surrounding the proposed AVA.

TTB published Notice No. 188 in the Federal Register on May 26, 2020 (85 FR 31416), proposing to establish the Palos Verde Peninsula AVA. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed AVA. The notice also compared the distinguishing features of the proposed AVA to the surrounding areas. For a detailed description of the evidence relating to the name, boundary, and distinguishing features of the proposed AVA, and for a detailed comparison of the distinguishing features of the proposed AVA to the surrounding areas, see Notice No. 188.

In Notice No. 188, TTB solicited comments on the accuracy of the name, boundary, and other required information submitted in support of the petition. The comment period closed July 27, 2020.

In response to Notice No. 188, TTB received a total of four comments. The commenters included local wine industry members and a former member of the Rancho Palos Verdes Planning Commission. All of the comments supported the establishment of the proposed Palos Verdes Peninsula AVA. Two of the comments expressed support for the proposed AVA due to its unique characteristics (comments 3 and 4), one comment supported the proposal due to the quality of wines produced from grapes grown in the region (comment 1), and the fourth comment expressed general support for the proposal without offering an explanation (comment 2).

After careful review of the petition and the comments received in response to Notice No. 188, TTB finds that the evidence provided by the petitioner supports the establishment of the Palos Verdes Peninsula AVA. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and parts 4 and 9 of the TTB regulations, TTB establishes the “Palos Verdes Peninsula” AVA in Los Angeles County, California, effective 30 days from the publication date of this document.

See the narrative description of the boundary of the Palos Verdes Peninsula AVA in the regulatory text published at the end of this final rule.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TTB received a petition from Kevin Corliss, Vice President of Vineyards for Ste. Michelle Wine Estates, Joan R. Davenport, Professor of Soil Sciences at Washington State University, and John Derrick, Vice President of Operations for Mercer Ranches, Inc., proposing to establish “The Burn of Columbia Valley” AVA. The proposed AVA is located in Klickitat County, Washington, and lies entirely within the established Columbia Valley AVA (27 CFR 9.74). Within the 16,870-acre proposed AVA, there are 3 commercial vineyards, which cover a total of approximately 1,261 acres and are owned by two different entities. The distinguishing features of the proposed The Burn of Columbia Valley AVA are its soils, climate, and topography.

The soils of the proposed The Burn of Columbia Valley are primarily silty loams in the taxonomic order Mollisols. The soils are described as having good plant-available water holding capacity that are capable of delivering sufficient water to the vines during the growing season. The soils are also relatively high in organic material and provide adequate nutrients, particularly nitrogen, to the vines. The most common soil series and complexes in the proposed AVA are Walla Walla silt loam (without cemented substratum), Rock outcrop-Haploxeroll complex, Haploxeroll-Fluvaquent complex, Fluventic Haploxeroll-Riverwash complex, Rock outcrop Rubble and Complex, Wato silt loam, Walla Walla silt loam (with cemented substratum), Endicott silt loam, and Endicott-Moxee complex.

The climate within the proposed The Burn of Columbia Valley AVA is characterized by an average annual growing degree day  1 (GDD) accumulation of 2,763 GDDs, with a minimum of 2,405 GDDs and a maximum of 3,249 GDDs. The average annual GDD accumulations favor the production of grape varietals with higher heat unit requirements, such as Cabernet Sauvignon and Syrah, which are the two most commonly grown grape varietals within the proposed AVA. The proposed AVA receives an average of 8.76 inches of precipitation annually, with a minimum of 6.65 inches and a maximum of 10.44 inches. Low annual rainfall amounts mean that vineyards within the proposed AVA require supplemental irrigation.

The topography of the proposed The Burn of Columbia Valley AVA is comprised of gently sloping bench lands above the Columbia River. The average slope angle within the proposed AVA is 7.27 percent, which is suitable for mechanical cultivation of vineyards, yet is steep enough to avoid the pooling of cold air that could damage grapes. The proposed AVA also has a large, contiguous expanse of land with easterly and southern aspects, as well as a southeasterly aspect, which allows excellent sunlight exposure for vineyards.

To the east-northeast and northwest of the proposed AVA, the soils include series and complexes that are not present within the proposed AVA, including the Renslow-Ralls-Whipple complex, Van Nostern silt loam, Van Nostern-Bakeoven complex, Colockum-Cheviot complex, Swalecreek-Rockley complex, and Goldendale silt loam. Average annual GDD accumulations to the east-northeast and northwest of the proposed AVA are lower, and average annual rainfall amounts are higher than within the proposed AVA. In the region to the south of the proposed AVA, the soils contain series and complexes also not present within the proposed AVA, including Ritzville silt loam, Willis silt loam, and Roloff-Rock outcrop complex. Average annual GDD accumulations are higher in the region south of the proposed AVA, as are average annual precipitation amounts. Additionally, in the region to the west of the proposed AVA, the soils contain complexes not present within the proposed AVA, including the Cheviot-Tronsen complex, Goodnoe-Swalecreek-Horseflat complex, and Asotin silt loam. The region to the west of the proposed AVA has lower annual GDD accumulations and higher average annual rainfall amounts. When compared to the proposed The Burn of Columbia Valley AVA, each of the surrounding regions has higher average slope angles except the region to the south, which has lower average slope angles.

TTB published Notice No. 190 in the Federal Register on May 27, 2020 (85 FR 31718), proposing to establish The Burn of Columbia Valley AVA. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed AVA. The notice also compared the distinguishing features of the proposed AVA to the surrounding areas. For a detailed description of the evidence relating to the name, boundary, and distinguishing features of the proposed AVA, and for a detailed comparison of the distinguishing features of the proposed AVA to the surrounding areas, see Notice No. 190.

In Notice No. 190, TTB solicited comments on the accuracy of the name, boundary, and other required information submitted in support of the petition. In addition, given the proposed The Burn of Columbia Valley AVA's location within the Columbia Valley AVA, TTB solicited comments on whether the evidence submitted in the petition regarding the distinguishing features of the proposed AVA sufficiently differentiates it from the established AVA. TTB also requested comments on whether the geographic features of the proposed AVA are so distinguishable from the established Columbia Valley AVA that the proposed AVA should no longer be part of the established AVA. The comment period closed July 27, 2020.

In response to Notice No. 190, TTB received 13 comments. The commenters included local wine industry members, local wine consumers, the Goldendale Chamber of Commerce, the Klickitat County Natural Resources & Economic Development Department, and the Columbia-Snake Rivers Irrigators Association. Eleven of the comments support creating the proposed The Burn of Columbia Valley AVA so as to distinguish this region from other areas within the established Columbia Valley AVA. One of the comments (comment 12) did not specifically express support for or opposition to the proposed AVA, but did state that the geography and climate of the proposed The Burn of Columbia Valley AVA are “significantly different than the existing Columbia Valley AVA.” Only one comment (comment 13), submitted by an anonymous commenter, opposed establishing the proposed AVA. The commenter stated their belief that the proposed The Burn of Columbia Valley AVA was not sufficiently distinguishable from the nearby established Horse Heaven Hills AVA (27 CFR 9.188) and should be included in that AVA instead of recognized as a new AVA. However, the comment did not include any evidence to support this claim.

After careful review of the petition and the comments received in response to Notice No. 190, TTB finds that the evidence provided by the petitioner supports the establishment of The Burn of Columbia Valley AVA. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and parts 4 and 9 of the TTB regulations, TTB establishes the “The Burn of Columbia Valley” AVA in Klickitat County, Washington, effective 30 days from the publication date of this document.

TTB has also determined that The Burn of Columbia Valley AVA will remain part of the established Columbia Valley AVA. As discussed in Notice No. 190, The Burn of Columbia Valley AVA shares some broad characteristics with the established AVA. For example, the proposed AVA and the Columbia Valley AVA both have similar average annual rainfall amounts. However, the proposed AVA can accumulate maximum GDDs of over 3,000 annually, indicating a climate that is slightly warmer than the rest of the much larger Columbia Valley AVA. Additionally, because the proposed The Burn of Columbia Valley AVA is much smaller than the Columbia Valley AVA, the proposed AVA has a greater uniformity of characteristics within its boundaries.

See the narrative description of the boundary of The Burn of Columbia Valley AVA in the regulatory text published at the end of this final rule.

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

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

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

TTB is not designating “The Burn,” standing alone, as a term of viticultural significance because the term “The Burn” is used to refer to multiple areas in the United States. Therefore, wine bottlers using “The Burn,” standing alone, in a brand name or in another label reference on their wines will not be affected by the establishment of this AVA.

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

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

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

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

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

Signed into law on December 20, 2019, section 731 of the 2020 NDAA allows members of the uniformed services or their authorized representatives to file claims for personal injury or death caused by a DoD health care provider in certain military medical treatment facilities.

Historically, members of the armed forces have been unable to bring suit against the government under the Feres doctrine, named for the plaintiff in Feres v. United States . Based on this 1950 Supreme Court decision, active duty military personnel may not sue the government for personal injuries suffered incident to service (generally, while on active duty). The 2020 NDAA allows Service members, with certain limitations, to bring administrative claims to seek compensation for personal injury or death resulting from medical malpractice that occurred in certain military medical treatment facilities, in addition to compensation already received under the comprehensive compensation system that currently exists for military members and their families.

A substantiated claim under $100,000 will be paid directly to the member or his/her estate by DoD. The Treasury Department will review and pay claims that the Secretary of Defense values at more than $100,000. Service members must present a claim that is received by DoD within two years after the claim accrues. However, the statute allowed Service members to file claims in 2020 for injuries that occurred in 2017.

Based on section 731 of the NDAA, this rule adds to Title 32 of the Code of Federal Regulations a new part 45, Medical Malpractice Claims by Members of the Uniformed Services. Title 10 U.S.C. 2733a(f)(2)(A)(ii) describes the claims process, which includes: The claimant's submission of information to initiate a medical malpractice claim; the claimant's response to an adjudicator's request for new information required to substantiate the claim or to determine damages; an Initial Determination issued by DoD; the opportunity for a claimant to seek reconsideration of damage calculations in the case of clear error; and, in most cases, the opportunity for a claimant to file an administrative appeal.

Claims will be adjudicated based on uniform national standards consistent with generally accepted standards used in a majority of States in adjudicating claims under the Federal Tort Claims Act (FTCA), 28 U.S.C. 2671 et seq., without regard to the place where the Service member received medical care.

This rule discusses who may file a claim (generally, a member of a uniformed service allegedly harmed incident to service by malpractice); what DoD health care providers may be involved (DoD personnel and personal services contractors acting within the scope of their employment or duties; where the malpractice must have occurred (in a “military medical treatment facility” (MTF) (10 U.S.C. 1073d); how to file (a written request mailed to a Military Department-specific address); records DoD will consider (submissions presented by claimant and any available relevant government records and information otherwise available to DoD); who has the burden of proof (claimant must substantiate the claim); how to substantiate a claim; deciding what caused the alleged harm (DoD liability proportionate to harm attributable to DoD health care providers); use of final DoD or VA disability determinations if applicable; calculating economic damages (principally actual and future health care costs, costs associated with long term care and disability, and loss of future earnings); determining non-economic damages (including pain and suffering, up to a capped amount); and initial decision and administrative appeal procedures (a single DoD appeals board decides appeals on the written record as a whole). More detailed information is below.

Section 45.1 explains the purpose of this part. It establishes the administrative process for adjudication of claims under the new 10 U.S.C. 2733a, which was added to 10 U.S.C. by section 731 of the National Defense Authorization Act for Fiscal Year 2020. The current comprehensive compensation system that currently exists for military members and their families, when members are injured or die incident to service, applies to all causes of death or disability, whether due to combat injuries, training mishaps, motor vehicle accidents, naturally occurring illnesses, with limited exceptions ( e.g., when the member is absent without leave or the injury is due to the member's intentional misconduct or willful negligence). The new law provides for the possibility of additional compensation beyond that provided by this comprehensive compensation system for personal injury or death of a military member caused by medical malpractice by a DoD health care provider in certain circumstances.

Section 45.1 also notes that the new medical malpractice claims process is separate from the Military Health System Healthcare Resolutions Program. 1 This existing program is an independent, neutral, and confidential system that promotes full disclosure of factual clinical information involving adverse events and outcomes, and mediation of clinical conflicts. The program is part of the Military Health System's commitment to transparency, which also includes a patient's right to be heard as part of any quality assurance review. To the extent a military member (or any other health care beneficiary) seeks to obtain more information about an adverse clinical event, the Healthcare Resolutions Program continues to be a valuable resource independent of any legal process or claims system. However, the Healthcare Resolutions Program is not involved with claims or legal matters. Thus, when a patient files a malpractice claim, under § 45.1 Healthcare Resolutions Specialists disengage from further patient communications related to the events associated with the claim.

Section 45.2 provides some of the terms rendering claims payable and not payable. This section also covers the time for filing claims, generally within two years after the claim accrues. For claims filed in calendar year 2020, the time for filing was expanded to three years. Because 10 U.S.C. 2733a(b)(4) prescribes the time period for filing claims, state statutes of limitation or repose are inapplicable. Consistent with 10 U.S.C. 2733a(g), there is a limitation on the amount of attorney's fees or expenses. The adjudication of claims under this authority is not an adversarial proceeding, there is no prevailing party to be awarded costs, and there is no judicial review. The settlement and adjudication of medical malpractice claims of members of the uniformed services is final and conclusive per 10 U.S.C. 2735.

A claim under this regulation is payable only if it may not be settled or paid under any other law, including the FTCA per Title 10 U.S.C. 2733a(b)(5). Claims are adjudicated based on generally accepted standards used in a majority of States in adjudicating claims under the FTCA without regard to the place where the service member received medical care per Title 10 U.S.C. 2733a(f)(2)(B). In adjudicating claims, DoD will make every effort to determine the applicable law adopted by the majority of States (at least 26 States).

Certain exclusions that are part of FTCA law apply to claims under this new authority as well. These exclusions include the discretionary function exception, which generally bars any claim challenging a discretionary agency policy. Another FTCA exclusion that is applicable to claims under this part is the combatant activities exception, although only in extremely unusual circumstances such as an attack on a military hospital. It should be noted, however, that the FTCA exception regarding any claim arising in a foreign country is not applicable to claims under this part. Title 10 U.S.C. 2733a(f)(2)(B) refers to such claims as covered by the new authority.

Section 45.3 discusses who may file a medical malpractice claim. As provided in the statute, the claim must be filed by the member of the uniformed services who is the subject of the medical malpractice claim, or by an authorized representative on behalf of a member who is deceased or otherwise unable to file the claim due to incapacitation per Title 10 U.S.C. 2733a(b)(1). A claim may be filed by or on behalf of a reserve component member if the claim is in connection with personal injury or death occurring while the member was in a Federal duty status. 10 U.S.C. 2733a(i)(3). The statute only authorizes claims by members of the uniformed services. Thus, the regulation does not permit derivative claims or other claims from third parties alleging a separate injury as a result of harm to a member of the uniformed services. Additionally, medical malpractice claims from members must be for an injury incident to service per 10 U.S.C. 2733a(a). For members on active duty, almost any injury or illness arising out of medical care received at a MTF by a DoD health care provider is considered incident to service. Medical care provided to a service member based on military status is incident to service.

Rules for filing a claim are addressed in § 45.4. A member of a uniformed service or, when applicable, an authorized representative, may file a claim. Any written claim will suffice provided that it includes the following: (a) The factual basis for the claim, which identifies the conduct allegedly constituting malpractice ( e.g., theory of liability and/or breach of the applicable standard of care); (b) a demand for a specified dollar amount; (c) signed by the claimant or claimant's duly authorized agent or legal representative; (d) if the claim is filed by an attorney, an affidavit from the claimant affirming the attorney's authority to file the claim on behalf of the claimant; (e) if the claim is filed by an authorized representative, an affidavit from the representative affirming his/her authority to file on behalf of the claimant; and (f) unless the alleged medical malpractice is within the general knowledge and experience of ordinary laypersons, an affidavit from the claimant affirming that the claimant consulted with a health care professional who opined that a DoD health care provider breached the standard of care that caused the alleged harm. Alternatively, if the claimant is represented by an attorney, unless the alleged medical malpractice is within the general knowledge and experience of ordinary laypersons, the claim must include an affidavit from the attorney affirming that the attorney consulted with a health care professional who opined that a DoD healthcare provider breached the standard of care that caused the alleged harm. This requirement for an affidavit at the time of filing the claim is consistent with the practice in a majority of States to require an expert report, expert affidavit, certification or affidavit of merit, or a similar requirement.

While DoD is not requiring an expert opinion at the time of filing a claim, claimants may submit whatever information and documentation they believe necessary to support their claim, as claimants have the burden to substantiate their claims. As part of the investigation and evaluation of a claim, DoD will access pertinent DoD or other available government information systems and records regarding the member in order to consider fully all facts relevant to the claim. This may include information in personnel records, medical records, the Defense Eligibility and Enrollment System (DEERS), reports of investigation, medical quality assurance records, and other information. Upon DoD's request, a claimant must identify any pertinent health care providers outside of DoD and provide a copy of his or her medical records from each of the identified health care providers, including a statement that the records are complete. A claimant must provide a medical release or medical releases upon DoD's request, enabling DoD to obtain medical records from the identified health care providers.

DoD may require that the claimant provide additional information DoD believes is necessary for adjudication of the claim, including the submission of an expert opinion at the claimant's expense. If DoD intends to deny a claim in which an expert opinion has not been submitted, prior to denying the claim, DoD will notify the claimant and provide the opportunity for submission of an expert opinion at the claimant's expense. DoD may determine an expert opinion is not required when allegations of medical malpractice are within the general knowledge and experience of ordinary laypersons, such as when a foreign object is improperly left in the body or an operation occurred on the wrong body part.

There is no discovery process for adjudication of claims. However, claimants may obtain copies of records in DoD's possession that are part of their personnel and medical records in accordance with DoD Instruction 5400.11, “DoD Privacy and Civil Liberties Programs”;  2 and DoD Instruction 6025.18, “Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule Compliance in DoD Health Care Programs.”  3 Claimants are not entitled to attorney work product, attorney client privileged communications, material that are medical quality assurance records protected under 10 U.S.C. 1102, predecisional material, or other privileged information.

Section 45.5 covers one of the statutory elements of payable claims, stating that the health care involved occurred in a covered military medical treatment facility by a DoD health care provider acting within the scope of employment. As stated in the statute, the claimed act or omission constituting medical malpractice must have occurred in a DoD medical center, inpatient hospital, or ambulatory care center. A claim may not be based on health care services provided by DoD health care providers in any other locations, such as in the field, battalion aid stations, ships, planes, deployed settings, or any other place that is not a covered MTF. With respect to covered DoD health care providers, they include members of the uniformed services, DoD civilian employees, and personal services contractors of the Department authorized by DoD to render health care services. A non-personal services contractor or a volunteer working in an MTF is not a DoD health care provider for purposes of a payable claim. Claims filed in court against non-personal services contractors and volunteers would be analyzed under the Feres doctrine. The DoD health care provider must be acting within the scope of employment, meaning that the provider was acting in furtherance of his or her duties in the MTF. For personal services contractors, “scope of employment” means the contractor was acting within the scope of his or her duties.

Section 45.6 establishes rules for determining if a provider's act or omission was negligent or wrongful. In general, a claimant needs to prove by a preponderance of evidence that a DoD health care provider in a covered MTF acting within the scope of employment had a professional duty to the patient involved and by act or omission breached that duty in a manner that proximately caused the harm. The provider must exercise the same degree of skill, care, and knowledge ordinarily expected of providers in the same field or specialty in a comparable clinical setting. The standard of care is determined based on generally recognized national standards, not on the standards of a particular region, State or locality. A claimant may present evidence to support what the claimant believes is the standard of care. A claimant may present evidence to support the failure of the DoD health care provider to meet the standard of care based on the medical records of the patient and other documentary evidence of the acts or omissions of the health care provider.

In addition to the information submitted by the claimant, DoD may consider all relevant information in DoD records and information systems or otherwise available to DoD, to include information prepared by or on behalf of DoD in connection with adjudication of the claim. DoD will consider medical quality assurance records relevant to the health care provided to the patient. As required by 10 U.S.C. 1102, DoD medical quality assurance records are confidential. While such records may be used by DoD, any information contained in or derived from such records may not be disclosed to the claimant.

Rules on determining whether the alleged malpractice was the proximate cause of the harm suffered by the member are the subject of § 45.7. In general, a claimant must prove by a preponderance of evidence that a negligent or wrongful act or omission by a DoD health care provider was the proximate cause of the harm suffered by the member. DoD is liable for only the portion of harm that is attributable to the medical malpractice of a DoD health care provider per 10 U.S.C. 2733a(c)(1). To the extent other causes contributed to the personal injury or death of the member, whether pre-existing, concurrent, or subsequent, the potential amount of compensation under this regulation will be reduced by that proportion of the alternative cause(s); however, if the claimant's own negligence constituted more than 50% of the fault, the claim is not payable.

Section 45.8 provides rules related to disability ratings and adjudication of these ratings under disability evaluation systems. DoD will use the disability rating established in the DoD Disability Evaluation System under DoD Instruction 1332.18  4 or otherwise established by the Department of Veterans Affairs (VA) to assess the extent of the harm alleged to have been caused by medical malpractice. A VASRD-based disability percentage represents the Government's estimate of the lost earning capacity attributable to an illness or injury incurred during military service.

Calculation of economic damages, which are one component of a potential damages award, is the subject of § 45.9. Elements of economic damages in personal injury claims are past expenses, including medical, hospital and related expenses actually incurred, and future medical expenses. Also covered are lost earnings, loss of earning capacity, and compensation paid to a person for essential household services and activities of daily living that the member can no longer provide for himself or herself.

Non-economic damages are also covered as outlined in § 45.10. Elements of non-economic damages in medical malpractice cases consist of past and future conscious pain and suffering, physical disfigurement, and loss of enjoyment of life. Consistent with the rule of law in a majority of States, total non-economic damages may not exceed a cap amount. Based on the current average cap amount in those States, the total cap amount for all non-economic damages arising from the malpractice is set at $500,000.

Section 45.11 provides that in the calculation of damages there is a deduction for compensation paid or expected to be paid by DoD or VA to the service member for the same harm that is caused by the medical malpractice. Tort damage awards against the U.S. are generally offset by other compensation paid by the U.S. for the same harm that is the subject of a malpractice claim so that the U.S. does not pay more than once for the injury.

This section lists categories of compensation that are included as offsets to potential malpractice damages awards when that compensation relates to harm caused by the act or omission involved, including: Pay and allowances while a member remains on active duty or in an active status; disability retired pay; disability severance pay; incapacitation pay; involuntary and voluntary separation pays and incentives; death gratuity; housing allowance continuation; Survivor Benefit Plan; VA disability compensation; VA Dependency and Indemnity Compensation; Special Survivor Indemnity Allowance; Special Compensation for Assistance with Activities of Daily Living; Program of Comprehensive Assistance for Family Caregivers; and the Fry Scholarship. Also included is an offset of the value of TRICARE coverage, including TRICARE-for-Life for a disability retiree, family, or survivors. Future TRICARE coverage is a major part of the Government's compensation package for a disability retiree or survivor. Potential malpractice awards are not offset by the present value of some payments and benefits for which Service members have made payments or contributions, which would be difficult to quantify, including Servicemembers Group Life Insurance; Traumatic Servicemembers Group Life Insurance; Social Security disability benefits; Social Security survivor benefits; prior Government contributions to a Thrift Savings Plan that are inherited by a beneficiary; and commissary, exchange, and morale, welfare, and recreation facility access; the value of legal assistance and other services provided by DoD. Medical care provided while in active service or in an active status prior to death, retirement, or separation is also not offset.

To illustrate what benefits are available under the existing comprehensive compensation system, both those that are offset and those that are not, and the value of these benefits, tables below in the section titled, “Impact to the Government,” provide notional examples of benefits available under the existing comprehensive compensation system during Fiscal Year 2020.

DoD will estimate the present value of future payments and benefits. Many of such payments and benefits in cases of death and disability are lifetime benefits for members or survivors. With respect to future compensation and benefits that would change if a surviving spouse remarries, DoD will not assume remarriage.

Section 45.12 provides rules for provision to claimants of an Initial Determination regarding the claim. The Initial Determination may take the form of a grant of a claim and an offer of settlement or denial of the claim.

If a claim does not contain the information required by § 45.4(b), DoD will issue an Initial Determination stating that DoD will issue a Final Determination denying the claim unless the deficiency is cured. DoD will provide the claimant 30 calendar days following receipt of the Initial Determination to cure the deficiency, unless an extension of time is granted for good cause. If the claimant does not timely cure the deficiency, DoD will issue a Final Determination denying the claim for failure to cure the deficiency. A Final Determination issued under § 45.12(a) may not be appealed.

If a claim does not, based upon the information provided, state a claim cognizable under 10 U.S.C. 2733a or this interim final rule, DoD will issue an Initial Determination denying the claim. An Initial Determination on these grounds may be appealed under the procedures in § 45.13.

If the claimant initially does not submit an expert report in support of his or her claim, where applicable, and DoD intends to deny the claim, DoD will issue an Initial Determination stating, without more, that DoD will issue a Final Determination denying the claim in the absence of an expert report. DoD will provide the claimant 90 calendar days following receipt of the Initial Determination to submit an expert report, unless an extension of time is granted for good cause. If the claimant does not timely submit an expert report, DoD will issue a Final Determination denying the claim, which may not be appealed, and will provide a brief explanation of the basis for the denial of the claim to the extent practicable.

Except as provided above, DoD will endeavor to provide a brief explanation of the basis for an Initial Determination to the extent practicable. However, as required by 10 U.S.C. 1102, medical quality assurance records may not be disclosed to anyone outside DoD, to include the claimant, other Federal agencies, or the judiciary. This prohibition applies to any information derived from a peer review obtained under DoD's Clinical Quality Management (CQM) Program to assess the quality of medical care provided by a DoD health care provider. DoD has a very extensive CQM Program (under DoD Instruction 6025.13  5 and Defense Health Agency Procedural Manual 6025.13)  6 to assess the quality of health care services, identify areas where improvements can be made, and ensure appropriate accountability. The CQM Program includes a peer review of every potentially compensable event. DoD considers records of these reviews in determining whether there was a negligent or wrongful act or omission by a DoD health care provider in relation to the claim but may not lawfully disclose this information. Therefore, while DoD will attempt to explain the basis for the Initial Determination, DoD cannot disclose any information covered by 10 U.S.C. 1102.

The Initial Determination will include information on the claimant's right to file an administrative appeal. The claimant may request reconsideration of the damages contained in an Initial Determination if, within the time otherwise allowed to file an administrative appeal, the claimant identifies an alleged clear error in the damages calculation. DoD will review the alleged clear error and will issue an Initial Determination on Reconsideration either granting or denying reconsideration of the Initial Determination and adjusting the damages calculation, if appropriate. The Initial Determination on Reconsideration will include information on the claimant's right to appeal.

The issue of appeals from Initial Determinations is addressed in § 45.13. In any case, other than a claim that is denied for failure to provide an expert report, in which the claimant disagrees with the Initial Determination, the claimant has a right to file an administrative appeal. A claimant should explain why he or she disagrees with the Initial Determination but may not submit additional information in support of the claim unless requested to do so by DoD.

An appeal must be filed within 60 calendar days of the date of the Initial Determination, unless an extension of time is granted for good cause. If no timely appeal is filed, DoD will issue a Final Determination.

Under the new rule, appeals will be decided by an Appeals Board administratively supported by the Defense Health Agency. The Appeals Board will consist of not fewer than three and no more than five DoD officials designated by the Defense Health Agency from the Defense Health Agency and/or the Military Departments who are experienced in medical malpractice claims adjudication. Appeals Board members must not have had any previous role in the claims adjudication under appeal. Appeals are decided on the written record and decisions will be approved by a majority of the members. There is no adversarial proceeding and no hearing. The Appeals Board may obtain or request information or assessments from appropriate sources, including from the claimant, to assist in deciding appeals. The claimant has the burden of proof by a preponderance of evidence that the claim is substantiated in the written record considered as a whole. Every claimant will be provided a written Final Determination on the claimant's appeal, which may adopt by reference the Initial Determination or revise the Initial Determination, as appropriate. If the Final Determination revises the Initial Determination, DoD will provide a brief explanation of the basis for the revisions to the extent practicable. Appeals Board decisions are final and conclusive. The Appeals Board may reverse the Initial Determination to grant or deny a claim and may adjust the settlement amount contained in the Initial Determination either upwards or downwards, as appropriate.

Section 45.14 states that, as provided in the statute, the adjudication and settlement of a claim is final and conclusive. Unlike the FTCA, the Military Claims Act, 10 U.S.C. chapter 163, which provides the authority for this regulation, does not give Federal courts jurisdiction over claims. Thus, the administrative adjudication process for all claims under the Military Claims Act, including medical malpractice claims under this part, is final and not subject to judicial review in any court. No claim may be paid unless the amount tendered is accepted by the claimant in full satisfaction. Settlement agreements will incorporate the statutory requirements regarding limitations on attorneys' fees, as well as a bar to any other claim against the United States or DoD health care providers arising from the same set of facts.

Finally, § 45.15 sets out other claims procedures and administrative matters.

If the claimant is represented by counsel, all communications will be through the claimant's counsel.

Laws applicable to false claims and false statements to the Government are applicable to claims and information relating to claims under this new authority.

This section also notes the requirement of 10 U.S.C. 2733a(e) that not later than 30 calendar days after a determination of medical malpractice or the payment of a claim, a report is sent to the Director, Defense Health Agency to be used for all necessary and appropriate purposes, including medical quality assurance. This means that DoD Final Determinations made under this new claims system—even if, due to offsets for compensation under the comprehensive system discussed above, no money is paid—will be reviewed under the Military Health System Clinical Quality Management Program, in accordance with DoD Instruction 6025.13  7 and Defense Health Agency Procedural Manual 6025.13. 8 That program features comprehensive activities to monitor the quality of health care in MTFs, identify opportunities for improvement, and maintain appropriate accountability for health care providers. That system includes procedures to grant and take specified adverse actions on clinical privileges and report certain events to the National Practitioner Data Bank (NPDB) maintained by the Department of Health and Human Services as a data repository available to health care systems throughout the United States. 9 NPDB reporting includes cases where DoD compensation is paid through the Disability Evaluation System or survivor benefits attributable to medical malpractice by a DoD health care provider and now, under this part, paid malpractice claims. Reports to the NPDB are accompanied by reports to State licensing boards and certifying agencies of the health care providers involved. Therefore, in addition to providing an additional potential compensation remedy, 10 U.S.C. 2733a reinforces DoD Clinical Quality Management Program procedures for appropriate accountability of DoD health care providers.

a. Who may File a Claim. Service members or former/retired Service members (“you”) may file a claim. Your authorized representative may file a claim on your behalf if you are deceased or incapacitated. DoD will acknowledge receipt of your claim via mail and/or email using the contact information you provided in your claim.

b. What to Include with a Claim. Your claim must provide, in writing, the reason why you believe a DoD health care provider committed malpractice and the amount of money you believe you should receive. No specific form or format is required.

If you have an attorney, you need to include in your claim filing an affidavit confirming that you have authorized the attorney to represent you.

You usually will need to provide an affidavit with your claim filing that you consulted with a health care professional who opined that a DoD health care provider breached the medical standard of care and caused harm to you. You do not need to provide this affidavit if the malpractice is obvious, such as an operation on the wrong body part.

Because all claims differ, nothing else is required at the time you file your claim. DoD may find during the review of your claim that additional information is needed. DoD will ask you for this information at that time. You may, but are not required to, submit any other information that you believe supports your claim at the time you file it.

c. Where to File a Claim. You should submit the claim to your Military Department.

Army: Claims should be presented to the nearest Office of the Staff Judge Advocate, to the Center Judge Advocate of the Medical Center in question, or with US Army Claims Service, 4411 Llewellyn Avenue, Fort Meade, Maryland 20755, ATTN: Tort Claims Division.

Navy: Information, directions and forms for filing a claim may be found at https://www.jag.navy.mil/. Claims should be mailed to the Office of the Judge Advocate General, Tort Claims Unit, 9620 Maryland Avenue, Suite 205, Norfolk, Virginia 23511-2949.

Air Force: Claims should be presented either at the Office of the Staff Judge Advocate at the nearest Air Force Base, or sent by mail to AFLOA/JACC, 1500 W Perimeter Road, Suite 1700, Joint Base Andrews, MD 20762. POC: Medical Law Branch, AFLOA/JACC 240-612-4620 or DSN 612-4620.

d. Time for Filing a Claim. Generally, you must file your claim by the later of (1) two years from the date of the injury or death; or (2) the date you knew, or with the exercise of reasonable diligence should have known, of the injury or death and that the possible cause of the injury or death was malpractice. A special rule existed in 2020 that allowed claims from 2017 to be filed in 2020, but that rule has expired.

e. Initial Determination on Your Claim. Once you have filed your claim, DoD will locate medical records held by DoD and VA and review your claim to determine whether malpractice occurred.

DoD may ask you for additional information about your medical care as part of this review. If DoD concludes that medical malpractice occurred, DoD may ask you for information about the harm to you as a result of malpractice to determine the amount of money you will be offered as a settlement. This amount of money is also called “damages.”

If DoD intends to deny your claim and you have not yet submitted an expert report in support of your claim, DoD will provide you with an opportunity to submit one before denying your claim. You usually will have 90 days to provide an expert report.

Once DoD has completed its review of your claim, you will be issued an Initial Determination. This Initial Determination will either state that your claim is granted and offer you an amount of money in settlement of your claim or will state that your claim is denied.

A settlement does not entitle you to any new benefits from DoD or the VA. A settlement will not cause you to lose any DoD or VA benefits, whether at the time of the settlement or in the future.

f. Reconsideration. If DoD has made a clear error in the calculation of the amount of money you are offered to settle your claim, you may request reconsideration. A clear error is an obvious or typographical error, such as a reference to $10 when it is clear $100 was intended. The reconsideration process was intended to fix minor issues without requiring you to file an appeal. You must file your request for reconsideration within 60 days of receipt of an Initial Determination. DoD will assume that you received the Initial Determination within five calendar days after the date the Initial Determination was mailed or emailed.

g. Appeals. If you disagree with an Initial Determination, you generally may file an administrative appeal. Your appeal should explain why you disagree with the Initial Determination. You must file your appeal within 60 days of receipt of an Initial Determination. DoD will assume that you received the Initial Determination within five calendar days after the date the Initial Determination was mailed or emailed.

You may not appeal a Final Determination issued because of deficiencies in your claim filing such as a missing affidavit or because DoD has determined you need to submit an expert report. You will have been given an opportunity to fix deficiencies or submit an expert report before the Final Determination is issued.

Your appeal will be decided by an Appeals Board of three to five DoD officials who have experience with medical malpractice claims and have no prior connection to your claim.

You may not submit additional information in support of your claim on appeal. DoD will ask you for additional information if it is needed.

The Appeals Board will issue a Final Determination on your claim. The Appeals Board may reverse the Initial Determination to grant or deny a claim. The Appeals Board may adjust the damages amount in the Initial Determination either upwards or downwards. A Final Determination is not subject to review in any court.

If you do not file an appeal, DoD will issue a Final Determination.

h. Settlement Agreement. You will be paid the damages amount offered in a Final Determination after you sign a settlement agreement provided to you by DoD.

i. Claims Process is Final. This claims process is the only process for Service members to bring medical malpractice claims related to their service. You may not challenge a Final Determination or the amount of any damages calculation contained in a Final Determination in court.

j. Attorneys. You may have an attorney assist you with your claim. If you have an attorney, DoD will communicate with your attorney instead of with you regarding your claim. Your attorney may not charge you attorney fees of more than 20 percent of the amount paid to you under this process.

Executive Orders 13556 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribution of impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Accordingly, this interim final rule has been reviewed by the Office of Management and Budget under the requirements of these Executive Orders. It has been determined to be a significant regulatory action, although not economically significant. Accordingly, this regulatory impact analysis presents the costs and benefits of the rulemaking.

This interim final rule implements requirements of the National Defense Authorization Act (NDAA) for Fiscal Year 2020 permitting members of the uniformed services or their authorized representatives to file claims for personal injury or death caused by a Department of Defense (DoD) health care providers in certain military medical treatment facilities. Because Federal courts do not have jurisdiction to consider these claims, DoD is issuing this rule to provide uniform standards and procedures for considering and processing these actions administratively.

At the end of Fiscal Year 2019, there were approximately 1,400,000 Active Duty, 390,000 Reserve and National Guard, and 250,000 other uniformed Service members eligible for DoD healthcare benefits. 11 or around 19% of the total eligible beneficiary population. These uniformed Service members will be able to file claims with DoD alleging malpractice. There were approximately 8,140,000 other eligible beneficiaries to include retirees, retiree family members, and family members of Active Duty Service members. These other eligible beneficiaries currently may file claims with DoD alleging malpractice.

As a result of the rule, individuals who believe they were subjected to malpractice may consider filing a claim. In determining whether to file a claim, individuals may consult with medical professionals and attorneys and we assume that most claimants will have attorneys. We estimate that this will require 5 hours for individuals to locate an attorney, view and download pertinent medical records, and discuss the case with an attorney (or a medical professional for claimants without attorneys). At a mean hourly rate of $27.07 based on data from the Bureau of Labor Statistics (BLS), 12 the cost of this activity is $135.

The cost for a consultation with a medical professional, whether directly by the claimant or through an attorney varies by the type of professional. Based upon information available from consultations and reports obtained in malpractice claims against the government and estimates of time spent by DoD in similar activity when handling those claims, we estimate a typical review of records would take about 3 to 5 hours (and include reviewing journals in support of the professional's opinion), with an additional 2 to 4 hours to write a report (if such a report is submitted with a claim, which is not required). The Department will assume for purposes of this analysis that the same type of professional would be consulted as the professional against whom the malpractice is alleged ( e.g., a doctor providing an opinion about the standard of care if a doctor is alleged to have committed malpractice). Most medical malpractice claims are brought on a contingent fee basis  13 so there is no initial cost to the claimant. Based on similar claim analysis activity in handing malpractice claims, we estimate an attorney might spend 17-26 hours analyzing a claim before filing. We use BLS data  14 to value time spent by these individuals, and we adjust mean wage rates upward by 100 percent to account for overhead and benefits. This implies hourly rates of $206.12 for physicians, $76.94 for nurses, and $111.62 for physician assistants, and $143.18 for lawyers. As a result, the estimated cost for medical review would be approximately $231 to $1,855, and the estimated cost for attorney time would be approximately $2,434 to $3,723.

The cost to a Service member or an authorized representative for the filing itself will vary based on the amount of information the Service member includes with his or her filing. A basic letter stating the factual basis for the claim and including a demand for a specified dollar amount would cost the claimant postage ($0.55 per claim, or $27.50 for an estimated 50 claims) and possibly minimal photocopying. Claimants will likely choose to use certified mail, requiring additional postage of $3.35 per claim (or $167.50 for an estimated 50 claims per year). Two affidavits are likely required, one containing a statement from the claimant indicating he or she consulted with a health care professional and obtained an opinion from that health care professional that the medical standard of care was breached and one affirming that a representative is authorized to represent the claimant. Those entitled to legal assistance under 10 U.S.C. 1044 (such as Active Duty Service members, retired Service members, and survivors) would be able to obtain notarial services at no cost. Most likely, those filing claims would fall into one of these categories and so could obtain notarial services at no cost. However, this rule results in societal costs associated with these notarial services. We estimate that notarial services will require the equivalent of 20 minutes of paralegal time. Using BLS data, 15 and adjusting upward by 100 percent to account for overhead and benefits to arrive at an hourly rate of $54.44 implies $18.14 in costs per claim. Finally, although not required, a claimant could submit any other information he or she chooses, which would result in a variable cost. DoD assumes that pertinent medical records outside its system would be fairly recent could be accessed via web portals, resulting in a cost to the claimant of only the cost of printing and postage. If the claimant elects to submit receipts, the claimant would need to pay the cost of printing or photocopying, as well as postage. DoD requests public comment on costs faced by claimants.

In 2020, DoD received 149 malpractice claims filed by Active Duty beneficiaries under the process in this Part and 173 malpractice claims filed by other beneficiaries under either the FTCA or MCA. Section 2733a(b)(4) requires claims to be presented to DoD within two years after the claim accrues, although section 731 of the Fiscal Year 2020 NDAA allowed claims accruing in 2017 to be filed in 2020. In future years, when three years' worth of claim filings are not compressed in the same year and the requirement for consultation with a health care professional in certain circumstances in advance of filing takes effect, DoD would anticipate around 50 claims per year. 16 Based on information related to malpractice claims not filed after consideration, we estimate that 90% of the claims considered by individuals and their attorneys will not be filed. 17 As a result, we estimate that 500 claims will be considered, and that 50 claims will be filed by Service members per year.

The categories of costs for considered claims are described above. In sum, we estimate costs of $2,822 to $5,735 per claim. This implies total costs of $1,401,102 to $2,857,602 each year for considered claims.

Next, we estimate costs associated with processing claims. Many steps in processing a claim will be the same for DoD whether or not the claim has merit. Based on activity in non-medical malpractice claims, we anticipate 3 hours of paralegal time for activities such as logging in claims, sending acknowledgment letters, mailing certified letters containing the outcome of a claim, drafting vouchers for payment, and filing/data entry. Assuming a GS-11 paralegal at the step 5 salary rate of $81,634 based on the 2020 Washington, DC, locality pay table (an hourly rate of $39.12) and the total value of labor including wages, benefits, and overhead being equal to 200 percent of the wage rate, the cost for this paralegal activity per claim is $234.72. We estimate that the approximately same amount of time that a claimant's attorney would spend analyzing a claim (17-26 hours of attorney time) would be spent by DoD attorneys to analyze the claim, conduct legal research, consult with experts, and draft a determination. Assuming a GS 13/14 at an average GS 13/14 salary of $127,788 based on the 2020 Washington, DC, locality pay table (an hourly rate of $61.23) and the total value of labor including wages, benefits, and overhead being equal to 200 percent of the wage rate, this attorney activity would cost $2,081 to $3,184 per claim.

Of these 50 claims, for purposes of this analysis, based on historical malpractice claims data involving non-Service members, we assume 27% of claimants will have claims for which DoD determines malpractice occurred, or 14 claims. For these claims, based on time spent by DoD on the damages portion of current malpractice claims against the government, DoD estimates claimants' attorneys and DoD attorneys will spend 6-8 hours respectively on matters pertaining to damages. This results in a cost per claim of $859 to $1,145 for claimants' attorneys and $748 to $997 for DoD attorneys.

Of submitted claims, DoD estimates that claimants will appeal all claims that do not result in a payment of damages, resulting in 36 appeals annually. Note that this is described in more detail in the transfers section. We estimate it will take around the same amount of time spent on initial determination activities for appeal activities, or 17-26 hours per claim for both claimants' attorneys (at a cost of $2,434 to $3,723) and DoD attorneys (at a cost of $2,081 to $3,184) and 3 hours per claim by DoD paralegals (at a cost of $235). This implies total annual costs of $171,000 to $257,112 for appeals.

As a result, we estimate total annual processing costs for these 50 claims to be $309,284 to $458,036.

In summary, total estimated annual costs of this interim final rule are $1,710,386 to $3,315,638.

Regardless of the number of claims in which malpractice occurred, the only claims in which damages will be awarded are those which exceed the offsets for any payment to be made. 18 Subject to some exceptions such as insurance benefits for which Service members have paid premiums, benefits received through the DoD and VA comprehensive compensation system applicable to all injuries and deaths will be applied as an offset in calculating malpractice damages to prevent a double recovery. Because of these offsets, regardless of the number of claims filed, the only claims pertinent for purposes of payments made by the government are those that would exceed applicable offsets.

We estimate 7 claims per year will result in additional payments made to individuals, which is the number of claims anticipated to involve additional payments after offsets are applied. To help explain how we reached this estimate, we prepared the following tables as notional examples to illustrate what benefits are available under the existing comprehensive compensation system, both those that are offset and those that are not, and the value of these benefits in Fiscal Year 2020. In addition to the benefits in the above tables, disability retirees and survivors receive healthcare for life through TRICARE. In Fiscal Year 2020, based on information from the Office of the Assistant Secretary of Defense for Health Affairs, the average value of the TRICARE benefit for an under-65 retiree family of three was $14,600 per year. Benefits provided through the Social Security Administration, such as Social Security disability benefits and Social Security survivor benefits, are also in addition to the above tables. Calculations in the tables were provided by the Office of Military Compensation Policy, within the Office of the Under Secretary of Defense for Personnel and Readiness.

We estimate that 7 claims per year would have damages that would exceed the offset amount of $1.1 million. We used the notional example in Table 2(d), the lowest of the estimates in the notional examples, as the basis for the $1.1 million offset. For the Table 2(b) example of the married enlisted member with two children in the grade of E-6 who is medically retired with a 50 percent disability rating, the current value of her lifetime compensation would be $1,142,430. In addition to the $1,142,430 paid, benefits include medical care for the retired Service member and her family. All these amounts would offset any damages award.

We then estimated the number of claims likely to exceed $1.1 million using claims data from non-Service member claims under the FTCA or MCA. In 2019 and 2020, the Military Departments had 14 claims from retirees or dependents under the FTCA or MCA with damages that exceeded $1.1 million, whether through settlement or an adverse court judgment. The average amount payable for these 14 claims over 2 years was approximately $2.7 million. In one year, therefore, we estimate that 7 claims by Service members would go forward that exceed the $1.1 million threshold for payable damages. Assuming 7 claims per year going forward exceeding $1.1 million, and average damages of $1.6 million (the difference between the average amount of $2.7 million paid per claim in the non-Active Duty claims and the estimated $1.1 million in offsets per Service member claim), the additional payments made by the U.S. because of section 731are estimated to be $11.2 million per year. Of this, the first $100,000 for each claim would be paid by DoD and the remainder paid by the Treasury Department, for an estimated total of $0.7 million to be paid by DoD based on 7 claims and $1.05 million to be paid by the Treasury Department.

As the tables above illustrate, Government paid benefits would not be a factor, as this claims process would have no impact on what the benefits Service member is already receiving, has received, or is entitled to receive in the future based on his or her injuries.

Total transfers from the U.S. government to claimants are estimated to be $11.2 million per year.

Absent the claims process established by section 731, Service members would not have the opportunity for potential monetary payments above the amounts they currently receive through current DoD and VA benefits. In addition to providing an additional potential compensation remedy, the claims process reinforces DoD Clinical Quality Management Program procedures for appropriate accountability of DoD health care providers. NPDB reporting includes cases where DoD compensation is paid through the Disability Evaluation System or survivor benefits attributable to medical malpractice by a DoD health care provider and now, under this part, paid malpractice claims. Reports to the NPDB are accompanied by reports to State licensing boards and certifying agencies of the health care providers involved. The claims process further provides an opportunity for DoD to identify opportunities for improvement in in the delivery of healthcare, potentially preventing harm to others based upon measures taken by DoD as a result of a claim even if the claim does not result in the payment of monetary damages. Finally, this process is only applicable in certain cases of medical malpractice.

This rule is being issued as an interim final rule based on explicit statutory authorization and clear Congressional intent. Specifically, 10 U.S.C. 2733a(f)(3) provides that in order “to implement expeditiously” the new law DoD may issue the regulations the statute requires “by prescribing an interim final rule.” The law also requires DoD to consider public comments and issue a final rule within one year after issuing an interim final rule. The new law became effective January 1, 2020, and Congress desired expeditious adjudication of claims arising from alleged instances of medical malpractice dating back to 2017. For this reason, there is good cause for finding, consistent with 5 U.S.C. 553(b)(B), that prior notice and public comment are impracticable, unnecessary, or contrary to the public interest.

This interim final rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it is not a notice of proposed rulemaking under 5 U.S.C. 601(2).

This interim final rule does not impose requirements on small entities.

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

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532) requires agencies to assess anticipated costs and benefits before issuing any rule whose mandates require non-Federal spending in any one year of $100 million in 1995 dollars, updated annually for inflation. This interim final rule will not mandate any requirements for State, local, or tribal governments, nor affect private sector costs.

It has been determined that 32 CFR part 45 does not impose new reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This interim final rule will not have a substantial effect on State and local governments.

The Coast Guard will enforce the Safety Zones; Annual Events in the Captain of the Port Buffalo Zone listed in 33 CFR 165.939, Table 165.939, entry (a)(1), in Vermillion, OH, on all U.S. waters within a 420 foot radius of the fireworks launch site located at position 41°25′45″ N and 082°21′54″ W, (NAD 83) for the Festival of the Fish.

Pursuant to 33 CFR 165.23, entry into, transiting, or anchoring within the safety zone during an enforcement period is prohibited unless authorized by the Captain of the Port Buffalo or a designated representative. Those seeking permission to enter the safety zone may request permission from the Captain of Port Buffalo via channel 16, VHF-FM. Vessels and persons granted permission to enter the safety zone shall obey the directions of the Captain of the Port Buffalo or a designated representative. While within a safety zone, all vessels shall operate at the minimum speed necessary to maintain a safe course.

This notification of enforcement is issued under authority of 33 CFR 165.939 and 5 U.S.C. 552(a). In addition to this notification of enforcement in the Federal Register , the Coast Guard will provide the maritime community with advance notification of this enforcement period via Broadcast Notice to Mariners or Local Notice to Mariners. If the Captain of the Port Buffalo determines that the safety zone need not be enforced for the full duration stated in this notification she may use a Broadcast Notice to Mariners to grant general permission to enter the respective safety zone.

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking with respect to this rule because it is impracticable. The Coast Guard received notification and details of the transit on May 15, 2021, and therefore lacks sufficient time to provide a reasonable comment period and respond to comments.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . It is contrary to the public interest to delay the effective date of this rule because the safety zone must be effective by June 11, 2021 to protect vessels and persons during the upcoming transit.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port Los Angeles-Long Beach has determined that potential hazards associated with the transit of the M/V ZHEN HUA 26 between June 11, 2021 through June 21, 2021, will be a safety concern for anyone within a 500-foot radius of the vessel during its transit to Everport Container Terminal, Berth 227, while the vessel is within the Port of Los Angeles-Long Beach and the waters inside the Federal breakwaters bounding San Pedro Bay or on the waters within three nautical miles seaward of the Federal breakwaters, respectively. The effect of the safety zone is to restrict navigation in the vicinity of the M/V ZHEN HUA 26. For this reason, a safety zone is needed to protect personnel, vessels, and the marine environment in the navigable waters around the M/V ZHEN HUA 26 during its transit to Berth 227 at the Everport Container Terminal in San Pedro, CA.

This rule establishes a temporary safety zone from 12:01 a.m. on June 11, 2021 through 11:59 p.m. on June 21, 2021 during the transit of the M/V ZEN HUA 26. While the M/V ZHEN HUA 26 is within the Port of Los Angeles-Long Beach and the waters inside the Federal breakwaters bounding San Pedro Bay or on the waters within three nautical miles seaward of the Federal breakwaters, respectively, the safety zone will encompass the navigable waters around and under the vessel, form surface to bottom, within a circle formed by connecting all points 500 feet out from the vessel. The safety zone is needed to protect personnel, mariners, and vessels from hazards associated with ship-to shore gantry crane arms which will extend more than 200 feet out from the transiting vessel.

Vessel traffic will be able to safely transit around the M/V ZHEN HUA 26 and the safety zone. Moreover, the Coast Guard will issue Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rule allows vessels to seek permission to enter the zone.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the limited duration and narrowly tailored geographic area of the safety zone. This safety zone impacts a 500-foot-radius area of the Port of Los Angeles-Long Beach and the waters inside the Federal breakwaters bounding San Pedro Bay or on the waters within three nautical miles seaward of the Federal breakwaters, respectively for a limited duration. While the safety zone encompasses a eleven-day period to account for uncertain transit delays of the M/V ZHEN HUA 26, the safety zone will only be enforced for the duration of the vessel's inbound transit, which is expected to last less than 24 hours, and that period will be announced via Broadcast Notice to Mariners. Vessels desiring to transit through the safety zone may do so upon express permission from the COTP or the COTP's designated representative.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator. Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under E.O. 13132, Federalism, if it has 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. We have analyzed this rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f) and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves establishment of a temporary safety zone, limited in duration and size. This rule is categorically excluded from further review under paragraph L60(a) of Section L of the Department of Homeland Security Instruction Manual 023-01-001-01 (series). A Record of Environmental Consideration (REC) supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

The Coast Guard will enforce the safety zones listed in 33 CFR 165.941, Table 1, Safety Zones; Annual Events in the Captain of the Port Detroit Zone, at the following dates and times for the following events:

(1) Bay-Rama Fish Fly Festival Fireworks, New Baltimore, MI. The safety zone listed in § 165.941, Table 1(3), will be enforced from 10 p.m. to 10:30 p.m. on June 24, 2021. In the case of inclement weather on June 24, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on June 25, 2021.

(2) Algonac Fireworks Festival, Algonac, MI. The safety zone listed in § 165.941, Table 1(7), will be enforced from 10 p.m. to 10:30 p.m. on July 3, 2021. In the case of inclement weather on July 3, 2021, this safety zone will be enforced from 10 p.m. to 13:30 p.m. on July 2, 2021.

(3) Bay City Fireworks Festival, Bay City, MI. The safety zone listed in § 165.941, Table 1(8), will be enforced from 9 p.m. to 11 p.m. on July 1, July 2, and July 3, 2021. In the case of inclement weather on any scheduled day, this safety zone will be enforced from 9 p.m. to 11 p.m. on July 4, 2021.

(4) Caseville Fireworks, Caseville, MI. The safety zone listed in § 165.941, Table 1(9), will be enforced from 10 p.m. to 11 p.m. on July 3, 2021. In the case of inclement weather on July 3, 2021, this safety zone will be enforced from 10 p.m. to 11 p.m. on July 5, 2021.

(5) Ecorse Fireworks, Ecorse, MI. The safety zone listed in the § 165.941, Table 1(10), will be enforced from 9:30 p.m. to 10:30 p.m. on July 10, 2021. In the case of inclement weather on July 10, 2021, this safety zone will be enforced from 9:30 p.m. to 10:30 p.m. on July 11, 2021.

(6) Grosse Ile Fireworks, Grosse Ile, MI. The safety zone listed in the § 165.941 Table 1(11), will be enforced from 10 p.m. to 10:30 p.m. on July 3, 2021. In the case of inclement weather on July 3, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 4, 2021.

(7) Grosse Pointe Yacht Fireworks, Grosse Pointe Shores, MI. The safety zone listed in § 165.941, Table 1(13), will be enforced from 10 p.m. to 10:30 p.m. on July 4, 2021. In the case of inclement weather on July 4, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 5, 2021.

(8) Harbor Beach Fireworks, Harbor Beach, MI. The safety zone listed in § 165.941, Table 1(14), will be enforced from 10 p.m. to 10:30 p.m. on July 10, 2021. In the case of inclement weather on July 10, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 11, 2021.

(9) Belle Maer Harbor Fireworks, Harrisville, MI. The safety zone listed in § 165.941, Table 1(15), will be enforced from 10 p.m. to 10:30 p.m. on July 4, 2021. In the case of inclement weather on July 4, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 5, 2021.

(10) Harrisville Fireworks, Harrisville, MI. The safety zone listed in § 165.941, Table 1(16), will be enforced from 10 p.m. to 10:30 p.m. on July 3, 2021.

(11) Lexington Fireworks, Lexington, MI. The safety zone listed in § 165.941, Table 1(17), will be enforced from 10 p.m. to 10:30 p.m. on July 2, 2021. In the case of inclement weather on July 2, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 3, 2021.

(12) Oscoda Township Fireworks, Oscoda, MI. The safety zone listed in § 165.941, Table 1(18), will be enforced from 10 p.m. to 10:30 p.m. on July 4, 2021. In the case of inclement weather on July 4, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 5, 2021.

(13) Port Austin Fireworks, Port Austin, MI. The safety zone listed in § 165.941, Table 1(19), will be enforced from 10 p.m. to 10:30 p.m. on July 4, 2021. In the case of inclement weather on July 4, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 5, 2021.

(14) Port Sanilac Fireworks, Port Sanilac, MI. The safety zone listed in § 165.941, Table 1(20), will be enforced from 10 p.m. to 10:30 p.m. on July 3, 2021. In the case of inclement weather on July 3, 2021, this safety zone will be enforced from 10 p.m. to 10:30 p.m. on July 4, 2021.

(15) St. Clair Fireworks, St. Clair, MI. The safety zone listed in § 165.941, Table 1(21), will be enforced from 10 p.m. to 10:45 p.m. on July 4, 2021. In the case of inclement weather on July 4, 2021, this safety zone will be enforced from 10 p.m. to 10:45 p.m. on July 5, 2021.

(16) St. Clair Shores Fireworks, St. Clair Shores, MI. The safety zone listed in § 165.941, Table 1(22), will be enforced from 9:30 p.m. to 10:15 p.m. on June 25, 2021. In the case of inclement weather on June 25, 2021, this safety zone will be enforced from 9:30 p.m. to 10:15 p.m. on June 26, 2021.

(17) Tawas Fireworks, Tawas, MI. The safety zone listed in § 165.941, Table 1(23), will be enforced from 10 p.m. to 11 p.m. on July 4, 2021. In the case of inclement weather on July 4, 2021, this safety zone will be enforced from 10 p.m. to 11 p.m. on July 5, 2021.

(18) Port Huron Blue Water Festival Fireworks, Port Huron, MI. The safety zone listed in § 165.941, Table 1(27), will be enforced from 10 p.m. to 11 p.m. on July 22, 2021. In the case of inclement weather on July 22 2021, this safety zone will be enforced from 10 p.m. to 11 p.m. on July 23, 2021.

(19) Marine City Maritime Days Fireworks, Marine City, MI. The safety zone listed in § 165.941, Table 1(33), will be enforced from 10 p.m. to 11 p.m. on August 6, 2021. In the case of inclement weather on August 6, 2021, this safety zone will be enforced from 10 p.m. to 11 p.m. on August 7, 2021.

(20) Washington Township Summerfest Fireworks, Toledo, OH. The safety zone listed in § 165.941, Table 1(35), will be enforced from 9:30 p.m. until 10:30 p.m. on June 26, 2021.

(21) Toledo Country Club 4th of July Fireworks, Toledo, OH. The safety zone listed in § 165.941, Table 1(39), will be enforced from 9:30 p.m. until 10:30 p.m. on July 2, 2021.

(22) Lakeside July 4th Fireworks, Lakeside, OH. The safety zone listed in § 165.941, Table 1(40), will be enforced from 9:15 p.m. until 10:15 p.m. on July 4, 2021. In case of inclement weather on July 4, 2021. This safety zone will be enforced on July 5, 2021.

Under the provisions of 33 CFR 165.23, entry into, transiting, or anchoring within these safety zones during the enforcement period is prohibited unless authorized by the Captain of the Port Detroit or his designated representative. Vessels that wish to transit through the safety zones may request permission from the Captain of the Port Detroit or his designated representative. Requests must be made in advance and approved by the Captain of Port Detroit before transits will be authorized. Approvals will be granted on a case by case basis. The Captain of the Port Detroit may be contacted via U.S. Coast Guard Sector Detroit on channel 16, VHF-FM or by calling (313) 568-9564. The Coast Guard will give notice to the public via Local Notice to Mariners and VHF radio broadcasts that the regulation is in effect.

This document is issued under authority of 33 CFR 165.941, Table 1, and 5 U.S.C. 552(a). If the Captain of the Port Detroit determines that any of these safety zones need not be enforced for the full duration stated in this document, he may suspend such enforcement and notify the public of the suspension via a Broadcast Notice to Mariners.

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impracticable and contrary to the public interest. The Coast Guard received the safety zone request on June 7, 2021. The Coast Guard did not receive the final details of the requested safety zone with sufficient time for a comment period to run before the start of the air show. Delaying this rule to wait for a notice and comment period to run would be impracticable and contrary to the public interest because it would inhibit the Coast Guard's ability to protect the public from the potential hazards associated with the air show.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . For the same reasons as discussed in the preceding paragraph, a 30 day notice period would be impracticable and contrary to the public interest. It is impracticable to publish an NPRM because we must establish this safety zone by 9:45 p.m. on July 23, 2021 to protect the public from the hazards associated with the air show.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Federal Aviation Administration regulates air shows. This action is only for the safety zone. The Captain of the Port Sault Ste. Marie (COTP) has determined that potential hazards associated with the air show ( i.e. noise levels and possible crashing of the aircraft(s)) will be a safety concern for anyone within Lake Charlevoix waters encompassed by a line connecting the following points beginning at 45°19′16″ N, 085°14′22″ W; thence to 45°19′11″ N, 085°13′49″ W; thence to 45°18′39″ N, 085°13′59″ W; thence to 45°18′45″ N, 085°14′33″ W; and back to the beginning point. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone during the air show.

This rule is necessary to ensure the safety of vessels during the aforementioned air show. The temporary safety zone will encompass all U.S. navigable waters of Lake Charlevoix bounded by a line drawn from 45°19′16″ N, 085°14′22″ W; thence to 45°19′11″ N, 085°13′49″ W; thence to 45°18′39″ N, 085°13′59″ W; thence to 45°18′45″ N, 085°14′33″ W; and back to the beginning point of origin. The safety zone will be enforced from 9:45 p.m. to 10 p.m. on July 23, 2021. Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the Captain of the Port, Sault Sainte Marie, or a designated on-scene representative. The Captain of the Port or a designated on-scene representative may be contacted via VHF Channel 16 or telephone at 906-635-3233.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the conclusion that this rule is not a significant regulatory action because we anticipate that will have minimal impact on the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues. The safety zone created by this rule is confined to area encompassing air show area over water and will be enforced only for the duration of the air show. Under certain conditions, moreover, vessels may still transit through the safety zones when permitted by the Captain of the Port.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves establishment of a safety zone lasting less than 15 minutes during the air show activities. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

Because the U.S. Environmental Protection Agency (EPA) received adverse comment, the agency is withdrawing the direct final rule for State of Michigan Underground Injection Control (UIC) Class II Program; Primacy Approval, published on March 19, 2021. EPA stated in that direct final rule that if the agency received adverse comments by April 19, 2021, the direct final rule would not take effect and we would publish a timely withdrawal in the Federal Register . EPA subsequently received adverse comments on that direct final rule. EPA will address those comments in any subsequent final action, which will be based on the parallel proposed rule also published on March 19, 2021. As stated in the direct final rule and the parallel proposed rule, EPA will not institute a second comment period on this action.

This is a summary of the Commission's Report and Order (Order), FCC 21-42, in MB Docket No. 20-299, adopted on April 22, 2021, and released on April 22, 2021. The complete text of this document is available electronically via the search function on the FCC's Electronic Document Management System (EDOCS) web page at https://apps.fcc.gov/edocs_public/ ( https://apps.fcc.gov/edocs_public/ ). To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov (mail to: fcc504@fcc.gov ) or call the FCC's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. Introduction: For over 60 years, the Commission's sponsorship identification rules have required that disclosures be made on-air when a station has been compensated for broadcasting particular material. Reports regarding foreign governmental entities' increased use of leasing agreements to broadcast programming without disclosing the source thereof, however, persuade us that more is required to ensure transparency on the airwaves. By this Order, the Commission seeks to address circumstances in which a foreign governmental entity, pursuant to a lease of airtime, is responsible for programming, in whole or in part, on a U.S. broadcast station. In this Order, the use of the term “foreign government-provided programming” refers to all programming that is provided by an entity or individual that falls into one of the four categories discussed below. In turn, the phrase “provided by” when used in relation to “foreign government programming” covers both the broadcast of programming in exchange for consideration and furnishing of any “political program or any program involving the discussion of a controversial issue” for free as an inducement to broadcast the programming. Although under U.S. law foreign governments and their representatives are restricted from holding a broadcast license directly, there is no limitation on their ability to enter into a contract with the licensee of a station to air programming of its choosing or to lease the entire capacity of a radio or television station. Nor does the Commission prohibit such arrangements going forward. Rather, in such instances, the rules the Commission adopts in this document will require that the programming aired pursuant to such an agreement contain a clear, standardized disclosure statement indicating to the listener or viewer that the material has been sponsored, paid for, or furnished by a foreign governmental entity and clearly indicate the foreign country involved.

2. The foreign sponsorship identification rules the Commission adopts in this Order seek to eliminate any potential ambiguity to the viewer or listener regarding the source of programming provided from foreign governmental entities. Based upon comments received in response to the notice of proposed rulemaking ( NPRM ), 85 FR 74955, Nov. 24, 2020, and as detailed further below, the Commission amends § 73.1212 of the Commission's rules to require a specific disclosure at the time of broadcast if material aired pursuant to the lease of time on the station has been sponsored, paid for, or furnished by a foreign governmental entity that indicates the specific entity and country involved. In so doing, the Commission will increase transparency and ensure that audiences of broadcast stations are aware when a foreign government, or its representatives, are seeking to persuade the American public. Through the public filing requirements associated with disclosures, the Commission will also enable interested parties to monitor the extent of such efforts to persuade the American public.

3. The new rules seek to address the primary means identified in the record by which foreign governmental entities are accessing U.S. airwaves to persuade the American public without adequate disclosure of the true sponsor, namely the lease of time to air programming on a U.S. licensed broadcast station. In focusing its disclosure requirement on such situations, the Commission seeks to address an important issue of public concern while going no further than necessary, thus balancing considerations of the First Amendment with the need for consumers to be sufficiently informed as to the origin of material broadcast on stations licensed on their behalf in the public interest. Further, the Commission's approach incorporates existing provisions of and definitions contained in the Foreign Agents Registration Act (FARA) (22 U.S.C. 611) and the Communications Act of 1934, as amended, so as to minimize the burden on broadcasters as they determine whether the programming is from a foreign governmental entity. In addition, the Commission discusses the steps that broadcasters must take to satisfy the statutory “reasonable diligence” standard in determining whether a foreign governmental entity is the source of programming provided over their stations.

4. In this manner, the Commission refines its rules to further ensure that the public is fully informed on the source of programming consumed. The Commission finds it is critical that the American public be aware when a foreign government has sponsored, paid for, or, in the case of political programs or programs involving the discussion of a controversial issue, furnished the programming for free as an inducement to air the material, particularly given what seems to be an increase in the dissemination of programming in the United States by foreign governments and their representatives.

5. Background: The principle that the public has a right to know the identity of those that solicit their support is a fundamental and long-standing tenet of broadcasting. Congress and the Commission have sought to ensure that the public is informed when airtime has been purchased in an effort to persuade audiences, finding it essential to ensure that audiences can distinguish between paid content and material chosen by the broadcaster itself. Accordingly, beginning with the Radio Act of 1927, broadcast stations have been required to announce the name of any “person, firm, company, or corporation” that has paid “valuable consideration” either “directly or indirectly” to the station at the time of broadcasting any programming for which such consideration has been given. With the creation of the Federal Communications Commission and the adoption of the Communications Act of 1934 (the Act), this disclosure requirement was incorporated almost verbatim into section 317 of the Act. Over the years, various amendments to the rules, decisions by the Commission, and a 1960 amendment to section 317 of the Act have continued to underscore the need for transparency and disclosure to the public about the true identity of a program's sponsor.

6. The Commission last implemented a major change to its sponsorship identification rules in 1963 when it adopted rules implementing Congress's 1960 amendments to the Act. The NPRM contained a thorough history of the background of the Commission's sponsorship identification rules. The sponsorship identification rules largely tracked the provisions of section 317 of the Act and make up the current § 73.1212 of the Commission's rules. As the NPRM noted, however, even with these rules in place there appear to be instances where foreign governments pay for the airing of programming, or provide it to broadcast stations free of charge, and the programming does not contain a clear indication, if any indication at all, to the listener or viewer that a foreign government has paid for or provided the programming's content. Given the passage of nearly 60 years since the sponsorship identification rules were last updated and growing concerns about foreign government-provided programming, the Commission determined last year that there was a further need to review the sponsorship identification rules to ensure that, consistent with its statutory mandate, foreign government program sponsorship over the airwaves is evident to the American public.

7. Significantly, the Commission's current sponsorship identification rules do not require a station to determine or disclose whether the source of its programming is in fact a foreign government, registered foreign agent, or foreign political party (what the Commission refers to as a foreign governmental entity). As the NPRM notes, in many instances a foreign government, foreign agent, or foreign political party providing programming to licensees may not be immediately identifiable as such. In other instances, the linkage between the foreign governmental entity and the entity providing the programming may be deliberately attenuated in an effort to obfuscate the true source of the programming. Although current rules require the disclosure of the sponsor's name, the relationship of that sponsor to a foreign country is not required as part of the current disclosure.

8. Consequently, to ensure that the American public can better assess the programming that is delivered over the airwaves, the Commission found that there is a need to identify instances where foreign governmental entities are involved in the provision of broadcast programming. To that end, the NPRM proposed to adopt specific disclosure requirements for broadcast programming to inform the public when programming has been paid for, or provided by, a foreign governmental entity and to identify the country involved. Specifically, the NPRM proposed that when a foreign governmental entity has paid a radio or television station, directly or indirectly, to air material, or if the programming was provided to the station free of charge by such an entity as an inducement to broadcast the material, the station, at the time of the broadcast, shall include a specified disclosure indicating the name of the foreign governmental entity, as well as the related country.

9. In defining “foreign governmental entity,” the NPRM relied directly on parts of the FARA statute (specifically the definitions of a “government of a foreign country,” “foreign political party,” and “agents of foreign principals”), which covers entities and individuals whose activities the United States Department of Justice (Department of Justice or DOJ) has identified as requiring disclosure because their activities are potentially intended to influence American public opinion, policy, and law. In addition, the NPRM proposed to include “United States-based foreign media outlets,” as defined by the Communications Act. Under the proposal, any programming provided by a “foreign governmental entity” would be considered a “political program” under section 317(a)(2) of the Act, and thus require identification of the sponsor of particular broadcast programing, even if the only inducement to air the programming was the provision of the programming itself. The NPRM further explored the “reasonable diligence” standard that broadcasters must employ pursuant to their statutory (47 U.S.C. 317 (c)) and regulatory (47 CFR 73.1212(b) and (e)) requirements to determine whether its programming was provided by a foreign governmental entity.

10. The NPRM proposed that the disclosure requirements should apply in the context of time brokerage agreements (TBAs) and local marketing agreements (LMAs). Moreover, the NPRM proposed to apply the new rules to entities authorized pursuant to section 325(c) to produce programing in the United States and transmit it to a non-U.S. licensed station in a foreign country for broadcast back into the United States. Also, the NPRM proposed that the disclosure requirements would apply equally to any programming transmitted on a radio or television stations' multicast streams. Finally, in addition to specifying the characteristics of the proposed disclosures on television and radio, the NPRM proposed that stations place a copy of the announcement in their online public inspection file (OPIF).

11. A total of seven commenters filed comments and reply comments in response to the NPRM. The commenters generally support the Commission's goal of identifying foreign sponsorship of programming. Commenters assert, however, that the Commission must address how current regulations are inadequate before adopting new rules, and several commenters suggest ways to narrow the proposed scope of the rules to more directly address the programming that is of most concern, as discussed further below.

12. Discussion: For the reasons discussed below, the Commission adopts the rules proposed in the NPRM with modifications to address more precisely the primary method by which foreign governmental entities appear to be gaining carriage for their programming on U.S.-licensed broadcast stations without disclosing the origin of such programming, namely through leasing agreements with such stations. By narrowly focusing its requirements, the Commission seeks to minimize the burden of compliance on licensees, including those public television and radio stations that carry programming from entities that depend upon tax credits, access to international locations, and historical or archival footage from foreign governmental sources in producing their programming. The Commission further notes that such tailoring is in keeping with the First Amendment by focusing its rules narrowly on the area of potential harm.

13. Specifically, as discussed below, the new rules require foreign sponsorship identification for programming content aired on a station pursuant to a lease of airtime if the direct or indirect provider of the programming qualifies as a “foreign governmental entity.” In the first section below, the Commission analyzes which entities or individuals meet that definition and find that they include governments of foreign countries, foreign political parties, certain agents of foreign principals, and U.S.-based foreign media outlets. Next, the Commission discusses the scope of the foreign sponsorship identification rules, explaining why and how the Commission narrows the scope of the NPRM 's proposed requirements to focus on programming aired on U.S. broadcast stations pursuant to an agreement for the lease of time. The Commission then discusses the scope of the reasonable diligence obligation that broadcast licensees must satisfy to determine if its lessee is a foreign governmental entity such that disclosures are necessary. Next, the Commission discusses the content and frequency requirements for the mandated disclosures that will ensure the identification of foreign government-provided programming is conveyed effectively to the public. As the Commission makes clear in that section, the rules also require quarterly filings of copies of the disclosures, as well as the name of the program to which any disclosures are appended, in stations' OPIF. Then, the Commission concludes that its foreign sponsorship identification rules apply equally to any programming broadcast pursuant to a section 325(c) permit. Finally, the Commission concludes that its foreign sponsorship identification rules satisfy the First Amendment and provide a cost-benefit analysis of those new rules.

14. Entities or Individuals Whose Involvement in the Provision of Programming Triggers a Disclosure. The Commission requires that programming aired on a station pursuant to a lease of airtime have a foreign sponsorship identification if the entity who has directly or indirectly provided the programming qualifies as a foreign governmental entity as defined herein. Specifically, a “foreign governmental entity” is defined as an entity included in one of the following categories:

(1) A “government of a foreign country” as defined by FARA (22 U.S.C. 611(e));

(2) A “foreign political party” as defined by FARA (22 U.S.C. 611(f));

(3) An individual or entity registered as an “agent of a foreign principal,” under section 611(c) of FARA (22 U.S.C. 611(c)), whose “foreign principal” is a “government of a foreign country,” a “foreign political party,” or is directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized by a “government of a foreign country” or by a “foreign political party” as defined by FARA, and that is acting in its capacity as an agent of such “foreign principal;”

(4) An entity meeting the definition of a “U.S.-based foreign media outlet” pursuant to section 722 of the Act that has filed a report with the Commission (47 U.S.C. 624).

15. As discussed in the NPRM, in establishing these categories to define covered foreign governmental entities that will trigger the disclosure requirement, the Commission relies on existing definitions, statutes, or determinations by the U.S. Government as to when an entity or individual is a foreign government, a foreign political party, or acting in the United States as an agent on behalf of a foreign government or foreign political party. Relying on these sources allows us to draw on the substantial experience and authority in such matters that already exists within the Federal Government and avoids involving the Commission, or the broadcaster, in subjective determinations regarding who qualifies as a foreign governmental entity.

16. FARA. In particular, the Commission finds that reliance on both the definitions contained in FARA and the list of agents registered pursuant to that act is appropriate. As discussed in the NRPM, this long-standing statute was designed specifically to identify those foreign entities or individuals that Congress has determined should be known to the U.S. Government and the American public when they are seeking to influence American public opinion, policy, and laws. The Commission notes that no commenters object to the its proposed use of the definitions set forth in FARA or the list of foreign agents registered pursuant to that statute as the primary basis for its foreign sponsorship identification rules. Accordingly, the Commission finds that including “government of a foreign country” and “foreign political party,” as defined by FARA, within the group of entities and individuals that trigger its foreign sponsorship identification rules is appropriate given its primary goal of ensuring that foreign government -provided programming is properly disclosed to the public. Rather than seeking to craft its own definitions, the Commission finds it more appropriate to turn to a definition of “foreign government” and “foreign political party” contained in a pre-existing statute designed to promote transparency about foreign governmental activity in the United States. Similarly, including FARA-registered “agents of foreign principals” who are defined by their engagement in certain activities in the United States on behalf of foreign interests furthers the Commission's goal of increasing transparency when such agents may be seeking to persuade the audiences of broadcast stations.

17. The Commission notes that FARA generally requires an “agent of foreign principal” undertaking certain activities in the United States (such as, political activities or acting in the role of public relations counsel, publicity agent, or political consultant) on behalf of a foreign principal to register with the Department of Justice. Section 611(b)(1) of FARA states that the term “foreign principal” includes the “government of a foreign country” and a “foreign political party” (22 U.S.C. 611(b)(1)). For purposes of its foreign sponsorship identification rules, the Commission includes FARA agents whose foreign principal is either a “government of a foreign country,” a “foreign political party,” or is directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized by a “government of a foreign country” or by a “foreign political party” as those terms are defined in sections 611(e) and (f) of FARA respectively (22 U.S.C. 611(e), (f)). As stated in the NPRM, to the extent that an agent of a foreign principal, whose “foreign principal” is either a “government of a foreign country” or a “foreign political party” is providing programming to U.S. broadcast stations in its capacity as an agent to that principal, it is reasonable that the public should be made aware of that fact. The Commission also clarifies, however, that the proposed disclosure is required not only when programming is provided by an “agent of a foreign principal” whose foreign principal is a government of a foreign country or a foreign political party, but also when the foreign principal is directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized by a government of a foreign country or by a foreign political party. This clarification to the original proposal will ensure that the foreign sponsorship identification rules cannot be circumvented by the existence or creation of additional corporate and/or ownership layers between the entity acting as a foreign principal and the government of a foreign country or foreign political party. This information is readily ascertainable by those who examine the FARA database.

18. The Commission recognizes that a given entity may be registered as an agent for multiple “foreign principals” or for a “foreign principal” other than a “government of a foreign country” or a “foreign political party.” The Commission emphasizes, however, that its foreign sponsorship identification rules apply only when the FARA agent is acting in its capacity as a registered agent of a principal that is a “government of a foreign country,” a “foreign political party,” or is directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized by a government of a foreign country or by a foreign political party.

19. U.S.-Based Foreign Media Outlet. In addition to drawing on FARA-based definitions and registrations and consistent with the NPRM, the Commission concludes that its foreign governmental entity definition should also extend to any entity or individual subject to section 722 of the Act that has filed a report with the Commission. Section 722 extends to any U.S.-based foreign media outlet that: (a) Produces or distributes video programming that is transmitted, or intended for transmission, by a multichannel video programming distributor (MVPD) to consumers in the United States and (b) would be an agent of a “foreign principal” but for an exemption in FARA. The Commission notes that Section 722 provides that the term “foreign principal” has the meaning given such term in section 611(b)(1) of FARA, which limits the scope of the definition of “foreign principal” to “a government of a foreign country” and a “foreign political party.” The Commission incorporates this limitation from section 722 of the Act into its foreign sponsorship identification rules to include both a “government of a foreign country” and “foreign political party,” as those terms are defined by FARA, within its definition of “foreign governmental entity.” Although the Commission could clarify—as the Commission has done with respect to foreign agents—that the disclosure requirement also applies when an outlet's foreign principal is directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized by a government of a foreign country or by a foreign political party, the Commission notes that such a clarification would accomplish nothing as, pursuant to the National Defense Authorization Act (NDAA), only entities whose foreign principals are a government of a foreign country or a foreign political party are required to report as U.S.-based foreign media outlets.

20. The Commission recognizes that the term “U.S.-based foreign media outlet” refers to an entity whose programming is either transmitted or intended for transmission by an MVPD, rather than by a broadcaster. But the Commission notes that there is no prohibition on such video programming also being transmitted by a broadcast television station, and it seems likely that an entity that is providing video programming to cable operators or direct broadcast satellite television providers might also seek to air such programming on broadcast stations. Hence, the Commission believes it is appropriate to include “U.S.-based foreign media outlets” within the ambit of its proposal when the programming provided by such entities is aired by broadcast stations. No commenter opposed this proposal in response to the NPRM.

21. Foreign Missions. While the NPRM proposed to include “foreign missions,” as designated pursuant to the Foreign Missions Act, within the Commission's definition of foreign governmental entities that trigger foreign sponsorship identification, commenters have persuaded us otherwise. In particular, American Public Television Stations (APTS) and the Public Broadcasting Service (PBS) (referenced collectively herein as APTS) expressed concern with the potential difficulty of discerning whether an entity is considered a “foreign mission” under the Foreign Missions Act. APTS noted that there is no single source identifying all foreign missions analogous to those that exist for FARA registrants and U.S.-based foreign media outlets. The Commission agrees with commenters that the lack of a single source identifying all foreign missions creates an additional burden for licensees, as such entities cannot be as readily and consistently identified as FARA registrants and U.S.-based foreign media outlets.

22. In addition, the Commission notes that, as discussed in the NPRM, most “foreign missions” are foreign embassies and consular offices. The primary purpose of the Foreign Missions Act is to confer upon such missions certain benefits, privileges, and immunities, while also requiring their observance of corresponding obligations in accordance with international law and principles of reciprocity. Other types of non-entities that are substantially owned or effectively controlled by a foreign government are from time to time designated as “foreign missions” at the discretion of the Secretary of State. By comparison the FARA statute is specifically designed to identify those entities and individuals whose activities should be disclosed because their activities are potentially intended to influence American public opinion, policy, and law. Based on the concerns raised by APTS and its own further review of the intent behind the statute, the Commission finds reliance on the Foreign Missions Act to be inappropriate and unnecessary for its intended purpose.

23. Other Potential Sources. In addition, the Commission declines to adopt APTS's suggestion that the list of FARA registrants included in the definition of foreign governmental entities be filtered through the United States Treasury Department's Office of Foreign Assets Control (OFAC) list of active U.S. sanctions. APTS asserts that its proposal would narrow the list of entities who qualify as a “foreign governmental entity” by linking this definition to a list of carefully pre-determined countries whose interests are directly at odds with the United States. The Commission declines to adopt this proposal. First, doing so would seem to involve even more work for licensees, as it would require them to consult the OFAC list in addition to the FARA list. Second, and most importantly, the Commission finds the basis for compiling the OFAC list to be inconsistent with its purposes here. The Commission's goal in requiring additional disclosure by foreign governmental entities is not premised on distinctions between countries that may or may not be subject to the United States sanctions. Rather, the Commission seeks to provide the American public with greater transparency about programming provided by any foreign government, consistent with the requirements of section 317 of the Act. In this regard, the Commission finds that FARA, with its associated definitions and reporting requirements premised on promoting transparency with respect to foreign influence within the United States, is better aligned with the goals of the instant proceeding than the OFAC list. As the Department of Justice has explained when discussing FARA, the government's concern is not the content of the speech but providing transparency about the true identity of the speaker.

24. Scope of Foreign Programming that Requires a Disclosure. While the Commission tentatively concluded in the NPRM that its proposed foreign sponsorship disclosure rules should apply in any circumstances in which a foreign governmental entity directly or indirectly provides material for broadcast or furnishes material to a station free of charge (or at nominal cost) as an inducement to broadcast such material, the Commission now narrows its focus to address specifically those circumstances in which a foreign governmental entity is programming a U.S. broadcast station pursuant to the lease of airtime. That is, for the reasons discussed below, the Commission will require a specific disclosure at the time of broadcast if material aired pursuant to the lease of time on the station has been sponsored, paid for, or, in the case of political program or any program involving the discussion of a controversial issue, if it has been furnished for free as an inducement to air by a foreign governmental entity. While the Commission focuses in this Order on the identification of programming sponsored by foreign governmental entities aired through a lease of time, the Commission reiterates that its existing sponsorship identification rules, of course, continue to apply even outside the specific context described herein. As explained below, leasing agreements potentially subject to the rules include any arrangement in which a licensee makes a block of broadcast time on its station available to another party in return for some form of compensation.

25. Programming Aired Pursuant to a Lease of Time. Based on the record before us, the Commission agrees with National Public Radio and find that focusing on the airing of programming on U.S. broadcast stations pursuant to leasing agreements will address the primary present concern with foreign governmental actors gaining access to American airwaves without disclosing the programming's origin to the public. To date, it appears that the reported instances of undisclosed foreign government programming aired on broadcast stations have involved lease agreements between a licensee and other entities. The record indicates that such contractual arrangements present the most prevalent instances of undisclosed foreign government programming to date. It also appears that it is through such arrangements that foreign governmental entities have commonly aired programming on U.S. broadcast stations, whether directly or indirectly, without necessarily disclosing the origin of the programming. Accordingly, the Commission believes that the foreign governmental source of this programming should be disclosed in such circumstances.

26. Moreover, the Commission's action will serve to ensure greater transparency to the public, and prevent foreign governments and their representatives, which are barred from owning a U.S. broadcast license, from leasing time on a station unbeknownst to the public or the Commission. Notably, Section 310(a) of the Act outright bars “any foreign government or the representative thereof” from holding a broadcast license. In addition, Section 310(b) limits the interest that a foreign corporation or individual can hold in a U.S. broadcast license, either directly or indirectly. While the Commission has revised its rules in recent years to permit a greater degree of ownership in U.S. broadcast stations by non-governmental foreign entities or individuals, acquisition of such interests requires Commission approval following proper consideration and public review and may also be subject to prior review and consideration by the relevant executive branch agencies. Despite these longstanding restrictions, and particularly the complete prohibition on a foreign government or its representatives' holding a U.S. broadcast license, some foreign governmental actors or their agents appear nonetheless to be programming stations that they otherwise would not be able to own, as detailed in the NPRM. When they do so, the American public and the Commission may not be aware that a foreign governmental entity has leased the time on the station and is programming the station.

27. As proposed in the NPRM, the disclosure requirements the Commission adopts in this document apply to leasing agreements, regardless of what those agreements are called, how they are styled, and whether they are reduced to writing. The Commission recognizes that leasing agreements within the broadcast industry may be known by different designations. The terms time brokerage agreement (TBA) and local marketing agreement (LMA) are used interchangeably to describe contractual arrangements whereby a party other than the licensee, i.e., a brokering party, programs time on a broadcast station, oftentimes also selling the advertising during such time and retaining the proceeds. Such leasing agreements may be for either discrete blocks of time (for example, two hours every day from 4 p.m. to 6 p.m.) or for the complete broadcast capacity of the station ( i.e., 24 hours a day, seven days a week). The agreements can be for the duration of a single day or for a term of years. Regardless of the title, terms, or duration of such an agreement, the purpose of such a contractual agreement is to give one party—the brokering party or programmer—the right and obligation to program the station licensed to the other party—the licensee or broadcaster. In this manner, the programmer is able to program a radio or television station that it does not own or hold the license to operate. A “time brokerage agreement,” also known as a “local marketing agreement” or “LMA,” is the sale by a licensee of discrete blocks of time to a “broker” that supplies the programming to fill that time and sells the commercial spot announcements in it.

28. For the purposes of applying the foreign sponsorship disclosure requirement, a lease constitutes any agreement in which a licensee makes a discrete block of broadcast time on its station available to be programmed by another party in return for some form of compensation. Thus, a licensee makes broadcast time available for purposes of the rule any time the licensee permits the airing on its station of programming either provided, or selected, by the programmer in return for some form of compensation. In describing a lease of time, however, the Commission does not mean to suggest that traditional, short-form advertising time constitutes a lease of airtime for these purposes. The Commission notes that such advertisements, whether they appear in programming aired by the licensee or provided by a third-party programmer pursuant to a lease, remain subject to the Commission's existing sponsorship identification rules under § 73.1212(f) and must contain a clear indication of the sponsor of the advertisement. The Commission's action in this document is focused on agreements by which a third party controls and programs a discrete block of time on a broadcast station. Ultimately, the Commission believes that requiring a disclosure to inform the audience of the source of the programming whenever a foreign governmental entity provides programming to a station for broadcast pursuant to the lease of time is wholly consistent with sections 317(a)(1) and (2) of the Act.

29. The Commission finds that its focus on situations where there are leasing agreements between a station and a third party will narrow the application of the disclosure rules appropriately, and ensure that the new disclosure obligations do not extend to situations where there is no evidence of foreign government sponsored programming. For example, the record does not demonstrate that advertisements; archival, stock, or supplemental video footage; or preferential access to filming locations are a significant source of unidentified foreign sponsored programming. In addition, given limitations on the ability of noncommercial educational (NCE) stations to engage in leasing arrangements, the Commission expects that NCE stations will rarely, if ever, face the need to address the foreign sponsorship disclosure rules, largely assuaging the concerns of NCE commenters. Therefore, the Commission finds that limiting the application of its disclosure requirement to the context of leasing agreements obviates a number of issues and suggestions put forth by commenters concerned that the Commission would inadvertently sweep in additional programming that does not carry the same concerns with foreign influence as the unidentified lease of programming time.

30. Programming Aired in Exchange for Consideration Under 317(a)(1) of the Act. As discussed in the NPRM, section 317(a)(1) of the Act requires the licensee of a broadcast station to disclose at the time of broadcast if it has received any form of payment or consideration, either directly or indirectly in exchange for the broadcast of programming. While there is no minimum level of “consideration” required to trigger the disclosure requirement under this section, the statute does permit the exclusion of services or property furnished without charge or at nominal charge in certain circumstances. One notable exception to the exclusion, however, is the provision of certain material furnished free of charge or at nominal cost as an inducement to air the program and that is related to any political program or program involving the discussion of any controversial issue, as discussed further below. Thus, consistent with the statute and current sponsorship identification rules, the foreign sponsorship identification rules the Commission adopts in this document will be triggered if any money, service, or other valuable consideration is directly or indirectly paid or promised to, or charged or accepted by a broadcast station in the context of a lease of broadcast time in exchange for the airing of material provided by a foreign governmental entity.

31. While the Commission expects that such consideration received by the station directly will be apparent from the terms and exercise of any lease agreement, as discussed below, the Commission notes that under section 507 of the Act, parties involved in the production, preparation, or supply of a program or program material that is intended to be aired on a broadcast station also have an obligation to disclose to their employer or to the party for whom the programming is being produced or to the station licensee, if they have accepted or agreed to accept, or paid or agreed to pay, any money or valuable consideration for inclusion of any program or material. Thus, as detailed further below, the Commission requires that licensees will exercise reasonable diligence to ascertain whether consideration has been provided in exchange for the lease of airtime or in exchange for the airing of materials directly or indirectly to the station, as well as whether anyone involved in the production, preparation, or supply of the material has received compensation, and that an appropriate disclosure will be made about the involvement of any foreign governmental entity. The Commission discusses what this obligation means for the licensee and lessee below.

32. Programming Provided for Free as an Inducement to Air Under 317(a)(2). In addition to the payment of monetary or other valuable consideration, section 317(a)(2) of the Act establishes that a sponsorship disclosure may also be required in some circumstances, even if the only “consideration” being offered to the station in exchange for the airing of the material is the programming itself. As stated above, the Commission believes that, as a practical matter, leasing agreements will involve the exchange of money or other valuable consideration from the programmer to the licensee. It is not typical for a station to enter into an agreement for the lease of airtime in exchange solely for the promise of free programming to be aired on the station. However, to account for such a circumstance, and consistent with the discussion in the NPRM, the Commission finds it is equally important that the foreign sponsorship identification rules apply in that instance, should such a circumstance arise. Section 317(a)(2) provides that a disclosure is required at the time of broadcast in the case of any “political program or any program involving the discussion of a controversial issue” if the program itself was furnished free of charge, or at nominal cost, as an inducement for its broadcast. The Commission has previously interpreted “political program” in the context of section 317(a)(2) to generally involve programming seeking to persuade or dissuade the American public on a given political candidate or policy issue.

33. While the NPRM tentatively concluded that all programming provided by a foreign governmental entity should be treated as a “political program” pursuant to section 317(a)(2) of the Act, and, thus, the provision of such programming in and of itself could be sufficient to trigger a disclosure, based on the record before us and upon further consideration, the Commission declines to expand the definition of political program in this context. Rather, consistent with the approach in this Order to narrow the scope of the rules to target more appropriately the reported instances of undisclosed foreign governmental programming, the Commission believes it is unnecessary to expand the interpretation of “political program” and elect to apply the existing interpretation of that term at this time. Similarly, for purposes of the foreign sponsorship identification rules the Commission will continue to interpret “any program involving the discussion of any controversial issue” under section 317(a)(2) in a manner consistent with precedent. The Commission finds that applying the existing definition of “political program” consistent with long-standing Commission precedent in this area addresses many of the concerns raised by commenters about various types of programming that inadvertently might be swept into the ambit the new foreign sponsorship identification rules. The Commission also clarifies that its new rules do not override the guidance provided in the Commission's 1963 seminal order and accompanying public notice about what would be considered an “inducement” to broadcast programming.

34. Additionally, similar to the analysis above, the Commission finds that section 507 of the Act applies in this context as well. Specifically, the Commission believes it is reasonable to consider the provision of any “political program or any program involving the discussion of a controversial issue” by a foreign governmental entity to a party in the distribution chain for no cost and as an inducement to air that material on a broadcast station to be “service or other valuable consideration” under the terms of section 507. Accordingly, in the event that an entity involved in the production, preparation, or supply of programming that is intended to be aired on a station has received any “political program or any program involving the discussion of a controversial issue” from a foreign governmental entity for free, or at nominal charge, as an inducement for its broadcast, the Commission finds that under section 507 it must disclose that fact to its employer, the person for whom the program is being produced, or the licensee of the station and will require an appropriate foreign sponsorship identification. The Commission discusses what this obligation means for the licensee and lessee below.

35. Reasonable Diligence. The Commission adopts its tentative conclusion from the NPRM that the final responsibility for any necessary foreign sponsorship identification disclosure rests with the licensee in accordance with the statutory scheme. Accordingly, the Commission finds that a broadcast station licensee must exercise “reasonable diligence” to determine if an entity within the scope addressed above— i.e. an entity or individual that is purchasing airtime on the station or providing any “political program or any program involving the discussion of a controversial issue” free of charge as an inducement to broadcast such material on the station—is a foreign governmental entity, such that a disclosure is required under the foreign sponsorship identification rules. As explained below, the Commission concludes that such diligence requires that the licensee must, at a minimum:

(1) Inform the lessee at the time of agreement and at renewal of the foreign sponsorship disclosure requirement;

(2) Inquire of the lessee at the time of agreement and at renewal whether it falls into any of the categories that qualify it as a “foreign governmental entity”;

(3) Inquire of the lessee at the time of agreement and at renewal whether it knows if anyone further back in the chain of producing/distributing the programming that will be aired pursuant to the lease agreement, or a sub-lease, qualifies as a foreign governmental entity and has provided some type of inducement to air the programming;

(4) Independently confirm the lessee's status, at the time of agreement and at renewal by consulting the Department of Justice's FARA website and the Commission's semi-annual U.S.-based foreign media outlets reports for the lessee's name. This need only be done if the lessee has not already disclosed that it falls into one of the covered categories and that there is no separate need for a disclosure because no one further back in the chain of producing/transmitting the programming falls into one of the covered categories and has provided some form of service or consideration as an inducement to broadcast the programming; and

(5) Memorialize the above-listed inquiries and investigations to track compliance in the event documentation is required to respond to any future Commission inquiry on the issue.

36. Finally, as discussed below, the Commission clarifies that the lessee, in accordance with sections 507(b) and (c) of the Act likewise carries an independent responsibility both to respond to the licensee's inquiries and inform the licensee if, during the course of the lease arrangement, it becomes aware of any information that would trigger a disclosure pursuant to the new foreign sponsorship identification rules.

37. Licensee's Responsibilities. Pursuant to section 317(c) of the Act, the licensee bears the responsibility to engage in “reasonable diligence” to determine the true source of the programming aired on its station. Section 317(c) of the Act states that the licensee of each radio station shall exercise reasonable diligence to obtain from its employees, and from other persons with whom it deals directly in connection with any program or program matter for broadcast, information to enable such licensee to make the announcement required by this section. This statutory provision is categoric and does not provide any exceptions, as it is the licensee who has been granted the right to use the public airwaves. As discussed in the NPRM, the licensee of a broadcast station must ultimately remain in control of the station and maintain responsibility for the material transmitted over its airwaves, even when it has entered into a leasing agreement. While this responsibility adheres in every instance, the Commission finds that it is particularly important here, where the record shows that the audience is typically unaware that the lessee/brokering party that is sponsoring, paying for, or furnishing the programming could either be a foreign governmental entity or be passing through programming on behalf of such an entity.

38. As a threshold matter, the Commission expects the licensee to convey clearly to the prospective lessee that there is a Commission disclosure requirement regarding foreign government-provided programming. In this regard, the Commission finds that “reasonable diligence” also includes inquiring of the potential lessee whether it qualifies under the definition of a “foreign governmental entity.” Given that the licensee is entering into a contractual agreement that allows the lessee to program airtime or provide programming on the station, the Commission finds it reasonable to expect that the licensee make these basic inquiries of the lessee to ascertain whether the programming to be aired will require a disclosure under the rules the Commission adopt herein. The Commission notes that broadcasters may choose to implement these requirements through contractual provisions between the licensee and lessee though they are not required to do so.

39. The Commission also expects the licensee to inquire of the lessee whether “in connection with the production or preparation of any program or program matter” that it, or any sub-lessee, intends to air it is aware of any money, service or other valuable consideration from a foreign governmental entity provided as an inducement to air a part of such program or program matter. Such an inquiry is consistent with sections 507(b) and (c) of the Act, which impose a duty on the lessee to inform the licensee to the extent it is aware of any payments or other valuable consideration, including inducements to air for free, associated with the programming such as to trigger a disclosure. Likewise, section 317(b) of the Act imposes an associated requirement on the licensee to make any disclosures necessitated by learning such information pursuant to section 507 of the Act. The Commission finds that this type of inquiry by the licensee is particularly important given reports about instances where programming originating from foreign governmental actors is being passed through program distributors who lease time on U.S. broadcast stations.

40. If in response to the licensee's initial inquiry, the lessee states that it falls within the definition of a “foreign governmental entity,” or is otherwise aware of the need for a foreign sponsorship identification disclosure, then the licensee needs to ensure that the programming contains the appropriate disclosure. As discussed above, licensees may become aware of the need for a foreign sponsorship identification disclosure via the reporting obligation contained in section 507 of the Act. On the other hand, if the lessee's response is that it does not fall within the definition and is not separately aware of the need for a disclosure, the Commission requires the licensee to verify independently that the lessee does not qualify as a “foreign governmental entity.” To do so, at a minimum, the licensee will need to conduct certain independent searches. Specifically, the licensee should check if the lessee appears on the Department of Justice's most recent FARA list as an agent that is acting on behalf of a foreign principal that is either a “government of a foreign country,” as defined by FARA, or a “foreign political party,” as defined by FARA. The licensee should also check if the lessee appears on the FARA list as an agent whose principal is either directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized, in whole or in part, by a “government of a foreign country,” as defined by FARA, or a “foreign political party” as defined by FARA.

41. Put differently, if a lessee named “ABC Corp.” appears as an agent on the FARA list, but ABC Corp.'s principal is XYZ Corp., the licensee's search does not stop at this point simply because XYZ Corp. is neither a government of a foreign country nor a foreign political party. Rather the licensee should review ABC Corp's filing to see whether XYZ Corp is in fact directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized, in whole or in part, by a government of a foreign country or a foreign political party. Such information will be indicated on the filing. If there is such direct or indirect operation, supervision, direction, ownership, control, financing, or subsidization, in whole or in part, then the programming aired by ABC Corp. will need a foreign sponsorship disclosure.

42. In this regard, the Commission notes that the FARA database is simple to use and allows for a search by terms. Consequently, the Commission anticipates that in most cases a licensee will need to do no more than merely run a search of the lessee's name on the FARA database. If the search does not generate any results, the licensee can safely assume that the lessee is not a FARA agent and no further search is needed on the FARA database. If the lessee's name does appear on the FARA database, the licensee may need to review the materials filed as part of a given agent's registration to ascertain whether the lessee qualifies as a “foreign governmental entity.” The licensee should also check if the lessee's name appears in the Commission's semi-annual reports of U.S.-based foreign media outlets. If the lessee's name does not appear on either the FARA list or in the U.S.-based foreign media outlet reports then no further checks are needed of these sites. Finally, the Commission requires that the licensee memorialize its inquiries to track compliance and create a record in the event of any future Commission inquiry.

43. The Commission requires that a licensee investigate the nature of the party to whom it is leasing airtime both at the time the agreement between the parties is executed and at renewal. As part of its inquiries, the licensee should also inquire whether the lessee is aware of anyone further back in the chain of producing/transmitting the programming who might qualify as a foreign governmental entity and has provided some form of consideration as an inducement to air the programming. To the extent that the lessee confirms that it still qualifies as a foreign governmental entity, no other investigation on the part of the licensee is necessary beyond ensuring that the disclosures specified by the rules continue to be made. If the lessee indicates that it is no longer a foreign governmental entity, then programming disclosures are no longer required under the rules after the licensee independently verifies that this is the case.

44. The Commission requires reasonable diligence to be conducted not only at the time of the agreement is entered into, but also at renewal time. The Commission recognizes the lessee's status may change, particularly if the duration of the lease agreement is for a term of years. That is, over the course of the lease, not only might the lessee in fact become, due to actions on its part, a “foreign governmental entity,” for example, by entering into an agency relationship pursuant to FARA, but it may also be the case that the lessee contests the Department of Justice's designation of the lessee as a FARA agent such that the lessee's name only appears on the FARA list subsequent to the establishment of the lease agreement. Moreover, the Commission requires the licensee to memorialize the results of its diligence in some manner for its own records and maintain this documentation for the remainder of the then-current license term or one year, whichever is longer. In this manner, the licensee will have the necessary documentation should the Commission inquire about a particular lease agreement or particular programming aired on the licensee's station pursuant to the lease of time.

45. In addition, the Commission strongly encourages licensees to include a provision in their lease agreements requiring the lessee to notify the licensee about any change in the lessee's status such as to trigger the foreign sponsorship identification rules. The Commission expects that inclusion of such a provision will impress upon the lessee the importance of its rules and result in a statement to the licensee if there is a change in status. Some commenters assert that in lieu of the clear objective steps laid out above for meeting the statutory “reasonable diligence” requirement, the Commission should instead require broadcasters to engage in “reasonable diligence” only if they have reason to believe that their lessee is affiliated with a foreign governmental entity. The Act does not, however, contain a threshold showing of “reason to believe” in advance of requiring that broadcasters engage in “reasonable diligence.” Moreover, the adoption of such a subjective standard would make the rules adopted in the instant Order virtually ineffectual and unenforceable by leaving it up to the broadcasters' discretion whether to check the status of a lessee, rather than relying on quick objective searches of reliable government databases. Some of those that propose this “reason to believe” standard assert by way of example that there is no reason to believe that a church or school group with whom a licensee has had an extended relationship is likely to be, or have any connection with, a foreign governmental entity, and, hence there is no reason to inquire about such a lessee's status or its programming. The practical implication of linking the “reasonable diligence” steps described above to a broadcaster's belief based on its previous long-term relationships with given lessees, however, is that only new lessees or perhaps those with characteristics unknown to the broadcaster will be subject to “reasonable diligence,” an approach that would seem to favor existing lessees at the expense of new and diverse entrants and to jeopardize the Commission's efforts to ensure broadcast audiences know who is seeking to persuade them.

46. Some commenters suggest that the requirement to check the FARA list is unduly burdensome. The Commission finds that limiting the application of its foreign sponsorship disclosure rules to situations involving leasing agreements and also narrowing the scope of the term “political program” to align with prior interpretations, should greatly diminish the overall compliance burden on licensees by limiting the circumstances in which such searches will be necessary to those areas that raise important issues of public concern—as compared to the proposal laid out in the NPRM, which applied to all programming arrangements and required a special disclosure for all programming provided by a foreign governmental entity—while taking necessary steps to ensure broadcasters will identify those instances where foreign sponsorship identification is necessary. In addition, the objective tests laid out above should facilitate compliance, by specifying what licensees have to do to comply with the “reasonable diligence” requirement in terms of straightforward and limited search requirements that minimize the burden on broadcasters and are necessary to ensure that the public is adequately informed about the true identity of a programmer's ties to a foreign government. Thus, the Commission finds that these reasonable diligence inquiries do not pose undue burden on broadcast licensees and, more importantly, will help ensure that the licensee is cognizant of whether the entity seeking to lease time on its station is a foreign governmental entity.

47. Lessee's Obligations. As previously discussed, pursuant to section 507, the lessee also holds an independent obligation to communicate information to the licensee relevant to determining whether a disclosure is needed. In this regard, the Commission adopts the tentative conclusion contained in the NPRM that sections 507(b) and (c) of the Act impose a duty on the broker/lessee to inform the licensee to the extent it is aware of any payments (or other valuable consideration) associated with the programming such as to trigger a disclosure. No party commented on the Commission's tentative conclusion that sections 507(b) and (c) of the Act impose a duty on the broker/lessee to inform the licensee to the extent it is aware of any payments (or other valuable consideration) associated with the programming. As stated in the NPRM, in its 1960 amendments to the Act, Congress imposed on non-licensees associated with the transmission or production of programming a requirement to disclose any knowledge of consideration paid as an inducement to air particular material. Congress added this provision in recognition that individuals other than the licensee were increasingly involved in programming decisions. Thus, consistent with the statute, the Commission concludes that it is incumbent on a lessee to convey to the licensee its knowledge of any payment or consideration provided by, or unpaid programming received as an inducement from, an entity or individual that triggers the foreign sponsorship identification rules laid out in this Order.

48. The Commission emphasizes here that the reach of sections 507(b) and (c) of the Act is not limited only to those entities or individuals who have entered into lease agreements with the licensee. Rather, these provisions impose a disclosure obligation on any person who, in connection with the production or preparation of any program or who supplies to any other person any program to convey any information such person may have about the provision of any inducement to broadcast the program in order to necessitate a sponsorship identification disclosure by the licensee. Specifically, such non-licensees must disclose to their employer, the person for which such program is being produced ( e.g., the next individual involved in the chain of transmitting the programming to the licensee), or the licensee itself, their knowledge of any payment or “valuable consideration” provided or accepted by a foreign governmental entity. Section 507(a) of the Act imposes a similar disclosure obligation on the licensee's own employees. Likewise, section 317(b) of the Act imposes a parallel requirement on licensees to make a required disclosure to the public at the time of broadcast if they learn of the need for a disclosure via the mechanism laid out in section 507 of the Act.

49. Reasonable Diligence Requirements to Apply on a Prospective Basis. Some commenters have asked that any new rules only apply on a going forward basis. Recognizing that some lease agreements may last for several years, the Commission declines to delay application of its rules to only new lease agreements. Rather, the Commission believes that the public interest is best served if audiences are notified of foreign sponsorship as soon as reasonably possible. Thus, in addition to applying the rules to new lease agreements and renewals of existing agreements, the Commission requires that lease agreements in place when the changes to the rules adopted herein become effective come into compliance with the new requirements, including undertaking reasonable diligence, within six months. In this manner, the transparency the Commission seeks to achieve can be accomplished in a way that does not unduly burden licensees.

50. Contents and Frequency of Required Disclosure of Foreign Sponsorship. Consistent with the NPRM, the Commission adopts standardized language to inform audiences at the time of broadcast that the program material has been provided by a foreign governmental entity. Such standardized language will avoid confusion and ensure that the information is conveyed clearly and concisely to the audience. Accordingly, as discussed below, the Commissions adopts the disclosure language proposed in the NPRM with two modifications, one to provide greater flexibility in the language used and the other to harmonize its labeling requirements with those imposed pursuant to FARA. In addition, the Commission adopts a requirement that stations airing programming subject to the proposed disclosure requirement must place copies of the disclosures in their OPIFs, in a standalone folder marked as “Foreign Government-Provided Programming Disclosures” so that the material is readily identifiable to the public pursuant to the timing requirements discussed below.

51. Labeling Requirement. First, as requested by NAB, the Commission allows licensees the flexibility to use any of three terms (sponsored, paid for, or furnished) in an on-air foreign sponsorship disclosure statement, rather than mandate the use of “paid for, or furnished” as proposed, in order to conform the new requirement more closely to existing sponsorship identification requirements. The Commission notes that the language proposed by the National Association of Broadcasters (NAB) is consistent with existing sponsorship identification requirements. To the extent that the foreign sponsorship identification rules comport with existing rules and with how broadcast station personnel are accustomed to operating, the Commission finds that such allowances should facilitate compliance by licensees and minimize the burden on them. Hence, at the time a station broadcasts programming that was provided by a foreign governmental entity, the Commission requires a disclosure identifying that fact and the origin of the programming as follows:

52. In establishing this disclosure language, the Commission recognizes that FARA also has a labelling requirement and clarify that the programming need not have two separate labels—both the FARA label and the Commission's full disclosure. Rather, for those entities that are subject to FARA, the Commission accepts for compliance purposes the contents of the FARA label as long as it is modified to include the country associated with the foreign governmental entity named in the label and comports with the format and frequency requirements described below. As discussed further below, the Commission notes that FARA requires only that FARA agents label materials, including broadcast programming, with a conspicuous statement identifying the FARA agent and its principal when distributed in the United States; therefore, unless the licensee has registered under FARA, the licensee may not have the required FARA label. Thus, for those entities not registered under FARA, the Commission requires the disclosure language the Commission adopts in this document. Moreover, the Commission finds that its disclosure statement—or, alternatively, the passthrough of modified FARA labels—provides audiences of broadcast stations greater insight about the source of foreign government-provided programming than may exist with existing FARA labeling practices. As described above, the language the Commission adopts in this document requires that the country associated with the foreign governmental entity be named in the disclosure, which will provide additional information when that entity is a foreign political party or an agent registered under FARA.

53. In the interest of ensuring transparency for the intended viewers and listeners of foreign government-provided programming, the Commission also requires that, if the primary language of the programming is other than English, the disclosure statement should be presented in the primary language of the programming. Although the NPRM sought comment on this issue, no commenters addressed this point. For programming that contains a “conspicuous statement” required by FARA, and such a conspicuous statement is in a language other than English, an additional disclosure in English is not needed.

54. With regard to the format of the disclosure, for televised programming, the Commission requires the disclosure to be in letters equal to or greater than four percent of the vertical picture height and be visible for not less than four seconds to ensure readability. The NPRM sought comment on this format, but no commenters addressed this point. As this format convention replicates the existing format rule for a televised political advertisement concerning a candidate for public office, the Commission anticipates minimal compliance burden on licensees. For radio broadcasts, the Commission incorporates into the rules the Department of Justice guidance provided to FARA registrants that the disclosure shall be audible. Once again, although the NPRM sought comment on this issue, no commenters addressed this point.

55. With regard to the frequency of the disclosure, consistent with the NPRM and the existing rules for political broadcast matter or any broadcast matter involving the discussion of a controversial issue of public importance, the Commission requires that the disclosure be made at both the beginning and conclusion of the broadcast station programming to ensure the audience is aware of the source of its programming. Also consistent with its existing rules for political broadcast matter or any broadcast matter involving the discussion of a controversial issue of public importance, the Commission requires that for any broadcast of 5 minutes duration or less, only one such announcement must be made at either the beginning or conclusion of the program.

56. The Commission deviates from its existing sponsorship identification rules in one respect. The Commission adopts its tentative conclusion from the NPRM that for programming of greater than sixty minutes in duration, an announcement must be made at regular intervals during the broadcast, but no less frequently than once every 60 minutes. Sponsorship announcements at regular intervals are not explicitly required under the current rules. While NAB urges the Commission not to deviate from the existing timing and frequency rules, the Commission believes that this one additional requirement is necessary given the importance of disclosure related to foreign government-provided programming. While APTS notes that NCE stations are prohibited by statute from interrupting programming to identify funding sources, which could override and nullify the proposed frequency requirement in the context of NCE stations, as stated above, the Commission believes that NCE stations will rarely, if ever, fall within the ambit of the new rules. To the extent an issue does arise, the Commission will address such situations on a case-by-case basis through either its waiver process or the means that appear appropriate at that time. As discussed in the NPRM, the Commission finds that periodic announcements are necessary, particularly in those instances where a foreign governmental entity is continually broadcasting programming without an identifiable beginning or end, such as through a lease of a 100% of a station's airtime. No commenter objected to the Commission's reasoning for this finding nor commented on the burden of recurring announcements. The Commission notes that in the case of a political broadcast matter or any broadcast matter involving the discussion of a controversial issue of public importance—which typically does not have an obvious sponsor—the current rules require a sponsorship identification both at the beginning and conclusion of any such broadcast of greater than 5 minutes. Similarly, here the Commission believes that periodic announcements (once every 60 minutes) are necessary for any foreign government-provided programming with a duration of greater than one hour because of the lack of transparency regarding the true sponsor of such programming. The Commission notes that periodic announcements ( i.e., once every hour versus at the beginning and conclusion of the program) are also necessary because of the longer blocks of programming time foreign governmental entities typically purchase in connection with leasing arrangements.

57. Finally, consistent with the proposal in the NPRM, the Commission finds that its standardized disclosure requirements apply equally to any programming transmitted on a broadcast station's multicast streams. The Commission received no objections to this proposal, and consequently finds no reason to exclude multicast streams. As such, multicast streams are subject to all the disclosure requirements pertaining to foreign government-provided programming that the Commission adopts in this document.

58. Public File. Consistent with the NPRM, the Commission adopts a requirement that stations airing programming subject to the proposed disclosure requirement must place copies of the disclosures in their OPIFs, in a standalone folder marked as “Foreign Government-Provided Programming Disclosures” so that the material is readily identifiable to the public, as well as a requirement with regard to the frequency of placing such material in the public file. For broadcast stations that do not have obligations to maintain OPIFs, the Commission recommends such stations retain a record of their disclosures in their station files consistent with previous Commission guidance. The Commission does not, however, require licensees to submit additional information to their OPIFs concerning the list of persons operating the foreign governmental entity providing programming.

59. Specifically, the Commission finds that licensees must place in their OPIFs the actual disclosure and the name of the program to which the disclosure was appended. In addition, the licensee must state the date and time the program aired. If there were repeat airings of the program, then those additional dates and times should also be included in the OPIF. With regard to the frequency with which licensees must update their OPIFs with this disclosure information, the Commission aligns this requirement with its existing requirement to update the TV Issues/Programs Lists on a quarterly basis, as this will minimize the need for licensees to track different public filing requirements. The Commission also establishes the same OPIF two-year retention period for disclosures related to foreign government-provided programming as currently exists for the retention of lists regarding the executives of any entity that sponsored programming concerning a political or controversial matter.

60. The Commission does not adopt the “as soon as possible” disclosure standard contained in § 73.1943 of its rules or require posting to occur “within twenty-four hours of the material being broadcast” as proposed in the NPRM. The Commission is persuaded by NAB's comments that the “as soon as possible” standard contained in § 73.1943(c) of the rules need not apply to disclosures associated with foreign governmental entities. As NAB notes, the immediacy requirement in the political advertising context stems from the need to ensure that candidates can exercise their statutory rights to equal opportunities at statutorily mandated rates and the time-sensitive need to reach potential voters before an election. The Commission finds no corresponding need to respond within an expedited timeframe in the case of foreign government-provided programming.

61. The Commission concludes that, to the extent the foreign programming consists of a political matter or matter involving the discussion of a controversial issue of public importance, licensees obtain and disclose in their OPIFs a list of the persons operating the entity providing the programming, as currently required. The Commission clarifies that licensees can satisfy the required OPIF disclosures by identifying the officers and directors of the lessee in a single filing per lessee (rather than separate filings concerning each individual program sponsored by the same lessee) together with other filings required by the foreign sponsorship identification rules. The Commission is not persuaded by NAB's contention—that, in the case of foreign-government-provided programming, the on-air and OPIF disclosures will provide the necessary information to the American public identifying the foreign governmental entity that provided the programming and the foreign country with which it is affiliated—to grant what effectively would be an exemption to existing sponsorship identification rules for political programming provided by foreign governmental entities. However, the Commission determines at this time that the licensee need not provide any additional information in its OPIF, as considered in the NPRM, regarding the relationship between the foreign governmental entity and the foreign country that the foreign governmental entity represents, having no evidence to support the need for such information to enhance public disclosure at this time.

62. Finally, the Commission adopts the unopposed tentative conclusion contained in the NPRM that licensees maintain in their OPIFs the disclosures associated with foreign government-provided programming rather than giving them the option of maintaining such information at the network headquarters if the programming was originated by a network.

63. Concerns About Overlap with Other Statutory or Regulatory Requirements. The Commission rejects any suggestion that its foreign sponsorship identification rules are either duplicative of requirements imposed under FARA or unnecessary given the Commission's current sponsorship identification rules. Rather, as discussed above and consistent with the admonitions of commenters, the Commission adopts disclosure requirements that further the its statutory mandate to provide transparency to audiences of broadcast stations regarding the source of sponsored programming, while avoiding unnecessary duplication with the FARA requirements.

64. As a preliminary matter, the Commission emphasizes that although the requirements laid out in the NPRM and the instant Order look to FARA for assistance in determining what qualifies as a “foreign governmental entity,” section 317 of the Act and FARA each cover different types of entities with respect to their labeling requirements. Section 317 and the Commission's sponsorship identification rules speak specifically to the obligations of licensees of broadcast stations, imposing transparency requirements regarding the origin of sponsored content as an element of the licensee's stewardship of the public airwaves. In contrast, FARA imposes an obligation on agents required to register under FARA to label materials with a conspicuous statement identifying the FARA agent and its principal when it is distributing relevant materials within the United States by any means or media. Accordingly, unless the licensee of a broadcast station itself is a registered agent under FARA, the label required by FARA may not appear. Even if such labels are being passed through in some instances, as discussed above and in the NPRM, the reports about incidents of undisclosed foreign government programming indicate the need for greater action to ensure transparency. Consistent with the Commission's own statutory mandate, the requirements adopted in the instant Order focus specifically on broadcast licensees to ensure they disclose foreign government provided-programming consistent with the intent and language of section 317 of the Act.

65. Further, as noted above, the rules the Commission adopts in this document require identification of the country associated with the foreign governmental entity that provided the programming, whereas the FARA disclosure statement does not require this information. Rather, FARA requires identification of only the foreign principal, whose name may not identify its connection to a foreign country. In addition, while FARA requires that covered materials that are televised or broadcast, or which are caused to be televised or broadcast shall be introduced by a statement which is reasonably adapted to convey to the viewers or listeners thereof such information as is required under FARA, it does not dictate whether such information should be repeated during a broadcast or at what frequency. In contrast, the foreign sponsorship identification rules the Commission adopts in this document contain specific guidance for broadcast licensees as to the frequency and content of the required label to increase transparency and ensure audiences are aware of the foreign sources of such programming.

66. Given the key differences between the FARA requirements and those the Commission adopts in this document, the Commission rejects NPR's assertion that enforcement of § 73.1212(e) of the Commission's rules could achieve the Commission's goals in this proceeding. As REC Networks notes, compliance with the Commission's existing sponsorship identification rules does not currently result in the identification of a foreign government as the ultimate provider of programming to the extent this is the case.

67. Section 325(c) Permits. The Commission adopts the NPRM's tentative conclusion that the proposed foreign sponsorship identification rules should apply expressly, to the extent applicable, to any programming broadcast pursuant to a section 325(c) permit, in addition to U.S.-licensed broadcast stations. A section 325(c) permit is required when an entity produces programming in the United States but, rather than broadcasting the programming from a U.S.-licensed station, transmits or delivers the programming from a U.S. studio to a non-U.S. licensed station in a foreign country and broadcasts the programming from the foreign station with a sufficient transmission power or from a geographic location that enables the material to be received consistently in the United States.

68. The Commission finds that applying the same disclosure requirements to programming broadcast pursuant to a section 325(c) permit serves the public interest because, like programming from a U.S.-licensed station, programming from a section 325(c) station is received by audiences in the United States. In this context, the section 325(c) permit holder has full control over its programming content and whether and how any programming provided by foreign governmental entities should be incorporated in the programming broadcast pursuant to its section 325(c) permit and broadcasted by the foreign station. Accordingly, any programming agreement with a section 325(c) holder will be subject to the foreign sponsorship disclosure if material aired on the foreign station has been sponsored, paid for, or furnished for free as an inducement to air by a foreign governmental entity. Under the rules the Commission adopts herein, a section 325(c) permit holder must ensure that the foreign station will broadcast the disclosure along with the programming provided under its section 325(c) permit. The Commission finds that treating U.S.-licensed broadcast station licensees and section 325(c) permittees in the same manner with respect to foreign government-provided programming would serve the public interest and could avoid creating a potential loophole in the regulatory framework with respect to the identification of foreign government-provided programming.

69. The Commission received no comment on its tentative conclusion regarding programming provided pursuant to section 325(c) permits, including regarding whether any aspect of the foreign sponsorship identification requirements should be modified for section 325(c) permit holders. The Commission therefore finds no reason to depart from its tentative conclusion in this regard and find that the foreign sponsorship identification rules will apply to any programming broadcast pursuant to a section 325(c) permit. The Commission notes, however, that the section 325(c) permit holders are not required to maintain an online public inspection file. Accordingly, a section 325(c) permit holder shall place copies of the disclosures required along with the name of the program to which the disclosures were appended in the International Bureau's public filing System (IBFS) under the relevant IBFS section 325(c) permit file. The filing must state the date and time the program aired. In the case of repeat airings of the program, those additional dates and times should also be included. Where an aural announcement was made, its contents must be reduced to writing and placed in the IBFS in the same manner.

70. First Amendment Considerations. Consistent with the NPRM, the Commission finds that the foreign sponsorship identification rules the Commission adopts in this document comport with the strictures of the First Amendment to the Constitution, even under the highest level of scrutiny. As discussed above and at length in the NPRM, the Government has a compelling interest in ensuring that the public is aware of when a party has sponsored content on a broadcast station. The Commission finds that interest is even more important when a foreign governmental entity is involved in the sponsorship of the programming material, and that transparency to American audiences as to the sponsorship of such programming is a compelling interest. Having narrowed the rules even further than initially proposed, the Commission finds the final rules to be “narrowly tailored” to fulfill a “compelling” government interest using the “least restrictive means” to serve that goal. That being said, consistent with the NPRM's further tentative conclusion, the Commission believes the disclosure requirement the Commission adopts in this document will be evaluated under a less restrictive, intermediate scrutiny standard applied to content neutral restrictions on broadcasters and thus will be upheld if narrowly tailored to achieve a substantial government interest. Moreover, because the disclosure requirement is content neutral—that is, it does not ban any type of speech but merely requires factual disclosure of the source of certain of programming—the Commission believes that the rules comply with the First Amendment as they are narrowly tailored to achieve a substantial Government interest. Thus, the Commission finds that, regardless of the level of scrutiny applied, its foreign sponsorship identification rules satisfy the First Amendment.

71. In addition, the Commission has significantly narrowed the scope of the programming covered by this rule and minimized both the amount of speech potentially affected and the compliance burdens placed on broadcast licensees to focus on the context in which the record shows there are significant transparency concerns. As discussed above, the disclosure will now be required only for programming aired pursuant to a lease of airtime if directly or indirectly provided by a foreign governmental entity. By focusing the foreign sponsorship identification rules on leased programming, the Commission excludes from coverage programming that does not raise the same level of transparency concerns and a significant number of broadcast stations that do not engage in such leasing agreements and virtually all non-commercial, educational broadcasters, which rarely lease time to third parties in the manner discussed.

72. Additionally, based on comments in the record, the Commission has clarified above how broadcast stations can comply with the narrowed scope of the rules to ensure that they are no more burdensome than necessary to serve the vital need for transparency about who is attempting to influence viewers. For example, the Commission has adopted the commenters' suggestion that if the programming already contains an appropriate disclosure pursuant to FARA that conveys the same information required by the Commission's rules and that is aired with at least the same frequency, then the station need not apply an additional disclosure.

73. Ultimately, the rules the Commission adopts in this document are a minimal extension of the long-standing sponsorship identification rules required by § 73.1212 of its rules and well within the authority granted under section 317 of the Act. Similarly, the Commission believes its rules are consistent with, and not duplicative of, the equally long-standing labeling requirement contained in FARA. As such, the Commission finds that the modification of the sponsorship identification rules the Commission adopts herein is entirely consistent with the existing statutes and precedent in this area and complies with the First Amendment.

74. Broadcasters have stated that focusing the rules on the type of programming subject to FARA disclosures and exempting inconsequential programming would appropriately focus the Commission's rules on foreign propaganda, rather than the broad array of broadcast content that raised a host of concerns, including First Amendment issues, for NAB and other commenters. Fox similarly states that the rules should apply to longer programming provided by a FARA registrant and aired pursuant to a lease agreement. NAB based its previous claim that the rules would not withstand either intermediate or strict scrutiny on the assertion that they are duplicative of FARA obligations and thus fail to serve a compelling or substantial Government interest. As the Commission has discussed above, its foreign sponsorship identification rules apply to entities and programming not necessarily covered by FARA because they impose obligations directly on broadcasters and their programming suppliers. Further, the rules the Commission adopts herein promote greater transparency by requiring identification of the specific foreign government attempting to influence American viewers rather than referring viewers to a Government website to review. For these reasons, the Commission concludes that its modified foreign sponsorship identification rules comply with the First Amendment.

75. Cost-Benefit Analysis. The NPRM sought comment on the benefits and costs associated with adopting foreign sponsorship identification rules. The NPRM also requested specific data and analysis in support of any claimed costs and benefits. No commenter provided quantified calculations of the benefits or costs of the proposed rules. Nevertheless, the Commission finds that by limiting the proposed rules to the circumstances stated above, the costs associated with the rules are reduced significantly from the initial proposal. Research reviewed by Commission staff also suggests that there are measurable benefits to sponsorship identification disclosures. Moreover, the lack of transparency regarding foreign influence and foreign government sponsored media has become a major public concern, including in Congress and for the United States Department of State. The public filing requirement will provide data on the extent of foreign government sponsored programming airing on broadcast stations. Therefore, the Commission finds that the costs associated with adopting the foreign sponsorship identification rules, as modified herein, do not outweigh the public benefits the Commission has identified regarding transparency of the source of programming heard or viewed by the American public.

76. Regulatory Flexibility Act. As required by the Regulatory Flexibility Act of 1980 (RFA), as amended, an Initial Regulatory Flexibility Certification was incorporated into the NPRM. Pursuant to the RFA, the Commission has prepared a Final Regulatory Flexibility Certification relating to this Report and Order.

77. Paperwork Reduction Act. This Report and Order contains proposed new or revised information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). The requirements will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.

78. Congressional Review Act. The Commission has determined, and Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs, that this rule is “non-major” under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of this Report & Order to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A). The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).

79. Final Regulatory Flexibility Act Analysis. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the NPRM in this proceeding. The Federal Communications Commission (Commission) sought written public comment on the proposals in the NPRM, including comment on the IRFA. The Commission received no comments on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

80. Need for, and Objectives of, the Proposed Rules. As stated in the IRFA, broadcast programming viewers and listeners deserve to know when a foreign governmental entity has provided programming so that they can better evaluate the value and accuracy of such programming. Broadcast stations are entrusted with using the public airwaves to benefit their local communities and this obligation includes ensuring that any foreign government-provided programming is clearly identified. The rules the Commission adopts in this document update its sponsorship identification rules to provide specific guidance on the language and frequency of the necessary disclosures, provide clarity about how to identify a foreign governmental entity, and specify the steps broadcasters should take to ensure compliance with the “reasonable diligence” standard contained in section 317(c) of the Communications Act of 1934, as amended (Act).

81. While the NPRM proposed that the foreign sponsorship identification rules would apply in any circumstance in which a foreign governmental entity directly or indirectly provided material for broadcast or furnished material to a station free of charge (or at nominal cost) as an inducement to broadcast such material, the Report and Order (R&O) narrows the rule to address specifically those circumstances in which a foreign governmental entity is programming a U.S. broadcast station pursuant to the lease of airtime. The rules adopted in the R&O require a specific disclosure at the time of broadcast if material aired pursuant to the lease of time on the station has been sponsored, paid for, or, in the case of political programming or programming involving a controversial issue, furnished for free as an inducement to air by a foreign governmental entity. The focus on leasing agreements narrows the application of the disclosure rules significantly, thereby minimizing the burden on broadcasters while ensuring that viewers and listeners are sufficiently informed as to the origin of material broadcast on stations when foreign governmental entities are providing programming. For example, the Commission anticipates that most, and possibly all, NCE station programming arrangements will fall outside the ambit of the rules given limitations on the ability of NCE stations to engage in leasing agreements. The foreign sponsorship identification rules apply to any programming broadcast pursuant to a section 325(c) permit. A section 325(c) permit is required when an entity produces programming in the United States but, rather than broadcasting the programming from a U.S.-licensed station, transmits or delivers the programming from a U.S. studio to a non-U.S. licensed station in a foreign country and broadcasts the programming from the foreign station with a sufficient transmission power or from a geographic location that enables the material to be received consistently in the United States.

82. The R&O defines foreign governmental entities by referring to existing statutory definitions included in the Foreign Agents Registration Act of 1938, as amended (FARA) and the Communications Act. The definition adopted in the R&O includes:

(1) A “government of a foreign country” as defined by FARA;

(2) A “foreign political party” as defined by FARA;

(3) An individual or entity registered as an “agent of a foreign principal,” under section 611(c) of FARA, whose “foreign principal” is a “government of a foreign country,” a “foreign political party,” or is directly or indirectly operated, supervised, directed, owned, controlled, financed, or subsidized by a “government of a foreign country” or by a “foreign political party” as defined by FARA, and that is acting in its capacity as an agent of such “foreign principal;”

(4) An entity meeting the definition of a “U.S.-based foreign media outlet” pursuant to section 722 of the Act that has filed a report with the Commission.

83. Based on broadcaster concerns regarding the difficulty of determining whether an entity is a “foreign mission” as included in the proposed definition of “foreign governmental entity,” the final definition the Commission adopts in this R&O excludes “foreign missions.”

84. The revised required standard foreign sponsorship identification disclosure must state:

85. The R&O details what is required of broadcasters to meet the “reasonable diligence” standard contained in section 317(c) of the Act so that broadcasters can determine if a foreign sponsorship identification disclosure is needed. The R&O concludes that such diligence at a minimum requires the broadcaster to at the time of agreement and at renewal:

(1) Inform the lessee of the foreign sponsorship disclosure requirement;

(2) Inquire of the lessee whether it falls into any of the categories that qualify it as a “foreign governmental entity”;

(3) Inquire of the lessee whether it knows if anyone further back in the chain of producing/distributing the programming that will be aired pursuant to the lease agreement, or a sub-lease, qualifies as a foreign governmental entity and has provided some type of inducement to air the programming;

(4) Independently confirm the lessee's status, by consulting the Department of Justice's FARA website and the Commission's semi-annual U.S.-based foreign media outlets reports. This need only be done if the lessee states that it does not fall into one of the covered categories and that there is no separate need for a disclosure because no one further back in the chain of producing/transmitting the programming falls into one of the covered categories and has provided some form of service or consideration as an inducement to broadcast the programming; and

(5) Memorialize the above-listed inquiries and investigations to track compliance in the event documentation is required to respond to any future Commission inquiry on the issue.

86. The R&O specifies that the licensee must memorialize the results of its diligence in some manner for its own records and maintain this documentation for the remainder of the then-current license term or one year, whichever is longer. In addition, the R&O clarifies that, under the revised rules, the lessee of airtime, in accordance with sections 507(b) and (c) of the Act, also holds an independent obligation to communicate information to the licensee relevant to determining whether a disclosure is needed.

87. In the interest of ensuring transparency for viewers and listeners of foreign government-provided programming, the R&O requires that, if the primary language of the programming is other than English, the disclosure statement should be presented in the primary language of the programming. The disclosure for televised programming should be in letters equal to or greater than four percent of the vertical picture height and be visible for not less than four seconds to ensure readability. As this requirement tracks existing rules for televised political advertisements, television licensees are familiar with this format. For radio broadcasts, the R&O incorporates the existing DOJ interpretation for programming provided by FARA registrants: That the disclosure shall be audible. The R&O requires that the disclosure be made at both the beginning and end of the programming, and, consistent with an existing requirement for “political broadcast matter,” for any broadcast of 5 minutes or less, only once. Finally, for programming longer than sixty minutes, the disclosure must be made at regular intervals during the broadcast, but no less frequently than once every sixty minutes. The R&O finds that periodic announcements are necessary, particularly in those instances where a foreign governmental entity is continually broadcasting programming without an identifiable beginning or end, such as through a lease of a 100% of a station's airtime. Other than this final requirement for longer programming, the new size, frequency and duration requirements of the new foreign sponsorship identification rules are consistent existing sponsorship identification rules and are thus familiar to broadcasters.

88. Consistent with the NPRM, the R&O adopts a requirement that stations airing foreign government-provided programming must place copies of the disclosures in their Online Public Information Files (OPIFs), in a standalone folder marked as “Foreign Government-Provided Programming Disclosures” so that the material is readily identifiable to the public. The R&O adopts the proposal discussed in the NPRM, that, to the extent the foreign programming consists of a political matter or matter involving the discussion of a controversial issue of public importance, licensees obtain and disclose in their OPIFs a list of the persons operating the foreign governmental entity that has provided the programming. The R&O rules require licensees to place in their OPIFs the actual disclosure and the name of the program to which the disclosure was appended. In addition, the licensee must state the date and time the program aired. If there are repeat airings of the program, then those additional dates and times should also be included in the OPIF. In response to broadcaster concerns about burdens, the R&O does not adopt the NPRM' s “as soon as possible” standard for updating OPIFs contained in § 73.1943 of existing rules, nor interpret this phrase to mean “within twenty-four hours of the material being broadcast.” Rather, for frequency of updating OPIFs, the R&O adopts rules that align with an existing requirement to update the TV Issues/Programs Lists on a quarterly basis, as this will minimize the need for licensees to track different public filing requirements. The R&O also adopts the same OPIF two-year retention period as currently exists for the retention of lists of the executives of any entity that sponsored programming concerning a political or controversial matter. For broadcast stations that do not have obligations to maintain OPIFs, the Commission recommends such stations retain a record of their disclosures in their station files consistent with previous Commission guidance. The R&O rules also require section 325(c) permit holders must place copies of the disclosures required along with the name of the program to which the disclosures were appended in the International Bureau's public filing System (IBFS) under the relevant IBFS section 325(c) permit file. The filing must state the date and time the program aired. In the case of repeat airings of the program, those additional dates and times should also be included. Where an aural announcement was made, its contents must be reduced to writing and placed in the IBFS in the same manner.

89. Summary of Significant Issues Raised by Public Comments in Response to the IRFA. There were no comments filed in response to the IRFA.

90. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to a comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.

91. Description and Estimate of the Number of Small Entities to Which the Rules Apply. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rule revisions, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act (SBA). A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. Below, the Commission provides a description of such small entities, as well as an estimate of the number of such small entities, where feasible.

92. Television Broadcasting. This U.S. Economic Census category comprises establishments primarily engaged in broadcasting images together with sound. These establishments operate television broadcast studios and facilities for the programming and transmission of programs to the public. These establishments also produce or transmit visual programming to affiliated broadcast television stations, which in turn broadcast the programs to the public on a predetermined schedule. Programming may originate in their own studio, from an affiliated network, or from external sources. The SBA has created the following small business size standard for such businesses: Those having $41.5 million or less in annual receipts. The 2012 Economic Census reports that 751 firms in this category operated in that year. Of that number, 656 had annual receipts of $25 million or less, 25 had annual receipts between $25 million and $49,999,999 and 70 had annual receipts of $50 million or more. Based on these data, the Commission estimates that the majority of commercial television broadcast stations are small entities under the applicable size standard.

93. Additionally, the Commission has estimated the number of licensed commercial television stations to be 1,374. Of this total, 1,269 stations (or 92%) had revenues of $41.5 million or less in 2020, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) on April 20, 2021, and therefore these stations qualify as small entities under the SBA definition. In addition, the Commission estimates the number of noncommercial educational stations to be 384. The Commission does not compile and does not have access to information on the revenue of NCE stations that would permit it to determine how many such stations would qualify as small entities. There are also 386 Class A stations. Given the nature of this service, the Commission presumes that all of these stations qualify as small entities under the applicable SBA size standard.

94. Radio Stations. This U.S. Economic Census category comprises establishments primarily engaged in broadcasting aural programs by radio to the public. Programming may originate in the establishment's own studio, from an affiliated network, or from external sources. The SBA has created the following small business size standard for such businesses: Those having $41.5 million or less in annual receipts. Economic Census data for 2012 show that 2,849 firms in this category operated in that year. Of that number, 2,806 operated with annual receipts of less than $25 million per year, 17 with annual receipts between $25 million and $49,999,999 million and 26 with annual receipts of $50 million or more. Based on these data, the Commission estimates that the majority of commercial radio broadcast stations were small under the applicable SBA size standard.

95. The Commission has estimated the number of licensed commercial AM radio stations to be 4,546 and the number of commercial FM radio stations to be 6,682 for a total of 11,228 commercial stations. Of this total, 11,227 stations (or 99%) had revenues of $41.5 million or less in 2020, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) on April 20, 2021, and therefore these stations qualify as small entities under the SBA definition. In addition, there were 4,213 noncommercial educational FM stations. The Commission does not compile and does not have access to information on the revenue of NCE radio stations that would permit it to determine how many such stations would qualify as small entities.

96. In assessing whether a business concern qualifies as small under the above definition, business (control) affiliations must be included. The Commission's estimate, therefore, likely overstates the number of small entities that might be affected by its action because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. In addition, an element of the definition of “small business” is that the entity not be dominant in its field of operation. The Commission is unable at this time to define or quantify the criteria that would establish whether a specific radio or television station is dominant in its field of operation. Accordingly, the estimate of small businesses to which the proposed rules may apply does not exclude any radio or television station from the definition of small business on this basis and is therefore possibly over-inclusive.

97. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements. The R&O adopts rules that require a specific disclosure at the time of broadcast if material aired pursuant to the lease of time on the station has been sponsored, paid for, or, in the case of political programming or programming involving a controversial issue, furnished for free as an inducement to air by a “foreign governmental entity.” As described above, the term “foreign governmental entity” is defined by reference to existing definitions in the Foreign Agents Registration Act of 1938 as amended (FARA) and Section 722 of the Communications Act of 1934, as amended (the Act). The R&O requires that stations use the following standard disclosure:

98. In response to requests from broadcasters, including small broadcasters, the R&O details what is required of broadcasters to meet the “reasonable diligence” standard contained in section 317(c) of the Act so that broadcasters can determine if a foreign sponsorship identification disclosure is needed. As described above, the R&O lists five specific steps broadcasters must take to satisfy the standard. The R&O states that searches of the FARA database may require more than simply reviewing the initial screens that appear on the list, but rather may also necessitate reviewing materials filed as part of an agent's registration and using whatever search features are available to investigate the list's contents. Licensees should also check if the lessee's name appears in the Commission's semi-annual reports of U.S.-based foreign media outlets. The R&O also requires, that, at regular intervals, the licensee should memorialize the results of its diligence in some manner for its own records and maintain this documentation for the remainder of the then-current license term or one year, whichever is longer. The R&O clarifies that, under the revised rules, the lessee of the airtime, in accordance with sections 507(b) and (c) of the Act, also holds an independent obligation to communicate information to the licensee relevant to determining whether a disclosure is needed.

99. In the interest of ensuring transparency for viewers and listeners of foreign government-provided programming, the R&O requires that, if the primary language of the programming is other than English, the disclosure statement should be presented in the primary language of the programming. The disclosure for televised programming should be in letters equal to or greater than four percent of the vertical picture height and be visible for not less than four seconds to ensure readability. As this requirement tracks existing rules for televised political advertisements, television licensees are familiar with this format, minimizing their compliance burdens. For radio broadcasts, the R&O incorporates the existing DOJ interpretation for programming provided by FARA registrants: That the disclosure shall be audible. The R&O requires that the disclosure be made at both the beginning and end of the programming, and, consistent with an existing requirement for “political broadcast matter,” for any broadcast of 5 minutes or less, only once. Finally, for programming longer than sixty minutes, the disclosure must be made at regular intervals during the broadcast, but no less frequently than once every sixty minutes. The R&O finds that periodic announcements are necessary, particularly in those instances where a foreign governmental entity is continually broadcasting programming without an identifiable beginning or end, such as through a lease of 100% of a station's airtime. Other than this final requirement for longer programming, the new rules are consistent with existing sponsorship identification rules and are thus familiar to broadcasters to reduce compliance burdens.

100. Consistent with the NPRM, the R&O adopts a requirement that stations airing foreign government-provided programming must place copies of the disclosures in their Online Public Information Files (OPIFs), in a standalone folder marked as “Foreign Government-Provided Programming Disclosures” so that the material is readily identifiable to the public. The R&O adopts the proposal discussed in the NPRM, that, to the extent the foreign programming consists of a political matter or matter involving the discussion of a controversial issue of public importance, licensees obtain and disclose in their OPIFs a list of the persons operating the foreign governmental entity providing the programming. In response to broadcaster concerns about burdens, the R&O also does not adopt the NPRM' s “as soon as possible” standard for updating OPIFs contained in § 73.1943 of existing rules, nor interpret this phrase to mean “within twenty-four hours of the material being broadcast.” Rather, for frequency of updating OPIFs, the R&O adopts rules that align with an existing requirement to update the TV Issues/Programs Lists on a quarterly basis, as this will minimize the need for licensees to track different public filing requirements. The R&O also adopts the same OPIF two-year retention period as currently exists for the retention of lists of the executives of any entity that sponsored programming concerning a political or controversial matter.

101. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in adopting its rules, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

102. While the NPRM proposed that foreign sponsorship disclosure rules should apply in any circumstances in which a foreign governmental entity directly or indirectly provided material for broadcast or furnished material to a station free of charge (or at nominal cost) as an inducement to broadcast such material, the R&O narrows the rule to address specifically those circumstances in which a foreign governmental entity is programming a U.S. broadcast station pursuant to the lease of airtime. The rules adopted in the R&O require a specific disclosure at the time of broadcast if material aired pursuant to the lease of time on the station has been sponsored, paid for, or, in the case of political programming or programming involving a controversial issue, furnished for free as an inducement to air by a foreign governmental entity. The focus on leasing agreements narrows the application of the disclosure rules significantly, thereby minimizing the burden on broadcasters while ensuring that viewers and listeners are sufficiently informed as to the origin of material broadcast on stations when foreign governmental entities are providing programming. Most, and possibly all, noncommercial educational NCE programming arrangements will fall outside the ambit of the narrowed rules given limitations on the ability of NCE stations to engage in leasing arrangements. Also, while the NPRM proposed to include “foreign missions,” as designated pursuant to the Foreign Missions Act, within the definition of foreign governmental entities that would trigger foreign sponsorship identification, based on broadcaster concerns regarding the difficulty and compliance burden of including these entities, the R&O eliminates then from the definition.

103. Additionally, based on comments from broadcasters, including small broadcasters, the R&O clarifies compliance obligations to ensure that, under the narrowed scope of the rules, they are no more burdensome than necessary to serve the vital need for transparency about who is attempting to influence viewers and listeners. The R&O details what is required of broadcasters to meet the “reasonable diligence” standard contained in section 317(c) of the Act so that broadcasters can determine if a foreign sponsorship identification disclosure is needed. The R&O lists specific steps broadcasters must take to satisfy the standard. The R&O also advises broadcasters to include a provision in their lease agreements requiring the lessee to notify the broadcaster about any change in the lessee's status such as to trigger the foreign sponsorship identification rules. The R&O also adopts broadcaster suggestions to reduce compliance burdens by matching, to the extent possible, disclosure language, size, frequency and duration requirements contained in existing sponsorship identification rules and allowing broadcasters to satisfy the new foreign sponsorship identification requirements by simply passing through existing FARA programming labels if they also disclose the country involved with provision of the programming and comport with the size and frequency requirements contained in the R&O. Similarly, in response to comments from broadcasters, including small broadcasters, to the extent possible, the Commission matches obligations to place and update disclosures in station OPIFs to other broadcaster OPIF obligations. Broadcasters have indicated that implementing such changes would mean the burden on broadcasters would be considerably less and more appropriate.

104. The NPRM sought comment on the benefits and costs associated with adopting foreign government-provided programming sponsorship identification rules and requested specific data and analysis in support of any claimed costs and benefits. No commenters provided quantified calculations of the benefits or costs of the proposed rules. Thus, the R&O finds that by narrowing the scope of the programming for which foreign governmental entity sponsorship is required and minimizing compliance burdens as described in the preceding paragraphs, the costs for broadcasters, including small broadcasters, associated with the rules are reduced significantly from the initial proposal. Research reviewed by Commission staff also suggests that there are measurable benefits to sponsorship identification disclosures. Therefore, the R&O finds that the costs, including the costs for small businesses, associated with adopting the rules, as modified by the R&O, do not outweigh the substantial public benefits associated with transparency regarding the source of programming heard or viewed by the American public.

105. Report to Congress. The Commission will send a copy of this R&O, including this FRFA, in a report to Congress and the Government Accountability Office pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. In addition, the Commission will send a copy of the R&O, including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the R&O and FRFA (or summaries thereof) will also be published in the Federal Register .

106. Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rule. The R&O contains requirements that may somewhat overlap with, but do not duplicate, DOJ rules for labelling of broadcast programming provided by an “agent of a foreign principal,” as that term is defined in the Foreign Agents Registration Act.

107. Ordering Clauses. Accordingly, it is ordered that, pursuant to the authority found in sections 1, 2, 4(i), 4(j), 303(r), 317, 325(c), 403, and 507 of the Communications Act, 47 U.S.C. 151, 152, 154(i), 154(j), 303(r), 317, 325(c), 403, and 508 this Report and Order is adopted and shall be effective 30 days after publication in the Federal Register .

108. It is further ordered that part 73 of the Commission's rules is amended as set forth in the Final Rules. The rule changes to § 73.1212 adopted herein contain new or modified information collection requirements subject to OMB review under the Paperwork Reduction Act. The Commission directs the Media Bureau to announce the effective date for those information collections in a document published in the Federal Register after the completion of OMB review and directs the Media Bureau to cause § 73.1212 to be revised accordingly.

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

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

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:

NMFS manages the NWHI commercial lobster fishery under the Fishery Ecosystem Plan for the Hawaiian Archipelago. The regulations at 50 CFR 665.252(b) require NMFS to publish an annual harvest guideline for lobster Permit Area 1, comprised of Federal waters around the NWHI.

Regulations governing the Papahanaumokuakea Marine National Monument in the NWHI prohibit the unpermitted removal of monument resources (50 CFR 404.7), and establish a zero annual harvest guideline for lobsters (50 CFR 404.10(a)). Accordingly, NMFS establishes the harvest guideline for the NWHI commercial lobster fishery for calendar year 2021 at zero lobsters. Harvest of NWHI lobster resources is not allowed.