Pursuant to section 217 of the Immigration and Nationality Act (INA), 8 U.S.C. 1187, the Secretary of Homeland Security (the Secretary), in consultation with the Secretary of State, may designate certain countries as Visa Waiver Program (VWP) countries  1 if certain requirements are met. Those requirements include: (1) A U.S. Government determination that the country meets the applicable statutory requirement with respect to nonimmigrant visitor visa refusals for nationals of the country; (2) a U.S. Government determination that the country extends or agrees to extend reciprocal privileges to citizens and nationals of the United States; (3) an official certification that it issues machine-readable, electronic passports that comply with internationally accepted standards; (4) a U.S. Government determination that the country's designation would not negatively affect U.S. law enforcement and security interests; (5) an agreement with the United States to report, or make available through other designated means, to the U.S. Government information about the theft or loss of passports; (6) a U.S. Government determination that the government accepts for repatriation any citizen, former citizen, or national not later than three weeks after the issuance of a final executable order of removal; and (7) an agreement with the United States to share information regarding whether citizens or nationals of the country represent a threat to the security or welfare of the United States or its citizens.

The Immigration and National Act (INA) also sets forth requirements for continued eligibility and, where appropriate, probation and/or termination of program countries.

Prior to this final rule, the designated countries in the VWP were Andorra, Australia, Austria, Belgium, Brunei, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, the Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, San Marino, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan, 2 and the United Kingdom. 3 See 8 CFR 217.2(a).

Citizens and eligible nationals of VWP countries may apply for admission to the United States at U.S. ports of entry as nonimmigrant visitors for a period of ninety days or less for business or pleasure without first obtaining a nonimmigrant visa, provided that they are otherwise eligible for admission under applicable statutory and regulatory requirements. To travel to the United States under the VWP, any person who is not a citizen or national of the United States (hereinafter a “noncitizen”) must satisfy the following:

(1) Be seeking admission as a nonimmigrant visitor for business or pleasure for ninety days or less;

(2) be a national of a program country;

(3) present a machine-readable, electronic passport issued by a designated VWP participant country to the air or vessel carrier before departure;

(4) execute the required immigration forms;

(5) if arriving by air or sea, arrive on an authorized carrier;

(6) not represent a threat to the welfare, health, safety, or security of the United States;

(7) have not violated U.S. immigration law during any previous admission under the VWP;

(8) possess a round-trip ticket, unless exempted by statute or federal regulation;

(9) the identity of the noncitizen has been checked to uncover any grounds on which the noncitizen may be inadmissible to the United States, and no such ground has been found;

(10) certain aircraft operators, as provided by statute and regulation, must electronically transmit information about the noncitizen passenger;

(11) obtain an approved travel authorization via the Electronic System for Travel Authorization (ESTA). For more information about the ESTA, please see 8 CFR 217.5 (regulation effective July 8, 2015), 80 FR 32267 (June 8, 2015), 75 FR 47701 (Aug. 9, 2010);

(12) has not been present, at any time on or after March 1, 2011 in Iraq, Syria, countries designated by the Secretary of State, or countries designated by the Secretary of the Department of Homeland Security, during the period of those countries' designations, in accordance with 8 U.S.C. 1187(a)(12)(D), subject to statutorily delineated exemptions or a waiver authorized by the Secretary; and

(13) waive the right to review or appeal a decision regarding admissibility or to contest, other than on the basis of an application for asylum, any action for removal. See sections 217(a) and 217(b) of the Immigration and Nationality Act (INA), 8 U.S.C. 1187(a)-(b); see also 8 CFR part 217.

The Department of Homeland Security, in consultation with the Department of State, has evaluated Croatia for VWP designation to ensure that it meets the requirements set forth in section 217 of the INA, as amended by section 711 of the Implementing Recommendations of the 9/11 Commission Act of 2007, Public Law 110-53. The Secretary has determined that Croatia has satisfied the statutory requirements for initial VWP designation; therefore, the Secretary, in consultation with the Secretary of State, has designated Croatia as a program country. 4

This final rule adds Croatia to the list of countries authorized to participate in the VWP. Accordingly, beginning December 1, 2021, eligible citizens and nationals of Croatia may apply for admission to the United States at U.S. ports of entry as nonimmigrant visitors for business or pleasure for a period of ninety days or less without first obtaining a nonimmigrant visa, provided that they are otherwise eligible for admission under applicable statutory and regulatory requirements.

Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the normal notice and comment requirements if it finds, for good cause, that they are impracticable, unnecessary, or contrary to the public interest. The final rule merely lists a country that the Secretary of Homeland Security, in consultation with the Secretary of State, has designated as a VWP eligible country in accordance with section 217(c) of the INA, 8 U.S.C. 1187(c). This amendment is a technical change to merely update the list of VWP countries. Therefore, notice and comment for this rule is unnecessary and contrary to the public interest because the rule has no substantive impact, is technical in nature, and relates only to management, organization, procedure, and practice.

This final rule is also excluded from the rulemaking provisions of 5 U.S.C. 553 as a foreign affairs function of the United States because it advances the President's foreign policy goals and directly involves relationships between the United States and its noncitizen visitors. Accordingly, DHS is not required to provide public notice and an opportunity to comment before implementing the requirements under this final rule.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 603(b)), as amended by the Small Business Regulatory Enforcement and Fairness Act of 1996 (SBREFA), requires an agency to prepare and make available to the public, a regulatory flexibility analysis that describes the effect of a proposed rule on small entities ( i.e., small businesses, small organizations, and small governmental jurisdictions) when the agency is required “to publish a general notice of proposed rulemaking for any proposed rule.” Because this rule is being issued as a final rule, on the grounds set forth above, a regulatory flexibility analysis is not required under the RFA.

DHS has considered the impact of this rule on small entities and has determined that this rule will not have a significant economic impact on a substantial number of small entities. The individual noncitizens  5 to whom this rule applies are not small entities as that term is defined in 5 U.S.C. 601(6). Accordingly, there is no change expected in any process as a result of this rule that would have a direct effect, either positive or negative, on a small entity.

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

This amendment does not meet the criteria for a “significant regulatory action” as specified in Executive Order 12866.

The rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, DHS has determined that this final rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

The Department of Homeland Security is modifying the Office of Management and Budget (OMB) Control Number 1651-0111, Arrival and Departure Record, to allow eligible Croatia passport holders to use an ESTA to apply for authorization to travel under the VWP prior to departing for the United States. U.S. Customs and Border Protection (CBP) uses the information to assist in determining if an applicant is eligible for travel under the VWP. The Department is requesting emergency processing of this change to 1651-0111 as the information is essential to the mission of the agency and is needed prior to the expiration of time periods established under the Paperwork Reduction Act of 1995 (PRA). Because of the designation of Croatia for participation in the VWP, the Department is requesting OMB approval of this information collection in accordance with the PRA (44 U.S.C. 3507).

The addition of Croatia to the VWP will result in an estimated annual increase to information collection 1651-0111 of 30,000 responses and 7,500 burden hours. The total burden hours for ESTA, including Croatia, is as follows:

Estimated annual reporting burden: 3,750,000 hours.

Estimated number of respondents: 15,000,000 respondents.

Estimated average annual burden per respondent: 15 minutes.

For the reasons stated in the preamble, DHS amends part 217 of title 8 of the Code of Federal Regulations (8 CFR part 217), as set forth below.

On August 5, 2021 (86 FR 42681), the NRC published a direct final rule amending its regulations in part 72 of title 10 of the Code of Federal Regulations for the NAC International NAC-UMS® Universal Storage System listing in the “List of approved spent fuel storage casks” to include Amendment No. 8 to Certificate of Compliance No. 1015. Amendment No. 8 revises the certificate of compliance to add the storage of damaged boiling-water reactor spent fuel, including higher enrichment and higher burnup spent fuel; change the allowable fuel burnup range; expand the boiling-water reactor class 5 fuel inventory that could be stored in the cask; and revise definitions in the technical specifications. In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on October 19, 2021. The NRC did not receive any comments on the direct final rule. Therefore, this direct final rule will become effective as scheduled.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2021-0726; Project Identifier 2019-CE-059-AD” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Doug Rudolph, Aviation Safety Engineer, General Aviation & Rotorcraft Section, International Validation Branch, FAA, 901 Locust, Room 301, Kansas City, MO. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued AD 2007-02-13, Amendment 39-14900 (72 FR 3355, January 25, 2007) (AD 2007-02-13), for certain serial-numbered Dornier Luftfahrt GmbH (type certificate now held by RUAG Aerospace Services GmbH) Model 228-212 airplanes. AD 2007-02-13 required inspecting the landing gear carbon brake assembly and replacing if necessary. AD 2007-02-13 resulted from AD No. 2006-0352-E, dated November 24, 2006, issued by EASA, which is the Technical Agent for the Member States of the European Union. The FAA issued AD 2007-02-13 to prevent the brake assembly from detaching and malfunctioning, degrading brake performance, and potentially causing loss of control of the airplane during landing or rollout.

Since the FAA issued AD 2007-02-13, EASA superseded its AD and issued EASA AD 2019-0307, dated December 18, 2019 (referred to after this as “the MCAI”), to address an unsafe condition on all RUAG Aerospace Services GmbH (formerly Dornier Luftfahrt GmbH) Model Dornier 228-212 airplanes. The MCAI states:

You may examine the MCAI in the AD docket at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-0726.

The FAA reviewed RUAG Dornier 228 Alert Service Bulletin No. ASB-228-265, Revision 2, dated December 10, 2019. This service information contains procedures for inspecting carbon brake assemblies having part/number (P/N) 5009850-1, P/N 5009850-2, P/N 5009850-3, or P/N 5009850-4 up to revision “F” for tight fit and damage of the bolts and self-locking nuts and for a gap between the brake housing subassembly and the torque tube subassembly, and taking corrective actions if any discrepancies (loose or damaged bolts and self-locking nuts or a gap between the brake housing subassembly and the torque tube subassembly) are found. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in ADDRESSES .

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI and service information referenced above. The FAA is issuing this AD because it determined the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in the service information already described, except as discussed under “Differences Between this AD and the MCAI.” This AD also prohibits installing certain carbon brake assemblies unless they have passed an inspection.

The MCAI has an initial compliance time of before further flight after November 27, 2006 (the effective date of EASA AD 2006-0352-E), while this AD has an initial compliance time of before further flight after the effective date of this AD. The MCAI requires contacting the manufacturer if any discrepancies are found, while this AD requires repair using an approved method or replacement.

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

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

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

There are currently no affected airplanes on the U.S. registry. In the event an affected airplane becomes a U.S.-registered product, the following is an estimate of the costs to comply with this AD.

The FAA estimates that it would take 1 work-hour per airplane to comply with the inspection required by this AD. The average labor rate is $85 per work-hour. Based on these figures, the FAA estimates the cost of this AD to be $85 per airplane per inspection cycle.

The extent of damage found during the required inspection could vary considerably from airplane to airplane. The FAA has no way of estimating how much damage may be found on each airplane or the cost to repair damaged parts.

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2021-0023, dated January 19, 2021 (EASA AD 2021-0023) to correct an unsafe condition for Airbus Helicopters Model AS 350 and AS 355 helicopters.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2020-24-03, Amendment 39-21333 (85 FR 76955, December 1, 2020) (AD 2020-24-03). AD 2020-24-03 applied to Airbus Helicopters Model AS350B, AS350BA, AS350B1, AS350B2, AS350D, AS355E, AS355F, AS355F1, and AS355F2 helicopters with DUNLOP cyclic stick grip manufacturer part number (MP/N) AC66444 with UP/DOWN switches for rescue hoist control installed. The NPRM published in the Federal Register on July 12, 2021 (86 FR 36516). The NPRM was prompted by Airbus Helicopters developing MOD MC20096 and Airbus Helicopters issuing service information for performing this modification on the DUNLOP cyclic stick. The NPRM proposed to continue to require ground testing of the UP/DOWN switches, installing a placard, and revising the existing RFM for your helicopter. The NPRM also proposed to require modifying the electrical wiring of the DUNLOP cyclic stick and removing both the placard and RFM amendment previously installed as specified in EASA AD 2021-0023.

The FAA is issuing this AD to address inadvertent activation of the rescue hoist cable cutter function and consequent detachment of an external load or person from the helicopter hoist, possibly resulting in personal injury, or injury to persons on the ground, as specified in an EASA AD. See EASA AD 2021-0023 for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA received no comments on the NPRM or on the determination of the cost to the public.

The FAA reviewed the relevant data and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. As published in the NPRM, three instances of “EASA AD 2020-0023” have been changed to “EASA AD 2021-0023” in this Final rule. These minor changes correct a typographical error and the FAA has determined that they:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

EASA AD 2021-0023 specifies procedures for installing the placard and revising the Flight Manual to prohibit the use of the UP/DOWN switches of the DUNLOP cyclic stick MP/N AC66444. EASA AD 2021-0023 also specifies procedures for modifying the electrical wiring of the DUNLOP cyclic stick and removing both the placard and RFM amendment previously installed.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

For helicopters with DUNLOP cyclic stick grip MP/N AC66444 with UP/DOWN switches for rescue hoist control installed, this AD requires accomplishing a ground test of the UP/DOWN switches for proper function before each hoist operation, whereas the EASA AD does not. Where EASA AD 2021-0023 refers to its effective date or the effective date of EASA Emergency AD 2020-0217-E, dated October 8, 2020, this AD requires using the effective date of this AD. Where the service information referenced in EASA AD 2021-0023 specifies “work must be performed on the helicopter by the operator,” this AD requires that the work be accomplished by a mechanic that meets the requirements of 14 CFR part 65 subpart D. Where the service information referenced in EASA AD 2021-0023 specifies to discard certain placards and Flight Manual pages (that were required by EASA AD 2020-0217-E), this AD requires removing them instead.

EASA AD 2021-0023 requires operators to “inform all flight crews” of revisions to the RFM, and thereafter to “operate the helicopter accordingly.” However, this AD does not specifically require those actions.

14 CFR 91.9 requires that no person may operate a civil aircraft without complying with the operating limitations specified in the RFM. Therefore, including a requirement in this AD to operate the helicopter according to the revised RFM would be redundant and unnecessary. Further, compliance with such a requirement in an AD would be impracticable to demonstrate or track on an ongoing basis; therefore, a requirement to operate the helicopter in such a manner would be unenforceable.

Where paragraph (4) of EASA AD 2021-0023 allows modifying a Group 2 helicopter into a Group 1 helicopter, this AD also requires accomplishing the requirements of paragraph (g)(1) of this AD. Finally, the service information referenced in EASA AD 2021-0023 requires reporting certain information, whereas this AD does not.

The FAA estimates that this AD affects 390 helicopters of U.S. Registry. The FAA estimates that operators may incur the following costs in order to comply with this AD. Labor costs are estimated at $85 per work-hour.

Accomplishing a ground test of the UP/DOWN switches for proper function takes a minimal amount of time for a nominal cost. Replacing a DUNLOP cyclic stick grip, if required, takes about 2.5 work-hours and parts cost about $2,500 for an estimated cost of $2,713. Installing the placard and revising the existing RFM for your helicopter takes about 0.5 work-hour for an estimated cost of $43 per helicopter and $16,770 for the U.S. fleet.

Modifying the electrical wiring of the DUNLOP cyclic stick takes up to 4 work-hours and parts cost $2,147 for an estimated cost of up to $2,487 per helicopter and $969,930 for the U.S. fleet. Removing the placard and revising the existing RFM for your helicopter takes about 0.5 work-hour for an estimated cost of $43 per helicopter and $16,770 for the U.S. fleet.

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Hélicoptères Guimbal Model CABRI G2 helicopters. The NPRM published in the Federal Register on July 23, 2021 (86 FR 38943). In the NPRM, the FAA proposed to require replacing an affected MR non-rotating scissor link with a serviceable part. The NPRM was prompted by EASA AD 2019-0186, dated July 30, 2019 (EASA AD 2019-0186), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for certain Hélicoptères Guimbal Model CABRI G2 helicopters. EASA advises that, during scheduled maintenance on two helicopters, cracks were found on the MR non-rotating scissor link, part number (P/N) G41-10-200. The suspected root cause for the cracking is corrosion due to stress induced by the mounting of the metal bushings inside the lug hole. To address this issue the manufacturer modified the design of the MR non-rotating scissor link to reinforce the lugs and replace the metal bushings with plastic bushings. Cracking of a MR non-rotating scissor link, if not addressed, could result in failure of that scissor link, resulting in reduced control of the helicopter.

Accordingly, EASA AD 2019-0186 requires replacement of affected MR non-rotating scissor links with serviceable parts.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA received no comments on the NPRM or on the determination of the cost to the public.

These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA about the unsafe condition described in its AD. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these helicopters. Except for minor editorial changes, this AD is adopted as proposed in the NPRM.

The FAA reviewed Guimbal Service Bulletin SB 15-015, Revision C, dated August 27, 2019. This service information specifies procedures for, among other actions, modifying the helicopter by replacing the MR nonrotating scissor link, P/N G41-10-200, with a serviceable part, P/N G41-10-201 (by installing scissor link assembly, P/N G41-12-100, which includes MR non-rotating scissor link, P/N G41-10-201) and torqueing the bolts. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA also reviewed Guimbal Service Bulletin SB 15-015, Revision A, dated July 20, 2015 (SB 15-015, Revision A); and SB 15-015, Revision B, dated July 12, 2019 (SB 15-015, Revision B). SB 15-015, Revision A, describes procedures for replacing a MR non-rotating scissor link, P/N G41-10-200, with P/N G41-12-100, which has a new, improved design. SB 15-015, Revision B, describes the same procedures as SB 15-015, Revision A, and includes a revised compliance time, an updated Situation section, and added an action.

The FAA estimates that this AD affects 32 helicopters of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

The FAA published a notice of proposed rulemaking in the Federal Register (86 FR 38245; July 20, 2021) for Docket No. FAA-2021-0517 to amend the Class E airspace at Newton-City-County Airport, Newton, KS. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6002 and 6005, respectively, of FAA Order JO 7400.11F, dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

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

This amendment to 14 CFR part 71:

Amends the Class E surface airspace at Newton-City-County Airport, Newton, KS by removing the Newton NDB and associated extensions from the airspace legal description;

And amends the Class E airspace extending upward from 700 feet above the surface to within a 6.7-mile (reduced from a 6.8-mile) radius of Newton-City-County Airport; removes the Newton NDB and associated extension from the airspace legal description; and updates the geographic coordinates of the airport to coincide with the FAA's aeronautical database.

This action is due to an airspace review caused by the decommissioning of the Newton NDB which provided navigation information for the instrument procedures this airport.

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

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

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

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

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

The FAA published a notice of proposed rulemaking in the Federal Register (86 FR 38954; July 23, 2021) for Docket No. FAA-2021-0555 to amend Class E airspace extending upward from 700 feet above the surface at Salem Memorial Airport, Salem, MO. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

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

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

This amendment to 14 CFR part 71 amends the Class E airspace extending upward from 700 feet above the at Salem Memorial Airport, Salem, MO, by removing the Maples VORTAC and associated extension from the airspace legal description.

This action is due to an airspace review caused by the decommissioning of the Maples VOR, which provided navigation information for the instrument procedures this airport, as part of the VOR MON Program.

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

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

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

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

Section 1250A(d) of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92) and § 205(d) of the Eastern Mediterranean Security and Energy Act (Div. J. Pub. L. 116-94) (hereinafter “the Acts”) provide that the policy of denial for exports, reexports, or transfers of defense articles on the United States Munitions List (USML) to Cyprus shall remain in place unless the President determines and certifies to the appropriate Congressional Committees not less than annually that: (A) Cyprus is continuing to cooperate with the U.S. Government in anti-money laundering reforms; and (B) Cyprus has taken the steps necessary to deny Russian military vessels access to ports for refueling and servicing. These provisions further provide that the President may waive these limitations for one fiscal year if the President determines that it is essential to the national security interests of the United States to do so.

On April 14, 2020, the President delegated to the Secretary of State the functions and authorities vested in the President by the Acts (85 FR 35797). On May 28, 2021, the Secretary of State, exercising this delegated authority, determined that it was essential to the national security interest of the United States to waive the limitations on non-lethal defense articles and defense services destined for or originating in Cyprus. On September 28, 2020, the Department of State published a temporary rule (RIN 1400-AF14) in the Federal Register , amending the ITAR to update defense trade policy toward the Republic of Cyprus by temporarily removing prohibitions on exports, reexports, retransfers, and temporary imports of non-lethal defense articles and defense services destined for or originating in Cyprus. This rule was effective on October 1, 2020, and expires on September 30, 2021.

On May 28, 2021, again utilizing these delegated functions and authorities, the Secretary of State determined that it is essential to the national security interest of the United States to maintain the temporary removal of restrictions on the export, reexport, retransfer, and temporary import of non-lethal defense articles and defense services destined for or originating in Cyprus. This determination requires the Department to extend the effective period of the temporarily modified text of ITAR § 126.1(r), which specifies the circumstances provided in the Acts in which the policy of denial for exports, reexports, retransfers, and temporary import of non-lethal defense articles and defense services destined for or originating in the Republic of Cyprus will not apply.

The expiration date of the temporary final rule will remain in effect through September 30, 2022, unless modified.

The Department of State is of the opinion that controlling the import and export of defense articles and services is a military or foreign affairs function of the United States Government and that rules implementing this function are exempt from sections 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act. Since this temporary rule is exempt from 5 U.S.C. 553, the provisions of § 553(d) do not apply to this rulemaking. Therefore, this temporary rule is effective upon publication.

Since this temporary rule is exempt from the provisions of 5 U.S.C. 553, there is no requirement for an analysis under the Regulatory Flexibility Act.

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

This amendment has been found not to be a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996.

This rulemaking will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, the Department has determined that this rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this rulemaking.

Executive Orders 12866 and 13563 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributed impacts, and equity). These executive orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Because the scope of this temporary rule implements a governmental policy increasing defense trade with a country, and does not impose additional regulatory requirements or obligations on the public, the Department believes costs associated with this temporary rule will be minimal. The Department also finds that any costs of this rulemaking do not outweigh the foreign policy benefits, as described in the preamble. This rule has been designated non-significant by the Office of Information and Regulatory Affairs under Executive Order 12866 Sec. 3(d)(2).

The Department of State reviewed this rulemaking in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

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

This temporary rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

The 2020 Rule, as published, amends a number of provisions adopted by ONRR in the 2016 Valuation Rule and the 2016 Civil Penalty Rule relating to the valuation of oil and gas produced from Federal leases for royalty purposes; the valuation of coal produced from Federal and Indian leases for royalty purposes; and the assessment of civil penalties. 86 FR 4612. The 2020 Rule amended the following portions of ONRR's valuation regulations that were adopted via the 2016 Valuation Rule in the following ways:

1. Deepwater gathering—codifies the principles of the Deepwater Policy to allow certain gathering costs to be deducted as part of a lessee's transportation allowance for Federal oil and gas produced on the OCS at depths greater than 200 meters.

2. Extraordinary processing allowances—reinstates a lessee's ability to apply for approval to claim an extraordinary processing allowance for Federal gas in situations where the gas stream, plant design, and/or unit costs are extraordinary, unusual, or unconventional relative to standard industry conditions and practice.

3. Index to be used in index-based valuation option—lowers the applicable index from the highest bidweek price to the average bidweek price.

4. Percentage deduction allowable for transportation in index-based valuation option—increases the percentage reduction to index stated in the 2016 Valuation Rule to reflect an average of more recently reported transportation cost data.

5. Arm's-length valuation option—extends the index-based valuation option (previously allowed in non-arm's-length sales) to arm's-length Federal gas sales.

6. Default provision—eliminates the default provision and references thereto from the Federal oil and gas and Federal and Indian coal regulations, which provision established criteria explaining how ONRR would exercise the Secretary's authority to establish royalty value when typical valuation methods are unavailable, unreliable, or unworkable.

7. Misconduct—eliminates the definition of “misconduct.”

8. Signed contracts—eliminates the requirement that a lessee have contracts signed by all parties.

9. Citation to legal precedent—eliminates the requirement to cite legal precedent when seeking a valuation determination.

10. Valuation of coal based on electricity sales—eliminates the requirement to value certain Federal and Indian coal based on the sales price of electricity.

11. Coal cooperative—removes the definition of “coal cooperative” and the method to value sales between members of a “coal cooperative” for Federal and Indian coal.

12. Non-substantive corrections—amends various regulations by making non-substantive corrections.

The 2020 Rule amended the following provisions of ONRR's civil penalty regulations that were adopted in the 2016 Civil Penalty Rule in the following ways:

1. Facts considered in assessing penalties for payment violations—specifies that ONRR considers unpaid, underpaid, or late payment amounts in the severity analysis for payment violations.

2. Consideration of aggravating and mitigating circumstances—specifies that ONRR may consider aggravating and mitigating circumstances when calculating the amount of a civil penalty.

3. Conforming civil penalty regulations to a court decision—eliminates 30 CFR 1241.11(b)(5), which permitted an ALJ to vacate a previously-granted stay of an accrual of penalties if the ALJ later determined that a violator's defense to a notice of noncompliance or assessment of civil penalties was frivolous.

The 2020 Rule has not, however, gone into effect. See 86 FR 9286 and 86 FR 20032.

The Proposed Withdrawal Rule described the procedural history of ONRR's publication of the Proposed 2020 Rule, the 2020 Rule, the First Delay Rule, and the Second Delay Rule. See 86 FR 31197-31198. ONRR published the Proposed 2020 Rule on October 1, 2020. On January 15, 2021, ONRR published the 2020 Rule. The effective date of the 2020 Rule was originally February 16, 2021.

On January 20, 2021, two memoranda were issued, one by the Assistant to the President and Chief of Staff and one by OMB, which directed agencies to consider a delay of the effective date of rules published in the Federal Register that had not yet become effective and to invite public comment on issues of fact, law, and policy raised by those rules. 86 FR 7424.

On February 12, 2021, ONRR published the First Delay Rule which delayed the effective date of the 2020 Rule by 60 days and opened a 30-day comment period on the facts, law, and policy underpinning the 2020 Rule as well as on the impact of a delay in the effective date of the 2020 Rule. After the close of the First Delay Rule's comment period, ONRR determined that a second delay of the 2020 Rule's effective date was needed. Thus, on April 16, 2021, ONRR published a second final rule which further delayed the effective date until November 1, 2021.

ONRR published the Proposed Withdrawal Rule on June 11, 2021. The Proposed Withdrawal Rule invited comment on a complete withdrawal of the 2020 Rule as well as potential alternatives. See 86 FR 31215. The Proposed Withdrawal Rule also requested comments pertaining to the substance or merits of the 2020 Rule and the regulatory scheme it replaced. Id.

In response to the Proposed Withdrawal Rule, ONRR received ten comment submissions and 151 pages of new comment materials from oil, gas, and coal trade associations and representatives, public interest groups, and State entities. After consideration of the public comment and further analysis by the agency, ONRR publishes this final rule pursuant to the authority delegated to it. See 30 U.S.C. 189 (MLA); 30 U.S.C. 1751 (FOGRMA); 43 U.S.C. 1334 (OCSLA); See S.O. 3299, sec. 5; and S.O. 3306, sec. 3-4.

After completing a review of the regulatory history and the public comment submissions received, ONRR determined that the defects discussed below require withdrawal of the 2020 Rule. These defects necessitating withdrawal of the 2020 Rule include, among others, (1) an inadequate comment period, (2) absence of discussion of alternatives, (3) lack of reasoned explanations for many of the amendments proposed in that rule, (4) inadequate justification for changes in recently adopted policies reflected in the 2016 Valuation Rule, and (5) flawed economic analysis. ONRR continues to consider and evaluate whether some of the provisions in the now withdrawn 2020 Rule should be adopted in the future. ONRR anticipates re-proposing some of these provisions, particularly ones to amend the 2016 Civil Penalty Rule, in the near future. If ONRR does so, it will avoid the defects that permeated the rulemaking process that resulted in the 2020 Rule and which necessitate the withdrawal of that Rule. Thus, DOI has determined to withdraw the 2020 Rule and to begin any new rulemaking in a manner that avoids the defects described herein.

Several years ago, ONRR amended the 30 CFR part 1206 regulations when it adopted the 2016 Valuation Rule. See 81 FR 43338. Though the 2016 Valuation Rule followed a public comment period of 120 days, the 2020 Rule followed a 60-day public comment period. In litigation construing ONRR's adoption of the 2017 Repeal Rule, the United States District Court for the Northern District of California found that ONRR did not provide meaningful opportunity for comment when it repealed the 2016 Valuation Rule without a comment period of commensurate length to the 2016 Valuation Rule's public comment period. California v. U.S. Dep't of the Interior, 381 F. Supp. 3d 1153, 1177-78 (N.D. Cal. 2019). Specifically, the District Court found that the 30-day comment period used for the 2017 repeal of the 2016 Valuation Rule was too brief when ONRR had a much longer comment period for the adoption of the 2016 Valuation Rule—approximately 120 days. Id.

While California is a decision by a tribunal of inferior jurisdiction and not binding on litigants who did not appear in that case, ONRR was a party to the case. Because ONRR did not appeal the California case, it is bound by the decision in a manner not applicable to other Federal agencies and bureaus. Here, though ONRR allowed for more than 30 days of comment on the 2020 Rule, ONRR provided a 60-day comment period on the Proposed 2020 Rule when the 2016 Valuation Rule was adopted after a 120-day comment period. ONRR needed to provide the public with more than a 60-day comment period for review and comment on the 2020 Rule even though some of the amendments may be less complex or controversial than others because the public needed time to consider the lengthy rulemaking history dating back to the 2016 Valuation Rule and how the amendments interrelate. ONRR's decision to combine various oil, gas, and coal valuation amendments with civil penalty amendments into one rulemaking, when previously it had addressed many of these topics in separate rulemakings in the 2016 Valuation Rule and 2016 Civil Penalty Rule, further added to the necessary review and comment time. Thus, ONRR must withdraw the 2020 Rule.

Public Comment: A commenter stated that the 2020 Rule did not rescind the entire 2016 Valuation Rule or fully reinstate the prior regulations.

ONRR Response: The 2020 Rule, while not fully repealing the 2016 Valuation Rule, repealed nearly all the revenue-impacting provisions adopted in the 2016 Valuation Rule. Thus, the 2020 Rule is fairly considered a targeted repeal of many of the substantive, revenue-impacting provisions of the 2016 Valuation Rule. Because ONRR is uniquely bound by California and most of the amendments have a lengthy, complex rulemaking history, ONRR should have provided the public with a comment period of commensurate length with respect to its targeted repeal of the substantive provisions of the 2016 Valuation Rule as was employed when those provisions were adopted in the 2016 Valuation Rule. This is especially the case since ONRR combined valuation and civil penalty amendments together in the 2020 Rule.

Public Comment: Multiple commenters stated that the public had sufficient notice and opportunity to comment on the 2020 Rule. The commenters stated that the Proposed Withdrawal Rule failed to acknowledge that the Proposed 2020 Rule was available on ONRR's website for almost two months prior to its publication in the Federal Register . The commenters stated that, with the additional time factored in, the public had approximately 115 days to comment on the 2020 Rule, similar to the 120-day comment period provided for the 2016 Valuation Rule.

ONRR Response: There is no legal authority supporting a conclusion that publication on ONRR's website can be substituted, in whole or in part, for the notice required under the APA. See 5 U.S.C. 553(b) (stating that, with only limited exceptions not applicable here, “notice of proposed rulemaking shall be published in the Federal Register ”). Moreover, there is no demonstration that the general public was perusing ONRR's website for advance notice of a proposed rule instead of relying on the traditional and statutorily-authorized method of notice in the Federal Register . In addition, the public was unable to submit comments for ONRR's review during the 55 days the draft was available only on ONRR's website. The comment period for the 2020 Rule did not open until its publication in the Federal Register and was only open for a 60-day period. Therefore, the commenters' assertions do not adequately consider the notice and comment requirements under the APA. See 5 U.S.C. 553(b); see also California, 381 F. Supp. at 1177 (finding legal deficiencies in a comment period for ONRR's withdrawal rule that was substantially shorter than the comment period employed when ONRR adopted the rule).

The Proposed 2020 Rule did not demonstrate that ONRR considered alternatives to the repeal of the provisions adopted via the 2016 Valuation Rule or the provisions adopted via the 2016 Civil Penalty Rule. Although the Proposed 2020 Rule solicited comment on alternatives, that alone was not sufficient since ONRR had to comply with the requirements of the California case. According to California, ONRR needed to discuss alternatives when adopting the 2020 Rule because, as discussed herein, ONRR was attempting, through the 2020 Rule, to repeal most of the substantive provisions adopted in 2016. California, 381 F. Supp. 3d at 1168-69. The 2020 Rule should have discussed alternatives. For example, ONRR should have discussed alternatives to the substantive, revenue impacting provisions instead of simply reversing course and reinstating a deepwater gathering policy (which had been overturned by the 2016 Valuation Rule), reinstating extraordinary processing allowances (which had been repealed by the 2016 Valuation Rule), and making changes to the index-based pricing options (which had been discussed but rejected in the 2016 Valuation Rule). Likewise, instead of merely repealing the default provision, the definition of misconduct, the requirement for signatures on contracts, and the requirement to cite legal precedent in requests for valuation determinations, ONRR should have discussed other alternatives which could have included further amendment of the existing provisions or amendments to related provisions.

These shortcomings resemble ONRR's 2017 attempt to repeal the 2016 Valuation Rule, where the United States District Court for the Northern District of California found that ONRR did not discuss alternatives to a full repeal of the 2016 Valuation Rule and explained that an agency must discuss alternatives even if the agency is repealing less than an entire rulemaking. See California, 381 F. Supp. 3d at 1168-69; Yakima Valley Cablevision, Inc. v. F.C.C., 794 F.2d 737, 746 n. 36 (D.C. Cir. 1986).

With respect to the repeal of the two coal provisions, ONRR notes that the position taken in the 2020 Rule is consistent with, but not identical to, the position taken by the Federal defendants in the Cloud Peak case, specifically that the coal cooperative provisions and the provisions providing for valuation of certain coal sales based on electricity are defective. See Cloud Peak Energy Inc. v. U.S. Dep't of the Interior, 415 F. Supp. 3d 1034 (D. Wyo. 2019). However, on September 8, 2021, the United States District Court for the District of Wyoming issued a ruling on the merits of the Cloud Peak petitions, which ruling renders moot the portions of the 2020 Rule applicable to Federal and Indian coal.

Public Comment: A commenter stated that ONRR's Proposed Withdrawal Rule fails to cite any legal support for its assertion that the APA requires an analysis of the alternatives to a repeal of regulations. The commenter also stated that ONRR failed to quantify the amount of discussion required to meet this standard. The commenter asserted that ONRR's reliance on California is unhelpful to its position because, according to the commenter, the case is currently under appeal at the U.S. Court of Appeals for the Ninth Circuit. The commenter also argued that the case law relied upon by ONRR is inapplicable in this instance. More specifically, the commenter stated that the California case primarily focused on rule repeals. The commenter further stated that the 2020 Rule did not repeal the entire 2016 Valuation Rule, but instead modified only some of the regulations promulgated through the 2016 Valuation Rule.

Another commenter noted appreciation for the alternatives provided in the Proposed Withdrawal Rule. However, this commenter stated that a full withdrawal of the 2020 Rule is necessary due to the legal and procedural deficiencies underpinning the 2020 Rule.

ONRR Response: As shown in the Proposed 2020 Rule, ONRR cited authority, including California, 381 F. Supp. 3d at 1168-69, that supports the requirement that ONRR must discuss alternatives due to the unique factual circumstances of this rule, its attempted repeal of the 2016 Valuation Rule, and the California decision. See also DHS v. Regents of the Univ. of Cal., 140 S. Ct. 1891, 1913-15 (2020) (discussing the requirement to consider alternatives). In addition, the commenter's statement regarding the status of the California litigation is incorrect. California is a final decision, binding on ONRR, because no party to that case appealed any of the District Court's decisions, including the final merits decision (dated March 29, 2019).

The Proposed 2020 Rule did not fully explain why the amendments were being proposed. ONRR needed to provide a reasoned explanation for repealing most of the substantive provisions adopted in 2016 Valuation Rule. The California Court noted a similar flaw in ONRR's 2017 proposal to repeal the 2016 Valuation Rule, finding that ONRR did not identify the reasons supporting its proposed repeal. 381 F. Supp. 3d at 1173-74 (“The Court concludes that, by failing to provide the requisite information to adequately apprise the public regarding the reasons the ONRR was seeking to repeal the Valuation Rule in favor of the former regulations it had just replaced, the ONRR effectively precluded interested parties from meaningfully commenting on the proposed repeal. The Court therefore concludes that Federal Defendants violated the APA by failing to comply with the notice and comment requirement.”) (citations omitted). Specifically, ONRR's Proposed 2020 Rule lacked the full statement of the reasons why ONRR was both proposing to return to some of the “historical practices” and suggesting other changes that were eventually adopted by the 2020 Rule, most of which targeted the changes adopted in the 2016 Valuation Rule and 2016 Civil Penalty Rule. While the Proposed 2020 Rule identified the proposed changes, discussed the anticipated economic impact of the changes, and set forth the language of the proposed amendments, ONRR did not fully discuss why it was repealing most of the substantive provisions adopted in 2016 Valuation Rule. Cf. 85 FR 62056-62062 with 86 FR 4617-4640. ONRR needed to provide such an explanation in light of the California case, the lengthy and complex rulemaking history, and the repeal of most of the substantive provisions adopted in 2016 Valuation Rule. Moreover, for the changes that were reverting to “historical practices” ( i.e., those existing before the 2016 Valuation Rule was adopted), ONRR did not fully explain why it was reverting to practices it had rejected in its last substantive rulemaking. Thus, the Proposed 2020 Rule did not provide sufficient notice of the reasons for the 2020 Rule. As such, the public was deprived of a meaningful opportunity to comment.

Public Comment: A commenter stated that frequent rule changes create confusion and unnecessary cost within the regulated community.

ONRR Response: While ONRR understands there may be confusion caused by the recent change in requirements due to the successive adoption of the 2016 Valuation Rule, publication of the 2020 Rule, and now this withdrawal, ONRR notes that the 2020 Rule has never gone into effect and no company has ever been required to report thereunder. ONRR also notes that the 2016 Valuation Rule has been in effect for a relatively short period of time. Withdrawing the 2020 Rule will avoid additional rule changes until such time as the public has had adequate opportunity to review and comment on any proposed amendments and ONRR has considered the associated costs of any changes to the regulated community.

Public Comment: Some commenters agreed with ONRR's analysis in the Proposed Withdrawal Rule, agreeing that the 2020 Rule lacked evidentiary support and a reasoned justification for the rulemaking.

ONRR Response: ONRR agrees. For the reasons stated in the Proposed Withdrawal Rule and herein, the withdrawal of the 2020 Rule is appropriate.

At the time the Proposed 2020 Rule was published, the 2016 Valuation Rule was in force only from March 29, 2019, when the repeal of the 2016 Valuation Rule was overturned, to October 1, 2020, and full compliance with the 2016 Valuation Rule was delayed by the series of Dear Reporter letters to October 1, 2020. Given that the Proposed 2020 Rule was, in many instances, an attempt to return to the valuation rules that existed prior to the 2016 Valuation Rule, ONRR should have included justifications for the proposed changes in the Proposed 2020 Rule to allow for public comment thereon. In addition, ONRR should have explained the inconsistencies between the 2016 Valuation Rule and the amendments described in the Proposed 2020 Rule and adequately explained its potential rejection of the position under which the agency and the regulated public had been operating for only a brief period of time. California, 381 F. Supp. 3d at 1173-74.

For example, the 2016 Valuation Rule discussed, but rejected, extending the index-based valuation option to arm's-length sales of gas. 81 FR 43347. The 2020 Rule did not adequately explain its change in position to adopt a provision rejected in the 2016 Valuation Rule. Similarly, the 2016 Valuation Rule rejected the request to use average bidweek prices for the index-based valuation option. Id. When it was published, the 2020 Rule took the position that the average bidweek price should be used but failed to explain why the change in position was warranted after being rejected by the 2016 Valuation Rule. Additionally, the 2016 Valuation Rule established that any movement of bulk production from the wellhead to a platform offshore is gathering and not transportation and effectively rescinded the Deepwater Policy. See 81 FR 43340. The 2020 Rule, however, allowed a lessee producing in waters deeper than 200 meters to deduct the costs incurred in gathering to be deducted as part of its transportation allowance. 86 FR 4613, 4622-4624. The 2020 Rule did not explain why ONRR was adopting a position so recently rejected in the 2016 Valuation Rule.

Because ONRR failed to explain, in the Proposed 2020 Rule, its reasons for changing rules adopted in 2016 and only belatedly did so in the 2020 Rule, the 2020 Rule is defective under the APA. See California, 381 F. Supp. 3d at 1166-68.

As discussed in the Economic Analysis of this Final Rule, the economic analyses set forth in the Proposed 2020 Rule and the 2020 Rule were flawed. See Section V, infra. The numerous flaws in the economic analysis in the Proposed 2020 Rule and the 2020 Rule could have a direct impact on the changes made relative to the transportation allowances allowed under 30 CFR 1206.141(c)(1)(iv) and 1206.142(d)(1)(iv) if a lessee elects optional index-based reporting. Accordingly, the 2020 Rule should be withdrawn in order to allow ONRR to propose changes to its valuation rules that are based on sound economic analysis.

Public Comment: Multiple commenters stated that the Proposed Withdrawal Rule does not justify a full withdrawal of the 2020 Rule. According to the commenters, the Proposed Withdrawal Rule did not provide ONRR's rationale for the withdrawal of the 2020 Rule's revenue-neutral amendments, such as the default provision, coal valuation, and civil penalties amendments. One commenter suggested that ONRR provide another opportunity for notice and comment before proceeding with a full withdrawal.

ONRR Response: ONRR has considered the commenters' statements and disagrees. Upon careful review, the defects of the 2020 Rule, including the lack of adequate comment period (Section II.A), the inadequate discussion of alternatives (Section II.B), the lack of reasoned explanation (Section II.C), and the inadequate justification for change in recently adopted policy (Section II.D) necessitate the withdrawal of the rule. As stated above, ONRR has the present intention to open a new rulemaking process with respect to some provisions that were adopted in the 2020 Rule.

Citing now-withdrawn E.O.s and S.O.s, the 2020 Rule adopted the deepwater gathering allowance, extraordinary processing allowance, and amendments to index-based valuation for Federal oil and gas production (“revenue-impacting amendments”) to incentivize oil and gas production. 86 FR 4614-4615. ONRR is withdrawing these revenue-impacting amendments for the reasons identified in Section II above and the additional reasons set forth in this section.

ONRR was formed when the Secretary reorganized the former MMS into BOEM, BSEE, and ONRR. See S.O. 3299 (Aug. 29, 2011). This reorganization was to “improve the management, oversight, and accountability of activities on the [OCS]; ensure a fair return to the taxpayer from royalty and revenue collection and disbursement activities; and provide independent safety and environmental oversight and enforcement of offshore activities.” Id. at Sec. 1. As part of this reorganization, ONRR assumed the royalty and revenue management functions of MMS, “including, but not limited to, royalty and revenue collection, distribution, auditing and compliance, investigation and enforcement, and asset management for both onshore and offshore activities . . . .” Id. at Sec. 5. Consistent with these responsibilities, ONRR promulgated detailed regulations governing mineral royalty reporting, valuation, auditing, collection, and disbursement. See 30 CFR Chapter XII.

BLM, BOEM, and BSEE, on the other hand, are primarily responsible for mineral leasing functions, such as awarding leases, setting royalty rates, and granting royalty relief when appropriate. 86 FR 31201. This royalty relief authority originates in the MLA and OCSLA. For onshore leases, the MLA authorizes the Secretary to “reduce the royalty on an entire leasehold . . . whenever in his judgment it is necessary to do so in order to promote development, or . . . the leases cannot be successfully operated under the terms provided therein.” 30 U.S.C. 209. For offshore leases, OCSLA authorizes the Secretary to “reduce or eliminate any royalty” to “promote increased production on the lease area.” 43 U.S.C. 1337(a)(3). To implement the Secretary's royalty relief authority, BLM and BSEE promulgated regulations requiring detailed technical and economic information for each lease or lease area for which royalty relief is sought. See 30 CFR part 203; 76 FR 64432, 64435 (Oct. 18, 2011) (for offshore leases, stating that “BSEE is responsible for the regulatory oversight of need-based royalty relief awarded after lease issuance and the tracking of all royalty-free production.”); 43 CFR 3103.4-1(b)(1) (for onshore leases, requiring that an operator file a relief application with the appropriate BLM office for BLM's consideration).

ONRR departed from its traditional role in the DOI in seeking to incentivize other oil and gas development and production through the revenue-impacting amendments. See 86 FR 31200. This was unwarranted because BLM, BOEM, and BSEE have primary authority, experience, and expertise to determine when royalty relief is needed for individual leases or lease areas to promote development or increase production. Id. at 31201. These entities review and consider royalty relief applications and can grant targeted royalty relief where needed. See, e.g., Special Case Royalty Relief, https://www.bsee.gov/what-we-do/conservation/gulf-of-mexico-deepwater-province/special-case-royalty-relief-overview. The 2020 Rule's revenue-impacting amendments, in contrast, are overbroad because those amendments apply to all leases, including highly profitable leases and lease areas that are being produced or will be developed and produced even without the incentives contained in the 2020 Rule. Id. This global reduction of royalties on profitable oil and gas production for the purpose of incentivizing other development and production undermines and conflicts with the royalty rate setting and royalty relief functions of BLM, BSEE, and BOEM and exceeds ONRR's expertise and area of delegated authorities.

Although the 2020 Rule cited certain E.O.s and S.O.s as a basis for incentivizing production, these E.O.s and S.O.s, before they were revoked, expressly required that they be implemented consistent with applicable law. See, e.g., E.O. 13783, Sec. 8(b). As discussed above, the MLA and OCSLA, and BOEM and BSEE's regulations, authorize targeted royalty relief for a lease or lease area. The revenue-impacting amendments are inconsistent with this targeted royalty relief because these amendments apply to all production, including production in highly profitable areas. Further, the E.O.s and S.O.s upon which the 2020 Rule was premised were revoked prior to the effective date of the 2020 Rule. See E.O. 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, Sec. 7 (Jan. 20, 2021) (revoking E.O.s 13783 and 13795); E.O. 13992, Revocation of Certain Executive Orders Concerning Federal Regulation, Sec. 2 (Jan. 20, 2021) (revoking E.O. 13892); and S.O. 3398, Sec. 4 (Apr. 16, 2021) (revoking S.O.s 3350 and 3360). Thus, the global incentivization of production exceeded ONRR's delegated authority and should not have been cited as a basis for the 2020 Rule. 86 FR 31200.

Further, regardless of whether ONRR has a role to play in the DOI in incentivizing oil and gas production, ONRR still would withdraw the amendments because there is insufficient basis to conclude that the amendments would maintain or incentivize oil and gas production in the United States above levels that would occur in their absence. 86 FR 31201. Many factors, such as oil and gas prices, national and international supply, market forecasts, alternative energy sources, credit markets, and competition, play a role in decisions on oil and gas development and production. The 2020 Rule fails to cite an economic study or contain an economic analysis demonstrating that the amendments would incentivize higher levels of oil and gas production from Federal lands. Nor does the 2020 Rule demonstrate that the royalties paid on any additional oil and gas production will offset the reduction in royalties attributable to the deepwater gathering allowance, extraordinary processing allowance, and amendments to the index-based valuation option contained in the 2020 Rule.

Public Comment: A commenter stated that ONRR departed from its primary accounting and auditing role in seeking to incentivize development and production. This commenter pointed to the long-held policy that gathering costs are considered costs of placing gas into marketable condition. This commenter supports withdrawal of the allowance to restore taxpayer protections, uphold valuation standards, and prevent the loss of hundreds of millions of dollars in royalty revenue over the next decade.

ONRR Response: ONRR acted outside of its traditional accounting and auditing role in seeking to incentivize oil and gas development and production.

Public Comment: A commenter stated that 2020 Rule was premised in part on a drop in commodity prices, that commodity prices have since recovered, and that commodity prices cannot be a basis for consistent Federal policy.

ONRR Response: In general, it is not advisable for ONRR to amend royalty valuation regulations based on temporary fluctuations in commodity prices. FOGRMA directs the Secretary to maintain a comprehensive inspection, collection, and fiscal and production accounting and auditing system that: (1) Accurately determines mineral royalties, interest, and other payments owed, (2) collects and accounts for such amounts in a timely manner, and (3) disburses the funds collected. See 30 U.S.C. 1701 and 1711. ONRR performs these mineral revenue management responsibilities for the Secretary. See S.O. 3299. Under its delegated authority, ONRR's function is to ensure fair return ( i.e., fair value) for the taxpayer from royalty and revenue collection and disbursement activities. Id. It has no statutory mandate or delegated authority to change its valuation regulations to account for fluctuations in commodity prices. The valuation regulations already account for changes in commodity prices because valuation often is based on the prices received for the mineral production, and in instances when the price received is lower, the dollar amount of the royalty obligation is lower. BLM, BOEM, and BSEE have authority to and are better positioned to address temporary drops in commodity prices when needed to incentive oil and gas development or production.

The 2020 Rule adopted a deepwater gathering allowance for the stated purpose of incentivizing deepwater oil and gas development and production. See 86 FR 4654. The allowance mirrors the Deepwater Policy that was expressly overturned by the 2016 Valuation Rule. ONRR is withdrawing the deepwater gathering allowance for the reasons stated in Sections II and III.A, and the additional reasons below.

ONRR is withdrawing the deepwater gathering allowance for the additional reason that the DOI has long required that oil and gas “be placed into marketable condition at no cost to the Federal lessor” and “gathering has consistently been held to be a part of that process.” See, e.g., Nexen Petroleum U.S.A., Inc. v. Norton, No. 02-3543, 2004 WL 722435, at *9 (E.D. La. Mar. 31, 2004). Consistent with the marketable condition requirement, ONRR's regulations define gathering as “movement of lease production to a central accumulation or treatment point on the lease, unit, or communitized area, or to a central accumulation or treatment point off of the lease, unit, or communitized area that BLM or BSEE approves for onshore and offshore leases, respectively, including any movement of bulk production from the wellhead to a platform offshore.” 30 CFR 1206.20. ONRR views the movement of bulk oil and gas production that has not been separated, treated, and measured for royalty purposes as gathering because these processes are integral to placing oil and gas into marketable condition. See 53 FR 1190-1191, 1193 (Jan. 15, 1988); Devon Energy Corp., Acting Asst. Sec. Decision, Valuation Determination for Coalbed Methane Production from the Kitty, Spotted Horse, and Rough Draw Fields, Powder River Basin, Wyoming, at 2, 18, 21-22, 32-33 (Oct. 9, 2003) (“Devon Valuation Determination”), aff'd sub nom., Devon Energy Corp v. Norton, No. 04-CV-0821 (GK), 2007 WL 2422005 (D.D.C. Aug. 23, 2007), aff'd sub nom., Devon Energy Corp. v. Kempthorne, 551 F.3d 1030 (D.C. Cir. 2008), cert. denied, 558 U.S. 819 (2009); Nexen, 2004 WL 722435, at *1, 4-5, 9-12; Marathon Oil Co., MMS-00-0063-OCS (FE), 2005 WL 6733988 (Oct. 20, 2005); Kerr-McGee Corp., 147 IBLA 277 (1999); CNG Producing Co. v. Royalty Valuation & Standards Div., MMS-96-0370-0CS, 1997 WL 34843496 (Oct. 16, 1997); see also DCOR, LLC, ONRR-17-0074-OCS (FE), 2019 WL 6127405, at *7-15 (Aug. 26, 2019).

Public Comment: Some commenters stated that the deepwater gathering allowance is needed to incentivize deepwater offshore oil and gas production, with one asserting that the deepwater gathering allowance should not be withdrawn because it benefits the United States to receive royalties and share in the costs of subsea transportation rather than forego development altogether. This commenter asserted that the development of offshore resources promotes one of ONRR's primary functions, i.e., to ensure fair return for the public.

ONRR Response: These commenters provided no information demonstrating that the deepwater gathering allowance would result in additional deepwater development or increased production and ONRR has no such information in its possession. If appropriate, BSEE could grant targeted royalty relief for individual leases and lease areas to promote increased development and production when necessary and supported by economic analysis.

Public Comment: While agreeing that gathering is not deductible, some commenters opposed withdrawing the deepwater gathering allowance because they view all subsea movement of oil and gas to a facility not located on a lease or unit adjacent to the lease on which the production originates to be transportation even if the production has not been separated, treated, or measured for royalty purposes. These commenters asserted that ONRR has considered such movement to always be transportation since the Deepwater Policy was issued in 1999. Consistent with this position, one of these commenters objected to referring to the allowance as a “deepwater gathering allowance” because that commenter considers such movement to always be transportation.

ONRR Response: The commenters' view that subsea movement of bulk oil and gas production to a facility off the lease or an adjacent lease is always transportation does not comport with ONRR's view that gathering is part of placing oil and gas into marketable condition; oil and gas that has not been separated, treated, and measured for royalty purposes has not been fully gathered and thus is not in marketable condition. Moreover, the commenters' position fails to recognize that the Deepwater Policy was an exception to the then-existing rules. Thus, even the Deepwater Policy acknowledged the movement would traditionally be considered gathering but allowed a lessee to claim such movement as part of its transportation allowance. Notably, the Deepwater Policy was never codified or otherwise made part of ONRR's regulations. It was properly set aside by the 2016 Valuation Rule because it was not a published rule and because it was inconsistent with published rules. As a result, the 2016 Valuation Rule clearly established, consistent with the language of the pre-existing regulations, that gathering does not end until oil and gas is separated, treated, and measured for royalty purposes.

Public Comment: A commenter supported the deepwater gathering allowance and claimed that industry relied on the Deepwater Policy between 1999 and 2016 when making financial investments and leasing and development decisions. This commenter suggested that retroactively eliminating the allowance would present legal vulnerabilities (stating that it was unlawful for ONRR to eliminate the deepwater gathering allowance considering that a lessee relied on it to make leasing and development decisions) and may disincentivize future investment and development on the OCS.

ONRR Response: The United States District Court for the District of Wyoming recently upheld ONRR's decision to rescind the deepwater gathering policy in litigation filed to challenge the 2016 Valuation Rule. See Cloud Peak Energy, Inc. v. Dep't of the Interior, Case No. 2:19-cv-00120-SWS, Order Upholding In Part And Reversing In Part 2016 Valuation Rule (D. Wyo. Sept. 8, 2021). Noting that ONRR “acknowledged and considered” reliance interests, the District Court stated that “ONRR considered the relevant information and articulated a rational basis based on the relevant information for its decision to vacate the Deep Water Policy.” Id. at 15. The District Court concluded that “Petitioners have not established that ONRR acted arbitrarily or capriciously, abused its discretion, or exceed[ed] its lawful authority by rescinding the Deep Water Policy.” Id.

Notably, the referenced reliance comment was general and not supported by discussion of specific leases or evidentiary materials. The commenter presented no evidence and did not explain how any specific investment was, in fact, premised on the future receipt of a relatively small allowance for gathering. Such general, unsubstantiated, and unquantified reliance interests do not outweigh the other interests and policy considerations that support withdrawal of the deepwater gathering allowance. 81 FR 43340.

An agency must comply with the APA to either promulgate new legally binding regulations or to substantively amend or modify existing regulations. The reasonableness of a lessee's reliance on an informal memorandum that directly contradicted the language of properly adopted rules is questionable. See, e.g., Glycine & More, Inc., v. United States, 880 F.3d 1335 (Fed. Cir. 2018). Even if the Deepwater Policy were found to qualify as a legally binding rule, standard OCS lease language illustrates that the reasonableness of expecting it to exist in perpetuity is also questionable. See Form BOEM-2005, § 1 (Feb. 2017) (“It is expressly understood that amendments to existing statutes and regulations . . . as well as the enactment of new statutes and promulgation of new regulations, which do not explicitly conflict with an express provision of this lease may be made and that the Lessee bears the risk that such may increase or decrease the Lessee's obligations under the lease.”). Moreover, to the extent any OCS lease contains terms consistent with the Deepwater Policy, those leases will continue to control regardless of any conflict with the valuation regulations. See 30 CFR 1206.100(d) and 1206.140(c); Form BOEM-2005, § 1 (Feb. 2017).

Public Comment: A commenter supporting the 2020 Rule's deepwater gathering allowance asserted that ONRR's elimination of the Deepwater Policy in the 2016 Valuation Rule violated both contract law and the APA. The commenter pointed to a term in Section 6(c) of the Form BOEM-2005 (Feb. 2017) OCS lease template. The commenter also cited Kerr-McGee Corp., 22 IBLA 124 (1975) to suggest that royalties to the Federal government should be the same regardless of whether it is paid in volume or value.

ONRR Response: Section 6(c) of the Form BOEM-2005 (Feb. 2017) OCS lease template is expressly limited to royalties paid in amount ( i.e., in kind), not in value: “When paid in amount, such royalties shall be delivered at pipeline connections or in tanks provided by the Lessee. Such deliveries shall be made at reasonable times and intervals and, at the Lessor's option, shall be effected either (i) on or immediately adjacent to the leased area, without cost to the Lessor, or (ii) at a more convenient point closer to shore or on shore, in which event the Lessee shall be entitled to reimbursement for the reasonable cost of transporting the royalty production to such delivery point.” The Secretary phased out the DOI's royalty-in-kind program starting in 2009. See 75 FR 15725. Moreover, lease terms govern if the lease terms are inconsistent with any of the valuation regulations. See 30 CFR 1206.100(d) and 1206.140(c). Thus, withdrawal of the deepwater gathering allowance would have no impact on the referenced lease term in the unique situation suggested by the commenter.

In addition, the commenter's reliance on Kerr-McGee Corp., 22 IBLA 124 (1975) is misplaced. Kerr-McGee was decided under the historic concept of “field” gathering and is devoid of any traditional contract law analysis. When the concept of “field” gathering was replaced in 1988 by the adoption of regulations containing a definition of gathering, that rulemaking also affected previously existing precedents that discussed the concept of “field” gathering. 53 FR 1184, 1193 (Jan. 15, 1988) (rejecting recommendations to “limit gathering to the lease or unit area so a transportation allowance may be obtained for all off-lease movement”); 53 FR 1230, 1240 (Jan. 15, 1988) (same); Devon Valuation Determination, at 18 (explaining how the regulatory definitions of gathering may impact precedents applying the historic concept of “field” gathering). As a result, the line between gathering and transportation may not be the same for royalties paid in amount and royalties paid in value. Compare Form BOEM-2005, § 6 (Feb. 2017) and 30 CFR 1206.20, 1206.110, and 1206.152.

Additionally, the commenter's statement that the elimination of the Deepwater Policy violated the APA is not supported by explanation or analysis. MMS' royalty and revenue management functions were transferred to ONRR in 2010. See 76 FR 64432 (Oct. 18, 2011). At that time, ONRR became responsible for MMS' regulations governing gathering and transportation. ONRR subsequently determined that the Deepwater Policy was inconsistent with the regulatory definitions of gathering and Departmental decisions interpreting that term. See 85 FR 62054, 62059 (Oct. 1, 2020); 80 FR 608, 624 (Jan. 6, 2015). Consequently, it rescinded the Deepwater Policy in the 2016 Valuation Rule. See id. This final rule affects the 2020 Rule, not any provision of the 2016 Valuation Rule.

While the Proposed 2020 Rule's preamble explained ONRR's intention to adopt a deepwater gathering allowance in 30 CFR 1206.110 (oil) and 1206.152 (gas), consistent with the former Deepwater Policy, key components and criteria for a deepwater gathering allowance were omitted from the proposed regulation text. For oil, the Proposed 2020 Rule omitted language later added by the 2020 Rule that expanded the proposed allowance from oil produced in waters deeper than 200 meters to oil produced from a lease or unit any part of which lies in waters deeper than 200 meters. Cf. 85 FR 62080 with 86 FR 4654. The Proposed 2020 Rule further omitted other key requirements of the Deepwater Policy, including that the movement is not to a facility that is located on a lease or unit adjacent to the lease or unit on which the production originates, that the movement is beyond a central accumulation point, defined to include a single well, a subsea manifold, the last well in a group of wells connected in a series, or a platform extending above the surface of the water, and that the gathering costs are only those allocable to the royalty-bearing oil. Id. For gas, the Proposed 2020 Rule completely omitted the deepwater gathering allowance in the proposed regulation text for §  1206.152. See 85 FR 4656.

Because ONRR made significant, substantive additions to the §§  1206.110(a) and 1206.152(a) without reopening the comment period, the public had inadequate opportunity to review and comment on the substantially revised regulatory text prior to publication of the 2020 Rule. Accordingly, the adoption of a deepwater gathering allowance in the 2020 Rule was defective because ONRR did not give the public adequate notice of the intended regulatory language and the scope of the allowance.

Public Comment: A commenter stated that ONRR revealed, in the preamble to the Proposed 2020 Rule, an intention to revert back to the Deepwater Policy and that any prospective commenter could review the Deepwater Policy. This commenter noted that several commenters pointed out the error in the text language in response to the Proposed 2020 Rule, suggesting that interested entities had access to information sufficient to formulate meaningful comments.

ONRR Response: ONRR disagrees. The Deepwater Policy was not adopted through any recognized form of rulemaking. The proposed regulation text was not included in the Proposed 2020 Rule, despite a general discussion appearing in the Proposed 2020 Rule's preamble. Moreover, the absence of the regulation text created a high likelihood of confusion regarding the precise parameters of the allowance being proposed. Moreover, because the meaning of unambiguous regulatory text is not changed by conflicting preamble language, some commenters may have reviewed and commented on the proposed regulatory text without reading the preamble and its general discussion. Because much of the intended regulatory text was missing from the Proposed 2020 Rule, including key provisions relating to deepwater allowances, the public was not provided with adequate notice and an opportunity to comment.

Prior to adopting the deepwater gathering allowance, ONRR was required to offer a rationale for the adoption of the amendment in order to allow interested parties a meaningful opportunity to comment. See Sections II.C and II.D. As its basis for the deepwater gathering allowance, the Proposed 2020 Rule stated that a lessee may be unable (without great costs, impaired engineering efficiency, or both) to satisfy ONRR's gathering definition before production reaches the platform due to unique environmental and operational factors in deepwater. 85 FR 62060. While this may be true for some deepwater leases, the 2020 Rule does not explain why these unique factors justify a deepwater gathering allowance that is applicable to all deepwater leases. Many locations, both onshore and offshore, have unique environmental and operational factors. The burdens placed on a lessee by the environment in which it operates are matters considered at the time the lease is issued, and reflected in the amount of bonus bids and, in some cases, the royalty rate. See 53 FR 1205 (Jan. 15, 1988). Thus, environmental and operational factors alone are inadequate justifications for a deepwater gathering allowance.

The 2020 Rule added new rationale for the deepwater gathering allowance. For example, the 2020 Rule stated that the Gulf of Mexico is currently viewed as a mature hydrocarbon province; that most of the acreage available for leasing has received multiple seismic surveys, has been offered for lease a number of times, or is under lease; that many of the remaining reserves are located in smaller fields that do not warrant stand- alone development and are unlikely to be developed absent subsea completions with tiebacks to existing platforms; that companies will consider not only the oil and gas potential of an area, but also the expected costs of development, as compared to alternative investments; and that the expected profitability of specific projects will be affected by a company's determinations of geologic and economic risk. 86 FR 4623.

However, the 2020 Rule cited no economic studies or research supporting this new rationale. It also did not explain why these facts, if true, justify a deepwater gathering allowance on all deepwater leases. Where gathering ends and transportation begins should not, for example, depend on whether a hydrocarbon reserve is mature. The maturity of a hydrocarbon reserve may be a factor that BLM, BSEE, or BOEM takes into consideration in setting royalty rates or granting royalty relief, but it is not a factor relevant to the determination as to where gathering ends. Finally, regardless of whether this new rationale might have been a legitimate basis for the deepwater gathering allowance, the public did not have a meaningful opportunity to comment on it because it was not stated in the 2020 Proposed Rule.

ONRR's valuation regulations allow a lessee to deduct the reasonable and actual costs incurred in processing gas. 30 CFR 1206.159(a)(1). A lessee cannot claim the processing allowance against the value of the residue gas. 30 CFR 1206.159(c)(1). Instead, it must allocate its processing costs among the other gas plant products, with NGLs being a single product. 30 CFR 1206.159(b). Additionally, the allowance cannot exceed 66 2/3 percent of the value of the gas plant product against which the allowance is taken. 30 CFR 1206.159(c)(2).

Prior to the 2016 Valuation Rule, ONRR could, upon request of a lessee, authorize a lessee to exceed the 66 2/3 percent cap. 53 FR 1281. Upon request of a lessee, ONRR could also authorize a lessee to claim an allowance for extraordinary processing costs actually incurred. Id. To qualify for an extraordinary processing allowance, a lessee's request had to demonstrate that the costs were, by reference to standard industry conditions and practice, extraordinary, unusual, or unconventional. Id.

The 2016 Valuation Rule eliminated ONRR's authority to allow a lessee to exceed the 66 2/3 percent cap and to take an extraordinary processing allowance. 81 FR 43353. The 2016 Valuation Rule also terminated any extraordinary processing allowances that ONRR previously approved. Id. At the time, there were two extraordinary processing allowances approved by ONRR for gas processed at two facilities in Wyoming. Id.

The 2020 Rule reinstated a lessee's ability to request to claim an extraordinary processing allowance but not its ability to request to exceed the 66 2/3 percent cap. 86 FR 4625-4626. The reinstatement of extraordinary processing allowances was justified as a way for ONRR to incentivize production or remove a disincentive to production having such costs. Id.

ONRR is withdrawing the extraordinary processing allowance amendment for the reasons stated in Sections II and III.A., and for the additional reasons below.

As discussed in Section III.A, ONRR's attempt to incentivize production through the adoption of the 2020 Rule, including through its reinstatement of a lessee's ability to apply for and receive an extraordinary processing allowance, is unwarranted. ONRR notes that no supporter of the 2020 Rule submitted a report or study demonstrating that the reinstatement of the extraordinary processing allowance would increase development or production. Moreover, this amendment is overbroad because it could potentially apply in areas where production is already profitable. Other DOI bureaus have programs in place to incentivize development or production where necessary. See Section III.A and 86 FR 31201-31202.

Public Comment: Some commenters asserted that the extraordinary processing allowance encourages continued and future production of unique hydrocarbon streams and the production of gas in atypical areas. Commenters also suggested that a few lessees may have relied on the historical extraordinary processing allowance approvals relating to the two processing facilities in Wyoming, and made investment decisions based on those then-existing approvals. These commenters opined that, absent the extraordinary processing allowances, the viability of lease operations associated with the two Wyoming facilities is questionable. Finally, some commenters stated that the extraordinary processing allowances are necessary to maximize hydrocarbon recovery, prevent waste due to premature lease abandonment, and provide a mechanism to reduce royalty payments when costs exceed profits.

ONRR Response: Although commenters assert that extraordinary processing allowances are needed to incentivize future production and ensure the viability of certain lease operations, no commenter provided support to show that, without the extraordinary processing allowances, a lessee would curtail production, or that ONRR's reinstatement of extraordinary processing allowances would increase gas production, including from leases serviced at the two Wyoming facilities. Notably, the preamble to the 2020 Rule recognized that the production impact of the rule's amendments, including the extraordinary processing amendment, is “negligible or marginal.” 86 FR 4616. Further, the historical rarity of submissions and approvals of applications for extraordinary processing allowances suggests that extraordinary processing allowances do not incentivize production to the degree commenters assert. In the almost 30 years an extraordinary processing allowance could have been sought, fewer than ten applications were submitted and only two were approved, neither of which was approved after 1996. To the extent that potential waste, premature lease abandonment, or production profitability are legitimate concerns, other bureaus within the DOI may have programs designed to address those issues.

Public Comment: A commenter asserted that the extraordinary processing allowance is needed to increase helium production because helium is critical for national security.

ONRR Response: ONRR's gas valuation regulations do not apply to helium. See Exxon Corp., 118 IBLA 221, 229 n.9 (1991) (noting that MMS does not consider helium in valuing a gas stream for royalty purposes because “it is not a leasable mineral”). Rather, helium production from Federal lands is administered by BLM and governed by the Helium Stewardship Act of 2013, codified at 50 U.S.C. 167-167q, and BLM regulations, 43 CFR part 16. See also https://www.blm.gov/programs/energy-and-minerals/helium/division-of-helium-resources (noting that BLM's Division of Helium Resources “adjudicates, collects, and audits monies for helium extracted from Federal lands”). Thus, any responsibility to incentivize helium production lies with BLM, not ONRR.

The 2020 Rule stated that “allowing a lessee to apply for an extraordinary processing allowance approval for the natural gas portion of [its] production stream, may lower natural gas production costs and incentivize new or continued production of helium.” 86 FR 4628. But as noted in Section III.A above, ONRR lacks evidence to substantiate that an extraordinary processing allowance will incentivize gas production, and more particular to this discussion, lacks evidence that an extraordinary processing allowance is likely to boost helium production. Moreover, of the two prior extraordinary processing allowances that ONRR approved, only one impacted a helium-bearing gas stream. Likewise, none of the public comments contain any support for the proposition that reinstating the extraordinary processing allowance will result in additional helium production from this stream. Thus, even if the United States has “important economic and national security interests in ensuring the continuation of a reliable supply of helium”—as noted in the 2020 Rule and referenced in the public comment—the extraordinary processing allowance has not been shown to be an effective means to increase helium production. Id.

Finally, DOI recently implemented other statutory shifts that encourage investment in helium production, but which were not mentioned in the 2020 Rule or by the commenter. The Dingell Act, Public Law 116-9, Section 1109, “Maintenance of Federal Mineral Leases Based on Extraction of Helium,” amended the MLA on March 12, 2019, to allow the production of helium to maintain a Federal oil and gas lease beyond its primary term. See 30 U.S.C. 181 (“extraction of helium from gas produced from such lands shall maintain the lease as if the extracted helium were oil and gas”). Prior to this amendment, the initial ten-year lease term could only be extended if oil or gas, not helium, was produced in paying quantities. A consequence of the prior MLA framework was that revenue from the sale of helium was not factored into whether a well was producing in “paying quantities” and thus qualified for an extension of the initial lease term beyond ten years. The shift away from considering only the production of oil and natural gas as holding the lease seems likely to encourage investment in helium production. The targeted amendment to the MLA negates any contention that the modest relief potentially available through an extraordinary processing allowance is effective to encourage helium production.

Public Comment: A commenter suggested that withdrawing ONRR's authority to permit extraordinary processing allowances would improperly inflate royalties due because a lessee cannot deduct its reasonable, actual gas processing costs as allowed under the gas valuation rules. The commenter further noted that the Proposed Withdrawal Rule does not question whether the previously approved extraordinary processing allowances comprised reasonable, actual processing costs for qualifying operations.

ONRR Response: ONRR agrees that the gas valuation rules permit a lessee to deduct most reasonable and actual gas processing costs. 30 CFR 1206.159(a)(1). But gas processing allowances have never been without limits. Rather, the mineral leasing statutes recognize ONRR's authority to create and subsequently modify regulations, including those related to processing allowances. See, e.g., 30 U.S.C. 189 (authorizing the Secretary, under the MLA, to “prescribe necessary and proper rules and regulations and to do any and all things necessary to carry out and accomplish the purposes of this chapter”); 43 U.S.C. 1334(a) (authorizing the Secretary to “prescribe such rules and regulations as may be necessary to carry out” the provisions of OCSLA); 30 U.S.C. 1751(a) (authorizing the Secretary, under FOGRMA, to “prescribe such rules and regulations as he deems reasonably necessary to carry out this chapter”).

The MLA, OCSLA, and FOGRMA do not define “royalty value.” None of those statutes mention processing costs, let alone mandate adoption of regulations allowing a deduction for processing costs. Instead, the agency-developed regulations at 30 CFR part 1206 to authorize processing allowances. The agency established the deductions by regulation and is authorized to change the regulations, as it did here. In Cloud Peak Energy Inc. v. U.S. Dep't of the Interior, 415 F. Supp. 3d 1034, 1046 (D. Wyo. 2019), the United States District Court for the District of Wyoming commented on the “wide latitude of discretion” ONRR has to enact “rules and regulations enabling [the DOI] to complete the tasks it [is] assigned.” This discretion would necessarily include the ability to change allowances adopted by regulation. Id. at 17, 24, 29; see also Am. Trucking Ass'ns v. Atchison, Topeka, & Santa Fe Ry. Co., 387 U.S. 397, 416 (1967) (stating that “[r]egulatory agencies do not establish rules of conduct to last forever”); FCC v. Fox Television Stations, 556 U.S. 502, 515 (2009) (recognizing agency authority to change regulatory course).

Public Comment: A commenter asserted that the extraordinary processing allowance prevented receipt of fair market value for minerals extracted from Federal land and should be withdrawn.

ONRR Response: ONRR is withdrawing the extraordinary processing allowance for the reasons discussed herein, consistent with the comment.

The 2020 Rule states that “ONRR anticipates . . . it will again receive very few requests and will rarely grant approval under this provision, as was the case when the language was in place between March 1, 1988, and December 31, 2016.” 86 FR 4628. Consistent with this, a commenter asserts that ONRR will not be impacted if it reinstates its authority to approve extraordinary processing allowances because ONRR maintains control of the approval process and is not required to grant all requests. Notably, however, when ONRR drafted the 2020 Rule, no consideration was given to the potential interplay between the reinstatement of ONRR's authority to permit extraordinary processing allowances and the retention of the hard cap on processing allowances, which could impact the number of extraordinary processing allowance applications submitted.

Prior to the adoption of the 2016 Valuation Rule, a lessee could apply, under specified circumstances, for an extraordinary processing allowance and to exceed the soft cap of 66 2/3 percent on processing allowances. The 2016 Valuation Rule eliminated extraordinary processing allowances and changed the soft cap to a hard cap ( i.e., a firm limit on the processing allowance cap). See 30 CFR 1206.159(c)(2). The Proposed 2020 Rule proposed to reinstate both the extraordinary processing allowance and soft caps. 85 FR 62058.

Between the publication of the Proposed 2020 Rule and the publication of the 2020 Rule, ONRR performed a new economic analysis. Based thereon, the 2020 Rule reinstated ONRR's authority to permit extraordinary processing allowances but did not restore a lessee's ability to seek to exceed the cap on processing allowances. 86 FR 4625. Thus, under the 2020 Rule, an extraordinary processing allowance application is the only mechanism by which a lessee can request to exceed limits on processing allowances, a circumstance that might cause ONRR to receive more applications for approval of an extraordinary processing allowance than it did historically. ONRR did not consider this possibility or the effect on royalty payments that might result if additional extraordinary processing allowance requests are submitted and approved.

Public Comment: Some commenters stated that ONRR will not be impacted if it reinstates its authority to approve extraordinary processing allowances because ONRR maintains control of the approval process and is not required to grant all requests.

ONRR Response: While the comments regarding the broad discretion of the approval process are generally valid, the comments are not sufficiently specific for ONRR to act on. Moreover, reinstatement of ONRR's authority to permit extraordinary processing allowances may create the unintended and unanticipated consequences discussed above. ONRR must analyze those circumstances before it could permit the extraordinary processing allowance to go into effect.

The Proposed 2020 Rule failed to provide a reasoned explanation, or adequate justification for the change, as required under the APA to provide sufficient notice to the public of the reasons for the reinstatement of the extraordinary processing allowance. See Sections II.C and II.D.

First, ONRR published the Proposed 2020 Rule on October 1, 2020. At that time, the 2016 Valuation Rule was reinstated for only eighteen months, but lessees had not yet been required to comply with the rule. Thus, ONRR had, at most, a limited opportunity to assess the impact of the withdrawal of its authority to permit extraordinary processing allowances.

Second, in the Proposed 2020 Rule, the amendment was premised on the notion of incentivizing production. See 85 FR 62058. However, the 2020 Rule contained inconsistent positions on incentivization. In response to public comments, the 2020 Rule stated that it was “not premised on increasing production of oil, gas or coal by some measured amount” and instead was “meant to incentivize both the conservation of natural resources . . . and domestic energy production over foreign energy production.” 86 FR 4616. The 2020 Rule also stated that the anticipated impact of the rule's amendments on production would be “negligible.” 86 FR 4626. The 2020 Rule similarly stated that, in most cases, allowing a lessee to exceed the processing allowance cap would not be sufficient to incentivize production. See 86 FR 4626-4629 (noting a lessee's greater royalty share of production negates any incentive to continue producing from a Federal lease under suboptimal circumstances). Further, neither the Proposed 2020 Rule nor the 2020 Rule explained the purported connection between the extraordinary processing allowance and increased production.

Finally, the public was not provided a meaningful opportunity to comment on the rationale that ultimately formed the basis for the reinstatement of the extraordinary processing allowance because it was not set forth in the Proposed 2020 Rule. Apart from an unpersuasive argument about incentivizing production, ONRR relied entirely on reasons submitted in response to the Proposed 2020 Rule to support its reinstatement of the extraordinary processing allowance. See 86 FR 31204 (identifying five additional justifications in the 2020 Rule for reinstatement of the extraordinary processing allowance, each of which was based on comments submitted in response to the Proposed 2020 Rule). Therefore, the public did not have an opportunity to comment on most of the reasons contained in the 2020 Rule to justify the reinstatement of the extraordinary processing allowance.

For the first time, the 2016 Valuation Rule allowed a lessee to calculate the royalty value of its production by using an index-based valuation formula for its non-arm's-length sales of Federal gas, instead of actual sales prices, transportation costs, and processing costs. 30 CFR 1206.141(c) and 1206.142(d). This index-based valuation method is required if there is an index pricing point and the lessee has no written contract for the sale of the gas or there is no sale of the gas, which is the case for approximately 0.3 percent of all Federal gas. 30 CFR 1206.141(e) and 1206.142(f). The index-based valuation formula is otherwise optional. 30 CFR 1206.141(c) and 1206.142(d).

Under the 2016 Valuation Rule, a lessee electing to use the index-based valuation formula must report and pay royalties based on the highest bidweek price for the index pricing points to which the gas could flow, reduced by an amount intended to account for average transportation costs. 30 CFR 1206.141(c)(1) and 1206.142(d)(1). The 2016 Valuation Rule considered and rejected comments that using the highest bidweek price results in an inflated value for royalty purposes, which is neither reasonable nor justified. 81 FR 43347. ONRR disagreed with those comments, stating that the “provision protects the interests of the Federal lessor, while also simplifying the royalty reporting process for industry.” Id.

The 2020 Rule amended the index-based valuation formula by substituting the average bidweek price for the highest bidweek price. 86 FR 4619. The 2020 Rule posited that “[w]hile the bidweek average price is lower than the bidweek high price, the bidweek average more closely reflects the gross proceeds that a lessee would typically receive in an arm's-length transaction, and therefore is more likely to actually be used by lessees.” 86 FR 4619-4620. Using an average, however, means that there are transactions where a lessee receives a higher price. And because index-based pricing is optional for all but 0.3 percent of Federal gas, a lessee who generally receives more than the average bidweek price could choose to report and pay based on the average bidweek price in order to reduce its royalty obligations, as could a lessee with lower than average transportation costs.

Conversely, a lessee who generally receives less than the average bidweek price or pays higher than average transportation costs could continue to report and pay royalties based on its actual sales and transaction data specific to the gas at issue rather than the index-based valuation formula. Thus, a lessee could avoid higher royalties by not using the index-based valuation option. 30 CFR 1206.141(c), 1206.142(d). In other words, a lessee would have an increased opportunity to pay royalties on the lower of two values. As a result, changing the formula to reduce the bidweek price used from highest to average is expected to reduce total Federal gas royalties due the United States by $5,062,000 per year, as detailed in the Economic Analysis, below.

In adopting the 2020 Rule, ONRR was required to explain why it was rejecting the position it adopted in the 2016 Valuation Rule that the use of the highest bidweek price is necessary to protect the interests of the Federal lessor. See California, 381 F. Supp. 3d at 1173-74. Use of the highest bidweek price helps ensure that the United States receives a fair market value, while allowing a lessee the option of a formula if the lessee is motivated to save on administrative costs incident to reporting, payment, and potential audit of actual sales prices, transportation costs, and processing costs, as well as the cost of any ensuing disputes. For the reasons described in Section II, which discusses various defects in the promulgation of the 2020 Rule, and III.A, which describes ONRR's unwarranted and overbroad attempt to incentivize production, and because the 2020 Rule did not adequately explain why it was shifting to average index prices, ONRR withdraws this provision of the 2020 Rule.

Similarly, the use of the highest bidweek price is consistent with frequently-seen royalty schemes—the lessee is required to pay the lessor on the higher or highest of multiple measures of royalty value to protect against valuation measures that may prove inapplicable or otherwise fail in some instances, and to minimize the impact of any self-dealing or exercise of poor business judgment. See, e.g., Federal and Indian lease and regulation provisions requiring payment based on (a) a major portion price if higher ( see 30 CFR 1206.54 and 1206.174(a)(4) and 47 FR 47774 (Oct. 27, 1982)), (b) the value of gas as unprocessed gas if higher than the value of gas as processed gas (30 CFR 1206.176 and 52 FR 1257 (Jan. 15, 1988)), and (c) no less than gross proceeds (30 CFR 1206.174(g) and 53 FR 1275 (Jan. 15, 1988)) ; see also, Competitive Oil and Gas Lease, State of Alaska, Department of Natural Resources, Sec. 36(a), https://dog.dnr.alaska.gov/Documents/Leasing/SaleDocuments/AKPeninsula/2016/LeaseForm-DOG201503.pdf , which requires royalty payments based on the highest of four measures of value; and Oil and Gas Lease, State of Wyoming, Sec. 1(d)(iv), https://lands.wyo.gov/trust-land-management/mineral-leasing/oil-gas-leases, which requires payment based a value no less than that received by the United States for its royalties in the same field.

Public Comment: Some commenters stated that by requiring the highest bidweek price, ONRR is extracting royalties above what it may be entitled to receive because the average bidweek price is more representative of the gross proceeds that a typical lessee may receive.

ONRR Response: With very minor exceptions, no lessee is required, but rather elects, to use the index-based valuation option for its non-arm's-length gas sales. 30 CFR 1206.141(c) and 1206.142(d). A lessee that concludes that its use of the index-based valuation formula would increase its royalty obligation above what it considers due the United States does not have to use the formula. Moreover, neither the governing statutes nor lease terms cap royalty value at an individual lessee's gross proceeds or typical or average gross proceeds. Also, as referenced above, lessors frequently require that royalties be paid on the highest of multiple measures of royalty value, including measures that may exceed a lessee's average gross proceeds.

Public Comment: Some commenters opposed the withdrawal of the 2020 Rule, alleging it creates inconsistency between valuation of Federal gas, Federal oil, and Federal NGLs. Another commenter stated it creates an inconsistency with Indian gas valuation.

ONRR Response: No statute or lease term requires identical treatment for Federal oil, Federal NGLs, Federal gas, and Indian gas, and there are many instances where those commodities are treated differently. Cf. 30 CFR 1206.153(b)(1) (allowing a transportation allowance for Federal gas for the unused portion of an arm's-length contract's firm demand fee) with 30 CFR 1206.178 (allowing only the used portion of that fee for Indian gas).

Furthermore, with respect to the difference between Federal residue gas and NGLs, index-based valuation is, in most instances, an optional reporting methodology. See 30 CFR 1206.141(c) and 1206.142(d). In designing an optional reporting methodology, ONRR strives to find a path that ensures it receives a fair return. As a result, ONRR determined in the 2016 Valuation Rule that a lessee who elects to use the index-based valuation option must apply the highest bidweek price to value its residue gas. 81 FR 43347. On the other hand, because it is optional for all but a small number of lessees, most lessees can eschew the option and, instead, use actual sales prices, transportation costs, and processing costs.

Public Comment: Some commenters wrote that using the highest bidweek price instead of the average bidweek price will reduce the number of lessees that elect to use index-based pricing.

ONRR Response: ONRR is under no statutory obligation to offer an index-based pricing option. If, as reporting under the index-based valuation option in 2016 continues, lessees' reporting shows no or insignificant use of index-based reporting, ONRR will have data upon which to evaluate the further use of index-based reporting, including the possible need to amend the price. However, at this time, ONRR believes use of the highest bid-week price is necessary to ensure that the Federal lessor receives fair market value for its mineral resources.

The 2016 Valuation Rule's index-based valuation method provided for a reduction to index prices to account for transportation costs. The amount of the reduction was calculated by ONRR based on ONRR's review and analysis of lessee-reported transportation costs for production years 2007-2010. For those years, the average reported transportation cost for the Gulf of Mexico was 4.6 percent of index value, and for all other areas, it was 8.6 percent of index value. In the 2016 Valuation Rule, the index-based valuation formula included a 5 percent reduction to index for the Gulf of Mexico and a 10 percent reduction for all other areas. 30 CFR 1206.141(c)(1)(iv) and 1206.142(d)(1)(iv).

Since the promulgation of the 2016 Valuation Rule, ONRR conducted a similar economic analysis for three other time periods. One of those time periods predated the Proposed 2020 Rule and ONRR's drafting of the final 2020 Rule. That period was used as a basis for the 2020 Rule. For production years 2014-2018, ONRR's analysis showed average lessee-reported transportation costs of 13.7 percent for the Gulf of Mexico and 16.8 percent for all other areas. Based on this information, the 2020 Rule increased the reductions to index from 5 percent to 10 percent for the Gulf of Mexico and from 10 percent to 15 percent for all other areas, again bounded by certain minimum and maximum amounts. 86 FR 4655.

Since publication of the 2020 Rule, ONRR conducted two additional analyses—one of production years 2016-2020 and the second for production years 2007-2020. These analyses showed average lessee-reported transportation costs of 19.6 percent and 14 percent for the Gulf of Mexico and 16.6 percent and 16.9 percent for all other areas, respectively.

In ONRR's experience, lessee-reported transportation costs may overstate allowable transportation costs for several reasons. First, costs reported at or soon after the time of production are estimates, and while, under 30 CFR 1210.30, a lessee must amend its reported royalties within 30 days of the discovery of an error, a lessee generally has up to six years after its initial royalty reporting is due to amend its reported costs. 30 U.S.C. 1721a(a). As a result, reported costs for recent time periods can be unreliable.

Second, a lessee frequently claims transportation costs in excess of the amounts allowed. Too often, a lessee fails to reduce the charges of an affiliated or third-party pipeline service provider to eliminate non-allowable costs such as gathering costs and other expenses of placing gas in marketable condition. While ONRR audits a lessee's reports to determine if excessive transportation allowances have been claimed, ONRR has seven years within which to do so. 30 U.S.C. 1724(b)(1). Thus, reported costs for recent time periods are potentially unreliable.

Finally, ONRR does not have sufficient resources to audit or conduct other compliance activities on every reported transportation allowance. As a result, some overstated allowances will be missed. For all these reasons, reported—and particularly recently-reported—transportation costs may be higher than the reduction to index ONRR authorizes to account for transportation in any index-based valuation method.

Further, for the reasons discussed above in evaluating whether to use high or average bidweek prices, ONRR should err, if at all, by allowing lower rather than higher reductions to index prices to account for the lessee's transportation costs in any index-based valuation option.

ONRR is withdrawing the 2020 Rule for the reasons set forth in Section II. Nonetheless, the over-time increase in reported transportation costs relative to index is notable. Absent the other flaws in the 2020 Rule discussed in Sections II and III.A of this final rule, ONRR might conclude in a future rulemaking following notice and comment that it is appropriate to increase the reduction to index to account for transportation in much the same way as it did in the 2020 Rule. But any such action will take place in a separate rulemaking action, and this provision of the 2020 Rule is withdrawn at this time due to the deficiencies of the 2020 Rule.

The 2016 Valuation Rule introduced the index-based valuation option for Federal gas disposed of in non-arm's-length transactions, which most often take the form of sales by a lessee to its affiliate. 30 CFR 1206.141(c) and 1206.142(d). The 2016 Valuation Rule considered and rejected comments strongly urging that the index-based valuation option also be available for arm's-length transactions, stating that “[g]ross proceeds under valid arm's-length transactions are the best measure of value.” 81 FR 43347.

The 2020 Rule expanded the index-based valuation option to Federal gas sold at arm's-length. 86 FR 4613. For the reasons described in Sections II and III.A, and the additional reasons set forth below, ONRR is withdrawing its expansion of the index-based valuation option to arm's-length sales, subject to the possibility of revisiting the topic in future rulemaking.

ONRR generally considers a lessee's arm's-length sale of gas to be the best indicator of value. 86 FR 4618. This position was reiterated in the 2020 Rule. Id. This indicator of value, however, is not always available when a lessee sells gas to its affiliate or otherwise disposes of gas in non-arm's-length transactions. Index prices can be a more reliable indicator of value than affiliate and other non-arm's-length sales prices because they are based on reported arm's-length sales. But an index-based valuation formula generally is not as reliable a measure of royalty value as is the use of actual sales prices, transportation costs, and processing costs obtained or incurred in arm's-length transactions. This is because, at a minimum, the implicit transportation deduction included in the index-based valuation formula is based on an average of all reported transportation costs for either the Gulf of Mexico or all other areas of the nation, and therefore is most often higher or lower than the transportation costs actually incurred for the gas being valued.

The 2016 Valuation Rule recognized this, reasoning that index prices are published prices derived from reported arm's-length transactions. ONRR considered the index-based valuation formula included in the 2016 Valuation Rule a simpler, acceptable, and potentially preferrable method to value gas disposed of in non-arm's-length (or affiliate) transactions. 81 FR 43338, 43346-43348. In short, under the 2016 Valuation Rule, the index-based valuation option allowed a lessee to, in effect, use a compilation of arm's-length transaction data to value gas not sold at arm's-length.

ONRR should have offered justification for why the 2020 Rule was adopting a provision expressly rejected by the 2016 Valuation Rule-declining to extend index-based valuation to arm's-length transactions-but it did not. See Section II.D. Using an index-based valuation formula to value arm's-length sales of Federal gas is problematic. For arm's-length transactions, the generally best indicator of value is typically available, and it is based on actual arm's-length transaction data specific to the gas at issue. 30 CFR 1206.141(b) and 1206.142(c). Nonetheless, the 2020 Rule extended the index-based option to gas sold at arm's-length. 86 FR 4618. The decision to do so was unsupported and premature, though ONRR may reexamine the issue in the future, after it has sufficient time to review, audit, and compare royalties received for index-based valuation of Federal gas sold at non-arm's-length and actual transaction data for Federal gas sold at arm's-length received after the reinstatement of the 2016 Valuation Rule. At this time, ONRR cannot determine whether the index-based valuation option adequately protects Federal and State royalty interests in Federal gas sold at arm's-length. Therefore, ONRR withdraws this portion of the 2020 Rule.

Public Comment: A few commenters, including multiple States, supported the withdrawal of the extension of the index-based option, asserting that ONRR should gain experience in administering an index-option for non-arm's-length sales before expanding index-based reporting into other areas. Similarly, commenters also stated but did not explain that extension of the index-based option is premature in light of pending Federal court litigation in Cloud Peak Energy Inc. v. U.S. Dep't of the Interior, No. 19-cv-120-SWS (D. Wyo.).

ONRR Response: ONRR agrees that the extension of the index-based option to arm's-length gas sales is premature at this time.

Public Comment: One commenter supported the withdrawal of this provision of the 2020 Rule because index prices and the index-based valuation option are not sufficiently transparent to the public.

ONRR Response: ONRR is withdrawing this provision of the 2020 Rule for reasons discussed in this final rule. ONRR monitors published index points to verify they meet specific liquidity requirements defined on onrr.gov. Additionally, index price publication companies have many checks in place to ensure the prices reported are transparent and representative of the market. They analyze transactions reported to the publication and validate any prices outside of a predetermined threshold. They also monitor and publish the number of reported trades and the total volumes associated with those trades.

Public Comment: Some commenters asserted that withdrawal of this portion of the 2020 Rule will increase administrative burdens; require lessees to maintain cross-departmental unbundling teams to analyze and continuously update unbundling cost methodologies; require lessees to obtain proprietary information from processors or make their best guess when the data is not provided; and increase the number of unbundling-related compliance reviews and audits, as well as the administrative and legal costs to respond to such compliance reviews and audits.

ONRR Response: ONRR acknowledges that a lessee would realize an administrative cost savings if the index-based valuation option were available for arm's-length sales. In the Economic Analysis below, ONRR has estimated the administrative cost savings to lessees to be $1,077,000 per year. Further, ONRR has estimated that the 2020 Rule's extension of the option to arm's-length sales would reduce lessees' royalty payments by $7,460,000 per year otherwise due the United States ($6,800,000 for gas plus $660,000 for natural gas liquids (“NGLs”)). A lessee's cost savings, as outlined in the Economic Analysis, also does not change the fact that actual arm's-length sales, transportation, and processing data specific to the gas being valued are most often better measures of its value than a formula derived from reported data relating to indices compiled from data relevant to other arm's-length transactions.

Among the obligations that Congress placed on the Secretary is the responsibility to audit lessee's royalties and reporting. 30 U.S.C. 1711(c). A lessee, operator, or other person directly involved in developing, producing, transporting, purchasing, or selling oil or gas must establish and maintain any records that the Secretary may require. 30 U.S.C. 1713(a) and 30 CFR 1212.50-1212.52. ONRR and its predecessor agencies, as the Secretary's designees, have historically performed audits based on the records the commenters find burdensome to maintain or acquire and produce. Further, ONRR's methods have been upheld by Federal Courts. Devon Energy Corp. v. Kempthorne, 551 F.3d 1030 (D.C. Cir. 2008), aff'g Devon Valuation Determination; Amoco Prod. Co. v. Watson, 410 F.3d 722 (D.C. Cir. 2005), aff'd sub nom. BP Am. Prod. Co. v. Burton, 549 U.S. 84 (2006); Burlington Res. Oil & Gas Co., 183 IBLA 333 (Apr. 23, 2013), aff'd 2014 WL 3721210 (N.D. Okla. July 24, 2014). When a lessee produces Federal oil and gas, it is foreseeable that it may be subject to ONRR compliance activities, including audit, and will incur associated administrative costs.

The commenters also ignore the fact that Federal oil and gas lessees have long been subject to the marketable condition rule, which is the source of the obligation to unbundle. Lessees are aware of the information and accounting that is required to comply with the marketable condition rule. Federal oil and gas lessees have long been required to calculate their gross proceeds, deduct transportation costs and processing costs, and segregate out (or unbundle) any marketable condition expenses if they seek to report the lowest allowable royalty value for gas. Further, in addition to entering into Federal oil and gas leases, lessees voluntarily enter into contracts with third-party and affiliate buyers, transporters, and processors. Nothing prevents each lessee from requiring its counterpart, by contract or otherwise, to provide the information necessary to accurately report royalty value, including the costs justifying the lessee's allowances. The Federal Government and its State beneficiaries are not obligated to save lessees the administrative costs of doing so.

Finally, even assuming arguendo that E.O.s 13783 and 13795 and S.O.s 3350 and 3360 policy objectives can still be relied upon, the 2020 Rule did not sufficiently support how the index-based option promotes its stated objective. The 2020 Rule states that it “[wa]s not premised on increasing the production of oil, gas, or coal by some measured amount,” but rather to generally “incentivize both the conservation of natural resources (by extending the life of current operations) and domestic energy production over foreign energy production.” 86 FR 4616. Because this conclusory statement is made without any supporting data, ONRR cannot determine, at this time, whether the 2020 Rule's extension of the index-based valuation provision to arm's-length sales would result in additional production. Thus, it was unsupported and must be withdrawn.

Public Comment: Some commenters opposed the withdrawal of this provision of the 2020 Rule because doing so reintroduces uncertainty in valuing Federal gas sold under arm's-length contracts.

ONRR Response: A lessee knows the amount at which it contracts to sell, transport, and process its gas. To ensure its compliance with its royalty reporting and payment obligations, the lessee can contract with the transporter or processor to require sharing of the information needed to accurately report royalty value. As long as a lessee negotiates contracts in a manner that allows it to meet its royalty obligations, its own actions minimize uncertainty. ONRR is not required to adopt an index-based valuation option for arm's-length sales simply because some lessees failed to secure rights to the data necessary to support the lessee's reported allowances.

Public Comment: One commenter stated that ONRR's revised economic analysis is an insufficient justification for a withdrawal of the index amendments because the difference between the 2020 Rule estimates as compared to the revised index analysis is nominal. According to the commenter, ONRR has collected $9 billion in royalties, rents and bonuses from oil and gas production per year over the past decade, and the 2020 Rule results in a $20.6 million decrease of in royalty collections per year, which equates to only a 0.2 percent decrease in average annual revenue collected. The commenter concluded that this achieves ONRR's objective of promulgating revenue neutral regulations.

ONRR Response: The 2020 Rule's economic analysis estimated that extending the index-based valuation option to arm's-length sales would increase royalties paid to the United States by $26,741,000 per year, but that the rule as a whole would decrease royalties paid by $28,879,000 per year. 86 FR 4641. The Proposed Withdrawal Rule and this final rule have improved on the methodology used to estimate economic impacts and now quantify the 2020 Rule's effect on royalties as follows: Extending the index-based valuation option to arm's-length sales would decrease royalties paid to the United States by $7,460,000 per year, and the 2020 Rule as a whole would decrease royalties paid by $64,600,000 per year. Cf. 86 FR 31208 with Economic Analysis, below.

ONRR does not consider these impacts revenue neutral. Further, judging the impact of an optional change in valuation available for some but not all Federal gas to the entirety of revenues from Federal oil, gas, coal, and other minerals distorts its significance. Finally, ONRR is not basing its withdrawal of any one of the five provisions discussed in this Section III on whether it incentivizes production or impacts revenue alone, but on the entirety of considerations discussed in this final rule. ONRR is withdrawing the five provisions for the additional reasons set forth in Section II above, and the defects set forth in this Section III further support withdrawal of the 2020 Rule.

The following addresses additional comments received in response to the Proposed Withdrawal Rule.

Public Comment: Rule changes are costly and time consuming. Commenters stated that, if new rules or rule revisions become more frequent, confusion increases, and industry will be tempted to not make changes because industry may anticipate that those rules will be reversed in a few years. Commenters stated that rules should not change with each new administration, especially reversing and re-doing the rules every term. One commenter expressed its desire to see an ONRR rule that is fair and equitable for both sides.

ONRR Response: ONRR agrees that rule changes should not be based solely on a change in administration. However, duly promulgated rule changes can reduce confusion by eliminating ambiguities, addressing new industry practices and technology, or otherwise improving the regulations. In addition, ONRR must update and modernize its regulations when necessary and appropriate. In doing so, ONRR strives to promulgate fair and equitable regulations compliant with governing law. Consistent with this, ONRR is withdrawing the 2020 Rule. See Sections II and III.

Public Comment: A few commenters referenced E.O.s that ONRR cited during the promulgation of the 2020 Rule that have since been revoked. Specifically, the commenters cite E.O. 13783 (Promoting Energy Independence and Economic Growth) and E.O. 13795 (Implementing an America-First Offshore Energy Strategy). Commenters also cite E.O.s now in effect, including E.O. 13990 (Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, 86 FR 7037 (Jan. 25, 2021)).

ONRR Response: ONRR acknowledges that E.O.s 13783 and 13795 were revoked after the publication of the 2020 Rule but before its effective date. ONRR likewise acknowledges the E.O. 13990 directs agencies to consider certain matters such as science and climate change. ONRR's statutory directives pertain to the collection of royalties based on the fair market value. ONRR has no statutory framework within which to consider climate change as part of its rulemakings. ONRR addressed similar comments in the Proposed Withdrawal Rule. See 86 FR 31205.

Public Comment: A commenter stated that the 2020 Rule failed to consider certain reasons for promulgating the 2016 Valuation Rule, such as ensuring the accurate calculation of royalties, which may be subsequently disbursed to States sharing in royalty revenues.

ONRR Response: ONRR distributes the royalties that it collects under Federal oil and gas leases as directed by the relevant disbursement statutes. See 30 U.S.C. 191(a) and 43 U.S.C. 1337(g)(2) and (7); see also 30 CFR part 1219. The Proposed 2020 Rule, the 2020 Rule, the Proposed Withdrawal Rule and this final rule estimate the impact of the amendments to States that share in royalty revenues in the respective sections entitled Economic Analysis. See 85 FR 62069-62070 and 86 FR 4649, 31214-31215.

Public Comment: ONRR received comments supporting and opposing withdrawal of some of the revenue-neutral amendments.

ONRR Response: ONRR is withdrawing the 2020 Rule for the reasons set forth above. As stated above, ONRR plans to publish proposed rules on some or all of the topics covered by the now withdrawn amendments.

ONRR's economic analysis of withdrawal of the 2020 Rule remains unchanged following publication of the Proposed Withdrawal Rule, except for the one-time administrative cost associated with the optional use of the index-based valuation method. The economic analysis is set forth in the Proposed Withdrawal Rule (86 FR 31208-31215) and summarized again below.

ONRR recognizes that estimated changes to royalty obligations and regulatory costs in the 2020 Rule impact many groups, including the Federal Government, State and local governments, and industry. These potential changes to royalty obligations can have broader impacts beyond the amount of royalties. Royalty collections are used by these governments in a variety of ways that include funding projects, developing infrastructure, and fueling economic growth.

Further, changes to royalties are transfers that are distinguishable from regulatory costs or cost savings. The estimated changes in royalties would affect both the private cost to the lessee and the amount of revenue collected by the Federal Government and disbursed to State and local governments. The net impact of the withdrawal of the 2020 Rule is an estimated $64.6 million annual increase in royalty collections over what would have been realized if the 2020 Rule went into effect.

Please note that, unless otherwise indicated, numbers in the tables in this section are rounded to the nearest thousand, and that the totals may not match due to rounding.

ONRR also estimated that the oil and gas industry would face increased annual administrative costs of $2.8 million under the 2020 Rule. As discussed below, this is the net impact of various cost increasing and cost saving measures. Withdrawal of the 2020 Rule will result in an estimated net cost savings for industry.

Following the publication of the delay rules and after consideration of comments received in response to the First Delay Rule, ONRR assessed which parts of the previous economic analysis warranted revision. To provide a more complete analysis, this final rule presents the estimated royalty impacts of the withdrawal of the 2020 Rule using the updated analyses. Changes are measured relative to a baseline that includes the royalty changes finalized in the 2020 Rule.

As shown in the tables, an updated analysis of the impact to royalty under the 2020 Rule results in a total decrease in royalties of $64.6 million per year, which translates to an increase of $64.6 million per year under this withdrawal. This amount stands in contrast to the annual decrease of $28.9 million per year in royalties previously estimated in the 2020 Rule and further justifies withdrawal of the 2020 Rule. The change in amounts is largely attributable to the new assumption and method used to estimate the impact from extending the index-based valuation method to arm's-length natural gas and NGL sales. A more detailed explanation of the new method is described below. All impacts to royalties other than those related to the index-based valuation option remain unchanged from those published in the 2020 Rule.

The administrative costs and potential administrative cost savings attributable to the 2020 Rule have also been updated using the new assumptions for the extension of index-based valuation method to arm's-length sales. The administrative cost to industry for deepwater gathering allowances would remain unchanged from the value published in the 2020 Rule.

ONRR updated the estimated one-time administrative cost associated with the optional use of the index-based valuation method. These costs are only incurred by a lessee once to distinguish allowed and disallowed costs in reported processing and transportation allowances. In many situations, industry has already performed these calculations to comply with previous reporting requirements. ONRR reduced the total one-time administrative cost published in the Proposed Withdrawal Rule to be more reflective of only newer gas processing plants that would require the additional administrative cost. Unless there is a significant change in processing and transportation costs, the ratio of allowed to disallowed costs should not substantially change from year to year.

Withdrawal of the 2020 Rule will increase administrative costs when compared to the current status quo, which is the 2020 Rule. While that rule has not yet gone into effect due to the First and Second Delay Rules, it would have gone into effect absent this withdrawal rule, and therefore is the appropriate point of comparison for the measurement of costs, benefits, and transfers.

ONRR used the same base dataset for this proposed rule's economic analysis as it used in the 2020 Rule for consistency and comparability. The description of the data was provided in the Economic Analysis of the 2020 Rule and is repeated here. ONRR reviewed royalty data for Federal oil, condensate, residue gas, unprocessed gas, fuel gas, gas lost (flared or vented), carbon dioxide (“CO 2 ”), sulfur, coalbed methane, and natural gas products (product codes 03, 04, 15, 16, 17, 19, 39, 07, 01, 02, 61, 62, 63, 64, and 65) from five calendar years, 2014-2018. ONRR used five calendar years of royalty data to reduce volatility caused by fluctuations in commodity pricing and volume swings. ONRR adjusted the historical data in this analysis to calendar year 2018 dollars using the Consumer Price Index (all items in U.S. city average, all urban consumers) published by the BLS. ONRR found that some companies aggregate their natural gas volumes from multiple leases into pools and sell that gas under multiple contracts. A lessee reports those sales and dispositions using the “POOL” sales type code. Only a small portion of these gas sales are non-arm's-length. ONRR used estimates of 10 percent of the POOL volumes in the economic analysis of non-arm's-length sales and 90 percent of the POOL volumes in the economic analysis of arm's-length sales.

ONRR analyzed this provision similarly to the 2020 Rule, assuming that half of lessees would elect to use the index-based valuation method. ONRR received many comments stating that this assumption was flawed, because a lessee will typically act in a manner that maximizes, not harms, financial benefits to the lessee. ONRR stated in the 2020 Rule that the assumption that half of lessees would elect to use the index-based valuation option was an attempt to simplify the royalty impact estimation. Due to the delay rules, ONRR was able to apply a more sophisticated set of assumptions to estimate the lessees that would likely benefit from the 2020 Rule's amendments to the index-based valuation option and those that would not. ONRR began the analysis with a similar rationale on the same data that it used in the 2020 Rule's calculation. ONRR reviewed the reported royalty data for all Federal gas sales except for non-arm's-length transactions (discussed below), future valuation agreements, and percentage of proceeds (“POP”) contracts. ONRR also adjusted the POOL sales down to 90 percent (as described above), which were spread across ten major geographic areas with active index prices. The ten areas account for over 95 percent of all Federal gas produced. ONRR assumed the remaining five percent of lessees producing Federal gas will not elect the index-based method because areas outside of major producing basins may have infrastructure limitations or limited access to index pricing. The ten geographic areas are:

To calculate the estimated royalty impact, ONRR:

(1) Identified the monthly bidweek price index, published by Platts Inside FERC, for each applicable area—Northwest Pipeline Rockies for Green River, Piceance and Uinta basins; El Paso San Juan for San Juan basin; Colorado Interstate Gas for Big Horn, Powder River, Williston, and Wind River basins; El Paso Permian for Permian basin; and Henry Hub for the Gulf of Mexico. ONRR determined the applicability of a price index based on proximity to the producing area and the frequency with which ONRR's audit and compliance staff verify these index prices in sales contracts;

(2) subtracted the appropriate transportation deduction as described in the 2020 Rule from the midpoint index price identified in step (1);

(3) compared the reported monthly price for each lease inclusive of any reported transportation allowances to the applicable index price for the lease calculated in step (2) for all months in the first year of reported royalty data in the dataset;

(4) identified all leases in step (3) where the reported price exceeded the price calculated in step (2) for seven or more months in the time period;

(5) used the lease list created in step (4) as the base universe of properties that would elect to use the index-based valuation method available;

(6) compared the actual reported price for each month for each lease in the universe identified in step (5), inclusive of transportation allowances reported, to the calculated price in step (2) to identify the difference between what was reported as actual royalties and what would have been reported as royalties under the terms of the index-based valuation method;

(7) performed this calculation and comparison for the next two sets of two-year time periods in the remaining four years of royalty reporting in the dataset; and

(8) calculated the total difference in the four years between the original reported royalty prices and royalties of the identified lease universe that elected the index-based valuation method, then divided that total by four to get an annual estimated royalty impact.

This new method of identification of the lease universe that would elect the index-based valuation method if given the opportunity is the basis for the differences between the estimated royalty impact published in the 2020 Rule and the estimated royalty impact included in this final rule. Also, this identification of the leases that stand to benefit is similar to how a lessee will make its decisions and is a better method to estimate the royalty impact. ONRR compared the monthly prices reported to it in the first year of the data period, inclusive of transportation allowances, to the index prices for the appropriate producing areas, inclusive of transportation deductions. ONRR then identified the leases with reported prices higher than the index price in seven or more months of the year. For these leases with prices higher than index for more than half of the year, ONRR assumes the lessee would elect to use the index-based valuation method. For arm's-length natural gas sales, this equates to 39.8 percent of the entire list of leases and represents a percentage that is lower than the 50 percent assumption made by ONRR in the 2020 Rule's estimated impacts on royalty collections of this same provision. This new percentage incorporates a more logical identification of the leases taking into account a lessee's potential financial benefit.

ONRR estimates the index-based valuation method in the 2020 Rule would have decreased royalty payments on arm's-length natural gas by approximately $6.8 million per year when compared to ONRR regulations in effect prior to the 2020 Rule.

ONRR used similar changes to the assumptions when calculating the royalty impact from extending the index-based valuation option to arm's-length sales of NGLs. As in the previous section, ONRR's goal was to identify a universe of leases that would benefit financially from electing the index-based valuation method. In the 2020 Rule, ONRR assumed that half of the lessees would elect the method without regard to financial benefit or harm.

ONRR used the same dataset for this analysis that was used in the 2020 Rule. It included all NGL sales except for non-arm's-length transactions and future valuation agreements. ONRR also adjusted the POOL sales down to 90 percent (as described above). These sales were spread across the same ten major geographic areas with active index prices for this analysis. To calculate the estimated royalty impact of the index-based valuation method on NGLs from Federal leases, ONRR:

(1) Identified the Platts Oilgram Price Report Price Average Supplement (Platts Conway) or OPIS LP Gas Spot Prices Monthly (OPIS Mont Belvieu) for published monthly midpoint NGL prices per component applicable to each area: Platts Conway for Williston and Wind River basins; and OPIS Mont Belvieu non-TET for the Gulf of Mexico, Big Horn, Green River, Permian, Piceance, Powder River, San Juan, and Uinta basins. In ONRR's audit experience, OPIS' prices are used to value NGLs in contracts more frequently at Mont Belvieu, and Platts' prices are used more frequently at Conway;

(2) calculated NGL basket prices (weighted average prices to group the individual NGL components), which were compared to the imputed price from the monthly royalty report. The baskets illustrate the difference in the gas composition between Conway, Kansas and Mont Belvieu, Texas. The NGL basket hydrocarbon allocations are:

(3) subtracted the current processing deductions, as well as fractionation costs and transportation costs referenced in ONRR regulations without amendment by the 2020 Rule ( see 30 CFR 1206.142(d)(2)(ii)), as shown in the table below from the NGL basket price calculated in step (2):

(4) compared the reported monthly price for each lease inclusive of any reported transportation or processing allowances to the applicable index price for the lease calculated in step (3) for all months in the first year of reported royalty data in the dataset;

(5) identified all leases in step (4) where the reported price exceeded the price calculated in step (3) for seven or more months in the time period;

(6) used the lease list created in step (5) as the base universe of leases that would elect to use the index-based valuation method if available;

(7) compared the actual reported price for each month for each lease in the universe identified in step (6), inclusive of transportation and processing allowances reported, to the calculated price in step (3) to identify the difference between what was reported as actual royalties and what would have been reported as royalties under the terms of the index-based valuation method;

(8) performed this calculation and comparison for the next two sets of two-year time periods in the remaining four years of royalty reporting in the dataset; and

(9) calculated the total difference in the four years between the original reported royalty prices and the royalties if the identified lease universe elected the index-based valuation method, then divided that total by four to get an annual estimated royalty impact.

This new method of identification of the lease universe that would elect the index-based valuation method is the basis for the difference between the estimated royalty impact published in the 2020 Rule and the estimated royalty impact included in this final rule.

ONRR estimates the index-based valuation method in the 2020 Rule would have decreased royalty payments on arm's-length NGLs by approximately $660,000 per year, and that withdrawing the 2020 Rule will increase royalty payments by $660,000 annually.

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. We must establish these security zones by September 23, 2021 to ensure security of personnel, vessels, and facilities from sabotage or other subversive acts, accidents, or other events of a similar nature and lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be contrary to the public interest because immediate action is needed to provide for the security of these vessels, facilities, and personnel.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port Sector Corpus Christi (COTP) has determined that potential hazards associated with the transit of the Motor Vessel (M/V) GASLOG WARSAW and M/V CELSIUS CANBERRA when loaded will be a security concern for facilities, vessels, and personnel within a 500-yard radius of the vessels. This rule is needed to ensure security of personnel, vessels, and facilities from sabotage or other subversive acts, accidents, or other events of a similar nature while the vessels are transiting within Corpus Christi, TX, from September 23, 2021 through September 30, 2021.

The Coast Guard is establishing two 500-yard radius temporary moving security zones around M/V GASLOG WARSAW and M/V CELSIUS CANBERRA. The zones for the vessels will be enforced from the time the first vessel departs loaded on September 23, 2021, until the last vessels departs the Corpus Christi Ship Channel and La Quinta Channel loaded on September 30, 2021. The duration of the zones is intended to protect the personnel, vessels, and facilities from sabotage or other subversive acts, accidents, or other events of a similar nature while the vessels are in transit. No vessel or person will be permitted to enter the security zones without obtaining permission from the COTP or a designated representative.

A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Sector Corpus Christi. Persons or vessels desiring to enter or pass through this zone must request permission from the COTP or a designated representative on VHF-FM channel 16 or by telephone at 361-939-0450. If permission is granted, all persons and vessels shall comply with the instructions of the COTP or designated representative. The COTP or a designated representative will inform the public through Broadcast Notices to Mariners (BNMs), Local Notices to Mariners (LNMs), and/or Marine Safety Information Bulletins (MSIBs) as appropriate of the enforcement times and dates for this security zone.

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

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

This regulatory action determination is based on the size, duration, and location of the security zones. This rule will impact a small designated area of the Corpus Christi Ship Channel and La Quinta Channel during the vessels' transits while loaded with cargo over a ten-day period. Moreover, the rule allows vessels to seek permission to enter the zones.

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

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

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves security zones lasting for the duration of time that the M/V GASLOG WARSAW and M/V CELSIUS CANBERRA are within the Corpus Christi Ship Channel and La Quinta Channel while loaded with cargo. It will prohibit entry within a 500 yard radius of the M/V GASLOG WARSAW and M/V CELSIUS CANBERRA while the vessels are transiting loaded within Corpus Christi Ship Channel and La Quinta Channel. It is categorically excluded from further review under L60 in Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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

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

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable and contrary to the public interest. The Coast Guard did not receive necessary information from the event sponsor for this year's event until September 16, 2021. The Coast Guard has an existing safety zone for this event in 33 CFR 165.786, Table to § 165.786, Line No. 4.1; however, the existing regulation only covers the event when it is scheduled on the last weekend of April. There is not sufficient time to publish an NPRM and respond to comments as the event will take place on October 2, 2021.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be impracticable because the event is taking place on October 2, 2021, and immediate action is needed to respond to the potential safety hazards associated with this event.

The Coast Guard is issuing this rule under the authority in 46 U.S.C. 70034. The Captain of the Port Key West (COTP) has determined that potential hazards associated with open water swim events will be a safety concern for persons and vessels in the regulated area. This rule is needed to ensure the safety of the event participants, the general public, vessels and the marine environment in the navigable waters within the safety zone during the Key West Paddle Classic paddle board event.

This rule establishes a moving safety zone on October 2, 2021 for a period of 7 hours, from 8 a.m. to 3 p.m. The moving safety zone will cover all waters within 50 yards in front of the lead safety vessel preceding the first event participants, 50 yards behind the safety vessel trailing the last event participants, and at all times extend 100 yards on either side of safety vessels. The event course begins at Higgs Beach in Key West, Florida, moves west to the area offshore of Fort Zach State Park, north through Key West Harbor, east through Fleming Key Cut, south through Cow Key Channel, and west returning back to Higgs Beach. The event is scheduled to take place from 8 a.m. to 3 p.m. Approximately 200 paddle boarders and six safety vessels are anticipated to participate in the event. The zone is intended to protect personnel, vessels, and the marine environment in these navigable waters during the event. Persons and non-participant vessels are prohibited from entering, transiting through, anchoring in, or remaining within the safety zone without obtaining permission from the COTP Key West or a designated representative. If authorization to enter, transit through, anchor in, or remain within the safety zone is granted by the COTP Key West or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the COTP Key West or a designated representative. The Coast Guard will provide notice of the safety zone by Local Notice to Mariners, Broadcast Notice to Mariners, or by on-scene designated representatives.

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

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

This regulatory action determination is based on the size, location, duration and available exceptions to the enforcement of the safety zone. The regulated area will impact small designated areas of the Atlantic Ocean and Gulf of Mexico around Key West, Florida, for only 7 hours and thus is limited in time and scope. Furthermore, the rule will allow vessels to seek permission to enter the zone. Non-participant persons and vessels may enter, transit through, anchor in, or remain within the regulated area during the enforcement periods if authorized by the COTP or a designated representative. Vessels not able to enter, transit through, anchor in, or remain within the regulated area without authorization from the COTP or a designated representative may operate in the surrounding areas during the 7 hour enforcement period. The Coast Guard will issue a Local Notice to Mariners and a Broadcast Notice to Mariners, allowing mariners to make alternative plans or seek permission to transit the zone.

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

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

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. The regulated area will impact small designated areas of the Atlantic Ocean and Gulf of Mexico around Key West, Florida, for only 7 hours and thus is limited in time and scope. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

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

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

The Coast Guard will enforce the safety zone established in 33 CFR 165.1191 Table 1, Item number 23, for the Rio Vista Bass Derby Fireworks Display from noon through 9:30 p.m. on October 9, 2021.

The safety zone will extend to all navigable waters of the Sacramento River, from surface to bottom, within a circle formed by connecting all points 100 feet out from the fireworks barge during the loading, transit, and arrival of the fireworks barge from the loading location to the display location and until the start of the fireworks display. From 10:00 a.m. through 4:00 p.m. October 9, 2021, the fireworks barge will load pyrotechnics from the Dutra Group, Oly Yard 615 River Road, Rio Vista, CA. The fireworks barge will remain at the loading location until its transit to the display location. From 7:45 p.m. to 7:55 p.m. on October 9, 2021 the loaded fireworks barge will transit from the Dutra Group, Oly Yard 615 River Road, Rio Vista, CA to the launch site off of Rio Vista, CA in approximate position 38°09′15.53″ N, 121°41′17.01″ W (NAD 83), where it will remain until the conclusion of the fireworks display. During the 15-minute fireworks display, scheduled to begin at approximately 8:45 p.m. on October 9, 2021, and 30 minutes after the conclusion of the fireworks display, the safety zone will increase in size and encompass all navigable waters of the Sacramento River, from surface to bottom, within a circle formed by connecting all points 1000 feet out from the fireworks barge near Rio Vista, CA in approximate position 38°09′15.53″ N, 121°41′17.01″ W (NAD 83). This safety zone will be enforced from noon until 9:30 p.m. on October 9, 2021, or as announced via Broadcast Notice to Mariners.

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

Under the provisions of 33 CFR 165.1191, unauthorized persons or vessels are prohibited from entering into, transiting through, or anchoring in the safety zone during all applicable effective dates and times, unless authorized to do so by the PATCOM or other Official Patrol defined as a federal, state, or local law enforcement agency on scene to assist the Coast Guard in enforcing the regulated area. Additionally, each person who receives notice of a lawful order or direction issued by the PATCOM or Official Patrol shall obey the order or direction. The PATCOM or Official Patrol may, upon request, allow the transit of commercial vessels through regulated areas when it is safe to do so.

If the Captain of the Port determines that the regulated area need not be enforced for the full duration stated in this notice, a Broadcast Notice to Mariners may be used to grant general permission to enter the regulated area.

The Pacific Rum Run race is the fifth race planned as part of the Ocean Cup Over the Horizon World Speed Record Series. The racecourse begins off Huntington Beach Pier, proceeds to Ship Rock and circumnavigates Catalina Island back to Ship Rock, and returns to the finish at the Huntington Beach Pier. The Captain of the Port (COTP), Los Angeles—Long Beach has determined that potential hazards associated with event safety may arise due to the expected high concentration of vessels in the general area along with the high-speed race vessels. For these reasons the Coast Guard believes that a safety zone is necessary to ensure the safety of, and reduce the risk to, the public, and mariners around Catalina Island.

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard did not receive final details for this event until August 25, 2021. There was insufficient time to undergo the full rulemaking process, including providing a reasonable comment period and considering those comments, because the Coast Guard must establish this temporary safety zone by September 30, 2021.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be contrary to the public interest because immediate action is needed to address potentially hazardous conditions associated with high-speed maneuvers from aircraft and waterborne vessels for a search and rescue demonstration.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port (COTP), Los Angeles—Long Beach has determined that potential hazards associated with event safety may arise due to the expected high concentration of vessels in the general area along with the high-speed race vessels. The purpose of this rule is to ensure the safety of, and reduce the risk to, the public, and mariners around Catalina Island before, during, and after the scheduled event.

This rule establishes a safety zone from 7 a.m. to 10 a.m. on October 1, 2021. The safety zone would encompass all navigable waters from the surface to the sea floor consisting of a line connecting the following coordinates: 33°27′38″ N, 118°30′09″ W, 33°27′51″ N, 118°29′53″ W 33°27′34″ N, 118°28′54″, 33°27′12″ N, 118°29′17″ W. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled race. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.

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

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

This regulatory action determination is based on the size, location, and duration of the safety zone. Commercial vessel traffic will be able to safely transit through this safety zone, with coordination by the Captain of the Port or their designated representative. The Coast Guard and Vessel Traffic Service/Marine Exchange will coordinate and mitigate all inbound and outbound commercial traffic movements through the race course. Recreational traffic will be able to transit around this safety zone, which is near the Two Harbors, Catalina entrance.

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

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone encompassing an area near Ship Rock, Catalina Island for the Ocean Cup Pacific Rum Run. It is categorically excluded from further review under paragraph 60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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

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

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard did not receive final details for this event until August 25, 2021. There was insufficient time to undergo the full rulemaking process, including providing a reasonable comment period and considering those comments, because the Coast Guard must establish this temporary safety zone by September 30, 2021.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be contrary to the public interest because immediate action is needed to address potentially hazardous conditions associated with high-speed maneuvers from aircraft and waterborne vessels for a search and rescue demonstration.

The Coast Guard is issuing this rule under authority in 46 U. S. C. 70034. The COTP has determined that potential hazards associated with this event. The sponsor will be conducting an air show in vicinity of the Huntington Beach Pier, for a period of four days. This air show will consist of numerous military and civilian aircraft performing aerobatic maneuvers at high speed within the lateral limits of an aerobatic box that would extend from the surface of the water to 15,000 feet above mean sea level (MSL). The event at Huntington Beach generates over 800 spectator craft in attendance each year. The COTP has determined that potential hazards associated with navigation safety may arise due to multiple low flying aircraft flight paths and stunt performances over the waters off Huntington Beach. This safety zone is necessary to ensure the safety of, and reduce the risk to, the public, and mariners, in the vicinity of the aerobatic performance.

This rule establishes a safety zone from 7 a.m. on September 30, 2021, through 5 p.m. on October 3, 2021. Based on the safety risks described above, the Coast Guard is establishing a safety zone in the vicinity of the Huntington Beach Pier during the Great Pacific Airshow event. The safety zone will encompass all navigable waters from the surface to the sea floor in an area bound by the following coordinates: 33°38.387′ N; 117°58.847′ W, 33°37.992′ N; 117°59.204′ W, 33°39.625′ N; 118°1.806′ W, 33°40.019′ N; 118°1.449′ W. All coordinates displayed are referenced by North American Datum of 1983, World Geodetic System, 1984.

During the enforcement period, vessels are prohibited from entering into, transiting through, or remaining within the designated area unless authorized by the COTP or her designated representative. General boating public will be notified prior to the enforcement of the safety zone via Broadcast Notice to Mariners. No vessel or person is permitted to operate in the safety zone without obtaining permission from COTP or the COTP's designated representative. A designated representative means a Coast Guard Patrol Commander, including a Coast Guard coxswain, petty officer, or other officer operating a Coast Guard vessel and a Federal, State, and local officer designated by or assisting the COTP in the enforcement of the security zone. To seek permission to enter, hail Coast Guard Sector Los Angeles—Long Beach on VHF-FM Channel 16 or 310-521-3801. Upon being hailed by a Coast Guard vessel or designated representative, by siren, radio, flashing light or other means, the operator of the vessel shall proceed as directed.

The general boating public will be notified prior to the enforcement of the temporary safety zone via Broadcast Notice to Mariners.

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

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

This regulatory action determination is based on the size, location, and duration of the safety zone. The size of the zone is the minimum necessary to provide adequate protection for the waterways users, adjoining areas, and the public. The zone will be in place during the scheduled times of 7:00 a.m. to 5:00 p.m. Commercial vessel traffic will in no way be affected by the establishment of the safety zone due to its overall proximity to the shore.

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

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone encompassing an area in vicinity of Huntington Beach and the Huntington Beach Pier. Normally such actions are categorically excluded from further review under paragraph L60(a), in Table 3-1 of U.S. Coast Guard Environmental Planning Implementing Procedures. An environmental analysis and checklist supporting this determination and Record of Environmental Consideration (REC) are available in the docket where indicated under ADDRESSES . We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

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

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

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard did not receive final details for this event until September 20, 2021. It is impracticable to go through the full notice and comment rule making process because the Coast Guard must establish this safety zone by October 1, 2021, and lacks sufficient time to provide a reasonable comment period and to consider those comments before issuing the rule.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be contrary to public interest because immediate action is necessary to protect personnel, vessels, and the marine environment from the potential safety hazards associated with the fireworks display near Pier 27 in the San Francisco Bay on October 1, 2021.

The Coast Guard is issuing this rule under authority 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port San Francisco (COTP) has determined that potential hazards associated with the Pier 27 Fireworks Display on October 1, 2021, will be a safety concern for anyone within a 100-foot radius of the fireworks barge during loading and staging, and anyone within a 500-foot radius of the fireworks barge starting 30 minutes before the fireworks display is scheduled to commence and ending 30 minutes after the conclusion of the fireworks display. For this reason, this temporary safety zone is needed to protect personnel, vessels, and the marine environment in the navigable waters around the fireworks barge and during the fireworks display.

This rule establishes a temporary safety zone from 9:00 a.m. until 10:30 p.m. on October 1, 2021, during the loading, staging, and transit of the fireworks barge in San Francisco Bay near Pier 27, San Francisco, CA, and until 30 minutes after completion of the fireworks display. During the loading, staging, and transit of the fireworks barge scheduled to take place between 9:00 a.m. and 9:20 p.m. on October 1, 2021, until 30 minutes prior to the start of the fireworks display, the safety zone will encompass the navigable waters around and under the fireworks barge, from surface to bottom, within a circle formed by connection of all points 100 feet out from the fireworks barge. Loading the pyrotechnics onto the fireworks barge is scheduled from 10 a.m. to 4 p.m. on October 1, 2021, at Pier 50 in San Francisco, CA.

The fireworks barge will remain at Pier 50 until the start of its transit to the display location. Towing of the barge from Pier 50 to the display location is scheduled to take place from 9:00 p.m. to 9:15 p.m. on October 1, 2021, where it will remain until the conclusion of the fireworks display.

At 9:20 p.m. on October 1, 2021, 30 minutes prior to the commencement of the 10-minute fireworks display, the safety zone will increase in size and encompass the navigable waters around and under the fireworks barge, from surface to bottom, within a circle formed by all connecting points 500 feet from the circle center at approximate position 37°48′23.0″ N, 122°23′51.1″ W (NAD 83). The safety zone will terminate at 10:30 p.m. on October 1, 2021, or as announced via Broadcast Notice to Mariners.

This regulation is necessary to keep persons and vessels away from the immediate vicinity of the fireworks loading, staging, transit, and display site. Except for persons or vessels authorized by the COTP or the COTP's designated representative, no person or vessel may enter or remain in the restricted area. A “designated representative” means a Coast Guard Patrol Commander, including a Coast Guard coxswain, petty officer, or other officer operating a Coast Guard vessel, or a Federal, State, or local officer designated by or assisting the COTP in the enforcement of the safety zone. This regulation is necessary to ensure the safety of participants, spectators, and transiting vessels.

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

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

This regulatory action determination is based on the limited duration and narrowly tailored geographic area of the safety zone. Although this rule restricts access to the waters encompassed by the safety zone, the effect of this rule will not be significant because the local waterways users will be notified to ensure the safety zone will result in minimum impact. The vessels desiring to transit through or around the temporary safety zone may do so upon express permission from the COTP or the COTP's designated representative.

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

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

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

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

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

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a temporary safety zone in the navigable waters around the loading, staging, transit, and display of fireworks near Pier 50 and Pier 27 in San Francisco Bay. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

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

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

On October 15, 2019, VA published the proposed rule for Schedule of Rating Disabilities; The Genitourinary Diseases and Conditions in the Federal Register . See 84 FR 55086. VA received 12 comments during the 60-day comment period. VA appreciates the comments submitted in response to the proposed rule. Based on the rationale stated in the proposed rule and in this document, the proposed rule is adopted as a final rule with minor changes noted below.

One commenter welcomed the proposed changes to 38 CFR 4.115a, including the replacement of a vague term (“intermittent intensive management”) with a more specific reference (“suppressive drug therapy”) in the urinary tract infection (UTI) criteria. The commenter supported VA's proposal to eliminate subjective terms such as “markedly,” “some,” and “slight” in the renal dysfunction criteria and to replace them with specific, objective laboratory findings, such as the glomerular filtration rate (GFR) and albumin/creatinine ratio (ACR). The commenter noted that these revisions will likely result in a more efficient application of the rating schedule of disabilities and will benefit many veterans with kidney diseases. VA appreciates the commenter's support and makes no changes based on this comment.

Another commenter supported VA's proposal to update medical terminology and 38 CFR 4.115a. The commenter noted that the proposed changes include more specific, objective laboratory findings such as GFR. The commenter also noted that the National Kidney Foundation indicated that an estimated glomerular filtration (eGFR) is the best test to measure the level of kidney function and to determine the stage of the kidney disease. VA appreciates the commenter's support and makes no changes based on this comment.

One commenter expressed an opinion that the GFR values in a previously proposed rule, which was published on July 28, 2017, are more in line with National Kidney Foundation standards. See 82 FR 35140. However, that July 2017 proposal was formally withdrawn through notice published in the Federal Register on March 5, 2019. See 84 FR 7844. Although the commenter asserted that the July 2017 proposal's GFR values more accurately reflected disease progression, VA found during its internal review that the renal dysfunction rating criteria proposed in July 2017 contained erroneous values and units of measure for ACR and GFR. These erroneous proposed values were not in line with the National Kidney Foundation guidelines and would have resulted in erroneous disability evaluations for multiple renal disabilities. In contrast, the October 2019 proposed rule cited corrected GFR values aligned with the National Kidney Foundation's definition and classification of chronic kidney disease. Nat'l Kidney Found., “KDIGO 2012 Clinical Practice Guideline for the Evaluation and Management of Chronic Kidney Disease,” 3(1) Kidney Int'l Suppl. 5 (Jan. 2013), available at https://kdigo.org/wp-content/uploads/2017/02/KDIGO_2012_CKD_GL.pdf (last viewed May 15, 2020) [hereinafter “KDIGO”]. Therefore, VA makes no changes based on this comment.

Another commenter stated that a recent study showed that an overestimation of renal function was correlated with patients' post-amputation status. The commenter stated that this study suggested that a cystatin C test would be a more accurate measure of kidney function in patients who have had amputations. According to the National Kidney Foundation, a blood test for cystatin C can be helpful in some instances, but it is not the usual or regular way to estimate a GFR. National Kidney Foundation, “Cystatin C,” https://www.kidney.org/atoz/content/cystatinC (last viewed May 15, 2020). A recently published study examined the accuracy of kidney function estimates when prescribing renally-eliminated medications in non-traumatic amputees. Aakjaer et al., “Differences in Kidney Function Estimates Based on Creatinine and/or Cystatin C in Non-Traumatic Amputation Patients and Their Impact on Drug Prescribing,” 8(1) J Clin Med. 89 (2019), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6351924/ (last viewed May 15, 2020). The conclusions of this study highlighted the fact that a non-traumatic amputation of a lower extremity has a significant effect on both eGFR and cystatin C. Furthermore, there are significant differences between eGFR and cystatin C (both before and after amputation) and these differences impact how renally-eliminated medications should be prescribed. VA appreciates this comment. However, the VA rating schedule for disabilities is not used for diagnosis and treatment of medical conditions; it is used to evaluate disabilities in accord with average earnings loss. VA has determined that, for VA disability evaluation purposes, GFR, eGFR, and ACR values present adequate measurements of functional impairment due to kidney disease. VA makes no changes based on this comment.

Another commenter disagreed with the changes made in 38 CFR 4.115a by stating that decreasing the required GFR for the 80, 60 and 30 percent rating criteria would disqualify many veterans with chronic kidney disease from future increases in their disability rating if their conditions worsen. However, VA did not propose a decrease in GFR values; rather, VA replaced subjective terms such as “markedly,” “some,” and “slight” in the current evaluation criteria with specific, objective laboratory findings, such as GFR and ACR. To the extent that the comment was intended to suggest that VA should use the GFR values in the proposed rule published in July 2017 and later withdrawn, VA has determined, as stated above, that the GFR values proposed in October 2019 are more accurate and better aligned with the National Kidney Foundation's definition and classification of chronic kidney disease. VA makes no changes based on this comment.

The same commenter was concerned that, under the proposed GFR values, a veteran would have to be at the point of getting a kidney transplant in order to reach an 80 percent disability evaluation. VA proposed an 80 percent evaluation for individuals with a GFR between 15 and 29 mL/min/1.73 m 2 for at least three consecutive months. This aligned VA's functional impairment evaluation with the most current clinical guidelines. Nat'l Kidney Found., “Managing Your Adult Patients Who Have a Kidney Transplant,” at 2 (2011), available at https://www.kidney.org/sites/default/files/02-50-4079_ABB_ManagingTransRecipBk_PC.pdf (last viewed May 15, 2020) [hereinafter “Managing”]. According to the National Kidney Foundation guidelines, only patients with kidney failure (GFR value <15 or dialysis) are considered for kidney replacement therapy (kidney transplant). Id. For patients with severely decreased kidney function (GFR between 15 and 29 mL/min/1.73 m 2 ), a referral to a nephrologist for evaluation of chronic kidney disease progression is recommended. Id. Such evaluation would include a range of activities in preparation for kidney replacement therapy such as patient and family education, dialysis access, and preemptive transplant. Id. VA makes no changes based on this comment.

Another commenter referenced a study that showed a link between kidney disease and/or kidney failure and prolonged use of proton pump inhibitors such as Prilosec and Nexium. The commenter suggested that the overuse and/or prolonged use of proton pump inhibitors during military service and the medications' side effects should be included in the schedule for rating disabilities. VA appreciates this comment. The comment appears directed more toward establishment of service connection for a condition resulting in disability than to rating the level of disability attributable to the condition. Nonetheless, to ensure that the full range of relevant factors is adequately addressed, VA intends to establish a work group that will consider this issue at a future time. Upon consideration and assessment of the work group's findings, VA will determine whether any additional amendments to the criteria are necessary; if so, they would be addressed in a future proposal. At this time, however, VA makes no changes based on this comment.

Another commenter expressed concern that the proposed rule did not make clear how the stages of chronic kidney disease (CKD) translate into the proposed rating criteria for renal disfunction. To be clear, VA proposed 100, 80, 60, 30, and 0 percent evaluations based on the stages of CKD according to most current clinical guidelines, specifically, those of the National Kidney Foundation. See KDIGO at 8. The National Kidney Foundation guidelines distinguish between patients with kidney failure (that is, GFR value <15 or dialysis), severely decreased kidney function (GFR value 15 to 29), moderately to severely decreased kidney function (GFR value 30 to 44), mildly to moderately decreased kidney function (GFR value 45 to 59), and mildly decreased kidney function (GFR value 60 to 89). Id. VA's proposed (and now final) rating criteria for renal dysfunction provide the same staging. VA makes no changes based on this comment.

Another commenter welcomed VA's decision to base its disability evaluations for renal dysfunction on GFR and ACR laboratory findings, but was concerned that VA would use only these laboratory findings without taking into consideration other available evidence in the claims file. By law, VA must consider all available evidence when determining whether the criteria for a particular a disability evaluation are met. 38 U.S.C. 5107(b). As noted above, the GFR and ACR laboratory findings are an objective, accurate, and standard method for measuring renal dysfunction. Other relevant evidence in the claims file may implicate broader issues such as separate ratings or secondary service connection in a given case but, for the renal dysfunction rating specifically, the GFR and ACR laboratory findings will govern. VA makes no changes based on this comment.

The same commenter referenced a National Institutes of Health (NIH) study and alleged that renal dysfunction due to cold injury-related venous congestion cannot be rated based on GFR values. VA disagrees. The NIH report does not appear to make such an allegation; indeed, it used GFR values to measure renal impairment. Mullens et al., “Importance of Venous Congestion for Worsening of Renal Function in Advanced Decompensated Heart Failure,” 53(7) J Am Coll Cardiol. 589-596 (2009), available at https://pubmed.ncbi.nlm.nih.gov/19215833/ (last visited May 19, 2020). According to the National Kidney Foundation, GFR is widely accepted as the best overall index of kidney function, KDIGO at 19, and the commenter does not appear to present an alternative measure. VA makes no changes based on this comment.

The same commenter stated that basing the renal dysfunction rating on GFR values would exclude combat veterans with warm water immersion foot and paddy foot injuries from receiving VA disability compensation. VA disagrees. To the extent that these injuries cause renal dysfunction, that dysfunction can be measured through GFR, and compensation can be provided based on the GFR value. VA makes no changes based on this comment.

The same commenter proposed the addition of new diagnostic codes for kidney dysfunction due to the warm water immersion foot and paddy foot injuries. VA appreciates this comment. To ensure that the full range of relevant factors is adequately addressed, VA intends to establish a work group that will consider this issue at a future time. Upon consideration and assessment of the work group's findings, VA will determine whether any additional amendments to the criteria are necessary; if so, they would be addressed in a future proposal. At this time, however, VA makes no changes based on this comment.

Based on its internal review, however, VA makes one change to the general rating formula for renal dysfunction: Adding the word “eligible” to the 100 percent evaluation that describes a kidney transplant recipient. This addition is made to ensure that all veterans with service-connected renal disease who are eligible to receive a kidney transplant will be entitled to a 100 percent evaluation as soon as they are deemed eligible for a kidney transplant, whether or not the transplant has been scheduled.

VA received several comments regarding the proposed changes to DCs 7520 through 7522, which address removal and deformity of the penis.

One commenter asked VA to provide a rationale for its decision to remove the ability to rate the removal of the penis or glans as voiding dysfunction. Under most circumstances, the removal of the penis or glans does not result in voiding dysfunction. Most commonly, the loss of penis or glans will affect the ability to void while standing, which is not considered a compensable functional impairment under the criteria for voiding dysfunction in 38 CFR 4.115a. Santucci et al., “Penile Fracture and Trauma,” Medscape (updated 2019), https://emedicine.medscape.com/article/456305-overview (last visited May 15, 2020). Furthermore, if, in the course of penis or glans surgical removal, there is associated urethral trauma resulting in voiding dysfunction, it should be separately rated under DC 7518, which addresses the stricture of the urethra. For these reasons, VA does not find it appropriate to direct rating personnel to reference the voiding dysfunction criteria of 38 CFR 4.115a when evaluating DCs 7520 and 7521. VA therefore makes no changes based on this comment.

The same commenter recognized that erectile dysfunction alone may not equate to a reduction in earning capacity, but nevertheless asserted that VA should acknowledge that erectile dysfunction could lead to mental distress, such as depression and anxiety, and could impact a veteran's ability to work. The commenter recommended that VA grant compensation for any secondary condition that is related to erectile dysfunction that causes a reduction in earning capacity. VA agrees with the commenter's assessment that a mental disorder related to service-connected erectile dysfunction could warrant secondary service connection. That mental disorder would require its own diagnosis, service connection, and a disability evaluation under 38 CFR 4.130, which governs ratings for mental disorders. VA already recognizes this concept in 38 CFR 3.310(a), which directs that any disability which is proximately due to or the result of a service-connected disability shall be service connected. VA makes no changes based on this comment.

Another commenter disagreed with the proposed changes to DC 7522, which addresses erectile dysfunction and penile deformity. The commenter expressed concern that, by removing a compensable evaluation for penis deformity, VA will unreasonably deprive certain veterans of benefits, specifically, veterans with Peyronie's disease. The commenter listed several signs and symptoms of Peyronie's disease to include scar tissue, a significant bend to the penis, erection problems, shortening of the penis, pain with or without erection, and mental health disorders due to stress and anxiety. The commenter indicated that the severity of the overall impact of Peyronie's disease on male veterans is evidenced by the prevalence of mental health disorders associated with it. The commenter expressed an opinion that the functional impairment due to Peyronie's disease affects veterans' ability to function under the ordinary conditions of life and work. Additionally, the commenter stated that, though disabilities relating to creative organs may not affect earning capacity directly, they impact non-economic factors such as personal inconvenience, social inadaptability, or psychological factors. The commenter proposed the addition of a diagnostic code and specific rating criteria for Peyronie's disease, including penile deformity and pain.

Moreover, two commenters asked VA to provide a rationale for its decision to exclude Peyronie's disease from ratable conditions. The commenters expressed concern that Peyronie's disease may be caused by trauma as a result of an in-service injury and, in some cases, prevent a veteran from having sexual intercourse or make it difficult to get or maintain an erection.

Peyronie's disease is typically associated with painful erections or intercourse or a curve in the penis that prevents sexual intercourse. According to the NIH, and based on studies of men who reported having symptoms of Peyronie's disease, researchers estimate that Peyronie's disease affects more than one in 10 men. “Penile Curvature (Peyronie's Disease),” National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), NIH, https://www.niddk.nih.gov/health-information/urologic-diseases/penile-curvature-peyronies-disease (last viewed May 15, 2020). The etiology of Peyronie's disease remains partially understood. More recently, Peyronie's disease has been thought to result from vascular trauma or injury to the penis that causes scarring and deformity of the penis. Lizza et al., “Peyronie's Disease,” Medscape (2018), https://emedicine.medscape.com/article/456574-overview#a7 (last visited May 15, 2020).

VA agrees with the commenters that penile trauma as a result of an in-service injury should be recognized under DC 7522. Accordingly, VA in this final rule is adding a note under DC 7522 to clarify how rating personnel should evaluate disabling effects of penile trauma or disease, to include Peyronie's disease. The note states that, for the purpose of VA disability evaluation, a disease or traumatic injury of the penis resulting in scarring or deformity shall be rated under DC 7522. With this clarification, VA ensures that a traumatic injury or disease of the penis will be recognized by the VASRD. VA would review any mental health disorders associated with erectile dysfunction or Peyronie's disease under 38 CFR 4.125, 4.126, and 4.130. Furthermore, DC 7522's footnote regarding consideration of special monthly compensation for loss of use of a creative organ, where warranted, will apply for both erectile dysfunction or Peyronie's disease.

Nevertheless, as noted in the preamble to the proposed rule, VA provides disability compensation for conditions based on the average impairment of earning capacity pursuant to 38 U.S.C. 1155. Erectile dysfunction, with or without penile deformity, is not associated directly with reductions in earning capacity, which is why VA proposed to provide a noncompensable evaluation for erectile dysfunction under DC 7522. Similarly, the potentially painful erections and intercourse associated with Peyronie's disease do not, on average, impair earning capacity at a compensable level. To the extent these conditions impact social or psychological factors, VA has a variety of mental health and counseling services available for service-connected veterans. But the law specifically links disability compensation to impairment of earning capacity. 38 U.S.C. 1155. VA thanks the commenters for their input.

One commenter expressed concern with VA's proposal to rate neurogenic bladder as voiding dysfunction or urinary tract infection, whichever is predominant. The commenter asserted that VA would fail to adequately compensate a veteran who suffers from both effects. Historically, 38 CFR 4.115a has recognized that “[d]iseases of the genitourinary system generally result in disabilities related to renal or voiding dysfunctions, infections, or a combination of these.” Further, § 4.115a directs rating personnel to evaluate such disabilities on the “predominant area of dysfunction.” VA's proposal for DC 7542 to evaluate neurogenic bladder conditions based on voiding dysfunction or urinary tract infection mirrors the instructions in § 4.115a, which instruct that only the predominant area of dysfunction shall be considered when evaluating genitourinary conditions. Moreover, § 4.14 directs that the evaluation of the same disability under various diagnoses is to be avoided. Both urinary tract infections and voiding dysfunctions affect urinary tract functioning, specifically, urination. Consequently, these dysfunctions do not lend themselves to distinct and separate disability evaluations without violating the fundamental principle relating to pyramiding as outlined in § 4.14. VA declines to make any changes based on this comment.

One commenter expressed concern that the noncompensable disability rating for varicocele and hydrocele under proposed DC 7543 does not provide proper compensation for individuals with severe cases of varicocele or hydrocele that result in acute pain during walking or driving. The commenter suggested a 10 percent disability rating for such severe cases of varicocele or hydrocele. However, the evidence indicates that varicoceles are often asymptomatic and hydroceles are usually painless and disappear without treatment. See Junnile, J. and Lassen, P., “Testicular Masses,” 57(4) Am Fam Physician 685-692 (1998), available at https://www.aafp.org/afp/1998/0215/p685.html (last viewed May 15, 2020). While these conditions may cause a decrease in fertility, or the existence of infertility, neither cause a reduction in earning capacity that would warrant a compensable rating. However, where varicocele or hydrocele causes pain that necessitates surgery, a rating under an appropriate diagnostic code may be available for post-surgery residuals. Also, in any instance in which a veteran has loss of use of a creative organ due to a service-connected condition, VA provides special monthly compensation for this functional loss. See 38 CFR 3.350(a). VA makes no changes based on these comments.

One commenter stated that many combat veterans are unknowingly and silently enduring cold injury kidney dysfunction, and VA neglected to notify 1.7 million combat veterans of the long-term sequelae of warm water immersion foot injuries. These aspects of the comment relate to notice and education for veterans, not the rating criteria used in the evaluation of service-connected genitourinary conditions. Therefore, these issues are not within the scope of this rulemaking. VA makes no changes based on these comments.

The same commenter stated that physicians at VA medical centers do not know and have no reasonable means to ascertain information related to the disability rating criteria associated with immersion foot injuries and related kidney dysfunction, in order to properly treat disabled veterans. Furthermore, the commenter discussed in detail his medical conditions and claims' adjudication process. VA appreciates these comments; however, the comments relate to diagnosis and treatment of cardiovascular and renal conditions rather than disability evaluations in the rating schedule. Therefore, these issues are not within the scope of this rulemaking. VA makes no changes based on these comments.

In its proposed rule, VA deemed the first three sentences of §  4.115 unnecessary and proposed to remove them. However, during its internal review and additional considerations of such removal, VA realized that further study of this action is warranted to account for complex relationships between cardiovascular and genitourinary disabilities.

Currently, VA does not assign separate evaluations for heart disease and any form of nephritis due to its close interrelationship with cardiovascular disabilities. However, VA can separately evaluate non-nephritis renal disease and cardiovascular disease ( e.g., diabetic nephropathy and coronary artery disease) when complications do not overlap.

VA proposed new terminology for § 4.115, but did not clearly define renal disease and its relationship with cardiovascular conditions. Thus, if the proposed changes were to be made effective, they might be interpreted as precluding separate evaluations for non-nephritis renal disease and cardiovascular disabilities. This was not an intended consequence of this rulemaking, and would be disadvantageous to veterans who suffer from service-connected renal and cardiovascular conditions.

Therefore, VA withdraws its proposal to revise §  4.115. VA will review and update §  4.115 during its next revision of the VA Rating Schedule for Disabilities.

In the proposed rule, VA updated its general rating formula for renal dysfunction by replacing subjective criteria with specific, objective laboratory findings, such as the GFR and ACR. Upon further review, VA realized that it inadvertently omitted a reference to the period of evaluation for the GFR and ACR values. VA makes a clarifying change in the text for the 100, 80, 60, 30, and 0 percent disability evaluations by adding the reference “during the past 12 months” to “Chronic kidney disease with GFR . . . for at least 3 consecutive months.” This change to the language does not result to any substantive changes to the criteria in the general rating formula for renal dysfunction.

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 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 Secretary hereby certifies that this final rule will 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). The certification is based on the fact that small entities or businesses are not affected by revisions to the VASRD. 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 final rule will have no such effect on State, local, and tribal governments, or on the private sector.

This final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

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

The Catalog of Federal Domestic Assistance program numbers and titles affected by this document are 64.009, Veterans Medical Care Benefits; 64.104, Pension for Non-Service-Connected Disability for Veterans; 64.109, Veterans Compensation for Service-Connected Disability.

Denis McDonough, Secretary of Veterans Affairs, approved this document on June 22, 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 out in the preamble of this rule and the proposed rule, the Department of Veterans Affairs amends 38 CFR part 4 as follows:

VA published a proposed rule in the Federal Register at 84 FR 37594 on August 1, 2019, to amend the regulations involving the cardiovascular system. VA provided a 60-day public comment period and invited interested persons to submit written comments, suggestions, or objections on or before September 30, 2019. VA received comments from National Organization of Veterans' Advocates (NOVA), Military Disability Made Easy (two comments), Veterans of Foreign Wars (VFW), National Veterans Legal Services Program (NVLSP), and four individuals. VA has made limited changes based on these comments, as discussed below.

General Discussion:

One commenter requested clarification for the meaning of “month” and asked that the number of days that a “month” represents be provided. VA clarifies that the term “month” is used to describe the procession from one month to the next on the Gregorian calendar. It does not denote a specific number of days since the number of days in a month vary throughout the year. However, for the purpose of understanding how long a temporary evaluation will be effective based on “months,” VA clarifies that temporary evaluations remain effective until the last day of the month in which the temporary evaluation ends. As an example, under Diagnostic Code 7000, VA will assign a 100-percent evaluation during active infection with valvular heart disease and for three months following the cessation of treatment for the active infection. If treatment ceased on January 5, 2020, the temporary evaluation would end after three months (on approximately April 5, 2020) and would remain effective until the end of the current month, April 30, 2020.

§ 4.100, Application of the evaluation criteria for diagnostic codes 7000-7007, 7011, and 7015:

Three issues within this section were highlighted by multiple commenters. One commenter asked why it was necessary to wait for significant debilitation before compensation is awarded when using disease classification as a basis for compensation. VA notes current law requires that VA adopt and apply “a schedule of ratings of reductions in earning capacity from specific injuries or combination of injuries” that are based upon the average impairments of earning capacity from injuries or disabilities related to military service in civil occupations. See 38 U.S.C. 1155. Second, disease classification is not a consistently accurate predictor of either disability or loss in earnings capacity. VA makes no changes based on this comment.

Another commenter asked what are the alternatives that can be used instead of metabolic equivalent of task (METs) when METs testing is contraindicated for diagnostic codes using the General Rating Formula for Diseases of the Heart. VA notes that under certain evaluation criteria within the General Rating Formula for Diseases of the Heart, medication and selected echocardiogram findings may be used. In addition, Note 2 of the General Rating Formula, as proposed, states that examiners are permitted to estimate METs level based on an interview when testing cannot be conducted. VA makes no changes based on this comment.

Three commenters objected to the removal of congestive heart failure (CHF) and left ventricular ejection fraction (LVEF). One commenter stated that instead of removing CHF and LVEF, VA should require medical examiners to provide a full picture of the heart disability, including explaining if CHF or LVEF is not caused by the heart condition, in accordance with § 4.10. Another commenter questioned the rationale for removing CHF and LVEF because VA argued for including those metrics in a 2002 proposed rule. The commenter also stated that removing these metrics would be overly restrictive and burdensome to veterans with limited access to care. The last commenter objected to the removal of CHF and LVEF and cited a 2017 medical journal article which concluded that LVEF was the best metric for functional and structural cardiac remodeling. VA appreciates these comments but continues with the proposed changes without modification for the following reasons.

First, under certain evaluation criteria within the General Rating Formula for Diseases of the Heart, medication and selected echocardiogram findings may be used instead of METs. Second, it should be noted that § 4.10 requires in part “full description of the effects of disability upon the person's ordinary activity.” CHF is actually a medical diagnosis, and does not, in and of itself, describe disability. Additionally, “ejection fraction (LVEF) is poorly related to exercise tolerance (which is measured in METS).” Topol, E.J., “Textbook of Cardiovascular Medicine, 3rd Edition, pg. 1349 (2007). MET, on the other hand, is a metric used to describe functional capacity or exercise tolerance of an individual performing activities, for some of which the difficulty with or inability to perform has a profoundly negative effect on earnings capacity. As VA explained in the proposed rule, LVEF and CHF are unreliable tools for assessing functional limitation and disability due to cardiac disease because they may be influenced by numerous factors not directly associated with the underlying cardiovascular disease. 84 FR at 37595. Third, on August 22, 2002, VA published proposed changes to § 4.100 that, while providing a basis to include consideration of LVEF and CHF in the cardiac disability evaluation, also clarified that VA does not require all three tests ( i.e., METs, CHF, and LVEF) in order to evaluate a cardiac disability. See 67 FR 54394. At the time, VA stated that “[o]ur intent in providing alternative criteria was to avoid the need for a veteran to undergo additional tests that might be invasive, risky, costly, or time-consuming, if one or more objective and reliable tests or findings suitable for evaluation purposes are already of record.” Id. at 54395. These proposed changes were finalized in 2006. See 71 FR 52457. VA does not consider removing CHF and LVEF as inconsistent with its stated intention in 2002. VA's intent has consistently been to avoid, whenever possible, invasive, risky, costly, or time-consuming tests when ascertaining level of impairment and METs testing is the least invasive procedure compared to CHF and LVEF testing. Further, although one commenter raised the issue of local accessibility of certain testing, VA notes that METs can be obtained via provider interview, observation, or actual physical testing.

Finally, a commenter who objected to the removal of CHF and LEVF also cited a 2017 medical journal article that involves functional and structural phenotyping of failing hearts to better diagnose, treat, and otherwise manage heart failure. The article does not, however, address residual disability leading to loss in earnings capacity, which is the primary focus of the ratings schedule.

§ 4.104, Schedule of ratings-cardiovascular system:

Two commenters raised three issues specific to this section. One commenter agreed with VA's continued recognition of palpitations and arrhythmias as elements within selected evaluation criteria. VA thanks the commenter for their input. One commenter disagreed with using METs, claiming they are inaccurate within key situations ( e.g., normal METs values despite cardiac abnormalities; symptomatic only with activities requiring greater than 10 METs; and METs are inaccurate for sustained activities). Finally, in place of METs, that commenter noted that disease is the limiting factor, and should be both measured as well as classified to determine compensation levels.

VA makes no changes based on the immediately preceding comments for the following reasons. VA disagrees with the commenter's conclusion that METs are inaccurate in situations involving normal function despite anatomic abnormalities and during sustained activities. Regardless of whether any anatomic/medical/ structural abnormalities exist, if they are not associated with a specific disability or disabilities, then such abnormalities are not a basis for disability compensation. Second, the Compendium of Physical Activities, which is “a coding scheme that classifies specific physical activity . . . by rate of energy expenditure,” https://pubmed.ncbi.nlm.nih.gov/10993420/, shows that while the amount of energy expended depends on the duration of the activity, the rate of energy expenditure is unchanged regardless of how long the energy is expended.

Finally, VA notes that the fact that a disease classification system functions well in terms of guiding treatment or predicting prognosis does not necessarily imply it is an adequate tool for rating disabilities. Pursuant to 38 U.S.C. 1155, VA's rating schedule is intended to reflect reductions in earning capacity from specific injuries or disabilities incurred in or due to military service, so any proposed classification system must fulfill that requirement.

Proposed new DC 7009, bradycardia (bradyarrhythmia), symptomatic, requiring permanent pacemaker implantation and current DC 7018, implantable cardiac pacemakers:

One commenter asked if a 100-percent evaluation for implanted pacemakers could be prolonged if recovery time was greater than one month. VA proposed to add a new DC 7009 for bradycardia requiring permanent pacemaker implantation that would provide a 100-percent evaluation for one month following hospitalization for implantation or re-implantation. Residuals after the following initial month will be evaluated using the General Rating Formula. Aside from total (100 percent) evaluations provided in the rating schedule, VA also provides temporary 100-percent evaluation ratings for any service-connected disability that requires hospitalization longer than 21 days or more or requires at least one month of convalescence for surgery (or immobilization by cast of one major joint or more), if the evidence shows that it is warranted. See 38 CFR 4.29-4.30. Since VA has provisions in place for post-operative or surgical total evaluations for such instances, VA makes no changes based on this comment.

Proposed new DC 7009, bradycardia (bradyarrhythmia), symptomatic, requiring permanent pacemaker implantation and current DCs 7010, supraventricular arrhythmias, 7011, ventricular arrhythmias (sustained), and 7015, atrioventricular block:

The proposed rule stated that, for conditions under these DCs, “a single evaluation will be assigned under the diagnostic code that reflects the predominant disability picture.” One commenter asked how a “medical professional” could “appeal[ ] or otherwise alter[ ]” the diagnostic code to the extent that person disagrees with that instruction. VA clarifies that “predominant disability picture” is a term of art that generally describes the disability that allows for the highest compensable evaluation. To the extent the commenter means to ask whether an examiner can provide additional information beyond what he or she believes is contemplated by the applicable diagnostic code, the answer is that an examiner should always strive to provide a complete picture of the claimant's disability, including any salient details, and provide medical reasoning to justify any conclusions drawn, which is consistent with the examiner's obligations under 38 CFR 4.10. If a veteran is service connected for two of these disabilities, a VA rating specialist will consider the probative value of this report in selecting the disability that warrants the highest evaluation to evaluate both conditions, consistent with the rater's obligation “to interpret reports of examination in the light of the whole recorded history, reconciling the various reports into a consistent picture so that the current rating may accurately reflect the elements of disability present.” 38 CFR 4.2.

If the claimant or the claimant's representative believes another service-connected condition is more disabling to the point that it warrants a higher evaluation than the original condition, the claimant or the claimant's representative may present evidence in support of that argument in whatever posture is most appropriate at the time. For example, the claimant may raise that argument in a notice of disagreement if filed within one year of the rating decision notification letter containing the disputed disability picture assessment, or the claimant may file an increased rating claim if the other service-connected condition has become the prominent disability any time after the initial rating decision becomes final. At that time, if the rating specialist determines the evidence supports the claimant's argument, VA will assign a new higher evaluation to reflect the appropriate disability picture. VA makes no changes based on this comment.

DC 7010, Supraventricular Arrythmias:

Four different commenters raised multiple concerns with this DC. Two commenters raised the issue of hospitalizations, one objecting to the use in the revised evaluation criteria and the other asking what level of hospitalization is required to receive an evaluation. VA used the term “hospitalizations” in giving a general description of the evaluation criteria revisions, but the proposed rule goes on to state VA's actual intent, which was to use specific treatment interventions such as intravenous pharmacologic adjustment, cardioversion, and/or ablation from a provider that are intended to treat acutely disabling symptoms. Hospitalization may or may not be associated with these treatment interventions, so it was excluded as a description within the evaluation criteria. VA regrets any confusion resulting from the use of the word “hospitalizations” in association with this DC and continues with the proposed changes without modification.

Three commenters proposed oral medication be used within evaluation criteria. One commenter proposed adding emergency room (ER) visits to the evaluation criteria. Still another commenter proposed adding vagal maneuvers to the evaluation criteria. VA agrees to incorporate oral medications and vagal maneuvers but declines to revise the evaluation criteria to incorporate ER visits. As previously stated, the evaluation criteria will be based on residual disability from treatment interventions to resolve disabling symptoms. ER visits do not necessarily require intravenous pharmacologic adjustment, cardioversion, or ablation to block or control the condition and any associated disability. When they do, the proposed evaluation criteria can accommodate this situation.

Finally, two commenters stated that the criteria did not account for other symptoms associated with supraventricular tachycardia, specifically extreme fatigue and tachycardia that induces hypotension, shortness of breath, dizziness, and chest pain. VA declines to revise the evaluation criteria to incorporate symptoms of extreme fatigue, hypotension, shortness of breath, dizziness, and chest pain. This DC specifically addresses supraventricular tachycardia; however, if the condition also causes ventricular arrhythmias ( i.e., tachycardia and bradycardia), an evaluation can be assigned using DC 7011 under the general rating formula, which considers symptoms of fatigue, syncope (hypotension), breathlessness, dizziness, and angina (chest pain). VA points to the instruction concerning DCs 7009, 7010, 7011, and 7015, which only allow for a single evaluation for all four DCs based on the one that reflects the pre-dominant disability picture.

DC 7011, Ventricular Arrhythmias (Sustained):

One commenter recommended VA include “discharge from inpatient cardiac rehabilitation” as another event before waiting six months to conduct the mandatory reexamination for a sustained arrhythmia or ventricular aneurysmectomy. This recommendation was made to ensure VA claims processors do not disallow the application of the provisions of § 4.29 in cases where the veteran is receiving cardiac rehabilitation, which the commenter believed to be a mistake.

The 100-percent evaluation under DC 7011, which is assigned for sustained ventricular arrhythmias following discharge from inpatient hospitalization, already contemplates activities the veteran may be subject to after sustained arrhythmia or ventricular aneurysmectomy, such as cardiac rehabilitation. In addition, a 100-percent evaluation under DC 7011 is assigned for an indefinite period and can remain even after the initial six-month mandatory reexamination, if the findings of the VA examination contemplated in the Note to DC 7011 warrant such a determination. Finally, VA confirms that it is appropriate to not apply the provisions of § 4.29 in cases where the veteran is currently receiving a temporary total rating for a disability for which hospitalization was required. Therefore, inpatient cardiac rehabilitation that occurs at any point during the indefinite assignment of a 100-percent rating under this DC cannot also qualify for benefits under the provisions of § 4.29, which provide a temporary total disability rating for a service-connected disability requiring hospital treatment in a VA or VA-approved hospital for a period in excess of 21 days. Therefore, VA makes no changes based on this comment. VA does, however, take this opportunity to clarify that the hospitalization referenced in DC 7011 is intended to only apply to inpatient cardiac hospitalization.

DC 7015, Atrioventricular Block:

One commenter asked if a block can be reclassified between benign or non-benign. The commenter mischaracterizes how an evaluation changes from benign to non-benign, so VA would like to clarify how a veteran receives an evaluation for an atrioventricular block and how that evaluation changes. An evaluation occurs whenever a veteran submits an electrocardiogram (ECG) with either benign or non-benign atrioventricular block findings. Instead of re-classification, it is during a follow-up examination when the ECG conversion to a non-benign atrioventricular block is identified. It is the submission of that second (non-benign) ECG that changes the evaluation from VA raters. VA makes no changes based on this comment.

DC 7019, Cardiac Transplantation:

One commenter sought clarification about the one-year time periods for rating and the mandatory evaluation. The commenter went on further to assert it did not make sense for VA to stipulate that the 100 percent evaluation under this DC only last for one year starting from the hospital admission but mandate reexamination one year after discharge. VA reiterates that it proposed to replace the phrase “for an indefinite period” concerning the length of the 100 percent evaluation with the phrase “for a minimum of one year.” This means that the 100 percent evaluation can exceed one year depending on the circumstances of the case, including the date of discharge as well as the date of the reexamination. VA makes no changes based on this comment.

DC 7110, Aortic Aneurysm:

Two commenters provided input for this DC. One commenter felt the evaluation criteria were confusing, particularly the criteria for the zero-percent evaluation. The other commenter asked if veterans previously receiving a 60-percent evaluation with an aortic aneurysm that precluded exertion would be evaluated under the proposed 100-percent evaluation.

First, VA clarifies that a veteran previously receiving a 60-percent evaluation with an aortic aneurysm that precluded exertion will now be entitled to a 100-percent evaluation. Second, VA originally proposed to provide a 100-percent evaluation under this DC when the aneurysm size is five centimeters or larger or when the aneurysm is symptomatic ( e.g., precludes exertion) and surgical correction was recommended. A zero-percent evaluation would have been assignable if surgery was not recommended and the aneurysm was smaller than five centimeters. Based on the comment, and to provide additional clarity, VA revises the evaluation criteria to specify that a 100-percent evaluation applies when (1) the aneurysm is five centimeters or larger in diameter; (2) the aneurysm is symptomatic; or (3) surgical correction is required. The current note addressing the circumstances triggering mandatory VA examination will be edited for clarity and will indicate that the 100-percent evaluation period begins on the date the physician recommends surgical correction, as described in the proposed rule.

DC 7120, Varicose Veins:

One commenter noted the proposed criteria under DC 7120 states “evaluate under diagnostic code 7121;” however, DC 7121 was not listed in the proposed rating schedule. VA thanks the commenter for this comment. DC 7121 was not listed in the proposed rule because there is no change to the criteria that currently exists under that DC.

Technical Corrections:

Several technical corrections were made for ease of reading or parity in rating schedule language to the following DCs: 7009, 7010, 7011, 7110, and 7124. These corrections were minor and non-substantive in nature and did not change the meaning or substance of the criteria or notes.

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 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 Secretary hereby certifies that this final rule will 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). The certification is based on the fact that no small entities or businesses assign evaluations for disability claims. 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 year. This final rule would have no such effect on State, local, and tribal governments, or on the private sector.

This final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The Catalog of Federal Domestic Assistance program numbers and titles for this rule are 64.104, Pension for Non-Service-Connected Disability for Veterans; 64.109, Veterans Compensation for Service-Connected Disability; and 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death.

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

Denis McDonough, Secretary of Veterans Affairs, approved this document on June 23, 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 out in the preamble, VA amends 38 CFR part 4 as follows:

Throughout this document “we,” “us,” and “our” refer to EPA.

The EPA is taking final action to approve SIP revisions submitted by the State of Missouri on November 12, 2019, revising the 2008 8-hour ozone maintenance plan previously approved on September 20, 2018 (83 FR 47572). This SIP revision demonstrates continued maintenance of the 2008 8-Hour ozone NAAQS, the 1979 1-Hour ozone NAAQS and 1997 8-Hour ozone NAAQS in the St. Louis area through the future year of 2030. The maintenance area boundary includes the Missouri counties of Franklin, Jefferson, St. Charles, and St. Louis along with the City of St. Louis.

Since the 2008 ozone standard is more stringent than the 1979 and 1997 ozone standards, and the boundary area for all three designations are identical, we are approving this SIP revision to also replace the previously approved maintenance plans under those older standards.

Through this final action, the EPA is approving this maintenance plan into Missouri's SIP pursuant to the CAA section 175A as a replacement to the maintenance plans previously approved by EPA on October 2, 2018 (83 FR 38033), May 12, 2003 (68 FR 25413), and February 20, 2015 (80 FR 9207).

On May 12, 2003, EPA published a final rule stating the St. Louis area attained the 1979 1-hour ozone standard, redesignated the area to attainment, and approved the State's plan for maintaining the 1-hour ozone NAAQS (68 FR 25413).

On February 20, 2015, EPA issued a final rulemaking approving the State of Missouri's request to redesignate the Missouri portion of the St. Louis nonattainment area to attainment and their demonstration for maintaining the 1997 8-hour ozone NAAQS through the ten-year maintenance period (2025) (80 FR 9207).

This SIP revision we are acting on in this final action, removes the reliance on the St. Louis Inspection and Maintenance (I/M) program, and Reformulated Gasoline (RFG) for continued maintenance of the 2008, 1979 and 1997 standard. To support this revision, Missouri utilized EPA's 2014 Motor Vehicle Emissions Simulator (MOVES2014b) emission modeling system to project revised mobile source emissions by removing emissions reductions related to I/M and RFG throughout the maintenance period to the future year of 2030.

EPA is approving this revised maintenance plan based on information provided in the emissions projections, modeling results, and an evaluation of quality assured air monitoring data submitted as part of this revision and in a previously reviewed analysis as part of the St. Louis Nonattainment Area 2008 8-hour Ozone NAAQS Redesignation rulemaking on September 20, 2018 (83 FR 47572). Current and future projections of air quality and emissions data for this revision demonstrates maintenance for the 2008, 1979 and 1997 ozone NAAQS.

This revision only affects maintenance for the 2008, 1979 and 1997 ozone standards, only removes the reliance upon the I/M program and RFG programs and meets the requirements of the Clean Air Act.

The full text of the plan revisions including Missouri's technical demonstration can be found in the State's submission, which is included in the docket for this action. The EPA solicited comments on these proposed revision to Missouri's SIP published on July 30, 2021 (86 FR 40977), and received one individual's comment in favor of approval. Therefore, the EPA is finalizing the approval of these revisions to the SIP.

The State's submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from July 29, 2019 through September 13, 2019 and received one comment from the Missouri Petroleum Marketers and Convenience Store Association, one comment from Abel Realty, and thirteen comments from EPA. After receiving comments, the State revised the SIP prior to submitting the plan to EPA. In addition, as explained above and in more detail in the Missouri submittal document, which is part of the docket, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The EPA is taking final action to approve a SIP revision submitted by the State of Missouri on November 12, 2019, revising the 2008 8-hour ozone maintenance plan. EPA has determined that this revision does not interfere with attainment or maintenance of the NAAQS or with any other CAA requirement.

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

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

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

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

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

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

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

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

• Is not subject to requirements of the National Technology Transfer and Advancement Act (NTTA) because this rulemaking does not involve technical standards; and

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 29, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For the reasons stated in the preamble, EPA amends 40 CFR part 52 as set forth below:

Throughout this document “we,” “us,” and “our” refer to EPA.

The EPA is approving revisions to the Missouri SIP received on January 19, 2021. The revisions are to Title 10, Division 10 of the Code of State Regulations (CSR), 10 CSR 10-6.330 “Restriction of Emissions From Batch-Type Charcoal Kilns” which establishes emission limits for batch-type charcoal kilns based on operational parameters that reflect the Best Available Control Technology (BACT) for this industry as of August 20, 1997. These revisions correct an erroneous reference to 10 CSR 10-6.030(21), update, correct, and clarify references to test methods, remove unnecessary words, and make other grammatical and typographical corrections. These revisions are described in detail in the technical support document (TSD) included in the docket for this action.

The public comment period on the EPA's proposed rule opened August 10, 2021, the date of its publication in the Federal Register and closed on September 9, 2021. (86 FR 43617) During this period, the EPA received no comments. The EPA is approving the revisions to this rule because it meets the requirements of the Clean Air Act and will not have a negative impact on air quality.

The State submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from September 16, 2019, to December 10, 2019, and received no comments on this rulemaking. As explained in the EPA's proposed rule and the TSD in the docket for this action, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The EPA is taking final action to amend the Missouri SIP to revise 10 CSR 10-6.330. The EPA received no comments on the revisions detailed in the proposed rule and the TSD. The EPA did not solicit comments on existing rule text that has been previously approved by the EPA into the SIP.

In this document, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Missouri Regulations described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 7 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Therefore, these materials have been approved by the EPA for inclusion in the State Implementation Plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 1

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

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

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

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

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

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

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

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

• Is not subject to requirements of the National Technology Transfer and Advancement Act (NTTA) because this rulemaking does not involve technical standards; and

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 29, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For the reasons stated in the preamble, EPA amends 40 CFR part 52 as set forth below:

Throughout this document “we,” “us,” and “our” refer to EPA.

Table of Contents

The EPA is approving revisions to the Missouri SIP received on January 19, 2021. The revisions are to Title 10, Division 10 of the Code of State Regulations (CSR), 10 CSR 10-6.405 “Restriction of Particulate Matter Emissions from Fuel Burning Equipment Used for Indirect Heating” which restricts the emission of particulate matter from fuel burning equipment used for indirect heating except where 10 CSR 10-6.070 would be applied. This rule applies throughout the State of Missouri with additional conditions applicable to the metropolitan areas of Kansas City, Springfield, and St. Louis. These revisions add incorporation by reference information, remove unnecessary words, and make other editorial changes for clarity. These revisions are described in detail in the technical support document (TSD) included in the docket for this action.

The public comment period on the EPA's proposed rule opened August 10, 2021, the date of its publication in the Federal Register and closed on September 9, 2021. (86 FR 43613) During this period, the EPA received no comments. The EPA is approving the revisions to this rule because it meets the requirements of the Clean Air Act and will not have a negative impact on air quality.

The State submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from January 2, 2020 to April 2, 2020. The State received and addressed two comments from the EPA. As explained in more detail in the TSD which is part of this docket, the SIP revision submission meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The EPA is taking final action to approve Missouri's request to revise 10 CSR 10-6.405. The EPA received no comments on the revisions detailed in the proposed rule and the TSD. The EPA did not solicit comments on existing rule text that has been previously approved by the EPA into the SIP.

In this document, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Missouri Regulations described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 7 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Therefore, these materials have been approved by the EPA for inclusion in the State Implementation Plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 1

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

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

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

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

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

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

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

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

• Is not subject to requirements of the National Technology Transfer and Advancement Act (NTTA) because this rulemaking does not involve technical standards; and

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 29, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For the reasons stated in the preamble, EPA amends 40 CFR part 52 as set forth below:

Through a letter dated April 24, 2020, SC DHEC requested approval of two changes to South Carolina's SIP-approved Regulation 61-62.5, Standard No. 2— Ambient Air Quality Standards. First, SC DHEC updates the formatting of references to the Code of Federal Regulations (CFR) by adding the word “Part” to CFR references in this regulation. This is a non-substantive, ministerial change. Second, SC DHEC removes a sentence referencing test methods for gaseous fluorides from this regulation.

On June 29, 2017 (82 FR 29414), EPA approved the removal of standards applicable to gaseous fluorides (as hydrogen flouride) from South Carolina's SIP-approved Regulation 61-62.5, Standard No. 2— Ambient Air Quality Standards. However, EPA's June 29, 2017, action did not remove the related language describing testing standards for gaseous fluorides that was contained in this same regulation.

In a notice of proposed rulemaking (NPRM) published on May 27, 2021 (86 FR 28519), EPA proposed to approve the aforementioned changes to the South Carolina SIP. Comments on the May 27, 2021, NPRM were due on or before June 28, 2021. EPA did not receive any comments on the May 27, 2021 NPRM.

In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of South Carolina's Regulation 61-62.5, Standard No. 2— Ambient Air Quality Standards,” State effective April 24, 2020. EPA has made and will continue to make these materials generally available through www.regulations.gov and at the EPA Region 4 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, the revised materials, as stated above, have been approved by EPA for inclusion in the SIP, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 1

EPA is finalizing approval of South Carolina's SIP revision to Regulation 61-62.5, Standard No. 2— Ambient Air Quality Standards, with a State effective date of April 24, 2020. Through this final action, EPA is incorporating those revisions into the SIP. EPA has determined that the April 24, 2020, SIP revision meets the applicable requirements of sections 110 of the CAA and applicable regulatory requirements at 40 CFR part 51.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 29, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section CAA section 307(b)(2).

Because this final rule merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law, this final rule for the State of South Carolina does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Therefore, this action will not impose substantial direct costs on Tribal governments or preempt Tribal law.The Catawba Indian Nation (CIN) Reservation is located within the boundary of York County, South Carolina. Pursuant to the Catawba Indian Claims Settlement Act, S.C. Code Ann. 27-16-120 (Settlement Act), “all state and local environmental laws and regulations apply to the [Catawba Indian Nation] and Reservation and are fully enforceable by all relevant state and local agencies and authorities.” The CIN also retains authority to impose regulations applying higher environmental standards to the Reservation than those imposed by state law or local governing bodies, in accordance with the Settlement Act.

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

Throughout this document “we,” “us,” and “our” refer to EPA.

The EPA is taking final action to approve SIP revisions submitted by the State of Missouri on November 12, 2019, revising the 1997 PM 2.5 maintenance plan. This SIP revision demonstrates continued maintenance of the 1997 PM 2.5 NAAQS in the St. Louis area through the future year of 2025. The maintenance area boundary includes the Missouri counties of Franklin, Jefferson, St. Charles, and St. Louis along with the City of St. Louis.

Through this final action, the EPA is approving this maintenance plan into Missouri's SIP pursuant to the CAA section 175A as a replacement to the maintenance plan previously approved by EPA on October 2, 2018 (83 FR 38033).

On August 3, 2018, EPA published in the Federal Register a final rulemaking approving the State of Missouri's request to redesignate the Missouri portion of the St. Louis nonattainment area to attainment and their demonstration for maintaining the 1997 PM 2.5 NAAQS through the ten-year maintenance period. The effective date for this approval was on October 2, 2018 (83 FR 38033).

The SIP revision we are approving in this final rulemaking removes the reliance on the St. Louis vehicle Inspection and Maintenance (I/M) program and the use of Reformulated Gasoline (RFG) for continued maintenance of the 1997 PM 2.5 standard. To support this revision, Missouri utilized EPA's 2014 Motor Vehicle Emissions Simulator (MOVES2014b) emission modeling system to project revised mobile source emissions by removing emissions reductions related to I/M and RFG throughout the maintenance period to the future year of 2025.

EPA is approving this revised maintenance plan based on information provided in the emissions projections, modeling results and an evaluation of quality assured air monitoring data submitted as part of this revision and in a previously reviewed analysis as part of the St. Louis Nonattainment Area 1997 PM 2.5 NAAQS Redesignation rulemaking published on August 3, 2018 (83 FR 38033). Current and future projections of air quality and emissions data for this revision demonstrates maintenance for the 1997 PM 2.5 NAAQS.

This revision only affects maintenance for the 1997 PM 2.5 standard, only removes the reliance upon the I/M and RFG programs for continued maintenance and therefore meets the requirements of the Clean Air Act.

The full text of the plan revisions including Missouri's technical demonstration can be found in the State's submission, which is included in the docket for this action.

The EPA solicited comments on these proposed revision to Missouri's SIP published on July 28, 2021 (86 FR 40395), and did not receive any comments. Therefore, the EPA is finalizing the approval of these revisions to the SIP.

The State's submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from July 29, 2019, through September 13, 2019, and received one comment from the Missouri Petroleum Marketers and Convenience Store Association, one comment from Abel Realty, and thirteen comments from EPA. After receiving comments, the State revised the SIP prior to submitting the plan to EPA. In addition, as explained above and in more detail in the Missouri submittal document, which is part of the docket, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The EPA is taking final action to approve a SIP revision submitted by the State of Missouri on November 12, 2019, revising the 1997 PM 2.5 maintenance plan. EPA has determined that this revision does not interfere with attainment or maintenance of the NAAQS or with any other CAA requirement.

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

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

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

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

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

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

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

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

• Is not subject to requirements of the National Technology Transfer and Advancement Act (NTTA) because this rulemaking does not involve technical standards; and

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

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

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

For the reasons stated in the preamble, EPA amends 40 CFR part 52 as set forth below:

States that have received final approval from the EPA under RCRA section 9004(b) of RCRA, 42 U.S.C. 6991c(b), must maintain an underground storage tank program equivalent to, consistent with, and no less stringent than the Federal underground storage tank program. When the EPA revises the regulations that govern the UST program, states must revise their programs to comply with the updated regulations and submit these revisions to the EPA for approval. Most commonly, states must change their programs because of changes to the EPA's regulations in 40 Code of Federal Regulations (CFR) part 280. States can also initiate changes on their own to their underground storage tank program and these changes must then be approved by the EPA.

On November 20, 2018, in accordance with 40 CFR 281.51(a), Nevada submitted a program revision application seeking the EPA's approval for its UST program revisions (State Application). On July 29, 2021, Nevada submitted amendments to the revision application, based on comments from the EPA. Nevada's revisions correspond to the EPA's final rule published on July 15, 2015 (80 FR 41566), which revised the 1988 UST regulations and the 1988 state program approval (SPA) regulations (2015 Federal Revisions). As required by 40 CFR 281.20, the State Application contains the following: A transmittal letter from the Governor requesting approval, a description of the program and operating procedures, a demonstration of the State's procedures to ensure adequate enforcement, a Memorandum of Agreement outlining the roles and responsibilities of the EPA and the implementing agency, a statement of certification from the Attorney General, copies of all relevant state statutes and regulations, and an application addendum submitted on July 29, 2021. We have reviewed the State Application and determined that the revisions to Nevada's UST program are equivalent to, consistent with, and no less stringent than the corresponding Federal requirements in subpart C of 40 CFR part 281, and that the Nevada program provides for adequate enforcement of compliance (40 CFR 281.11(b)). Therefore, the EPA grants Nevada final approval to operate its UST program with the changes described in the program revision application and as outlined below in Section I.G of this document.

This action does not impose additional requirements on the regulated community because the regulations being approved by this authorization are already in effect in the State of Nevada, and are not changed by this action. This action merely approves the existing State regulations as meeting the Federal requirements and renders them federally enforceable.

The EPA is publishing this direct final authorization without a prior proposal because we view this as a noncontroversial action and we anticipate no adverse comment. Nevada did not receive any comments during its comment period when the rules and regulations being considered in this document were proposed at the State level.

Along with this direct final authorization, the EPA is publishing a separate document in the “Proposed Rules” section of this Federal Register that serves as the proposal to approve the State's UST program revisions, and provides an opportunity for public comment. If the EPA receives comments that oppose this approval, the EPA will withdraw this direct final authorization by publishing a document in the Federal Register before it becomes effective. The EPA will base any further decision on approval of the State Application after considering all comments received during the comment period. The EPA will then address all public comments in a later final authorization. You may not have another opportunity to comment. If you want to comment on this approval, you must do so at this time.

On March 30, 1993, the EPA finalized a rule approving the UST program that Nevada proposed to administer in lieu of the Federal UST program. On July 17, 1998, the EPA codified the approved Nevada program that is subject to the EPA's inspection and enforcement authorities under RCRA sections 9005 and 9006, 42 U.S.C. 6991d and 6991e, and other applicable statutory and regulatory provisions.

In order to be approved, each state program application must meet the general requirements in 40 CFR 281.11, and specific requirements in 40 CFR part 281, subpart B (Components of a Program Application), subpart C (Criteria for No Less Stringent), and subpart D (Adequate Enforcement of Compliance). This is also true for proposed revisions to approved state programs.

As more fully described below, the State has made the changes to its approved UST program to reflect the 2015 Federal Revisions. The EPA is approving the State's changes because they are equivalent to, consistent with, and no less stringent than the Federal UST program and because the EPA has confirmed that the Nevada UST program will continue to provide for adequate enforcement of compliance as described in 40 CFR 281.11(b) and part 281, subpart D, after this approval. There remains a typographical error in NAC 445C.230, in the Cleanup of Discharged Petroleum section, which indicates that Nevada adopts by reference the relevant Federal regulations as they existed on July 1, 1990, rather than as they existed on October 13, 2015. The correct date is referenced in NAC 459.993, in the Storage Tanks section. Nevada's July 29, 2021 submittal describes the steps it will take to revise the regulation.

The Nevada Division of Environmental Protection (NDEP or Division) is the lead implementing agency for the UST program in Nevada, except in Indian country.

NDEP continues to have broad statutory authority to regulate the installation, operation, maintenance, and closure of USTs, as well as UST releases under selected provisions from Nevada Revised Statutes (NRS), Chapters 233B, Nevada Administrative Procedures Act; Chapter 439 Administration of Public Health; Chapter 445A, Water Controls; and Chapter 459, Hazardous Materials. The Nevada UST Program gets its enforcement authority from the powers of the Nevada State Environmental Commission found at NRS 445A.675, 445A.690, 459.842, 459.844, 459.846, 459.848, 459.850, 459.852. 459.854 and 459.856 and administrative rules under the Nevada Administrative Code (NAC) at NAC 459.9941 through 459.9944 regarding delivery prohibition.

Specific authorities to regulate the installation, operation, maintenance, and closure of USTs, as well as UST releases, are found under NRS 459, in addition to the regulatory provisions of NAC 459 and selected sections from NAC 445A, effective November 2, 2018; Reporting and recordkeeping requirements are also found in selected provisions of NAC 459. The aforementioned statutory and regulatory sections satisfy the requirements of 40 CFR 281.40 and 281.41.

Through a Memorandum of Agreement between the State of Nevada and the EPA, signed by the EPA Region 9 Regional Administrator April 3, 2019, the State maintains procedures for receiving and ensuring proper consideration of information about violations submitted by the public. The State agrees to comply with public participation provisions contained in 40 CFR 281.42 by incorporating by reference the Federal provisions at NAC 459.993 and providing authority to hold hearings as deemed necessary to obtain public testimony at NAC 445.22755.

To qualify for final approval, revisions to a state's program must be “equivalent to, consistent with, and no less stringent” than the 2015 Federal Revisions. In the 2015 Federal Revisions, the EPA addressed UST systems deferred in the 1988 UST regulations, and added, among other things, new operation and maintenance requirements; secondary containment requirements for new and replaced tanks and piping; operator training requirements; and a requirement to ensure UST system compatibility before storing certain biofuel blends. In addition, the EPA removed past deferrals for emergency generator tanks, field constructed tanks, and airport hydrant systems. The EPA analyzes revisions to approved state programs pursuant to the criteria found in 40 CFR 281.30 through 281.39.

The Division has revised its regulations to help ensure that the State's UST program revisions are equivalent to, consistent with, and no less stringent than the 2015 Federal Revisions. In particular, the Division has amended the NAC to incorporate the revised requirements of 40 CFR part 280, including the requirements added by the 2015 Federal Revisions. The State, therefore, has ensured that the criteria found in 40 CFR 281.30 through 281.38 are met.

Title 40 CFR 281.39 describes the state operator training requirements that must be met in order to be considered equivalent to, consistent with, and no less stringent than Federal requirements. Nevada has incorporated by reference the Federal requirements at NAC 459.993 with certain additional provisions at NAC 459.99395(1) and (2). After a thorough review, the EPA has determined that Nevada's operator training requirements are equivalent to, consistent with, and no less stringent than Federal requirements.

As part of the State Application, the Senior Deputy Attorney General for the Division certified that the laws of the State provide adequate authority to carry out the “no less stringent” technical requirements submitted by the state in order to meet the criteria in 40 CFR 281.30 through 281.39. The EPA is relying on this certification in addition to the analysis submitted by the State in making our determination.

Where an approved state program has a greater scope of coverage than required by Federal law, the additional coverage is considered “broader in scope” and is not part of the federally-approved program and are not federally enforceable (40 CFR 281.12(a)(3)(ii)). The following regulatory requirements are considered broader in scope than the Federal program as these State-only regulations are not required by Federal regulation and are implemented by the State in addition to the federally approved program: NAC 459.99285, which provides the State-only definition of “marina storage tank,” is outside the scope of the Federal program because these types of tanks do not fall under the applicability of the UST program; and NAC 445.2271 and 445A.2273, which deal with specific types of corrective action plans, contain references that are outside the scope of the Federal UST program with respect to contamination by hazardous waste, which is regulated under RCRA Subtitle C. Nevada also has multiple additional state-only provisions at NAC 459.9933 through 459.9938 that only apply to marina storage tanks. Marina storage tanks are defined as a type of aboveground storage tank and these types of tanks are broader in scope than the Federal RCRA Subtitle I program.

The following statutory provisions are considered broader in scope than the Federal program: Nevada Revised Statutes (NRS) Chapter 445C, Environmental Requirements, Cleanup of Discharged Petroleum is broader in scope than the Federal program because this provision concerns the relocation of the State's Petroleum Fund, a State-only fund; NRS 459.812(2) and 459.820(2) are broader in scope than the Federal underground storage tank program because these particular definitions are exclusive to aboveground storage tanks; and NRS 459.836(3), 459.838, and 459.840 are broader in scope than the Federal program because they are applicable to certain State-only fees and funds, and fees and funds are not included in the Federal program and are broader in scope.

Where an approved state program includes requirements that are considered more stringent than required by Federal law, the more stringent requirements become part of the federally-approved program (40 CFR 281.12(a)(3)(i)).

The following regulatory requirements are considered more stringent than the Federal program, and on approval, they become part of the federally-approved program and are federally enforceable:

NAC 459.9945 requires secondary containment of tanks beginning with those installed on or after July 1, 2008, which is more stringent than the Federal program that subjected tanks to the secondary containment requirement in 2015;

NAC 459.994 includes an additional provision related to tank tightness testing that is more stringent than the Federal program (for example, NAC 459.994(2) requires the testing to be performed by a contractor certified by the Division and that a certificate issued by the contractor be retained by the owner or operator, and NAC 459.994(3) allows the testing to be waived for “abandoned underground storage tanks” if there is a threat to human health or the environment.);

NAC 445A Water Controls, section 445A.22695(1) requires “immediate action . . . under certain circumstances; Director may waive certain requirements”, which is more stringent than the Federal program because Nevada requires immediate action in certain circumstances where the Federal program does not; and

NAC 445A.227 and 445A.22725, which include a provision that the Director may consider certain factors when determining whether a corrective action is required, making the State provisions more stringent than the Federal program because Nevada may require owners/operators to take corrective action in circumstances not required by the Federal program.

The EPA's approval of Nevada's Program does not extend to Indian country as defined in 18 U.S.C. 1151. Indian country generally includes any land held in trust by the United States for an Indian tribe, and any other areas that are “Indian country” within the meaning of 18 U.S.C. 1151. Any lands removed from an Indian reservation status by Federal court action are not considered reservation lands even if located within the exterior boundaries of an Indian reservation. The EPA will retain responsibilities under RCRA for underground storage tanks in Indian country. Therefore, this action has no effect in Indian country. See 40 CFR 281.12(a)(2).

This action only applies to Nevada's UST Program requirements pursuant to RCRA section 9004 and imposes no requirements other than those imposed by State law. It complies with applicable EOs and statutory provisions as follows.

The Office of Management and Budget (OMB) has exempted this action from the requirements of Executive Orders 12866 (58 FR 51735, Oct. 4, 1993) and 13563 (76 FR 3821, Jan. 21, 2011). This action approves State requirements for the purpose of RCRA section 9004 and imposes no additional requirements beyond those imposed by State law. Therefore, this action is not subject to review by OMB.

Because this action approves pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538). For the same reason, this action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

This action 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, as specified in Executive Order 13132 (64 FR 43255, Aug. 10, 1999), because it merely approves State requirements as part of the State RCRA Underground Storage Tank Program without altering the relationship or the distribution of power and responsibilities established by RCRA.

This action also is not subject to Executive Order 13045 (62 FR 19885, Apr. 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks.

This authorization is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a “significant regulatory action” as defined under Executive Order 12866.

Under RCRA section 9004(b), the EPA grants a state's application for approval as long as the state meets the criteria required by RCRA. It would thus be inconsistent with applicable law for the EPA, when it reviews a state approval application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.

As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this authorization, the EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct.

The EPA has complied with Executive Order 12630 (53 FR 8859, Mar. 15, 1988) by examining the takings implications of the authorization in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the Executive order.

This authorization does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). “Burden” is defined at 5 CFR 1320.3(b).

Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. Because this authorization approves pre-existing State rules which are at least equivalent to, consistent with, and no less stringent than existing Federal requirements, and imposes no additional requirements beyond those imposed by State law, and there are no anticipated significant adverse human health or environmental effects, the authorization is not subject to Executive Order 12898.

The Congressional Review Act, 5 U.S.C. 801-808, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this document and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). However, this action will be effective November 29, 2021 because it is a direct final authorization.

In final rule FR Doc. 2021-10808, beginning on page 27989 in the issue of May 25, 2021, make the following correction: On page 27989, in the first column, the Regulation Identifier Number is corrected to read “RIN 3145-AA62.”

These changes seek to align the VAAR with the FAR, remove outdated and duplicative requirements, and reduce burden on contractors. The VAAM incorporates portions of the removed VAAR as well as other internal agency procedural guidance. VA will rewrite certain parts of the VAAR and VAAM, and as VAAR parts are rewritten, VA will publish them in the Federal Register .

On February 1, 2019, VA published a proposed rule in the Federal Register (84 FR 1041) which announced VA's intent to amend regulations for VAAR Case RIN 2900-AQ21—VA Acquisition Regulation: Competition Requirements. VA provided a 60-day comment period for the public to respond to the proposed rule and submit comments. The comment period for the proposed rule ended on April 2, 2019, and VA received comments from six respondents. This rule adopts as a final rule the proposed rule published in the Federal Register on February 1, 2019, with the exception of minor formatting/grammatical edits and a few non-substantive edits, which are described below.

In particular, this final rule adds section 806.004-70, Definition, to establish that as used in part 806, “health-care resource(s)” has the same definition as that provided in VAAR 873.102.

This final rule adds subpart 806.1—Full and Open Competition, and section 806.102, Use of competitive procedures, to address the application of 38 U.S.C. 8127 to competitive General Services Administration (GSA) and VA Federal Supply Schedules.

This rule also adds subpart 806.2—Full and Open Competition After Exclusion of Sources, which contains two sections: 806.203, Set-asides for small business concerns, which directs attention to subparts 819.5 and 819.70 for VA's policies on set-asides for small business concerns, and 806.270, Set-asides for verified Veteran-owned small businesses. This rulemaking, in section 806.270, sets forth VA's authority under VA's supplement to FAR part 6—VAAR part 806, and the requirement mandated by 38 U.S.C. 8127(d)—referred to as the VA Rule of Two, to conduct set-asides for Veteran-owned small businesses whenever market research provides the contracting officer with a reasonable expectation of receiving two or more offers/quotes from eligible and verified service-disabled veteran-owned small businesses (SDVOSBs) or veteran-owned small businesses (VOSBs), and award can be made at a fair and reasonable price that offers best value to the Government. This section also states that the requirement to set aside procurements for Veteran-owned small businesses applies to all contracts under this regulation, including orders under interagency acquisition vehicles such as the Federal Supply Schedules (FSS).

As a part of this rulemaking, subpart 806.3—Other Than Full and Open Competition, is revised to add specific reference to VA's authority for noncompetitive procedures for verified Veteran-owned small businesses and to clarify existing authorities regarding such noncompetitive procedures. The revised subpart also clarifies existing statutory authority for other VA unique authorities and updates new Title 41 citations and other specific citation requirements.

This final rule amends section 806.302, Circumstances permitting other than full and open competition, to add several sections. This rule also revises section 806.302-5, Authorized or required by statute, to remove its text and retain the title. The removed text has been revised and moved to section 806.302-571.

Under section 806.302-5, this final rule adds two sections: 806.302-570 and 806.302-571. Section 806.302-570, Noncompetitive procedures for verified Veteran-owned small businesses, provides coverage of the authority to enter into contracts non-competitively, when specifically authorized under the VA Veterans First Contracting Program in accordance with VAAR 819.7007 or 819.7008.

Section 806.302-571, Authorized or required by statute—VA unique authorities, contains the statutes previously listed in 806.302-5 and provides policy under the statutes to make awards by other than full and open competition. Paragraph (a) provides the updated Title 41 authority—41 U.S.C. 3304(a)(5), updated from the moved coverage under 806.302-5. Paragraph (b)(1) provides that full and open competition is not required for the acquisition of prosthetic appliances and services based on the authority under 38 U.S.C. 8123. Paragraph (b)(2) provides the existing policy for the acquisition of commercial health-care resources, use of medical equipment or space, or research acquired from an institution affiliated with VA under the authority set forth in 38 U.S.C. 8153(a)(3)(A). Paragraph (b)(3) includes policy for the acquisition of commercial health-care resources, the use of medical equipment or space from other than an affiliated institution, but only when conducted in accordance with simplified procedures in VAAR part 873, Simplified Acquisition Procedures for Health-Care Resources, under the authority set forth in 38 U.S.C. 8153(a)(3)(B). Paragraph (b)(4) provides the authority under 38 U.S.C. 8153(a)(3)(C)-(D) for the sole source acquisition of commercial health-care resources, the use of medical equipment or space, when not acquired from an affiliated institution in accordance with paragraph (b)(2).

Section 806.302-571, paragraph (c), requires that contracts awarded using the authority set forth under paragraph (a), with the exception of acquisitions authorized under paragraph (b)(2) of this section, shall be supported by the written justifications and approvals described in FAR 6.303 and 6.304.

Section 806.302-571, paragraph (d), incorporates an updated Title 41 citation reference: 41 U.S.C. 3304(a)(5); defines specific authorities that permit VA to procure certain supplies and services as sole source awards; and requires contracting officers, pursuant to FAR 6.302-5(c)(2)(ii), to comply with written justification and approval requirements set forth in FAR 6.303 and 6.304, citing 41 U.S.C. 3304(a)(5) and the applicable statute. Specifically, section 806.302-571(d) contains authorities previously under section 806.302-5 and continues existing policy to allow VA to enter into contracts for the cited types of supplies and services under this section.

This rulemaking removes section 806.302-7, Public interest, as it provides internal procedural guidance not having a significant effect beyond the internal operating procedures of the VA (see FAR 1.301(b)) and moves the coverage to the VAAM.

This final rule also removes section 806.304, Approval of the justification, as it provides internal procedural guidance not having a significant effect beyond the internal operating procedures of the VA (see FAR 1.301(b)) and which will be moved to the VAAM.

The proposed rule revised subpart 806.5—Competition Advocates to amend the title to “Advocates for Competition” to conform to the revised title in FAR part 6. The proposed rule also revised section 806.501, Requirement, to identify the Deputy Senior Procurement Executive as the VA Advocate for Competition. However, subsequent to publication of the proposed rule, VA organizational changes resulted in the need to update the title of who in VA is assigned the role of the VA Advocate for Competition. This is now updated in this final rule as described in item six in the Technical Non-Substantive Changes section of the preamble.

This final rule removes section 806.570, Planning requirements, as it provides internal procedural guidance not having a significant effect beyond the internal operating procedures of the VA (see FAR 1.301(b)) and the coverage has been moved to the VAAM.

VA provided a 60-day comment period for the public to respond to the proposed rule. As stated previously, VA received comments from six respondents.

A summary of the comments and the issues raised are provided as follows:

One commenter posted a general comment regarding advances in health care in what appears to be part of an academic exercise. VA appreciates the comment. As the comment does not specifically address issues with the proposed rule, VA is making no revisions as a result of the comment.

Another respondent suggests that moving items into the VAAM and eliminating Information Letters (ILs) and various procedural guidance is a positive move. They also note that the VAAM is a better alternative than continued reliance on sub-agency procurement manuals. VA appreciates the comment on the proposed rule. The VAAR/VAAM project objective is to remove procedural guidance that is internal to VA and move it into the VA Acquisition Manual (VAAM), and to incorporate any new agency specific regulations or policies. These changes seek to streamline and align the VAAR with the FAR and remove outdated and duplicative requirements and reduce burden on contractors. The comment does not require the VA to make any revisions to the proposed rule.

The third commenter submits that the Class Deviations and other guidance issued by VA in response to the Supreme Court's decision in Kingdomware Technologies, Inc. v. United States, 136 S. Ct. 1969 (2016), recognize that the Javits-Wagner-O'Day Act's (JWOD) mandatory requirement to purchase from the Procurement List is capable of coexisting with the VA Rule of Two. The commenter states that the current guidance provides that the products and services on the AbilityOne Procurement List are mandatory sources but the VA Rule of Two is to be applied before adding new VA requirements to the Procurement List. To avoid any doubt that the February 9, 2018, class deviation is still in effect, the commenter urges the VA to clarify that VAAR 806.270 does not supersede VAAR 808.002 or the February 9, 2018, class deviation.

VA appreciates the comments. The respondent's comments concerning mandatory sources are appropriately addressed in the proposed rule pertaining to VAAR part 808 and related clauses and provisions. Since the rule (RIN 2900-AQ21) was published for public comment, new legislation impacting AbilityOne was signed into law on August 8, 2020 (see further description regarding this below and the class deviation to VAAR 808.002 issued on August 14, 2020, that addresses the priority of the AbilityOne program in relation to the Veterans First Contracting Program, with certain exceptions). As these comments do not pertain to the language and text in this rule for VAAR part 806, VA is making no changes based on these comments.

The fourth respondent also commented on this rule and its relation to AbilityOne, supporting the primacy of JWOD as a mandatory source and states that “this section of the VAAR should also recognize that non-mandatory source competition is not required where a mandatory source applies, and that the JWOD, and other statutes, direct agencies to purchase certain products and services from mandatory sources.” The commenter also recommends revising the part to recognize that specified sources include the mandatory sources identified in FAR 8.002, 8.004, and subpart 8.7.

While VA appreciates the feedback from the respondents on this proposed rule, the Veterans First Contracting Program was updated as a result of amendments to 38 U.S.C. 8127 by Public Law 116-155, the Department of Veterans Affairs Contracting Preference Consistency Act of 2020, signed August 8, 2020, which requires the use of mandatory Government sources under the AbilityOne program for covered products and services except for certain previously awarded contracts to service-disabled veteran-owned small businesses (SDVOSBs) and veteran-owned small businesses (VOSBs) after December 22, 2006, and in effect August 7, 2020. This is implemented in VAAR 808.002(a)(1)(iv) and (a)(2). VA originally issued a Class Deviation on August 14, 2020, to make this change pending publication of a rule; this deviation was rescinded and replaced with Class Deviation from VA Acquisition Regulation part 808, Required Sources of Supplies and Services, dated July 20, 2021. The priorities for use of mandatory Government sources are covered by FAR part 8 and VAAR part 808, respectively. The language as set forth in VAAR part 806 and specifically at VAAR 806.270 fully comports with VA's requirements under VAAR part 808. VA will not revise the final rule as a result of this comment. Note: VA is also planning an interim rule which would include a pointer at subpart 819.5 back to 808.002(a)(1)(iv) and (a)(2) regarding the AbilityOne program to ensure contracting officers and the public are reminded of the priority use of the AbilityOne program as set forth in VAAR 808.002.

The next respondent had multiple comments and the VA will address each in order. After first commending VA for its thoughtful development of the proposed rule, the commenter recommends that VAAR 806.501 be revised to include the actual list of Advocates for Competition. The commenter also states that VAAR 806.501 could be further improved by including a requirement to identify the cognizant SBA Procurement Center Representative, the VA Ombudsman, and the VA Advocate for Competition in each solicitation above the simplified acquisition threshold.

VA has considered this suggestion but requiring each solicitation or contract to include a list is beyond the requirements of FAR 6.501 that VA is implementing at VAAR 806.501. However, VA is making available a complete list of VA procuring activity Advocates for Competition on its website that will be available when the final rule is published. Therefore, VA is making no changes to the proposed rule as a result of this comment.

The next comment recommended revisions to VAAR 806.270; specifically, that VAAR 806.270 be modified to exclude references to Class Deviation provisions and that VA remove the reference to “the VA Rule of Two (see 802.101)” from the final version of VAAR 806.270 as the definition of “VA Rule of Two” was not added to VAAR 802.101 via the required notice and public comment rulemaking process.

VA appreciates the comment and responds that the VA Rule of Two is a term that is defined and incorporated into 802.101 under a Class Deviation and it will be incorporated into part 802 as a part of a future proposed rule. Nevertheless, to avoid any confusion, section 806.270 has been revised to remove the reference, “see 802.101.”

The respondent also comments that the VAAR must fully implement the Vets Act Priority for SDVOSBs first, and then VOSBs. The commenter states VA should further explain how contracting officers give full credit and partial credit for VOSBs and to address its use in Lowest Priced Technically Acceptable (LPTA) procurements that do not permit tradeoffs. They believe that a new provision should be added to VAAR 852.215-70.

VA appreciates the comments. The respondent's comments concerning 852.215-70 were appropriately addressed in the rule RIN 2900-AQ20 pertaining to VAAR part 815 and related clauses and provisions. Therefore, as these comments do not pertain to the language and text in this rule for VAAR part 806, VA is making no changes based on these comments. However, VA is clarifying section 806.270 to make clear that the statute's required set aside priorities are for SDVOSBs first, then VOSBs by adding the words “first, then . . .” after “(SDVOSBs)”, and removing the word “and” so that it now reads, “. . . verified service-disabled Veteran-owned small businesses (SDVOSBs) first, then Veteran-owned small businesses (VOSBs).” This clarification is consistent with 38 U.S.C. 8127.

The same respondent recommends the proposed rule should be revised as a reference in the preamble of the proposed rule to additional internal requirements is problematic in their opinion. When VA issues the final rule, it should explain in the preamble that the only requirements for a VA contracting officer to issue a sole source contract under the Vets Act are as specified in the text of VAAR 806.302-570, and there are no unspecified agency procedures or class deviations that would restrict or water down this unique and important tool.

VA appreciates the opportunity to make clear the requirements of this section and what is set forth in the preamble. VA's internal procedures, including review and approval thresholds, are properly contained in the VAAM as authorized by FAR 1.301(a)(2) which authorizes an agency head to issue or authorize the issuance of internal agency guidance. While 38 U.S.C. 8127(c) provides the authority for when awards to such sole source concerns may be made, VA implements required internal review and approval oversight procedures as necessary. Therefore, VA makes no changes to the rule on the basis of these comments.

The same commenter asserts that VA should provide Contracting Officers guidance regarding what constitutes a fair and reasonable price.

VA notes that guidance on how to conduct a price analysis and establish a fair and reasonable price determination is already addressed in the FAR. Specifically, FAR subpart 15.4, Contract Pricing, provides guidance to contracting officers to assist in making a fair and reasonable price determination. Additional internal agency guidance would be contained in the VA Acquisition Manual. However, VA acknowledges this is an area of interest for the public as well as VA's acquisition workforce. VA is preparing additional internal training for its acquisition workforce to strengthen contracting officers' skillset in this area. VA is making no changes to the rule based on these comments.

The same commenter recommends VA revise VAAR 806.302-570(a) to state that the sole source contract shall be supported “by the applicable justification and approval requirements of FAR 6.302-5(c)(2)(ii), 6.303, and 6.304.”

VA has considered the comment and concurs that the VA legislation provides a unique sole source authority that is less restrictive than a sole source award otherwise permitted under FAR 6.302-1, “Only one responsible source and no other supplies or services will satisfy agency requirements.” Accordingly, section 806.302-570(a) has been revised to add the word “applicable” as noted in the amendatory language with respect to the content of the justification requirements.

The next comment takes issue with the language “without regard to any other provision of law” in VAAR 806.302-571(b)(1) and believes that the other proposed sections of this rule may create confusion as to whether this sole source authority trumps the Vets Act requirements for VA to give priority to SDVOSBs and VOSBs in all VA contracts. They go on to state, “The sole source authorities cited in VAAR 806.302-571 do not trump the VA's obligations under the Vets Act. For example, 38 U.S.C. 8123 provides, permissively, that VA may procure prosthetic appliances . . . without regard to any other provision of law.” They submit that by contrast, the Vets Act includes broader language that mandates VA give priority to SDVOSBs and VOSBs.

VA does not concur with the respondent's assessment and will make no change based on these comments. The legislative language provides VA broad discretion in certain types of procurements “without regard to any other provision of law.”

The last respondent provides the following positive comments regarding the proposed rule: “. . . strongly supports the VA in their efforts to create more flexibility in the contracting process as well as efforts to reorganize the community care programs through the MISSION Act of 2018.”

VA appreciates the comment. The comment does not require VA to make any revisions to the proposed rule as the comments do not apply to this rule.

This rule makes six non-substantive changes to the proposed rule to provide clarity, eliminate confusion, and to ensure compliance with statute and VA's authority.

1. Under section 806.270, Set-asides for verified Veteran-owned small businesses, VA has revised the language to remove the phrase “including Governmentwide acquisition contracts (GWACs)” as unnecessary to set forth specifically further types of contract vehicles.

2. Under section 806.302-571, Authorized or required by statute—VA unique authorities, VA has revised the language in paragraph (b)(1) to remove the phrase at the end of the subparagraph: “as set forth in VA directives governing prosthetic appliances, sensory aids and services supporting the same . . .” as unnecessary. VA contracting officers are already required to follow VA directives and are internal operating procedures.

3. Under section 806.302-571, paragraph (b)(2), VA is revising the language to provide clarity by: Adding “Acquisition of resources from” in the first sentence before “medical practice groups” and to remove “affiliated” before “institution affiliated with VA.”

4. Under section 806.302-571, at paragraph (b)(3), VA is removing the phrase “only if the procurement is conducted” as too restrictive to VA's procurement authority in various statutes and to ensure clarity. In paragraph (b)(4), VA is revising the authority citation at the end of the paragraph to add “(D)” at the end so that it now reads: (38 U.S.C. 8153(a)(3)(C)-(D)).

5. Under section 806.302-571, paragraph (c), VA is making minor grammatical edits to provide clarity by revising the first sentence so that “this authority” now reads “an authority” and by adding the words, “in this section” so that the intro to the sentence now reads: “Contracts awarded using an authority in this section, . . .”.

6. Under subpart 806.5, Advocates for Competition, and the underlying section 806.501, Requirement, the section is updated to reflect a new organization role and title, to clarify the authority to appoint an alternate agency advocate for competition, and add the requirement to designate procuring activity advocates for competition in accordance with FAR 6.501. The section has been updated to remove the title of Deputy Senior Procurement Executive (DSPE) to reflect the official organizational title of the Associate Executive Director, Office of Procurement Policy, Systems and Oversight (AED/PPSO) and to add “for the agency” after the phrase “VA Advocate for Competition.” The delegated authority is clarified that the AED/PPSO may further delegate the authority to appoint an alternate agency advocate for competition, and to add “shall designate procuring activity advocates for competition in accordance with FAR 6.501.”

Executive Orders (EOs) 12866 and 13563 direct agencies to assess all 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.

This final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this final rule will 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). The rule primarily affects the use of authorities that VA contracting officers are already authorized by statute to utilize when required and in accordance with existing agency regulation, policies and procedures. This rule appropriately clarifies and revises the use of such authorities and when certain justification and approval requirements apply. The authorities were previously codified in the VAAR either in this part or in other parts, to include those affecting small business programs, and they affected both large and small entities alike. With this rule, VA ensures content to supplement the FAR for VA's unique service-disabled veteran-owned small business and veteran-owned small business program is properly implemented in this part.

The overall impact of the rule is of benefit to small businesses owned by Veterans or service-disabled Veterans as the VAAR is being updated to remove extraneous procedural information that applies only to VA's internal operating processes or procedures. This rule will ensure clarity for both the public and VA contracting officers to ensure that when such authorities are utilized, they are properly cited and, when required, appropriately documented and publicized. This rulemaking does not change VA's policy regarding small businesses. VA estimates that no cost or economic impact to individual businesses will result from this rule update. VA estimates this final rule is not expected to result in increased or decreased costs to small business entities, and no more than de minimis costs. On this basis, the final rule does 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. 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 final rule will have no such effect on State, local, and tribal Governments or on the private sector.

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

Denis McDonough, Secretary of Veterans Affairs, approved this document on September 1, 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 revises 48 CFR part 806 to read as follows:

These changes seek to streamline and align the VAAR with the FAR and remove outdated and duplicative requirements and reduce burden on contractors. The VAAM incorporates portions of the removed VAAR as well as other internal agency acquisition policy. VA will rewrite certain parts of the VAAR and VAAM, and as VAAR parts are rewritten, will publish them in the Federal Register .

On January 21,2021, VA published a proposed rule in the Federal Register (85 FR 35238) which announced VA's intent to amend regulations for VAAR Case RIN 2900-AQ78—Simplified Procedures for Health-Care Resources. VA provided a 60-day comment period for the public to respond to the proposed rule and submit comments. The comment period for the proposed rule ended on March 22, 2021, and VA received comments from three respondents. This rule adopts as a final rule the proposed rule published in the Federal Register on January 21, 2021, with the exception of minor formatting edits.

VA received three comments from the public. Two commenters expressed support for the rule—with one of the respondents stating that the streamlined procedures will help Veterans and the other respondent expressing the opinion that amending the VAAR by removing outdated and superseded information would allow for a more concise understanding of the regulation. VA appreciates this feedback. As a result of these comments, no changes have been made to the rule.

The third respondent commented on the rules' coverage at 873.104, Competition requirements, permitting VA to contract on a sole source basis with affiliated institutions for commercial health-care resources. In particular, the respondent expressed their view that a sole source justification should be published and that competitive proposals should be considered.

VA appreciates the feedback. This comment pertains to a specific statutory exception provided by Congress for VA to be able to contract with affiliated institutions in accordance with 38 U.S.C. 7302, on a sole source basis as provided by 38 U.S.C. 8153(a)(3)(A), without publication of a justification for health-care resources. VA policy encourages competition where appropriate. When sole source acquisitions are necessary to meet critical mission needs, justification and approvals are publicized as required in accordance with law and regulation. However, as 38 U.S.C. 8153 expressly provides this unique exception for VA's work with affiliated institutions to provide Veteran's critical healthcare, no revisions will be made to the proposed rule.

Executive Orders (EOs) 12866 and 13563 direct agencies to assess all 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.

This final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The rule primarily affects the use of authorities that VA contracting officers are already authorized by statute to utilize when required and in accordance with existing agency regulation, policies and procedures. This rule appropriately clarifies and revises the use of such authorities and when certain justification and approval requirements apply. The authorities were previously codified in the VAAR either in this part or in other parts, to include those affecting small business programs, and they affected both large and small entities alike. With this rule, VA ensures content to supplement the FAR for VA's unique service-disabled veteran-owned small business and veteran-owned small business program is properly implemented in this part.

The overall impact of the rule is of benefit to small businesses owned by Veterans or service-disabled Veterans as the VAAR is being updated to remove extraneous procedural information that applies only to VA's internal operating processes or procedures. This rule will ensure clarity for both the public and VA contracting officers to ensure that when such authorities are utilized, they are properly cited and, when required, appropriately documented and publicized. This rulemaking does not change VA's policy regarding small businesses. VA estimates that no cost or economic impact to individual businesses will result from this rule update. VA estimates this final rule is not expected to result in increased or decreased costs to small business entities, and no more than de minimis costs. On this basis, the final rule does 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. 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 rule will have no such effect on State, local, and tribal Governments or on the private sector.

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

Denis McDonough, Secretary of Veterans Affairs, approved this document on August 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 out in the preamble, VA amends 48 CFR parts 852 and 873 as follows: