On March 29, 2021, OPM published at 86 FR 16401, a notice in the Federal Register to revise the normal cost percentages under the Federal Employees' Retirement System (FERS) Act of 1986, Public Law 99-335, 100 Stat. 514, as amended, based on economic assumptions and demographic factors adopted by the Board of Actuaries of the Civil Service Retirement System. By statute under 5 U.S.C. 8461(i), the revisions to the actuarial assumptions require corresponding changes in factors used to produce actuarially equivalent benefits when required by the FERS Act. As a result, on June 30, 2021, at 86 FR 34637, OPM published a proposed rule in the Federal Register to revise the table of reduction factors in appendix A to subpart C of part 843 of title 5, Code of Federal Regulations, for early commencing dates of survivor annuities for spouses of separated employees who die before the date on which they would be eligible for unreduced deferred annuities, and to revise the annuity factor for spouses of deceased employees who die in service when those spouses elect to receive the basic employee death benefit in 36 installments under 5 CFR 843.309. OPM received one comment that simply disagreed with the proposed rule without citing any basis for the disagreement. Because this comment is not clear, OPM is unable to provide a substantive response to it.

OPM has examined the impact of this rule as required by Executive Order 12866 and Executive Order 13563, which directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public, health, and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects of $100 million or more in any one year. This rule was not designated as a “significant regulatory action,” under Executive Order 12866.

The Office of Personnel Management certifies that this rule will not have a significant economic impact on a substantial number of small entities.

We have examined this rule in accordance with Executive Order 13132, Federalism, and have determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or tribal governments.

This regulation meets the applicable standard set forth in Executive Order 12988.

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This action pertains to agency management, personnel, and organization and does not substantially affect the rights or obligations of nonagency parties and, accordingly, is not a “rule” as that term is used by the Congressional Review Act (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.

Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number.

This rule involves an OMB approved collection of information subject to the PRA Application for Death Benefits (FERS)/Documentation and Elections in Support of Application for Death Benefits when Deceased was an Employee at the Time of Death (FERS), 3206-0172. The public reporting burden for this collection is estimated to average 60 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The total burden hour estimate for this form is 16,751 hours. The systems of record notice for this collection is: OPM SORN CENTRAL-1-Civil Service Retirement and Insurance Records.

For the reasons stated in the preamble, the Office of Personnel Management amends 5 CFR part 843 as follows:

On May 8, 2021, the Colonial Pipeline Company announced that it had halted its pipeline operations due to a ransomware attack. This attack temporarily disrupted critical supplies of gasoline and other refined petroleum products throughout the East Coast and demonstrated the significant threat such attacks pose to the country's infrastructure and economic well-being. In response, TSA issued Security Directive Pipeline-2021-01 on May 26, 2021, which required Owner/Operators to: (1) Report cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency (CISA) within 12 hours; (2) appoint a cybersecurity coordinator to be available 24/7 to coordinate with TSA and CISA; and (3) conduct a self-assessment of cybersecurity practices, identify any gaps, and develop a plan and timeline for remediation. 1 As ratified by the TSOB on July 3, 2021, this first security directive became effective on May 28, 2021, and is set to expire on May 28, 2022. 2

Due to a continuing active threat to pipeline cybersecurity, TSA issued Security Directive Pipeline-2021-02 on July 19, 2021, which requires Owner/Operators to implement additional and immediately needed cybersecurity measures to prevent disruption and degradation to their infrastructure in response to an ongoing threat. Specifically, Security Directive Pipeline-2021-02 requires Owner/Operators to take the following additional actions:

• Implement specified mitigation measures to reduce the risk of compromise from a cyberattack, drawing on guidelines published by the National Institute of Standards and Technology (NIST) and recommendations from CISA as reflected in a series of recent alerts;  3

• Develop a Cybersecurity Contingency/Response Plan to reduce the risk of operational disruption or functional degradation of information technology and operational technology systems in the event of a malicious cyber intrusion; and

• Test the effectiveness their cybersecurity practices through an annual cybersecurity architecture design review conducted by a third party.

TSA issued this Security Directive pursuant to its authority under 49 U.S.C. 114( l )(2), which authorizes TSA to issue emergency security directives without providing notice or an opportunity for public comment when the TSA Administrator “determines that a . . . security directive must be issued immediately in order to protect transportation security . . . ”. Each of the measures have been carefully evaluated and determined critical to protect this critical sector in light of the current threat. The directive became effective on July 26, 2021, and expires on July 26, 2022.

TSA has broad statutory responsibility and authority to safeguard the nation's transportation system, including pipelines. 4 The TSOB—a body consisting of the Secretary of Homeland Security, the Secretary of Transportation, the Attorney General, the Secretary of Defense, the Secretary of the Treasury, the Director of National Intelligence, or their designees, and a representative of the National Security Council—reviews certain regulations and security directives consistent with law. 5 Security directives issued pursuant to the procedures in 49 U.S.C. 114( l )(2) “shall remain effective for a period not to exceed 90 days unless ratified or disapproved by the Board or rescinded by the Administrator.”  6

On August 4, 2021, the chairman of the TSOB convened an in-person a meeting of the Board for the purpose of reviewing the security directive. At the meeting, the TSOB discussed the threat to the cybersecurity of the pipeline industry, the actions required by Security Directive Pipeline-2021-02, and the need for TSA to issue the security directive pursuant to its emergency authority under 49 U.S.C. 114( l )(2) to prevent the disruption and degradation of the country's critical pipeline infrastructure. There was unanimous consensus that the Security Directive should be in place. Following this review, on August 17, 2021, the TSOB ratified Security Directive-2021-02 in its entirety.

Trichinella are parasitic nematodes (roundworms) that are found in many warm-blooded carnivores and omnivores, including swine. There are eight known species of Trichinella nematodes: Trichinella britovi, Trichinella murrelli, Trichinella nativa, Trichinella nelsoni, Trichinella papuae, Trichinella pseudospiralis, Trichinella spiralis, and Trichinella zimbabwensis. Trichinae is a generic term that refers to all species of Trichinella.

In 2008, the Animal and Plant Health Inspection Service (APHIS) established the Voluntary Trichinae Certification Program, the regulations for which were contained in 9 CFR part 149. Those regulations provided for the certification of pork production sites that follow certain prescribed management practices that reduce, eliminate, or avoid the risk of exposure of swine to Trichinella spp. Under the regulations, a producer's initial enrollment and continued participation in the Trichinae Certification Program required that the producer adhere to all of the good production practices set out in the regulations, as confirmed by periodic site audits, and comply with other recordkeeping and program requirements provided in part 149.

Producer participation in this voluntary program has decreased since the program began. Only two producers re-enrolled in the past 3 years. The lack of producer interest and involvement has become problematic for a number of reasons. Maintaining the program places demands on limited APHIS funding and human resources that could be better directed elsewhere. In addition, the existence of a program that producers have little interest in has had trade implications. Trading partners have questioned our ability to certify freedom of trichinae in exported products, given that the vast majority of the products are not produced under the auspices of the Trichinae Certification Program.

In a proposed rule  1 published in the Federal Register on March 3, 2021, (86 FR 12293-12294; Docket No. APHIS-2020-0065), we proposed to eliminate the Voluntary Trichinae Certification Program by removing part 149 from the regulations. We also notified the public that we would no longer maintain any activity associated with the program, such as training for qualified accredited veterinarians, on-farm audits, or any other administrative process associated with program maintenance and support. The proposed elimination of the program was intended to benefit the swine industry by reducing possible confusion about the trichinae-free status of exported products, while allowing APHIS to avoid incurring the costs associated with program administration and payments to auditors and to address its resources to areas of greater need.

We solicited comments concerning our proposal for 60 days ending May 3, 2021. We received 5 comments by that date. They were from individual commenters without institutional affiliations. All the commenters supported the proposed rule. Therefore, for the reasons given in the proposed rule, we are adopting the proposed rule as a final rule, without change.

This final rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available on the Regulations.gov website (see footnote 1 in this document for a link to Regulations.gov ) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT .

In this final rule, APHIS is eliminating the Voluntary Trichinae Certification Program and removing its associated regulations from title 9 of the Code of Federal Regulations.

Producer participation has decreased significantly since the voluntary program began. Only 2 producers with 23 audit sites re-enrolled in the past 3 years. Continuation of the program given the lack of producer participation is difficult to justify, especially as it may have trade implications. APHIS plays a crucial role in supporting the U.S. pork industry and its exports, which have increased substantially in recent years. Since 2007, U.S. pork exports have more than doubled in value (110 percent increase) and in quantity (109 percent increase). Trading partners, however, have questioned our ability to certify freedom of trichinae in exported products, given that the vast majority of the products are not produced under the auspices of the Voluntary Trichinae Certification Program.

The Small Business Administration (SBA) small business size standard for hog and pig farming is annual revenue of not more than $1 million. According to the 2017 Agricultural Census, 64,871 hog and pig farms sold over 235 million hogs and pigs, with total sales of $26.3 billion in 2017. Average annual sales per farm was 3,267 head valued at $404,907, well below the SBA small-entity standard.

Because the Voluntary Trichinae Certification Program did not progress beyond the pilot stage, the participating producers have not borne program costs.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.)

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

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

This final rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and will reduce those currently approved by the Office of Management and Budget under control number 0579-0065.

On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Inflation Adjustment Act), Public Law 114-74, 129 Stat. 584, was enacted. This act amended the Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101-410, 104 Stat. 890 (the 1990 Inflation Adjustment Act), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The 2015 Inflation Adjustment Act required agencies to issue a final rule by August 1, 2016, to adjust the level of civil monetary penalties with an initial “catch-up” adjustment and to annually adjust these monetary penalties for inflation by January 15 of each subsequent year.

Based on the definition of a “civil monetary penalty” in the 1990 Inflation Adjustment Act, agencies are to make adjustments only to the civil penalties that (i) are for a specific monetary amount as provided by Federal law or have a maximum amount provided for by Federal law; (ii) are assessed or enforced by an agency; and (iii) are enforced or assessed in an administrative proceeding or a civil action in the Federal courts. Therefore, penalties that are stated as a percentage of an indeterminate amount or as a function of a violation (penalties that encompass actual damages incurred) are not to be adjusted.

SBA published in the Federal Register an interim final rule with its initial adjustments to the civil monetary penalties, including an initial “catch-up” adjustment, on May 19, 2016, (81 FR 31489) with an effective date of August 1, 2016. SBA published its first annual adjustments to the monetary penalties on February 9, 2017 (82 FR 9967), with an immediate effective date. SBA published its subsequent annual adjustments for 2018 on February 21, 2018 (83 FR 7361), for 2019 on April 1, 2019 (84 FR 12059), and for 2020 on March 10, 2020 (85 FR 13725), all with immediate effective dates. This rule will establish the adjusted penalty amounts for 2021 with an immediate effective date upon publication.

On December 23, 2020, the Office of Management and Budget (OMB) published its annual guidance memorandum for 2021 civil monetary penalties inflation adjustments (M-21-10, Implementation of Penalty Inflation Adjustments for 2021, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015). The memorandum provides the formula for calculating the annual adjustments based on the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October preceding the adjustment, and specifically on the change between the October CPI-U preceding the date of adjustment and the prior year's CPI-U. Based on this methodology, the 2021 civil monetary penalty inflation adjustment factor is 1.01182 (October 2020 CPI-U (260.388)/October 2019 CPI-U (257.346). The annual adjustment amounts identified in this rule were obtained by applying this multiplier of 1.01182 to those penalty amounts that were published in SBA's 2020 adjustments to civil monetary penalties at 85 FR 13725 (March 10, 2020) and to the civil monetary penalty found at 13 CFR 120.1500(b)(2), first published March 16, 2020, at 85 FR 14783.

This rule adjusts civil monetary penalties authorized by the Small Business Act, the Small Business Investment Act of 1958 (SBIAct), the Program Fraud Civil Remedies Act, and the Byrd Amendment to the Federal Regulation of Lobbying Act. These penalties and the implementing regulations are discussed below.

1. 13 CFR 107.665—Civil Penalties.

SBA licenses, regulates, and provides financial assistance to financial entities called small business investment companies (SBICs). Pursuant to section 315 of the SBIAct, 15 U.S.C. 687g, SBA may impose a penalty on any SBIC for each day that it fails to comply with SBA's regulations or directives governing the filing of regular or special reports. The penalty for non-compliance is incorporated in § 107.665 of the SBIC program regulations.

This rule amends § 107.665 to adjust the current civil penalty from $271 to $274 per day of failure to file. The current civil penalty of $271 was multiplied by the multiplier of 1.01182 to reach a product of $274, rounded to the nearest dollar.

2. 13 CFR 120.465—Civil penalty for late submission of required reports.

According to the regulations at § 120.465, any SBA Supervised Lender, as defined in 13 CFR 120.10, that violates a regulation or written directive issued by the SBA Administrator regarding the filing of any regular or special report is subject to the civil penalty amount stated in § 120.465(b) for each day the company fails to file the report, unless the SBA Supervised Lender can show that there is reasonable cause for its failure to file. This penalty is authorized by section 23(j)(1) of the Small Business Act, 15 U.S.C. 650(j)(1).

This rule amends § 120.465(b) to adjust the current civil penalty from $6,740 to $6,820 per day of failure to file. The current civil penalty of $6,740 was multiplied by the multiplier of 1.01182 to reach a product of $6,820, rounded to the nearest dollar.

3. 13 CFR 120.1500—Types of Formal Enforcement Actions—SBA Lenders.

According to the regulations at § 120.1500(b), SBA may assess a civil monetary penalty against a 7(a) Lender. In determining whether to assess a civil monetary penalty and, if so, in what amount, SBA may consider: the gravity ( e.g., severity and frequency) of the violation; the history of previous violations; the financial resources and good faith of the 7(a) Lender; and any other matters as justice may require. This penalty is authorized by the Small Business Act, 15 U.S.C. 657t(e)(2)(B).

This rule amends § 120.1500(b)(2) to adjust the current civil penalty from $250,000 to $252,955. The current civil penalty of $250,000 was multiplied by the multiplier of 1.01182 to reach a product of $252,955.

4. 13 CFR 142.1—Overview of Regulations.

SBA has promulgated regulations at 13 CFR part 142 to implement the civil penalties authorized by the Program Fraud Civil Remedies Act of 1986 (PFCRA), 31 U.S.C. 3801-3812. Under the current regulation at 13 CFR 142.1(b), a person who submits, or causes to be submitted, a false claim or a false statement to SBA is subject to a civil penalty of not more than $11,665, for each statement or claim.

This rule amends § 142.1(b) to adjust the current civil penalty from $11,665 to $11,803. The adjusted civil penalty amount was calculated by multiplying the current civil penalty of $11,665 by the multiplier of 1.01182 to reach a product of $11,803, rounded to the nearest dollar.

5. 13 CFR 146.400—Penalties.

SBA's regulations at 13 CFR part 146 govern lobbying activities by recipients of federal financial assistance. These regulations implement the authority in 31 U.S.C. 1352 and impose penalties on any recipient that fails to comply with certain requirements in the part. Specifically, under § 146.400(a) and (b), penalties may be imposed on those who make prohibited expenditures or fail to file the required disclosure forms or to amend such forms, if necessary.

This rule amends § 146.400(a) and (b) to adjust the current civil penalty amounts to “not less than $20,731 and not more than $207,314.” The current civil penalty amounts of $20,489 and $204,892 were multiplied by the multiplier of 1.01182 to reach a product of $20,731 and $207,314, respectively, rounded to the nearest dollar.

This rule also amends § 146.400(e) to adjust the civil penalty that may be imposed for a first-time violation of § 146.400(a) and (b) to $20,731 and to adjust the civil penalty that may be imposed for second and subsequent offenses to “not less than $20,731 and not more than $207,314.” The current civil penalty amounts of $20,489 and $204,892 were multiplied by the multiplier of 1.01182 to reach a product of $20,731 and $207,314 respectively, rounded to the nearest dollar.

The Office of Management and Budget determined that this final rule is not a significant regulatory action under Executive Order 12866.

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

For the purpose of Executive Order 13132, SBA determined that the rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, this final rule has no federalism implications warranting preparation of a federalism assessment.

The APA requires agencies generally to provide notice and an opportunity for public comment before adopting a rule unless the agency for good cause finds that notice and comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b). The APA also requires agencies to allow at least 30-days after publication for a final rule to become effective “except as otherwise provided by the agency for good cause found and published with the rule.” (5 U.S.C. 553(d). For the following reasons prior public notice, an opportunity for public comment, and a delayed effective date are not required for this rule. The 2015 Inflation Adjustment Act directs agencies to adjust their civil penalties annually notwithstanding section 553 of the APA. 28 U.S.C. 2461 note, sec. 4(b)(2). This exemption from the notice and comment, and delayed effective date requirements of the APA, in effect provides SBA with the good cause justification to promulgate this as a final rule that will become effective immediately on the date it is published in the Federal Register . Additionally, the 2015 Inflation Adjustment Act provides a non-discretionary cost-of-living formula for making the annual adjustment to the civil monetary penalties; SBA merely performs the ministerial task of calculating the amount of the adjustments. Therefore, even without the statutory exemption from the APA, notice and comment would be unnecessary.

The Office of Management and Budget determined that this rule is not a major rule under 5 U.S.C. 804(2).

SBA has determined that this rule does not impose additional reporting or recordkeeping requirements.

The Regulatory Flexibility Act (RFA) requires agencies to consider the effect of their regulatory actions on small entities, including small non-profit businesses, and small local governments. Pursuant to the RFA, when an agency issues a rule, the agency must prepare an analysis that describes whether the impact of the rule will have a significant economic impact on a substantial number of such small entities. However, the RFA requires such analysis only where notice and comment rulemaking are required. As stated above, SBA has express statutory authority to issue this rule without regard to the notice and comment requirement of the APA. Since notice and comment is not required before this rule is issued, SBA is not required to prepare a regulatory analysis.

For the reasons set forth in the preamble, SBA amends 13 CFR parts 107, 120, 142, and 146 as follows:

When Congress created EDA in 1965, it recognized the unique economic needs of American Indian Nations (AINs or Tribes) and carved out a special provision within PWEDA that authorized Indian Tribes to be eligible for a 100% grant rate, across all of EDA's PWEDA programs. 42 U.S.C. 3144(c)(1). No other category of eligible entity is provided such broad flexibility with regard to grant rate under PWEDA.

PWEDA defines “Indian Tribe” as any Indian tribe, band, nation, pueblo, or other organized group or community, including any Alaska Native village or Regional Corporation (as defined in or established under the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq. )), that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. 42 U.S.C. 3122(7).

EDA has long recognized that AINs have diverse organizational, governance, and operating structures. In deference to the special government-to-government relationship that exists between the U.S. Government and AINs and recognizing their sovereign interest in determining their own organizational arrangements, EDA has historically interpreted the term “Indian Tribe” broadly to include a range of Tribally controlled entities in addition to the AIN's primary governing body. EDA's regulations, codified at 13 CFR 300.3, therefore provide that the term “Indian Tribe” includes the governing body of an Indian Tribe, non-profit Indian corporation (restricted to Indians), Indian authority, or other non-profit Indian tribal organization or entity; provided that the Indian tribal organization or entity is wholly owned by, and established for the benefit of, the Indian Tribe or Alaska Native Village.

For over 45 years, EDA's regulations have limited the types of organizations included within the term “Indian Tribe” to non-profit Tribal organizations. The word non-profit first appeared in EDA's regulations in 1973 to condition the term “corporation.” In 1999, EDA further modified the definition and added a second use of “non-profit” to serve as an overarching descriptor to the entire list of eligible entities. 1

There is no background preamble language or other documentation that EDA has found that explains EDA's reasoning at that time for including “non-profit” as a limitation in these two instances. As a result of the use of the term “non-profit” in the regulations, however, for-profit Tribal entities have been found ineligible for EDA Tribal funds.

While EDA has a long history of supporting AINs, the agency has also seen a stagnation in funding to Tribes even while there is broad recognition that these communities are among the most economically distressed in the country. To address this gap, EDA has identified several internal and external actions it can take to strengthen its work with AINs. One action is to extend EDA Tribal eligibility to include additional entities beyond those already included in the definition, specifically for-profit entities that are wholly owned by and established for the benefit of the Tribe, which, as noted above, is currently prohibited by EDA regulation.

Over the past decade, EDA has seen an increase in applications from for-profit Tribal entities. These applications were often submitted by Tribal corporations chartered under Section 17 of the Indian Reorganization Act (25 U.S.C. 477) (also referred to as “Section 17 corporations”), limited liability corporations organized under state or Tribal law, or other similar structures. This increase tracks both the evolution of these entities and their expanding economic development role within Tribes.

Under Federal policies of self-determination, Tribes play a similar role as state and local governments and are generally responsible for providing basic services within the Tribe ( e.g., roads, water, electricity, and telecommunications). 2 To generate revenue to provide these services, Tribes can create corporations to participate in the private marketplace through tourism, manufacturing, and services sectors. 3

Tribal corporations are distinct from ordinary “for-profit” entities. Tribal corporations may be organized under Federal law and granted the same legal protections and advantages as the Tribe itself. Depending on their structure and place of operation, Tribally owned for-profit entities may also enjoy the Tribe's sovereign immunity from lawsuits, exemption from certain Federal and state taxes, or exemption from otherwise-applicable state laws. Most importantly from EDA's perspective, many of these entities are furthering the long-term economic development of AINs.

Such corporate entities can be owned by the Tribe or they may have non-Indian business partners. Under this update to EDA's regulations, EDA will only authorize for-profit entities that are wholly owned and managed by the Tribe to be eligible for EDA Tribal funding, thereby ensuring the EDA investment directly and principally benefits the Tribe. As is currently the case, EDA will verify the status largely through a review of articles of incorporation, business charters, and other formation documents.

EDA conducted extensive Tribal consultations under Executive Order 13175 (Nov. 6, 2000) regarding the change to the regulations provided in this final rule. On April 6, 2021, EDA sent a letter requesting consultation with Tribal Leaders to the Tribal Leaders of existing EDA grantees, national and regional Tribal Organizations, and entities and persons on the White House Tribal Affairs email listserv. This notice was also posted on EDA's website. EDA leadership held two virtual meetings with Tribal representatives on April 16 and 19, 2021. In addition, EDA accepted comments on the proposal by email and voicemail through April 28, 2021.

AINs participating in the consultation were broadly supportive of the change. Several AINs commented that allowing Tribally owned for-profit organizations to be eligible for EDA grants would increase Tribal access to economic development opportunities and support long-term prosperity. One letter noted:

Many other AINs made similar comments in support of the change provided in this final rule. Several AINs also noted that Tribally owned businesses are often major employers for Tribal communities and that extending EDA eligibility to these organizations would support job growth.

Some AINs supported the change, encouraging EDA to extend eligibility to all forms of Tribally owned corporations, whether chartered under Tribal or state law. Other commenters urged EDA to take care to ensure that the benefits of for-profit activity are in fact flowing back to a Tribe and its members before extending eligibility. Commenters also suggested that EDA provide clear guidance on how it would make eligibility determinations.

Under the new definition of “Indian Tribe,” a for-profit entity may be eligible for EDA assistance provided that it is wholly owned by a Tribe and organized for the benefit of the Tribe. Eligibility is not limited to any particular type of entity. Indian corporations, Section 17 corporations, state-chartered corporations, and Limited Liability Corporations (among others) are all potentially eligible. EDA intends to verify both that the for-profit entity is wholly owned by a Tribe and that the entity is organized for the benefit of that Tribe before extending eligibility. EDA anticipates that these determinations will largely be made on the basis of corporate organizational documents ( e.g., charters, by-laws), but will also look to other sources, as needed, to verify eligibility. Because EDA does not currently have experience with examining the eligibility of Tribal for-profit entities, EDA will initially consider eligibility on a case-by-case basis. EDA will communicate openly with affected Tribes to ensure that its eligibility determinations take account of all relevant considerations.

Some AINs expressed concerns regarding the change to the regulations provided in this final rule. Some commenters cautioned that, if EDA extended eligibility to for-profit entities, smaller and less well-resourced Tribes would be disadvantaged in competition for EDA funding. EDA appreciates this concern and will take steps when reviewing applications to ensure that applications from smaller tribes receive proper attention. Because economic development need is always an important consideration in funding decisions, EDA does not believe that larger tribes with associated for-profit entities will necessarily have an advantage over smaller tribes in the competitive process. Nonetheless, EDA will monitor the distribution of funding and make adjustments to its application review process, as necessary, to ensure that funding is distributed equitably.

Other commenters expressed particular concern that the change provided in this final rule would make Alaska Native Corporations (ANCs) eligible for EDA funding. The eligibility of ANCs for EDA funding is governed by the language of PWEDA, however, and is therefore not within the scope of this action and not affected by this final rule. Based on the Supreme Court's recent decision in Yellen v. Confederated Tribes of the Chehalis Reservation, 121 S. Ct. 2434 (2021), EDA has determined that ANCs fall within PWEDA's definition of “Indian Tribe.”

To enable for-profits that are wholly owned by, and established for the benefit of, the Indian Tribe to be eligible for EDA Tribal funding, this final rule changes EDA's regulation by deleting the first instance of “non-profit” where it appears in the second sentence of the definition at 13 CFR 300.3, so that “non-profit” no longer modifies the type of “Indian corporation (restricted to Indians)” that is eligible. This final rule also adds “, corporation” in the proviso to the second sentence to ensure that any such corporation must be wholly owned by, and established for the benefit of, the Tribe.

As noted above, this change has no effect on the eligibility of ANCs, which are separately identified in PWEDA's definition of “Indian Tribe.”

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action because EDA formally consulted AINs on this change in accordance with Executive Order 13125, and AINs are the only affected entities. Additional public comment would therefore serve no purpose and is unnecessary. There is also good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness. Expanding eligibility of Native American communities is urgent given the current availability of funds for such communities under the American Rescue Plan Act (ARPA) of 2021 (Pub. L. 117-2). Expanding eligibility within Native American communities as accomplished by this rule is critically necessary to ensure the benefits of ARPA effectively reach those communities and that they are able to equally take part in the economic recovery from the pandemic.

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

The Office of Management and Budget (OMB) has determined that this rule is not significant for purposes of Executive Order 12866.

This final rule is not major under the Congressional Review Act (5 U.S.C. 801 et seq. ).

This final rule does not contain policies that have federalism implications.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (“PRA”) requires that a Federal agency consider the impact of paperwork and other information collection burdens imposed on the public and, under the provisions of PRA section 3507(d), obtain approval from OMB for each collection of information it conducts, sponsors, or requires through regulations. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information subject to the PRA unless that collection displays a currently valid OMB Control Number. This final rule does not require the collection of any information.

For the reasons discussed above, EDA is amending title 13, chapter III of the Code of Federal Regulations as follows:

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

The FAA published a notice of proposed rulemaking in the Federal Register (86 FR 37939, July 19, 2021) for Docket No. FAA-2021-0536 to establish Class D airspace and amend Class E airspace extending upward from 700 feet above the surface for Jack Edwards National Airport, Gulf Shores, AL, as a new air traffic control tower will service the airport. This action also proposed updating the airport's name and geographic coordinates under the existing Class E airspace.

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

Class D and Class E airspace designations are published in Paragraphs 5000, and 6005, respectively, of FAA Order JO 7400.11F, dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The Class D and E airspace designations listed in this document will be published subsequently in the Order.

This document amends FAA Order JO 7400.11F, Airspace Designations and Reporting Points, dated August 10, 2021, and effective September 15, 2021. FAA Order JO 7400.11F is publicly available as listed in the ADDRESSES section of this document. FAA Order JO 7400.11F lists Class A, B, C, D, and E airspace areas, air traffic routes, and reporting points.

The FAA is amending 14 CFR part 71 by establishing Class D airspace for Jack Edwards National Airport, Gulf Shores, AL, as a new air traffic control tower will service the airport. Also, an airspace evaluation resulted in increasing the radius of the existing Class E airspace extending upward from 700 feet above the surface to 6.8 miles from 6.5 miles. In addition, the FAA is updating the name and geographic coordinates of the airport to coincide with the FAA's aeronautical database. Finally, the city name is removed from the airspace header under the existing Class E airspace to comply with the 7400.2M. These changes are necessary for continued safety and management of IFR operations in the area.

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

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

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

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the airway structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.

The FAA published a notice of proposed rulemaking for Docket No. FAA-2021-0086, in the Federal Register (86 FR 14293; March 15, 2021), revoking V-271 and amending V-285. The proposed revocation and amendment actions were due to the planned decommissioning of the VOR portion of the Manistee, MI, VOR/DME navigational aid. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

VOR Federal airways are published in paragraph 6010(a) of FAA Order JO 7400.11F, dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The airways listed in this document will be published subsequently in the Order.

This document amends FAA Order JO 7400.11F, Airspace Designations and Reporting Points, dated August 10, 2021, and effective September 15, 2021. FAA Order JO 7400.11F is publicly available as listed in the ADDRESSES section of this document. FAA Order JO 7400.11F lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This action amends 14 CFR part 71 by revoking V-271 and amending V-285. The planned decommissioning of the VOR portion of the Manistee, MI, VOR/DME has made this action necessary.

The VOR Federal airway amendment actions are described below.

V-271: V-271 extends between the Manistee, MI, VOR/DME and the Escanaba, MI, VOR/DME. The airway is revoked in its entirety.

V-285: V-285 extends between the Brickyard, IN, VOR/Tactical Air Navigation (VORTAC) and the Traverse City, MI, VOR/DME. The portion of the airway between the White Cloud, MI, VOR/DME and the Traverse City, MI, VOR/DME is removed. The unaffected portions of the existing airway remain as charted.

All navigational aid radials in the VOR Federal airway description listed below are unchanged and stated in True degrees.

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

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

The FAA has determined that this action of revoking V-271 and amending V-285, due to the planned decommissioning of the VOR portion of the Manistee, MI, VOR/DME navigational aid, qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. Accordingly, the FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

This final rule revises the requirements in §§ 705.5 (Request or application for an investigation) and 705.6 (Confidential information) of the National Security Industrial Base Regulations (“NSIBR”) (15 CFR parts 700 through 709) to increase the transparency of Section 232 investigations by requiring an application for an investigation by an interested party be submitted publicly. Section 705.5 specifies the procedures for submitting a request or application for an investigation under Section 232. Section 705.6 specifies the requirements for the submission of confidential information (classified national security information or business confidential information) to the Bureau of Industry and Security (BIS) at any stage of a Section 232 investigation and as part of an application for an investigation from an interested party. In order to enhance transparency and aid public understanding of applications for Section 232 investigations submitted by interested parties, as well as, when warranted, allowing public comments on such applications (for example, when a Federal Register notice is published soliciting comments on an investigation), the Department of Commerce has determined that interested parties applying for a Section 232 investigation that include business confidential information or classified national security information in their submission must simultaneously submit a public version of their application to BIS.

In order to implement this change in the Section 232 investigation process, this final rule makes the following changes to part 705 of the NSIBR:

In § 705.5, this final rule revises paragraph (a) by adding a sentence to require that an application for an investigation from an interested party containing business confidential information include a public version of the entire application in writing accompanying their submission. This final rule also adds a sentence to paragraph (a) to specify that the application, if it includes business confidential information submitted in confidence pursuant to § 705.6, must contain a public summary of the business confidential information providing sufficient detail to permit a reasonable understanding of the substance of the information, and, if summarization is not possible, the application must make that claim and accompany it by a full explanation of its basis. The revisions to paragraph (a) also include guidance on how to summarize the information in sufficient detail to meet these additional requirements. This final rule adds a new cross reference to § 705.6 to alert the public that in order to submit business confidential information that is not for public release, the applicant must follow the procedures in § 705.6, including by making a separate submission to the Department of Commerce for the public and confidential versions. Lastly, this final rule also adds a new note to paragraph (a), explaining that United States Government agencies shall be excluded from the requirement to include public versions of submissions. This rule also codifies the existing practice that an electronic copy of the application be submitted with the printed application.

In § 705.6 (Confidential information), this final rule adds three new paragraphs: (a)(1) ( Classified national security information ), (2) ( Business confidential information ) and (3) ( United States Government communication ). The revised paragraph (a) specifies the requirements for submissions and treatment of these three types of confidential information, including how submissions by the public should be marked and submitted when they include confidential information.

The classified national security information described under paragraph (a)(1) of § 705.6 will not be made publicly available and therefore does not require a public version. As a conforming change, this final rule revises existing text previously found in paragraph (a) of § 705.6, which is now being moved to paragraph (a)(1) of § 705.6, regarding the identification and marking standards for national security information. Inadvertently, this text was not previously updated to reflect identification and marking standards set forth in 32 CFR part 2001, even though BIS has been complying with the requirements in 32 CFR part 2001 and requiring submitters to comply with those requirements, as applicable, since at least 2010. These revisions explicitly align paragraph (a)(1) of § 705.6 with the requirements set forth in 32 CFR part 2001. These changes will also improve public understanding of these provisions and clarify the requirements for submitting classified national security information pursuant to § 705.6. If an applicant or other party submits business confidential information as described in paragraph (a)(2) of § 705.6, it will now be required to submit a public version of that information based on the changes this rule makes to §§ 705.5 and 705.6. This final rule also adds a sentence at the end of paragraph (a)(2) of § 705.6 to specify that the public summary required under § 705.5 must be clearly marked “PUBLIC” as part of the submission described under paragraph (a)(1) of § 705.6. The classified national security information described under paragraph (a)(1) of § 705.6 and the United States Government communications described under paragraph (a)(3) of § 705.6 will not be made publicly available and therefore do not require a public version. Lastly, this final rule also adds a new paragraph (a)(3) to clarify the treatment of communication from the United States Government involving Section 232 investigations, including requests for the initiation of investigations received from U.S. Government agencies. This paragraph clarifies for the public that communication from agencies of the United States Government will generally not be made available to the public.

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

2. The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA) provides that an agency generally cannot conduct or sponsor a collection of information, and no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, unless that collection has obtained Office of Management and Budget (OMB) approval and displays a currently valid OMB Control Number.

This final regulation involves one collection currently approved by OMB with the following control number “Request for Investigation under section 232 of the Trade Expansion Act” (control number 0694-0120).

This rule is not expected to increase the burden hours for any of the collections associated with this rule as minimal changes are anticipated. Any comments regarding this collection of information, including suggestions for reducing the burden, may be submitted online at https://www.reginfo.gov/public/do/PRAMain. Find the particular information collection by using the search function and entering either the title of the collection or the OMB Control Number.

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

4. The provisions of the Administrative Procedure Act (APA) (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public comment, and a delay in effective date are inapplicable because this regulation involves a military or foreign affairs function of the United States. ( See 5 U.S.C. 553(a)(1)). The Section 232 investigation process is important for identifying areas where the United States' defense industrial base is undermined to the detriment of national security. Improving efficiency and transparency of this process is important for those regulatory provisions to achieve their stated purpose.

In addition, the Department finds that there is good cause under 5 U.S.C. 553(b)(B) to waive the provisions of the APA requiring prior notice and the opportunity for public comment and under 5 U.S.C. 553(d)(3) to waive the delay in effective date because such delays would be contrary to the public interest. The changes in this rule will increase transparency of Section 232 investigations by requiring a public submission for an application for an investigation from an interested party. These changes will improve public transparency of the Section 232 investigation process, while imposing only a minimal burden on those submitting an application for an investigation to the Department. Based on BIS's past experience, including in the recent Section 232 investigations into imports of uranium, titanium sponge, and mobile cranes, most of the applicants each published their own public versions of their applications for an investigation with business confidential information redacted/removed (roughly contemporaneously with their submission of their applications to the Department of Commerce). Therefore, complying with the requirement to include a public version should not be burdensome for the clear majority of applicants because they have already taken the initiative to share a public version. For any other applicant who does not prepare public versions of their submissions as a matter of course, the new requirements is minimal; the information required to generate the public version is already contained within the confidential version, and applicants need only redact/remove confidential information that meets the criteria in 15 CFR 705.6 and that the applicants wish to not disclose.

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

For the reasons set forth in the preamble, part 705 of subchapter A of 15 CFR chapter VII is amended as follows:

Notice of proposed rulemaking was published in the Federal Register on March 26, 2021; New York Register on April 14, 2021; Pennsylvania Bulletin on April 10, 2021; and Maryland Register on April 9, 2021. The Commission held two informational webinars explaining the proposed rulemaking on April 6 and April 14, 2021. The Commission convened a public hearing held by telephone on May 6, 2021. A written comment period was held open through May 17, 2021. Concurrent with the proposed rule, the Commission also released three draft groundwater related policies for public review and comment.

Three comments were received during the comment period. One commenter appreciated the Commission's proposal to eliminate some of the triggers for the loss of grandfathering under § 806.4(a)(2). The commenter offered amended language for § 806.4(a)(2)(ii) and (iii) for the Commission's consideration that would change the Commission's intent and would limit any review of a grandfathered source increasing its quantity to only the increased withdrawal amount and not to the entire withdrawal. This would be a substantial change of the Commission's current practice for the loss of grandfathering triggered by an increase in quantity from a grandfathered source. The Commission declines to make this change. The preamble to the proposed rule makes the Commission's intent for the regulations clear, and the regulations reflect that intent. This rulemaking is intended to change the Commission's overall policy regarding the number and scope of the triggers for losing grandfathering; however, it is not intended to provide a permanent exemption from eventual regulation of grandfathered sources or withdrawal quantities.

A second commenter commended the Commission for acting upon the need for regulatory clarification, simplification, and recalibration of project review based on the scale and quantity (potential impact) of the project. The commenter specifically appreciated the proposed changes regarding the consideration of small and medium capacity sources; the elimination of potential triggers for loss of grandfathered source status; the addition of the Alternative Hydrogeologic Evaluation (AHE) process; and the further development of the minor modification process. In addition, the commenter suggested that the Commission create a redefined docket appeal process under 18 CFR 808.2 and 808.3. This final aspect of the comment is outside the scope of the proposed rulemaking that was noticed and subjected to public comment. Therefore, the Commission cannot make any changes to these sections as a part of the final rule.

A third commenter expressed concerns about the addition of § 806.4(a)(3)(viii) and (ix) that would allow the diversion of drinking water or wastewater into or out of the basin without Commission approval for municipalities on the basin divide if the diversion occurs by or through a publicly or privately owned public water supplier or wastewater treatment works. The commenter opined that this change is not justified or supported by sufficient rationale. The Commission disagrees and declines to make the change requested. The regulation of into-basin diversions is focused on water quality coming into the Basin and the protection of the Basin's water resources. Drinking water quality and wastewater quality are regulated solely by partner agencies and the Commission does not have water quality standards, in an effort to not duplicate partner agency regulatory authorities. The final regulation simply exempts, from Commission review, the movement across Basin boundaries of treated public water or wastewater that has been managed for water quality concerns by partner agencies. The final regulation does not pose any new threats or exacerbate existing threats to the quality of the Basin's water resources. Withdrawals that supply out-of-basin diversions by communities straddling the Basin divide will still be subject to the Commission's review and application of its standards. Those standards, as for all withdrawals, are at 18 CFR 806.23 and are equivalent to, if not broader, than those in § 806.24. Thus, the concerns raised in the comment are addressed by the Commission's review standards to the withdrawal that supports the diversion.

Accordingly, for the reasons set forth in the preamble, the Susquehanna River Basin Commission amends 18 CFR part 806 as follows:

On January 15, 2021, the Department of the Treasury (“Treasury Department”) and the IRS published proposed regulations (REG-111950-20) under sections 250, 951A, 1297, and 1298 in the Federal Register (86 FR 4582, as corrected at 86 FR 12886) (the “2021 proposed regulations”). The provisions in the 2021 proposed regulations under sections 250 and 951A, which were added to the Code in the Tax Cuts and Jobs Act, Public Law 115-97, 131 Stat. 2234 (2017), addressed the treatment of QIP under the ADS for purposes of calculating QBAI.

The Treasury Department and the IRS received no written comments with respect to the proposed rules under sections 250 and 951A. A public hearing on the 2021 proposed regulations was not held because there were no requests to speak.

This rulemaking finalizes the portion of the 2021 proposed regulations under sections 250 and 951A, but does not finalize the portions of the 2021 proposed regulations under sections 1297 and 1298 (determining whether a foreign corporation is treated as a passive foreign investment company and the treatment of income and assets of a qualifying insurance corporation that is engaged in the active conduct of an insurance business). The Treasury Department and the IRS intend to finalize those portions of the 2021 proposed regulations separately.

On November 12, 2020, the Treasury Department and the IRS published proposed regulations (REG-101657-20) in the Federal Register (85 FR 72078) (the “2020 FTC proposed regulations”), which included revisions to the transition rules for post-2017 NOL carrybacks to pre-2018 taxable years.

The Treasury Department and the IRS received no written comments with respect to the proposed revisions to the transition rules that address post-2017 NOL carrybacks to pre-2018 taxable years. A public hearing on the 2020 FTC proposed regulations was held on April 7, 2021.

This rulemaking finalizes the portion of the 2020 FTC proposed regulations that addresses the transition rules for post-2017 NOL carrybacks to pre-2018 taxable years. This rulemaking does not finalize any other portions of the 2020 FTC proposed regulations. The Treasury Department and the IRS intend to finalize those portions of the 2020 FTC proposed regulations separately.

The Treasury Department and the IRS received no written comments with respect to the proposed rules under sections 250 and 951A or the transition rules that address post-2017 NOL carrybacks to pre-2018 taxable years. Therefore, those portions of the proposed regulations are being finalized without substantive change.

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

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) generally requires that a federal agency obtain the approval of the OMB before collecting information from the public, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit.

There are no information collection requirements associated with these final regulations.

It is hereby certified that these final regulations will not have a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6).

The economic impact of the regulations regarding the treatment of QIP under sections 250 and 951A is not likely to be significant because these regulations merely clarify that the technical amendment to section 168 enacted in section 2307(a) of the CARES Act applies to determine the adjusted basis of property under section 951A(d)(3) as if it had originally been part of section 13204 of the Act. The clarification resolves an ambiguity and adopts the interpretation that does not require duplicative recordkeeping for the basis in this property. Therefore, this rule should reduce recordkeeping and compliance burdens that might otherwise apply. In addition, the regulations do not impose a collection of information burden on any person, including small entities. Accordingly, it is hereby certified that the regulations regarding the treatment of QIP under sections 250 and 951A will not have a significant economic impact on a substantial number of small entities.

The foreign tax credit transition rules addressing post-2017 NOL carrybacks to pre-2018 taxable years provide guidance needed to comply with statutory changes and affect individuals and corporations claiming foreign tax credits. Adequate data are not available at this time to certify that a substantial number of small entities would be unaffected. However, the Treasury Department and the IRS have determined that the regulations will not have a significant economic impact on domestic small business entities. Based on information from the Statistics of Income 2017 Corporate File, foreign tax credits as a percentage of three different tax-related measures of annual receipts (see Table for variables) by corporations are substantially less than the 3 to 5 percent threshold for significant economic impact.

In addition, these final regulations do not impose a collection of information burden on any person, including small entities. Accordingly, it is hereby certified that the foreign tax credit transition rules addressing post-2017 NOL carrybacks to pre-2018 taxable years will not have a significant economic impact on a substantial number of small entities.

Pursuant to section 7805(f) of the Internal Revenue Code, the notices of proposed rulemaking preceding these final regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comments on their impact on small business, and no comments were received.

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

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

The principal authors of these regulations are Jorge M. Oben, Jeffrey L. Parry, and Larry R. Pounders of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.

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

Accordingly, 26 CFR part 1 is amended as follows:

Section 3(m) of the FLSA allows an employer that satisfies certain requirements to count a limited amount of the tips received by its “tipped employees” as a credit toward the employer's Federal minimum wage obligation (known as a “tip credit”). See 29 U.S.C. 203(m)(2)(A). In 2018, Congress passed the Consolidated Appropriations Act (CAA), Public Law 115-141, Div. S., Tit. XII, sec. 1201, 132 Stat. 348, 1148-49 (2018), which amended section 3(m). The CAA added a new statutory provision at section 3(m)(2)(B) which expressly prohibits employers from keeping employees' tips “for any purposes” regardless of whether the employer claims a tip credit. This includes prohibiting “managers or supervisors” from keeping employees' tips. The CAA also amended section 16(e)(2) of the FLSA to give the Department discretion to impose civil money penalties (CMPs) of up to $1,100 when employers unlawfully keep employees' tips. On December 30, 2020, the Department issued a final rule (2020 Tip final rule) that updated the Department's tip regulations to implement the CAA amendments. The 2020 Tip final rule also made other changes to the Department's regulations, including revising the definition of “willful” in the Department's CMP regulations.

On March 25, 2021, the Department published a notice of proposed rulemaking (CMP NPRM) in the Federal Register , 86 FR 15817, proposing to withdraw and repropose two portions of the 2020 Tip final rule and seeking comment on whether to revise another portion of the 2020 Tip final rule. The Department proposed to withdraw and repropose: (1) The portion of the 2020 Tip final rule incorporating the CAA's new provisions authorizing the assessment of CMPs for violations of section 3(m)(2)(B) of the Act; and (2) the portion of its CMP regulations addressing willful violations. The Department subsequently finalized a delay of the effective date of these portions of the rule until December 31, 2021 to allow the Department to review these and one other portion of the 2020 Tips final rule. In the CMP NPRM, the Department also sought comment on whether to revise certain aspects of the 2020 Tip final rule that apply to “managers or supervisors” who perform tipped work and went into effect on April 30, 2021. Section 578.1, as revised by the 2020 Tip final rule, at 85 FR 86756 , and the effective date of which the Department also delayed, will go into effect on December 31, 2021.

After considering the comments, the Department has decided to adopt the NPRM's proposed changes to the portion of the 2020 Tip final rule incorporating the CAA's new provisions authorizing the assessment of CMPs for violations of section 3(m)(2)(B) of the Act, and the portion of its CMP regulations addressing willful violations. The Department has also decided to modify portions of the 2020 Tip final rule addressing managers and supervisors who perform tipped work.

The final rule modifies the CMP provisions for violations of 3(m)(2)(B) included in the 2020 Tip final rule by withdrawing regulatory language in 29 CFR 578.3, 578.4, 579.1, 580.2, 580.3, and 580.12 that limited assessment of CMPs for section 3(m)(2)(B) violations to only repeated or willful violations. 1 This modification upholds the Department's statutorily-granted discretion with regard to section 3(m)(2)(B) CMPs and aligns the Department's regulations with the statutory text. At the same time, the final rule adopts the same rules, procedures, and amount considerations for CMPs for violation of 3(m)(2)(B) as the Department applies for other FLSA CMPs, and therefore preserves consistent enforcement procedures that are familiar to the Department and the public.

The final rule also modifies the amendments made by the 2020 Tip final rule to the portion of the Department's CMP regulations at 29 CFR 578.3(c)(2) and (3) and 29 CFR 579.2 addressing when a violation of section 6 or 7 of the FLSA is willful. Specifically, the rule modifies these regulations by clarifying that multiple circumstances, not just the circumstance identified in §§ 578.3(c)(2) and (3), can be sufficient to show that a violation is willful because it is knowing or is done with reckless disregard for whether the conduct violates the FLSA and by reinserting language addressing the meaning of reckless disregard. These revisions further align the Department's regulations with applicable precedent and how the Department litigates willfulness and provide improved guidance on circumstances where employers' conduct may be willful.

In addition, the Department has decided to modify § 531.54(c)(3) and (d), which currently provide that an employer may not “include” managers and supervisors in tip pools or sharing arrangements. The final rule clarifies that while managers and supervisors may not receive tips from mandatory tip pools or tip sharing arrangements, managers or supervisors are not prohibited from contributing tips to eligible employees in mandatory tip pools or sharing arrangements. The Department is also modifying language in § 531.52, as amended by the 2020 Tip final rule, which currently explains that it is not a violation of section 3(m)(2)(B) when a manager or supervisor keeps tips that the manager or supervisor receives directly from customers based on the service that the manager or supervisor directly provides. The modified language clarifies that a manager or supervisor may keep tips only when the tip is based on a service the manager or supervisor directly and “solely” provides. Thus, under the Department's tip regulations as revised by this final rule, when a manager or supervisor directly receives tips for services the manager or supervisor directly and solely provides, an employer may allow the manager or supervisor to keep those tips, and may also require the manager or supervisor to share some portion of the tips with other eligible employees. The final regulations reflect the reality that some managers or supervisors perform work for which they receive tips, while ensuring that managers and supervisors do not keep any portion of other employees' tips in violation of section 3(m)(2)(B).

Section 6(a) of the FLSA generally requires covered employers to pay employees at least the federal minimum wage, which is currently $7.25 per hour. 29 U.S.C. 206(a). Section 3(m)(2)(A) allows an employer to satisfy a portion of its minimum wage obligation to any “tipped employee” by taking a partial credit toward the minimum wage based on tips the employee receives. 29 U.S.C. 203(m)(2)(A). An employer may take a tip credit only if, among other requirements, the tipped employee retains all the tips he or she receives. Id. An employer taking a tip credit is, however, allowed to require tipped employees to participate in a mandatory, “traditional” tip pool  2 in which tipped employees share tips with other employees who “customarily and regularly receive tips.” 29 U.S.C. 203(m)(2)(A). The employee must retain sufficient tips to make up the difference between the cash wage paid and the minimum wage. Id.

In 2011, the Department issued regulations interpreting what is now section 3(m)(2)(A) to prohibit all covered employers—regardless of whether the employer takes a tip credit—from using employees' tips other than as a credit against its minimum wage obligation to the employee, or in furtherance of valid traditional tip pools. See 76 FR 18832, 29 CFR 531.52 (2011); 29 CFR 531.54 (2011); 29 CFR 531.59 (2011). These regulations were consistent with the Department's longstanding position on tipped employees, and the Department stated that, although the statutory language did not expressly address the use of an employee's tips when an employer does not take a tip credit and pays a direct cash wage equal to or greater than the minimum wage, the regulations filled a gap in the statutory scheme. 3 See 76 FR 18841-42.

On March 23, 2018, Congress enacted the CAA, which amended section 3(m) of the FLSA to expressly prohibit employers from keeping employees' tips “for any purposes,” “regardless of whether or not the employer takes a tip credit.” See Public Law 115-141, Div. S., Tit. XII, sec. 1201; 29 U.S.C. 203(m)(2)(B). Section 3(m)(2)(B) also prohibits employers from “allowing managers or supervisors to keep any portion of employees' tips.” Id. In addition, the CAA suspended the portions of the Department's 2011 regulations that restricted tip pooling when employers do not take a tip credit, by providing that those regulations “shall have no further force or effect until any future action taken by [the Department of Labor].” See Public Law 115-141, Div. S, Tit. XII, sec. 1201(c).

The CAA also amended the penalty provisions in section 16 of the FLSA to incorporate the new statutory prohibition on employers keeping tips. Among other things, the CAA amended section 16(e)(2) to authorize the assessment of a civil money penalty (CMP) for violations of section 3(m)(2)(B): “Any person who violates section 3(m)(2)(B) shall be subject to a civil penalty not to exceed $1,100  4  for each such violation, as the Secretary determines appropriate, in addition to being liable to the employee or employees affected for all tips unlawfully kept, and an additional equal amount as liquidated damages[.]”

Shortly after Congress passed the CAA, the Department issued a Field Assistance Bulletin (FAB) concerning the Wage and Hour Division's (WHD) enforcement of the amendments to section 3(m). See FAB No. 2018-3 (Apr. 6, 2018). The Department explained that the CAA had effectively suspended the regulatory restrictions that prohibited an employer that does not take a tip credit from requiring tip pooling, and that “given these developments, employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.” Id. As a result, the Department explained, such employers may implement mandatory, “nontraditional” tip pools in which employees who do not customarily and regularly receive tips, such as cooks and dishwashers, may participate. The FAB also explained that the amendments prohibit employers, including managers or supervisors, from keeping tips received by their employees, regardless of whether the employer takes a tip credit under 29 U.S.C. 203(m). In addition, the FAB provided that, as “an enforcement policy, WHD will use the duties test at 29 CFR 541.100(a)(2)-(4) to determine whether an employee is a manager or supervisor,” and thus cannot “keep” another employee's tips under section 3(m)(2)(B). Id. Finally, the FAB stated that the Department will follow its “normal procedures” for FLSA CMPs when enforcing the new tips CMP, and will assess tips CMPs only when it determines that a violation of section 3(m)(2)(B) is repeated or willful. Id.

Section 16(e)(2) of the FLSA provides for the assessment of CMPs for violations of the minimum wage (section 6), overtime pay (section 7), and, with the enactment of the CAA, tip provisions (section 3(m)(2)(B)) of the FLSA. Section 16(e)(2) authorizes the Department to assess CMPs for minimum wage and overtime pay violations only when the violations are “repeated[ ] or willful[ ].” See 29 U.S.C. 216(e)(2). The Department's regulations at 29 CFR 578.3(c) and 579.2 address what violations are willful under the Act. These regulations are intended to implement the Supreme Court's decision in McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988), that a willful violation occurs when the employer knew or showed reckless disregard for whether its conduct was prohibited by the FLSA. For many years, these regulations identified two specific circumstances in which a violation “shall be deemed” willful. 29 CFR 578.3(c)(2) and (3), 579.2. Specifically, the Department's regulations at sections 578.3(c)(2) and 579.2 provided that “an employer's conduct shall be deemed knowing,” among other situations, if the employer received prior advice from WHD that its conduct was unlawful. Additionally, sections 578.3(c)(3) and 579.2 stated that “an employer's conduct shall be deemed to be in reckless disregard of the requirements of the Act,” among other situations, if the employer failed to inquire further into the lawfulness of its conduct when it should have. The Department's regulations further provided that WHD shall take into account “[a]ll of the facts and circumstances surrounding the violation” when determining whether a violation is willful. 29 CFR 578.3(c)(1), 579.2.

In Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 680-81 (1st Cir. 1998), the U.S. Court of Appeals for the First Circuit identified an “incongruity” between the regulatory provisions deeming two specific circumstances to be willful, and “the Richland Shoe standard on which the regulation is based” which takes into account all of the facts and circumstances. The court urged the Department “to reconsider” §  578.3(c)(2) and (3) “to ensure that they comport with” Richland Shoe. Id. at 681 n.16. In 2016, the U.S. Court of Appeals for the D.C. Circuit also addressed these regulations and noted that the Department had not altered them despite being urged to do so by the court in Baystate. See Rhea Lana, Inc. v. Dep't of Labor, 824 F.3d 1023, 1030-31 (D.C. Cir. 2016).

On October 8, 2019, the Department issued an NPRM proposing to revise the Department's tip regulations to incorporate the CAA amendments, among other things. See 84 FR 53956. Because the Department was revising its CMP regulations to incorporate the new CMP provision for section 3(m)(2)(B) violations, the Department also proposed to address the “willful” provisions of the Department's existing FLSA CMP regulations in light of the decisions of the courts of appeals in Baystate and Rhea Lana. See id. at 53964. The Department published the Tip final rule on December 30, 2020. See 85 FR 86756. The 2020 Tip final rule was initially scheduled to go into effect on March 1, 2021; however, the Department delayed the 2020 Tip final rule's effective date to April 30, 2021, in order to give the Department additional time to consider issues of law, policy, and fact that warranted additional review. See 86 FR 11632. The Department subsequently further delayed the effective date, until December 31, 2021, of three portions of the 2020 Tip final rule, including the two portions addressing CMPs. See 86 FR 22597. 5

Most of the provisions of the 2020 Tip final rule went into effect on April 30, 2021. The 2020 Tip final rule amended the Department's tip pooling regulations at 29 CFR 531.52, 531.54, and 531.59 to implement newly added section 3(m)(2)(B), which prohibits employers—regardless of whether they take a tip credit—from keeping employees' tips for any purposes, and prohibits managers and supervisors from keeping employees' tips. The 2020 Tip final rule explained that section 3(m)(2)(B) proscribes all manner of keeping tips, and is so broad as to prohibit an employer from exerting control over employees' tips other than to (1) distribute tips to the employee who received them, (2) require employees to share tips with other eligible employees, or, (3) where the employer facilitates tip pooling by collecting and redistributing employees' tips, to distribute tips to employees in a tip pool. The 2020 Tip final rule further provided that any employer that collects tips to facilitate a mandatory tip pool must fully redistribute the tips, no less often than when it pays wages, to avoid “keep[ing]” the tips in violation of section 3(m)(2)(B).

The 2020 Tip final rule also addressed who is a manager or supervisor, and therefore may not keep employees' tips under section 3(m)(2)(B). The rule defined a “manager or supervisor,” as an individual who meets the duties test at § 541.100(a)(2)-(4) or § 541.101. As a result, a manager or supervisor for purposes of section 3(m)(2)(B) is any employee (1) whose primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise; (2) who customarily and regularly directs the work of at least two or more other full-time employees or their equivalent; and (3) who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring or firing are given particular weight. The definition also includes as managers or supervisors any individuals who own at least a bona fide 20 percent equity interest in the enterprise in which they are employed and who are actively engaged in its management.

The final rule revised § 531.54 to state that FLSA section 3(m)(2)(B) “prohibits employers from requiring employees to share tips with managers and supervisors,” and to state that employers “may not include supervisors and managers” in a tip pool. The rule at § 531.52(b) specified, however, that such a manager or supervisor may keep tips that he or she receives directly from customers based on the service that he or she directly provides.

Consistent with the CAA amendments, the 2020 Tip final rule also removed the provisions of the Department's 2011 regulations that imposed restrictions on employers that do not take a tip credit. In addition, the 2020 Tip final rule amended § 531.54 to explicitly state that an employer that pays tipped employees the full minimum wage and does not take a tip credit may require tipped employees to share tips with dishwashers, cooks, or other employees who are not employed in an occupation in which employees customarily and regularly receive tips, as long as that arrangement does not include any employer, supervisor, or manager. The 2020 Tip final rule also incorporated a new recordkeeping requirement for employers that administer such “nontraditional” tip pools.

These portions of the 2020 Tip final rule—addressing the CAA's changes to tips and tip pooling in section 3(m) and related recordkeeping requirements, including the provisions on managers and supervisors—went into effect on April 30, 2021. 86 FR 22597.

The 2020 Tip final rule also made changes to the Department's CMP regulations at 29 CFR parts 578, 579, and 580. The Department delayed the effective date of these changes, and the revised provisions have not gone into effect. See 86 FR 22597. The 2020 Tip final rule updated the Department's FLSA CMP regulations to add references to the new CMP for violations of 3(m)(2)(B). The 2020 Tip final rule also specified that the Department may assess CMPs only for “repeated or willful” violations of section 3(m)(2)(B), although the statute does not include this limitation. The 2020 Tip final rule also amended the Department's CMP regulations at §§ 578.3(c)(2) and 579.2 regarding when a violation is knowing, and thus willful, to address the appellate court decisions that have, for example, “urge[d]” the Department to reconsider those regulations to ensure their consistency with the Supreme Court's interpretation of the meaning of “willful” in the FLSA. See 85 FR 86757. In addition, the 2020 Tip final rule deleted § 578.3(c)(3) and the corresponding language in § 579.2 regarding when a violation is in reckless disregard of the FLSA. See id. at 86774.

On January 19, 2021, before the 2020 Tip final rule went into effect, Attorneys General from eight states and the District of Columbia (“AG Coalition”) filed a complaint in the United States District Court for the Eastern District of Pennsylvania, in which they argued that the Department violated the Administrative Procedure Act in promulgating the 2020 Tip final rule. 6 The complaint argues that the 2020 Tip final rule made several changes to the Department's regulations that are contrary to the FLSA and the CAA, including the 2020 Tip final rule's imposition of a willfulness requirement for CMPs for section 3(m)(2)(B) violations, and the rule's revisions to its CMP regulations on willful violations. It further argues that the 2020 Tip final rule's revisions to the Department's CMP regulations on willful violations contradict the longstanding Supreme Court precedent on willfulness. The complaint also asserts that the 2020 Tip final rule's provisions on managers and supervisors improperly prevent certain lower-paid managers and supervisors from receiving tips.

On March 25, 2021, the Department issued an NPRM proposing to withdraw and repropose the two portions of the 2020 Tip final rule addressing CMPs and seeking comment on whether to revise another portion of the 2020 Tip final rule. See 86 FR 15817. Because of its concerns that the 2020 Tip final rule inappropriately circumscribed the Department's discretion to assess CMPs for violations of 3(m)(2)(B), the Department proposed to withdraw that portion of the rule and adopt regulatory language so that the Department is not limited in its assessment of CMPs to only repeated and willful violations of section 3(m)(2)(B). At the same time, the Department reproposed language that would, similar to the language in the 2020 Tip final rule, adopt the same rules, procedures, and amount considerations for CMPs for violation of 3(m)(2)(B), as the Department applies for other FLSA CMPs. The Department also proposed to withdraw the portion of its CMP regulations addressing willful violations, and reproposed those portions with modifications to further align the regulations with Supreme Court and appellate court decisions and provide improved guidance on circumstances where employers' conduct may be willful. Finally, the Department requested comment on whether to revise the 2020 Tip final rule's language regarding managers or supervisors, which went into effect on April 30, 2021, to better address the fact that some managers and supervisors perform tipped work. 7

The 60-day comment period for the NPRM ended on May 24, 2021. The Department received 33 unique comments from various constituencies including small business owners, worker advocacy groups, employer and industry associations, non-profit organizations, law firms, attorneys general, and other interested members of the public. All timely received comments may be viewed on the regulations.gov website, docket ID WHD-2019-0004. The Department has considered the timely submitted comments addressing the proposed changes and discusses significant comments below.

The Department also received a small number of comments on issues that are beyond the scope of this rulemaking. These include, for example, comments suggesting that the amount of the federal minimum wage should be increased, and comments requesting that the Department revise the regulatory definition of “managers or supervisors” that cannot keep employees' tips to include a salary component. The Department does not address those issues in this final rule.

The CAA amended FLSA section 16(e), which establishes CMPs for certain violations of the Act, to add new penalty language for employers who violate section 3(m)(2)(B) by “keep[ing]” employees' tips. 29 U.S.C. 216(e)(2). This provision states that: “Any person who violates section 3(m)(2)(B) shall be subject to a civil penalty not to exceed $1,100  8 for each such violation, as the Secretary determines appropriate, in addition to being liable to the employee or employees affected for all tips unlawfully kept . . . .” Unlike the statutory provisions in section 16(e)(2) setting forth CMPs for minimum wage and overtime violations, the statute does not limit the assessment of CMPs to repeated or willful violations of section 3(m)(2)(B). Instead, the penalty language subjects persons who violate 3(m)(2)(B) to civil penalties “as the Secretary determines appropriate.”

Although the 2020 Tip final rule acknowledged the Department's discretion to assess CMPs for any violation of section 3(m)(2)(B), the 2020 Tip final rule limited this discretion by restricting CMPs to only repeated or willful violations of section 3(m)(2)(B). In the CMP NPRM, the Department proposed to withdraw the 2020 Tip final rule CMP provisions for violations of 3(m)(2)(B) and adopt regulatory language in 29 CFR 578.3, 578.4, 579.1, 580.2, 580.3, and 580.12 that retains the full discretion granted to the Secretary to assess CMPs for any violation of section 3(m)(2)(B). The Department also proposed to adopt the same rules, procedures, and amount considerations for CMP assessments applicable to violation of section 3(m)(2)(B) as the Department applies to other FLSA CMP assessments. 9 These procedures are found in §§ 578.3, 578.4, 579.1, 580.2, 580.3, and 580.12.

Many commenters, such as the National Partnership for Women & Families and the Employee Rights Center, supported the proposal, stating that it “aligns with the plain language of the FLSA and Congress's legislative intent.” Several commenters that supported the proposal noted that it preserved the full discretion the statute grants to the Department to assess CMPs for violations of section 3(m)(2)(B). The AG Coalition noted that by including regulatory language in the proposal that differentiates between violations of section 3(m)(2)(B) and repeated or willful minimum wage and overtime violations, the “Department retains its discretion to levy CMPs against employers that violate the FLSA, as intended by Congress and limited only by the statute.” Texas RioGrande Legal Aid stated that the discretion permitted by the proposal would mean that “DOL investigators will have more tools at their disposal to help workers” and argued that the Department should not “hamper its own investigations” by restricting such discretion.

Other commenters opposed the proposal. The National Restaurant Association (NRA) stated that the Department should instead retain the 2020 Tip final rule requirement that the Department would only assess CMPs for repeated and willful violations of section 3(m)(2)(B), noting that the Department had previously explained that this limitation was “consistent with how the Department enforces other FLSA wage violations.” The NRA also argued that making such a differentiation between violations of sections 6 and 7 and violations of section 3(m)(2)(B) will “destroy the public trust.” The Department disagrees. The statute itself distinguishes between violations of sections 6 and 7 and violations of section 3(m)(2)(B) with regard to the assessment of CMPs. Thus, removing the 2020 Tip final rule's repeated or willful requirement for section 3(m)(2)(B) CMPs is consistent with the FLSA itself. Moreover, the Department's enforcement of different sections of the FLSA currently varies depending on whether the statutory text limits CMPs to repeated or willful violations or not. The child labor provisions of the FLSA—like the statutory text for violations of section 3(m)(2)(B)—do not limit CMPs to repeated or willful violations. Compare 29 U.S.C. 216(e)(1)(A)(i) (“Any person who violates the provisions of sections 212 or 213(c) of this title, relating to child labor . . . shall be subject to a civil penalty . . . for each employee who was the subject of such a violation”) with 29 U.S.C. 216(e)(1)(A)(ii) (CMPs for violations that caused the death or serious injury of a child employee “may be doubled where the violation is a repeated or willful violation”). The Department's final rule will bring the assessment of section 3(m)(2)(B) CMPs into harmony with the statutory text, as is currently the case with the child labor CMP provisions. Furthermore, this final rule adopts the same rules, procedures, and amount considerations for determining section 3(m)(2)(B) CMPs that the Department uses to determine CMPs for other FLSA wage violations. Therefore, the final rule will preserve consistent enforcement procedures familiar to the Department and the public.

The National Federation of Independent Businesses (NFIB) also opposed the proposal. Recognizing that the statute “vests wide discretion in the Secretary of Labor,” NFIB asked the Department to keep the “repeated or willful” requirement from the 2020 Tip final rule for small businesses that violate section 3(m)(2)(B). The Department declines to adopt this recommendation, because it would not be consistent with its enforcement in other areas to impose the requirement that CMPs be assessed against small businesses only when the violations committed are repeated and willful. However, NFIB also requested that the Department preserve the requirement that it consider the seriousness of the violation and the size of the employer's business when assessing CMPs for section 3(m)(2)(B). The Department's final rule does preserve that requirement, because, as explained above, it adopts the same longstanding rules and procedures that the Department applies for other FLSA CMPs for the assessment of section 3(m)(2)(B) CMPs. This includes the obligation, required by 29 U.S.C. 216(e)(3), to consider the size of the employer's business when determining the amount of any civil money penalty.

After review of the comments, the Department agrees that it was inappropriate to limit the statutorily-granted discretion by regulation and that instead the regulations should reflect the statutory text. Therefore, the Department finalizes the revisions to 29 CFR 578.3, 578.4, 579.1, 580.2, 580.3, and 580.12 that eliminate the references limiting CMP assessments for violations of section 3(m)(2)(B) to repeated and willful violations as proposed. The Department also finalizes as proposed the other revisions to §§ 578.3, 578.4, 579.1, 580.2, 580.3, and 580.12 which amend those provisions to adopt the same rules, procedures, and amount considerations for tip CMP assessments as the Department applies for other FLSA CMP assessments, which will promote the goals of consistency and familiarity that the Department emphasized in the 2020 Tip final rule.

The Department also finalizes as proposed the revision to § 580.18(b)(3), which eliminates the reference in that regulation to willful violations of section 3(m)(2)(B), which was a technical error in the 2020 Tip final rule, since the CAA Amendments did not provide for criminal penalties for violations of section 3(m)(2)(B).

In addition to revising its regulations to preserve the Department's full discretion to assess CMPs for violations of section 3(m)(2)(B), the Department proposed to further modify §§ 578.3(c) and 579.2 of its CMP regulations, which address when a violation of the FLSA is “willful,” and thus subject to a CMP under section 16(e). 86 FR 15822. Specifically, the Department proposed to withdraw and repropose with a modification the language at §§ 578.3(c)(2) and 579.2 addressing when an employer's violation is knowing, and further proposed to reinsert language at §§ 578.3(c)(3) and 579.2 to provide guidance regarding the meaning of reckless disregard.

As previously explained, 10 the Department's definition of a “willful” violation in §§ 578.3(c) and 579.2 is based on McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988), which held that a violation is willful if the employer “knew or showed reckless disregard” for whether its conduct was prohibited by the FLSA. The Department incorporated this holding into § 578.3(c)(1) of its CMP regulations when they were first promulgated in 1992, and § 578.3(c)(1) further states that “[a]ll of the facts and circumstances surrounding the violation shall be taken into account in determining whether a violation was willful.” 29 CFR 578.3(c)(1); 57 FR 49130 (1992). The 2020 Tip final rule made no changes to this language in § 578.3(c)(1), and the Department did not propose any in the CMP NPRM. See 86 FR 15822.

The Department's 1992 CMP regulations identified two specific circumstances in which a violation “shall be deemed” knowing and in reckless disregard, respectively, and thus willful: Prior advice from WHD to the employer that its conduct was unlawful, and the employer's failure to adequately inquire further into the lawfulness of its conduct when it should have. 57 FR 49130; 29 CFR 578.3(c)(2)-(3). As the Department noted in the NPRM for the 2020 Tip final rule, two appellate courts identified an inconsistency between the 1992 regulations' language, on the one hand, that conduct “shall be deemed knowing” if the employer was previously advised by WHD that the conduct was unlawful, and its language, on the other hand, derived from Richland Shoe, that WHD shall take into account “[a]ll of the facts and circumstances surrounding the violation” when determining willfulness. See 84 FR 53964-65 (discussing Rhea Lana, Inc. v. Dep't of Labor, 824 F.3d 1023, 1030-32 (D.C. Cir. 2016), and Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 680-81 (1st Cir. 1998)). The Department also explained in the NPRM for the 2020 Tip final rule that it does evaluate all of the facts and circumstances surrounding a violation when litigating willfulness, notwithstanding the regulatory language that appeared to be to the contrary. See 84 FR 53965. Accordingly, the NPRM for the 2020 Tip final rule proposed to revise §§ 578.3(c)(2)-(3) and 579.2 to state that an employer's receipt of advice from WHD that its conduct is unlawful and its failure to inquire further regarding the legality of its conduct are each “a relevant fact and circumstance” in determining willfulness. See 84 FR 53978.

After considering comments received, the 2020 Tip final rule revised § 578.3(c)(2) and the corresponding language in § 579.2 to state that, in considering all of the facts and circumstances, an employer's receipt of advice from WHD that its conduct was unlawful “can be sufficient” to show that the violation is knowing but is “not automatically dispositive.” See 85 FR 86774. In addition, the 2020 Tip final rule deleted § 578.3(c)(3) and the corresponding language in § 579.2 addressing the meaning of reckless disregard. The 2020 Tip final rule explained that, unlike § 578.3(c)(2), § 578.3(c)(3) does not just identify a fact and address how that fact impacts a willfulness finding; instead, it addresses a scenario—in which an employer should have inquired further into the lawfulness of its conduct but did not do so adequately—that is “tantamount to reckless disregard.” See 85 FR 86774 (citing Davila v. Menendez, 717 F.3d 1179, 1185 (11th Cir. 2013)). According to the 2020 Tip final rule, revising § 578.3(c)(3) in the same manner as § 578.3(c)(2) thus “did not seem helpful.” Id.

In the CMP NPRM, the Department stated that it believed a modification to § 578.3(c)(2) and the corresponding language in section § 579.2 regarding knowing violations was necessary to clarify that other circumstances, not just the circumstance identified in these regulations, can be sufficient to show that a violation is knowing. Accordingly, the Department proposed to withdraw and repropose § 578.3(c)(2) and the corresponding language in § 579.2 to state that “the employer's receipt of advice from a responsible [WHD] official . . . to the effect that the conduct in question is not lawful, among other situations, can be sufficient to show that the employer's conduct is knowing, but is not automatically dispositive.” 86 FR 15823. The Department also explained in the CMP NPRM that, although the preamble to the 2020 Tip final rule stated that an employer's failure to make adequate further inquiry into the lawfulness of its conduct when it should have done so is “tantamount to reckless disregard,” the rule's deletion of § 578.3(c)(3) and the corresponding language in § 579.2 could be read as suggesting the opposite. See id. Accordingly, the Department proposed to reinsert language in §§ 578.3(c)(3) and 579.2 addressing reckless disregard—specifically, that “reckless disregard of the requirements of the Act means, among other situations, that the employer should have inquired further into whether its conduct was in compliance with the Act and failed to make adequate further inquiry.” 86 FR 15823.

Multiple commenters supported the willfulness changes proposed in the CMP NPRM. The AG Coalition stated that the proposed revisions to §§ 578.3(c)(2) and (3) and 579.2 would address their concerns with the 2020 Tip final rule's amendments to these provisions, which “[left] the regulated community without guidance in determining when reckless conduct is willful” (among other concerns). The AG Coalition supported the Department's proposal to “clarif[y] that there may be other situations” where a violation can be found knowing, in addition to when an employer has received advice from WHD that its conduct is unlawful. The AG Coalition also supported the Department's proposal to reinstate regulatory text regarding the meaning of reckless disregard in §§ 578.3(c)(3) and 579.2, including the Department's proposal that reckless disregard may be established in situations other than where “the employer should have inquired further but did not do so adequately.”  11 The Center for Workplace Compliance (CWC) stated that it was “pleased to support” the Department's proposal to retain language in §§ 578.3(c)(2) and 579.2 stating that an employer's receipt of advice from WHD that its conduct was unlawful is “not automatically dispositive” of willfulness. According to CWC, this language “recognizes that employers should not be automatically subject to [CMPs] where legitimate questions exist concerning . . . coverage.”

Commenters representing employees generally supported the proposed willfulness changes in part. Commenters such as Restaurant Opportunities Centers United (ROC United), the North Carolina Justice Center (NCJC), and the National Employment Lawyers Association (NELA) supported the Department's affirmation in the CMP NPRM that the two scenarios identified in its regulations—an employer's receipt of advice from WHD that its conduct was unlawful and an employer's failure to adequately inquire into the lawfulness of its conduct when it should have done so—“can be sufficient” to establish willfulness. See also Texas RioGrande Legal Aid (TRLA) (“TRLA appreciate[s] the DOL's improvement between the prior notice of proposed rulemaking and this reproposal.”). These commenters noted that they understood the Department's concern that the 1992 versions of §§ 578.3(c)(2) and (3) and 579.2 “may be in tension” with Richland Shoe and with § 578.3(c)(1)'s requirement that all facts and circumstances be considered. 12 However, to give the scenarios identified in the regulations “the proper weight,” commenters representing employees recommended that the Department “establish a rebuttable presumption that a violation is knowing when an employer received notice from WHD that its conduct was unlawful, and that a violation is in reckless disregard of the law if the employer failed to make adequate inquiry into whether its conduct was compliant.” See, e.g., ROC United; NCJC; NELA; NELP; TRLA.

The NRA and NFIB urged the Department to retain the 2020 Tip final rule's revisions to §§ 578.3(c)(2) and (3) and 579.2. The NRA stated that it supported the 2020 Tip final rule's willfulness changes “for the reasons that the Department already outlined” in the 2020 Tip final rule before the Department's “sudden” change of opinion in the CMP NPRM. The NFIB supported the 2020 Tip final rule's willfulness changes over those proposed in the CMP NPRM as well, characterizing the 2020 revisions as “reasonable and practical.” In the alternative, NFIB requested that the Department retain the 2020 Tip final rule's willfulness changes for “small and independent businesses.”

After considering all the comments, the Department is finalizing the revisions to §§ 578.3(c)(2) and (c)(3) and 579.2 as proposed.

The Department continues to believe that revisions to its 1992 regulations regarding when a violation of the FLSA is willful are necessary for the reasons identified in the 2020 Tip final rule: To resolve the tensions identified by appellate courts within § 578.3(c) and between § 578.3(c) and Richland Shoe and to align these provisions more closely with how the Department actually litigates. Accordingly, as proposed in the CMP NPRM, the Department is retaining the language in § 578.3(c)(2) and the corresponding language in § 579.2 that an employer's receipt of advice from WHD that its conduct is unlawful is “not automatically dispositive” of a knowing violation. By clarifying that an employer's receipt of advice from WHD that its conduct is unlawful is not automatically dispositive, the Department also addresses the concern raised by CWC that such evidence should not “automatically subject” an employer to CMPs where the employer has a legitimate disagreement with WHD concerning the FLSA's coverage.

At the same time, this rule's revisions to §§ 578.3(c)(2) and 579.2 affirm that an employer's receipt of advice from WHD that its conduct is unlawful “can be sufficient” to show that a violation is knowing and thus willful. In accordance with § 578.3(c)(1), all facts and circumstances surrounding the violation must be taken into account when determining willfulness. However, an employer's receipt of advice from WHD that its conduct is unlawful is a significant, and may be a determining, factor regarding that employer's willfulness.

By finalizing the proposed changes to § 578.2(c)(2) and the corresponding language in § 579.2, this rule also makes explicit, consistent with considering all of the facts and circumstances, that evidence other than an employer's receipt of advice from WHD that its conduct was unlawful can be sufficient to show that a violation was knowing. As noted above, the AG Coalition urged the Department to finalize this proposed change. This rule thus makes clear that other circumstances, not just the circumstance identified in § 578.3(c)(2), can be sufficient to show that a violation is knowing.

This rule also restores regulatory text regarding the meaning of willfulness by reinserting language regarding reckless disregard in §§ 578.3(c)(3) and 579.2. The Department agrees with the AG Coalition and advocacy groups representing employees who argued that simply deleting § 578.3(c)(3) and the corresponding language in § 579.2 may have led to confusion and uncertainty. The revised language in §§ 578.3(c)(3) and 579.2 regarding reckless disregard aligns the Department's regulations with appellate court precedent, pursuant to which an employer's failure to adequately inquire into whether it violated the FLSA when it should have done so is considered tantamount to reckless disregard. See Davila v. Menendez, 717 F.3d 1179, 1184 (11th Cir. 2013). The revisions to § 578.3(c)(3) and the corresponding language in § 579.2 also make clear that reckless disregard can be proven by evidence other than that the employer should have inquired further but did not do so adequately. When determining reckless disregard, the Department must still consider all of the relevant facts and circumstances. See § 578.3(c)(1). Accordingly, under revised §§ 578.3(c)(3) and 579.2, an employer is in reckless disregard of the FLSA when, among other situations, the Department determines based on all of the facts and circumstances that the employer should have inquired into whether its conduct was lawful but failed to do so adequately.

The Department appreciates the concern of commenters representing employees that the circumstances identified in §§ 578.3(c)(2) and (3) be accorded appropriate weight in the willfulness analysis. However, the Department declines to incorporate into its regulations a rebuttable presumption that a violation of the FLSA is willful in these scenarios. Any rebuttable presumption would need to be carefully calibrated to ensure that it is consistent with § 578.3(c)(1)'s requirement, derived from Richland Shoe, that all facts and circumstances be considered in determining willfulness. 13 Incorporating a rebuttable presumption into these provisions would also create administrative difficulties, as it would require a change in how WHD assesses CMPs and how the Department litigates CMP proceedings.

Moreover, the Department does not agree that incorporating a rebuttable presumption of willfulness into its CMP regulations would accord greater weight to the scenarios identified in §§ 578.3(c)(2) and (3) than is accorded by its revisions to these provisions. As discussed above, under the proposed revisions—which this rule finalizes—an employer's receipt of advice from WHD that its conduct was unlawful “can be sufficient” to establish a knowing violation; thus, the revisions accord significant, and possibly determinative, weight to this fact in the willfulness analysis. Additionally, as noted above, an employer is in reckless disregard of the FLSA when, based on all of the facts and circumstances, it should have inquired into the lawfulness of its conduct but failed to do so adequately. Since any rebuttable presumption would need to be carefully calibrated to avoid conflicting with the requirement that all facts and circumstances be considered and would necessitate a change in how the Department administers CMPs and litigates willfulness, and given that incorporating a rebuttable presumption into the regulations would not necessarily accord greater weight to the scenarios in §§ 578.3(c)(2) and (3) and 579.2, the Department declines to incorporate a rebuttable presumption of willfulness into its CMP regulations.

Finally, the Department declines to retain the 2020 Tip final rule's willfulness revisions, as urged by the NRA and NFIB. Upon review of the comments and for the reasons discussed above, the Department believes that the proposed revisions to §§ 578.3(c)(2) and (3) and 579.2 make needed modifications to its CMP regulations. 14 The Department also declines NFIB's suggestion to preserve the 2020 Tip final rule's willfulness revisions for smaller employers. Consistent with the text of section 16(e)(2) of the FLSA, which provides that “any person who repeatedly or willfully violates” section 6 or 7 of the FLSA “shall be subject to a civil penalty,” 29 U.S.C. 216(e)(2), the Department has always maintained a uniform standard of willfulness applicable to all persons who violate the FLSA. See 57 FR 49128. Adopting different standards of willfulness for different sizes of employers would present administrative difficulties for WHD.

Accordingly, the final rule adopts the revisions to §§ 578.3(c)(2) and (c)(3) and 579.2 as proposed.

Section 3(m)(2)(B) prohibits employers, regardless of whether they take a tip credit, from keeping tips received by employees, “including allowing managers or supervisors to keep any portion of employees' tips.” 29 U.S.C. 203(m)(2)(B). Section 531.52(b)(2), as amended by the 2020 Tip final rule, reiterates the prohibition in section 3(m)(2)(B) that “[a]n employer may not allow managers and supervisors to keep any portion of an employee's tips, regardless of whether the employer takes a tip credit.” 29 CFR 531.52(b)(2). However, § 531.52(b)(2) clarifies that an employer does not violate 3(m)(2)(B) when a manager or supervisor keeps tips that “he or she receives directly from customers based on the service that he or she directly provides.” The Department explained in the 2020 Tip final rule that section 3(m)(2)(B) does not bar managers and supervisors from keeping their own tips but only prohibits managers and supervisors from keeping “tips received by employees other than themselves.” See 85 FR 86764. Thus, for example, a salon manager may “keep tips left by customers whose hair she personally styles,” without violating the statute. Id.

In the CMP NPRM, the Department observed that some managers and supervisors may directly engage in a significant amount of tipped work for which they earn tips, and requested comments on whether it could make additional adjustments to the regulations to better address these employees without running afoul of section 3(m)(2)(B)'s prohibition of these individuals “keeping” other employees' tips. The Department asked whether language in the current regulation is sufficient to allow managers and supervisors to retain the tips they earn from customer service work. The Department also requested comment on whether it should modify the regulation to clarify that managers and supervisors can contribute tips to mandatory tip pools. In addition, the Department asked general questions about managers and supervisors and tipped work, including: (1) How commonly managers and supervisors perform tipped work; (2) whether, prior to the CAA, managers and supervisors who perform tipped work typically participated in tip pools or tip sharing arrangements; and (3) whether it is common for tips provided for work performed by a manager or supervisor to be commingled with other employees' tips.

Commenters—representing both employers and employees—generally noted that it is not unusual for managers and supervisors in service industries to perform tipped work. See Werman Salas; NRA. NRA stated that, in the restaurant industry, managers and supervisors “take orders,” and “serve food . . . on [a] daily basis throughout the country.” NRA also explained that, in “some circumstances,” a “manager might be the only individual serving tables because it is a slow day or because it is an event outside the restaurant location and only supervisors are managing it.” One brewery employer noted that its bar manager has three jobs codes—manager, bartender, and brewery assistant—and that “there are many times” when the manager “must change roles and work under a bartender job code for 4 hours of a 6 hour shift.” The commenter further noted that even in large restaurants, “[i]f a bartender doesn't show up for work,” the manager may be “forced to stop managing and become the bartender for a night.” Commenters also indicated that managers and supervisors are performing more tipped work as a result of the COVID-19 pandemic. The Employment Rights Center commented that, as a result of the pandemic, a manager might, for example, be more likely to “serve an unexpected in-person table, while a server is staffing a takeout counter or preparing to-go orders.” ROC United stated that managers and supervisors at full-service restaurants “have performed tipped work on a daily and hourly basis over the last year.”

Nearly all commenters supported regulatory language allowing managers and supervisors who receive their own tips for services they directly provide to keep those tips. See, e.g., Economic Policy Institute (EPI); Employee Rights Center; Public Justice Center; Kentucky Equal Justice Center; National Employment Lawyers Association; National Employment Law Project; NFIB; National Partnership for Women and Families; National Women's Law Center; ROC United; and Worker Justice Center of New York. NFIB stated that this policy, “reasonably recognizes situations in which a manager or supervisor provides leadership services with respect to other employees, but also furnishes services to customers on the same basis as those employees, as happens frequently, for example, in the restaurant business.” One individual commenter, however, argued that managers and supervisors should not be able to keep the tips that they receive for their direct service, as this would incentivize managers or supervisors to “use less staff, so they `have to' lend a hand.”

Commenters also described instances in which tips provided for work performed by a manager or supervisor may be commingled with tips provided to other tipped employees. Werman Salas commented that commingling frequently occurs in two scenarios: When a manager or supervisor “performs tipped work alongside other tipped employees and there is a common tip jar,” or when the manager or supervisor assists with tipped work, but “is not solely responsible for the service that results in the gratuity being given by the customer.” For example a manager or supervisor might run food to a table, but the “server is otherwise responsible for the balance of the guest experience.” Id.

The Department requested comments on whether it was possible to modify the regulations so that a manager or supervisor could retain tips in commingling scenarios without allowing the manager or supervisor to keep other employees' tips in violation of 3(m)(2)(B). Commenters who responded to this question generally stated that such an approach was not feasible because it will often be impossible to determine the amount of the tip “earned” by the manager or supervisor. See Werman Salas; NWLC. For example, NWLC stated that when a customer leaves a single tip for a service experience in which both a manager or supervisor and a non-managerial tipped employee participate, it is not possible to attribute a portion of the tip to the manager or supervisor. Rather than revise the language in § 531.52(b)(2) to allow a manager or supervisor to keep commingled tips, these commenters proposed revising the regulation to “state the opposite” and provide that a manager or supervisor may keep a tip he or she directly receives for service he or she directly provides only if the tip is not commingled with and is segregable from other employees' tips. Werman Salas Law Firm; see also NWLC. NRA, on the other hand, agreed generally that “tips to managers and supervisors should not be `commingled' with tips provided to tipped employees,” but suggested that managers and supervisors could pool tips among themselves. According to the NRA, “no tipped employee shares tips with a supervisor or manager” in these scenarios.

Having carefully considered the comments, the Department has decided to slightly modify the statement in § 531.52(b)(2) that a manager or supervisor may keep tips that “he or she receives directly from customers based on the service that he or she directly provides.” In this final rule, the Department amends the regulatory language to clarify that a manager or supervisor may keep tips only for services the manager or supervisor directly and “solely” provides. Particularly given comments highlighting the prevalence of tipped work among managers and supervisors in the service industry, it is important that the Department's regulations continue to reflect the fact that section 3(m)(2)(B) does not prohibit managers and supervisors who are tipped employees from keeping tips that are theirs alone. Moreover, as one individual commenter noted, if managers and supervisor cannot keep such tips, it is unclear who would be entitled to them.

However, by clarifying that a manager or supervisor may keep tips only for services the manager or supervisor directly and “solely” provides, the modified regulatory text will prevent managers and supervisors from keeping tips when it is not possible to attribute the tip solely to the manager or supervisor. The modified regulatory text thus helps to ensure that managers and supervisors do not keep “any portion” of other employees' tips, see 29 U.S.C. 203(m)(2)(B). With respect to commenters' suggestion that the Department specify that such tips must be segregable from or not commingled with other employees' tips, the Department believes that the clarified language of § 531.52(b)(2) makes clear that a manager or supervisor may keep only those tips that the manager or supervisor receives directly for a service that the manager or supervisor directly and solely provides. Thus, a manager who serves her own tables may keep her own tips, for example. However, when a manager simply runs food to a table for which a server is otherwise responsible, she may not keep any portion of the tip the customer leaves for the server since that tip was not earned solely by the manager or supervisor.

The Department also declines to amend the regulations to allow mandatory tip pools comprised only of managers and supervisors, as proposed by NRA. The statute does not permit such arrangements: Managers and supervisors are employees under the FLSA, see 29 U.S.C. 203(e)(1), and 3(m)(2)(B) prohibits employers from allowing managers or supervisors to keep other “employees' tips.”  15 This includes other managers and supervisors' tips. Moreover, to permit scenarios in which a higher-ranking manager or supervisor—for example, the general manager of a restaurant—could keep tips from a lower-ranking manager or supervisor—for example, a shift supervisor who also tends bar—would undermine the CAA's mandate of preventing employers and their agents from keeping employees' tips.

In this final rule, the Department also amends §§ 531.54(c)(3) and 531.54(d) to clarify that an employer may not allow a manager or supervisor to receive tips from employer-mandated tip pools or tip sharing arrangements, but may require a manager and supervisor to contribute tips to such an arrangement. As discussed above, section 3(m)(2)(B) prohibits managers and supervisors from keeping any portion of other employees' tips. See also § 531.52(b)(2). Sections 531.54(c)(3) and (d), as amended by the 2020 Tip final rule, implement this prohibition by barring employers from “includ[ing]” such managers and supervisors in mandatory tip pools. The preamble accompanying the 2020 Tip final rule interpreted § 531.54(c)(3) and (d) to prohibit employers from requiring managers and supervisors to contribute, as well as from allowing them to receive, tips from mandatory tip pooling or sharing arrangements. 85 FR 86764. As a result of the Department's interpretation in the 2020 Tip final rule, a restaurant employer, for example, can require non-managerial servers to give a portion of their tips to the bussers, but is prohibited from requiring a manager who also serves tables to similarly contribute. Or a salon employer may require non-supervisory stylists to share a portion of tips with the shampoo assistant, but cannot require a stylist who is also a supervisor to do the same. In the CMP NPRM, the Department therefore sought comment on whether it should adjust its regulations to allow managers and supervisors, like other employees who receive tips, to contribute tips to eligible employees in mandatory tip pools or tip sharing arrangements, so long as: (1) They do not receive any tips from a pool; or (2) alternatively, so long as they receive out of the tip pool no more than what they contributed.

Commenters overwhelmingly supported a change to allow employers to require managers and supervisors, like other employees who receive tips, to contribute to tip pooling or sharing arrangements. See, e.g., EPI; Employee Rights Center; Public Justice Center; ROC United; North Carolina Justice Center; Workplace Justice Project; National Employment Lawyers Association; National Employment Law Project; Kentucky Equal Justice Center; National Partnership for Women and Families; National Women's Law Center; Worker Justice Center of New York; NRA. 16 NRA noted that mandatory tip sharing arrangements in which managers or supervisors who have “responsibility for serving tables” share a portion of their tips with bartenders, bussers, or other employees who help them, are common in the restaurant industry. Commenters also stated that allowing managers and supervisors who earn tips to contribute them to eligible employees in mandatory tip pools would benefit non-managerial employees. See Werman Salas; NRA. In addition, the Center for Workplace Compliance commented that modifying the regulations to allow managers and supervisors to contribute to mandatory tip pools would benefit employers by giving them “a little more flexibility to adopt tip pooling practices that work best in their industry.” NRA also stated that the statute does not prohibit employers from requiring managers and supervisors to share their own tips.

To the extent that commenters addressed the possibility of allowing managers and supervisors who contribute tips to a tip pool to receive tips from the arrangement up to the amount they contributed, commenters opposed this alternative. See Werman Salas; NRA. Werman Salas asserted that a policy allowing managers or supervisors to receive some tips from a tip pool, but no more than what the manager or supervisor contributes, “would be difficult or impossible to apply.” In contrast, allowing employers to require managers and supervisors to contribute a portion of their tips to mandatory tip pooling or sharing arrangements, while preserving “the prohibition on managers and supervisors receiving any tips from such pooling or sharing arrangements” would maintain “the integrity of the tip pooling arrangements without improper participation from managers or supervisors.”

Having considered the comments, the Department adopts changes to its regulations to clarify that, while an employer may not allow a manager or supervisor to keep other employees' tips by receiving tips from a tip pool or tip sharing arrangement, section 3(m)(2)(B) does not prohibit an employer from requiring a manager and supervisor who receives tips directly from customers to contribute some portion of those tips to eligible employees in an employer-mandated tip pooling or tip sharing arrangement. The final rule similarly provides that employers—some of whom may themselves be managers or supervisors who perform tipped work—may not receive tips from a tip pool or sharing arrangement, but does not bar employers who receive tips directly from customers from sharing those tips with their employees.

The Department agrees with commenters that allowing employers to require managers and supervisors to share their tips with other eligible employees will benefit non-managerial employees. When managers or supervisors contribute tips to mandatory tip pools, non-managerial employees ( e.g., bussers, other servers, and bartenders) may earn more from the pool and tipped non-managerial employees ( e.g., servers and bartenders) may be required to contribute less to the pool. The Department believes that allowing employers to require managers and supervisors, like other employees who receive tips, to contribute to tip sharing is particularly important given that managers or supervisors may have the opportunity to serve the largest tables or groups of customers, or work the more desirable shifts. In addition, the Department takes note of commenters' statement that section 3(m)(2)(B) does not expressly prohibit employers from requiring managers or supervisors to share tips.

The Department expressed concerns in the 2020 Tip final rule that allowing managers and supervisors to participate in tip pools for one purpose (contributing tips) and not for another (receiving tips) could “create confusion among employers and employees,” and lead to situations in which compliance is difficult. 85 FR 86764. On further consideration, however, the Department has determined that any compliance difficulties created by this policy are minimal and are outweighed by the benefits noted above. The far more intractable challenge for compliance and enforcement, as commenters noted, would be to allow managers and supervisors to contribute to employer-mandated tip pooling or tip sharing arrangements and also receive tips from the pool. Under such a policy, it would be very difficult to ensure that managers and supervisors are not taking more than the equivalent of their own tips in violation of the statute. The Department believes, however, that employers can more easily implement a bright line rule in which managers or supervisors contribute tips to mandatory tip sharing arrangements, but do not receive any tips from those arrangements.

As finalized, § 531.54(c)(3) and (d) provide that, consistent with section 3(m)(2)(B) of the FLSA, an employer may not receive and may not allow a manager or supervisor to receive any tips from a tip pool or tip sharing arrangement. As amended, the regulations do not prohibit an employer from contributing tips to, or from requiring a manager and supervisor who receives tips to contribute tips to, eligible employees in an employer-mandated tip pooling or tip sharing arrangement. When a manager or supervisor directly receives tips for a service the manager or supervisor directly and solely provides, an employer may allow the manager or supervisor to keep the tips, and may also require the manager or supervisor to share some portion of the tips with other eligible employees. Neither of these options runs afoul of section 3(m)(2)(B)'s prohibition on managers and supervisors “keep[ing]” other employees' tips.

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its attendant regulations, 5 CFR part 1320, require the Department to consider the agency's need for its information collections, their practical utility, the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. This final rule does not contain a collection of information subject to OMB approval under the PRA.

Under Executive Order 12866, OMB's Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and OMB review. 17 Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as a regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities (also referred to as economically significant); (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. OIRA has determined that this rule is not economically significant under section 3(f) of Executive Order 12866.

Executive Order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with obtaining the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. Executive Order 13563 recognizes that some costs and benefits are difficult to quantify and provides that, when appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. The analysis below outlines the impacts that the Department anticipates may result from this rule and was prepared pursuant to the above-mentioned executive orders.

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act) (5 U.S.C. 801 et seq. ), OIRA has not designated this rule as a major rule, as defined by 5 U.S.C. 804(2).

In this final rule, the Department modifies the portion of the 2020 Tip final rule incorporating the CAA's new provisions authorizing the assessment of CMPs for violations of section 3(m)(2)(B) of the Act. The Department also modifies an additional portion of its CMP regulations addressing willful violations. Because these changes will only apply when an employer violates the FLSA, the Department does not believe that they will have an impact on costs or transfers. The Department has also decided to clarify in this final rule that while managers and supervisors may not receive tips from tip pools or tip sharing arrangements, managers or supervisors are not prohibited from contributing to mandatory tip pools or sharing arrangements. The Department has discussed this change qualitatively due to data limitations. Other provisions codifying the CAA amendments were already discussed and quantified in the 2020 Tip final rule, and so have not been quantified again here. The only costs quantified here are the rule familiarization costs associated with reviewing the rule. The Department qualitatively discusses possible benefits associated with this rule.

Regulatory familiarization costs represent direct costs to businesses associated with reviewing the new regulation. It is not clear whether regulatory familiarization costs are a function of the number of establishments or the number of firms. 18 Presumably, the headquarters of a firm will conduct the regulatory review for businesses with multiple locations, and may also require these locations to familiarize themselves with the regulation at the establishment level. To avoid underestimating the costs of this rule, the Department uses both the number of establishments and the number of firms to estimate a potential range for regulatory familiarization costs. The lower bound of the range is calculated assuming that one specialist per firm will review the rule, and the upper bound of the range assumes one specialist per establishment.

The most recent data on private sector entities at the time this rule was drafted are from the 2017 Statistics of U.S. Businesses (SUSB). 19 The Department limited this analysis to a few industries that were acknowledged to have tipped workers in the 2020 Tip final rule. These industries are classified under the North American Industry Classification System (NAICS) as 713210 (Casinos), 721110 (Hotels and Motels), 722410 (Drinking Places (Alcoholic Beverages)), 722511 (Full-service Restaurants), 722513 (Limited Service Restaurants), and 722515 (Snack and Nonalcoholic Beverage Bars). The Department understands that there may be entities in other industries with tipped workers who may review this rule, but did not receive any comments about other industries that should be included in the analysis. See Table 1 for a list of the number of firms and establishments in each of these industries.

The Department believes 30 minutes per entity, on average, to be an appropriate review time for this rule, because most of the information related to the CAA amendments that employers would have to familiarize themselves with was already captured in the 2020 Tip final rule. The changes in this rule are small, and one is consistent with the Department's existing enforcement. This review time represents an average of employers who will spend less than 30 minutes reviewing, and others who will spend more time. In the NPRM, the Department estimated that average review time would be 15 minutes, but has increased it here to account for the additional provisions on managers' participation in tip pools.

The Department's analysis assumes that the rule would be reviewed by Compensation, Benefits, and Job Analysis Specialists (SOC 13-1141) or employees of similar status and comparable pay. The median hourly wage for these workers was $32.30 per hour in 2020, the most recent year of data available. 20 The Department also assumes that benefits are paid at a rate of 46 percent  21 and overhead costs are paid at a rate of 17 percent of the base wage, resulting in a fully loaded hourly rate of $52.65.

The Department estimates that the lower bound of regulatory familiarization cost range would be $13,265,562 (503,915 firms × $52.65 × 0.5 hours), and the upper bound, $17,406,037 (661,198 establishments × $52.65 × 0.5 hours). The Department estimates that all regulatory familiarization costs would occur in Year 1.

Additionally, the Department estimated average annualized costs of this rule over 10 years. Over 10 years, it would have an average annual cost of $1.8 million to $2.3 million, calculated at a 7 percent discount rate ($1.5 million to $1.9 million calculated at a 3 percent discount rate). All costs are in 2020 dollars.

As noted above, in the 2020 Tip final rule, the Department implemented section 3(m)(2)(B) of the FLSA by prohibiting employers from including managers or supervisors in mandatory tip pooling or sharing arrangements. See 29 CFR 531.54(c)(3), (d) (April 30, 2021). The preamble accompanying the 2020 Tip final rule interpreted § 531.54(c)(3) and (d) to prohibit employers from requiring managers and supervisors to contribute, as well as from allowing them to receive, tips from mandatory tip pooling or sharing arrangements. 85 FR 86764. This final rule clarifies that managers and supervisors are not prohibited from contributing to eligible employees in mandatory tip pools or sharing arrangements, but they may not receive tips from tip pools or tip sharing arrangements. If, prior to this final rule, a manager was prevented from contributing to tip pools, but is now able to contribute following this rule, their tipped income and overall earnings could decrease, while the tipped income and overall earnings of the other employees in the tip pool could increase. The magnitude of this change could be estimated by observing how managers' and non-manager employees' tipped income and overall earnings changed following the provisions of the 2020 Tip final rule that prevented managers from contributing to tip pools. Although the Department lacks comprehensive data on the number of managers who perform tipped work, the Department used data from the Current Population Survey (CPS) to estimate the number of people in the occupation “First-Line Supervisors of Food Preparation and Serving Workers.” The Department acknowledges that this could be an undercount of the number of food service managers or supervisors who receive tips, and that this is not the only industry in which managers may receive tips. According to CPS, in 2019 there were 590,900 First-Line Supervisors of Food Preparation and Serving Workers. 22 Their overall average hourly earnings were $17.48 (includes hourly and non-hourly workers and tipped and non-tipped workers). Of those workers who are paid hourly, 24 percent report regularly receiving tips, overtime, or commissions (this question is only asked of hourly workers). After backing out estimated overtime pay, the Department estimates that these First-Line Supervisors of Food Preparation and Serving Workers earned an average of $19.71 per hour, which includes $5.68 per hour in tips. Several commenters asserted that it is common for managers and supervisors to perform tipped work. For example, Werman Salas stated, “Our experience from litigation is that managers and supervisors who arguably satisfy the executive employee duties test also frequently perform tipped work. For example, in litigation against a national casual dining establishment, both assistant managers and managers who arguably met the duties test for executive employees, frequently greeted customers and ran food to tables as part of promoting the `guest experience.' ” The Department did not receive any comments with data on the earnings of these managers and supervisors.

It would also be difficult to discern whether any change in earnings would be related to the provisions of the 2020 Tip final rule that prevented managers from contributing to mandatory tip pools, because the rule had only been in effect since April 30, 2021. Prior to the 2020 Tip final rule, it was unclear to the regulated community whether an employer could require a manager to contribute to tip pools following the 2018 CAA amendments. See NRA, Comment on the 2019 Tip NPRM (requesting clarity on this issue).

This rule replaces regulatory language in the CMP regulations so that the Department is not limited in its assessment of tip CMPs to only repeated and willful violations of section 3(m)(2)(B). This change is consistent with the text of section 16(e) of the FLSA, which provides that “[a]ny person who violates section 3(m)(2)(B) shall be subject to a civil penalty . . . for each such violation, as the Secretary determines appropriate.” 29 U.S.C. 216(e). The Department believes that this change, by ensuring that the Department has the ability to impose CMPs for violations of section 3(m)(2)(B) when it deems appropriate, can help improve the enforcement of the statute, potentially discourage more employers from violating the FLSA, and better ensure that employees keep the tips they receive.

This rule also revises portions of the Department's CMP regulations regarding when a violation of section 6 (minimum wage) or section 7 (overtime) of the FLSA is “willful,” and thus subject to a CMP under section 16(e). As discussed above, these portions of the Department's regulations are based on McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988), which held that a violation is willful if the employer “knew or showed reckless disregard.” This rule modifies the CMP regulations to clarify that multiple circumstances, including those not specified in the rule, can be sufficient to show a knowing violation of section 6 or 7. The Department also reinserts language in the CMP regulations to address the meaning of reckless disregard. The Department believes that these revisions will better align its CMP regulations with how it actually litigates willfulness and make clearer to the regulated community when a violation is knowing or in reckless disregard and thus willful. This increased clarity will enable employers to better understand when they may be subject to a CMP for violating the FLSA's minimum wage or overtime requirements, which may enhance the penalty's deterrent effect.

This rule revises the Department's regulation addressing managers and supervisors who cannot keep other employees' tips under section 3(m)(2)(B) of the FLSA. The final rule provides that managers and supervisors cannot receive tips from tip pools or tip sharing arrangements, but does not prohibit managers and supervisors, who may earn their own tips from customers, from contributing tips to such arrangements. The Department believes that these changes will result in increased flexibility in tip pooling arrangements.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (1996), requires federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. The RFA requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Accordingly, the Department examined this rule to determine whether it would have a significant economic impact on a substantial number of small entities. The most recent data on private sector entities at the time this rule was drafted are from the 2017 Statistics of U.S. Businesses (SUSB). 23 The Department limited this analysis to a few industries that were acknowledged to have tipped workers in the 2020 Tip final rule. These industries are classified under the North American Industry Classification System (NAICS) as 713210 (Casinos), 721110 (Hotels and Motels), 722410 (Drinking Places (Alcoholic Beverages)), 722511 (Full-service Restaurants), 722513 (Limited Service Restaurants), and 722515 (Snack and Nonalcoholic Beverage Bars). The SUSB reports that these industries have 503,915 private firms and 661,198 private establishments. Of these, 501,322 firms and 554,088 establishments have fewer than 500 employees.

The per-entity cost for small business employers is the regulatory familiarization cost of $26.33, or the fully loaded mean hourly wage of a Compensation, Benefits, and Job Analysis Specialist ($52.65) multiplied by 1/2 hour (thirty minutes). Because this cost is minimal for small business entities, and well below one percent of their gross annual revenues, which is typically at least $100,000 per year for the smallest businesses, the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (UMRA)  24 requires agencies to prepare a written statement for rules with a federal mandate that may result in increased expenditures by state, local, and tribal governments, in the aggregate, or by the private sector, of $165 million ($100 million in 1995 dollars adjusted for inflation) or more in at least one year. 25 This statement must: (1) Identify the authorizing legislation; (2) present the estimated costs and benefits of the rule and, to the extent that such estimates are feasible and relevant, its estimated effects on the national economy; (3) summarize and evaluate state, local, and tribal government input; and (4) identify reasonable alternatives and select, or explain the non-selection, of the least costly, most cost-effective, or least burdensome alternative. This rule is not expected to result in increased expenditures by the private sector or by state, local, and tribal governments of $165 million or more in any one year.

The Department has (1) reviewed this rule in accordance with Executive Order 13132 regarding federalism and (2) determined that it does not have federalism implications. The rule would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule would not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

For the reasons set forth above, the Department amends title 29, parts 531, 578, 579, and 580 of the Code of Federal Regulations as follows:

The Coast Guard will enforce the limited access area for the annual San Francisco Bay Navy Fleet Week Parade of Ships and Blue Angels Demonstration in 33 CFR 100.1105.

The regulated area “Alpha” in § 100.1105(b)(1) for the Navy Parade of Ships will be enforced from 9:30 a.m. until 12 p.m. on October 8, 2021.The regulated area “Bravo” in § 100.1105(b)(2) for the U.S. Navy Blue Angels will be enforced from 12:30 p.m. until 6 p.m. on October 7, 2021, and 11:30 p.m. until 5 p.m. daily from October 8, 2021 through October 10, 2021.

Regulated area “Alpha” will be enforced during the Navy Parade of Ships and is bounded by a line connecting the following points:

Under the provisions of 33 CFR 100.1105, except for persons or vessels authorized by the PATCOM, in regulated area “Alpha” no person or vessel may enter the parade route or remain within 500 yards of any Navy parade vessel. No person or vessel shall anchor, block, loiter in, or impede the through transit of ship parade participants or official patrol vessels in regulated area “Alpha.”

Regulated area “Bravo” will be enforced during the Navy Blue Angels Demonstration and is bounded by a line connecting the following points:

Except for persons or vessels authorized by the PATCOM, no person or vessel may enter or remain within regulated area “Bravo.”

When hailed or signaled by U.S. Coast Guard patrol personnel by siren, radio, flashing light, or other means, a person or vessel shall come to an immediate stop. Persons or vessels shall comply with all directions given; failure to do so may result in expulsion from the area, citation for failure to comply, or both. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

The PATCOM shall be designated by the Commander, Coast Guard Sector San Francisco, California. The PATCOM is empowered to forbid and control the movement of all vessels in the regulated areas.

In addition to this notification of enforcement in the Federal Register , the Coast Guard plans to provide notification of this enforcement period via the Local Notice to Mariners.

Executive Summary: Purpose: This interim rule expands prioritized examination (Track One) practice to increase the number of applications that may be accepted for prioritized examination in a fiscal year to 15,000.

Summary of Major Provisions: The prioritized examination provisions (37 CFR 1.102(e)) currently provide that a request for prioritized examination may be filed with an original utility or plant nonprovisional application under 35 U.S.C. 111(a). The America Invents Act provides that the Office may not accept more than 10,000 requests for prioritization in any fiscal year until regulations setting another limit are prescribed. The Office published an interim rule in 2019 expanding the availability of prioritized examination by increasing the limit on the number of prioritized examination requests that may be accepted in a fiscal year to 12,000. The current interim rule further expands the availability of prioritized examination by increasing the limit on the number of prioritized examination requests that may be accepted in a fiscal year to 15,000.

Background: Section 11(h) of the America Invents Act provides for prioritized examination of an application. See Public Law 112-29, 125 Stat. 284, 324 (2011). Section 11(h)(1)(B)(i) of the America Invents Act also provides that the Office may, by regulation, prescribe conditions for the acceptance of a request for prioritized examination, and section 11(h)(1)(B)(iii) provides that “[t]he Director may not accept in any fiscal year more than 10,000 requests for prioritization until regulations are prescribed under this subparagraph setting another limit.” Id.

The Office implemented the prioritized examination provision of the America Invents Act for applications on filing in a final rule published on September 23, 2011. See Changes to Implement the Prioritized Examination Track (Track I) of the Enhanced Examination Timing Control Procedures Under the Leahy-Smith America Invents Act, 76 FR 59050 (Sept. 23, 2011) (codified in 37 CFR 1.102(e)). Following its implementation, the Office improved its processes for carrying out prioritized examination and expanded the scope of prioritized examination in view of those improvements. First, the Office implemented prioritized examination for pending applications after the filing of a proper request for continued examination under 35 U.S.C. 132(b) and 37 CFR 1.114. See Changes to Implement the Prioritized Examination for Requests for Continued Examination, 76 FR 78566 (Dec. 19, 2011). Next, the prioritized examination procedures further expanded to permit the delayed submission of certain filing requirements while maintaining the Office's ability to timely examine the patent application. See Changes to Permit Delayed Submission of Certain Requirements for Prioritized Examination, 79 FR 12386 (Mar. 5, 2014).

The number of requests for prioritized examination has been increasing steadily over the years. The Office published an interim rule in 2019 expanding the availability of prioritized examination by increasing the limit on the number of prioritized examination requests that may be accepted in a fiscal year from 10,000 to 12,000. See Increase of the Annual Limit on Accepted Requests for Track I Prioritized Examination, 84 FR 45907 (Sept. 3, 2019). The current interim rule further expands the availability of prioritized examination by increasing the limit on the number of prioritized examination requests that may be accepted in a fiscal year to 15,000. Through continued monitoring of the implementation of the Track One program, the Office has determined that the program may be further expanded to permit more applications to undergo prioritized examination while maintaining the ability to timely examine all prioritized applications. Quality metrics used by the Office continue to reveal no loss in examination quality for applications given prioritized examination. In addition, the number of applications accepted for prioritized examination will remain a small fraction of the patent examinations completed in a fiscal year (the Office examines approximately 640,000 applications and requests for continued examination in total per fiscal year). Accordingly, the Office is further expanding the availability of prioritized examination by increasing the limit on the number of prioritized examination requests that may be accepted in a fiscal year to 15,000, beginning in fiscal year 2021 (October 1, 2020, through September 30, 2021) and continuing every fiscal year thereafter until further notice.

The following is a discussion of the amendments to 37 CFR part 1.

Section 1.102: Section 1.102(e) is revised to increase the limit on the total number of requests for prioritized examination that may be accepted (granted) in any fiscal year from 12,000 to 15,000.

A. Administrative Procedure Act: This interim rule revises the procedures that apply to applications for which an applicant has requested Track One prioritized examination. The changes in this interim rule do not change the substantive criteria of patentability. Therefore, the changes in this rulemaking involve rules of agency practice and procedure, and/or interpretive rules. See JEM Broad. Co. v. F.C.C., 22 F.3d 320, 326 (D.C. Cir. 1994) (“[T]he `critical feature' of the procedural exception [in 5 U.S.C. 553(b)(A)] `is that it covers agency actions that do not themselves alter the rights or interests of parties, although [they] may alter the manner in which the parties present themselves or their viewpoints to the agency.'” (quoting Batterton v. Marshall, 648 F.2d 694, 707 (D.C. Cir. 1980))); see also Bachow Commc'ns Inc. v. F.C.C., 237 F.3d 683, 690 (D.C. Cir. 2001) (rules governing an application process are procedural under the Administrative Procedure Act); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (rules for handling appeals were procedural where they did not change the substantive standard for reviewing claims). Accordingly, prior notice and opportunity for public comment are not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law). See Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), do not require notice and comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice” (quoting 5 U.S.C. 553(b)(A)). In addition, the changes in this interim rule may be made immediately effective because this interim rule is not a substantive rule under 35 U.S.C. 553(d).

Moreover, the Office, pursuant to authority at 5 U.S.C. 553(b)(B), finds good cause to adopt the changes in this interim rule without prior notice and an opportunity for public comment, as such procedures would be contrary to the public interest. Delay in the promulgation of this interim rule to provide prior notice and comment procedures would cause harm to those applicants who desire to file a request for Track One prioritized examination with a new application or request for continued examination. Immediate implementation of the changes in this interim rule is in the public interest because: (1) The public does not need time to conform its conduct, as the changes in this interim rule do not add any additional requirement for requesting prioritized examination of an application; and (2) those applicants who would otherwise be ineligible for prioritized examination will benefit from the immediate implementation of the changes in this interim rule. See Nat'l Customs Brokers & Forwarders Ass'n of Am., Inc. v. United States, 59 F.3d 1219, 1223-24 (Fed. Cir. 1995). In addition, pursuant to authority at 5 U.S.C. 553(d)(3), the Office finds good cause to adopt the changes in this interim rule without the 30-day delay in effectiveness as such delay would be contrary to the public interest. Immediate implementation of the changes in this interim rule is in the public interest because: (1) The public does not need time to conform its conduct, as the changes in this interim rule do not add any additional requirement for requesting prioritized examination of an application; and (2) those applicants who would otherwise be ineligible for prioritized examination will benefit from the immediate implementation of the changes in this interim rule.

B. Regulatory Flexibility Act: As prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553 or any other law, neither a regulatory flexibility analysis nor a certification under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) is required. See 5 U.S.C. 603.

C. Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

D. Executive Order 13563 (Improving Regulation and Regulatory Review): The Office has complied with Executive Order 13563 (Jan. 18, 2011). Specifically, the Office has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of the rule; (2) tailored the rule to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole, and provided online access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across Government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes.

E. Executive Order 13132 (Federalism): This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

F. Executive Order 13175 (Tribal Consultation): This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes, (2) impose substantial direct compliance costs on Indian tribal governments, or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000).

G. Executive Order 13211 (Energy Effects): This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001).

H. Executive Order 12988 (Civil Justice Reform): This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996).

I. Executive Order 13045 (Protection of Children): This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997).

J. Executive Order 12630 (Taking of Private Property): This rulemaking will not effect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988).

K. Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq. ), prior to issuing any final rule, the USPTO will submit a report containing the final rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this rulemaking are not expected to result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this rulemaking is not expected to result in a “major rule” as defined in 5 U.S.C. 804(2).

L. Unfunded Mandates Reform Act of 1995: The changes set forth in this rulemaking do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of $100 million (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of $100 million (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

M. National Environmental Policy Act of 1969: This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

N. National Technology Transfer and Advancement Act of 1995: The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions that involve the use of technical standards.

O. Paperwork Reduction Act of 1995: The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) requires that the Office consider the impact of paperwork and other information collection burdens imposed on the public. This interim rule does not involve information collection requirements that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3549). An applicant who wishes to participate in the prioritized examination program must submit a certification and request to participate in the program, preferably by using Form PTO/AIA/424. However, OMB has determined that, under 5 CFR 1320.3(h), Form PTO/AIA/424 does not collect “information” within the meaning of the Paperwork Reduction Act of 1995. Therefore, this rulemaking does not impose any additional collection requirements under the Paperwork Reduction Act that are subject to further review by OMB.

P. E-Government Act Compliance: The USPTO is committed to compliance with the E-Government Act to promote the use of the internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes.

For the reasons set forth in the preamble, 37 CFR part 1 is amended as follows:

VA is amending its final rule 2900-AR09, Nomenclature Change for Position Title to fix technical errors published on September 15, 2021, in the Federal Register at 86 FR 51274. Specifically, in updating the position title of “Director, Loan Guaranty Service” to “Executive Director, Loan Guaranty Service”, references to “Deputy Director, Loan Guaranty Service” and “Assistant Director, Loan Guaranty Service” were inadvertently updated as well. Therefore, VA is issuing these amendments to correct these errors.

For the reasons set forth in the preamble, the VA amends 38 CFR part 36 as follows:

Throughout this document “we,” “us,” or “our” mean “the EPA.”

In a notice of proposed rulemaking (NPRM) published on July 21, 2021, 1 EPA proposed to approve LDEQ's regional haze progress report for the first implementation period. On March 25, 2021, the State submitted its progress report in the form of a SIP revision which, among other things, detailed the progress made toward implementing the State's long-term strategy for regional haze that was outlined in the Louisiana Regional Haze SIP. The progress report assessed visibility improvement toward meeting the 2018 RPGs for the one Class I area in Louisiana (the Breton National Wilderness Refuge) and also for one Class I area in Arkansas (Caney Creek Wilderness area) affected by emissions from Louisiana. The State also provided a determination of adequacy of the existing regional haze SIP that no further substantive revisions are needed at this time. The details of LDEQ's submittal and the rationale for our proposed approval are explained in the NPRM. We did not receive any comments regarding our proposed action.

EPA is approving LDEQ's regional haze progress report SIP revision on the basis that it satisfies the requirements of 40 CFR 51.308(g), (h), and (i) for the first regional haze implementation period. The State's analysis showed visibility improvement that exceeded the visibility goals set for 2018 and emission trends indicated that SO 2 , NO X , and PM emissions have all been decreasing. Because the regional haze SIP will ensure the control of these emission reductions relied upon by Louisiana and other states in setting their RPG's for the first planning period, we agree with the State's determination that there is no need to revise the existing Louisiana regional haze implementation plan to achieve reasonable progress at the impacted Class I areas in Louisiana or nearby states.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 23, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, the Environmental Protection Agency amends 40 CFR part 52 as follows:

On February 9, 2021 (86 FR 8742), EPA published a notice of proposed rulemaking (NPRM) for the State of Maryland. In the NPRM, EPA proposed approval of Maryland's negative declaration SIP submittal for the 2016 Oil and Gas CTG. On June 18, 2020, the Maryland Department of the Environment (MDE) submitted the negative declaration for the 2016 Oil and Gas CTG as a revision to the Maryland SIP.

The CAA regulates emissions of nitrogen oxides (NO X ) and volatile organic compounds (VOCs) to prevent photochemical reactions that result in ozone formation. Reasonably available control technology (RACT) is a strategy for reducing NO X and VOC emissions from stationary sources within designated nonattainment areas classified as moderate or above that are not meeting the national ambient air quality standards (NAAQS) for ozone. EPA has consistently defined “RACT” as the lowest emission limit that a particular source is capable of meeting by the application of the control technology that is reasonably available considering technological and economic feasibility.

Control techniques guidelines (CTGs) and alternative control techniques (ACTs) form important components of the guidance that EPA provides to states for making RACT determinations. CTGs are used to presumptively define VOC RACT for applicable source categories. CAA section 182(b)(2)(A) requires that for ozone nonattainment areas classified as moderate or above, states must revise their SIPs to include provisions to implement RACT for each category of VOC sources covered by a CTG document. CAA section 184(b)(1)(B) extends the RACT obligation to all areas of states within the ozone transport region (OTR), including Maryland.

States subject to RACT requirements are required to enact controls for sources subject to CTGs that are at least as stringent as those found within the CTG, either via the adoption of regulations or by issuance of single source permits that outline what the source is required to do to meet RACT. On March 6, 2016 (80 FR 12264), EPA issued a final rule entitled “Implementation of the 2008 National Ambient Air Quality Standards for Ozone: State Implementation Plan Requirements” (2008 Ozone Implementation Rule). In the preamble to the final rule, EPA makes clear that if there are no sources covered by a specific CTG source category located in an ozone nonattainment area or an area in the OTR, the state may submit a negative declaration for that CTG. See 80 FR 12264, 12278. The same negative declaration is allowed by the 2015 ozone NAAQS implementation rule. 1

On October 27, 2016 (81 FR 74798), EPA published in the Federal Register the “Release of Final Control Techniques Guidelines for the Oil and Natural Gas Industry,” (2016 Oil and Gas CTG). This CTG provided information to state, local, and tribal air agencies to assist in determining RACT for VOC emissions from certain VOC emission sources within the oil and natural gas industry. The 2016 Oil and Gas CTG replaces an earlier 1983 CTG entitled “Control of Volatile Organic Compound Equipment Leaks from Natural Gas/Gasoline Processing Plants. December 1983.” EPA-450/3-83-007 (1983 CTG) 49 FR 4432; February 6, 1984. See 2016 Oil and Gas CTG, p. 8-1.

According to Maryland's June 18, 2020 submittal, MDE conducted a review of potential sources subject to the 2016 Oil and Gas CTG. This review consisted of a search of Maryland's oil and gas well records, air permit records, EPA greenhouse gas reporting records, and the Standard Industrial Classification (SIC) system. MDE's search identified a total of 13 facilities in Maryland operating in the production, processing, or transmission and storage segments of the oil and natural gas industry. However, none of these facilities had storage tanks or production wells that met or exceeded the applicability criteria of the CTG. MDE identified five facilities in the natural gas transmission sector, but determined that none of them had storage tanks with the potential to emit (PTE) more than 6 tons per year (tpy) of VOCs, which is the threshold for applicability of the CTG. 2 Additionally, MDE identified eight active individual production wells, but determined that none of these exceeded the 15 barrel equivalents per day per well, which is the threshold for CTG applicability. 3 Other specific requirements of the 2016 Oil and Gas CTG and the rationale for EPA's proposed action are explained in the NPRM and will not be restated here.

EPA received four sets of comments on our proposed approval of Maryland's

June 18, 2020 negative declaration SIP submittal. One comment was generally in favor of EPA's proposed action and will not be addressed in this action. A summary of the other comments and EPA's response is provided herein. All comments received are included in the docket for this action.

Comment 1: The commenter asserts that the tanks and production wells identified by MDE as being potentially subject to the CTG, but determined by MDE to not meet the applicability thresholds and therefore not subject to the 2016 Oil and Gas CTG, should have mechanisms to limit their PTE to ensure that they remain below the thresholds. The commenter provides the example of synthetic minor permits. The commenter further asserts that relying on emission factors or other engineering estimates would be arbitrary given the “many variables involved.”

Response 1: EPA disagrees with the commenter's assertions. First, AP42 emissions factors and the engineering estimates ( i.e. modelling) relied upon in Maryland's submittal are generally accepted and are used regularly in place of direct emissions measurement. Therefore, MDE's reliance upon them for the purposes of this negative declaration is not “arbitrary.” EPA further disagrees with the commenter's assertion that the reported facilities should have synthetic minor permits or other enforceable limits on their PTE, and that it is “implausible” to claim that these facilities could have PTEs below the applicability thresholds absent such limits. In support of this claim, the commenter offers merely the “many variables involved,” such as varying composition of the gas over time. EPA's review of Maryland's submittal shows that the referenced sources all report emissions well below the thresholds. For the potentially affected storage vessels (tanks), Maryland provided extensive documentation, including calculations that considered ambient temperature variations, throughput, and chemical composition of the liquids stored in the tanks. All emissions reported were considerably under the applicability threshold for storage vessels. For example, of the six potentially affected tanks identified at the Dominion Cove Point facility, the highest emissions reported were 0.02 tpy of VOC, which is significantly below the 6 tpy threshold. See Attachment A of MDE's June 18, 2020 submittal. The overwhelming majority of the tanks analyzed reported emissions of only a fraction of a ton per year. The highest reported emissions were for the two condensate storage tanks at the Accident compressor station. Each of those had calculated emissions of 1.2 tpy, still well below the threshold. See Attachment B of MDE's June 18, 2020 submittal.

Similarly, EPA disagrees that the identified production wells need enforceable limits on their production. First, the commenter has provided no evidence to contradict MDE's evaluation of the wells' outputs. Second, MDE certified in their submittal that their evaluation of the production wells was based on a search of their permit records. Each of the listed wells was constructed under a permit issued by Maryland. MDE is therefore well positioned to review the data associated with each of those permits and make an accurate determination of each well's output. EPA finds no reason to determine that MDE's determination with respect to the wells was unreasonable.

EPA believes that there is a sufficient margin between the reported emissions and the applicability threshold to determine that the identified sources do not need enforceable PTE limits in order for EPA to approve Maryland's negative declaration. Furthermore, Federal regulations are only necessary if a covered source exceeds the applicability thresholds established by the CTG. Maryland has certified that none of the sources within its jurisdiction exceed these thresholds. Should any of the reported sources exceed the thresholds in the future; or should a new source of the type covered by the existing CTG emitting more than either threshold be constructed in the state after approval of a negative declaration, EPA expects the state to develop a regulation and submit it to EPA for approval into the SIP in accordance with the relevant timing provided for by the CAA. Additionally, it is likely that any significant change in the operation of the existing facilities which would impact their PTE would be subject to preconstruction review by MDE. The same is true for the construction of new sources. At this time, because Maryland does not have any sources subject to the 2016 Oil and Gas CTG, no regulation is required to be developed and submitted for EPA approval. Therefore, we disagree with the commenter and are finalizing our approval of Maryland's negative declaration.

Comment 2: The commenter asserts that EPA should disapprove MDE's June 18, 2020 submittal because it relies on TANKS modelling, which utilizes outdated information, including temperature/climate data which is “all over 10 years old.” The commenter further takes issue with the use in the model of 70 degrees Fahrenheit (F) as an average temperature, asserting that summer temperatures routinely exceed that mark, and that it is “settled science” that as temperatures rise, so do VOC emissions. The commenter asserts that EPA “cannot assume with a straight face” that these tanks will only operate at 70 degrees F, that the 70 degrees F assumption is only valid for indoor, climate-controlled situations, and that MDE's negative declaration should be disapproved because the model was improperly performed and did not consider “current and realistic temperature and climatic data.” Finally, the commenter asserts that the model should be run using “average climatic data for each month.”

Response 2: EPA disagrees with the commenter's assertions. First, the CTG provides flexibility and does not require a specific method for calculating VOC emissions. The model rule language provided in the CTG requires only that “emissions must be calculated using a generally accepted model or calculation methodology.”  4 The new source performance standards of title 40 of the Code of Federal Regulations (CFR) part 60, subpart OOOOa, (also applying to the oil and natural gas sector) include similar language. See 40 CFR 60.5395a(a)(3). E&P TANKS is a “generally accepted” model, and therefore an appropriate tool for calculating VOC emissions for the purpose of this negative declaration. In fact, the model was one of the resources utilized by EPA in the development of the CTG. 5 Second, while EPA acknowledges that ambient temperatures impact VOC emissions from storage vessels, we do not agree that the assumption of 70 degrees F as an average temperature within the model is inappropriate. Furthermore, contrary to the commenter's assertion, the use of 70 degrees as an average is not an assumption that the tank will never operate above that temperature. MDE identified six facilities that had tanks potentially subject to the CTG: the Dominion Cove Point LNG facility, the Dominion Myersville compressor station, the Enbridge Eastern Accident compressor station, the Enbridge Accident underground storage facility, the Williams Transco Ellicott City compressor station, and the TransCanada compressor station. The documentation provided by MDE included submittals from the potentially impacted sources, including the results of TANKS modelling to evaluate their particular storage vessels. Of the six facilities identified, only the Dominion facilities appear to have run the model with an “across the board” assumption of 70 degrees as the ambient temperature. 6 See attachments A-D of MDE's June 18, 2020 submittal. Temperature data from the National Weather Service for the Baltimore  7 area for 2020 show that only three months—June, July and August—exceeded an average monthly temperature of 70 degrees (75.1, 82.6, and 78.7 degrees, respectively). 8 The other nine months were below 70. Using 70 degrees as an average for all twelve months is therefore a conservative approach, as the over-estimating for nine months offsets the potential under-estimating for the other three. Furthermore, Dominion reported emissions for six tanks, five at the Cove Point facility, and one at the Myersville compressor station. Of those tanks, only one reported any emissions at all. That tank, a 38,152 gallon tank, containing “hydrocarbons,” reported emissions of only 0.02 tpy AND is equipped with a control device (emissions are piped via a closed loop to a flare). See Attachment A of MDE's June 18, 2020 submittal. The modelling for the Enbridge tanks, as well as the Williams Transco tanks, appears to have taken into account daily temperature variations and other variables to calculate actual monthly averages. See Attachments B and C of MDE's June 18, 2020 submittal. This approach, which is in line with the commenter's assertion, also results in emissions that, in all cases, are well below the 6 tpy threshold. We find these analyses (and MDE's reliance upon them) to be reasonable. Therefore, we disagree with the commenter and are finalizing our approval of Maryland's negative declaration.

Comment 3: The commenter asserts that EPA must disapprove MDE's negative declaration because “the standards are not scientific or related to scientific procedures and are not consistent with the state's development priorities for air, water, and noise.” Further, the commenter asserts that the SIP is not consistent with EPA's “study on methane emissions from drilling operations,” that the guidelines “cannot be promulgated under the state's authority” because they were “derived from an out-of-date methodology used in 2012,” and that MDE's own review of “EPA's 2012 study of hydraulic fracturing fluid emissions” identified a number of concerns about the findings.

Response 3: EPA disagrees with the commenter's assertion that we must disapprove MDE's June 18, 2020 submittal. First, the commenter makes several references to “hydraulic fracturing” (fracking), but none of the wells addressed by MDE's submittal employ fracking as a means of extraction. Indeed, Maryland has imposed a “fracking ban,” and does not allow the practice within the State. See Md. Code Ann. Environment section 14-107.1. Therefore, fracking plays no role in MDE's negative declaration or EPA's approval. Second, it is not entirely clear to which allegedly out of date “methodology” and allegedly unscientific “standards” the commenter is referring. If the commenter is referring to the CTG itself, the validity of the CTG is not at issue in this action and will not be addressed here. This action relates only to MDE's certification that there are no sources within the State subject to the CTG. The commenter has not identified any flaws specific to MDE's methodology for making that determination, nor with EPA's proposed approval. Therefore, we disagree with the commenter and are finalizing our approval of Maryland's negative declaration.

EPA is approving Maryland's negative declaration as a revision to Maryland's SIP, to address the CAA requirements of section 182(b)(2)(A) and 184(b)(1)(B) under the 2008 and 2015 ozone NAAQS, as they pertain to the 2016 Oil and Gas CTG.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 23, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action.

This action pertaining to Maryland's negative declaration for the 2016 Oil and Gas CTG may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

Throughout this document wherever “we,” “us,” or “our” is used, it is intended to refer to EPA.

On February 22, 2021, the EPA published its proposal to approve parts of the Fairbanks Serious Plan and associated SIP revisions (86 FR 10511). Specifically, we proposed to approve the submitted revisions to the Alaska SIP as meeting the base year emissions inventory and precursor demonstration requirements triggered for the Fairbanks PM 2.5 Nonattainment Area upon reclassification of the area to Serious on May 10, 2017 (82 FR 21711). The EPA also proposed to approve as SIP-strengthening the submitted sections of the Alaska Air Quality Control Plan for the Fairbanks PM 2.5 Nonattainment Area, state effective January 8, 2020, related to the Emergency Episode Plan. The EPA also proposed to approve and incorporate by reference as SIP-strengthening the submitted regulatory changes to Alaska Administrative Code Title 18, Environmental Conservation, Chapter 50, Air Quality Control (18 AAC 50). The reasons for our proposed approval are described in the EPA's February 22, 2021, proposal and will not be restated here (86 FR 10511).

The EPA provided a 30-day period for the public to comment on the proposed action that ended on March 24, 2021. We received 19 public comments. The public comments can be found in the docket for this action. Each of the 19 comments raise concerns about a suite of measures Alaska included under 18 AAC 50.077 that prohibit the installation, reinstallation, sale, lease, distribution, or conveyance of wood-fired heating devices in the Fairbanks PM 2.5 Nonattainment Area.

Comment 1: The Hearth, Patio & Barbecue Association (HPBA), Blaze King Industries, Inc., Hearth & Home Technologies, Inc., Jotul, Kozy Heat Fireplaces, Kuma Stoves, Inc., Woodstock Soapstone Company, Myren Consulting, Inc., Rais, Fireplace Products International Ltd. (FPI), Travis Industries, United States Stove Company, and two anonymous commenters raise concerns about the State's submitted revisions to heating device requirements established in regulation at 18 AAC 50.077. The current SIP-approved heating device requirements in this rule place restrictions on wood-fired hydronic heaters and wood-fired heating devices with a manufacturer-rated heat output capacity of less than 350,000 British Thermal Units (BTUs) per hour and prohibit the installation, reinstallation, sale, lease, distribution, or conveyance of a woodstove in the area, unless:

• The EPA has certified the device under 40 CFR 60.533; and

• an EPA-accredited lab has tested the woodstove and determined it meets an emissions limit of 2.5 grams per hour, and

○ the test results were obtained using EPA New Source Performance Standard (NSPS) for new residential wood heaters test procedures (40 CFR part 60, appendix A, Methods 28, 28A, and 28R), or alternative cordwood methods that have been approved by the EPA, and

• the test results were obtained using EPA NSPS emissions concentration measurement procedures (40 CFR part 60, appendix A, Methods 5G and 5H).

The submitted SIP revisions tighten the applicable woodstove emissions limit from 2.5 grams/hour to 2.0 grams/hour, require that alternative methods used to test a woodstove be approved by both the EPA and the Alaska Department of Environmental Conservation (ADEC), and specify that during testing, a woodstove must not emit more than 4 grams/hour or 6 grams/hour depending on the test methods and measurement procedures used. Specifically, the submissions revise the regulation at 18 AAC 50.077 to prohibit the installation, reinstallation, sale, lease, distribution, or conveyance of a woodstove in the area, unless:  1

• The EPA has certified the device under 40 CFR 60.533, and

• an EPA-accredited lab has tested the woodstove and determined it meets an emission limit of 2.0 grams per hour, and

○ the test results were obtained using EPA NSPS test procedures (Methods 28, 28A, or 28R), or alternative test methods, including broadly applicable test methods, if approved by both EPA and the Alaska Department of Environmental Conservation; and

○ the test results were obtained using EPA NSPS emission concentration measurement procedures (Methods 5G and 5H); and

○ After September 1, 2020, the test results must demonstrate: (1) No rolling 60-minute period exceeds 4 grams per hour using a tapered element oscillating microbalance (TEOM) following procedures set out in the Northeast States for Coordinated Air Use Management (NESCAUM) Standard Operating Procedures; or (2) no reported valid test run measurement (one-hour filter data) exceeds 6 grams per hour from the EPA certification report for the device. See 18 AAC 50.077(c)(b)(ii).

The commenters assert that the new test requirements at 18 AAC 50.077(c)(b)(ii) are not reliable indicators of device performance, and that there is insufficient information to approve the use of these test requirements. One commenter, Jotul, states that the one-hour emissions limit established by ADEC is completely arbitrary, and Jotul considers it of utmost importance that any new regulations be developed and promulgated based on sound scientific principles combined with robust data to support the conclusions for establishing new emissions limits and testing protocol.

Hearth & Home Technologies, Inc., Jotul, Kozy Heat Fireplaces, Woodstock Soapstone Company, Myren Consulting, Inc., FPI, Travis Industries, and United States Stove Company do not support relying on the TEOM method. According to these commenters, TEOM is a new test that has not undergone significant testing and research and relies on NESCAUM guidance documents that have not undergone peer review.

Blaze King Industries, Inc. and Woodstone Soapstone Company also note the difficulty working with the TEOM device, which might jeopardize the potential for a qualified sample catch and invalidate an otherwise valid test run. Woodstone Soapstone Company notes that there is no definitive method that correlates results captured from a TEOM to results from Method 28 (EPA-approved woodstove device test method). Kozy Heat Fireplaces states that the TEOM equipment has not been tested or incorporated into the Federal certification process and has shown significant variances in testing. An anonymous commenter notes that different stoves burn differently and the total amount of emissions over a burn cycle should be the relevant metric, rather than a one-hour measurement. Myren Consulting states that the 6 grams per hour limit is arbitrary and capricious because it does not differentiate between the two applicable test methods, EPA M28/28R and American Society for Testing and Materials (ASTM) E3053, which have drastically different operating and fueling protocols. Myren Consulting also notes that the 6 gram per hour limit is being applied in an ex post facto manner and that, had manufacturers known about this limit in advance, they would have had the opportunity to change their woodstove designs and bring their stoves into compliance.

Further, HPBA, Innovative Hearth Products (IHP), Kozy Heat Fireplaces, Woodstock Soapstone Company, Myren Consulting, Inc., New Buck Corporation, Rais, FPI, Travis Industries, United States Stove Company, and four anonymous commenters assert that the additional device requirements for new woodstoves and pellet stoves, included in 18 AAC 50.077(c)(b)(ii), are inconsistent with the Federal NSPS requirements and that the hourly measurements depart from the weighted average emissions limit methodology relied on by the EPA's NSPS. IHP states that individual test runs are conducted as part of a calculation that establishes an overall weighted emissions average that is then compared to standards that have been developed as per ASTM methods. The commenters state that individual test runs cannot in and of themselves establish a weighted average and therefore cannot determine the overall usage expectancy of any multi-rate appliance and that any such conjectures by the State of Alaska are erroneous and without merit.

Blaze King Industries, Inc. asserts that the one-hour filter pull requirement for all test runs has eliminated one of the cleanest burning woodstoves (30.2 series by Blaze King), based on an EPA weighted average. Blaze King Industries, Inc. provides data to support the contention that, during one woodstove device test, the wood did not collapse uniformly, with one piece shifting slightly forward, which resulted in a one-hour filter pull of 8 grams per hour. Blaze King Industries, Inc. states other stoves that are approved for sale in the Fairbanks PM 2.5 Nonattainment Area have weighted emissions averages more than twice that of the particular Blaze King device. Woodstock Soapstone Company and Rais also provide an example each of a woodstove that has one of the lowest weighted average emissions of all EPA-certified woodstoves, but due to one test run exceeding 6 grams per hour, would not be approved for sale in the Fairbanks PM 2.5 Nonattainment Area.

Another anonymous commenter states that non-catalytic stoves are more user-friendly and require less maintenance, but they are more likely to be rejected under this one-hour requirement because non-catalytic stoves require more heat to burn cleanly, and they take time to heat up and start burning cleanly. Hearth & Home Technologies, Inc. asserts that the clearest path to cleaner air in the Fairbanks PM 2.5 Nonattainment Area is by removing older, pre-1988 wood-burning devices, not by prohibiting certain EPA-certified devices that do not meet Alaska's revised requirements in 18 AAC 50.077.

Response 1: For the ensuing reasons, the comments do not demonstrate that approval of Alaska's revisions to 18 AAC 50.077 is inconsistent with the CAA; therefore, the EPA is finalizing its approval as proposed. Regarding Alaska's rule revisions for wood-fired heating device emission standards under 18 AAC 50.077, the EPA proposed to find that the revisions submitted by ADEC are more stringent than the current EPA-approved rules. For the reasons stated in our proposal and in this response, we find that Alaska was not unreasonable in requiring additional testing requirements as a method of regulating the installation and operation of woodstoves. As stated in a prior EPA action on November 27, 2018 (83 FR 60769), approving the Alaska SIP as meeting specific infrastructure requirements for the 1997, 2006, and 2012 PM 2.5 NAAQS, the EPA disagrees with the premise that states cannot regulate a source category more stringently than may be required in a Federal regulation. The EPA's role is to review and approve state choices if they meet the CAA requirements. There is nothing in the CAA that prevents SIP provisions from being more stringent than Federal NSPS standards. To the contrary, CAA section 116 explicitly authorizes states to regulate sources more stringently than the EPA does through Federal regulations. Thus, the fact that 18 AAC 50.077 is more stringent than the NSPS for new residential wood heaters does not impact the approvability of these control measures as SIP-strengthening.

In addition, ADEC addressed similar comments during the State's public comment period on the SIP revisions. In the Alaska Department of Environmental Conservation's Response to Comments on the proposed regulations (ADEC Response to Comments), 2 ADEC asserted that the purpose of these additional testing requirements is to better reflect actual emissions of wood heaters in the Fairbanks PM 2.5 Nonattainment Area. ADEC asserted that the current test method for woodstoves that results in the certification value (grams of PM 2.5 per hour) averages emissions over four steady-state runs. The values from each of these runs is an average emission rate over the time it takes to burn 100% of the full load of wood used for each run. This approach translates into a certification value that is an average of an average. ADEC stated that averaging results multiple times minimizes emission rates, which results in certification values that may vastly under predict actual in-use emission rates and does not reflect the fuel loading events that in field use may occur multiple times per day. Further, ADEC stated that real-time PM 2.5 measurements collected from EPA certification tests have shown that the maximum emission rate occurs within two hours of the test period, and typically, on average, appliances spend approximately 50% of the certification testing time in the period known as the charcoal tail, where virtually no emissions occur, and in some cases filters may experience particulate loss due to warm dry air blowing through the filter. While this test method approach differs from the NSPS for new residential wood heaters, EPA finds ADEC's rationale for the revisions to 18 AAC 50.077 is reasonable and a rational attempt to strengthen rules for the residential space heating source category.

With respect to the inclusion of the TEOM measurement requirement, ADEC states that the goal was to achieve a 1.0 grams per hour emission limit in practice, taking into consideration the variability of emissions when burning cordwood. After reviewing public comments submitted during the State's public comment period, ADEC amended the final regulation to provide an alternative to the TEOM test method while still providing what it considered to be an equivalent, if not better, air quality result than a 1.0 grams per hour average emission limit. The final regulation stipulates that manufacturers may provide the TEOM data as ADEC originally proposed, with the additional specificity that no rolling 60-minute period may exceed 4.0 grams per hour, or alternatively, by utilizing existing EPA certification test data showing that no valid one-hour filter measurement from the certifying report to EPA is greater than 6.0 grams per hour.

ADEC asserted that, while this limit is three times the final ADEC standard (certification value of 2.0 grams per hour or less), the limit will apply to all woodstoves being installed, reinstalled, sold, leased, distributed, or conveyed in the nonattainment area (not just non-catalytic devices). Due to a number of devices expected to exceed this limit based on the revised test method, the result will be fewer devices available for installation, sale, lease, distribution, or conveyance in the area. ADEC noted this approach is designed to ensure that performance of the devices under more real-world operations will be more consistent because the emissions limit value is not an average. As an example, ADEC found devices that meet the 1.0 grams per hour emissions limit (adopted in Missoula County, Montana), but that exceed the one-hour filter measurement of 6.0 grams per hour.

Further, ADEC noted that, while the TEOM is a new approach for wood heater device certification testing, it has been incorporated into a standard test method (ASTM D6831-11) for stack gas testing. ADEC believes the TEOM test is a valuable tool that should be used in future device certification test requirements and has maintained it as one option for meeting testing requirements in the final regulation. ADEC stated that it is specifying use of the TEOM and its alternative one-hour filter measurement is based on the ADEC's analysis of over 60 EPA approved certification reports, the vast majority of the tests reviewed were for EPA Step 2 certification.

Thus, Alaska developed and implemented additional requirements for wood-fired heating devices, a 2.0 grams per hour limit for all wood-fired devices and hourly requirements measured by a TEOM device or during the EPA certification process, with the intention to reduce the emissions from the home heating source category, the source category with the highest PM 2.5 emissions in the Fairbanks PM 2.5 Nonattainment Area. EPA has determined that Alaska's revisions to 18 AAC 50.077 are reasonable and strengthen the SIP with respect to the regulation of emissions from the residential space heating source category.

Comment 2: HPBA, Kozy Heat Fireplaces, and Travis Industries assert that the one-hour filter alternative is not compatible with woodstove emissions and the Federal air quality standard that the EPA based on data averaged over 24 hours, noting that the Federal air quality standard is not a “peaking” standard that is violated by a single episodic, one-hour reading. Thus, the commenters assert that the EPA was proposing to approve this metric without any explanation in the record of its relevance to the nonattainment issues experienced in the Fairbanks PM 2.5 Nonattainment Area.

Response 2: The EPA disagrees with the commenters. First, the EPA disagrees with the commenters' assertion that device requirements must be directly tied to the Federal air quality standard. Overall, the EPA notes that PM 2.5 is a complex and highly variable mixture of particles and gases. The EPA's PM 2.5 Implementation Rule (81 FR 58010, August 24, 2016) recommends that states should base potential control measures in part on an analysis of emissions inventory data summaries, fine particle speciation monitoring data, and source apportionment air quality modeling data. Emissions standards can have different averaging periods based on the type of source, rate of emissions, and control measure. Irrespective of the particular NAAQS, our basis for approval here is that Alaska's revisions to 18 AAC 50.077 render the SIP more stringent than the prior approved rule in terms of regulating emissions from woodstoves. The EPA finds that ADEC's rationale for why the revised 18 AAC 50.077 will reduce emissions from the residential home heating source category is reasonable.

Second, the record contains ample information showing that ADEC's revised rule will reduce emissions of direct PM 2.5 from the residential home heating source category. The EPA evaluated ADEC's SIP submission, including the responses to similar comments in the development of the State's regulation. In ADEC's Response to Comments, ADEC noted that, under the 2015 NSPS for new residential wood heaters, the EPA required reporting of emission rates for the first hour of the test period. This data reflects the timing and emission rates typically associated with the 60-minute test requirements for particulate matter testing at all other sources (EPA Method 5). ADEC asserted that the assessment of one-hour data allows agencies to gauge performance and determine which appliances are low emitting from the start of the certification test versus those that have been able to design for long charcoal tails to minimize the peak emissions. ADEC additionally stated that one of the reasons for requiring the use of TEOM measurement data is to provide a more meaningful equivalency to a 1.0 grams per hour average emission limit (as adopted by Missoula County, Montana), taking into consideration the variability of emissions when burning cordwood, while still allowing a range of devices to be sold and used in the Fairbanks PM 2.5 Nonattainment Area. Thus, the record does contain information explaining the reason for the one-hour filter alternative.

Finally, as stated in a prior EPA action on November 27, 2018 (83 FR 60769), approving the Alaska SIP as meeting specific PM 2.5 infrastructure requirements, states have the obligation to regulate sources as necessary to meet nonattainment area plan stringency requirements, such as reasonably and best available control measures, and the obligation to regulate sources as necessary to attain the NAAQS in a given nonattainment area. ADEC determined it was necessary to revise 18 AAC 50.077 and submitted the revisions to address Serious area planning requirements for best available control measures in the Fairbanks PM 2.5 Nonattainment Area. While this action does not address whether the submitted revisions to 18 AAC 50.077 and other rules are sufficient to meet best available control measure requirements, we explained in our proposed action how the revisions strengthen the SIP. The comments do not demonstrate that Alaska's revisions to 18 AAC 50.077 or rationale for these revisions are unreasonable, and EPA is thus finalizing approval of 18 AAC 50.077 as proposed.

Comment 3: HPBA, Blaze King Industries, Inc., Hearth & Home Technologies, Inc., Travis Industries, and United States Stove Company note that Fairbanks has a unique winter environment where woodstoves are only “started” once during winter and left running during entire cold season. Thus, the commenters assert that establishing a particulate emissions standard based only on the first hour of operation inaccurately represents the emissions of wood-fired heating devices in the Fairbanks PM 2.5 Nonattainment Area. In addition, Blaze King Industries, Inc. states that woodstove users in the Fairbanks North Star Borough are unique in their use of stoves to address sub-zero climate conditions in the region. Myren Consulting states that, no matter the test method, testing of certified stoves in the test environment will not reflect conditions in the field because of differences in static pressure, that the commenter asserts will significantly affect performance in areas with colder temperatures such as in Fairbanks.

Response 3: As noted in Responses 1 and 2, ADEC revised 18 AAC 50.077 to reduce emissions from wood-fired heating devices while allowing for sale and use of a range of devices in the Fairbanks PM 2.5 Nonattainment Area. In ADEC's Response to Comments, ADEC stated that the TEOM measurement and the one-hour filter pull data reflect more real-time particulate matter measurements and that other test methods, based on an average of multiple test runs, may vastly under predict actual in-use emission rates and do not reflect the actual fuel loading events that may occur multiple times per day. Moreover, ADEC developed this control measure as part of its control measure analysis that incorporates the emissions inventory, speciation, and source apportionment data for the nonattainment area. Based on ADEC's SIP submission, including the responses to comments in ADEC's rulemaking process, the EPA finds that ADEC's rationale for incorporating the TEOM measurement and the one-hour filter pull data is credible and based on a robust understanding of the emissions from woodstoves. Therefore, the EPA is approving this rule revision as SIP-strengthening because the revised rule imposes requirements for woodstoves in the Fairbanks PM 2.5 Nonattainment Area that are more stringent than the woodstove requirements in the current SIP.

Comment 4: Travis Industries asserts that the EPA must expressly state that the standards ADEC is imposing in 18 AAC 50.077 are inappropriate in other settings that do not share the Fairbanks PM 2.5 Nonattainment Area's extreme climatic conditions.

Response 4: As specified in 18 AAC 50.077, this regulation only applies to qualifying wood-fired heating devices in areas in Alaska that are designated nonattainment for PM 2.5, under 18 AAC 50.015(b)(3). Currently the Fairbanks and North Pole urban area ( i.e., Fairbanks PM 2.5 Nonattainment Area) is listed as the only nonattainment area in Alaska where this regulation applies. However, other state and local governments have the authority to adopt similar measures.

Comment 5: Comments by HPBA, Blaze King Industries, Inc., Kuma Stoves, Inc., IHP, Woodstock Soapstone Company, Myren Consulting, and FPI object to Alaska's authority to validate the EPA's wood-fired heating device certifications for applicability in the Fairbanks PM 2.5 Nonattainment Area and limit the EPA-approved applicable testing methods. HPBA asserts that, under 18 AAC 50.077(c)(3)(A), ADEC can effectively veto an EPA device certification on the grounds that ADEC had not approved the same alternative test method. As an example, HPBA notes that while the EPA approved ASTM 3053 (cordwood test method), Alaska has not. These commenters state that Alaska's failure to recognize this approved test method undermines the EPA's authority. In addition, Kuma Stoves, Inc. states that the EPA should not now, after benefitting from valuable data generated by the ASTM 3053 test method, support language that declares ASTM 3053 to be a nonrepresentative test. One anonymous commenter contends that, based on experience as a manufacturer of EPA-certified woodstoves, the ASTM 3053 test method is credible and produces consistent and reliable emissions values, and therefore rejecting this test method results in less informative testing data.

Generally, IHP states that it is onerous for a state to regulate an industry to meet any requirements that are not previously set and known before development, certification, and manufacturing of those industry products. Kozy Heat Fireplaces, Inc. states these device requirements impose new and greater costs for certification and that these costs have not been quantified by either ADEC or the EPA. IHP recommends that the EPA reject ADEC's revised requirements for woodstoves in the Alaska SIP submission as a “de facto federal standard,” and in the comment encourages the State of Alaska to work with the industry to find a more complete solution. FPI also notes that, not only does ADEC not recognize the alternate test method, but it does not recognize the 2.5 grams per hour emissions limit associated with this test method. FPI asserts that dismissing this limit by setting a 2.0 grams per hour limit for cordwood without a scientific process and peer review is arbitrary.

An anonymous commenter notes that the same entities are involved in woodstove device testing certifications and accreditations as product safety testing. The commenter states that laboratories need an International Organization for Standardization (ISO) 17025 accreditation that can be renewed every two years following an official audit from the accreditor. The commenter states that proficiency testing has been put in place by the EPA as part of the ISO-17025 accreditation and all accredited laboratories should comply with the proficiency testing every two years.

Response 5: The EPA disagrees with the commenters' assertion that Alaska lacks authority to promulgate rules that are more stringent than EPA's NSPS or that otherwise limit the range of devices allowed in the area. The EPA also disagrees with the assertion that Alaska, by promulgating these rules, establishes a “de facto federal standard” and as such undermines the EPA's independent authorities to establish Federal new source performance standards. Congress gave the EPA authority in CAA section 111 to establish performance standards for categories of new sources. Distinct from CAA section 111, Congress required in CAA section 110 that states have an overarching SIP to implement, maintain, and enforce the NAAQS. If states have designated nonattainment areas, then they must make a nonattainment plan SIP submission meeting additional specific requirements. State regulation of sources more stringently for purposes of meeting SIP requirements does not interfere or undermine the EPA's authority to regulate new sources under the CAA. With few exceptions, states are not preempted from regulating source categories more stringently and have explicit authority in CAA section 116 to do so.

The EPA disagrees with the commenters' assertion that ADEC did not consider compliance costs. In ADEC's Response to Comments, Alaska acknowledged the potential increased costs to certification testing. ADEC stated that the intention is to provide a meaningful equivalent control measure to a 1.0 grams per hour average emissions limit, while also allowing a range of devices to be sold and used in the Fairbanks PM 2.5 Nonattainment Area. As discussed in Response 1 in this preamble, states have explicit authority to regulate a source category more stringently than may be required in a Federal regulation. The EPA's role is to review and approve state choices if they meet applicable CAA requirements. See 42 U.S.C. 7410(k) and 40 CFR 52.02(a); see also Union Elec. Co. v. EPA, 427 U.S. 246, 256-266 (1976) (holding that the EPA may not disapprove a state implementation plan that meets the requirements of CAA Section 110(a)(2) on the basis of technological or economic infeasibility). There is nothing in the CAA that prevents states from imposing SIP requirements that are more stringent than Federal NSPS standards.

Regarding woodstove device testing certifications and ISO-17025 accreditations, the 2015 NSPS stipulates that for new residential wood heaters, new residential hydronic heaters, and forced-air furnaces (80 FR 13672), a test laboratory must agree to participate biennially in an independently operated proficiency testing program with no direct ties to the participating laboratories. Further, the EPA Administrator may revoke a test laboratory approval if a test laboratory has failed to participate in a proficiency testing program, in accordance with 40 CFR 60.535.

Comment 6: Central Boiler/Woodmaster objects to the provision under 18 AAC 50.077(a) that prohibits the sale and installation of cordwood-fueled outdoor hydronic heaters in the Fairbanks PM 2.5 Nonattainment Area. Central Boiler/Woodmaster states that these devices are not given consideration by the state based on emissions or performance like other wood heating appliances.

Response 6: Consistent with CAA requirements and the EPA's PM 2.5 Implementation Rule, Alaska has authority to prohibit the sale and installation of devices that contribute to PM 2.5 concentrations in the Fairbanks PM 2.5 Nonattainment Area, such as cordwood-fueled outdoor hydronic heaters, to bring the area into attainment. We note that, under 18 AAC 50.077(b), Alaska does permit pellet-fueled wood-fired hydronic heaters for use in the Fairbanks PM 2.5 Nonattainment Area, if specific device performance criteria meet Alaska regulations. Therefore, the EPA is finalizing the approval of 18 AAC 50.077(b) as proposed.

Comment 7: HPBA notes that while point sources (electric power plants) constitute the largest source of SO 2 emissions in the Fairbanks PM 2.5 Nonattainment Area, ADEC, in many instances, did not require additional source-level controls on several large facilities. HPBA states that ADEC did not require installation of new control technologies for SO 2 even though the average daily emissions from these point sources are nearly three times larger than sources of directly-emitted PM 2.5 from woodstoves.

Response 7: The EPA agrees with the commenter that the largest source category of SO 2 emissions is point sources, including electric power plants, and that SO 2 is a significant contributor to PM 2.5 concentrations in the Fairbanks PM 2.5 Nonattainment Area. On December 13, 2019, Alaska submitted a best available control technology (BACT) control analysis for specific point sources located in the area, including several electric power plants, as part of the Fairbanks Serious Plan. However, we consider this comment to be outside the scope of this action. In this action, the EPA is evaluating rule revisions that ADEC has adopted to address direct PM 2.5 emissions from wood-fired heating devices. We did not propose action on the BACT Serious area planning requirements, including the issue of appropriate regulation of SO 2 emissions from point sources, as part of this action. We intend to address Alaska's best available control measures (BACM)/BACT control analysis, and any supplemental BACT control analysis submissions, in a separate action. We encourage the commenter to resubmit the comment during the public comment period of our future action on the BACT control analysis.

The EPA finds that the comments do not change our proposed determination that the regulations submitted by Alaska are consistent with CAA requirements and strengthen the SIP. Therefore, we are finalizing our action as proposed.

In this action, the EPA is approving a portion of the submitted revisions to the Alaska SIP as meeting the following Serious Plan required elements for the Fairbanks PM 2.5 Nonattainment Area:

• The 2013 base year emissions inventory (CAA section 172(c)(3); 40 CFR 51.1008(b)(1)); and

• The State's PM 2.5 precursor demonstration for NO X and volatile organic compound (VOC) emissions (CAA section 189(e); 40 CFR 51.1006(a)).

We reiterate that Alaska's precursor analysis did not address nonattainment New Source Review (NSR) requirements. The State made the prior determination to regulate all four EPA identified legal precursors to PM 2.5 in the nonattainment NSR regulations applicable to the Fairbanks PM 2.5 Nonattainment Area. The EPA approved Alaska's October 25, 2018, SIP revision as meeting the nonattainment NSR requirements triggered upon reclassification of the area to Serious (August 29, 2019, 84 FR 45419).

Specifically, the EPA is approving the submitted sections of the Alaska Air Quality Control Plan for the Fairbanks PM 2.5 Nonattainment Area, State effective January 8, 2020:

• Volume II Section III.D.7.06 and Volume III Section III.D.7.06 Emissions Inventory, for purposes of the 2013 base year emissions inventory;

• Volume II Section III.D.7.08 Precursor Demonstration, for the purposes of NO X and VOC emissions as it relates to BACM/BACT control measure requirements; and

Further, the EPA is approving the submitted section of the Alaska Air Quality Control Plan for the Fairbanks PM 2.5 Nonattainment Area, State effective December 25, 2020:

• Volume II Section III.D.7.12, Emergency Episode Plan. 3

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Publishing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2020-0009 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before November 23, 2021. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b), although at this time, EPA strongly encourages those interested in submitting objections or a hearing request, to submit objections and hearing requests electronically. See Order Urging Electronic Service and Filing (April 10, 2020), https://www.epa.gov/sites/production/files/2020-05/documents/2020-04-10_-_order_urging_electronic_service_and_filing.pdf. At this time, because of the COVID-19 pandemic, the judges and staff of the Office of Administrative Law Judges are working remotely and not able to accept filings or correspondence by courier, personal deliver, or commercial delivery, and the ability to receive filings or correspondence by U.S. Mail is similarly limited. When submitting documents to the U.S. EPA Office of Administrative Law Judges (OALJ), a person should utilize the OALJ e-filing system, at https://yosemite.epa.gov/OA/EAB/EAB-ALJ_upload.nsf.

Although EPA's regulations require submission via U.S. Mail or hand deliver, EPA intends to treat submissions filed via electronic means as properly filed submissions during this time that the Agency continues to maximize telework due to the pandemic; therefore, EPA believes the preference for submission via electronic means will not be prejudicial. If it is impossible for a person to submit documents electronically or receive service electronically, e.g., the person does not have any access to a computer, the person shall so advise OALJ by contacting the Hearing Clerk at (202) 564-6281. If a person is without access to a computer and must file documents by U.S. Mail, the person shall notify the Hearing Clerk every time it files a document in such a manner. The address for mailing documents is U.S. Environmental Protection Agency, Office of Administrative Law Judges, Mail Code 1900R, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2020-0009, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html. Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of May 29, 2020 (85 FR 32338) (FRL-10009-84), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 9E8811) by American Spice Trade Association, 1101 17th Street NW, Suite 700, Washington, DC 20036. The petition requested that 40 CFR 180.408 be amended by establishing tolerances for residues of the fungicide metalaxyl, methyl N -(2,6-dimethylphenyl)- N -(methoxyacetyl)-DL-alaninate, in or on pepper, black at 1 part per million (ppm). That document referenced a summary of the petition prepared by American Spice Trade Association, the registrant, which is available in the docket, http://www.regulations.gov. Comments were received on the notice of filing. EPA's response to these comments is discussed in Unit IV.C. Based upon review of the data supporting the petition, EPA has modified the tolerance levels on black pepper. The reason for these changes is explained in Unit IV.D.

FFDCA section 408(b)(2)(A)(i) allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for metalaxyl including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with metalaxyl follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. EPA conducted a human health risk assessment to evaluate the safety of the requested tolerances and the assessment “Metalaxyl Human Health Risk Assessment for the Proposed Tolerances in/on White and Black Pepper without a U.S. Registration” is found in docket ID number EPA-HQ-OPP-2020-0009 at www.regulations.gov. In that document, EPA evaluated the available hazard and exposure data to conduct dietary, residential, and aggregate assessment to determine risk to human health and refers back to the full discussions of the hazard profile, residue chemistry database, and residential exposures contained in the previous human health risk assessment conducted for the registration review of metalaxyl/mefenoxam. The human health risk assessment “Metalaxyl, Mefenoxam (metalaxyl-m) Human Health Draft Risk Assessment for Registration Review” is located in docket EPA-HQ-OPP-2009-0863-0023.

The Draft Risk Assessment reflects both mefenoxam and metalaxyl. The Agency compared the available chemistry and toxicity data for mefenoxam and metalaxyl and concluded that the toxicity studies for both chemicals can be combined for hazard characterization and dose-response assessment because the two chemicals have similar toxicity and identical chemical structures.

In rat and dog repeat dose ( i.e., subchronic and chronic) oral toxicity studies, there were no indications of adverse effects up to the highest dose tested (HDT). Adverse effects ( i.e., convulsions that occurred minutes after dosing) were only observed from acute exposure to rats.

There was no evidence of increased susceptibility following pre- or post-natal exposure in the prenatal developmental toxicity studies or the reproduction and fertility effects study in the animals treated with metalaxyl. In the rat developmental toxicity study of metalaxyl, maternal toxicity consisted of dose-related increased incidence of convulsions that occurred shortly after dosing, as well as other clinical signs. In a range-finding acute neurotoxicity study of mefenoxam, females showed abnormal functional observation battery findings at doses lower than males, but higher than in the rat developmental study. However, there was no indication of toxicity up to the HDT in the mefenoxam subchronic neurotoxicity study, which confirms the lack of adverse effects observed in all other repeat-dose studies.

There was no indication of immunotoxicity in a mouse immunotoxicity study of mefenoxam.

Metalaxyl is classified as “Not Likely to be Carcinogenic to Humans” based on the lack of evidence of carcinogenicity in the metalaxyl carcinogenicity study in mice and the combined chronic toxicity and carcinogenicity study in rats.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm.

A summary of the toxicological endpoints for metalaxyl used for the human health risk assessment is shown in the Metalaxyl Human Health Risk Assessment for the Proposed Tolerances in/on White and Black Pepper without a U.S. Registration, and further explanation can be found in “Metalaxyl, Mefenoxam (metalaxyl-m) Human Health Draft Risk Assessment for Registration Review”.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to metalaxyl, EPA considered exposure under the existing tolerances for mefenoxam and the existing and petitioned-for tolerances for metalaxyl. EPA assessed dietary exposures in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

In conducting acute dietary exposure assessment, EPA used the 2003-2008 food consumption data from the U.S. Department of Agriculture's National Health and Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA). A partially refined acute dietary exposure assessment was conducted for metalaxyl. The refinement was based on a tolerance level adjustment to account for all residues of concern and anticipated residues were used for livestock commodities. The analysis used tolerance-level residues, adjusted to include additional residues of concern, and 100 percent crop treated (PCT).

ii. Chronic exposure. Because no chronic dietary endpoint was selected, a chronic dietary exposure assessment was not conducted. Nevertheless, for purposes of assessing short-term aggregate risk, EPA calculated average dietary exposures. In conducting the chronic dietary exposure assessment, EPA used tolerance level values adjusted for additional residues of concern and 100 PCT.

iii. Cancer. Metalaxyl is classified as “Not Likely to Be Carcinogenic to Humans” therefore, a cancer assessment is not needed.

2. Dietary exposure from drinking water. Drinking water exposures are not impacted by the import tolerances on black pepper; therefore, the assessment for this tolerance action relied on the second refinement for the drinking water exposure assessment (DWA) for metalaxyl and mefenoxam, in support of the Agency human health assessment for Registration Review for the estimated drinking water concentrations (EDWCs). See “Metalaxyl/Mefenoxam: Second Refinement Addendum to Drinking Water Exposure Assessment in Support of Registration Review”, which is located at https://www.regulations.gov in docket ID number EPA-HQ-OPP-2009-0863.

That assessment modeled drinking water exposures using the Pesticide Root Zone Model (PRZM, v5, November 15, 2006) and the Variable Volume Water Body Model (VVWM, March 6, 2014) for surface water and the PRZM-GW for groundwater. Using those models, EPA calculated the following EDWCs for use in exposure assessment: 350 ppb for acute exposure assessment and 135 ppb for chronic exposure assessment.

3. Non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure ( e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Mefenoxam and metalaxyl are currently registered for the following uses that could result in residential exposures: Lawns, ornamentals, gardens, and trees. EPA assessed residential exposure using the following assumptions: For residential handlers, all registered metalaxyl and mefenoxam product labels with residential use sites (lawns, ornamentals and garden and trees) require that handlers wear specific clothing ( e.g., long-sleeve shirt/long pants) and chemical-resistant gloves. Therefore, EPA has made the assumption that these products are not for homeowner use and has not conducted a quantitative residential handler assessment.

There is potential for residential post-application exposures to metalaxyl. Since no dermal endpoints were identified, only incidental oral post-application exposures to small children ages 1 to <2 have been assessed. Metalaxyl and mefenoxam are registered for use on home lawns; therefore, there is the potential for incidental oral exposure (hand-to-mouth, object-to-mouth, soil ingestion and granular ingestion).

The recommended residential exposure for use in the children 1 to <2 years old aggregate assessment reflects hand-to-mouth incidental oral exposures from treated turf using a liquid formulation. Ingestion of granules is considered an episodic event and not a routine behavior. Because the Agency does not believe that this would occur on a regular basis, the concern for human health is related to acute poisoning rather than short-term residue exposure. Therefore, an acute dietary dose is used to estimate exposure and risk resulting from episodic ingestion of granules. For these same reasons, the episodic ingestion scenario was not included in the aggregate assessment.

A summary of the residential exposures for metalaxyl used for the human health risk assessment can be found in “Metalaxyl, Mefenoxam (metalaxyl-m) Human Health Draft Risk Assessment for Registration Review” docket ID number EPA-HQ-OPP-2009-0863-0023.

Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.

4. Cumulative effects from substances with a common mechanism of toxicity. FFDCA section 408(b)(2)(D)(v) requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to mefenoxam and any other substances and mefenoxam does not appear to produce a toxic metabolite produced by other substances. For the purposes of this action, therefore, EPA has not assumed that mefenoxam has a common mechanism of toxicity with other substances.

1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity. There was no evidence of increased susceptibility in offspring in the prenatal developmental or the 2-generation reproductive toxicity studies. In adult rats treated with metalaxyl or mefenoxam, clinical signs and abnormal functional observation battery (FOB) findings were noted after a bolus gavage dose but not in repeated dose studies.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X. That decision is based on the following findings:

i. The toxicity databases for metalaxyl and mefenoxam are adequate to assess the potential for prenatal and postnatal toxicity for infants and children.

ii. In the rat prenatal developmental toxicity with metalaxyl, maternal animals exhibited clinical signs indicative of neurobehavioral effects as previously discussed. In the range-finding acute neurotoxicity study with mefenoxam, females exhibited abnormal FOB findings at doses lower than in males. In the subchronic neurotoxicity study with mefenoxam, there were no indications of neurotoxicity up to the HDT. In metalaxyl and mefenoxam treated adult animals, clinical signs and abnormal FOB findings were noted. However, a developmental neurotoxicity (DNT) study is not required for metalaxyl or mefenoxam because (1) there are no indications of increased susceptibility for infants or children; (2) the convulsions observed in the rat prenatal developmental toxicity study occurred in the maternal animals with no effects being observed in the young; (3) the convulsions occurred only after a bolus dose; (4) the available developmental and range-finding acute neurotoxicity studies provided clear NOAELs and LOAELs for evaluating effects; (5) the current POD is below the level at which any effects were seen in either study, and (6) there were no other indications of neurotoxicity in the mefenoxam or metalaxyl databases, which include a subchronic (adult rat) neurotoxicity study for mefenoxam. Therefore, there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity. See “Metalaxyl, Mefenoxam (metalaxyl-m) Human Health Draft Risk Assessment for Registration Review” docket ID number EPA-HQ-OPP-2009-0863-0023.

iii. As discussed above in Unit III.D.2., there is no evidence that metalaxyl results in increased susceptibility in the developmental or reproductive toxicity studies; and

iv. There are no residual uncertainties in the exposure database. Dietary exposure analysis was performed incorporating all existing and proposed uses using tolerance level values to estimate residues in food commodities and anticipated residues in livestock commodities. Drinking water estimates were generated based upon conservative inputs and modeling. Similarly, potential residential post application exposures are based upon conservative, default assumptions. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to metalaxyl in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. These assessments are not expected to underestimate the exposure to metalaxyl.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. An acute aggregate risk assessment takes into account acute exposure estimates from dietary consumption of food and drinking water. Using the exposure assumptions described in this unit for acute exposure, EPA has concluded that acute exposure to metalaxyl from food and water will utilize 52% of the aPAD for children 1 to 2 years old, the population subgroup with the highest exposure estimate.

2. Chronic risk. There is no increase in hazard from repeat exposures to metalaxyl/mefenoxam; therefore, a chronic dietary POD was not selected. Due to the lack of a chronic endpoint, a chronic dietary risk is not expected. The acute endpoint and dietary exposure assessment are protective of potential effects from chronic duration dietary exposures.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Mefenoxam and metalaxyl are currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to mefenoxam and metalaxyl. Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in an aggregate MOE of 270 for children. Because EPA's level of concern for mefenoxam is a MOE of 100 or below, this MOE is not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). An intermediate-term adverse effect was identified; however, metalaxyl and mefenoxam are not registered for any use patterns that would result in intermediate-term residential exposure.

5. Aggregate cancer risk for U.S. population. Metalaxyl is classified as “Not Likely to Be Carcinogenic to Humans”; therefore, EPA does not expect metalaxyl exposures to pose an aggregate cancer risk.

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to metalaxyl residues.

There are adequate residue analytical methods for enforcing tolerances for metalaxyl residues of concern in/on the registered plant and livestock commodities. These several methods include gas chromatography equipped with an alkali flame ionization detector (GC/AFID), gas chromatography equipped with a nitrogen/phosphorus detector (GC/NPD), the multiresidue method in PAM, Vol. I section 302 (Protocol D) in the nitrogen-specific mode, and gas-liquid chromatography/mass spectrometry in the chemical ionization mode with selected ion monitoring (SIM) of the M+1 ion at m/z 268 for determining residues in/on black pepper and livestock.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level. The Codex has not established a MRL for metalaxyl in or on black pepper.

Two comments were received in response to the notice of filing. One of the comments was not germane to the petition for metalaxyl tolerances.

The second comment argued against the use metalaxyl on black pepper and expressed concern about the overall toxicity of pesticides. Although the Agency recognizes that some individuals believe that pesticides should be banned on agricultural crops, the existing legal framework provided by FFDCA section 408 authorizes EPA to establish tolerances when it determines that the tolerance is safe. Upon consideration of the validity, completeness, and reliability of the available data as well as other factors the FFDCA requires EPA to consider, EPA has determined that these metalaxyl tolerances are safe. The commenter has provided no information supporting a contrary conclusion.

EPA is establishing the tolerance at 0.3 ppm rather than at the petitioned-for tolerance level of 1.0 ppm. EPA's analysis of the monitoring data that was submitted to support the tolerance level concludes that 0.3 ppm is sufficient to cover residues in imported black pepper.

Therefore, tolerances are established for residues of metalaxyl, methyl N -(2,6-dimethylphenyl)- N -(methoxyacetyl)-DL-alaninate, in or on pepper, black at 0.3 ppm.

This action establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), do not apply.

This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal Governments, on the relationship between the National Government and the States or Tribal Governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian Tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq. ).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

Pursuant to the CRA (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, for the reasons stated in the preamble, EPA is amending 40 CFR chapter I as follows:

The proposed rule was published at 86 FR 13684 on March 10, 2021. The Licensee filed comments in support of the petition reaffirming its commitment to apply for channel 14. The Land Mobile Communications Council (LMCC) filed opposition comments, to which the Licensee filed a reply. LMCC also filed an ex parte letter opposing the petition.

In its rulemaking petition, the Licensee stated that KTUL, as a VHF channel station, has a long history of dealing with severe reception problems, and that operation on channel 14 would not result in any predicted loss of television service. The Licensee further stated that with respect to operations on channel 14 and nearby land mobile services, it would install the appropriate mask filter and antenna needed to avoid interference to land mobile operations. LMCC opposed the channel substitution because it believes KTUL's operation on channel 14 at 1,000 kW power poses an unacceptable risk of harmful interference to protected land mobile operations and proposed that that the Commission investigate whether alternative substitute UHF channels are available for KTUL. LMCC believes that while installing filtering, as the Licensee proposes, may be effective at preventing certain interference issues, it will have no impact on the receiver desensitization it expects will occur from the Licensee's proposed operation. In its Reply, the Licensee asserted that section 73.687 of the rules states that once a channel 14 permittee has performed the required pre-operation steps to avoid land mobile interference, including installing filters and making outreach efforts to local operators, its obligation is to co-operate with land mobile operators to resolve interference issues that may arise that are caused by the station after it begins operations, which the Licensee commits to do. The Licensee further stated that it had searched for other viable UHF channels and found none. In addition, the Licensee states that its affiliated stations have considerable experience operating television stations on channel 14, and there have been no known instances of interference to land mobile operations. The Licensee also provided technical information regarding the common use of band stop filters by land mobile systems to deal with receiver desensitization. In its ex parte filing in response to the Licensee's reply, LMCC primarily repeats its previous arguments in opposition to the petition.

The Bureau denied LMCC's objections and granted the proposed substitution of channel 14 for channel 10, concluding that the Licensee's proposal meets the Commission's technical and interference rules, and that grant would serve the public interest. While LMCC stated that it is concerned that there will be interference to large numbers of land mobile systems within 40 miles of the channel 14 proposed transmission site, the Bureau stated that the majority of interference cases occur within five miles of the TV transmitter site, that KTUL's tower is located more than five miles outside Tulsa, and that the few instances of reported interference in other cases where television stations have operated on channel 14 and the separation was greater than five miles were resolved by the installation of filters. The Bureau also noted that the Commission has recognized that use of band-stop filters at the land mobile receiver is an effective procedure to reduce interference caused by receiver desensitization, and that the Licensee recognizes its obligation under the rules to correct any desensitization problems that may occur after it begins operations. With respect to LMCC's request that the Bureau find an alternative channel for KTUL, the Licensee stated that it could find no other technically feasible channel and Bureau found that the channels proposed by LMCC were all unavailable for the Licensee's use because of interference to other television stations. The Bureau concluded that since the Licensee has committed to perform the steps required by the rule and its construction permit, if granted, will have the standard condition requiring it to do so, it would deny LMCC's opposition. It also concluded that because it was at the stage of amending the DTV Table of Allotments and an application for a construction permit for channel 14 has not yet been submitted, it need not address LMCC's interpretation of section 73.687(e) of the rules.

This is a synopsis of the Commission's Report and Order, MB Docket No. 21-9; RM-11872; DA 21-1161, adopted September 15, 2021, and released September 16, 2021. The full text of this document is available for download at https://www.fcc.gov/edocs. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4). Provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to this proceeding.

The Commission will 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:

Atlantic HMS fisheries, including BFT fisheries, are managed under the authority of the Atlantic Tunas Convention Act (ATCA; 16 U.S.C. 971 et seq. ) and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act; 16 U.S.C. 1801 et seq. ). The 2006 Consolidated Atlantic HMS Fishery Management Plan (FMP) and its amendments are implemented by regulations at 50 CFR part 635. Section 635.27 divides the U.S. BFT quota recommended by the International Commission for the Conservation of Atlantic Tunas (ICCAT) and as implemented by the United States among the various domestic fishing categories, per the allocations established in the 2006 Consolidated HMS FMP and its amendments. NMFS is required under the Magnuson-Stevens Act to provide U.S. fishing vessels with a reasonable opportunity to harvest quotas under relevant international fishery agreements such as the ICCAT Convention, which is implemented domestically pursuant to ATCA.

Under § 635.28(a)(1), NMFS files a closure action with the Office of the Federal Register for publication when a BFT quota (or subquota) is reached or is projected to be reached. Retaining, possessing, or landing BFT under that quota category is prohibited on or after the effective date and time of a closure notice for that category until the opening of the relevant subsequent quota period or until such date as specified.

The 2021 baseline quota for the General category is 555.7 mt. The General category baseline subquota for the September time period is 147.3 mt. NMFS recently increased the September subquota to 207.3 mt through an inseason quota transfer (86 FR 51016, September 14, 2021). This transfer provided additional quota for the September time period and also addressed an 53.8 mt overharvest from previous time-period subquotas.

As of September 21, 2021, reported landings for the General category September subquota time-period total approximately 161.6 mt. Based on these landings data, as well as average catch rates and anticipated fishing conditions, NMFS projects the adjusted September 2021 subquota of 207.3 mt will be reached shortly. Therefore, retaining, possessing, or landing large medium or giant ( i.e., measuring 73 inches (185 cm) curved fork length or greater) BFT by persons aboard vessels permitted in the Atlantic Tunas General category and HMS Charter/Headboat permitted vessels (while fishing commercially) must cease at 11:30 p.m. local time on September 23, 2021. The General category will automatically reopen October 1, 2021, for the October through November 2021 subquota time-period. This action applies to Atlantic Tunas General category (commercial) permitted vessels and HMS Charter/Headboat permitted vessels with a commercial sale endorsement when fishing commercially for BFT, and is taken consistent with the regulations at § 635.28(a)(1). The intent of this closure is to prevent overharvest of the available September subquota.

On August 9, 2021 (86 FR 43421), NMFS published a final rule implementing RFDs every Tuesday, Friday, and Saturday through November 30, 2021. Because the fishery will be closed for the remainder of September, NMFS has decided to waive the previously-scheduled RFDs for the rest of September. RFDs will resume on October 1, 2021.

With the RFDs waived during the closure, consistent with § 635.23(a)(4), fishermen aboard General category permitted vessels and HMS Charter/Headboat permitted vessels may tag and release BFT of all sizes, subject to the requirements of the catch-and-release and tag-and-release programs at § 635.26. All BFT that are released must be handled in a manner that will maximize their survival, and without removing the fish from the water, consistent with requirements at § 635.21(a)(1). For additional information on safe handling, see the “Careful Catch and Release” brochure available at https://www.fisheries.noaa.gov/resource/outreach-and-education/careful-catch-and-release-brochure/.

NMFS will continue to monitor the BFT fisheries closely. Dealers are required to submit landing reports within 24 hours of a dealer receiving BFT. Late reporting by dealers compromises NMFS' ability to timely implement actions such as quota and retention limit adjustment, as well as closures, and may result in enforcement actions. Additionally, and separate from the dealer reporting requirement, General and HMS Charter/Headboat category vessel owners are required to report the catch of all BFT retained or discarded dead within 24 hours of the landing(s) or end of each trip, by accessing hmspermits.noaa.gov, using the HMS Catch Reporting app, or calling (888) 872-8862 (Monday through Friday from 8 a.m. until 4:30 p.m.).

After the fishery re-opens on October 1, depending on the level of fishing effort and catch rates of BFT, NMFS may determine that additional adjustments are necessary to ensure available subquotas are not exceeded or to enhance scientific data collection from, and fishing opportunities in, all geographic areas. If needed, subsequent adjustments will be published in the Federal Register . In addition, fishermen may call the Atlantic Tunas Information Line at (978) 281-9260, or access hmspermits.noaa.gov, for updates on quota monitoring and inseason adjustments.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is taken pursuant to 50 CFR part 635, which was issued pursuant to section 304(c), and is exempt from review under Executive Order 12866.

The Assistant Administrator for NMFS (AA) finds that pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice of, and an opportunity for public comment on, this action for the following reasons:

The regulations implementing the 2006 Consolidated HMS FMP and amendments provide for inseason retention limit adjustments to respond to the unpredictable nature of BFT availability on the fishing grounds, the migratory nature of this species, and the regional variations in the BFT fishery. This fishery is currently underway and delaying this action would be contrary to the public interest as it could result in BFT landings exceeding the adjusted September 2021 General category quota. For all of the above reasons, there is good cause under 5 U.S.C. 553(d) to waive the 30-day delay in effectiveness.

NMFS published a final rule for Framework Adjustment 3 to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan in the Federal Register on November 3, 2003 (68 FR 62250), implementing a process to roll over unused Winter I commercial scup quota (January 1 through April 30) to be added to the Winter II period quota (October 1 through December 31) (50 CFR 648.122(d)). The framework also allows adjustment of the commercial possession limit for the Winter II period dependent on the amount of quota rolled over from the Winter I period. The Winter II period start date was changed from November 1 to October 1 as part of Framework Adjustment 12 (83 FR 17314; April 19, 2018).

For 2021, the initial Winter II quota is 3,267,825 lb (1,482,260 kg). The best available landings information indicates that 3,415,629 lb (1,549,303 kg) remain of the 9,247,904 lb (4,194,779 kg) Winter I quota. Consistent with Framework 3, the full amount of unused 2021 Winter I quota is being transferred to Winter II, resulting in a revised 2021 Winter II quota of 6,683,454 lb (3,031,563 kg). Because the amount transferred is between 3.0 and 3.5 million lb (1,587,573 and 1,814,369 kg), the Federal per trip possession limit will increase from 12,000 lb (5,443 kg) to 21,000 lb (9,525 kg), as outlined in the final rule that established the possession limit and quota rollover procedures for this year, published on December 21, 2020 (85 FR 82946). The new possession limit would be effective October 1 through December 31, 2021. The possession limit will revert back to 12,000 lb (5,443 kg) at the start of the next fishing year that begins January 1, 2022.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 648.122(d), which was issued pursuant to section 304(b), and is exempted from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be contrary to the public interest. This action transfers unused quota from the Winter I Period to the Winter II Period to make it accessible to the commercial scup fishery and increase fishing opportunities. If implementation of this in-season action is delayed to solicit prior public comment, the objective of the fishery management plan to achieve the optimum yield from the fishery could be compromised. Deteriorating weather conditions during the latter part of the fishing year may reduce fishing effort, and could also prevent the annual quota from being fully harvested. If this action is delayed, it would reduce the amount of time vessels have to realize the benefits of this quota increase, which would result in negative economic impacts on vessels permitted to fish in this fishery. Moreover, the rollover process being applied here is routine and formulaic and was the subject of notice and comment rulemaking, and the range of potential trip limit changes were outlined in the final 2018 scup specifications that were published December 22, 2017; which were developed through public notice and comment. The benefit of soliciting additional public comment on this formulaic adjustment would not outweigh the benefits of making this additional quota available to the fishery as quickly as possible. Based on these considerations, there is good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delayed effectiveness period for the reasons stated above.

Regulations governing the Atlantic bluefish fishery are found in 50 CFR 648.160 through 648.167. These regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through Florida. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.162, and the final 2021 allocations were published on December 16, 2020 (85 FR 81421).

The final rule implementing Amendment 1 to the Bluefish Fishery Management Plan (FMP) published in the Federal Register on July 26, 2000 (65 FR 45844), and provided a mechanism for transferring bluefish quota from one state to another. Two or more states, under mutual agreement and with the concurrence of the NMFS Greater Atlantic Regional Administrator, can request approval to transfer or combine bluefish commercial quota under § 648.162(e)(1)(i) through (iii). The Regional Administrator must approve any such transfer based on the criteria in § 648.162(e). In evaluating requests to transfer a quota or combine quotas, the Regional Administrator shall consider whether: The transfer or combinations would preclude the overall annual quota from being fully harvested; the transfer addresses an unforeseen variation or contingency in the fishery; and the transfer is consistent with the objectives of the FMP and the Magnuson-Stevens Act.

Virginia is transferring 20,000 lb (9,072 kg) to New York, and New Jersey is transferring 40,000 lb (18,144 kg) to North Carolina through mutual agreement of the states. These transfers were requested to ensure that New York and North Carolina would not exceed their 2021 state quota. The revised bluefish quotas for 2021 are: Virginia, 258,800 lb (117,390 kg); New York, 357,438 lb (162,131 kg); New Jersey, 370,082 lb (167,866 kg); and, North Carolina, 927,377 lb (420,651 kg).

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 648.162(e)(1)(i) through (iii), which was issued pursuant to section 304(b), and is exempted from review under Executive Order 12866.