This document contains proposed amendments to 26 CFR part 300 regarding user fees.

Section 330 of Title 31 of the United States Code authorizes the Secretary of the Treasury to regulate the practice of representatives before the Department of the Treasury (Treasury Department) and require that an individual seeking to practice demonstrate the necessary qualifications, competency, and good character, and reputation. The rules governing practice before the IRS are published in 31 CFR, Subtitle A, part 10, and reprinted as Treasury Department Circular No. 230 (Circular 230).

Section 10.4(a) of Circular 230 authorizes the IRS to grant status as enrolled agents to individuals who demonstrate special competence in tax matters by passing a written examination, the EA SEE, and who have not engaged in any conduct that would justify suspension or disbarment under Circular 230.

The EA SEE is comprised of three parts and an applicant generally must pass all three parts within two years to be granted enrolled agent status through written examination. The EA SEE testing period generally begins on May 1 each year and ends the last day of the following February. The EA SEE is not offered during March and April when it is updated to reflect recent changes in the relevant law. More information on the EA SEE, including content, scoring, and how to register, can be found on the IRS website at www.irs.gov/tax-professionals/enrolled-agents. Since 2006, the IRS has engaged the services of a third-party contractor to develop and administer the EA SEE. The IRS Return Preparer Office (RPO) oversees the development and administration of the EA SEE. As of August 30, 2021, there were 62,686 enrolled agents.

Section 10.4(b) of Circular 230 authorizes the IRS to grant status as enrolled retirement plan agents to individuals who demonstrate special competence in qualified retirement plan matters by passing a written examination, the ERPA SEE, and who have not engaged in any conduct that would justify suspension or disbarment under Circular 230. The IRS stopped offering the ERPA SEE as of February 12, 2016, and no longer accepts applications for new enrollment as an enrolled retirement plan agent. Accordingly, the proposed regulations remove the user fee for the ERPA SEE. Individuals currently enrolled as retirement plan agents can maintain their status as enrolled retirement plan agents. As of August 30, 2021, there were 743 enrolled retirement plan agents.

The Independent Offices Appropriation Act of 1952 (IOAA) (31 U.S.C. 9701) authorizes each agency to promulgate regulations establishing the charge for services provided by the agency. The IOAA states that the services provided by an agency should be self-sustaining to the extent possible. 31 U.S.C. 9701(a). The IOAA provides that user fees are subject to policies prescribed by the President, which are currently set forth in the Office of Management and Budget (OMB) Circular A-25 (OMB Circular A-25), 58 FR 38142 (July 15, 1993).

Section 6a(1) of OMB Circular A-25 states that when a service offered by an agency provides special benefits to identifiable recipients beyond those accruing to the general public, the agency is to charge a user fee to recover the full cost of providing the service. Section 8e of OMB Circular A-25 requires agencies to review user fees biennially and update the fees as necessary to reflect changes in the cost of providing the underlying services. During the biennial review, an agency must calculate the full cost of providing each service, taking into account all direct and indirect costs to any part of the U.S. government. Under section 6d(1) of OMB Circular A-25, the full cost of providing a service includes, but is not limited to, an appropriate share of salaries, medical insurance and retirement benefits, management costs, and physical overhead and other indirect costs, including rents, utilities, and travel, associated with providing the service.

An agency should set the user fee at an amount that recovers the full cost of providing the service unless the agency requests, and the OMB grants, an exception to the full-cost requirement. Under section 6c(2) of OMB Circular A-25, the OMB may grant exceptions when the cost of collecting the fees would represent an unduly large part of the fee for the activity or when any other condition exists that, in the opinion of the agency head, justifies an exception. When the OMB grants an exception, the agency does not collect the full cost of providing the service and must fund the remaining cost of providing the service from other available funding sources. Consequently, the agency subsidizes the cost of the service to the recipients of reduced-fee services even though the service confers a special benefit on those recipients who would otherwise be required to pay the full cost of receiving the benefit as provided for by the IOAA and OMB Circular A-25.

Section 10.4(a) of Circular 230 provides that the IRS will grant enrolled agent status to an applicant who, among other things, demonstrates special competence in tax matters by written examination. The EA SEE is the written examination by which applicants can demonstrate special competence in tax matters, and an applicant must pass all three parts of the EA SEE to be granted enrolled agent status through written examination. The IRS confers a benefit on individuals who take the EA SEE beyond those that accrue to the general public by providing them with an opportunity to demonstrate special competence in tax matters by passing a written examination and thereby satisfy one of the requirements for becoming an enrolled agent under section 10.4(a) of Circular 230. Because the EA SEE is a service that provides a special benefit to test takers, the IRS charges a user fee to take the examination.

Final regulations (TD 9820) published in the Federal Register (82 FR 33009-01) on July 19, 2017, established the current $81 user fee per part of the EA SEE. At that time the Treasury Department and the IRS determined that a $81 user fee per part would recover the full direct and indirect costs the government would incur to oversee the EA SEE. The contractor who administers the EA SEE also charges individuals taking the EA SEE an additional fee for its services. For the May 2021 to February 2022 testing period, the contractor's fee is $104 for each part of the EA SEE.

As required by OMB Circular A-25, in 2021 the IRS conducted a biennial review of the EA SEE user fee and calculated its costs for overseeing the examination. As a result of the review, the IRS determined that its full cost for overseeing the EA SEE is $99 per part, plus an amount payable directly to a third-party contractor for its services. The proposed regulations increase the amount of the user fee for taking the EA SEE from $81 per part to $99 per part. This amount is in addition to an amount payable directly to the third-party contractor for each part. The IRS does not intend to subsidize any of the cost of making the EA SEE available to examinees and is not applying for an exception to the full-cost requirement in OMB Circular A-25.

The increase in the user fee is primarily attributable to increases in salary and benefits for employees conducting activities related to the EA SEE program. The proposed user fee accounts for the time and personnel necessary to oversee the development and administration of the EA SEE and to ensure the contractor complies with the terms of its contract. The IRS's oversight costs include costs associated with: (1) Review and approval of materials used by the contractor in developing the EA SEE; (2) review of surveys of existing enrolled agents, which help to determine the topics to be covered in the EA SEE; (3) composition of potential EA SEE questions in coordination with the contractor's external tax law experts; and (4) analysis of the answers and raw scores of a testing population to determine a passing score.

In addition, IRS personnel ensure the contractor's compliance with its contract by reviewing the work of the contractor using an annual Work Breakdown Structure—a project management tool—and reviewing and verifying that the contractor is in compliance with a Quality Assurance Plan measuring customer satisfaction and accuracy. The IRS incurs additional costs associated with enforcing compliance with the Treasury contractor personnel security and training policies, Federal Information Security Modernization Act (FISMA), Section 508 of the Rehabilitation Act of 1973 and other laws, regulations and policies in the scope of the EA SEE contract; monitoring the contractor's help desk; and the resolution of test-related issues such as cheating incidents, appeals regarding test scores, refund requests, and customer service complaints that are not resolved by the contractor.

The IRS follows generally accepted accounting principles (GAAP) in calculating the full cost of overseeing the EA SEE. The Federal Accounting Standards Advisory Board (FASAB) is the body that establishes GAAP that apply for Federal reporting entities, such as the IRS. FASAB publishes the FASAB Handbook of Accounting Standards and Other Pronouncements, as Amended (Current Handbook), which is available at https://files.fasab.gov/pdffiles/2020_fasab_handbook.pdf. The Current Handbook includes the Statement of Federal Financial Accounting Standards (SFFAS) No. 4: Managerial Cost Accounting Standards and Concepts. SFFAS No. 4 establishes internal costing standards under GAAP to accurately measure and manage the full cost of Federal programs, and the methodology below is in accordance with SFFAS No. 4.

The IRS determines the cost of its services and the activities involved in producing them through a cost accounting system that tracks costs to organizational units. The lowest organizational unit in the IRS's cost accounting system is called a cost center. Cost centers are usually separate offices that are distinguished by subject matter area of responsibility or geographic region. All costs of operating a cost center are recorded in the IRS's cost accounting system. The costs charged to a cost center are the direct costs for the cost center's activities in addition to allocated overhead. Some cost centers work on different services across the IRS and are not fully devoted to the services for which the IRS charges user fees.

The IRS uses various cost measurement techniques to estimate the costs attributable to oversight of the EA SEE. These techniques include using various timekeeping systems to measure the time required to accomplish activities, or using information provided by subject matter experts on the time devoted to a service or activity. To determine the labor and benefits costs incurred to provide the service of providing the EA SEE, the IRS estimated the number of full-time employees required to conduct activities related to the costs of overseeing the EA SEE. The number of full-time employees is based on both current employment numbers and future hiring estimates. Other direct costs associated with overseeing the EA SEE include travel, training, and supplies.

When the indirect cost of a service or activity is not specifically identified from the cost accounting system, an overhead rate is added to the identifiable direct cost to arrive at full cost. Overhead is an indirect cost of operating an organization that is not specifically identified with an activity. Overhead includes costs of resources that are jointly or commonly consumed by one or more organizational unit's activities but are not specifically identifiable to a single activity.

These costs can include:

• General management and administrative services of sustaining and supporting organizations.

• Facilities management and ground maintenance services (security, rent, utilities, and building maintenance).

• Procurement and contracting services.

• Financial management and accounting services.

• Information technology services.

• Services to acquire and operate property, plants, and equipment.

• Publication, reproduction, and graphics and video services.

• Research, analytical, and statistical services.

• Human resources/personnel services.

• Library and legal services.

To calculate the overhead allocable to a service, the IRS multiplies an overhead rate by the estimated direct costs. The IRS calculates the overhead rate annually based on the Statement of Net Cost included in the IRS annual financial statements. The financial statements are audited by the Government Accountability Office. The overhead rate is the ratio of the IRS's indirect costs divided by the direct costs of its organizational units. Indirect costs are labor, benefits, and non-labor costs (excluding IT related to taxpayer services, enforcement, and business system modernization) from the supporting and sustaining organizational units. Direct costs are the labor, benefits, and non-labor costs for the IRS's organizational units that interact directly with taxpayers.

For the EA SEE user fee review, the Fiscal Year (FY) 2021 overhead rate of 58.83 percent was used. The rate was calculated based on the FY 2020 Statement of Net Cost as follows:

The IRS projected the estimated costs of direct labor and benefits based on the actual salary and benefits of employees who devote time to oversee the administration of the EA SEE program, reduced to reflect the percentage of time each individual spends overseeing the EA SEE program. RPO's managers estimated the percentage of time these employees devote to overseeing the EA SEE based on their knowledge of actual program assignments. Six employees devote seventy-five percent of their time to EA SEE-related activities. Two employees who are contracting officer representatives devote 90 percent and 80 percent of their time, respectively, to EA SEE-related activities. Additional

On December 27, 2020, the President signed into law the Copyright Alternative in Small-Claims Enforcement (“CASE”) Act of 2020. 1 The CASE Act directs the Copyright Office to establish the Copyright Claims Board (“CCB” or “Board”), a voluntary, alternative forum to federal court for parties to seek resolution of copyright disputes that have a low economic value (“small copyright claims”). 2 The CCB's creation does not displace or limit a party's ability to bring small copyright claims in federal court, but rather provides a more accessible alternative forum to decide those claims. 3 The CCB has authority to hear copyright infringement claims, claims seeking a declaration of noninfringement, and misrepresentation claims under section 512(f) of title 17. 4 Participation in the CCB is voluntary for all parties, 5 and all determinations are non-precedential. 6 On March 26, 2021, the Copyright Office published a notification of inquiry (“NOI”) inviting public comment on various aspects of the CCB's operations, which the Office noted would be established through a series of rulemakings. 7 Congress directed that the CCB begin operations by December 27, 2021, though the Register may for good cause extend that deadline by not more than 180 days. 8

The CASE Act directs the Register of Copyrights to establish the regulations by which the CCB will conduct its proceedings, subject to the provisions of chapter 15 and relevant principles of law under title 17. 9 In this notice, the Office proposes procedures related to the filing of a claim, the CCB's subsequent review of the claim to ensure that it complies with statutory requirements and the Office's regulations (referred to in this rulemaking as the CCB's “compliance review”), service, issuance of notice of the claim, the respondent's opt-out election, responses, and counterclaims. The Office will issue proposed rules related to later stages of a proceeding in subsequent rulemakings.

To initiate a proceeding before the CCB, a claimant shall, “subject to such additional requirements as may be prescribed in regulations established by the Register of Copyrights,” file a claim that “(1) includes a statement of material facts in support of the claim; (2) is certified under [17 U.S.C. 1506(y)(1)]; and (3) is accompanied by a filing fee in such amount as may be prescribed in regulations established by the Register of Copyrights.”  10 The legislative history states that the Office should establish a process that is “accessible especially for pro se parties and those with little prior formal exposure to copyright laws.”  11

Parties provided comments on several matters relating to the contents of a claim. Commenters emphasized the need for plain language, 12 suggested that the forms should be available, at a minimum, in English and Spanish, 13 and encouraged the use of fillable forms. 14 The Office agrees with these suggestions, and intends to use plain-language fillable forms throughout various stages of CCB proceedings, including for the filing of a claim.

The Office proposes that to initiate a proceeding, a claimant must: First, complete a claim form provided by the CCB; second, complete an initial notice form, also provided by the CCB; and, finally, submit the completed forms and required filing fee through the Board's electronic filing and document management system. A claimant who is unable to use the electronic filing and document management system may initiate a proceeding by using printed forms and alternative submission instructions. In addition to the statutory requirements to submit the claim and filing fee to the CCB, the Office is proposing that the claimant be required to submit a completed initial notice form with the claim form. This proposal allows a Copyright Claims Attorney to review the initial notice and address any issues during compliance review, and issue the signed notice under Copyright Office seal upon approving the claim. 15

The proposed rule sets forth the required information for the claim form. It generally requires the claimant to identify the parties, the claim asserted under section 1504(c), and the harms experienced as a result of the dispute subject to the proceeding. Then, the claimant must identify certain facts relevant to the claim and provide a statement describing the dispute in more detail. The claimant will be asked to be as detailed as possible, but, as contemplated by Congress, the CCB will “construe liberally” any information in the claim to satisfy regulatory requirements during claim review. 16

The Office received one substantive comment arguing that the claim should require more than is required by notice pleading as set forth in the Federal Rules of Civil Procedure. 17 Such a heightened pleading standard, however, would go against congressional intent. The legislative history explains that “many of the terms and processes used in the [CASE] Act are drawn from preexisting, related state and federal statutory language, the Federal Rules of Civil Procedure, and established case law,” and emphasizes that the CCB is intended to be “an efficient, effective, and voluntary alternative” to litigation. 18 As a general rule, therefore, practice before the CCB should be less complex than practice in the federal courts, and certainly not more complex. Further, to the extent there are statements in the claim that clearly do not state facts upon which relief can be granted, the CCB anticipates that the compliance review process typically will resolve such issues. Finally, the claimant must certify that the information provided in the claim form is “accura[te] and truthful[ ]”  19 to the best of the certifying party's knowledge.

The proposed rule also allows optional documentation to be attached to the claim form, including copies of the works involved. While some commenters suggested that additional documentation should be a requirement for filing a claim and serving notice, 20 the Office believes that requiring such information at the initial claim stage would discourage claimants from initiating a proceeding and would be more burdensome than the requirements for litigation in the federal courts. Documentary evidence will be a focus of the standard requests for production that the Office will propose in a future rulemaking addressing discovery.

The proposed rule does not address matters relating to the layout or presentation of questions on the form, as the Office seeks to preserve the flexibility to adjust those items as circumstances warrant. The Office intends to make proposed forms available in advance of the CCB's commencement of operations.

After the claimant files a claim, the claim “shall be reviewed by a Copyright Claims Attorney to ensure that the claim complies with [chapter 15] and applicable regulations.”  21 If the claimant is proceeding “ pro se,” i.e., they are not represented by an attorney, the claim and assertions are to be “construed liberally in favor of adjudicating applicable claims and defenses.”  22

If the claim is found to comply with the statute and regulations, the CCB shall notify the claimant and provide instructions to proceed with service of the claim. 23 If the claim is found not to comply, the CCB is required to provide the claimant with a notice of deficiency and an opportunity to file an amended claim within 30 days after receiving the notice. 24 The amended claim is then reviewed, and the claimant is either notified of the sufficiency of the claim or directed to file an additional amended complaint in that 30-day period. This second amended complaint is reviewed a final time, with the CCB either clearing the claim for service or, upon confirmation of noncompliance by a Copyright Claims Officer, dismissing the claim without prejudice. The CCB shall also dismiss without prejudice any proceeding in which the claimant fails to file an amended complaint within the 30-day window. Counterclaims are subject to the same compliance review. 25

The statute describes the compliance review process in some detail. Here, the Office proposes a limited number of regulations to clarify the scope of review. The proposed rule provides that a Copyright Claims Attorney shall review a claim to determine whether the allegations “clearly do not state a claim upon which relief can be granted.” This standard echoes the standard set forth in the Federal Rules of Civil Procedure, 26 but is meant to be less exacting than that governing a motion to dismiss. The Office believes that this approach is in the best interest of all parties: The claimant has the opportunity to state its case; the respondent has a better understanding of the allegations involved in the claim and will be in a stronger position to consider participation; and the CCB will avoid the administrative burden associated with hearing overbroad or clearly implausible claims. The Office is also proposing to incorporate an examination standard from the Compendium of U.S. Copyright Office Practices, which stipulates that while the Office does not conduct factual investigations, it may take administrative notice of facts generally known as established and may use that knowledge during compliance review. 27 Finally, as suggested by one commenter, 28 the proposed rule clarifies that the CCB's clearance of a claim for notice is not an endorsement of the facts and statements asserted in the claim.

Under the statute, the CCB must dismiss a claim or counterclaim without prejudice if it “concludes that the claim or counterclaim is unsuitable for determination . . . including on account of any of the following . . . [t]he failure to join a necessary party; . . . [t]he lack of an essential witness, evidence, or expert testimony; [or] [t]he determination of a relevant issue of law or fact that could exceed either the number of proceedings the [CCB] could reasonably administer or the subject matter competence of the [CCB].”  29 The issue of unsuitability may be taken up by the Board at any time during the proceedings, whether during compliance review or thereafter. 30

The Office did receive suggestions as to particular claims that should be considered unsuitable. 31 At this time, however, the proposed regulation addresses only the procedural matter of how the issue of unsuitability will be addressed. The Office proposes that the issue of unsuitability may be raised by the Board or by any party to the proceeding. Upon consideration of the matter, the Board may issue an order dismissing the claim without prejudice, after which the claimant has an opportunity to request reconsideration and the respondent has an opportunity to respond. In proposing this approach, the Office seeks to strike an appropriate balance between maximizing parties' opportunity to be heard and preserving the Board's authority to dismiss claims that it determines to be unsuitable for determination.

Once the claimant receives notification that the claim is compliant, the claimant must, not later than ninety days from receiving notification, file with the CCB proof of service on the respondent in order to proceed with the claim. 32 To effectuate service, the claimant “shall cause notice of the proceeding and a copy of the claim to be served on the respondent”  33 as prescribed by the statute and regulations.

To ensure that respondents are provided with proper notice of the claims asserted against them, the statute details elements that must be included in the initial notice accompanying the claim. In addition, the Office is required to create a prescribed initial notice form and is vested with regulatory authority to specify further requirements to be included in the notice.

At a minimum, the initial notice must describe the CCB and the nature of a CCB proceeding, so that pro se parties understand the process. 34 The initial notice must include “a clear and prominent explanation of the respondent's right to opt out of the proceeding and the rights the respondent waives if [they] do [ ] not.”  35 In particular, it must include a prominent statement that by not opting out of a CCB proceeding within sixty days of receiving the notice, the respondent “loses the opportunity to have the dispute decided by a court created under article III of the Constitution of the United States” and “waives the right to a jury trial regarding the dispute.”  36

In the NOI, the Office requested comment on “additional regulatory requirements to help ensure that the initial notice conveys a clear explanation of the CCB, deadlines associated with the pending claim, the ability and method for the respondent to opt out of the proceeding, and the benefits and consequences of participating or declining to do so.”  37 The Office provided examples of various approaches by federal and state courts, 38 and invited parties to provide specific language to be included on the form or sample forms. 39 The Office asked whether the notice should include a docket number and links to the CCB's website for relevant public information, and encouraged parties to suggest additional educational information “while being mindful that the notice must remain easy to understand and avoid overwhelming respondents.”  40

In response, commenters suggested a number of additional features to be included. Some proposed that the notice include not only information such as the respondent's name, phone number, address, email address, and other contact information, but also information about the claim itself and background information about the CCB. 41 Others suggested that the notice include explanations of copyright law, 42 fair use, 43 and other defenses. 44 Multiple commenters argued that the notice should not include elements of infringement or defenses, but should simply state that there are defenses available and include a link to the Copyright Office web page with information about fair use and other defenses that would be typically raised. 45 Many agreed that the notice should address the pros and cons of opting out, with several noting that the Board should do so clearly, concisely, and in a disinterested way. 46

The Office appreciates parties' comments on this issue and proposes that the initial notice to the respondent be provided in a form that includes the information required by the statute as well as additional basic information about the claim and the parties. The Office envisions a notice that, as is the case with summonses issued by federal courts, is clear and concise and is easy to understand. The Office also envisions that the notice will bear the Office's seal, the CCB's logo, and other indicia to identify it as an official document issued by the federal government.

The Office received a number of suggestions related to substantive claim information that should be attached to the notice, including evidence of infringement  47 and a picture of the allegedly infringing work. 48 The Office believes that for efficiency and clarity, substantive information should be included in or attached to the claim, which sets forth the facts at issue, rather than the notice, which sets forth the procedural implications of the claim. The initial notice is similar to a summons, and with a few exceptions (such as the caption, docket number, and names and addresses of the parties), every notice issued by the Board will be identical. And, for the reasons stated above, the Office has included documentary evidence as an optional attachment to the claim rather than a requirement.

The proposed rule prescribes that claimants use an initial notice form provided by the Board, with most of the content prepared by the Board for use in all initial notices. Claimants will fill in certain information, such as the names, addresses, and contact information for the claimant and the respondent. The rule does not require that the claimant provide a telephone number or email address in the initial notice. Although the Office recognizes the benefits of providing means through which the parties may communicate to discuss the merits of a claim and to discuss settlement, the Office also recognizes that such information might implicate privacy or other interests. The Office invites comments on this proposed approach.

In addition to basic information about the parties, the notice form would require the claimant to identify the nature of the claims being asserted— i.e., whether the claim is for copyright infringement, a declaration of noninfringement, or misrepresentation in connection with a notification or a counter notification served on an online service provider under section 512 of title 17.

The notice would also include the information required by 17 U.S.C. 1506, including a brief description of the CCB and its proceedings, a statement advising the respondent of the right to opt out of the proceeding, how to opt out, and the consequences of doing so (including the statements required by 17 U.S.C. 1506(g)(1)(A) and (B)). It is the Office's intention that the latter statement be concise, clear, and objective.

The notice will also direct the respondent (as well as the claimant) to further information that will be made available on the Office or CCB websites pertaining to copyright law, including exclusive rights, infringement, and exceptions and limitations, as well as further information on CCB proceedings. Information will be provided on how to access the Board's electronic filing and document management system, which will also give respondents a means to confirm that the notice relates to a genuine legal proceeding.

Under the statute, any individual who is not a party to the proceeding and is older than 18 years of age may effectuate service, 49 and both service and waiver of service may only occur within the United States. 50 Choosing how to effectuate service, however, depends on the nature of the respondent. The statute includes separate rules of service for individuals and corporations, partnerships, and unincorporated associations, including those organizations using designated service agents. 51 No claims can be brought “by or against a Federal or State governmental entity.”  52

Service on an individual  53 may be effectuated by using procedures analogous to those in the Federal Rules of Civil Procedure. 54 Service can be accomplished by “complying with State law for serving a summons in an action brought in courts of general jurisdiction in the State where service is made.”  55 Service can also be accomplished by “leaving a copy of the notice and claim at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there.”  56 Finally, service on an individual can be accomplished by “delivering a copy of the notice and claim to an agent designated by the respondent to receive service of process or, if not so designated, an agent authorized by appointment or by law to receive service of process.”  57

Like individuals, corporations, partnerships, or unincorporated associations can be served “by complying with State law for serving a summons in an action brought in courts of general jurisdiction in the State where service is made.”  58 These organizations can also be served by delivering the notice and claim to “an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process in an action brought in courts of general jurisdiction in the State where service is made.”  59 Under the statute, such corporations, partnerships, or unincorporated associations may elect to receive CCB claim notices via a designated service agent. The Office is required to establish regulations governing this designated service agent option and to “maintain a current directory of service agents that is available to the public for inspection, including through the internet.”  60 The Office may charge these organizations a fee to maintain the designated service agent directory. 61

In the NOI, the Office requested comments specifically related to the designated service agent directory. The Office encouraged commenting parties to review the Office's designated agent directory for online service providers, created pursuant to the Digital Millennium Copyright Act (“DMCA”), and to discuss to what extent the Office should use the DMCA database as a model. 62 The Office also invited comments on how the system should indicate corporate parent-subsidiary relationships, and on fees. In addition, the Office noted its general authority to establish additional regulations governing service throughout a CCB proceeding, 63 and requested comment on any issues that should be considered related to that authority.

The Office received a number of comments regarding the ability of a corporate parent to act as a designated agent on behalf of a subsidiary. The majority of commenters who addressed the issue encouraged the designation of one agent for the corporate parent and all subsidiary firms. 64 Commenters also recommended that service agents be able to choose their method of service, 65 and some argued that after an eligible entity has designated a service agent, the only effective means of service that should be allowed is through the identified service agent in the database. 66 The Office appreciates these comments and finds them to be generally consistent with the statutory text. The proposed rule allows a submitter to provide the same designated agent information for multiple companies, partnerships, or unincorporated associations, but a separate submission would be required for each entity. A designated agent submission is required to include identifying information for the business, including contact information, principal place of business, and for corporations, the state of incorporation, any associated state file or registration number, and all other states in which the corporation is registered to do business. Organizations may also list up to five alternate names under which they are doing business, i.e., trade names. The names provided will be used for indexing the designation, and the business contact information will not be on public view.

The submission must also include contact information for the service agent and the designating entity's consent to service by mail. An entity submitting a designation may also elect to accept service by email in addition to mail. In such cases, the email address of the designated service agent will be included in the public directory.

Although some parties suggested that the Office should require periodic renewal of the designated agent listing, 67 the Office has not included such a requirement in the proposed rule. It is true that, in the context of the designated agent databases for online service providers under the DMCA, the Office implemented a renewal requirement to “encourage effective compliance with the requirements of [17 U.S.C.] 512(c)(2).”  68 That provision reflects the statutory requirement that a service provider must designate an agent with the Copyright Office to be eligible for statutory safe harbor provisions. 69 Here, designating a service agent is not a statutory requirement for service on a corporation, partnership, or unincorporated association, but an administrative convenience. 70 In addition, the claimant may effectuate service by alternative means. While the Office accepts the possibility that corporations, partnerships, or unincorporated associations may not keep current their designations, service on the agent who is designated in the directory shall be valid unless the designating entity cancels or amends the designation. The Office believes that this should offer sufficient incentive to parties to keep their designations current.

Finally, the proposed rule provides that if the CCB determines that a designation does not qualify, or if it has reason to believe the submitter does not have authority to make the designation, CCB staff will notify the submitter that the designation will be removed. The submitter will then have ten days to respond. If the submitter does not respond, or the CCB determines that the response is insufficient, the entry will be removed from the directory.

The proposed rule also provides requirements for service of materials filed after the initial notice and claim. The proposed rule has a general requirement for service through the CCB's electronic filing management system or by other means of electronic service, and establishes such service methods as the default. Unrepresented parties, however, may be excused from electronic service and instead receive service by mail or in-person delivery. The same structure is proposed for filing documents beyond the initial notice and claim: parties who are excused from using the electronic filing and document management system may file documents by email, mail, hand delivery, or courier delivery.

As an alternative to serving notice of the claim on a respondent, the statute allows the claimant to request waiver of service. The claimant must send the request for waiver of service to the respondent “by first class mail or by other reasonable means,” and return of the acceptance of waiver must be at no cost to the respondent. 71 The claimant's waiver request must be in writing, include a notice of the proceeding and a copy of the claim, state the date the request was sent, and provide the respondent thirty days to respond. 72 The personal service waiver, if accepted by respondent, does not constitute a waiver of the respondent's right to opt out of the proceeding. 73

The Office received one comment specifically addressing waiver, expressing concern regarding the use of “intimidating or misleading language.”  74 The Office intends to require a standard form provided by the CCB for requesting waiver of service. The form will provide the basic information regarding the proceeding, clarify that the form is not a formal service of summons and does not waive the respondent's right to opt out of the proceeding, and describe the effect of agreeing or declining to waive service. The claimant can request waiver by mailing the request, claim, initial notice, and envelope with postage prepaid to the respondent. The respondent will have thirty days from the date the request is sent to waive service, and may return the signed waiver form by mail or by email, if the claimant includes an email address in the request. If the respondent accepts waiver of service, and further does not opt out, respondent will have an additional thirty days to file a response beyond the time for response typically set by the CCB. If the respondent does not waive service, the claimant must complete service with sufficient time to file the proof of service with the CCB.

In addition to the notice served by the claimant on the respondent, the CCB is required to issue a second notice to the respondent if the respondent has not already opted out or filed a response. The statute requires that the Register promulgate regulations “providing for a written notification to be sent by, or on behalf of, the Copyright Claims Board to notify the respondent of a pending proceeding.”  75 Similar to the claimant's initial notice, this notice must “include information concerning the respondent's right to opt out of the proceeding, the consequences of opting out and not opting out, and a prominent statement that, by not opting out within 60 days after the date of service . . . the respondent loses the opportunity to have the dispute decided by a court created under article III of the Constitution of the United States” and “waives the right to a jury trial regarding the dispute.”  76 This second notice supplements the initial notice served by the claimant and is intended to facilitate understanding of the official nature of the documents and proceeding, encourage a respondent to review the materials, and overall, increase the likelihood that a respondent engages with the asserted claim and knowingly elects to proceed or opt out of the CCB proceeding.

In the NOI, the Office sought comment on the second notice, including “its content and how to ensure that recipients understand that it is an official Federal Government notification.”  77 The Office also requested input on the method of service—specifically, whether the second notice should be sent “by or on behalf of” the CCB, whether the second notice should be posted to the online filing system or delivered by mail or email, and how delivery should be documented. 78

Commenters suggested that the second notice should be substantially the same as the first, with a prominent warning that this is the second and final notice with an explanation of the impact of not opting out. 79 Parties also recommended that the CCB issue the second notice via U.S. mail. 80 The Office agrees with these comments and proposes that the second notice closely mirror the initial notice, specifically with regard to the description of the CCB, the consequences of opting out, the process of opting out, and accessing legal assistance. The Office proposes to issue the second notice by mail, but also to deliver a second copy via email to the designated service agent of a respondent that is a corporation, partnership, or unincorporated association that has indicated in the designated service agent directory that it will accept email service.

The Office has also proposed that the second notice be issued no later than twenty days after the claimant files proof of service or waiver of service. The CCB will not issue a second notice if the respondent has opted out. The Office anticipates that the respondent will have at least thirty days between the receipt of the second notice and the end of the opt-out period, given that the claimant has seven days to file proof after effectuating service or obtaining waiver, and the Office will issue the second notice no more than twenty days after that. Delays in the claimant's filing of proof of service or waiver may constitute good cause for extending the opt-out or response period.

Once the respondent receives notice of the claim, the respondent has sixty days to opt out of the proceeding before the CCB, although the CCB can extend that period in the interests of justice, such as for a delay in the receipt of a second notice due to a claimant's failure to file proof of service in a timely manner. 81 If a respondent does not timely opt out, the proceeding will become active and the respondent will be bound by the CCB's determination. 82 If the respondent does opt out, the proceeding will be dismissed without prejudice. 83

The Office solicited general input regarding opt-out, in particular, the form and process of a written opt-out notice. 84 Commenters were consistent that the opt-out process should be quick and easy to exercise, and that respondents should be provided both online and mail options for opting out. 85 Parties proposed different approaches for the online opt-out process. Suggestions included the creation of a QR code, 86 a button on the CCB home page, 87 and providing a verification key code for security. 88 The Office appreciates parties' comments on this issue and proposes an opt-out notification form that asks for the docket number of the claim, identifying information regarding the respondent, and a signed affirmation that the person affirming is the respondent identified in the claim (or a representative of that respondent) and that the respondent will not be participating in the CCB proceeding. This notification can be submitted either online using a form on the CCB's website or through the mail, or via hand delivery or commercial courier. The Office has included the suggestion that an online opt-out be accompanied by a verification code provided in the initial notice and second notices, and will continue to consider the remaining suggestions regarding online opt-out as it develops its form, website, and online filing system. The CCB will include in the initial and second notice instructions for completing opt-out election online, as well as by using a paper opt-out form.

The proposed rule clarifies various issues related to the scope and effect of opting out. In particular, the rule requires that each respondent to a proceeding independently opt out, and that an opt-out will be effective against duplicate claims but not unrelated claims. The Office recognized that “Congress did not establish a blanket opt-out for any entities other than libraries and archives,”  89 and yet the Office also recognizes that the result of an opt-out is a dismissal without prejudice, leaving a claimant open to file substantially the same claim again. The proposed rule is crafted in light of the Office's inability to impose a blanket opt-out, but still seeks to avoid subjecting a respondent to refiled claims.

Not included in this proposed rule is a specific mechanism for a respondent to revoke an opt-out for a particular claim. The Office recognizes that there may be situations where respondents may wish to change their minds and opt in to a proceeding that was previously filed with the CCB and dismissed due to a prior opt-out election. 90 The Office welcomes comment on whether the regulatory text should include a provision permitting a respondent to give the CCB notice of an intention to participate after an initial opt-out, and, if so, any suggestions for regulatory language to govern this process.

The Office also solicited comments regarding whether it should create a publicly accessible list of entities or individuals who have opted out of particular proceedings. 91 At present, given the limited time before the anticipated commencement of CCB operations and the need to focus on establishing the core proceedings of the CCB, the proposed rule does not provide for a public list of prior opt outs. The Office may, however, revisit this issue in the future.

A respondent who decides not to opt out of the proceeding must file a response to the claim with the CCB. The response may include “legal or equitable defense[s] under this title or otherwise available under law”  92 in response to the claim. A respondent who timely waives service has an additional thirty days to file a response in addition to any deadlines set forth by the CCB. 93 The statute is otherwise silent as to the timing of a response filing, and a proceeding is considered active prior to the filing of any response. 94 Given that a scheduling order must be sent out “upon confirmation that a proceeding has become an active proceeding”  95 — i.e., upon the filing of proof of service and the passing of the opt-out window—the Office understands this requirement to mean that any response timeline is to be set forth after the proceeding becomes active and should be included in the scheduling order. Accordingly, the scheduling order issued by the CCB “upon confirmation that a proceeding has become an active proceeding” will include a thirty-day deadline from the date of the scheduling order for filing the response. If the respondent has waived service, thereby availing itself of an extra thirty days to respond to the claim, the order will require that the response be filed within sixty days of the date of the scheduling order.

The Office proposes that to respond to a claim, the respondent must complete the appropriate form provided by the CCB and submit the completed form through the Board's electronic filing and document management system. If a respondent is unable to use the electronic filing and document management system, it may submit a response by following alternative submission instructions provided in the form or by the CCB. In addition to identifying information and certification, the form will ask for short statements from the respondent disputing the facts of the claim and describing the dispute or the reasons claimant's claim has no merit from its point of view. As discussed below, the respondent will be able to raise counterclaims. For infringement claims, the form will allow the respondent to identify relevant defenses. In contrast to the Federal Rules of Civil Procedure, 96 however, the proposed regulation does not provide that a defense that is not asserted in a response is waived by the respondent. At this early stage of the proceeding, such a rigid application of pleading requirements would impose an unjustifiable burden on respondents, especially those who are representing themselves. A subsequent rulemaking will address the appropriate stage at which defenses must be raised.

The proposed rule also allows optional documentation to be attached to the response form, including copies of the works involved in the claim. In requesting this information, the Office is seeking to provide respondents with the opportunity to meaningfully respond during the initial stage of the proceeding.

For the response, the Office is particularly interested in comments on an appropriate presentation of possible defenses available to the respondent, any instructional or educational material that would assist the respondent in constructing its response, and any other suggestions that would enhance the respondent's ability to be meaningfully heard and the claimant to be on notice of defenses. 97 With respect to defenses, the Office seeks comment on whether providing a list of defenses (or a link to lists of defenses) that are commonly pleaded in copyright infringement suits would be productive at this, or any, stage in the case, and how to ensure that a respondent understands the defenses available and only asserts those that are applicable.

The CCB may also hear counterclaims that either “arise[ ] under section 106 or section 512(f) and out of the same transaction or occurrence that is the subject of a claim of infringement, . . . a claim of noninfringement, . . . or a claim of misrepresentation,”  98 or “arise[ ] under an agreement pertaining to the same transaction or occurrence that is the subject of a claim of infringement . . . if the agreement could affect the relief awarded to the claimant.”  99 Any asserted counterclaim is subject to the same compliance review applicable to an initial claim  100 and is subject to dismissal for unsuitability. 101

The Office proposes that the information required to assert a counterclaim should closely mirror the information required to assert a claim. A counterclaim must be filed at the time of the response, unless the Board, for good cause, permits it to be asserted later in the proceeding. This approach resembles the general requirement of asserting a compulsory counterclaim in federal court. 102 In proposing this approach, the Office is seeking to maintain an efficient, orderly procedure that provides parties sufficient notice as to the issues involved in the proceeding.

The requirements for responding to a counterclaim largely mirror the requirements for responding to a claim, including that a failure to file a response will constitute default. The triggering event for responding to a counterclaim, however, is the notification by a Copyright Claims Attorney that the counterclaim is compliant, 103 rather than the issuance of a scheduling order. When a respondent files a counterclaim, a Copyright Claims Attorney must conduct the same compliance review that occurs after the filing of an initial claim. If the counterclaim is found to be compliant, the Board will provide notification of compliance, which will begin the counterclaim respondent's thirty-day period to respond. The Board then will issue a new scheduling order updating the prior due dates as appropriate.

The proposed rule does not provide a mechanism for the respondent to the counterclaim to opt out of the proceeding. The Office encourages comment on this issue, including as to whether such a process is permitted under the statute. The Office notes that Congress did not set forth a procedure for opting out of a counterclaim, in contrast to the detailed procedure set forth for the respondent's initial ability to opt out. It also is noteworthy that Congress has limited allowable counterclaims to those arising from the same transaction or occurrence, and has further limited such claims to those implicating copyright or an agreement affecting the relief to be awarded to the claimant. 104 Accordingly, there arguably should be no surprise for the claimant when a counterclaim is asserted. For example, a claimant who brings an action before the CCB seeking a declaration of noninfringement of a work could reasonably expect a counterclaim for infringement of that same work. As the claimant has already voluntarily submitted to, and in fact requested, the CCB to take up the general issue at hand, having an opt-out procedure for counterclaims potentially could constitute an inefficient use of time and resources.

The Register has general authority to set fees for Copyright Office services, 105 and is specifically directed to set certain fees related to CCB proceedings. 106 Here, the Office sets forth proposed fees relating to the CCB rules included in this notice. The Office will propose additional fees in subsequent rulemakings for the services addressed in those proceedings.

To commence a proceeding before the CCB, a claim must be accompanied “by a filing fee in such amount as may be prescribed in regulations established by the Register of Copyrights.”  107 The Office is given upper and lower limits to the filing fees it may assess: “the sum total of” filing fees must not be less than $100 or exceed the “cost of filing an action in a district court of the United States,”  108 currently $402. 109 The Office understands the “sum total of” filing fees to consist of the two filing fees indicated in the statute: The filing fee for the initial claim  110 and the filing fee to request review of a final determination by the Register. 111 The amount of fees must “further the goals of the Copyright Claims Board.”  112

The Office proposes an initial claim filing fee of $100 in the interest of facilitating access to the CCB. Given Congress's goal of ensuring that the CCB be accessible to the widest constituency possible, 113 the Office believes it is appropriate to keep the fee at the statutory minimum.

The Senate Report proposed in a footnote that the Office consider a two-tiered fee structure, with an initial fee assessed when the claim is filed and a second fee assessed after the claim becomes active. 114 After consideration, the Office has not included such a framework in the proposed rule. First, it is not clear that the Office has the statutory authority to split fees in this way. While the statute expressly provides for a fee to initiate a claim, 115 it does not require a separate fee for a proceeding to become active. 116 Furthermore, if the Office were to establish a system in which it charged less than $100 for the first tier, and the claimant did not move on to the second tier, the total filing fees would not reach the statutory floor. The Office invites comment on these issues.

For similar reasons, the Office does not currently propose a fee for a counterclaim. In contrast to the statutory provisions relating to a claim, the CASE Act contains no express authorization for the Office to charge fees for a counterclaim. The Office also notes that fees for counterclaims are not required in federal district court, although some state courts do assess such fees. 117 The Office welcomes comment on this matter as well.

As part of its authority to maintain a directory of service agents, the Office “may require . . . corporations, partnerships, and unincorporated associations designating . . . service agents to pay a fee to cover the costs of maintaining the directory.”  118 As discussed in the NOI, 119 the designated service agent directory will be similar in nature to the Office's existing DMCA designated agent directory. The fee for adding an entry to the DMCA designated agent directory is $6. 120 This amount was selected, despite an estimated $52 operating cost, in part due to the elastic nature of demand for the DMCA directory. 121 The Office anticipates that the demand for the CCB designated service agent directory will be similarly elastic, if not more, given that participation in the designated service agent directory is not a statutory requirement. The proposed rule accordingly sets a $6 fee for designation of a service agent for CCB purposes. The Office believes that setting the fee at this low level will encourage participation by corporations, partnerships, and unincorporated associations, which in turn will produce a robust database that benefits claimants and respondents alike.

For the reasons stated in the preamble, the U.S. Copyright Office proposes to amend Chapter II, Subchapters A and B, of title 37 Code of Federal Regulations to read as follows:

VA administers a fiduciary program for beneficiaries who, as a result of injury, disease, the infirmities of advanced age, or being less than 18 years of age, cannot manage their own VA benefits. Under this program, VA oversees these vulnerable beneficiaries, and appoints and oversees fiduciaries who manage these beneficiaries' benefits. VA's current statutory authority for this program is in 38 U.S.C. chapters 55 and 61.

VA is authorized to issue payments to and supervise fiduciaries acting on behalf of beneficiaries under 38 U.S.C. 5502. In 2004, Congress amended 38 U.S.C. chapters 55 and 61 to add new provisions which, among other things, authorize VA to conduct specific investigations regarding the fitness of individuals to serve as fiduciaries and reissue certain benefits misused by fiduciaries. In relevant part, the law provides that any certification of a person as a fiduciary shall be made on the basis of “the furnishing of any bond that may be required by the Secretary.” 38 U.S.C. 5507(a)(3). On its face, this statutory language provides VA with authority to decide whether to require a bond.

Under certain circumstances, if a fiduciary misuses benefits, the law requires that the Secretary pay the beneficiary an amount equal to the amount of benefits that were misused. 38 U.S.C. 6107. In 2018, VA amended its fiduciary program regulations to implement current law. Fiduciary Activities, 83 FR 32716 (July 13, 2018).

As stated above, in some cases, fiduciaries are required to obtain a surety bond in order to protect the beneficiaries' benefits. However, there is conflicting information in VA regulations pertaining to bond requirements for fiduciaries. Specifically, 38 CFR 14.709 provides that VA's general policy is to require a surety bond that follows State laws and court rules from a court-appointed individual fiduciary. Further, the regulation indicates approved alternative methods to a corporate surety bond and authorizes the acceptance of a lesser degree of protection of funds under certain circumstances. However, 38 CFR 13.230, which was promulgated in 2018 when VA amended its fiduciary program regulations, requires that any bond furnished by a fiduciary “[c]ontain a statement that the bond is payable to the Secretary of Veterans Affairs.” 38 CFR 13.230(d)(3)(ii). VA's final rule that amended 38 CFR part 13 went into effect on August 13, 2018. 83 FR 32716. When it was promulgated, VA explicitly stated that “[w]e intend to issue uniform rules for all VA-appointed fiduciaries, such as allowable fees, surety bond requirements and appropriate investments, to include fiduciaries who also serve as court-appointed guardians for beneficiaries.” Id. at 32727. The rule noted that “VA's fiduciary regulations will result in a gradual discontinuance of the current practice of recognizing a court-appointed guardian or fiduciary for purposes of receiving VA benefits on behalf of a VA beneficiary” and that, “VA will establish a national standard for appointing and overseeing fiduciaries.” Id. at 32735. VA noted in the final rule that, “[b]ased on our experience in administering the program, the risks of not requiring all fiduciaries, with the [general] exception of spouses, to furnish a surety bond significantly outweigh any burden on a prospective fiduciary.” Id. at 32727. VA set forth a number of factors that weigh in favor of requiring a bond: (1) It serves as a screening tool for VA to use in confirming qualification for appointment—in other words, if a fiduciary cannot obtain a bond because the bonding company considers the risk of fund exploitation too high, VA will not appoint the prospective fiduciary; (2) it is consistent with VA's oversight obligations, which include deterring fiduciary misuse of benefits; and (3) it puts a fiduciary on notice that he or she is liable to a third party for any payment on the bond. Id. With the 2018 amendment, VA also promulgated additional bond requirements under § 13.230(d) in order to protect a beneficiary's interests if a fiduciary misuses funds, including a requirement that the bond be payable to the Secretary. More recently, in January 2021, Congress enacted Public Law 116-315, which amended 38 U.S.C. 6107(b), to require VA to reissue misused funds to all beneficiaries, regardless of whether VA negligence was involved.

Under current § 13.410(c), VA must attempt to recoup any misused benefits, either from the surety company or, if no bond is in place, from the fiduciary directly. VA then must reissue any recouped benefits to the beneficiary's fiduciary successor to the extent they were not already reissued. Under § 13.230(g), bond expenses may be deducted from the beneficiary's account so that the fiduciary does not have to pay for them out of pocket. Although this cuts into the amount of benefits the beneficiary ultimately receives, VA noted that this provision is “consistent with the protection of funds in guardianships under state and uniform laws.” 79 FR 430, 442 (Jan. 3, 2014). While it seems redundant for VA to require a separate bond from a VA-appointed fiduciary who also is serving as a court-appointed fiduciary, VA instituted uniform surety bond requirements as an additional safeguard to “protect the beneficiary's funds.” 83 FR 32727. In theory, requiring that a VA-appointed fiduciary obtain a bond that is payable to the Secretary ensures that VA will be able to recoup any misused funds from the surety company rather than having to initiate a collections action against an individual fiduciary. Moreover, in instances where a court-appointed fiduciary already has a bond in place, the bond typically would be payable to the state where the court is located, so VA could not make a direct claim against that bond. If the state-court bond were enough to cover the misused VA benefits, the state would be able to make a claim against the bond to make the beneficiary whole. Thus, at least in some cases, a state-court bond would provide adequate protection for the beneficiary. We note, however, that, in the event that VA reissues benefits and the beneficiary later receives funds recovered from the state-court bond, it is not apparent that VA would have any basis to recoup the excess funds paid to the beneficiary, even though it would amount to double recovery on the part of the beneficiary. A potential problem with VA's practice of requiring multiple bonds is that if a surety company already paid out on a misused-benefits claim under a state-court bond, another surety company would not pay out on the VA bond for the same misconduct. That would therefore defeat the purpose of requiring a second bond made payable to the Secretary. If the purpose of the second bond is to ensure that the beneficiary is made whole in the event of misuse, it does not make sense to burden the beneficiary with paying for a second bond where there already is adequate protection in place. As a result, VA proposes to amend § 13.230 of its part 13 regulations as described below.

VA proposes to amend 38 CFR 13.230 to exempt a VA-appointed fiduciary who is also serving as a court-appointed fiduciary with a bond sufficient to protect both VA and non-VA funds from posting multiple bonds and to exempt a VA-appointed fiduciary that is also a State agency with existing, State-mandated liability insurance or a blanket bond from having to obtain an additional bond payable to the Secretary of Veterans Affairs. The proposed amendment is within VA's general rulemaking authority under 38 U.S.C. 501(a) and implements VA's authority under 38 U.S.C. 6107. The proposed amendment would eliminate duplicative fees from being charged against a VA beneficiary's funds for an additional, unnecessary bond. Additionally, VA beneficiaries who are victims of misuse of their benefits by their VA fiduciaries would not experience undue delay in the reissuance of their misused benefits. Further, the bond requirement in 38 U.S.C. 5507(a)(3) gives VA discretion to determine whether to require a bond.

Under current rules, 38 CFR 13.230, does not include an exception to the bond requirement for court-appointed fiduciaries. Further, § 13.230 specifically requires that any bond furnished by the fiduciary “[c]ontain a statement that the bond is payable to the Secretary of Veterans Affairs.”

VA proposes to amend § 13.230 to add an exception for posting an additional bond for an individual serving as a court-appointed fiduciary, where a bond is in place under State law and court rules and is sufficient to protect both VA and non-VA funds and to add another exception for a VA-appointed fiduciary that is also a State agency with existing, State-mandated liability insurance or a blanket bond to not have to obtain an additional bond payable to the Secretary of Veterans Affairs. This amendment is authorized by VA's general rulemaking authority in 38 U.S.C. 501, and by the discretion conferred by 38 U.S.C. 5507(a)(3).

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

The Paperwork Reduction Act of 1995 (at 44 U.S.C. 3507) requires that VA consider the impact of paperwork and other information collection burdens imposed on the public. Under 44 U.S.C. 3507(a), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid OMB control number. See also 5 CFR 1320.8(b)(3)(vi).

The information collection requirement in § 13.230 is currently approved by OMB and has been assigned OMB control number 2900-0804. The proposed rule includes provisions involving a revised collection of information under the Paperwork Reduction Act of 1995 that will require approval by OMB. The proposed rule would not involve a substantive or material modification of the approved collection.

Title: Protection of beneficiary funds.

Type of Information Collection: Modification of a currently approved information collection.

OMB Number: 2900-0804.

Summary of collection of information: The amendment to the collection of information in proposed § 13.230(c)(1) would eliminate the requirement for a VA-appointed fiduciary who is also serving as a court-appointed fiduciary to post multiple bonds and would also eliminate the requirement for a VA-appointed fiduciary that is also a State agency with existing, State-mandated liability insurance or a blanket bond to obtain an additional bond payable to the Secretary of Veterans Affairs. The proposed amendment to § 13.230(c)(1) would decrease the estimated annual number of respondents and consequently reduce the estimated total annual reporting and recordkeeping burden.

The estimated annual burden for the revised collection of information would be determined as follows:

Description of need for information and proposed use of information: There would be no change in the need for information nor the proposed use of information collected for OMB-approved Control Number 2900-0804. The information is needed to facilitate VA's oversight regarding the funds under management protection requirements prescribed in proposed § 13.230.

Description of likely respondents: Certain fiduciaries appointed by VA who manage VA benefit funds in excess of $25,000. As stated, the proposed rule would exempt a VA-appointed fiduciary who is also serving as a court-appointed fiduciary from posting multiple bonds and would also exempt a VA-appointed fiduciary that is also a State agency with existing, State-mandated liability insurance or a blanket bond from having to obtain an additional bond payable to the Secretary of Veterans Affairs. This change would reduce the number of respondents.

Estimated number of respondents per year: 9,634 annually.

Estimated frequency of responses per year: Once per year.

Estimated number of responses per year: 9,634 annually.

Estimated average burden per response: The estimated average burden per response for OMB-approved Control Number 2900-0804 has not changed and remains at 1 minute.

Estimated total annual reporting and recordkeeping burden: 161 hours.

Estimated total annual respondent burden cost: $4,358.

VA estimates that the proposed rule would reduce the number of respondents in 2021 by 366 (from 10,000 to 9,634); however, it would increase the current annual respondent burden costs from $4,008 to $4,358, resulting in an estimated information collection burden costs increase of $350 (161 burden hours × $27.07 per hour). The Bureau of Labor Statistics (BLS) gathers information on full-time wage and salary workers. According to the latest available BLS data, the mean hourly wage is $27.07 based on the BLS wage code—“00-0000 All Occupations.” This information was taken from the following website: https://www.bls.gov/oes/current/oes_nat.htm.

The Secretary certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This regulation has the potential to impact all 2,350 small entities within the North American Industry Classification System Code 524126 (casualty and bonding companies). There is a projected loss of revenue of $66,989 per firm which yields a 0.16% revenue loss to each entity. Based on this analysis, we conclude that this regulation will not have a significant economic impact on a substantial number of small entities. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance program number and title for this proposed rule are as follows: 64.104, Pension for Non-Service-Connected Disability for Veterans; 64.105, Pension to Veterans Surviving Spouses, and Children; 64.109, Veterans Compensation for Service-Connected Disability; and 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death.

Denis McDonough, Secretary of Veterans Affairs, approved this document on September 24, 2021, and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs.

For the reasons set forth in the preamble, VA proposes to amend 38 CFR part 13 as follows:

In the Rules and Regulations section of this Federal Register , EPA is approving the State's SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this rule, no further activity is contemplated. If EPA receives such comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the Rules section of this Federal Register .

Throughout this document, whenever “we,” “us,” or “our” is used, we mean EPA. Acronyms that are used in this rulemaking that may be helpful include:

You may be potentially affected by this action if you manufacture class II ozone-depleting substances (ODS) listed at 40 CFR part 82, subpart A, Appendix B, and hydrofluorocarbon-23 (HFC-23) is also generated as a byproduct at your plant. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT.

The Environmental Protection Agency (EPA) is proposing to require the control, capture, and/or destruction of byproduct HFC-23 that would otherwise be emitted from plants that manufacture class II ODS ( i.e., hydrochlorofluorocarbons (HCFCs)), including HCFC-22. Under the Clean Air Act (CAA) and EPA's regulations at 40 CFR part 82, controls are in place that restrict the production and consumption of HCFCs to implement the phaseout of these chemicals. There are limited exceptions to these restrictions for the manufacture of HCFCs that are not considered to be production under the CAA. One of the exceptions allows manufacture of HCFCs for use in a process in which the HCFC is used and entirely consumed, except for trace quantities, in the manufacture of other chemicals. The process is known as transformation and the controlled substances used and consumed are called feedstocks. Under this proposed action, any plant that manufactures HCFCs for transformation would need to control, capture, and/or destroy HFC-23 byproduct generated. More specifically, EPA is proposing that no later than October 1, 2022, as compared to the amount of HCFCs intentionally manufactured on a facility line, no more than 0.1 percent of HFC-23 generated on the line may be emitted. Rather, such HFC-23 byproduct must be captured and employed for a commercial purpose or destroyed using a technology approved by EPA.

This proposed rule is narrow in scope and is expected only to affect those plants that continue to manufacture HCFCs under an exception to the HCFC phaseout under the CAA and its implementing regulations. Based on data from EPA's Greenhouse Gas Reporting Program (GHGRP), we are aware of two plants that would fall under the proposed requirements. These two plants report their emissions under subpart O of the GHGRP ( HCFC-22 Production and HFC-23 Destruction ), which requires owners or operators of facilities that contain HCFC-22 production or HFC-23 destruction processes to report their emissions from those processes. Plant-specific emissions from these processes are then published in EPA's Facility Level Information on GreenHouse gases Tool (FLIGHT). Interested readers can review the data concerning HFC-23 reported to EPA for over a decade. Other than the two plants included in the GHGRP data, EPA is not aware of any other class II ODS production plants in the United States that generate emissions of HFC-23. 1 EPA is soliciting comment on whether there are any other plants manufacturing class II ODS that have emissions of HFC-23. EPA is also aware that there are plants that generate HFC-23 emissions during production of HFCs and directs interested readers to “Phasedown of Hydrofluorocarbons: Establishing the Allowance Allocation and Trading Program under the American Innovation and Manufacturing Act” (86 FR 27150, May 19, 2021), the “Proposed HFC Allocation Rule,” to learn more about EPA's proposal to implement a similar standard for emissions of HFC-23 at those plants.

EPA is proposing a compliance date of October 1, 2022. EPA recognizes that individual circumstances could arise that make it impossible for an individual plant to install necessary controls by October 1, 2022, and therefore is proposing a process under which companies could seek an extension of the compliance date.

Several sections of the CAA provide authority for this proposed action. 2 Section 603 provides authority to establish monitoring and reporting requirements for ODS, and section 605 provides authority to phase out the production and consumption of class II substances, to restrict the use of class II ODS, and to promulgate regulations associated with the production of class II ODS. EPA's regulations implementing the production and consumption controls for class II substances, including provisions implementing exceptions to those controls, can be found at 40 CFR part 82, subpart A.

To the extent that this rulemaking involves recordkeeping and reporting requirements, EPA also relies on its authority under section 114 of the CAA, which authorizes the EPA Administrator to require recordkeeping and reporting in carrying out any provision of the CAA (with certain exceptions that do not apply here). Additional authority for electronic reporting comes from the Government Paperwork Elimination Act (44 U.S.C. 3504), which provides “(1) for the option of the electronic maintenance, submission, or disclosure of information, when practicable as a substitute for paper; and (2) for the use and acceptance of electronic signatures, when practicable.”

To comply with the United States' obligations under the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) and requirements under Title VI of the CAA, EPA has been implementing a system of production and consumption controls for decades to facilitate the orderly phaseout of class I and class II ODS. 3 Under this system, EPA allocates allowances for the production and consumption of these substances, gradually reducing the number of allowances allocated over time. Allocation of production and consumption allowances for most class I substances ( e.g., chlorofluorocarbons, methyl chloroform, carbon tetrachloride, and halons) ended by 1996, and in 2005 for methyl bromide. EPA is implementing the phaseout of class II ODS on a chemical-by-chemical basis and had stopped allocating production and consumption allowances for most HCFCs by 2020. EPA allocated the few remaining production and consumption allowances for HCFC-123 and HCFC-124 in a 2020 rulemaking (85 FR 15258). Under that rule, production and consumption allowances for class II substances are reduced to zero by 2030 (§ 82.16). Production and import of HCFCs that are categorized as class II ODS without the appropriate allowances is generally prohibited unless an exception applies (§ 82.15(a) and (b)). The Montreal Protocol, the CAA, and EPA's implementing regulations also limit the permissible uses of HCFCs, with certain exceptions. Additional information on the class II phaseout can be found in EPA's prior rulemakings in this area (see, e.g., 68 FR 2819, 79 FR 64254, and 85 FR 15258).

As noted previously, there are limited exceptions to these production controls under the CAA and EPA's implementing regulations (§ 82.15(a)). One exception allowed indefinitely under the CAA is manufacture for use in a process resulting in the HCFC being transformed. Consistent with section 601(11) of the CAA, the definition of “production” in 40 CFR 82.3 excludes the “manufacture of a controlled substance that is subsequently transformed.” As defined in 40 CFR 82.3, “transform” means to “use and entirely consume (except for trace quantities) a controlled substance in the manufacture of other chemicals for commercial purposes.”

HFC-23 is a very potent GHG with a 100-year global warming potential (GWP) of 14,800  4 that is generated as a byproduct during the manufacture of certain chemicals, including HCFC-22. In a Technical Support Document for EPA's GHGRP, EPA detailed the process by which HFC-23 is generated as a byproduct during the manufacture of HCFC-22:

Historically, HFC-23 that has not been controlled or captured has been vented to the atmosphere. EPA is also aware of limited instances where HFC-23 is captured, purified, and used for commercial purposes, such as fire suppression, very low temperature refrigeration, and semiconductor manufacturing.

HFC-23 is a regulated substance under the American Innovation and Manufacturing Act of 2020 (AIM Act) enacted December 27, 2020, as section 103 in Division S, Innovation for the Environment, of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260). EPA has recently published a proposed rule under AIM Act authority, the Proposed HFC Allocation Rule (86 FR 27150, May 19, 2021), that has several interrelated proposed approaches linked to HFC-23 emissions. Under the primary proposed approach, all creation of HFC-23, whether intentional or unintentional, beyond insignificant quantities under certain conditions, would be “production” covered by AIM Act regulations. That proposal would require that HFC-23 be captured and controlled to a specific standard and then the HFC-23 could be refined for sale, which would require expenditure of AIM Act allowances, or the HFC-23 would need to be destroyed. 6 In the alternative, EPA is proposing to require that, in order to be eligible for a production allowance under the AIM Act rules, companies must control, capture, and destroy HFC-23 emissions from plants producing HFCs listed as regulated substances in the AIM Act. Under both proposals, EPA is proposing that, no later than October 1, 2022, as compared to the amount of chemical intentionally produced on a facility line, no more than 0.1 percent of HFC-23 generated as a byproduct on the line may be emitted. EPA also proposed a process under which companies could seek an extension of the compliance date in certain circumstances. Accordingly, the timeline proposed in the Proposed HFC Allocation Rule matches the timeline proposed in this rulemaking, such that facilities would have no compliance obligations until October 1, 2022, or later if a compliance date extension was granted, to allow facilities necessary time to install and calibrate equipment. The HFC-23 must be destroyed using a technology approved in the context of the AIM Act regulations (which are also proposed in the same notice).

Studies indicate that HFC-23 emission trends from HCFC-22 manufacturing largely depend on the magnitude of HCFC-22 manufacturing and the effectiveness of HFC-23 destruction associated with that manufacture of HCFC-22. 7   8   9 HFC-23 has a substantially longer atmospheric lifetime and higher GWP than all other HFCs at 14,800. In 2015, EPA estimated that global controls on byproduct HFC-23 emissions from HCFC-22 manufacture would result in cumulative HFC-23 byproduct emission reductions of 12,600 MMTCO 2 eq through 2050. 10

On September 16, 2014, and October 15, 2015, entities in the private sector announced commitments to reduce emissions of HFCs. 11 Several of those commitments included reducing HFC-23 byproduct emissions. For example, one commitment from 2015 states, in part:

These commitments demonstrate longstanding concerns over and efforts to limit HFC-23 byproduct emissions. Further, in a 2021 news release, Chemours announced a project to significantly reduce emissions at their Louisville, Kentucky, manufacturing site. As stated in the news release, the project includes the design, custom-build, and installation of proprietary technology to capture at least 99 percent of HFC-23 process emissions from the site. The news release is available in the docket to this rule (EPA-HQ-OAR-2021-0253).

In this action, EPA is proposing plants that manufacture HCFCs must control, capture, and destroy HFC-23 byproduct emissions. More specifically, EPA is proposing that, no later than October 1, 2022, as compared to the amount of chemical intentionally manufactured on a facility line over a certain time period, no more than 0.1 percent of HFC-23 generated on the line may be emitted during that same time period. After such point, emissions of HFC-23 byproduct that exceed the 0.1 percent would be treated as violations of an applicable emissions limitation in violation of federal law and subject to appropriate enforcement action. The proposed 0.1 percent allowable emissions standard is mass based, with the mass of the intentionally produced substance as the comparison point. In other words, if a line is intentionally producing 1,000 pounds of HCFC-22 over a certain time period, only one pound of HFC-23 could be emitted over that same time period. EPA proposes that any captured HFC-23 must either be refined and employed for commercial purposes, in accordance with any other governing regulatory requirements, or destroyed.

Given that the focus of this rulemaking is to minimize HFC-23 byproduct emissions, it is reasonable to require that if the HFC-23 is not being captured and employed for a commercial purpose, in which case it is not directly emitted from the HCFC manufacturing facility, HFC-23 must be destroyed using a technology that has been demonstrated to be highly effective in destroying HFC-23. EPA is proposing that HFC-23 must be destroyed using a technology approved by EPA. HFC-23 is a regulated substance under the newly enacted AIM Act. EPA has recently published the Proposed HFC Allocation Rule (86 FR 27150, May 19, 2021), which includes a proposal to approve specific technologies as permissible for the destruction of HFC-23. Because HFC-23 is a regulated substance under the AIM Act, it seems most appropriate to list approved technologies for the destruction of HFC-23 through the Proposed HFC Allocation Rule. Therefore, EPA is not separately proposing a list of technologies through this rulemaking. The list of technologies proposed for approval through the Proposed HFC Allocation Rule is as follows: (1) Gaseous/fume oxidation; (2) Liquid injection incineration; (3) Reactor cracking; (4) Rotary kiln incineration; (5) Argon plasma arc; (6) Nitrogen plasma arc; (7) Chemical reaction with hydrogen and carbon dioxide; and (8) Superheated steam reactor. As stated in the preamble of the Proposed HFC Allocation Rule (86 FR 27183), these technologies are capable of destroying HFC-23 to a destruction and removal efficiency (DRE) of 99.99 percent. 12

For additional information on these technologies, EPA's basis for approving them for destruction of HFC-23, and to participate in the public process concerning that Proposed HFC Allocation Rule, please see the earlier-cited proposed rule. EPA is soliciting comment on its proposed approach to require use of a technology listed as approved through the Proposed HFC Allocation Rule, and it is also soliciting comment in this rulemaking on whether the same set of destruction technologies should be separately listed and approved for HFC-23 destruction under this rulemaking for inclusion in the part 82 regulations.

As noted previously, the known plants affected by this rulemaking have made public commitments to control and, to the extent feasible, eliminate byproduct emissions of HFC-23. In recent discussions with EPA, affected companies described ongoing efforts to control, capture, and destroy HFC-23, including planned facility upgrades. 13 EPA is proposing regulations to establish permanent and federally enforceable requirements in addition to these voluntary commitments. EPA acknowledges that some plants may need to install and calibrate new equipment to meet the standard and therefore is proposing a compliance date of October 1, 2022, to allow these plants to complete these activities. Based on the actions EPA understands need to be undertaken, including building and installing customized equipment, October 1, 2022, is a reasonable date by which plants should be expected to comply with the requirements proposed in this rule, if finalized.

Moreover, EPA recognizes that individual circumstances could arise that make it impossible for an individual plant to install necessary controls by October 1, 2022. Therefore, EPA proposes that the Agency may grant a six-month deferral of this compliance deadline (with the possibility of an additional, one-time six month extension) for companies that can demonstrate to EPA that they have taken concrete steps to start to improve their HFC-23 control, capture, and destruction (such as purchase and installation of necessary equipment) at the relevant plants, are reporting under applicable sections of 40 CFR parts 82, 84, 14 and 98, and have clear plans to come into full compliance with the 0.1 percent HFC-23 limit by the deferred date. Alternatively, EPA proposes that the Agency may grant a one-time, one-year deferral of the October 1, 2022 deadline, with no possible extension. EPA is soliciting comment on whether a phased approach of two six-month deferrals would provide helpful oversight by EPA on the company's progress to ensure regulatory requirements take effect as soon as feasible, or whether a single one-time deferral is more appropriate in this instance. Under this proposal, companies would need to request such a deferral by August 1, 2022. EPA proposes to make a determination on an application within 30 days. EPA intends to publicly announce any compliance deferrals granted under this process.

EPA proposes that the destruction of captured HFC-23 is not required to occur at the same plant where the HFC-23 is generated. Destruction of HFC-23 may occur either at the plant where it is generated (on-site) or off-site at another plant. In instances where captured HFC-23 is destroyed off-site, EPA proposes that the transportation to and destruction at the off-site plant would be considered in calculating compliance with the 0.1 percent emissions standard.

Destruction of HFC-23 on-site at the plant where it is generated occurs very soon after it is generated. Accordingly, EPA proposes that if a company utilizes onsite destruction capability, HFC-23 must be destroyed within 30 days of its generation. Alternatively, where destruction occurs off-site, more time may be needed to allow for transportation. To ensure HFC-23 is destroyed in a reasonable amount of time and is not inadvertently emitted, EPA is proposing to require that off-site HFC-23 destruction occur within 90 days after it is generated. These timelines are achievable as a practical matter while being short enough to avoid potential malfeasance that could occur over an elongated time horizon and to minimize the potential of accidental releases. EPA welcomes comment on these timeframes and would consider longer time windows if necessary to destroy HFC-23.

The CAA in section 605(c) provides EPA with the authority to promulgate regulations relating to the phase out of production of class II substances. Given plants are allowed to continue to manufacture HCFCs indefinitely under certain exceptions to the general prohibition on their production, such as manufacture as a feedstock for transformation, it is reasonable to require them to control, capture, and/or destroy HFC-23 emissions associated with such manufacture. As noted previously, HFC-23 has a GWP of 14,800, meaning that emitting a single kilogram of HFC-23 has about the same effect on the global climate over 100 years as emitting 14,800 kilograms of CO 2 . Elevated concentrations of greenhouse gases (GHGs), including HFC-23, have been warming the planet, leading to changes in the Earth's climate including changes in the frequency and intensity of heat waves, precipitation, and extreme weather events, rising seas, and retreating snow and ice. The changes taking place in the atmosphere as a result of the well-documented buildup of GHGs due to human activities are changing the climate at a pace and in a way that threatens human health, society, and the natural environment. Extensive additional information on climate change is available in numerous scientific assessments  15 and EPA documents, as well as in the technical and scientific information supporting them. Two of these documents are EPA's 2009 final rule document “Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act” (74 FR 66496, December 15, 2009) and EPA's 2016 Endangerment and Cause or Contribute Findings for greenhouse gas emissions from aircraft under section 231(a)(2)(A) of the Clean Air Act (81 FR 54422, September 14, 2016). 16

As noted, EPA is aware of two plants that intentionally manufacture HCFCs that generate HFC-23 as a byproduct. Both of these plants manufacture HCFC-22 for transformation. The definition in 40 CFR 82.3 of transformation notes that chemicals used in transformation processes are used and entirely consumed, except for trace quantities. As noted previously, this is consistent with the exclusion of substances that are “used and entirely consumed (except for trace quantities) in the manufacture of other chemicals” from the definition of produce, produced, and production in section 601(11) of the CAA. It is reasonable to assume that, in excepting transformation processes from the definitions related to production and accordingly from the production controls under the ODS phaseout, including for HCFCs, Congress's expectation was that HCFCs manufactured under this exception would be used and entirely consumed in the subsequent transformation processes, thereby resulting in minimal environmental effects from the manufactured HCFCs. Accordingly, it is reasonable for EPA to place additional controls around the process used to manufacture HCFCs intended for transformation in order to minimize its environmental effects.

EPA is proposing reporting requirements and corresponding recordkeeping requirements for plants that manufacture class II ODS with HFC-23 byproduct generation. EPA is proposing a one-time report, to be submitted within 45 days after the effective date of the rule, containing the following: (i) Information on the capacity to manufacture the intended chemical(s) on the line(s) where HFC-23 byproduct is generated; (ii) a description of actions taken at the plant to control the generation and emissions of HFC-23; (iii) identification of approved destruction technology and its location intended for use for HFC-23 destruction; and (iv) a copy of the DRE report associated with the destruction technology. EPA is further proposing that any changes to the information provided in the one-time report be reflected in a revision submitted to EPA within 60 days of the change(s).

EPA is also proposing quarterly reporting, to be submitted 45 days after the end of the applicable reporting period, 17 for production line data on HFC-23: (i) Emissions; (ii) generated, whether captured or not; (iii) generated and captured for all uses; (iv) generated and captured for feedstock use in the United States; (v) generated and captured for destruction; (vi) used for feedstock without prior capture; and (vii) destroyed without prior capture. Quantities should be reported in kilograms consistent with the existing reporting requirements in 40 CFR 82.24 for class II controlled substances.

If captured HFC-23 byproduct is destroyed in a subsequent calendar year ( e.g., it is generated and captured December 15 and destroyed January 15 in the following year), EPA is further proposing to require the entity that generated the HFC-23 to report that the HFC-23 has been destroyed. The information must be submitted within 45 days after destruction occurs. In addition, where destruction of HFC-23 occurs at a different plant than where it is generated, EPA is proposing to require the entity that generated the HFC-23 to report that the HFC-23 has been destroyed within 90 days of being generated. The information must be submitted within 45 days after destruction occurs.

To ensure that reported values for HFC-23 generation, capture, transformation, and destruction are reliable, EPA is proposing to require entities to comply with certain monitoring and calculation provisions. Specifically, EPA is proposing to require entities to meet the same requirements in 40 CFR part 98, subpart L or subpart OO, depending on the quantity being reported. These provisions include validated methods for measuring concentrations of HFC-23 in process streams and the mass flow rates of those streams; accuracy, precision, and calibration requirements for instrumentation; and specific calculation methods for uncontrolled emissions and for quantities transformed and destroyed. EPA proposes to include these reporting requirements to ensure that reported data are accurate, precise, and comparable over time and across plants and companies.

Regarding annual plant-level information on HFC-23 generated and destroyed, these data are inputs into emission equations that are used under GHGRP subpart O to calculate and report emissions of HFC-23, and inputs into emission equations are considered “emission data.” Section 114(c) of the CAA provides that “emission data” shall be available to the public. EPA generally anticipates that these elements related to HFC-23 are emission data and thus will not be treated as confidential following their collection.

EPA is proposing to require records of reports submitted to EPA to be kept for five years.

This action is an economically significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. Any changes made in response to OMB recommendations have been documented in the docket. EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis, “Draft Regulatory Impact Analysis for Protection of Stratospheric Ozone: Standards Related to the Manufacture of Class II Ozone-Depleting Substances for Feedstock” is available in the docket.

The information collection activities in this proposed rule have been submitted for approval to OMB under the PRA. The Information Collection Request (ICR) document that EPA prepared has been assigned EPA ICR number 1432.37. You can find a copy of the ICR in the docket for this rule, and it is briefly summarized here.

EPA is proposing both a one-time report and quarterly reporting to ensure compliance with the proposed limits related to HFC-23 byproduct emissions from the manufacture of class II controlled substances or HCFCs. Quarterly reporting is consistent with the existing reporting requirements in 40 CFR 82.24 for class II controlled substances. The ICR addresses the incremental changes to the existing reporting and recordkeeping programs that are approved under OMB control number 2060-0170.

Respondents/affected entities: Respondents and affected entities will be plants that manufacture HCFCs and generate HFC-23 as a byproduct.

Respondent's obligation to respond: Mandatory—sections 603(b) and 114 of the CAA.

Estimated number of respondents: 2.

Frequency of response: Quarterly, annually, and as needed.

Total estimated burden: 164 hours (per year). Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: $20,157 (per year), includes $0 annualized capital or operation and maintenance costs.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

Submit your comments on the Agency's need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden to EPA using the docket identified at the beginning of this rule. You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs via email to OIRA_submission@omb.eop.gov, Attention: Desk Officer for EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days after receipt, OMB must receive comments no later than October 29, 2021. EPA will respond to any ICR-related comments in the final rule.

I certify that this action will not have a significant economic impact on a substantial number of small entities (SISNOSE) under the RFA. This action will not impose any requirements on small entities. If a rule may have a SISNOSE, the Agency would be required to take certain steps to ensure that the interests of small entities were represented in the rulemaking process. To determine whether the proposed changes would likely have a SISNOSE, EPA identified producers with HFC-23 emissions under EPA's GHGRP. The small business threshold is defined by the SBA as the number of employees in the company and varied between 100 and 1,500 employees. Because only two plants were identified as potentially affected by this action, and neither of those plants are owned by small businesses, it can be presumed that this action will have no SISNOSE.

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538 and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local, or tribal governments.

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

This action does not have tribal implications as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, 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, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action. EPA periodically provides updates on air regulations to the National Tribal Air Association and will share information on this rulemaking through this and other fora.

This action is subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is an economically significant regulatory action as defined by Executive Order 12866, and EPA believes that the environmental health or safety risk addressed by this action has a disproportionate effect on children. Accordingly, EPA has evaluated the environmental health and welfare effects of climate change on children.

GHGs, including HFCs, contribute to climate change. The GHG emissions reductions from HFC-23 resulting from implementation of this rule will further improve children's health. The assessment literature cited in EPA's 2009 and 2016 Endangerment Findings concluded that certain populations and life stages, including children, the elderly, and the poor, are most vulnerable to climate-related health effects. The assessment literature since 2016 strengthens these conclusions by providing more detailed findings regarding these groups' vulnerabilities and the projected impacts they may experience. These assessments describe how children's unique physiological and developmental factors contribute to making them particularly vulnerable to climate change. Impacts to children are expected from heat waves, air pollution, infectious and waterborne illnesses, and mental health effects resulting from extreme weather events. In addition, children are among those especially susceptible to most allergic diseases, as well as health effects associated with heat waves, storms, and floods. Additional health concerns may arise in low-income households, especially those with children, if climate change reduces food availability and increases prices, leading to food insecurity within households.

This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. This action applies to the manufacture of certain regulated substances, none of which are used to supply or distribute energy.

This rulemaking does not involve technical standards.

EPA believes that this action does not contribute to disproportionately high and adverse human health or environmental effects on minority populations, low-income populations, and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). As discussed in the Regulatory Impact Analysis, “Draft Regulatory Impact Analysis for Protection of Stratospheric Ozone: Standards Related to the Manufacture of Class II Ozone-Depleting Substances for Feedstock,” one of the plants potentially affected by this proposed rule is currently controlling their HFC-23 emissions on-site, and the other plant plans to install equipment that will capture HFC-23 process emissions. Based on this information and as discussed further in the Regulatory Impact Analysis, we do not anticipate any effects from the proposed rule on the manufacture of HCFC-22.

This rule, if finalized, will reduce emissions of a potent GHG that is generated as a byproduct from the manufacture of certain HCFCs. While there are no local effects associated with the release of HFC-23, reducing emissions of HFC-23 will contribute to reducing the effects of climate change in the longer term, including public health and welfare effects that may be unevenly distributed and particularly harmful to minority populations, low-income populations, and/or indigenous peoples.

For the reasons set forth in the preamble, EPA proposes to amend 40 CFR part 82 as follows:

DoD, GSA, and NASA are proposing to revise the FAR to implement a policy that provides for accelerated payments to contractors that are small businesses and to small business subcontractors by accelerating payments to their prime contractors. This change implements section 873 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 (Pub. L. 116-92). Section 873 amends 31 U.S.C. 3903(a). Specifically, section 873 requires agencies to establish an accelerated payment date for small business prime contractors, to the fullest extent permitted by law, with a goal of 15 days after receipt of a proper invoice, if a specific payment date is not established by contract. Section 873 also requires that, to the fullest extent permitted by law, the head of an agency establish an accelerated payment date for prime contractors that subcontract with small businesses, with a goal of 15 days after receipt of a proper invoice, if—

(1) A specific payment date is not established by contract; and

(2) The contractor agrees to make accelerated payments to the subcontractor without any further consideration from, or fees charged to, the subcontractor. The proposed rule implements both aspects of section 873.

The FAR currently addresses providing accelerated payments to small business subcontractors at FAR 32.009 and requires contracting officers to insert the clause at FAR 52.232-40, Providing Accelerated Payments to Small Business Subcontractors, in solicitations and contracts. FAR 52.232-40 requires prime contractors to provide accelerated payments to their small business subcontractors when the Government provides accelerated payments to the prime contractors.

In addition, this rule implements 10 U.S.C. 2307, which includes the same provisions regarding accelerated payments, applicable only to the Department of Defense.

The following summarizes the proposed changes to the FAR:

The policy at FAR 32.009-1 has been expanded to address accelerated payments to small business contractors. A goal of payment within 15 days after receipt of a proper invoice is added, and prime contractors are prohibited from requesting any further consideration from the subcontractor in exchange for the accelerated payments. Section 873 does not specify the number of days for the prime to make accelerated payments to the subcontractor; however, DoD, GSA, and NASA propose, as a matter of policy, that the prime contractor make payments to the small business subcontractor within 15 days of receiving the accelerated payment from the Government, after receipt of a proper invoice and all other required documentation from the small business subcontractor.

These requirements are also incorporated into the clause at FAR 52.232-40, Providing Accelerated Payments to Small Business Subcontractors. For applicability to contracts for the acquisition of commercial items, because this clause is now based on a statutory requirement, it is incorporated into FAR clause 52.212-5, Contract Terms and Conditions Required To Implement Statutes or Executive Orders—Commercial Items, rather than being separately prescribed at FAR 12.301(d).

There are other conforming changes at FAR 12.301, 32.903, 32.906, 52.213-4, and 52.244-6.

To further improve cash flow and access to the Federal marketplace, DoD, GSA, and NASA are considering additional regulatory actions to further broaden the reach of accelerated payments to small business subcontractors and welcome public comment on how this broadening might best be accomplished. This proposed rule flows down the requirement for accelerated payments from the prime contractor to small business subcontractors; the accelerated payment requirement does not flow down to other than small businesses, i.e., large business subcontractors. As drafted, large business subcontractors in the supply chain are not required to receive accelerated payments, and therefore are not required to accelerate payments to their small business subcontractors. Should the rule be expanded to apply the accelerated payment requirement to large business subcontractors in order to reach lower tier small business subcontractors? In other words, should all businesses, large and small, be directed to accelerate payment to their subcontractors, all the way down the tiers? What are the benefits, burdens, and unintended consequences, if any, of this type of expansion?

This rule does not add any new solicitation provisions or clauses. This rule proposes to amend the following FAR clauses: 52.212-5, Contract Terms and Conditions Required To Implement Statutes or Executive Orders-Commercial Items; 52.213-4, Terms and Conditions-Simplified Acquisitions (Other Than Commercial Items); 52.232-40, Providing Accelerated Payments to Small Business Subcontractors; and 52.244-6, Subcontracts for Commercial Items.

The FAR rule makes the 10 U.S.C. 2307 and 31 U.S.C. 3903 statutory changes to a requirement already applicable to contracts at or below the SAT and to contracts for the acquisition of commercial items, including COTS items. The Federal Acquisition Regulatory Council (FAR Council) is proposing, in accordance with 41 U.S.C. 1905, 41 U.S.C. 1906, and 41 U.S.C. 1907, to apply the rule to contracts at or below the SAT and acquisitions of commercial items, including acquisitions for COTS items. The FAR Council will consider public feedback before making a final determination on the scope of the final rule.

41 U.S.C. 1905 governs the applicability of laws to acquisitions at or below the SAT. Section 1905 generally limits the applicability of new laws when agencies are making acquisitions at or below the SAT, but provides that such acquisitions will not be exempt from a provision of law under certain circumstances, including when the FAR Council makes a written determination and finding that it would not be in the best interest of the Federal Government to exempt contracts and subcontracts in amounts not greater than the SAT from the provision of law.

The FAR Council intends to make a determination to apply this statute to acquisitions at or below the SAT. These accelerated payments provide benefits to contractors that are small businesses, to contractors that subcontract with small businesses, and to small business subcontractors by accelerating payments to their prime contractors, without adding any reporting or recordkeeping requirements. Approximately 96 percent of Federal contracts are in amounts at or below the SAT. An exception for contracts and subcontracts at or below the SAT would exclude contracts and subcontracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law.

41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. Section 1906 provides that if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items.

41 U.S.C. 1907 states that acquisitions of COTS items will be exempt from certain provisions of law unless the Administrator for Federal Procurement Policy makes a written determination and finds that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of COTS items.

The FAR Council intends to make a determination to apply this statute to acquisitions for commercial items. The Administrator for Federal Procurement Policy intends to make a determination to apply this statute to acquisitions for COTS items. These accelerated payments provide benefits to contractors that are small businesses, to contractors that subcontract with small businesses, and to small business subcontractors by accelerating payments to their prime contractors, without adding any reporting or recordkeeping requirements. Over 50 percent of Federal contracts are awarded using commercial item procedures. An exception for commercial items, including COTS items, contracts and subcontracts would exclude contracts and subcontracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.

As required by the Congressional Review Act (5 U.S.C. 801-808) before an interim or final rule takes effect, DoD, GSA, and NASA will send the rule and the “Submission of Federal Rules Under the Congressional Review Act” form to each House of the Congress and to the Comptroller General of the United States. A major rule cannot take effect until 60 days after it is published in the Federal Register . This rule is not anticipated to be a major rule under 5 U.S.C. 804.

DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612, because the rule is not implementing any requirements with which small entities must comply. However, an Initial Regulatory Flexibility Analysis (IRFA) has been performed and is summarized as follows:

The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAR Case 2020-007), in correspondence.

This rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 12, 32, and 52 as set forth below:

The revision and addition read as follows:

The revision and addition read as follows:

The revision reads as follows:

Section 824 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328) amends 10 U.S.C. 2372 to require that regulations may not infringe on the independence of a contractor to choose which technologies to pursue in its independent research and development (IR&D) program if the chief executive officer (CEO) of the contractor determines that IR&D expenditures will advance the needs of DoD for future technology and advanced capability.

Section 824 amends 10 U.S.C. 2372 to remove the list that limits the allowability of IR&D costs to seven activities of potential interest to DoD. In lieu of the list of activities of potential interest to DoD, section 824 requires a CEO determination that IR&D expenses will advance the needs of DoD for future technology and advanced capability.

Section 824 also decouples IR&D and bid and proposal (B&P) costs by moving the language pertaining to B&P costs out of 10 U.S.C. 2372 and placing it in the new 10 U.S.C. 2372a. This change ensures that regulations pertaining to B&P costs are separated from regulations pertaining to IR&D costs.

Section 824 also amends 10 U.S.C. 2313a by adding a requirement for the Defense Contract Audit Agency to submit an annual report to Congress of all incurred IR&D and B&P costs of contractors in the prior Government fiscal year.

In accordance with 10 U.S.C. 2372(d), the rule adds language at DFARS 231.205-18(c)(iii)(A)( 1 ) to require contractor CEOs to determine that IR&D expenditures will advance the needs of DoD for future technology and advanced capability. In addition, the rule adds a requirement at DFARS 231.205-18(iii)(c)(A)( 2 ) for major contractors to include a statement in the submission to the Defense Technical Information Center (DTIC) that the CEO of the contractor has made the determination required by 10 U.S.C. 2372. This statement serves as evidence for DoD, when determining whether IR&D costs are allowable. Major contractors are already required to upload IR&D activities in DTIC in order to provide DoD with information on the progress of these activities; this rule simply adds a requirement for those major contractors to include a statement in the DTIC input that the determination required by 10 U.S.C. 2372 has been made as a means for DoD to know that those costs are allowable.

Since the list of seven activities of potential interest to DoD was deleted from 10 U.S.C. 2372, the requirement for the Defense Contract Management Agency (DCMA) administrative contracting officer (ACO) or corporate ACO (CACO) to compare the IR&D activities uploaded in DTIC to the list of seven IR&D activities of potential interest to DoD no longer exists. Therefore, DFARS 242.771-3(a) is modified to remove the ACO and CACO responsibilities for determining if an activity is of potential interest to DoD.

The rule also adds language to clarify that IR&D and B&P costs will be reported independently from other incurred indirect costs in a new paragraph at DFARS 231.205-18(c)(iv). This change corresponds to 10 U.S.C. 2372(a) and 10 U.S.C. 2372a(a), which require allowable IR&D and B&P costs to be reported independently.

The proposed rule decouples IR&D and B&P by stating “IR&D and B&P” instead of “IR&D/B&P” throughout the text based on the amendment to 10 U.S.C. 2372, which segregates IR&D and B&P costs. However, for the purposes of calculating the threshold that requires major contractors to submit IR&D activities and statements regarding the CEO determinations in DTIC, the rule does not change the calculation, which combines IR&D and B&P, to ensure the definition of “major contractor” remains the same.

DFARS 242.771-3(c)(1) is modified in the proposed rule to change the content of the communication from DoD to contractors from the “planned or expected DoD future needs” to the “planned or expected needs of DoD for future technology and advanced capability.” In addition, the responsibilities of the Office of the Under Secretary of Defense for Research and Engineering are expanded to include providing on the DTIC website communities of interest on DoD's future needs. An email address for additional information is also provided. This change ensures that timely and comprehensive information on DoD's planned or expected needs for future technology and advanced capability is being transmitted from DoD to contractors, as required by 10 U.S.C. 2372(c)(2)(A).

To support DCAA's compliance with 10 U.S.C. 2313a, the proposed rule adds a contract clause at DFARS 252.242-70XX, Independent Research and Development and Bid and Proposal Incurred Costs, which requires all contractors with noncommercial awards exceeding the simplified acquisition threshold to provide an incurred cost submission of IR&D and B&P costs for the prior Government fiscal year to a website for DCAA to access. The related clause prescription is at DFARS 242.771-4.

This rule proposes to create a new clause at DFARS 252.242-70XX, Independent Research and Development and Bid and Proposal Incurred Costs. However, this clause does not impact contracts at or below the simplified acquisition threshold or contracts for the acquisition of commercial items, including commercially available off-the-shelf items.

Executive Order (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.

As required by the Congressional Review Act (5 U.S.C. 801-808) before an interim or final rule takes effect, DoD will submit a copy of the interim or final rule with the form, Submission of Federal Rules under the Congressional Review Act, to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule under the Congressional Review Act cannot take effect until 60 days after it is published in the Federal Register . This rule is not anticipated to be a major rule under 5 U.S.C. 804.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

DoD is proposing to amend the DFARS to implement section 824 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328). Section 824 modifies 10 U.S.C. 2372 to require the chief executive officer (CEO) of the contractor to make a determination that independent research and development (IR&D) expenditures will advance the needs of the Department of Defense for future technology and advanced capability. Section 824 also amends 10 U.S.C. 2313a to require the Defense Contract Audit Agency (DCAA) to submit an annual report to Congress on incurred IR&D and bid and proposal (B&P) costs for all contractors in the prior Government fiscal year. The legal basis for the amendment to the DFARS is section 824 of the NDAA for FY 2017.

In accordance with 10 U.S.C. 2372(d), the proposed rule adds language applicable to contractors at DFARS 231.205-18(c)(iii)(A)( 1 ) requiring the CEO of the contractor to determine that IR&D expenditures will advance the needs of DoD for future technology and advanced capability. The proposed rule also adds, at DFARS 231.205-18(iii)(A)( 2 ), a requirement for major contractors to include a statement in the Defense Technical Information Center (DTIC) submission that the CEO of the contractor made the determination required by 10 U.S.C. 2372. To support DCAA's compliance with 10 U.S.C. 2313a, the proposed rule includes a contract clause that requires contractors with noncommercial awards exceeding the simplified acquisition threshold to provide an incurred cost submission of IR&D and B&P costs for the prior Government fiscal year to a website for DCAA to access.

The proposed rule will only apply to small entities that have incurred IR&D costs or B&P costs associated with noncommercial DoD awards exceeding the simplified acquisition threshold or small businesses that have an IR&D program and are considered to be a major contractor, which is defined as having annual expenditures of $1.1 million in combined IR&D and B&P expenditures.

Based on an internal DoD website, on average for FY 2017 through FY 2019, there were 69 other than small business major contractors that submitted IR&D activities to DTIC. DoD does not have a list of other than major contractors or small entities that have IR&D programs. As a result, the burden on the public for developing a statement of the CEO determination in DTIC is expected to be close to 69 contractors. DoD expects a minimal number of the contractors to be small entities.

DoD determined that for FY 2020, a total of 1,869 contractors submitted incurred cost proposals to the Government claiming IR&D or B&P costs. This number represents the estimated number of contractors that will be required under the new clause 252.242-70XX, Independent Research and Development and Bid and Proposal Incurred Costs, to annually report IR&D and B&P costs to the Defense Contract Audit Agency. The ratio of small entities to other than small entities is unknown. However, DoD expects the proposed rule will have minimal impact on small entities.

This proposed rule does include new reporting or recordkeeping requirements for small entities. The annual reporting burden is related to adding the statement that the CEO has made a determination to IR&D project submissions in DTIC and submitting IR&D and B&P incurred costs to a DCAA website. It is expected that, if applicable to a small entity, the CEO of the contractor and an attorney of the contractor would be required to support including a statement that the CEO made a determination with IR&D project submissions in DTIC and a financial analyst of the contractor would be required to support submitting IR&D and B&P incurred costs to a website. As stated previously, it is expected that a minimal number of small entities will be impacted by the major contractor requirement to upload to DTIC a statement that the CEO made a determination as there are currently no known small entities classified as major contractors. It is expected that fewer than 1,869 small businesses would be required to upload IR&D and B&P incurred costs to a DCAA website.

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

There are no known significant alternative approaches to the proposed rule that would meet the requirements of the applicable statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2017-D018), in correspondence.

The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The rule contains information collection requirements that require the approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, DoD plans to submit a request for approval of a new information collection requirement concerning DFARS Case 2017-D018, Treatment of Incurred Independent Research and Development Costs, to OMB.

Based on the proposed revisions to DFARS 231.205-18(c)(iii)(A) (2)(iii), an upward adjustment is being made to the burden hours for reporting per response. Public reporting burden for this collection of information is estimated to average 1 hour per response for submission of the confirming statement into DTIC that the chief executive officer of the contractor has made a determination that the expenditures will advance the needs of DoD future technology and advanced capability. The annual reporting burden is estimated as follows:

Respondents: 69.

Responses per respondent: 90, approximately.

Total annual responses: 6,244.

Hours per response: 1.

Total annual burden hours: 6,244.

Public reporting burden results from the collection of information regarding contractor submission of an annual report of IR&D and B&P costs incurred during performance of any DoD contract in the prior Government fiscal year. Reports are required no later than December 31 each year. Approximately 0.25 hour per response is expected for the contractor to submit incurred IR&D and B&P costs for the prior Government fiscal year to a website provided in the clause that DCAA can access. The annual reporting burden is estimated as follows:

Respondents: 1,869.

Responses per respondent: 1.

Total annual responses: 1,869.

Hours per response: 0.25.

Total response Burden Hours: 467.

Written comments and recommendations on the proposed information collection, including suggestions for reducing this burden, should be sent to Ms. Susan Minson at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503, or email Susan_M_Minson@omb.eop.gov, with a copy to the Defense Acquisition Regulations System, Attn: David E. Johnson, OUSD(A&S)DPC/DARS, Room 3B938, 3060 Defense Pentagon, Washington, DC 20301-3060. Comments can be received from 30 to 60 days after the date of this notice, but comments to OMB will be most useful if received by OMB within 30 days after the date of this notice.

Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the DFARS, and will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.

To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Acquisition Regulations System, Attn: David E. Johnson, OUSD(A&S)DPC/DARS, Room 3B938, 3060 Defense Pentagon, Washington, DC 20301-3060, or email osd.dfars@mail.mil. Include DFARS Case 2017-D018 in the subject line of the message.

Therefore, 48 CFR parts 225, 231, 242, and 252 are proposed to be amended as follows:

This rule proposes to amend DFARS subpart 225.70 to implement section 817 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116-283). Section 817 amends 10 U.S.C. 2533a (commonly known as the “Berry Amendment”), by reducing the dollar threshold at which an acquisition is excepted from the source restrictions of the Berry Amendment from the simplified acquisition threshold (SAT) to an amount not to exceed $150,000.

DFARS 225.7002 identifies the domestic source restrictions of 10 U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring tools, and flags, unless an exception applies. DFARS 225.7002-2, Exceptions, has historically referred to “actions at or below the small purchase threshold,” rather than a specific dollar value, as an exception to the domestic source restrictions of the Berry Amendment. As a result, each time the SAT increased, the exception threshold also increased to align with the new SAT, to include the most recent SAT increase to $250,000. Federal Acquisition Regulation (FAR) Case 2018-004, published July 2, 2020 (85 FR 40064) raised the SAT at FAR 2.101 from $150,000 to $250,000.

The proposed rule implements section 817 of the NDAA for FY 2021 by revising the exception at DFARS 225.7002-2(a) from “at or below the simplified acquisition threshold” to “not exceeding $150,000”. The net effect of this revision will be to increase the number of acquisitions subject to the domestic source requirements at DFARS 225.7002. Conforming changes will also be made at DFARS 225.7002-2(j)(2), 225.7002-3(b) and (c), and the associated contract clause 252.225-7012, Preference for Certain Domestic Commodities.

While the statute reduces the dollar value of the current exception threshold, it also authorizes the adjustment of this statutory threshold for inflation every five years, in accordance with 41 U.S.C. 1908.

This rule proposes to amend the applicability of the following DFARS clauses: (1) 252.225-7006, Acquisition of the American Flag; (2) 252.225-7012, Preference for Certain Domestic Commodities; and (3) 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools. DoD does intend to apply the rule to contracts valued above $150,000 but at or below the SAT. The clauses impacted by the rule are already prescribed for use in solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, including COTS items.

41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the simplified acquisition threshold. It is intended to limit the applicability of laws to such contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the Federal Acquisition Regulatory Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Principal Director, Defense Pricing and Contracting (DPC), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations. DoD does intend to make that determination. Therefore, this rule will apply below the simplified acquisition threshold.

DoD plans to apply the rule to contracts valued above $150,000 but at or below the SAT for the following DFARS clauses: (1) 252.225-7006, Acquisition of the American Flag; (2) 252.225-7012, Preference for Certain Domestic Commodities; and (3) 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools.

Not applying these clauses to contracts valued above $150,000 but at or below the SAT would exclude contracts intended to be covered by this rule and undermine the overarching purpose of the rule, which is to increase the number of acquisitions subject to the domestic source restrictions at DFARS 225.7002 by reducing the volume of procurements subject to the exception at DFARS 225.7002-2(a). The clauses already apply to commercial items, including COTS items.

DFARS 225.7002 identifies the domestic source restrictions of 10 U.S.C. 2533a on food, clothing, fabrics, fibers, hand or measuring tools, and flags, unless an exception at DFARS 225.7002-2 applies. Acquisitions valued below the SAT, currently defined at FAR 2.201 as $250,000, are excepted from the domestic source restrictions of the Berry Amendment.

This rule proposes to implement section 817 of the NDAA for FY 2021 by reducing the exception threshold from the SAT to $150,000. DoD expects the reduction required by section 817 to result in an increase in the number of procurements of domestically sourced end products that are subject to 10 U.S.C. 2533a.

DoD estimates that approximately 970 procurements valued between $150,000 and the SAT of $250,000 are awarded to an estimated 400 entities annually, based upon data obtained from the Federal Procurement Data System (FPDS) for fiscal years 2018 through 2020. Until the final rule for FAR case 2018-004 (85 FR 40064), which increased the SAT from $150,000 to $250,000, became effective on August 31, 2020, these entities were required to comply with domestic source restrictions of the Berry Amendment, including the $150,000 exception threshold. It has only been since August 31, 2020, that these entities have had the benefit of the higher exception threshold ( i.e., the SAT of $250,000). DoD assumes that some of these entities may have adjusted their procurement sources in the short time since the threshold was raised, while some may have continued with their established supply chains. There is currently no data source that would identify the entities that made adjustments and would have to make additional adjustments to return to their previous practices.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.

As required by the Congressional Review Act (5 U.S.C. 801-808) before an interim or final rule takes effect, DoD will submit a copy of the interim or final rule with the form, Submission of Federal Rules Under the Congressional Review Act, to the U.S. Senate, the U.S. House of Representatives, and to the Comptroller General of the United States. A major rule under the Congressional Review Act cannot take effect until 60 days after it is published in the Federal Register . This rule is not anticipated to be a major rule under 5 U.S.C. 804.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the types of end products or components subject to 10 U.S.C. 2533a are generally at a dollar value below the simplified acquisition threshold (SAT) and normally set aside for small entities. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

This rule proposes to amend the DFARS to implement section 817 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Pub. L. 116-283). Section 817 reduces the dollar threshold exception at DFARS 225.7002, which implements 10 U.S.C. 2533a (commonly known as the “Berry Amendment”), from the SAT to an amount not to exceed $150,000.

The objective of the rule is to increase the number of acquisitions subject to the domestic source restrictions at DFARS 225.7002 by reducing the number of procurements subject to the exception at DFARS 225.7002-2(a). The legal basis of the rule is section 817 of the NDAA for FY 2021.

This rule is expected to affect small entities that participate in procurements subject to the domestic source restrictions at DFARS 225.7002. However, DoD does not expect a significant change in the number of actions awarded to small entities resulting from the reduction in the threshold from the current SAT of $250,000 to $150,000. To assess the impact of this reduction, data was obtained from the Federal Procurement Data System (FPDS). According to FPDS for fiscal years 2018 through 2020, DoD awarded an average of approximately 970 applicable actions valued above $150,000 but below the SAT. Of those actions, an average of 200 contract actions were awarded to approximately 72 unique small entities.

The rule does not impose any new reporting, recordkeeping, or compliance requirements.

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

There are no practical alternatives that will accomplish the objectives of the statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2021-D010), in correspondence.

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

Therefore, 48 CFR parts 225 and 252 are proposed to be amended as follows:

The revisions read as follows:

Under section 4(b)(3)(B) of the Act (16 U.S.C. 1531 et seq. ), we are required to make a finding whether or not a petitioned action is warranted within 12 months after receiving any petition for which we have determined contains substantial scientific or commercial information indicating that the petitioned action may be warranted (“12-month finding”). We must make a finding that the petitioned action is: (1) Not warranted; (2) warranted; or (3) warranted but precluded. We must publish a notification of these 12-month findings in the Federal Register .

Section 4 of the Act (16 U.S.C. 1533) and the implementing regulations at part 424 of title 50 of the Code of Federal Regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Lists of Endangered and Threatened Wildlife and Plants (Lists). The Act defines “species” as any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature (16 U.S.C. 1532(16)). The Act defines “endangered species” as any species that is in danger of extinction throughout all or a significant portion of its range (16 U.S.C. 1532(6)), and “threatened species” as any species that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range (16 U.S.C. 1532(20)). Under section 4(a)(1) of the Act, a species may be determined to be an endangered species or a threatened species because of any of the following five factors:

(A) The present or threatened destruction, modification, or curtailment of its habitat or range;

(B) Overutilization for commercial, recreational, scientific, or educational purposes;

(C) Disease or predation;

(D) The inadequacy of existing regulatory mechanisms; or

(E) Other natural or manmade factors affecting its continued existence.

These factors represent broad categories of natural or human-caused actions or conditions that could have an effect on a species' continued existence. In evaluating these actions and conditions, we look for those that may have a negative effect on individuals of the species, as well as other actions or conditions that may ameliorate any negative effects or may have positive effects.

We use the term “threat” to refer in general to actions or conditions that are known to or are reasonably likely to negatively affect individuals of a species. The term “threat” includes actions or conditions that have a direct impact on individuals (direct impacts), as well as those that affect individuals through alteration of their habitat or required resources (stressors). The term “threat” may encompass—either together or separately—the source of the action or condition or the action or condition itself. However, the mere identification of any threat(s) does not necessarily mean that the species meets the statutory definition of an “endangered species” or a “threatened species.” In determining whether a species meets either definition, we must evaluate all identified threats by considering the expected response by the species, and the effects of the threats—in light of those actions and conditions that will ameliorate the threats—on an individual, population, and species level. We evaluate each threat and its expected effects on the species, then analyze the cumulative effect of all of the threats on the species as a whole. We also consider the cumulative effect of the threats in light of those actions and conditions that will have positive effects on the species, such as any existing regulatory mechanisms or conservation efforts. The Secretary determines whether the species meets the definition of an “endangered species” or a “threatened species” only after conducting this cumulative analysis and describing the expected effect on the species now and in the foreseeable future.

The Act does not define the term “foreseeable future,” which appears in the statutory definition of “threatened species.” Our implementing regulations at 50 CFR 424.11(d) set forth a framework for evaluating the foreseeable future on a case-by-case basis. The term “foreseeable future” extends only so far into the future as the Service can reasonably determine that both the future threats and the species' responses to those threats are likely. In other words, the foreseeable future is the period of time in which we can make reliable predictions. “Reliable” does not mean “certain”; it means sufficient to provide a reasonable degree of confidence in the prediction. Thus, a prediction is reliable if it is reasonable to depend on it when making decisions.

It is not always possible or necessary to define foreseeable future as a particular number of years. Analysis of the foreseeable future uses the best scientific and commercial data available and should consider the timeframes applicable to the relevant threats and to the species' likely responses to those threats in view of its life-history characteristics. Data that are typically relevant to assessing the species' biological response include species-specific factors such as lifespan, reproductive rates or productivity, certain behaviors, and other demographic factors.

In conducting our evaluation of the five factors provided in section 4(a)(1) of the Act to determine whether Black Creek crayfish or hairy-peduncled beakrush meet the definition of “endangered species” or “threatened species,” we considered and thoroughly evaluated the best scientific and commercial information available regarding the past, present, and future stressors and threats. We reviewed the petitions, information available in our files, and other available published and unpublished information. Our evaluation may include information from recognized experts; Federal, State, and Tribal governments; academic institutions; foreign governments; private entities; and other members of the public.

The species assessment forms for these species contain more detailed biological information, a thorough analysis of the listing factors, a list of literature cited, and an explanation of why we determined that the species does not meet the Act's definition of an endangered species or a threatened species. A thorough review of the taxonomy, life history, and ecology of the Black Creek crayfish and the hairy-peduncled beakrush is presented in the species' Species Status Assessment reports. This supporting information can be found on the internet at http://www.regulations.gov under the appropriate docket number (see ADDRESSES , above). The following are informational summaries for the findings in this document.

On April 20, 2010, the Service received a petition from the Center for Biological Diversity (CBD), Alabama Rivers Alliance, Clinch Coalition, Dogwood Alliance, Gulf Restoration Network, Tennessee Forests Council, and West Virginia Highlands Conservancy to list 404 aquatic, riparian, and wetland species, including the Black Creek crayfish ( Procambarus pictus ), from the southeastern United States as endangered or threatened species under the Act (CDB 2010, entire). On September 27, 2011, we published a 90-day finding (76 FR 59836) for 374 of the 404 petitioned species, including the Black Creek crayfish, stating the petition presented substantial information that listing the Black Creek crayfish may be warranted, due to the threats of present or threatened destruction, modification, or curtailment of the species' habitat or range and inadequacy of existing regulatory mechanisms. The finding solicited information on, and initiated status reviews for, the 374 species, including the Black Creek crayfish.

On February 27, 2020, CBD filed a complaint alleging, among other things, that the Service failed to make statutorily required 12-month findings for 241 species, including the Black Creek crayfish. The Service moved to dismiss most of the actions, including the 12-month finding claim for the Black Creek crayfish, on May 4, 2020. The motion is fully briefed, and the court has not ruled on it as of July 12, 2021. However, we are effectively mooting the claim by publishing this notification, which fulfils our statutory duty to make a 12-month finding for the Black Creek crayfish.

The Black Creek crayfish is endemic to four northeastern Florida counties (Clay, Duval, Putnam, and St. Johns) in the Lower St. Johns River Basin. This small to medium-sized crayfish has dark claws and a dark carapace with a white or yellowish mid-dorsal stripe, white spots or streaks on its sides, and a rust-colored abdomen. The Black Creek crayfish lives about 16 months and reproduces once during its life cycle. The Black Creek crayfish occurs in flowing, sand-bottomed, tannic-stained streams that contain cool, unpolluted water, and maintain a constant flow of highly oxygenated water (5 to 8 parts per million). Within these streams, Black Creek crayfish require aquatic vegetation and debris for shelter with alternating shaded and open canopy cover where they eat aquatic plants, dead plant and animal material, and detritus.

We have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to the Black Creek crayfish, and we evaluated all relevant factors under the five listing factors, including any regulatory mechanisms and conservation measures addressing these threats. The potential threats affecting the Black Creek crayfish are due to land conversion impacts and from climate change. The threat of land conversion impacts includes water quality and water quantity degradation from urbanization mining, logging, and agriculture, and the threat of climate change primarily is from sea level rise (SLR), and combined effects. These threats can impact the Black Creek crayfish by degrading or inundating its habitat. The effects from these impacts may result in a decrease in habitat quality and quantity across the species' range during some years. However, significant ongoing conservation actions are protecting the species.

Currently, 47% of Black Creek crayfish habitat is protected, including Camp Blanding Joint Training Center (Camp Blanding) conservation agreements. The range of the Black Creek crayfish largely overlaps public lands managed by the Florida Army National Guard, Camp Blanding, and the Florida Forest Service, specifically 2 state forests: Jennings and Etoniah Creek. These lands are wildlife management areas wherein wildlife is managed by the Florida Wildlife Conservation Commission and the Florida Forest Service. Additional conservation lands with occurrence records for Black Creek crayfish include parcels owned by the St. John's River Water Management District (District) and mitigation banks. Management of the upland habitat adjacent to Black Creek crayfish habitat is provided by Camp Blanding and the Florida Forest Service, while the District has regulatory authority regarding water quality.

Upon examining the current trends and future forecast scenarios, we expect that the primary threats—water quality and water quantity degradation due to land conversion, and SLR from climate change—may impact the Black Creek crayfish. But a substantial portion (47 percent) of the habitat is protected (Camp Blanding conservation agreements, Florida Forest Service, and the District), alleviating many of the primary threats to the crayfish. Habitat protection and conservation measures, including measures to manage and protect water quality and water quantity degradation, maintain adequate water conditions and flows that will keep a sufficient number of populations viable to ensure overall species viability into the foreseeable future (30-50 years). In addition, protection of special management zones (SMZs) may reduce its contribution to nonpoint source water pollution. SMZs are meant to provide shade for temperature regulation, a natural vegetation strip, intact ground cover, large and small woody debris, leaf litter, and a variety of tree species and age classes, most of these benefitting Black Creek crayfish. Also, monitoring of SLR by Camp Blanding and the District in protected habitat areas will help inform the Service on the status of the SLR threat. All 19 extant Black Creek crayfish populations are expected to maintain resiliency, redundancy, and representation under examined future scenarios out to 2050 and 10 out to 2070 with conservation measures. We examined the interactions of the white tubercled crayfish ( Procambarus spiculifer ), and while uncertainty still exists, the possibility remains that white tubercled crayfish may have the potential to decrease occupancy and abundance of Black Creek crayfish; however, the best available information indicates that it is likely that the two species co-exist at sites where Black Creek crayfish occur (Service 2020, p.37, 39, Fig. 4-6)). We expect that existing regulatory mechanisms and conservation measures are adequate and would continue to help ameliorate or reduce impacts of threats to the species and protect the Black Creek crayfish and its habitat which would also help the Black Creek crayfish continue to maintain an adequate level of resiliency, representation, and redundancy now and into the foreseeable future (30 to 50 years). For Black Creek crayfish, we considered whether the threats are geographically concentrated in any portion of the species' range at a biologically meaningful scale. We examined the following threats: Land use conversion impacts and climate change, including cumulative effects. Based on the species' response to threats, current resiliency, and predicted future resiliency throughout its range, we found no concentration of threats in any portion of the Black Creek crayfish's range at a biologically meaningful scale. We found that the identified threats act uniformly throughout the range, because it occurs in four northeastern Florida counties (Clay, Duval, Putnam, and St. Johns) in the Lower St. Johns River Basin that are geographically close to each other. Thus, there are no portions of the species' range where the species has a different status from its range-wide status.

After evaluating the best available scientific and commercial information on potential threats acting individually or in combination, we found that all 19 extant Black Creek crayfish populations are expected to maintain resiliency, redundancy, and representation, under examined future scenarios out to 2050, and 10 out to 2070 with conservation measures, in all or a significant portion of the species' range.

Our review of the best available scientific and commercial information regarding the past, present, and future threats to the species indicates that the Black Creek crayfish is not in danger of extinction nor likely to become endangered within the foreseeable future throughout all or a significant portion of its range, and that the Black Creek crayfish does not meet the definition of an endangered species or a threatened species under the Act. Therefore, we find that listing the Black Creek crayfish as an endangered or threatened species under the Act is not warranted at this time. A detailed discussion of the basis for this finding can be found in the Black Creek crayfish species assessment form and other supporting documents (see ADDRESSES , above).

On April 20, 2010, the Service received a petition from CBD, Alabama Rivers Alliance, Clinch Coalition, Dogwood Alliance, Gulf Restoration Network, Tennessee Forests Council, and West Virginia Highlands Conservancy to list 404 aquatic, riparian, and wetland species, including hairy-peduncled beakrush ( Rhynchospora crinipes ), from the southeastern United States as endangered or threatened species under the Act (CDB 2010, entire). On September 27, 2011, we published a 90-day finding (76 FR 59836) for 374 of the 404 petitioned species, including hairy-peduncled beakrush, stating that the petition presented substantial information indicating that listing hairy-peduncled beakrush may be warranted, due to the threats of present or threatened destruction, modification, or curtailment of the species' habitat or range and inadequacy of existing regulatory mechanisms. The finding solicited information on, and initiated status reviews for, the 374 species, including hairy-peduncled beakrush. Hairy-peduncled beakrush is on the Service's National Workplan for a 12-month finding in Fiscal Year 2021.

On February 27, 2020, CBD filed a complaint alleging, among other things, that the Service failed to make statutorily required 12-month findings for 241 species, including the hairy-peduncled beakrush. The Service moved to dismiss most of the actions, including the 12-month finding claim for the hairy-peduncled beakrush, on May 4, 2020. The motion is fully briefed, and the court has not ruled on it as of July 12, 2021. However, we are effectively mooting the claim by publishing this notification, which fulfils our statutory duty to make a 12-month finding for the hairy-peduncled beakrush.

A member of the sedge family (Cyperaceae), hairy-peduncled beakrush is a perennial grass-like herb that occurs solitary or as clumps to dense mats of plants typically 2-3 1/4 feet (60-100 centimeters) tall. Hairy-peduncled beakrush has a broad geographic range within the southeastern United States, spanning nearly 700 miles (over 1,100 kilometers) from southwestern Mississippi to central North Carolina. The species has been found in at least 28 counties in 5 southeastern States: Mississippi (5 counties), Alabama (6 counties), Florida (5 counties), Georgia (10 counties) and North Carolina (2 counties).

Hairy-peduncled beakrush typically occurs on banks and bars along blackwater streams and associated spring runs that are prone to flooding and periodic scouring. Within these systems, plants are often found in peaty silt on streamside shelves or sandy-clay stream bars, but have also occasionally been found rooting on stumps and tree bases as well as in the streambed. The species is an obligate wetland species, meaning that they are almost always found in standing water or soils that are seasonally saturated. Hairy-peduncled beakrush plants typically occur in full sun to partly shady conditions under open to filtered canopies, often along north-south oriented streams. The species' deep, extensive root system provides a strong attachment to the substrate and allows it to withstand strong flood events, which may also provide a competitive advantage over other species with weaker root systems that are more readily washed away during flood events. Likewise, hairy-peduncled beakrush's ability to root at its nodes allows it to withstand being partially buried by sediment deposited during flooding events and facilitates clonal spread. Together, these adaptations to flooding and sedimentation suggest that hairy-peduncled beakrush is not only tolerant of disturbance, but may be disturbance-dependent, with periodic disturbances (such as scouring floods) being required to remove competing vegetation from occupied and unoccupied habitat, thereby allowing the species to thrive and spread locally and disperse more widely.

We have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to hairy-peduncled beakrush, and we evaluated all relevant factors under the five listing factors, including any regulatory mechanisms and conservation measures addressing these stressors. The primary stressors affecting the hairy-peduncled beakrush include sedimentation from development and urbanization, incompatible logging practices, military and recreational activities, sand and gravel mining, and an altered hydrologic regime resulting from climate change and development and urbanization. Sedimentation currently represents a localized threat to hairy-peduncled beakrush. Activities that produce excessive sedimentation may smother plants or otherwise degrade habitats; however, hairy-peduncled beakrush is able to tolerate at least some sediment deposition, as partially buried plants have been observed rooting at their buried nodes. This adaptation limits the threat to hairy-peduncled beakrush from all but the most extreme sedimentation events. Flooding has been suggested as a threat to hairy-peduncled beakrush; however, natural flooding is unlikely a major threat to hairy-peduncled beakrush rangewide in light of its association with systems that are subject to periodic flooding and various other natural disturbances that may contribute to extreme flooding ( e.g., hurricanes, tropical storms), which suggests that the species is adapted to tolerate such periodic disturbances.

Sedimentation and hydrologic regime changes are influenced by development and urbanization, incompatible logging practices, sand and gravel mining, activities on military installations, and right-of-way maintenance; however, most of these threats are considered historical, or occur on a very limited number of sites, or are actively managed and monitored by Federal and State agencies through adequate regulatory protections. In the assessment of hairy-peduncled beakrush current condition, 30 populations (of a total of 39 populations) exhibit moderate to high resiliency, as evidenced by population size, multiple subpopulations, current status and resilience through time, and little evidence of threats. Although changes in the hydrologic regime may occur as a result of climate change, the species is resilient to fluctuating water levels and relies on periodic high flow events to some extent for dispersal of propagules and removal of competing vegetation ( i.e., hairy-peduncled beakrush is a disturbance-dependent species).

Our future scenarios assessed the viability of hairy-peduncled beakrush over a 40-year time period in response to urbanization and hydrological changes. In Scenario 1, current land protection and management are projected to remain unchanged, urbanization continues at the current pace, and changes to the hydrological regime are those predicted under a moderate emissions scenario, representative concentration pathway 4.5 (RCP 4.5). Under this scenario, 37 of 39 populations are predicted to remain at their current levels of resiliency, while 2 populations are expected to exhibit decreased resiliency by 2060. In Scenario 2, current land protection and management are projected to remain unchanged, urbanization increases relative to Scenario 1, and changes to the hydrological regime are those predicted under a higher atmospheric emission scenario (RCP 8.5). Under this scenario, four populations are expected to exhibit decreased resiliency and one population is expected to exhibit increased resiliency, while 34 are predicted to remain at their current levels of resiliency. We expect the species' representation and redundancy to remain high under both future scenarios.

For hairy-peduncled beakrush, we considered whether the threats are geographically concentrated in any portion of the species' range at a biologically meaningful scale. We examined the following threats: Sedimentation and hydrologic regime change, including cumulative effects. Based on the species' adaptation to stressors, current resiliency, and predicted future resiliency throughout its range, we found no concentration of threats in any portion of hairy-peduncled beakrush's range at a biologically meaningful scale. Thus, there are no portions of the species' range where the species has a different status from its range-wide status.

After evaluating the best available scientific and commercial information on potential stressors acting individually or in combination, we found no indication that the combined effects are causing a population-level decline, or that the combined effects are likely to do so in the next 10 to 40 years, in all or a significant portion of the species' range.

Therefore, we find that listing hairy-peduncled beakrush as an endangered species or threatened species under the Act is not warranted. A detailed discussion of the basis for this finding can be found in the hairy-peduncled beakrush species assessment and other supporting documents (see ADDRESSES , above).

We request that you submit any new information concerning the taxonomy of, biology of, ecology of, status of, or stressors to the Black Creek crayfish or hairy-peduncled beakrush to the appropriate person, as specified under FOR FURTHER INFORMATION CONTACT , whenever it becomes available. New information will help us monitor these species and make appropriate decisions about their conservation and status. We encourage local agencies and stakeholders to continue cooperative monitoring and conservation efforts.

A list of the references cited in these petition findings is available on the internet at http://www.regulations.gov in the species assessment form or in the appropriate docket provided above in ADDRESSES , or upon request from the appropriate person, as specified under FOR FURTHER INFORMATION CONTACT .

The primary authors of this document are the staff members of the Species Assessment Team, Ecological Services Program.

The authority for this action is section 4 of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq. ).

Section 4 of the Act (16 U.S.C. 1533) and its implementing regulations in title 50 of the Code of Federal Regulations (50 CFR part 424) set forth the procedures for adding species to, removing species from, or reclassifying species on the Federal Lists of Endangered and Threatened Wildlife and Plants (Lists or List) in 50 CFR part 17. Section 4(b)(3)(A) of the Act requires that we make a finding on whether a petition to add a species to the List ( i.e., “list” a species), remove a species from the List ( i.e., “delist” a species), or change a listed species' status from endangered to threatened or from threatened to endangered ( i.e., “reclassify” a species) presents substantial scientific or commercial information indicating that the petitioned action may be warranted. To the maximum extent practicable, we are to make this finding within 90 days of our receipt of the petition and publish the finding promptly in the Federal Register .

Our regulations establish that substantial scientific or commercial information with regard to a 90-day petition finding refers to credible scientific or commercial information in support of the petition's claims such that a reasonable person conducting an impartial scientific review would conclude that the action proposed in the petition may be warranted (50 CFR 424.14(h)(1)(i)).

A species may be determined to be an endangered species or a threatened species because of one or more of the five factors described in section 4(a)(1) of the Act (16 U.S.C. 1533(a)(1)). The five factors are:

(a) The present or threatened destruction, modification, or curtailment of its habitat or range (Factor A);

(b) Overutilization for commercial, recreational, scientific, or educational purposes (Factor B);

(c) Disease or predation (Factor C);

(d) The inadequacy of existing regulatory mechanisms (Factor D); and

(e) Other natural or manmade factors affecting its continued existence (Factor E).

These factors represent broad categories of natural or human-caused actions or conditions that could have an effect on a species' continued existence. In evaluating these actions and conditions, we look for those that may have a negative effect on individuals of the species, as well as other actions or conditions that may ameliorate any negative effects or may have positive effects.

We use the term “threat” to refer in general to actions or conditions that are known to, or are reasonably likely to, affect individuals of a species negatively. The term “threat” includes actions or conditions that have a direct impact on individuals (direct impacts), as well as those that affect individuals through alteration of their habitat or required resources (stressors). The term “threat” may encompass—either together or separately—the source of the action or condition, or the action or condition itself. However, the mere identification of any threat(s) may not be sufficient to compel a finding that the information in the petition is substantial information indicating that the petitioned action may be warranted. The information presented in the petition must include evidence sufficient to suggest that these threats may be affecting the species to the point that the species may meet the definition of an endangered species or threatened species under the Act.

If we find that a petition presents such information, our subsequent status review will evaluate all identified threats by considering the individual-, population-, and species-level effects and the expected response by the species. We will evaluate individual threats and their expected effects on the species, then analyze the cumulative effect of the threats on the species as a whole. We also consider the cumulative effect of the threats in light of those actions and conditions that are expected to have positive effects on the species—such as any existing regulatory mechanisms or conservation efforts that may ameliorate threats. It is only after conducting this cumulative analysis of threats and the actions that may ameliorate them, and the expected effect on the species now and in the foreseeable future, that we can determine whether the species meets the definition of an endangered species or threatened species under the Act.

If we find that a petition presents substantial scientific or commercial information indicating that the petitioned action may be warranted, the Act requires that we promptly commence a review of the status of the species, and we will subsequently complete a status review in accordance with our prioritization methodology for 12-month findings (81 FR 49248; July 27, 2016).

We note that designating critical habitat is not a petitionable action under the Act. Petitions to designate critical habitat (for species without existing critical habitat) are reviewed under the Administrative Procedure Act and are not addressed here (see 50 CFR 424.14(j)). To the maximum extent prudent and determinable, any proposed critical habitat will be addressed concurrently with a proposed rule to list a species, if applicable.

The petition findings contained in this document are listed in the tables below, and the basis for each finding, along with supporting information, is available on http://www.regulations.gov under the appropriate docket number.