I. Introduction A. Flower Garden Banks National Marine Sanctuary

The National Marine Sanctuaries Act (NMSA) authorizes the Secretary of Commerce (Secretary) to designate and protect, as national marine sanctuaries, areas of the marine environment that are of special national significance due to their conservation, recreational, ecological, historical, scientific, cultural, archeological, educational, or aesthetic qualities. Day-to-day management of national marine sanctuaries is delegated by the Secretary to NOAA's ONMS. The primary objective of the NMSA is to protect nationally significant marine resources, including biological features such as coral reefs, and cultural resources, such as historic shipwrecks and archaeological sites. The mission of FGBNMS is to identify, protect, conserve, and enhance the natural and cultural resources, values, and qualities of the sanctuary and its regional environment for this and future generations.

FGBNMS is located in the northwestern Gulf of Mexico approximately 70 to 115 miles (113 to 185 kilometers) off the coasts of Texas and Louisiana. These offshore areas encompass a wide range of geologic features and habitat conditions that support several distinct biological communities, including the northernmost stony coral reefs in the continental United States. The banks, reefs, and similar formations provide the foundation for essential benthic habitats that support a wide variety of species. They are home to the most significant examples of coral and algal reefs, mesophotic and deepwater coral communities, and other biological assemblages in the Gulf of Mexico. The combination of location and geology makes FGBNMS extremely productive and diverse, and presents a unique set of challenges for managing and protecting its natural wonders.

When NOAA first designated FGBNMS on December 5, 1991 (56 FR 63634), and Congress subsequently passed a law recognizing the designation on January 17, 1992 (Pub. L. 102-251, Title I, Sec. 101), the sanctuary consisted of only two areas known as East and West Flower Garden Banks (56 FR 63634). Among other things, FGBNMS regulated a narrow range of activities, established permit and certification procedures, and exempted certain U.S. Department of Defense (DOD) activities from the sanctuary's prohibitions (56 FR 63634). The regulations also exempted activities necessary to respond to emergencies threatening life, property, or the environment (56 FR 63634). Those regulations became effective on January 18, 1994 (58 FR 65664). In 1996, Congress added Stetson Bank to the sanctuary (Pub. L. 104-283). The boundaries of Stetson Bank and West Flower Garden Bank were later amended to improve administrative efficiencies and increase the precision of all boundary coordinates based on new positioning technology (65 FR 81175, Dec. 22, 2000). Subsequently, on January 19, 2021, NOAA issued a final rule for the expansion of FGBNMS (86 FR 4953). The final rule went into effect on March 22, 2021 (86 FR 15404), and expanded the boundaries of FGBNMS from approximately 56 square miles to approximately 160 square miles (145 square kilometers to 414 square kilometers), and increased the number of protected reefs and banks (86 FR 4953). FGBNMS now protects East and West Flower Garden Banks, Stetson Bank, Horseshoe Bank, MacNeil Bank, Rankin/28 Fathom Banks, Bright Bank, Geyer Bank, Elvers Bank, McGrail Bank, Bouma Bank, Sonnier Bank, Rezak Bank, Sidner Bank, Parker Bank, and Aldrice Bank.

The areas designated as FGBNMS are currently managed by several Federal agencies that share jurisdiction over the area and its resources. These agencies include: the U.S. Department of the Interior, Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE), who share primary jurisdiction over offshore energy exploration and development; the U.S. Environmental Protection Agency (EPA), which is responsible for protecting the quality of the nation's waters; NOAA's National Marine Fisheries Service (NMFS) and Gulf of Mexico Fishery Management Council (GMFMC), which jointly manage the U.S fisheries; and, as previously stated above, NOAA's ONMS, which provides comprehensive management and protection to the sanctuary. Additionally, DoD and U.S. Coast Guard activities, as well as commercial shipping and other marine activities, occur in and around the waters of FGBNMS.

This action responds to the issues raised by Federal agency partners during interagency review of the final rule to expand FGBNMS (86 FR 4953), and during interagency review of a separate, unrelated interim final rule to update and reorganize the existing sanctuary regulations and eliminate redundancies (87 FR 29606). Specifically, the Federal agency partners expressed concern that the sanctuary regulation at 15 CFR 922.122(b) does not reflect existing practice and may be an overreach of the ONMS Director's delegated authority under the NMSA. Specifically, section 922.122(b) provides that if a Federal agency regulation and a Sanctuary regulation conflict, then the regulation deemed by the Director of the ONMS as being more protective of Sanctuary resources and qualities shall govern. The NMSA does not contain express language that prescribes how potential conflicts with other Federal regulations are to be resolved. The NMSA instead establishes a framework “to facilitate to the extent compatible with the primary objective of resource protection, all public and private uses of the resources of these marine areas not prohibited pursuant to other authorities” (16 U.S.C. 1431(b)(6)). The NMSA also “provide[s] authority for comprehensive and coordinated conservation and management of . . . marine areas, and activities affecting them, in a manner which complements existing regulatory authorities” (16 U.S.C. 1431(b)(2)). To ensure sanctuary regulations facilitate compatible use and complement existing regulatory authorities, the NMSA directs NOAA to consult with other Federal agencies on the proposed designation of new sites or expansion of existing sites (16 U.S.C. 1433(b)(2), 1434(a)(4)). It is through this consultation process, which occurs before the designation or expansion of sanctuaries, that potential conflicts among Federal agency regulations are typically resolved or avoided. NOAA is presently unaware of any situation in which 15 CFR 922.122(b) has ever been triggered, and section 922.122(b) does not reflect NOAA's preferred approach to resolve potential interagency regulatory conflicts. Therefore, to address the concerns raised by Federal partners, NOAA proposes to remove the existing language from 15 CFR 922.122(b) to reflect existing practice and better track the NMSA. The remaining paragraphs of 15 CFR 922.122 would remain unchanged.

A provision similar to 15 CFR 922.122(b) also appears in Article V of the terms of designation codified in appendix B of 15 CFR part 922, subpart L. This action does not modify that provision. Pursuant to section 304(a)(4) of the NMSA, the terms of designation may only be modified by the same procedures by which the designation is made. The process includes scoping, proposal, consultation with Federal agency partners and public review, as well as review by Congress. Because additional procedures are required to alter the terms of designation, NOAA is using regulatory action as the first step in the process.

NOAA concludes that this action will not have a significant effect, individually or cumulatively, on the human environment. This action is categorically excluded from the requirement to prepare an Environmental Assessment or Environmental Impact Statement in accordance with the NOAA Categorical Exclusion G7 because there are no extraordinary circumstances precluding the application of this categorical exclusion. Specifically, this action is a notice of an administrative and legal nature, and any future effects of subsequent actions are too broad, speculative, or conjectural to lend themselves to meaningful analysis and will be subject to later NEPA analysis. This action would remove language that inaccurately describes how a conflict of regulatory authorities between Federal agencies would be addressed, and therefore, is an administrative issue. It does not commit the outcome of any particular Federal action taken by NOAA or other Federal agencies. Furthermore, individual Federal actions taken by ONMS or other Federal agencies will be subject to additional case-by-case analysis, as required under NEPA, which will be completed as any new Federal actions are submitted for specific projects and activities. In these situations, NOAA or other Federal agencies will ensure that the appropriate NEPA documentation is prepared prior to taking any final action. Any such NEPA analysis would describe the impacts of prospective projects or operations.

This notice of proposed rulemaking has been determined to be not significant within the meaning of Executive Order 12866. NOAA has considered this action under E.O. 12866. Based on that review, this action is not expected to have an annual effect on the economy of $100 million or more, or have an adverse effect in a material way on the economy. Furthermore, this action would not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; or materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or raise novel or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this E.O.

The Regulatory Flexibility Act (RFA) requires Federal agencies to prepare an analysis of a rule's impact on small entities whenever the agency is required to publish a rule, unless the head of the agency can certify, pursuant to 5 U.S.C. 605(b), that the action will not have a significant economic impact on a substantial number of small entities.

Pursuant to section 605(b), the Chief Counsel for Regulations for the Department of Commerce has certified to the Office of Advocacy of the Small Business Administration that the proposed modifications of the regulations at 15 CFR part 922 would not have a significant economic impact on a substantial number of small entities.

Because the provision proposed to be removed from the FGBNMS regulations addresses potential conflicts of law between Federal agencies, NOAA does not anticipate any impact on small businesses. This proposed rule also does not establish any new reporting, recordkeeping, or other compliance requirements. This proposed action is strictly an administrative action with implications anticipated only on Federal agency partners. Further, since 15 CFR 922.122(b) has never been triggered, NOAA is strongly convinced there are no overarching impacts of this proposed administrative regulatory update on any party, whether Federal or otherwise.

Since the impacts of this proposed administrative rule are only intended as an administrative flexibility for Federal agencies, NOAA does not anticipate an impact on marine sanctuary stakeholders that entail small businesses, including entities in the following North American Industry Classification System (NAICS) categories: consumptive and non-consumptive recreational charter businesses (NAICS codes 483114 and 483112); commercial fishing businesses (NAICS codes 114112 (Shellfish Fishing), 114111 (Finfish and mackerel fishing), and 114119 (other marine fishing)); sightseeing businesses (NAICS code 487210); and diving businesses (NAICS codes 611620 (Sports and Recreation Instruction), 561990 (All Other Support Services), 339920 (Sporting and Athletic Goods Manufacturing), 459110 (Sporting Goods Retailers)).

Based on the analysis presented above, NOAA concludes that the proposed action would result in no negative impact on a substantial number of small entities. Therefore, an initial regulatory flexibility analysis is not required and none has been prepared.

Accordingly, for the reasons set forth above, NOAA proposes to amend part 922, title 15 of the Code of Federal Regulations as follows:

Executive Summary

The Pension Benefit Guaranty Corporation (PBGC) is proposing to provide interest rate assumptions that may be used by a plan actuary in determining a withdrawing employer's liability under a multiemployer plan.

PBGC's legal authority for this rulemaking comes from section 4213 of the Employee Retirement Income Security Act of 1974 (ERISA), which authorizes PBGC to prescribe actuarial assumptions and methods for purposes of determining an employer's withdrawal liability, and from section 4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA.

PBGC administers two independent insurance programs for private-sector defined benefit pension plans under title IV of ERISA—one for single-employer defined benefit pension plans and one for multiemployer defined benefit pension plans (multiemployer plans). In general, a multiemployer plan is a collectively bargained plan involving two or more unrelated employers. The multiemployer program protects benefits of approximately 10.9 million workers and retirees in approximately 1,360 plans. 1 This proposed rule applies only to multiemployer plans.

Under ERISA, an employer that withdraws from a multiemployer plan may be liable to the plan for withdrawal liability, which generally represents the employer's share of any unfunded vested benefits (UVBs) that the plan may have at the end of the plan year immediately preceding the plan year in which the employer withdraws. UVBs are the amount by which the present value of nonforfeitable benefits under the plan as of the valuation date exceeds the value of plan assets as of that date. The plan actuary determines the present value of all of the plan's nonforfeitable benefits using actuarial assumptions and methods. The assumptions include the interest rate—sometimes called the “discount rate”—that is used to discount future benefit payments to their present value and the mortality tables used to determine the probability that each benefit payment will be made. Assuming a higher interest rate results in lower UVBs, whereas a lower rate leads to higher UVBs. Disputes between plans and employers about the value of UVBs are resolved through mandatory arbitration, and then, if necessary, litigation.

For plans terminated by mass withdrawal, PBGC's regulation on Duties of Plan Sponsor Following Mass Withdrawal (29 CFR part 4281) specifies actuarial assumptions for valuing benefits, including interest rates described in Appendix B to PBGC's regulation on Allocation of Assets in Single-Employer Plans (29 CFR part 4044). 2 These interest rates are based on the average market price of a life annuity, which PBGC determines from a quarterly survey of insurance companies and can be used to approximate the cost of purchasing annuities to cover benefits. Annuity prices are derived in part from yields on high-quality corporate bonds.

For ongoing plans, section 4213(a) of ERISA provides—

Because PBGC has not issued regulations under section 4213(a)(2), withdrawal liability determinations governed by section 4213(a) have heretofore been made under section 4213(a)(1).

Plans have used a variety of approaches to determine withdrawal liability; three common approaches are described in the following paragraphs.

One approach uses the same interest rate assumption that is used to determine minimum funding requirements, based on the expected average return on plan assets over the long term. This approach applies the interest rate assumption used under section 431(b)(6) of the Internal Revenue Code (Code) and section 304(b)(6) of ERISA (funding interest rate assumption) to satisfy both standards under section 4213(a)(1)—that the actuarial assumptions and methods used to determine withdrawal liability are in the aggregate reasonable (taking into account the experience of the plan and reasonable expectations) and in combination offer the actuary's best estimate of anticipated experience.

Another approach focuses on the contrast between contributing employers and withdrawing employers. This approach identifies contributing employers as continuing to participate in the plan's investment portfolio and share in future gains and losses, including the risk of increased contributions if plan investments do not earn as much as the assumed funding interest rate. This approach considers that a withdrawing employer ceases to participate in the plan's investment experience because the employer is settling its liabilities once and for all and bears no risk of future losses. This approach therefore considers the use of settlement interest rate assumptions prescribed by PBGC under section 4044 of ERISA (4044 rates) to be appropriate to determine the amount sufficient to release a withdrawing employer from any future financial obligations to the plan. Those interest rate assumptions can be used to approximate the market price of purchasing annuities to cover the withdrawing employer's share of the plan's benefit liabilities, which are generally paid in the form of life annuities. From this perspective, the plan trustees' investment risk appetite, asset allocation choices, or the actuary's best estimate of the plan's future investment returns following the withdrawal are not relevant to the withdrawal liability assessment.

A third approach uses an interest rate assumption that employs both funding and settlement interest rate assumptions. For example, the actuary might value unfunded benefits using the funding interest rate assumption, and value funded benefits using a settlement interest rate assumption like PBGC's 4044 rates.

There has been increasing litigation over withdrawal liability determinations, centered on the interest rate assumption used to discount liabilities of ongoing plans. In five cases since 2018 (and an unknown number of arbitrations), a withdrawing employer has challenged its withdrawal liability assessment by arguing that the interest assumption that the plan actuary used to value nonforfeitable benefits failed to satisfy section 4213(a)(1) of ERISA because it was lower than the actuary's best estimate of anticipated average returns on plan investments. Court decisions have varied  3 and some have noted PBGC's unused authority to issue a regulation prescribing assumptions that may be used under section 4213(a)(2). 4

On July 12, 2021 (at 86 FR 36598), PBGC published an interim final rule on special financial assistance (SFA) under new section 4262 of ERISA. 5 In footnote 18 of that rule's preamble, PBGC indicated that it intends to propose a separate rule of general applicability under section 4213(a) of ERISA to prescribe actuarial assumptions that may be used by a plan actuary in determining an employer's withdrawal liability. This proposed rule carries out PBGC's stated intention.

Section 4213(a)(2) of ERISA authorizes PBGC to set forth in its regulations actuarial assumptions and methods that may be used by a plan actuary for the purpose of determining an employer's withdrawal liability as an alternative to the assumptions and methods used under section 4213(a)(1). This rule is being proposed under section 4213(a)(2) to make clear that use of 4044 rates, either as a standalone assumption or combined with funding interest assumptions represents a valid approach to selecting an interest rate assumption to determine withdrawal liability in all circumstances. Withdrawing employers will not be making future plan contributions, and ERISA accounts for this by requiring an employer to settle its share of the plan's unfunded liabilities. In the event of worse than expected investment performance or other actuarial experience following an employer's withdrawal, the plan cannot seek additional funds from that employer. Thus, a withdrawing employer shifts its share of investment risk and other risks to the plan and its remaining employers. If a party promising a pension, as an employer participating in a multiemployer plan indirectly does, were to shift all investment risk, mortality risk, and other asset and liability risks to an annuity provider, that party must pay the premium amount necessary to fund the promised pension liability. Accordingly, it is reasonable to base the amount needed to settle the employer's share of the liability on the market price of settling pension liabilities by purchasing annuities from private insurers.

The use of actuarial assumptions and methods prescribed by PBGC under section 4213(a)(2) would not be subject to the requirements of section 4213(a)(1), and accordingly, the plan's actuary would be permitted to determine withdrawal liability under the proposed rule without regard to section 4213(a)(1).

The proposed rule would specifically permit the use of an interest rate anywhere in the spectrum from 4044 rates alone to funding rates alone. 6 In the case of an interest assumption that involves two or more rates to value a plan's liabilities, such as a yield curve or the use of separate interest rates for benefits expected to be covered by current assets and for other benefits, this proposed rule would apply to the single interest rate that would result in the same liability measure as the multiple rates. PBGC requests comments on whether the final rule should restrict the allowable options to a narrower range of interest rates or to only specific methodologies for determining interest rates. In particular, should the top of the range of permitted interest rates under section 4213(a)(2) be lower than the typical funding interest rate assumption (which represents the expected return on a portfolio with a significant allocation to return-seeking assets)? PBGC also requests comments on what should be the relationship, if any, between (a) the estimated date of plan insolvency, expected investment mix, and/or funded ratio, and (b) permitted withdrawal liability assumptions.

Under § 4213.11(c) of the proposed rule, each assumption and method used, other than the interest assumption, would have to be reasonable (taking into account the experience of the plan and reasonable expectations). Additionally, the assumptions and methods other than the interest assumption would, in combination, have to offer the actuary's best estimate of anticipated experience under the plan. Note that the standards under proposed § 4213.11(c) echo the current standard for selecting actuarial assumptions for multiemployer funding under section 431(c)(3) of the Code and section 304(c)(3) of ERISA, which has been updated since the enactment of ERISA. 7 As with assumptions adopted under those sections, assumptions used under § 4213.11(c) would reflect the actuary's judgment as an independent professional generally bound by actuarial standards of practice. The standards in proposed § 4213.11(c) would apply to assumptions and methods other than interest assumptions. As discussed earlier in this preamble, consideration of the anticipated experience of the plan in selecting withdrawal liability interest assumptions is not necessarily appropriate in light of a withdrawing employer's lack of continued shared investment experience.

PBGC requests comments on whether the final rule should specify assumptions or methods other than interest assumptions. Also, if PBGC were to specify assumptions under section 4213(a) of ERISA that included demographic assumptions, such as mortality assumptions, that differed from plans' demographic assumptions, would plans be unlikely to use the PBGC assumptions because of those differences? If so, why? Although PBGC is specifically requesting comments on the issues discussed earlier in this preamble, PBGC also invites comment on any other issue relating to section 4213 withdrawal liability assumptions.

The changes in this proposed rule would apply to the determination of withdrawal liability for employer withdrawals from multiemployer plans that occur on or after the effective date of the final rule. The proposed rule does not preclude the use of an interest rate assumption described in proposed § 4213.11(b) to determine unfunded vested benefits before the effective date of the final rule.

Under Executive Order (E.O.) 12866, Office of Management and Budget (OMB) reviews any regulation determined to be a “significant regulatory action.” Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that: (1) has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O.

OMB has determined that this proposed rule is economically significant under section 3(f)(1) and has therefore reviewed this rule under E.O. 12866.

E.O. 13563 supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review that were established in E.O. 12866, emphasizing the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. It directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, and public health and safety effects, distributive impacts, and equity).

PBGC has provided an assessment of the potential benefits, costs, and distributive impacts associated with this proposed rule.

Benefit levels in a multiemployer plan are typically set by trustees representing contributing employers and unions. As discussed earlier in this preamble, withdrawal liability generally represents an employer's share of the plan's unfunded vested benefits (UVBs) that the plan may have at the end of the plan year immediately preceding the plan year in which the employer withdraws. Withdrawal liability is the portion of the UVBs allocable to the withdrawing employer and represents a plan's only opportunity to require a withdrawing employer to pay its allocated share of the unfunded liabilities. When a plan does not collect an adequate amount of withdrawal liability from a withdrawing employer or collects an amount that is less than a withdrawing employer's allocated share of the plan's UVBs, that burden is shifted to the remaining contributing employers in the plan. There is a higher likelihood that the plan will not be able to pay full accrued benefits, and ultimately, there is an increased likelihood that it would not have resources to pay basic (PBGC-guaranteed) benefits. In that case, a plan may have to cut benefits to the PBGC guarantee level and apply to PBGC for financial assistance, which shifts costs to plan participants and to others in the multiemployer insurance system who fund PBGC via annual premiums.

This proposed rule is needed to clarify that a plan actuary's use of 4044 rates represents a valid approach to selecting an interest rate assumption to determine withdrawal liability in all circumstances. The proposed rule would thereby reduce or eliminate the cost-shifting effects of impediments to actuaries' use of 4044 rates:

• As noted earlier in the preamble discussion, several recent court decisions (and an unknown number of arbitration decisions) have required plans to re-assess withdrawal liability using interest assumptions based on anticipated investment returns rather than 4044 rates (or a blend using such rates), resulting in lower withdrawal liability assessments.

• The delay, expense, and risk of adverse judgment involved with arbitration and litigation may provide an incentive for plans to settle withdrawal liability claims for less than the amount of withdrawal liability determined by the plan actuary, even in cases where the withdrawal liability dispute is not arbitrated or litigated.

• Recent court decisions may deter actuaries from using 4044 rates (or a blend incorporating such rates) instead of interest rate assumptions based solely on anticipated plan investment returns.

Under this proposed rule, actuaries would be able to determine an employer's withdrawal liability on the basis of interest rate assumptions ranging from plan funding rates to 4044 rates, provided that the other assumptions and methods selected meet certain specified requirements.

Because PBGC expects the proposed rule will reduce the litigation risk for plans associated with selection of the interest assumption, PBGC believes that more plans will use 4044 rates, which would tend to increase withdrawal liability and a plan's collection of withdrawal liability assessments. PBGC also believes that increasing plans' withdrawal liability income would have an overall positive effect on the multiemployer system and PBGC's multiemployer program. It is also consistent with PBGC's mission to enhance the retirement security of workers and retirees.

For the reasons discussed earlier, this proposed rule would tend to increase the amount of withdrawal liability that multiemployer plans assess and collect.

The aggregate economic impact of this proposed rule is best measured by the amount of additional withdrawal liability that multiemployer plans are expected to receive from withdrawing employers. PBGC estimates that, in the 20 years following the final rule's effective date, there will be a nominal increase in cumulative withdrawal liability payments ranging between $804 million and $2.98 billion. A 20-year time horizon was chosen to show the impact on withdrawal liability payments which, depending on the circumstances of the withdrawal, can last as long as 20 years, and to capture the impact on plans receiving SFA (which must calculate withdrawal liability using 4044 rates for at least 10 years). However, because the assumptions underlying this analysis become more speculative as projections reach further into the future, PBGC cannot reasonably estimate the impact after 20 years. While PBGC expects that the proposed rule will deter employer withdrawals, it will do so only at the margin, and this impact is difficult to estimate. Accordingly, this analysis does not model any change to the rate of employer withdrawals or decrease in contributions due to improved plan funding attributable to these changes because doing so would be too speculative.

Currently, the aggregate amount of withdrawal liability paid into the multiemployer plan system each year (taking into account the result of any dispute resolution process) is approximately $1.3 billion, based on a PBGC analysis of attachments to 2018 and 2019 Form 5500 Schedules MB. 8 As discussed later in this Regulatory Impact Analysis, because the increase in withdrawal liability paid to a plan (and the mechanics of how such increase would come about) would depend on how it currently calculates withdrawal liability, PBGC makes assumptions in this analysis about how plans currently calculate withdrawal liability. For the purpose of this analysis, in the absence of reliable data, current withdrawal liability calculations are assumed as follows: (a) plans for which the Schedule MB was signed by an actuary from the firm associated with the largest number of plans use a blend of funding interest rates and 4044 rates and (b) for remaining plans, 80 percent use funding interest rates and 20 percent use 4044 rates. Further, to simplify the analysis, 4044 rates are assumed to be 3 percent, an approximation of current 4044 rates.

PBGC's measurement of the increase in annual withdrawal liability paid attributable to this proposed rule depends on two primary assumptions: (1) the number and size of plans that change withdrawal liability assumptions because of this rulemaking (switching assumption), and (2) the value of reductions in withdrawal liability either directly resulting from the order of an arbitrator or judge interpreting section 4213(a)(1) of ERISA or agreed to by plans in recognition of the risk of similar arbitration and litigation outcomes that would occur if this proposed rule is not finalized (dispute resolution assumption). Due to a lack of reliable data upon which to base these assumptions and because the effect of the proposed rule could vary widely because it allows for a range of approaches, this analysis shows impacts when these assumptions are set at three different levels.

Because the impact is expected to be substantially lower in the first 10 years after the effective date of the final rule than in the period thereafter, PBGC is separating the impact into two separate time periods: the first 10 years after the effective date of the final rule and the time period thereafter. The reasons for this are as follows: (1) after the final rule's effective date, the number of withdrawal liability payments that would be affected would start at zero and increase over time (before leveling off when substantially all withdrawal liability payments are for withdrawals occurring after the final rule's effective date) and (2) plans receiving SFA under section 4262 of ERISA are required to use 4044 rates for withdrawal liability calculations for at least the first 10 years after receiving SFA, and as a result, this rule would have no impact on withdrawal liability received by such plans in connection with approximately 10 years of withdrawals.

Within each time period, three sets of assumptions are shown in three tables under the “Estimated Impact of Increase in Withdrawal Liability Received” heading with respect to the switching assumption and the dispute resolution assumption. Row (a), the switching assumption, represents the assumed percentage of plans for which the plan is assumed to change from using funding interest rate assumptions to 4044 rates as a result of this proposed rule. The percentages represent what PBGC believes to be a reasonable range of the percentage of plans assumed to be using funding interest rates for withdrawal liability purposes that would switch to 4044 rates. Row (b), the dispute resolution assumption, represents, for plans currently using 4044 rates or a blend using such rates, in the absence of this rule, the assumed reduction in withdrawal liability payments received by plans due to litigation outcomes, or similar reductions done voluntarily as a result of the threat of litigation. This reduction is measured as the percent reduction in the difference between the expected value of withdrawal liability payments calculated using 4044 rates and the expected value of withdrawal liability payments calculated using funding rates. In calculating the estimated annual increase in withdrawal liability payments, it is assumed that after the rule is effective, plans using 4044 rates or a blend using such rates will receive the expected value of withdrawal liability payments for a given assessment without a reduction due to settlements. The dispute resolution assumption assumes that no plans currently using 4044 rates would, in the absence of this proposed rule, switch from using 4044 rates to funding rates. Assuming that some plans would switch would increase the annual economic impact to some extent.

The following tables summarize the estimated annual increases to withdrawal liability payments received by multiemployer pension plans and the present value of those increases at 3 percent and 7 percent discount rates:

The information presented in this document is organized as follows:

Entities potentially affected by this action include sources that do not belong to a source category listed in 40 Code of Federal Regulations (CFR) 52.21(b)(1)(iii) (and other identical provisions in other sections of the CFR). Entities potentially affected by this proposed action also include state and local air pollution control agencies responsible for permitting sources pursuant to the New Source Review (NSR) program.

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To request a virtual public hearing, contact Ms. Pamela Long at (919) 541-0641 or by email at long.pam@epa.gov. If requested, the virtual hearing will be held on October 31, 2022. The hearing will convene at 9:00 a.m. Eastern Time (ET) and will conclude at 3:00 p.m. ET. The EPA may close a session 15 minutes after the last pre-registered speaker has testified if there are no additional speakers. The EPA will announce further details at https://www.epa.gov/nsr.

Upon publication of this document in the Federal Register , the EPA will begin pre-registering speakers for the hearing, if a hearing is requested. To register to speak at the virtual hearing, please use the online registration form available at https://www.epa.gov/nsr or contact Ms. Pamela Long at (919) 541-0641 or by email at long.pam@epa.gov. The last day to pre-register to speak at the hearing will be October 26, 2022. Prior to the hearing, the EPA will post a general agenda that will list pre-registered speakers in approximate order at: https://www.epa.gov/nsr.

The EPA will make every effort to follow the schedule as closely as possible on the day of the hearing; however, please plan for the hearings to run either ahead of schedule or behind schedule.

Each commenter will have 3 minutes to provide oral testimony. The EPA encourages commenters to provide the EPA with a copy of their oral testimony electronically (via email) by emailing it to long.pam@epa.gov. The EPA also recommends submitting the text of your oral testimony as written comments to the rulemaking docket.

The EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral testimony and supporting information presented at the public hearing.

Please note that any updates made to any aspect of the hearing will be posted online at https://www.epa.gov/nsr. While the EPA expects the hearing to go forward as set forth above, please monitor our website or contact Ms. Pamela Long at (919) 541-0641 or by email at long.pam@epa.gov to determine if there are any updates. The EPA does not intend to publish a document in the Federal Register announcing updates.

If you require the services of a translator or special accommodations such as audio description, please pre-register for the hearing with Ms. Pamela Long and describe your needs by October 21, 2022. The EPA may not be able to arrange accommodations without advanced notice.

The NSR program was designed to protect public health and welfare from the effects of air pollution and to preserve and/or improve air quality throughout the nation. See 42 U.S.C. 7470(1), (2), (4). The NSR program requires certain stationary sources of air pollution to obtain air pollution permits prior to beginning construction. Construction of new sources with emissions above statutory thresholds, and modifications of existing sources emitting above those thresholds, that increase emissions of “regulated NSR pollutants” by more than amounts specified in the EPA's NSR regulations are subject to “major source” NSR requirements. New construction or modifications of smaller emitting sources and modifications of existing major sources that do not increase emissions by more than the thresholds in the major NSR regulations may be subject to minor NSR requirements or excluded from NSR altogether.

The major source NSR program includes two distinct programs that each have unique requirements for new or modified sources. The applicability of these two programs depends on whether the area where the source is located is exceeding the National Ambient Air Quality Standards (NAAQS). The PSD program, based on requirements in Part C of title I of the CAA, applies to pollutants for which the area is not exceeding the NAAQS (areas designated as attainment or unclassifiable) and to regulated NSR pollutants for which there are no NAAQS. The NNSR program, based on Part D of title I of the CAA, applies to pollutants for which the area is not meeting the NAAQS (areas designated as nonattainment).

To implement the requirements of the CAA for these programs, most states have EPA-approved State Implementation Plans (SIPs) containing PSD and NNSR preconstruction permitting programs that meet the minimum requirements reflected in the EPA's major NSR program regulations at 40 CFR 51.166 and 51.165. Upon EPA approval of a SIP, the state or local air agency becomes the permitting authority for major NSR permits for sources within its boundaries and issues permits under state law. Currently, state and local air agencies issue the vast majority of major NSR permits each year. When a state or local air agency does not have an approved NSR program, federal regulations apply and either the EPA issues the major NSR permits or a state or local air agency issues the major NSR permits on behalf of the EPA by way of a delegation agreement. For sources located in Indian Country, 18 U.S.C. 1151, the EPA is the permitting authority for major NSR.

The permitting program for construction of new non-major sources and minor modifications to major sources is known as the minor NSR program. CAA section 110(a)(2)(C) requires states to develop a program to regulate the construction and modification of any stationary source “as necessary to assure that [NAAQS] are achieved.” 42 U.S.C. 7410(a)(2)(C). The CAA and the EPA's regulations are less prescriptive regarding minimum requirements for minor NSR, so air agencies generally have more flexibility in designing minor NSR programs in their EPA-approved SIPs. Minor NSR permits are almost exclusively issued by state and local air agencies, although the EPA issues minor NSR permits in many areas of Indian Country.

The applicability of the PSD, NNSR, and/or minor NSR programs to a stationary source must be determined in advance of construction and is a pollutant-specific determination. Thus, a stationary source may be subject to the PSD program for certain pollutants, NNSR for some pollutants, and minor NSR for others.

Major NSR applies to (1) construction of new major sources and (2) major modifications of existing major sources. In either case, the initial step in assessing applicability is to determine whether the new or modified source in question qualifies as a “major stationary source.” A new or existing source qualifies as a major stationary source if it “emits or has the potential to emit” a regulated NSR pollutant in an amount greater than the specified annual thresholds. For the PSD program, the major source threshold is 100 tons per year (tpy) for sources in certain source categories listed in the regulations, and 250 tpy for any other type of source. See 40 CFR 51.166(b)(1)(i)( a ) and 52.21(b)(1)(i)( a ). The major source threshold for NNSR is generally 100 tpy for all source categories but is lower for some pollutants in nonattainment areas classified as Serious, Severe, or Extreme. See 40 CFR 51.165(a)(1)(iv).

If a proposed new source's actual or potential emissions of a regulated NSR pollutant  1 are at or above the applicable major source threshold, it is subject to preconstruction review under major NSR for that pollutant. 2 Furthermore, under PSD, the proposed new source would also be subject to major NSR review for any other regulated NSR pollutant that it emits at or above the pollutant's “significant” emissions rate as defined in 40 CFR 51.166(b)(23) and 52.21(b)(23).

An existing major stationary source can be subject to major NSR when a proposed physical change or a change in the method of operation qualifies as a “major modification.”  3 A major modification occurs when a physical or operational change ( i.e., a construction project) would result in (1) a significant emissions increase of a regulated NSR pollutant, considering emissions increases and decreases from the project alone, and (2) a significant net emissions increase of a regulated NSR pollutant, considering the project as well as other contemporaneous emissions increases and decreases at the source. See, e.g., 40 CFR 52.21(b)(2)(i) and (b)(52). As noted in the previous paragraph, the NSR regulations define the annual emissions rate considered “significant” for each regulated NSR pollutant. See 40 CFR 51.165(a)(1)(x), 51.166(b)(23), and 52.21(b)(23). In determining the increase in emissions from a physical or operational change, new emissions units are evaluated at their potential emissions, while existing and replacement units are generally evaluated by comparing their baseline actual emissions before the physical or operational change to their projected actual emissions after the change. See, e.g., 40 CFR 52.21(a)(2)(iv)( c-f ), (b)(7), and (b)(33).

For purposes of major NSR, “fugitive emissions” are defined as “emissions which could not reasonably pass through a stack, chimney, vent, or other functionally equivalent opening.” E.g., 40 CFR 52.21(b)(20). Examples of fugitive emissions include windblown dust from surface mines and volatile organic compounds (VOCs) emitted from leaking pipes and fittings at petroleum refineries. Section VII of this preamble further discusses the definition of “fugitive emissions.”

For certain types of sources, fugitive emissions are treated differently from non-fugitive emissions in determining whether major NSR applies to a source. Fugitive emissions may be relevant to determining whether a source triggers major NSR in two distinct contexts.

First, for purposes of determining whether a new or existing source is a “major stationary source,”  4 quantifiable fugitive emissions are included in calculating a source's emissions only if the source belongs to one of the source categories specifically listed in the major NSR regulations. See, e.g., 40 CFR 52.21(b)(1)(iii). 5 Thus, fugitive emissions from sources not belonging to a listed category are generally not included in determining whether a source is a major stationary source. The treatment of fugitive emissions in determining whether a new or existing source is a major source is well-established and is not impacted by this proposed action.

Second, the inclusion of fugitive emissions may impact whether a physical or operational change at a major stationary source results in a “major modification.” This proposed action addresses the treatment of fugitive emissions in this second context. As discussed further in Sections III and IV of this preamble, the EPA proposes to affirm its longstanding position that all existing major sources (regardless of source category) must include fugitive emissions when determining if a modification is major. A summary of the relevant history of the treatment of fugitive emissions in the context of modifications is presented in Section II.D of this preamble; additional discussion of the legal and policy considerations underlying this history is included in Section IV.A of this preamble.

Once a source is subject to the major NSR program, fugitive emissions are generally treated the same as stack emissions in determining which substantive requirements apply to the source. 6 Specifically, for PSD, once a new source is determined to be “major” ( i.e., over the 100 or 250 tpy threshold) for a particular pollutant, all emissions (including fugitive emissions) are included in all subsequent analysis, including PSD applicability for other individual pollutants ( i.e., comparing emissions to the significant emission rates), Best Available Control Technology (BACT) analyses, and air quality impact analyses. E.g., 40 CFR 52.21(j)(2); see also 54 FR 48871 n.2. Similarly, once a modification is determined to be major with respect to at least one regulated NSR pollutant (and provided an exemption discussed in Section II.D of this preamble does not apply), fugitive emissions are included in all subsequent analyses. E.g., 40 CFR 52.21(j)(3); see also 54 FR 48871 n.2; In re Masonite Corp., 5 EAD 551, 582-83 (EAB 1994).

Following the 1977 CAA Amendments, the EPA's initial 1978 regulations implementing the major NSR program required that fugitive emissions from sources in all source categories be included in the first instance in calculating whether a new source or modification of an existing source was major. 7 However, in its 1979 Alabama Power decision that reviewed the 1978 regulations, 8 the D.C. Circuit held that CAA section 302(j) requires a rulemaking to identify the sources that must include fugitive emissions in determining whether a source is a “major emitting facility” ( i.e., “major stationary source”). In response, in 1980 the EPA promulgated a list of source categories, along with a provision exempting sources not belonging to one of those listed source categories from substantive major NSR requirements if the source or modification would be considered “major” solely due to the inclusion of fugitive emissions. 45 FR 52676 (August 7, 1980) (promulgating, e.g., 40 CFR 52.21(i)(4)(vii), which was later recodified at 40 CFR 52.21(i)(1)(vii) in 2002). 9

In 1984, the EPA finalized revisions to the NSR regulations that were intended to better implement CAA section 302(j), the statutory provision on which the 1980 exemption was based. In the context of major source determinations, the EPA revised the definition of “major source” such that sources in non-listed source categories need not include fugitive emissions in the first instance in determining whether their emissions exceed major source thresholds. 49 FR 43202 (October 26, 1984). This reflected a more straightforward approach for major source determinations than the one established in the 1980 exemption. 10

The EPA declined at that time to finalize a similar revision for major modifications. Instead, in a companion document to the 1984 final rule, the EPA proposed an “interpretive ruling” reevaluating and reversing the EPA's prior assumption that fugitive emissions should be treated the same in major source and major modification contexts. 49 FR 43211 (October 26, 1984). For major modification determinations, the EPA proposed to include quantifiable fugitive emissions from sources in all source categories when determining whether a physical or operational change meets the significance thresholds for a major modification. This was based on the EPA's interpretation that CAA section 302(j) does not apply in the major modification context, and that CAA section 111(a)(4), which defines “modification,” requires consideration of all types of emissions (as discussed further in Section IV.A of this preamble). Along with this interpretation, the EPA proposed to remove the 1980 exemption, which was no longer needed in the major source context after the 1984 revisions and which conflicted with the agency's proposed interpretation in the major modification context. In 1986, the EPA again solicited comment on the 1984 “interpretive ruling.” 51 FR 7090 (February 28, 1986).

The EPA ultimately “retain[ed]” and “reaffirm[ed]” the EPA's 1984 interpretive ruling in a 1989 action finalizing certain other rule revisions. 54 FR 48870 (November 28, 1989). 11 This interpretation—that all sources must include fugitive emissions in the major modification context—remained the EPA's position until 2008. 12 The EPA inadvertently failed to remove the 1980 exemption in the 1989 rule, creating an apparent conflict between the EPA's interpretation and the legacy regulatory text.

In 2002, the EPA finalized major revisions to its NSR regulations. 67 FR 80186 (December 31, 2002) (“NSR Reform Rule”). Among many other changes, and consistent with the 1989 interpretive ruling, this 2002 rule explicitly required the inclusion of fugitive emissions in calculating emissions increases for purposes of determining whether a physical or operational change constitutes a major modification for all major sources, regardless of source category. 13 Notwithstanding this affirmation and codification of the agency's longstanding position, the EPA again inadvertently left the 1980 exemption in the CFR. 14

In 2003, the EPA received a petition from Newmont USA Ltd., dba Newmont Mining Corporation, requesting that the EPA reconsider the treatment of fugitive emissions in the provisions adopted in the 2002 NSR Reform Rule. 15 After granting the petition for reconsideration in 2004, 16 the EPA proposed in 2007 and finalized in 2008 a rule titled “Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NSR): Reconsideration of Inclusion of Fugitive Emissions” (the Fugitive Emissions Rule). 72 FR 63850 (November 13, 2007); 73 FR 77882 (December 19, 2008). The Fugitive Emissions Rule, which became effective on January 20, 2009, reversed the EPA's position as set forth in the 1984 and 1989 interpretive rulings concerning the treatment of fugitive emissions for major modification purposes. Under the Fugitive Emissions Rule, only sources in listed source categories designated through rulemaking pursuant to section 302(j) of the Act needed to include fugitive emissions in determining whether a change is a major modification. Thus, the Fugitive Emissions Rule adopted the same approach for considering fugitive emissions when determining whether a change is a major modification as has been used since 1984 for determining whether a source is a major stationary source. Because the 2008 Fugitive Emissions Rule rendered the 1980 exemption obsolete in the major modification context, the EPA also removed the 1980 exemption in the 2008 rule.

On February 17, 2009, the Natural Resources Defense Council (NRDC) submitted a petition for reconsideration of the 2008 Fugitive Emissions Rule under CAA 307(d)(7)(B). 17 On April 24, 2009, the EPA responded by letter indicating that the EPA was convening a reconsideration proceeding and granting a 3-month administrative stay of the rule. 18

The initial 3-month administrative stay of the Fugitive Emissions Rule became effective on September 30, 2009. 74 FR 50115 (September 30, 2009). An interim final rule extending the stay for an additional 3 months became effective on December 31, 2009. 74 FR 65692 (December 11, 2009). An additional 18-month stay became effective on April 1, 2010. 75 FR 16012 (March 31, 2010). In each of these stay actions (beginning on September 30, 2009), the EPA not only stayed the CFR paragraphs added or changed by the Fugitive Emissions Rule, but also amended the CFR to temporarily reinstate the 1980 exemption (which had been removed by the 2008 rule).

These initial administrative stays were intended to “effectuate this stay of the December 19, 2008, rule [by] reinstating previous provisions on a temporary basis.” 74 FR 50115. However, in several cases, paragraphs of the affected regulations were stayed in their entirety, unintentionally staying existing regulatory provisions unrelated to those that were revised by the Fugitive Emissions Rule. To correct this error, on March 30, 2011, the EPA published an “interim rule” to more precisely effectuate the stay of the Fugitive Emissions Rule itself ( i.e., to stay only those portions of the NSR regulations that were added or revised by the 2008 rule, without staying other unrelated portions of the NSR regulations). 76 FR 17548 (March 30, 2011). In order to do this, the interim rule revised 47 paragraphs of the regulatory text that were changed by the Fugitive Emissions Rule, reverting these paragraphs to the regulatory text that existed prior to the Fugitive Emissions Rule. 19 And, as with the 2009 and 2010 actions, in the 2011 action, the EPA again added the 1980 exemption back to the four relevant sections of the CFR. The interim rule also extended the stay of seven other provisions indefinitely until the EPA completed its reconsideration of the Fugitive Emissions Rule. 20

In summary, due to the EPA's stay actions described in this section, the Fugitive Emissions Rule only briefly took effect between January 20, 2009, and September 30, 2009. Since 2009, the regulations that predated the 2008 Fugitive Emissions Rule have been the operative regulations governing the treatment of fugitive emissions in the major modification context.

This proposed rule seeks to close out the reconsideration process initiated in 2009 in a manner that better aligns with the structure and purpose of the NSR program and that minimizes confusion for all stakeholders. After reevaluating the legal and policy bases of the Fugitive Emissions Rule, the EPA no longer considers that rule's treatment of fugitive emissions in the context of major modifications to be appropriate. Instead, for the reasons described further in Sections IV and V of this preamble, the EPA is proposing to reaffirm the EPA's longstanding interpretation of CAA sections 302(j) and 111(a)(4). Specifically, the EPA proposes to reaffirm its interpretation that the language in CAA section 302(j) regarding fugitive emissions applies only in the major source context, and not in the major modification context. The EPA proposes to interpret CAA section 111(a)(4) to require that all sources consider increases in all types of emissions (including fugitive emissions) in determining whether a proposed change would constitute a major modification. Accordingly, the EPA is proposing to repeal the 2008 Fugitive Emissions Rule by removing the portions of the 2008 rule that remain in the agency's NSR regulations.

Additionally, in light of the statutory interpretation presented in Section IV.C of this preamble, the EPA is proposing to remove the “major solely due to the inclusion of fugitive emissions” exemption first promulgated in 1980 and reinstated in 2009. As described in Section II.D of this preamble, this 1980 exemption was inadvertently left in the EPA's regulations from 1989 to 2008 despite the fact that the agency had interpreted the statute in that period (as EPA proposes now) to provide no such exemption in the context of modifications. This inconsistency, along with other issues related to the 1980 exemption, has created significant uncertainty about the EPA's treatment of fugitive emissions in the major modification context.

The Fugitive Emissions Rule revised similar regulatory text in all four sections of the CFR associated with the major NSR program, including 40 CFR 51.165, 51.166, 52.21, and appendix S to part 51. This proposed action would revise the text in each of these four sections in order to fully repeal the 2008 rule.

As discussed in Section II.E of this preamble, the EPA's March 2011 interim rule revised 47 paragraphs of the regulatory text that had been changed by the Fugitive Emissions Rule, reverting these paragraphs back to the text that existed prior to the Fugitive Emissions Rule. These paragraphs need not be revised further in this action in order to repeal the Fugitive Emissions Rule. To the extent necessary, the EPA proposes in this action to affirm those changes to the regulatory text effectuated in the March 2011 interim rule and lift the “interim” label from those aspects of the 2011 rule.

Seven additional paragraphs that were added (instead of revised) by the Fugitive Emissions Rule were stayed in the EPA's 2009, 2010, and 2011 actions, but still exist within the EPA's NSR regulations. 40 CFR 51.165(a)(1)(v)(G), 51.165(a)(1)(vi)(C)( 3 ), 51.166(b)(2)(v), 51.166(b)(3)(iii)( d ), part 51 appx. S II.A.5(vii), 52.21(b)(2)(v), 52.21(b)(3)(iii)( c ). These provisions are accompanied by a notation in the CFR (at the end of each CFR section) that these provisions are stayed and have no current legal effect. For these paragraphs, the EPA is proposing to concurrently lift the existing stay and remove these provisions from the regulations (the only way to remove these provisions is to lift the stay). In so doing, the EPA intends to permanently restore the relevant regulatory text that existed before the Fugitive Emissions Rule was promulgated.

Four paragraphs embodying the 1980 exemption were removed by the Fugitive Emissions Rule, but were reinstated in the EPA's 2009, 2010, and 2011 actions in order to effectuate a stay of the Fugitive Emissions Rule. 40 CFR 51.165(a)(4), 51.166(i)(1)(ii), 52.21(i)(1)(vii), and part 51 appx. S II.F. In light of the interpretation advanced in Section IV.C of this preamble—that all sources must account for fugitive emissions in determining whether a modification is major—the EPA is also proposing to remove these provisions embodying the 1980 exemption.

Given the number and complexity of the regulatory provisions impacted by the Fugitive Emissions Rule and the current proposal, the EPA specifically seeks comment on whether the proposed changes to the regulatory text, in addition to those changes previously made in 2011, will fully effectuate the repeal of the Fugitive Emissions Rule and conform the EPA's regulations to the interpretation described in Section IV.C of this preamble.

The plain language of CAA sections 302(j) and 111(a)(4), as well as the legislative history and case law involving these provisions, supports requiring that all existing major sources include fugitive emissions when determining whether a modification at the source requires a major NSR permit. This view is consistent with the approach the EPA has applied in the NSR program for most of the past 4 decades, but the EPA has inadvertently fostered uncertainty on this subject through its rulemaking actions and omissions. To end this uncertainty and better align the regulations with the structure and purpose of the NSR program, the EPA proposes to affirm the longstanding interpretation that fugitive emissions must be counted from all existing major sources when determining whether a modification is major. As discussed in Section V of this preamble, this approach properly accommodates the relevant policy considerations associated with balancing the potential air quality benefits that could result from this action with the potential impacts on a limited subset of sources.

When the EPA established the foundation for the current NSR program in response to the 1977 CAA Amendments, the EPA required all quantifiable emissions (including fugitive emissions) to be considered in determining whether sources are subject to major NSR. 43 FR 26388, 26395 (June 19, 1978) (“[T]he regulations do not exclude fugitive dust from the determination of potential emissions.”). 21 However, in recognition of concerns from the surface coal mining industry, the EPA's 1978 regulations excluded “fugitive dust” from air quality impact assessments for new and modified sources. See, e.g., 40 CFR 52.21(k)(5) (1978); 43 FR 26395.

In its 1979 Alabama Power decision, the U.S. Court of Appeals for the D.C. Circuit considered various challenges to the 1978 NSR regulations, including those related to the treatment of fugitive emissions. In relevant part, the D.C. Circuit stated that it had “reason to doubt whether EPA possesses the statutory authority to promulgate the [fugitive dust] exception in this manner.” Id. at 370. 22 Although the court did not specifically resolve the matter, it nonetheless vacated and remanded the 1978 fugitive dust exemption “[i]n light of [the court's] interpretation of section 302(j), and in accordance with [the court's] discussion as to the limits of EPA general exemption authority.”

The D.C. Circuit's discussion of CAA section 302(j) was particularly noteworthy. CAA section 302(j) defines “major stationary source” and “major emitting facility” as “any stationary facility or source of air pollutants which directly emits, or has the potential to emit, one hundred tons per year or more of any air pollutant (including any major emitting facility or source of fugitive emissions of any such pollutant, as determined by rule by the Administrator).” 42 U.S.C. 7602(j). The D.C. Circuit held that CAA “section 302(j) specifically attaches a rulemaking requirement for the inclusion of fugitive emissions in the threshold calculation” of determining whether a source is a “major emitting facility.” 636 F.2d at 369. 23

In response to the Alabama Power decision, in its 1980 revisions to the NSR regulations, the EPA removed the 1978 partial exclusion for fugitive dust. In order to implement the CAA section 302(j) rulemaking requirement, the EPA also listed, by rule, a number of source categories for which fugitive emissions were to be considered in threshold determinations. See 45 FR 52676 (August 7, 1980) (promulgating, e.g., 40 CFR 52.21(i)(4)(vii), which was later recodified at 40 CFR 52.21(i)(1)(vii) in 2002). Specifically, although the 1980 regulations required all sources to include fugitive emissions in the first instance when determining whether a new source or modification was considered major, the 1980 rule provided an exemption from substantive major NSR requirements for sources that did not belong to a listed source category if the source or modification would be considered “major” solely due to the inclusion of fugitive emissions. This 1980 exemption did not differentiate between “major source” and “major modification” inquiries. However, the EPA did not discuss this lack of differentiation, nor did the EPA suggest that this result was required by CAA section 302(j) or the Alabama Power decision. 24

When the EPA revised the NSR regulations in 1984 to better implement the CAA section 302(j) rulemaking requirement, it finalized regulatory text within the definition of “major source” that more directly excluded fugitive emissions from major source calculations for sources not in the listed source categories. 49 FR 43202 (October 26, 1984). However, the EPA decided not to finalize similar revisions with respect to major modifications. Instead, in a companion document accompanying the 1984 rule, the EPA for the first time took a closer look at the applicability of section 302(j) and the Alabama Power decision in the context of major modifications. The EPA explained that in its 1980 and 1983 regulatory actions, the “EPA assumed that the rulemaking requirement in section 302(j) applies to modifications as well as to sources.” 49 FR 43213 (October 26, 1984) (emphasis added). 25 The EPA further explained that the litigants and commenters on those 1980 and 1983 actions similarly “carried that assumption into their communications, without evidencing any examination of it.” Id. After examining the assumption for the first time in 1984, the EPA “concluded that it appears to be incorrect.” Id. Accordingly, the EPA proposed an “interpretive rule” outlining its interpretation that CAA section 302(j) did not apply in the major modification context, and that all sources (not just those in a listed source category) should include fugitive emissions in the major modification context. The 1984 proposed interpretive rule, summarized in the following paragraphs, explained the basis for the decision in considerable detail. See 49 FR 43213.

First, the EPA explained that the plain language of the Act strongly suggests that Congress did not intend the rulemaking requirement in section 302(j) to apply to modifications. The EPA noted that CAA section 302(j) on its face defines major source and does not speak to modifications of those sources. By contrast, the EPA noted that the definition of “modification” in CAA section 111(a)(4) (which is incorporated by the statutory provisions for major NSR  26 ) appears to require the inclusion of fugitive emissions in threshold applicability determinations for modifications. CAA section 111(a)(4) provides that “the term `modification' means any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emissions of any air pollutant not previously emitted.” 42 U.S.C. 7411(a)(4). The EPA indicated that, in defining “modification” solely in terms of the total amount of pollution that a source change would produce, section 111(a)(4) suggests that Congress intended to establish here no qualitative distinction between different types of emissions ( e.g., fugitive or non-fugitive). Thus, the EPA concluded that Congress intended to require the inclusion of fugitive emissions for modifications without any intermediate rulemaking step. 49 FR 43213.

Next, the EPA's 1984 interpretive rule examined the legislative history surrounding these statutory provisions. With respect to CAA section 302(j), the EPA noted that the passages in the relevant House and conference reports that focus on CAA section 302(j) (as well as CAA section 302(j) itself) refer only to major sources, and not to modifications of these sources. 49 FR 43213 (citing H.R. Report No. 95-294, 95th Cong., 1st Sess. 4, 9, 144 (1977); H.S. Rep. No. 95-564, 95th Cong., 1st Sess. 172 (1977)). With respect to the reference to “modification” in the PSD provisions of the Act, the EPA indicated that the conference committee said that it “[i]mplements conference agreement to cover `modification' as well as `construction' by defining `construction' in Part C to conform to usage in other parts of the Act.” Id. (quoting 123 Cong. Rec. H. 11957. col. 3 (daily ed.) (November 1, 1977)). The EPA posited that the phrase “usage in other parts of the Act,” most likely refers not only to CAA section 111(a)(4), but also to the EPA regulations implementing section 111 that were in effect at the time. Id. The EPA explained that those regulations (as well as CAA section 111(a)(4) itself) on their face require the inclusion of fugitive emissions in CAA section 111 applicability determinations, inasmuch as they concern themselves only with the quantity of the emissions in question. Id. (citing 40 CFR 60.14(a) (1977)). Moreover, the EPA explained that prior to the enactment of CAA section 302(j) in 1977, both the EPA and states made no distinction between fugitive and non-fugitive emissions in threshold applicability determinations. Id. (citing 40 CFR 51.18, 52.21(d)(1) (1977); 41 FR 55528 (December 21, 1976)). Given that CAA section 302(j) ran against longstanding practice throughout the agency's implementation of the CAA, the EPA suggested that if Congress had intended a change as to modifications, it probably would have said so explicitly, yet Congress said nothing. Id.

The 1984 interpretive rule also addressed practical issues related to the inclusion or exclusion of fugitive emissions in major modification determinations and concluded that including fugitive emissions in this context would be consistent with Congress's purposes, including the potential relief from the burdens of NSR afforded by the CAA section 302(j) rulemaking requirement. Given that the EPA's regulations did not require unlisted sources with predominantly fugitive emissions ( e.g., surface coal mines) to count fugitive emissions towards major source thresholds, the EPA noted that it is unlikely that those sources would be considered major sources in the first instance. And, because only modifications to an existing major source can be considered major modifications, the EPA concluded that it would be unlikely for sources of predominantly fugitive emissions to be subject to major NSR due to a modification, even under the EPA's proposed interpretation. 49 FR 43214.

When the EPA “affirmed” the 1984 interpretive rule in a related 1989 rulemaking, it did so based on the justifications presented in 1984, with some additional discussion based on comments received from stakeholders. See 54 FR 48882 (November 28, 1989). Specifically, commenters argued: (1) that congressional silence on the subject indicated a lack of guidance (rather than support for the EPA's position) and (2) because new sources and modifications are generally treated the same in most respects under the Act, there is no basis to treat them differently under CAA section 302(j). The EPA was not persuaded by these comments. The EPA concluded that its interpretation was both reasonable and proper, warranting deference under Chevron, U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). Additionally, the EPA reiterated and elaborated on its view that the agency's interpretation should have little general impact on sources of predominantly fugitive emissions like surface coal mines. This remained the EPA's interpretation of CAA sections 302(j) and 111(a)(4) until the Fugitive Emissions Rule was proposed in 2007 and finalized in 2008. 27

The Fugitive Emissions Rule represented a significant shift in the EPA's treatment of fugitive emissions. This 2008 rule was the first time the EPA had, after focused deliberation, applied the CAA section 302(j) rulemaking requirement to major modifications, such that only sources in categories listed by rule would need to account for fugitive emissions when determining whether a project constituted a major modification.

To justify this changed interpretation, the EPA argued that the lack of any reference in CAA section 302(j) to “major modification,” in addition to a scant legislative history, created ambiguity and room for the EPA to extend CAA section 302(j) to the context of major modifications. 28 See 73 FR 77888 (December 19, 2008). The EPA stated that it could not conclude from the statutory text or legislative history what Congress specifically intended on this point. 29 Accordingly, the EPA suggested that Congress simply did not know enough to make the critical decisions regarding the treatment of fugitive emissions in the major source and major modification contexts, instead assigning resolution of these complex issues to the EPA. The EPA additionally posited that CAA “section 302(j) evinces, at a minimum, an intent by Congress to require a special look at fugitive emissions for purposes of calculating a source's emissions for NSR purposes.” 73 FR 77888. 30

The EPA then explained the policy and programmatic reasons supporting its shift in approach. First, the EPA stated that its new position was most consistent with its earliest and most nearly contemporaneous construction of the statute in the 1980 NSR rules. The EPA argued that providing a more uniform approach— i.e., treating fugitive emissions the same in both major source and major modification contexts—more accurately reflected the original intent of Congress in establishing CAA section 302(j) and the resulting EPA rules that followed. Second, the EPA said that the revised position better addressed an additional regulatory burden that had not been adequately recognized in the past. Specifically, the EPA asserted that the EPA's policies discussed in 1984 and 1989 would have imposed a new burden on major sources in unlisted source categories, “since their fugitive emissions would be counted in determining whether they had made a change constituting a major modification and thus possibly subjecting those modifications to NSR review.” 73 FR 77889.

NRDC's 2009 petition for reconsideration argued that the Fugitive Emissions Rule was unlawful and urged the EPA to return to its prior interpretation concerning fugitive emissions. NRDC's petition focused largely on the definition of “modification” in CAA section 111(a)(4). Citing CAA section 111(a)(4) and the D.C. Circuit's 2005 New York v. EPA decision ( New York I ), 31 NRDC emphasized that the definition of modification focuses exclusively on increases in “actual” emissions. NRDC asserted that the EPA's prior interpretations echoed this focus and did not differentiate between stack emissions and fugitive emissions, instead focusing on the total amount of pollution that a change at a source would produce. Citing the D.C. Circuit's 2006 New York v. EPA decision ( New York II ), 32 NRDC further asserted that the coverage of CAA section 111(a)(4) is broad—including any physical change that increases emissions—and subject only to narrow de minimis exceptions.

NRDC claimed that, in promulgating the Fugitive Emissions Rule, the EPA failed to address the definition of modification in CAA section 111(a)(4), explain its reversal of its interpretation of this statutory provision, or respond to comments concerning this provision. Moreover, NRDC claimed that the Fugitive Emissions Rule created an impermissible exemption to the definition of “modification” because the EPA did not (and could not) claim (1) that the exemption was supported by the de minimis doctrine, (2) that increased fugitive emissions do not qualify as “the amount of any air pollutant emitted by such source” under CAA section 111(a)(4), or (3) that exempt fugitive emissions increases do not fall within the meaning of “any physical change” or “any” change in the method of operation under CAA section 111(a)(4). 33 As noted previously, on April 24, 2009, the EPA responded by letter indicating that the EPA was convening a reconsideration proceeding.

After reconsidering the 2008 Fugitive Emissions Rule, the EPA proposes to return to the position first articulated in 1984, adopted in a final action in 1989, and which remained the EPA's interpretation until revisited in 2008. Given CAA section 302(j)'s silence with respect to modifications, in conjunction with the definition of “modification” in CAA section 111(a)(4), the EPA does not believe the CAA section 302(j) rulemaking requirement applies to major modification determinations. Moreover, the EPA does not consider it appropriate to allow existing major sources in non-listed source categories to omit increases and decreases in fugitive emissions when evaluating whether a physical or operational change constitutes a major modification. All major sources should include both stack and fugitive emissions in the major modification context.

The EPA considers this a prudent change in position. The EPA's treatment of fugitive emissions in modifications has a complicated history, particularly during the early years of the NSR program following the 1977 CAA Amendments. However, the interpretation advanced now most closely aligns with the interpretation of CAA section 302(j) originally proposed in 1984 and adopted in 1989. This interpretation was more thoughtful and fully developed than the one the EPA had followed from 1980 until 1984, 34 and has reflected the EPA's position for the majority of the NSR program's existence. 35 More importantly, the legal and policy reasoning advanced in the 1984 and 1989 actions (summarized in Section IV.A of this preamble), in light of more recent case law ( New York I and II ), reflects a more complete depiction of the relevant statutory authorities than the reasoning articulated in the 2008 Fugitive Emissions Rule. The EPA also believes this approach fully accommodates congressional intent and the practical and policy considerations surrounding this issue. Therefore, for the reasons detailed later in this preamble, the EPA is well-justified in returning to its longest-standing view concerning the treatment of fugitive emissions in the major modification context.

CAA section 302(j), as interpreted by the Alabama Power court, restricts the EPA's consideration of fugitive emissions in certain situations, requiring a rulemaking before the EPA can consider such emissions towards major stationary source thresholds. In extending this rulemaking requirement to major modifications, the 2008 rule focused largely on the fact that both CAA section 302(j) and the accompanying legislative history were silent with respect to the treatment of fugitive emissions for major modification purposes. The EPA concluded that CAA section 302(j) indicates congressional intent “to require a special look at fugitive emissions for purposes of calculating a source's emissions for NSR purposes.” 73 FR 77888 (December 19, 2008). This conclusion, while true to an extent, reflected an overbroad understanding of the “special look” required by CAA section 302(j), which is not specific to NSR  36 and only explicitly addresses one aspect of the expansive NSR program (major source determinations). 37 Notwithstanding this “special look,” the EPA did not in 2008 interpret CAA section 302(j) as requiring the EPA to conduct rulemaking to identify source categories prior to including fugitive emissions in the major modification context. Instead, the EPA determined that the congressional silence gave the agency the discretion to “apply” the CAA section 302(j) methodology to major modifications. 38 Moreover, in the final Fugitive Emissions Rule in 2008, the EPA acknowledged that its prior interpretation remained a permissible construction of the Act (as the agency had previously asserted in 1989). 73 FR 77888; see 54 FR 48883 (November 28, 1989).

Moreover, the EPA's 2008 conclusion that Congress “simply did not know enough to make the critical decisions regarding the extent to which fugitive emissions should be included in threshold applicability determinations” for both major source and major modification determinations is undermined by the fact that Congress chose to explicitly provide special treatment of fugitive emissions in the relevant definition of major source, while declining to do so in the relevant definition of major modification. As the EPA first explained in 1984, because the special treatment of fugitive emissions in CAA section 302(j) “ran against the grain of longstanding practice[, i]f Congress had intended a change as to modifications, it probably would have said so explicitly, yet it said nothing.” 49 FR 43213 (October 26, 1984).

On its face, CAA section 302(j) only applies to determining what constitutes a “major stationary source.” CAA section 302(j) does not merely reference this concept, but literally defines this specific term (along with the interchangeable term, “major emitting facility”), and this term alone. Nothing in the definition of “major stationary source” in CAA section 302(j)—or its usage elsewhere in the NSR-relevant statutory provisions  39 —suggests that its restriction on counting fugitive emissions was intended to be extended to other, distinct definitions or inquiries, such as the operative definition of “modification” in CAA section 111(a)(4). Rather than expand this principle to other contexts, the silence in CAA section 302(j) with respect to anything other than “major source” inquiries suggests Congress's intent to confine the fugitive emissions rulemaking requirement to major source determinations. The EPA's authority to apply a similar treatment in another, different context depends on the operative statutory provisions governing that context. 40 As discussed in the following paragraphs, in the context of determining whether a major modification has occurred, the EPA does not interpret CAA section 111(a)(4) as providing a basis for restricting consideration of fugitive emissions in such a manner.

The EPA's 1984 and 1989 interpretations of the definition of “modification” in CAA section 111(a)(4) formed a central tenet of the agency's prior position that all emissions—both stack and fugitive—must be accounted for in the modification context. CAA section 111(a)(4) provides that “the term `modification' means any physical change in, or change in the method of operation of, a stationary source which increases the amount of any air pollutant emitted by such source or which results in the emissions of any air pollutant not previously emitted.” 42 U.S.C. 7411(a)(4). 41 As first stated in 1984, the EPA proposes to reaffirm in this rule that, in defining “modification” solely in terms of the total amount of pollution that a change would produce, Congress did not make a distinction between different types of emissions—stack or fugitive—in the context of modifications under the major NSR program. CAA section 111(a)(4)'s discussion of “any” physical or operational change, and its focus on increases in “any air pollutant,” further support this position. This is consistent with the EPA's historical interpretation of CAA section 111(a)(4) in other relevant contexts, namely the NSPS program. See, e.g., 49 FR 43213 (October 26, 1984).

This interpretation is also consistent with case law discussing the boundaries on the EPA's authority to establish exemptions to major NSR. As early as 1979, the Alabama Power court expressed skepticism of the EPA's authority to promulgate its initial 1978 exemption for fugitive dust—remanding that provision and providing extensive discussion of the limits on EPA's general exemption authority. 636 F.2d at 370; see id. at 357-61. More recently, as noted in NRDC's petition for reconsideration, the D.C. Circuit's New York I and New York II decisions further explored the EPA's limited ability to establish exemptions to the definition of “modification” in the context of major NSR. In New York I, the court “conclude[d] that the CAA unambiguously defines `increases' in terms of actual emissions,” explaining that the phrase “ `the amount of any air pollutant emitted by [the] source' [in CAA section 111(a)(4)] plainly refers to actual emissions.” 413 F.3d at 40. In New York II, the court stated the following: “Because Congress used the word `any,' EPA must apply NSR whenever a source conducts an emission-increasing activity that fits within one of the ordinary meanings of `physical change.' ” 443 F.3d at 885. Additionally, in vacating an exclusion from NSR applicability, the court concluded, “only physical changes that do not result in emission increases are excused from NSR.” Id. at 887. Thus, allowing certain sources to omit fugitive emissions in determining whether a change is a major modification would run counter to the D.C. Circuit's direction that modifications must account for all actual emissions increases from “any” physical change ( i.e., not just changes that increase non-fugitive emissions), subject only to de minimis exceptions.

In summary, for purposes of major NSR, the EPA proposes to affirm that CAA section 302(j) requires rulemaking before considering a source's fugitive emissions only in the major source context, and not in the major modification context. The EPA proposes to restore its longest-standing interpretation that CAA section 111(a)(4) requires that all major sources consider increases in all types of emissions (including fugitive emissions) in determining whether a proposed change would constitute a major modification.

The EPA has considered the legal issues underlying the treatment of fugitive emissions in major modifications in multiple actions over the past 4 decades. During these prior actions, the EPA has also received and considered a substantial amount of feedback from stakeholders, upon which the conclusions in this proposal are based. However, the EPA solicits comment concerning the interpretation of CAA sections 302(j) and 111(a)(4) described in this section, in light of the authorities and considerations discussed in this Section. The EPA seeks comment on whether this interpretation supports repealing the 2008 Fugitive Emissions Rule, as well as removing the similar “major solely due to the inclusion of fugitive emissions” exemption first established in 1980.

Through this proposal, the EPA seeks to realign its NSR regulations to better reflect the purpose of the NSR program and to end the regulatory uncertainty that has surrounded the EPA's treatment of fugitive emissions in the major modification context over the past four decades. The EPA expects any impacts of this proposed action on a limited subset of the regulated community to be manageable.

The NSR program was designed to protect public health and welfare from the effects of air pollution and to preserve and/or improve air quality throughout the nation. See 42 U.S.C. 7470(1), (2), (4). As the EPA has recognized since the early days of the NSR program, emissions deteriorate air quality regardless of how they emanate—whether stack or fugitive. 45 FR 52690 (August 7, 1980). Fugitive emissions in particular are more likely to have localized impacts on the air quality of communities located near these sources of pollution. The EPA welcomes comments from affected communities and other stakeholders on this topic and the broader air quality impacts of this rule.

Allowing large, existing sources of pollution to ignore increases in fugitive emissions when determining whether a project is a major modification, as the EPA did in its 2008 Fugitive Emissions Rule, could reduce the likelihood that projects would be subject to careful evaluation through the major NSR permitting process, notwithstanding significant increases in actual air pollution. This would undermine an important tool that the EPA and state and local air agencies use to preserve and improve air quality. Thus, the EPA's proposal seeks to preserve the ability to evaluate all increases of air pollution at existing major sources, regardless of origin, consistent with the purposes of NSR.

By removing outdated and conflicting provisions from the CFR and aligning the regulatory text with the EPA's stated interpretation, the agency seeks to restore clarity, certainty, and consistency to the regulations. The proposed approach reflects a more straightforward, simplified test for determining whether a change at an existing source is a major modification. Collectively, the EPA expects these changes to assist existing major sources to better understand the requirements that might be applicable to planned modifications, and to streamline the permitting process.

First, the proposed rule would eliminate uncertainty caused by the EPA's stay of the 2008 rule and the revisions to the regulatory text made in 2011 to effectuate the stay. Viewing the current text of the CFR, it is difficult to understand the proper treatment of fugitive emissions. The CFR is currently a patchwork of regulations that includes some of the paragraphs promulgated by the 2008 rule (which are stayed, although this may not be readily apparent from the paragraphs themselves)  42 alongside reinstated paragraphs that predated, and conflict with, the stayed paragraphs from the 2008 rule. The proposed changes to remove the remaining stayed portions of the 2008 rule would restore much-needed clarity to the CFR.

Second, the proposed changes would eliminate uncertainty caused by inconsistencies between the EPA's longstanding interpretation of CAA sections 302(j) and 111(a)(4) and the 1980 exemption. As discussed in Section IV.A of this preamble, from 1989 through 2008, the EPA interpreted CAA sections 302(j) and 114(a)(4) to require all existing major sources to include fugitive emissions when determining whether a modification is major. Nonetheless, since 1980 (excepting a brief period in 2009), the NSR regulations have included an exemption allowing certain types of sources to avoid substantive major NSR requirements if a modification would be considered major solely due to the inclusion of fugitive emissions. The EPA's failure to remove this 1980 exemption in 1989 (and in subsequent actions) in light of the agency's interpretation has led to significant confusion for both permitting authorities and the regulated community. Additional confusion has resulted from the imprecise drafting of the 1980 exemption  43 and the fact that this regulatory text reflects outdated applicability procedures. 44 The EPA expects that removing the 1980 exemption to align the regulations with the EPA's longstanding interpretation (which the EPA proposes to affirm in the current action) will further eliminate uncertainty.

The proposed changes provide a more straightforward method for accounting emissions increases and decreases in the context of modifications, which could potentially reduce the administrative burden for certain sources affected by these changes and for permitting authorities processing permit applications. Specifically, if the 2008 rule is repealed and the 1980 exemption is removed, major sources in non-listed categories would no longer have to distinguish between fugitive and non-fugitive emissions in determining whether a future modification is major. Removing this potentially complicated and contentious analytical step from the permitting process would provide greater certainty for sources contemplating modifications and ease the administrative burden for both sources and permitting authorities. 45

After reevaluating the policy and programmatic reasons that motivated the 2008 Fugitive Emissions Rule, the EPA no longer views these considerations as warranting the same approach. First, in the 2008 rule, the EPA suggested—without explanation—that it is better to adopt a uniform approach to major source and major modification determinations (that is, to allow the same sources to exclude fugitive emissions from both types of determinations). 73 FR 77888 (December 19, 2008). Upon reflection, the EPA sees little benefit in pursuing this type of “uniformity” for uniformity's sake. Most elements of the NSR program make no distinction between stack and fugitive emissions; the ability for non-listed sources to exclude fugitive emissions in initially determining whether they constitute a major source is the unique exception. At a certain point in the NSR applicability evaluation process, all sources (including those in non-listed categories) must account for all emissions (including fugitive emissions) in determining which substantive requirements apply. 46 Thus, “uniformity” in the treatment of fugitive emissions is ultimately illusory. The more pertinent issue is whether the EPA's approach to determining what constitutes a “major modification” should align more closely with the preliminary determination of whether a non-listed source is a “major source” (where fugitive emissions are excluded), or with consequent determinations concerning the application of substantive major NSR requirements to a major source or modification (where fugitive emissions are included). For the reasons presented in this section, the EPA believes the latter reflects better policy. 47

The EPA also said in 2008 that its prior approaches had not adequately recognized the regulatory burden associated with requiring all sources to consider fugitive emissions in the major modification context. For support, the EPA explained: “our interpretation proposed in 1984 and finalized in 1989 imposed a new regulatory burden on major sources in a source category on the section 302(j) list, since their fugitive emissions would be counted in determining whether they had made a change constituting a major modification and thus possibly subjecting those modifications to NSR review.” 73 FR 77889 (December 19, 2008). While this was a concise summary of the potential effect of the EPA's pre-2008 interpretations (and the one proposed in the current action), this statement did not address or contradict the EPA's more extensive consideration and discussion of the same issue in the interpretive rule proposed in 1984 and finalized in 1989. In these prior documents, the EPA explained that few sources would likely be impacted by the interpretation. See 54 FR 48882 (November 28, 1989). The following subsection addresses these potential impacts.

After reevaluating currently available information, the EPA expects that the proposed interpretation, and the resulting revocation of the 2008 Fugitive Emissions Rule and removal of the 1980 exemption will have a limited practical impact and result in limited increased burden for regulated entities, for the following reasons. First, revoking the 2008 Fugitive Emissions Rule should have almost no appreciable impact on the status quo, given that the 2008 rule has been stayed (in some form) since September 2009 (less than a year after becoming effective).

Second, removing the 1980 exemption from the regulations should also have a limited impact. To the EPA's knowledge, the exemption has generally not been relied on by sources, and the population of sources that could invoke the exemption is limited. The changes proposed in this rule would only impact sources that do not belong to a listed source category (as listed sources have to include fugitive emissions for major modification purposes under any scenario). More importantly, it would only impact those non-listed sources that are already considered existing major stationary sources (as major modifications can only occur at existing major sources). 48 Given that non-listed sources do not count fugitive emissions towards major source thresholds, the EPA understands the universe of such sources to be relatively small, particularly for sources of predominantly fugitive emissions that might be most concerned with the EPA's proposed changes. As explained in the EPA's 1989 interpretive rule, the EPA expects that major NSR applicability for sources of predominantly fugitive emissions would, in most situations, be attributable to other existing EPA regulations and policies—such as those defining the scope of a stationary source—and not to the EPA's interpretation of CAA section 302(j) with respect to modifications. See 54 FR 48883 (November 28, 1989); see also 51 FR 7092 (February 28, 1986). Non-listed sources with large quantities of non-fugitive (stack) emissions are more likely to be considered major sources, and thus could be impacted by this rule. However, the likelihood that such a source (with large amounts of non-fugitive emissions) would undertake a modification that would be major solely due to consideration of the source's fugitive emissions seems remote. In any case, as described in the following paragraphs, the EPA expects that any entities that are affected are likely well-positioned to handle the additional obligations of major NSR review.

The policy considerations that may have motivated Congress to enact CAA section 302(j), and which motivated the EPA's listing of certain source categories but not others in its definition of “major source,” are already effectively accomplished by allowing sources in non-listed categories to exclude fugitive emissions when determining whether they constitute a “major source.” As discussed in Section IV of this preamble, the sparse legislative history does not express a clear purpose for the treatment of fugitive emissions in CAA section 302(j). However, as the Alabama Power court suggested, CAA section 302(j) “may well define a legislative response to the policy considerations presented by the regulation of sources where the predominant emissions are fugitive in origin, particularly fugitive dust.” 636 F.2d at 369. The court also noted that the provision “gives EPA flexibility to provide industry-by-industry consideration and appropriate tailoring of coverage.” Id. The EPA believes that the industry-specific coverage afforded by allowing sources in non-listed source categories to omit fugitive emissions in determining whether they are a “major source” is sufficient coverage for NSR purposes. As noted in the preceding paragraph, by omitting fugitive emissions in determining whether a non-listed source is a major source, this significantly reduces the possibility that such a source of predominantly fugitive emissions would be considered major, accordingly limiting the possibility that future modifications at such a source would trigger major source NSR.

To the extent that any sources are impacted by this rule, such sources will, by definition, be existing major stationary sources. In the specific context at issue here, these sources are likely to be large, relatively well-resourced operations, given that their emissions will necessarily generally exceed 250 tons per year for at least one pollutant even before considering fugitive emissions. Thus, although these major sources do not belong to a listed source category, they nonetheless represent the type of “facilities, which, due to their size, are financially able to bear the substantial regulatory costs imposed by the PSD provisions and which . . . are primarily responsible for emissions of the deleterious pollutants that befoul our nation's air.”  49 If these facilities were constructed anew, they would be subject to the major NSR program (and, presumably, many if not most of these sources have already been through the major NSR permitting process). These sources should be familiar with the NSR program and able to manage any additional obligations imposed by this proposed regulatory change.

Accordingly, in light of these policy considerations and the legal constraints discussed in Section IV.C of this preamble, the EPA does not consider it necessary or prudent to extend a second, additional exemption to these existing major sources that are contemplating modifications, as the EPA did in the Fugitive Emissions Rule. Doing so would unnecessarily render future modifications less likely to trigger major NSR review, even in cases where a modification would significantly increase actual air pollution, frustrating the ultimate goals of the major NSR program (as discussed in Section V.A of this preamble). Overall, the EPA believes the interpretation and regulatory approach proposed in the current action strikes the appropriate balance to protect air quality while ensuring “that economic growth will occur in a manner consistent with the preservation of existing clean air resources.” 42 U.S.C. 7470(3).

The EPA's proposed conclusions regarding the limited potential impact of this action are based on the agency's experience over the past 4 decades as well as feedback received from stakeholders on prior actions. However, the EPA solicits additional comments from stakeholders on the practical impact of the proposed action, including the scope of overall programmatic impacts ( e.g., how many sources might be affected). Specifically, the EPA seeks information on the types and numbers of existing major sources that do not belong to a listed source category and that have predominantly fugitive emissions, or which might otherwise be affected by this rule. As noted in the previous paragraphs, the EPA expects the number of such sources to be relatively small, but the EPA would welcome more quantitative information on this topic. Relatedly, the EPA solicits information about specific real-world or hypothetical examples of situations where a particular type of source might be affected by the proposed changes ( e.g., how the changes might impact a regulated entity's behavior in considering whether to undertake a modification).

If the EPA affirms the interpretation of CAA sections 302(j) and 111(a)(4) discussed in Section IV.C of this preamble— i.e., that all existing major sources must account for fugitive emissions in determining whether a modification is major—the EPA proposes that the changes to the EPA regulations reflected in this rule would also be minimum program elements for SIPs. If this rule is finalized as proposed, it is likely that any SIPs containing an exemption for fugitive emissions in the major modification context will be less stringent than the minimum program elements specified in the EPA's regulations and would therefore need to be revised. The scope of necessary SIP revisions would be a case-specific inquiry and would depend on the nature of any final changes to the EPA's regulations as well as the nature of existing SIP provisions. Based on a preliminary review of existing EPA-approved SIPs, the EPA observes that very few state or local agencies have EPA-approved SIP provisions based on, or incorporating, the 2008 Fugitive Emissions Rule. This makes sense considering that the EPA stayed and amended the 2008 rule shortly after it became effective, leaving a relatively small window of time for states to adopt revisions based on the 2008 rule. However, the EPA understands that significantly more SIPs contain provisions based on, or incorporating, the 1980 exemption (as recodified in the 2002 NSR Reform Rule). Accordingly, if the EPA finalizes a rule that not only repeals the 2008 rule, but also removes the 1980 exemption from the EPA's regulations, a larger number of permitting authorities may be required to submit SIP revisions. If the EPA determines that conforming SIP revisions are necessary, states would be required to submit SIP revisions no later than three years after the final rule amending the EPA's regulations publishes in the Federal Register . 40 CFR 51.166(a)(6)(i). The EPA is soliciting comment on the need to establish the proposed changes as minimum program elements and the consequent potential for SIP revisions.

Fugitive emissions, for purposes of both the NSR and title V permitting programs, are defined as “emissions which could not reasonably pass through a stack, chimney, vent, or other functionally equivalent opening.” E.g., 40 CFR 52.21(b)(20), 70.2. The 2008 Fugitive Emissions Rule did not change this regulatory definition, but the preamble to that rule did include a discussion of “guiding principles” based on the EPA's interpretation of this regulatory definition. See 73 FR 77891 (December 19, 2008). Most of the principles articulated in the 2008 preamble simply restated or summarized prior EPA letters and memoranda expressing the EPA's interpretations and policies on the issue. 50 The EPA continues to follow its interpretations and policies concerning the definition of “fugitive emissions” that predated the 2008 rule, including those that were restated and summarized in the 2008 rule preamble. These positions were not affected by the 2008 rule or the stays of the 2008 rule. The EPA is providing the following summary of these interpretations and policies in order to provide clarity and certainty about how EPA intends to approach these issues.

Determining whether certain emissions are fugitive or non-fugitive at a particular source is inherently a fact-specific inquiry. All emissions which do actually pass through a stack, chimney, vent, or other functionally equivalent opening at a facility are non-fugitive. If emissions do not currently pass through such an opening, then one must evaluate whether such emissions could reasonably pass. 51 The EPA interprets the phrase “reasonably pass” by determining whether emissions could reasonably be collected or captured and discharged through a stack, chimney, vent, or functionally equivalent opening. Various criteria guide this case-by-case analysis, and no single criterion should be considered determinative. Relevant considerations include whether and to what extent similar facilities collect or capture similar emissions (including how common this practice is, and whether the EPA has established a national emissions standard or regulation that requires some sources in the source category to collect or capture the emissions) and the technical and economic feasibility ( e.g., cost) of collecting or capturing the emissions.

In addition to outlining these longstanding interpretations and policies, the preamble to the 2008 Fugitive Emissions Rule also expanded some of the factors that permitting authorities may consider when assessing whether certain emissions are fugitive or non-fugitive. Notably, the EPA said for the first time in the 2008 preamble that permitting authorities could consider the cost of controlling emissions when determining whether such emissions “could not reasonably pass” and accordingly whether such emissions should be considered fugitive or non-fugitive. The EPA understands that the stay of the 2008 rule left a question of whether EPA continued to support considering the cost of control in identifying whether emissions are fugitive. The EPA intended the initial 2009 stay (and all subsequent stays) of the 2008 Fugitive Emissions Rule to apply to the entire rulemaking effort, including the discussion of the definition of “fugitive emissions” contained within the rule's preamble. Thus, the EPA statements regarding the cost of control were also stayed and were not applied by EPA thereafter. Likewise, these statements regarding cost of control do not reflect the EPA's current thinking and should not be relied upon by states or sources in making permitting decisions. Instead, the EPA continues to apply the longstanding interpretations and policies that predated the 2008 rule, as summarized in the preceding paragraphs.

Although the EPA does not propose in this action to revise its longstanding approach for evaluating this issue, the EPA welcomes public comment on how to interpret and apply the definition of “fugitive emissions” in the NSR and title V regulations. To the extent that the EPA seeks to provide additional guidance on applying the definition of “fugitive emissions” in the future, any such guidance may be provided alongside, or separate from, any final action in this rulemaking concerning the treatment of fugitive emissions for major modifications. In the meantime, the EPA will continue to be responsive to case-specific inquiries from permitting authorities and regulated entities requesting the EPA's views on whether certain emissions should be considered fugitive or non-fugitive.

The proposed changes are not expected to have any effect or increased burden on communities with environmental justice concerns. Although the impact of this proposal is expected to be limited, requiring all existing major sources to include fugitive emissions in determining whether a change constitutes a major modification could potentially result in more projects subject to major NSR and installing pollution controls, improving the air quality for all communities, particularly those located near major sources with a large proportion of fugitive emissions.

Additional information about these statutes and Executive Orders can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. Pursuant to E.O. 12866, the EPA has assessed the potential costs and benefits of this regulatory action. EPA believes the rule will have a limited practical impact and result in limited increased burden for regulated entities, as discussed in Section V.D. Any changes made in response to OMB recommendations have been documented in the docket.

This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control numbers 2060-0003 for the PSD and NNSR permit programs. The burden associated with obtaining an NSR permit for a major stationary source undergoing a major modification is already accounted for under the approved information collection requests. A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA unless that collection of information displays a currently valid OMB control number.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. In general, major stationary sources undergoing major modifications are not small entities, as discussed in Section V of this preamble. State and local air agencies that could be affected by this rule do not qualify as small entities under the RFA.

This action does not contain an unfunded federal mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action imposes no enforceable duty on any state, local or tribal governments or the private sector. Nonetheless, if this rule is finalized as proposed, it is possible that some state and local air agencies will need to submit a small, one-time revision to their SIP. However, the rule could ultimately reduce regulatory impacts for these state and local agencies (and potentially affected sources) because they would no longer have to expend resources differentiating between fugitive and non-fugitive emissions when assessing whether a project constitutes a major modification.

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

This action does not have tribal implications as specified in Executive Order 13175. The EPA is currently the reviewing authority for PSD and NNSR permits issued in tribal lands and, as such, the revisions being proposed will not impose direct burdens on tribal authorities. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.

This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution or use of energy. Industries directly involved in energy production ( e.g., fossil fuel-fired power plants) will not be affected by this rule because they belong to a listed source category, and this rule only pertains to sources in non-listed source categories. As discussed in Section V of this preamble, the EPA considers it unlikely that this rule would affect other industries involved in energy supply that do not belong to a listed source category ( e.g., surface coal mining).

This rulemaking does not involve technical standards.

The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). The basis for this decision is contained in Section VIII of this preamble.

The statutory authority for this action is provided by 42 U.S.C. 7401 et seq.

For the reasons stated in the preamble, title 40, chapter I of the Code of Federal Regulations is proposed to be amended as follows:

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

On December 14, 2018, the California Air Resources Board (CARB) adopted a set of rules referred to as the Innovative Clean Transit (ICT) regulation. On August 13, 2019, the California Office of Administrative Law (OAL) approved the ICT regulation, effective October 1, 2019. On February 13, 2020, CARB submitted the ICT regulation to the EPA as a revision to the California SIP. 1 Table 1 lists the specific sections of Title 13, Division 3, Chapter 1, Article 4.3 of the California Code of Regulations (CCR) that comprise the ICT regulation.

Table of Contents I. Introduction and Background II. Summary of Comments III. Ocean Shipping Reform Act of 2022 IV. Discussion of Proposed Rule A. General Provisions 1. Purpose of Rule 2. Scope and Applicability 3. Definitions 4. Properly Issued Invoices B. Required Billing Information 1. Identifying Information 2. Timing Information 3. Rate Information 4. Dispute Information 5. Certifications C. Billing Practices 1. 30-Day Timeframe To Issue Demurrage or Detention Invoices 2. Timeframes for Disputing Charges and Resolving Disputes V. Public Participation VI. Rulemaking Analyses I. Introduction and Background

As rising cargo volumes have increasingly put pressure on common carrier, port and terminal performance, demurrage and detention charges have for a variety of reasons substantially increased. For example, over a two-year period between 2020 and 2022, nine of the largest carriers serving the U.S. liner trades individually charged a total of approximately $8.9 billion in demurrage and detention charges and collected roughly $6.9 billion. 1 On July 28, 2021, Commissioner Rebecca F. Dye, the Fact Finding Officer for Fact Finding Investigation No. 29, International Ocean Transportation Supply Chain Engagement (Fact Finding No. 29), recommended, among other things, that the Commission “[i]ssue an [Advance Notice of Proposed Rulemaking (ANPRM)] seeking industry input on whether the Commission should require common carriers  2 and marine terminal operators (MTOs) to include certain minimum information on or with demurrage and detention billings and adhere to certain practices regarding the timing of demurrage and detention billings.”  3 The Fact Finding Officer expressed concern about certain demurrage and detention billing practices and a need to ensure that it is clear to shippers “what is being billed by whom” so that they can understand the charges. 4 The Commission approved this Fact Finding 29 recommendation on September 15, 2021. 5

On February 15, 2022, the Commission issued an ANPRM to request industry views on potential demurrage and detention billing requirements. 6 Specifically, the Commission requested comments on whether a proposed regulation on demurrage and detention billing practices should apply to non-vessel-operating common carriers (NVOCCs) as well as vessel-operating common carriers (VOCCs), and whether the regulations should differ based on whether the billing party is a NVOCC or a VOCC. 7 The Commission also requested comments on whether proposed regulations on demurrage and detention billings should apply to MTOs. 8

In addition to requesting comments regarding the applicability of demurrage and detention billing requirements to parties such as NVOCCs and MTOs, the Commission also requested comments on what information should be required in demurrage and detention invoices. 9 In addition to information necessary to identify the shipment (bill of lading number, container number, etc.), the Commission asked whether bills should include information on how the billing party calculated demurrage and detention charges. 10 For example, the Commission requested comments on whether it should require the billing party to include the following information: identifying clear and concise container availability dates in addition to vessel arrival dates for import shipments; and, for export shipments, the earliest return dates (and any modifications to those dates) as well as the availability of return locations and appointments, where applicable. 11 The Commission also requested comments on whether the bills should include information on any events ( e.g., container unavailability, lack of return locations, appointments, or other force-majeure reasons) that would justify stopping the clock on charges. 12

In the ANPRM, the Commission stated that it was considering whether it should require common carriers and MTOs to adhere to certain practices regarding the timing of demurrage and detention billings. The Commission sought comments on whether the Commission should require billing parties to issue demurrage or detention invoices within 60 days after the charges stopped accruing. 13 The Commission stated that the Uniform Intermodal Interchange Agreement (UIIA)  14 on which the industry relies currently requires that invoices be issued within 60 days and asked whether the 60-day timeframe was effective in addressing concerns raised by billing parties, or whether a longer or shorter time period would be more appropriate. 15 In addition, the Commission requested comments on whether it should regulate the timeframe for refunds and, if so, what would be an appropriate timeframe. 16

The Commission received 82 comments in response to the ANPRM from 81 commenters. 17 The commenters represent the following interest groups: VOCCs; MTOs; NVOCCs, freight forwarders, and customs brokers; motor carriers; and beneficial cargo owners (BCOs). The Commission also received comments from five entities with unknown affiliations, and three other commenters that did not fit into the above categories. 18 Comments from these eight entities were consistent with other commenter categories and are captured in the discussions below. All comments are identified below and are available on the docket at https://www.regulations.gov by their document number (Doc. No.). They are also available in the Commission's Reading Room, at: https://www2.fmc.gov/readingroom/proceeding/22-04/.

The Commission received comments from an individual VOCC and from two trade organizations that represent most of the largest VOCCs operating in U.S.-foreign ocean trade (collectively VOCC commenters). 19 In general, VOCC commenters cautioned the Commission against pursuing regulation in this area. There was an overall concern that such a regulation could overreach and ultimately create more harm than good. For example, WSC warned the Commission to “focus on preventing what is unreasonable as opposed to seeking to re-make the waterfront in the image that it believes is most desirable.”  20

VOCC commenters noted the existing commercial relationships and how solutions to issues and innovation best develop through these natural relationships without outside parties, such as the Commission. 21 The existence of commercial relationships meant issues could be resolved in contractual relations and that regulations were generally unnecessary. VOCC commenters expressed concern about the Commission creating an environment where the Commission would create an unbalanced negotiation sphere. 22

VOCC commenters asserted that the existence of commercial relationships lends itself to innovation. These commenters expressed concern that regulation in this area could stifle innovation. For example, WSC stated, “a fixed form and process for invoices could stifle digital innovation to include initiatives to do business electronically, including automated invoices, use of block chain technology, and more broadly efforts to digitize the supply chain.”  23

Finally, VOCC commenters also stressed that implementation of these changes may prove difficult. These commenters noted that they have developed their own billing systems and because these systems must exchange information, any required changes would be significantly difficult. 24 OCEMA noted that it is important for “the FMC to first consider technological feasibility, the scope and required time for systems development work that would be required to support any new requirements, and whether the proposed change would burden the ability to resolve items as part of a pre-pay process rather than a post-pay transaction.”  25

The Commission received comments from an MTO and from three MTO trade organizations (collectively MTO commenters). 26 Like VOCC commenters, MTO commenters generally argued against any new regulation, particularly if such regulation would apply to MTOs. 27 One commenter observed that the Commission may already consider billing in evaluating demurrage and detention practices and so additional regulation was unnecessary. 28 Commenters claimed that current Commission regulations adequately protect the industry.

MTO commenters also noted the unique aspects of individual terminals. MTO commenters expressed concern about applying a “one size fits all” approach and cautioned the Commission about the unintended consequences and technological difficulties of pursuing this type of regulation. 29 For example, the National Association of Waterfront Employees (NAWE) expressed concern that establishing billing requirements “will inevitably disrupt existing commercial relationships and could impact the competitiveness of MTOs that continue to face competition from neighboring foreign ports.”  30 Other MTO commenters shared this view and asserted that compliance with any changes would create administrative burdens that could worsen current supply chain issues. 31 MTO commenters argued the costs of any new regulation would outweigh any benefits and cited technological limitations, international competition, and security concerns as reasons why the Commission should limit any regulation it decides to adopt. 32

The Commission received comments from ten NVOCCs, freight forwarders, and customs brokers, and five trade organizations that represent such entities (collectively ocean transportation intermediary (OTI) commenters). 33 OTI commenters supported the Commission pursuing this regulation, but NVOCC commenters did not uniformly support applying any adopted regulation to NVOCCs. 34 Most NVOCCs argued that the regulation should not apply to NVOCCs because NVOCCs do not determine demurrage or detention rates. 35 Two NVOCCs indicated that the demurrage and detention billing requirements should apply to NVOCCs, but did not provide further explanation. However, one of these commenters stated that any new requirements that would apply to NVOCCs should differ from those that would apply to VOCCs because NVOCCs serve as an intermediary between the VOCCs and shippers. 36 In contrast, freight forwarders and customs brokers indicated that any proposed demurrage and detention billing requirements should apply to VOCCs and NVOCCs equally as they both charge demurrage and detention fees. 37

OTI commenters generally agreed on other questions posed in the ANPRM. For example, OTI commenters responded that the proposed regulations should apply to MTOs because they issue demurrage and detention charges. 38 In addition, these commenters supported requiring billing parties to provide all information identified in Question 6 of the ANPRM as well as information on how to dispute charges to the billing party. 39 Some OTI commenters stated that the Commission should also require billing parties to certify that the charges comply with the Shipping Act of 1984, as amended. 40 These commenters were generally supportive of requiring billing parties to issue invoices within a specific timeframe (with most agreeing that the timeframe should be 30 days or less) and requiring billing parties to issue refunds within a specified timeframe. 41

These commenters also stated that if the billing party invoices multiple parties, that the invoice should identify all billed parties and the basis for billing each. Furthermore, several commenters, especially customs brokers, asserted that they should not receive demurrage and detention invoices. For example, Los Angeles Customs Brokers and Freight Forwarders Association (LACBFFA) observed that shippers often name the customs broker as the “notify party” for customs purposes, and, as a result, custom brokers may receive demurrage or detention invoices. 42 Such commenters argued that customs brokers should not receive invoices because they have no part in the transportation, negotiation, handling, or inland transport, and that the Commission should prohibit common carriers and MTOs from billing parties only shown as a notify party on the Bills of Lading. 43

The Commission received comments from 26 BCOs and 15 trade organizations that represent these entities (collectively BCO commenters). 44 BCO commenters generally agreed on issues raised in the ANPRM. For example, BCO commenters responded that the regulations should apply to VOCCs, NVOCCs, and MTOs equally. The majority of BCO commenters stated that if the entity issued demurrage or detention charges, then the regulation should apply. 45 BCO commenters cited the need for uniform requirements to apply to all demurrage and detention invoices they receive, regardless of whether the billing party is a VOCC, NVOCC, or MTO. However, many of these BCOs preferred not to receive invoices from MTOs because they have no contractual relationship with the MTO. 46 Several BCO commenters expressed the opposite view and supported a requirement that MTOs bill the BCO directly to avoid additional fees from VOCCs when they pass through such charges. 47

BCO commenters generally supported requiring billing parties to provide all information identified in Question 6 of the ANPRM and information on how to dispute charges to the billing party. Specifically, BCO commenters cited that requiring such information would put the burden to support the charge on the carrier and would, hopefully, limit the need to dispute charges. 48 They noted that the most helpful data to address disputed charges would be information related to stop-the-clock events, free time or charges applied when containers are not available for pickup, or when BCOs are unable to drop off containers at a terminal. 49 BCO commenters asserted that having access to the type of information listed in the ANPRM would help them verify the charges. 50 Some BCO commenters stated that the Commission should also require billing parties to certify that the charges comply with the Shipping Act of 1984, as amended. 51 In addition, they also supported the requirement that if the billing party invoices more than one party, then the invoice must identify all billed parties and the basis for billing each party.

BCO commenters were generally supportive of requiring billing parties to include specific information regarding how the billed party may dispute a charge. Specifically, they supported requiring billing parties to provide contact information for disputes and instructions on how to file disputes or information applicable to the dispute process, such as when a charge may be waived or what documentation the billed party must submit with its request. 52

Many BCO commenters supported requiring billing parties to issue demurrage or detention invoices within 60 days of when the charges stop accruing; many commenters supported a timeframe of 30 days or less. 53 As discussed below, BCO commenters supported a shorter timeframe for issuing demurrage and detention invoices because it is more likely that billed parties will have the information and documents necessary to verify the charges. They also complained that demurrage and detention invoices arrive months after the charges accrued and that billed parties lacked the documentation necessary to verify the charge due to passage of time.

The Commission received comments from six motor carriers and four motor carrier trade organizations (collectively Motor Carrier commenters). 54 For the most part, the Motor Carrier commenters expressed similar views as the BCO commenters. For example, the Motor Carrier commenters generally supported applying the demurrage and detention billing requirements to VOCCs, NVOCCs, and MTOs; requiring billing parties to provide all information listed in the ANPRM; requiring billing parties to identify all billed parties and the basis for each billed party; and requiring billing parties to issue invoices within a specific timeframe.

In addition, the Motor Carrier commenters expressed concern that billing parties frequently invoiced motor carriers, who have no contractual relationship with the billing parties. For example, the Association of Bi-State Motor Carriers (Bi-State) argued that “motor carriers are not privy to the specifics of the contractual agreements between the shipper and billing parties, and should not be dragged into billing disputes.”  55 However, Bi-State noted that billing parties sometimes threatened to prevent motor carriers from picking up or dropping off containers due to disputes with one of the motor carrier's customers. 56 As a result, Motor Carrier commenters alleged that they must cover the disputed charges in order to serve their other customers. 57 Accordingly, the Motor Carrier commenters encouraged the Commission to adopt an approach that would require the billing party to bill the customers (BCOs or shippers) directly, as they are the parties who have a contractual relationship with the billing parties. 58 As a result they said, motor carriers would no longer be responsible to pay such charges or risk business relationships with their other customers if one customer disputes those charges.

After the Commission issued the ANPRM and received comments, on June 16, 2022, the President signed the Ocean Shipping Reform Act of 2022 (OSRA 2022) into law. 59 In OSRA 2022, Congress amended various statutory provisions contained in Part A of Subtitle IV of Title 46, U.S. Code. Specifically, OSRA 2022 prohibits common carriers from issuing an invoice for demurrage or detention charges unless the invoice includes specific information to show that the charges comply with part 545 of title 46, Code of Federal Regulations and applicable provisions and regulations. 60 OSRA 2022 then lists the minimum information that common carriers must include in a demurrage or detention invoice:

(A) date that container is made available.

(B) the port of discharge.

(C) the container number or numbers.

(D) for exported shipments, the earliest return date.

(E) the allowed free time in days.

(F) the start date of free time.

(G) the end date of free time.

(H) the applicable detention or demurrage rule on which the daily rate is based.

(I) the applicable rate or rates per the applicable rule.

(J) the total amount due.

(K) the email, telephone number, or other appropriate contact information for questions or requests for mitigation of fees.

(L) a statement that the charges are consistent with any of Federal Maritime Commission rules with respect to detention and demurrage.

(M) a statement that the common carrier's performance did not cause or contribute to the underlying invoiced charges. 61

Failure to include the required information on a demurrage or detention invoice eliminates any obligation of the billed party to pay the applicable charge. 62 In addition, OSRA 2022 also authorizes the Commission to revise the minimum information that common carriers must include on demurrage or detention invoices in future rulemakings. The Commission addresses this minimum information in this proposed rule. 63

OSRA 2022 requires the Commission to initiate a rulemaking further defining prohibited practices by common carriers, marine terminal operators, shippers, and OTIs regarding the assessment of demurrage or detention charges. 64 OSRA 2022 also provides that such rulemaking must “only seek to further clarify reasonable rules and practices related to the assessment of detention and demurrage charges to address the issues identified in the final rule published on May 18, 2020, entitled `Interpretive Rule on Demurrage and Detention Under the Shipping Act' (or successor rule)[.]”  65 Specifically, the Commission's rulemaking must clarify “which parties may be appropriately billed for any demurrage, detention, or other similar per container charges.”  66 The Commission offers that clarification in this proposed rule.

This proposed rule would (1) adopt minimum information that common carriers must include in a demurrage or detention invoice that is listed in 46 U.S.C. 41104(d)(2); (2) add to this list additional information that must be included in or with a demurrage or detention invoice; (3) further define prohibited practices by clarifying which parties may be appropriately billed for demurrage or detention charges; and (4) establish billing practices that billing parties must follow when invoicing for demurrage or detention charges.

This subpart sets forth regulations governing any invoice issued by an ocean common carrier, MTO, or NVOCC to a billed party or their designated agent for the collection of demurrage or detention charges. This regulation does not govern the billing relationships among and between ocean common carriers and MTOs.

As a preliminary matter, the Commission sought comment on to whom this rule should apply. Specifically, the Commission asked whether NVOCCs and MTOs should be bound by the requirements of the rule. The majority of commenters supported applying the rule to both NVOCCs and MTOs. The Commission has determined that the proposed rule would apply to MTOs and NVOCCs, as well as VOCCs, but will not regulate the billing arrangements between VOCCs and MTOs for the reasons discussed below.

Fact Finding No. 29 recommended that the Commission regulate the demurrage and detention billings and billing practices of both common carriers and MTOs. 67 In its opening question to the ANPRM's list of requested information, the Commission asked if both NVOCCs and VOCCs should be included in the regulation. 68 Most commenters supported applying the regulations to NVOCCs. Generally, these commenters noted the importance of consistency across the industry and the need for everyone to adhere to uniform standards. 69 As described by the WSC, “[t]he need for predictable and clear billing does not change on the basis of whether the billing entity does or does not operate ships—the distinction between VOCCs and NVOCCs. The customer benefits of transparent and timely billing apply equally in both instances[.]”  70

Few commenters opposed applying any proposed billing requirements to NVOCCs. The most common objection was that NVOCCs do not control any physical assets ( i.e., equipment or land) to be subject to the rule and that usually NVOCCs treat demurrage and detention charges as a pass-through cost. 71 One commenter noted that because a NVOCC has to pay a VOCC or MTO for these types of charges, an NVOCC has no reason to hold back sending an invoice to a BCO because that will leave the NVOCC with outstanding charges to the carrier. 72

Although most NVOCCs are only passing through charges to BCOs, that does not change the fact that some NVOCCs invoice BCOs for demurrage and detention. 73 BCOs employing an NVOCC generally do not interact with VOCCs and, as a result, the demurrage or detention invoice BCOs receive from an NVOCC may be their only notice about the origin and breakout of these charges. Additionally, because of its contractual relationship with the BCO, an NVOCC is often the only party in this transaction able to inform BCOs as to the nature of these charges. Furthermore, there is a greater need for transparency when the NVOCCs markup demurrage or detention charges assessed by VOCCs or MTOs or when NVOCCs charge demurrage or detention based on their own tariff rules or negotiated agreements.

Ultimately, this regulation is an outgrowth of the work done in Fact Finding No. 29. As noted in the Final Report, “[t]hroughout the Fact Finding, industry members reported confusion about the information contained in invoices.”  74 As discussed below, the intent of this rulemaking is to ensure that the person receiving the bill understands the charges regardless of whether the billing party is a VOCC, NVOCC, or an MTO. 75

MTOs often do not have direct contractual relationships with shippers. Instead, MTOs usually have contractual relationships with VOCCs, such as through terminal services agreements. 76 However, an MTO may separately assess demurrage as an implied contract in a court of law, provided that demurrage rates are published as part of the MTO's rate schedule. 77

Commenters overwhelmingly argued that the proposed rule should apply to MTOs. Again, while the most common practice is for the MTO to invoice the VOCC and the VOCC to send a combined invoice to the shipper, several commenters also noted that in some cases MTOs bill shippers directly. 78 MTOs were generally opposed to the proposed regulations, citing that traditionally they do not invoice shippers directly, but instead work with VOCCs. 79

The Commission's primary concern with this proposed regulation is to ensure billed parties understand the demurrage or detention invoices they receive. Although, at least under the traditional process, it appears that MTOs rarely interact with anyone other than the VOCC, in those cases where an MTO invoices a shipper, the MTO should be subject to the same regulations that apply to VOCCs and NVOCCs.

This proposed regulation does not govern the billing relationships among and between VOCCs and MTOs. As noted earlier, the purpose of the proposed rule is to identify the minimum information billing parties must include on demurrage and detention invoices, and to improve the invoices' clarity. Although the Fact Finding No. 29 Final Report noted that shippers reported confusion about information contained in demurrage and detention invoices, the Fact-Finding Officer did not receive similar concerns from VOCCs about invoices they were receiving from MTOs. 80

The ANPRM specifically asked whether the proposed regulation should apply to the format in which MTOs bill VOCCs. 81 Most OTI, BCO, and Motor Carrier commenters answered this question by discussing invoices they receive from carriers and the need to have charges originating from an MTO and charges originating from a VOCC distinguished. 82 This fact suggests that the primary concern that needs to be addressed in this proposed regulation is not the billing interactions between MTOs and VOCCs, but rather transparency and clarity on invoices issued to OTIs, shippers, and motor carriers.

Further, many MTOs and MTO trade organizations also argued that regulations in this realm were not warranted. For example, the NAWE explained, “[t]he unique commercial relationships negotiated between VOCCs and MTOs have not been the source of demurrage complaints.”  83 Other commenters cited the close commercial relationship shared by MTOs and VOCCs, which, they argued, made additional regulation unnecessary. 84

The Commission received a few comments from VOCCs who favored extending regulations to cover the invoicing from MTOs to VOCCs. These comments were generally about maintaining accurate information throughout the process. 85 VOCC commenters stressed the importance of applying consistent information requirements at each stage in the supply chain. 86

Notwithstanding the comments from OCEMA and WSC, the Commission has not received comments responding to the ANPRM or elsewhere that expressed concerns about the relationships or interactions between VOCCs and MTOs that warrant regulating the format used by MTOs to bill VOCCs. The Commission notes the strong commercial relationships between MTOs and VOCCs and is confident that these current contractual relationships will continue to ensure that the proper information is shared and that the party who ultimately receives the invoice is receiving accurate information. Thus, the Commission concludes that at this time it is not necessary to impose minimum billing information requirements for MTO invoices issued to VOCCs.

For purposes of this proposed rule, the Commission defines the terms “demurrage or detention” broadly to include any charge assessed by common carriers and marine terminal operators related to the use of marine terminal space or shipping containers. This proposed definition is the same as the scope used in 46 CFR 545.5(b). The goal is to encompass all charges having the purpose or effect of demurrage or detention regardless of the labels given to those charges. Under this definition, for instance, a charge assessed by a common carrier for the use of containers outside a marine terminal would fall within the scope of this rule regardless of whether the charge was called “detention” or “per diem.” Similarly, a charge assessed because a container is taking up terminal space would fall within the scope of this rule even if the billing party called the charge something other than “demurrage.” Like the scope denoted in 46 CFR 545.5, the proposed rule specifically limits these definitions to “shipping containers” and excludes charges related to other equipment, such as chassis, because depending on the context, “per diem” can refer to containers, chassis, or both.

As previously expressed during the Commission's interpretive rulemaking at 46 CFR 545.5, the Commission supports defining demurrage and detention charges based on what asset is the source of the charge (land or container) as opposed to the location of a container (inside or outside a terminal). 87 In that prior rulemaking, the Commission discouraged use of terms such as “storage” and “per diem” as synonyms for demurrage and detention because these terms add additional complexity. The Commission reiterates those statements here and notes that, despite how it may be used in the industry, to ensure clarity the Commission generally favors using the term “per diem” to refer to the use of chassis.

The Commission proposes to broadly defining the term “demurrage or detention invoice” as meaning any statement, printed, written, or accessible online, that documents an assessment of demurrage or detention charges. By proposing a broad definition, the Commission intends the definition to include the existing variety of methods employed by common carriers and MTOs to invoice shippers, and to leave room for improvement of existing systems or adopting of any new, innovative invoicing methods.

The Commission received a few comments asking it to institute requirements on how invoices are displayed or presented to shippers. 88 Although there are a variety of existing methods to display and deliver this information, the Commission does not perceive a problem necessitating a regulatory solution at this time. The Commission intends the proposed definition to encompass the many existing and potential future methods that a bill might be presented and does not indicate a preference or requirement.

The Commission is proposing to define “billed party” as meaning the person receiving the demurrage or detention invoice and who is responsible for the payment of any incurred demurrage or detention charge. In the Commission's view, this proposed definition would best capture the intended scope of this term and eliminate any potential ambiguity as to its coverage.

This proposed rule would define the term “billing party” as meaning the VOCC, NVOCC, or MTO who issues a demurrage or detention invoice. The Commission acknowledges that, currently, in most circumstances the billing party will be a VOCC. For purposes of this proposed rule, this term is defined broadly to incorporate the occasions when an MTO or an NVOCC may issue a demurrage or detention invoice.

The term “billing dispute” would mean any disagreement with respect to the validity of the charges, or the method of their invoicing raised by the billed party or their agent to the billing party. This proposed definition, and more generally, this proposed rule, does not indicate a preference or requirement for the format in which a dispute may be raised. Instead, the Commission proposes a broad definition that incorporates all types of disputes raised by a billed party upon receiving a demurrage or detention invoice.

OSRA 2022 directs the Commission to initiate a rulemaking that seeks to “further clarify reasonable rules and practices related to the assessment of detention and demurrage charges[.]”  89 Specifically, OSRA 2022 instructs the Commission to address “which parties may be appropriately billed for any demurrage, detention, or other similar per container charge.”  90 Under the proposed rule, a properly issued invoice is an invoice that is only issued to the person that has contracted with the billing party for the carriage of goods or space to store cargo, and is therefore the person responsible for the payment of any incurred demurrage or detention charge. This is often the shipper of record. The proposed rule would prohibit billing parties from issuing demurrage and detention invoices to persons other than the person for whose account the billing party provided ocean transportation or storage.

As a result of anecdotal reports indicating that billing parties sometimes sent invoices to multiple parties for the same shipments, the Commission asked whether this practice occurred regularly. 91 Many commenters described a current, wide-spread practice where the billing party sends the invoice to multiple parties, most of whom are not the recipient of the service giving rise to the invoiced charge. 92 The current system, in which parties who did not negotiate contract terms with the billing party are nonetheless bound by them, creates additional confusion and hardship and exacerbates problems in the supply chain. For example, one commenter noted that this practice often results in disputes among the parties. 93 Other commenters noted that invoicing multiple parties results in duplicative payments, which further complicates resolving invoice disputes. 94

Although the Commission did not specifically request comments on prohibiting billing parties from invoicing anyone except the party who contracted for the service (usually the shipper), the Commission received many comments urging it to adopt such regulations. 95 Commenters expressed frustration at the practice of billing demurrage and detention charges to parties who have not agreed to the charges or are not otherwise liable. 96 Other commenters suggested that common carriers bill third parties to shield customer relationships. 97

Commenters who supported such a regulation generally agreed with the concept that only the parties to the contract (usually the shipper and common carrier), have insight into the contractual agreements between the shipper and common carrier. 98 Because third parties lack direct involvement and information, most would not be privy to the demurrage and detention terms negotiated by the parties to the original contractual agreement, and therefore are at a disadvantage if pulled into a dispute over such charges. One specific instance where not being a party to the contract is a disadvantage is in determining free time. As one commenter explained:

“Motor carriers are not a party to contracts and may not be aware of contractual allowances for free time. Yet motor carriers receive these invoices and are then responsible for working with ocean carriers and shippers to determine which contract the shipment was under and whether it allowed for additional free time beyond what has been billed.”  99

Other commenters also described the difficulty of verifying the accuracy of charges when they were not party to the agreements that determine the allotted free time. 100

The Commission understands the concerns with invoices being sent to those individuals without a contractual relationship and acknowledges that this practice exacerbates dispute resolution and efficient movement of cargo. As was pointed out in the Final Report of the Supply Chain Innovation Team Initiative, the “United States international supply chain is a complex, dynamic ecosystem” and the “lack of direct customer relationships between actors in this system (such as shippers and terminals) impedes cooperative problem-solving, exacerbates disruptions . . . and makes recovering from disruptions more difficult[.]”  101 This is exactly the case here where motor carriers, custom brokers, and others who do not have customer relationships with common carriers are being asked to resolve disputes.

Many commenters also acknowledged the value of commercial relationships within the system. For example, many commenters opposed requiring MTOs to bill shippers directly because of a lack of direct commercial relationship. 102 Other commenters cited the value of the existing relationships between MTOs and VOCCs and the benefit it brings to the supply chain. For example, the National Industrial Transportation League noted, “[t]he commercial relationship between [VOCCs] and their MTO partners should be valued for its ability to bring benefit to the ocean delivery system and, by extension, to the shipping public in a way that the transactional relationship between [BCOs] and [MTOs] cannot.”  103 Parties involved in a continuous commercial relationship have made an investment in that relationship and are highly motivated to timely and effectively resolve problems as they arise in order to maintain a mutually beneficial, ongoing relationship.

The Commission believes that prohibiting billing parties from issuing demurrage and detention invoices to persons with whom they do not have a genuine commercial relationship will similarly benefit the supply chain. If the billed party has firsthand knowledge of the terms of its service contract with a common carrier, then they are in a better position to ensure that both they and the carrier are abiding by those terms. When demurrage or detention invoice disputes do arise, the billed party is in a better position than third parties such as truckers and customs brokers to analyze the accuracy of the charge. Further, when the billed party disputes a charge, they have an existing commercial relationship with the billing party and are in a better position to resolve the dispute.

Practically, the proposed rule would prohibit billing parties from invoicing motor carriers or customs brokers. If adopted, the proposed rule would not prevent motor carriers from paying on behalf of the billed party. Although a motor carrier could pay on behalf of a billed party, the motor carrier would not be liable for these charges and could not be penalized for nonpayment of charges. Although this arrangement is different from many of the billing systems currently employed, it would not be unprecedented. During Fact Finding Investigation No. 28, the Commission sought information on how contractual relationships, policies, and practices regarding demurrage and detention in the United States differ from those in other maritime nations. The Commission received information that, in other nations, VOCCs collect demurrage and detention charges (often combined), directly from shippers rather than motor carriers. 104

Under the proposed rule, only the person who contracted with the common carrier for the carriage or storage of goods may be issued an invoice. The Commission is aware that there are a variety of shipping arrangements that allocate risks, obligations, and costs between the shipper and the consignee named on the bill of lading. Considering these arrangements, the Commission is specifically seeking comment on whether it would be appropriate to also include the consignee named on the bill of lading as another person who may receive a demurrage or detention invoice. Including the consignee named on the bill of lading as an appropriately billed party for demurrage or detention charges in the Commission's proposed rule would memorialize an existing industry practice and allow the common carrier to bill either the person who contracted for the shipment of the cargo or consignee named on the bill of lading.

In sum, the proposed rule should simplify the current system and ensure that only the person with the most knowledge about the shipment and who is in the best position to understand and dispute the charge receives a demurrage or detention invoice. The Commission views the practice of sending an invoice to multiple parties involved in the shipping transaction rather than sending an invoice for demurrage or detention charges to only the person that has contracted with the billing party for the carriage or storage of goods as untenable. Therefore, the proposed rule would prohibit such a practice and require that only the person that has contracted with the billing party for the carriage or storage of goods receive an invoice for incurred demurrage or detention charges.

In the ANPRM, the Commission requested comment on the minimum information that should be required on billings. 105 Specifically, the ANPRM requested comment on whether it should require demurrage and detention invoices to include information necessary to identify the shipment (bill of lading number, container number, etc.); information on how the chargers were calculated (container availability date, vessel arrival dates for import shipments and earliest return date for export shipments, etc.); and information on events that justify stopping the clock on charges ( e.g., container unavailability, lack of return locations, lack of appointments, other force majeure reasons). 106 An overwhelming number of commenters supported the Commission requiring all of the information listed under Question 6 of the ANPRM. However, a small number of commenters opposed such a requirement. For example, NAWE, American Association of Port Authorities, and Port of NY/NJ Sustainable Services Agreement commented that some information listed in the ANPRM may be extremely burdensome or impossible to provide. 107 In addition, Maher believed that marine terminals should provide basic information on demurrage charges but did not support requiring one-size-fits-all billing information. 108

OSRA 2022 requires common carriers to include the following information on demurrage and detention invoices: the date that the container is made available; the port of discharge; the container number or numbers; for exported shipments, the earliest return date; the allowed free time in days; the start date of free time; the end date of free time; the applicable detention or demurrage rule on which the daily rate is based; the applicable rate or rates per the applicable rule; the total amount due; the email, telephone number, or other appropriate contact information for questions or requests for mitigation of fees; a statement that the charges are consistent with any of Federal Maritime Commission rules with respect to detention and demurrage; and a statement that the common carrier's performance did not cause or contribute to the underlying invoiced charges. 109

The proposed rule would require common carriers and MTOs to include all the information required in 46 U.S.C. 41104(d)(2), listed above on demurrage or detention invoices. The proposed rule also would require billing parties to include minimum information in addition to the information listed in 46 U.S.C. 41104(d)(2) to include specific identifying, timing, rate, and dispute resolution information, discussed in detail below. The Commission requests comments on whether it should require billing parties to include all the proposed information in demurrage and detention invoices. If the commenter opposes any of the proposed requirements, they should identify the information and the obstacles or burden to including such information on demurrage or detention invoices. If the commenter supports the proposed required information, they should explain how the specific information will assist them in verifying the accuracy of the charge or ascertaining how the charge was calculated.

Under the proposed rule, the invoice must contain sufficient information to enable the billed party to identify the container(s) to which the charges apply, including: the bill of lading number(s); the container number(s); for imports, the port(s) of discharge; and the basis for why the invoiced party is the proper party of interest and thus liable for the charge. OSRA 2022 requires that invoices include the port of discharge and the container number. 110 The proposed rule clarifies that billing parties must only include ports of discharge for import shipments because providing the port of discharge on a demurrage or detention invoice would be less useful in the context of export shipments. The proposed rule would also require billing parties to include the bill of lading number and the basis for why the billed party was invoiced. Commenters expressed support for requiring billing parties to include the container number, bill of lading number, and basis for why the billed party is the proper party in interest. The ANPRM did not request comments on whether the invoice should include the port of discharge for import shipments.

The Commission received many comments in favor of including the bill of lading number as required information. Several commenters noted that without the bill of lading number it would be difficult to determine which shipment is being charged and to verify the accuracy of the charge. 111 However, the Commission received one comment that opposed such a requirement. OCEMA stated that the bill of lading number is not provided to billed parties that are not party to the transportation contract because disclosure may present a risk of violating legal or contractual non-disclosure requirements. 112 In response to this comment, the Commission notes that bill of lading numbers are available through publicly accessible import and export data systems, such as PIERS. In addition, the proposed rule would prohibit the billing party from issuing demurrage or detention invoices to a person other than the person for whose account the billing party provided ocean transportation or space to store goods. Further, commenters observed that demurrage and detention invoices already include bill of lading numbers. 113 Because the bill of lading number provides valuable identifying information to the billed party, the Commission proposes requiring this information on demurrage and detention invoices.