Prior documents in this proceeding: Notice of Hearing published in the April 1, 2022, issue of the Federal Register (87 FR 19020).

The recommendation is in conformance with the provisions of sections 556 and 557 of title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Orders 12866, 13563, and 13175.

Notice of this rulemaking action was provided to tribal governments through the Department of Agriculture's (USDA) Office of Tribal Relations.

Notice is hereby given of the filing with the Hearing Clerk of this recommended decision with respect to the proposed amendments to 7 CFR part 948 (hereinafter referred to as “Marketing Order 984” or the “Order”) regulating the handling of walnuts grown in California and the opportunity to file written exceptions thereto. Copies of this decision can be obtained from Geronimo Quinones, whose address is listed above.

This recommended decision is issued pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” and the applicable rules of practice and procedure governing the formulation and amendment of marketing agreements and orders (7 CFR part 900).

The proposed amendments are based on the record of a public hearing held via videoconference technology on April 19 and 20, 2022. Notice of this hearing was published in the Federal Register on April 1, 2022 (87 FR 19020). The notice of hearing contained five proposals submitted by the Board and one submitted by USDA.

The proposed amendments were recommended to the Secretary by the Board on October 28, 2021. After reviewing the proposals and other information submitted by the Board, USDA decided to schedule this matter for a hearing. The Board's proposed amendments to the Order would amend quality control provisions to remove inspection and certification requirements, create a new mechanism for determining and collecting handler assessments, add authority to charge interest for late payments, establish an assessment rate of $0.0125 per inshell pound of walnuts; expand the definition of “to handle” to include “receive”, and remove volume control authority.

As proposed, inspection and certification of outbound walnuts would no longer be required, and handler assessments would be calculated based on a proposed assessment rate, recommended by the Board, and applied to handler's inbound walnuts receipts instead of outbound walnuts certified.

USDA proposed to make any such changes as may be necessary to the Order to conform to any amendment that may be adopted, or to correct minor inconsistencies and typographical errors.

Ten witnesses testified at the hearing. Nine witnesses represented walnut producers and handlers in the production area, as well as the Board, and one witness was from USDA. All nine industry witnesses supported the proposed amendments. The USDA witness remained neutral. After the notice of hearing was published in the Federal Register , AMS received a substantive email from the Board. In accordance with § 900.16 of the Rules of Practice governing this proceeding (7 CFR 900.16), the email constituted an ex parte communication and was entered into the record but did not constitute testimony and was not considered in the drafting of this recommended decision.

Under the Order, quality control provisions require inspection and certification of outbound walnuts, volume regulation is stayed indefinitely, and the authority to charge for late payments does not exist. The Board's proposed amendments would eliminate the inspection and certification of outbound walnuts, remove volume authority, establish a new mechanism for the collection of assessments and provide authority to charge interest for late payments.

Currently, a moratorium on the enforcement of inspection is in effect, and while under the moratorium, the Board is unable to collect assessments. If implemented, the proposed amendments would allow the Board to resume the collection of assessments applied to walnuts received and to charge interest for late payments. Assessments would be determined by handler receipts for total walnuts received for the crop year, multiplied by the proposed new assessment rate of $0.0125, and billings would be staggered throughout the marketing year to allow handlers to pay in three installments.

Witnesses at the hearing explained that the proposed amendments are necessary to streamline the Order and would make the industry more efficient by eliminating redundancies in inspection, reducing costs and administrative burden to handlers and the Board, and providing a cost saving to growers. Therefore, proponents support the need to modernize the Order to better meet current and future industry needs.

As an indicator for the need to eliminate inspection and certification of outbound walnuts, witnesses stated that the moratorium issued by USDA on September 2, 2021, of mandatory inspections has not adversely affected the quality of California walnuts produced and handled. Witnesses testified that a common practice for the industry is to conduct quality assurance inspections on inbound shipments of walnuts and that the current regulations require inspections on the outbound walnuts. The end result of industry practice and regulatory requirements is two forms of inspection being conducted in the industry. Further, witnesses contended that significant investments and advancement in processing, storage, technology, and equipment have ensured better programs that are able to maintain higher walnut quality and condition that exceed the minimum grades and standards currently set forth in the Order.

At the conclusion of the hearing, the Administrative Law Judge established a deadline of May 19, 2022, for the submission of corrections to the transcript, and June 23, 2022, as a deadline for interested persons to file proposed findings and conclusions or written arguments and briefs based on the evidence received at the hearing. The Board filed a brief in support of the proposed amendments.

The material issues presented on the record of hearing are as follows:

1. Whether to modify § 984.50, Grade, quality, and size regulations, to remove quality and size regulations and include only the Board's authority and eliminate §§ 984.51 and 984.52 inspection and certification of inshell and shelled walnuts and shelled walnuts for processing. This includes revising: §§ 984.12, 984.32, 984.64, 984.69, 984.77, 984.459(a)(3), and 984.472(b) and removing: §§ 984.450(c), 984.451(a) and (b), 984.452, and 984.464(b) and (c).

2. Whether to revise § 984.69 by changing the calculation of assessments from kernelweight to inshell pound in paragraph (a) and revising paragraph (c) to include an authority to charge for late payments and/or interest as prescribed by the Board with approval from the Secretary. Corresponding changes would be made to §§ 984.37, 984.48, 984.69, and 984.347.

3. Whether to revise § 984.347 to establish an assessment rate of $0.0125 per inshell pound of walnuts.

4. Whether to modify the definition in § 984.13 of “to handle” to include “receive”.

5. Whether to remove § 984.49, Volume regulation, reserve pool authority, and subsequent sections including provisions for volume control. This includes removing: §§ 984.23, 984.26, 984.33, 984.54, 984.56, 984.66, 984.69(b), 984.450(a) and (b), 984.451(c), 984.456, and 984.464(a) and revising: §§ 984.48 and 984.67.

6. Whether any conforming changes need to be made as a result of the above proposed amendments. Conforming changes may also include correction of non-substantive, typographical errors.

The following findings and conclusions on the material issues are based on evidence presented at the hearing and the record thereof.

Section 984.50 “Grade, quality and size regulations” should be amended to remove quality and size regulations and only the authority should remain. Removing quality and size regulations would remove the minimum grade and size requirements for shelled and inshell walnuts. Retaining the authority would allow the Board to recommend handling regulations and establish inspection and certification requirements if market conditions warrant regulations in the future, subject to the approval of the Secretary.

Sections 984.51 “Inspection and certification of inshell and shelled walnuts” and 984.52 “Processing of shelled walnuts” should be removed. Removing inspection and certification would eliminate mandatory outbound inspections for all varieties of walnuts, walnuts for processing, and inspections applied to walnuts imported into the United States under section 608e of the Act. In addition, multiple sections of the Order with provisions for quality, grade and size, and inspection and certification should be revised. This includes revising: §§ 984.12, 984.32, 984.64, 984.69, 984.77, 984.459(a)(3), and 984.472(b). Conforming changes would include removing §§ 984.450(c), 984.451(a) and (b), 984.452, and 984.464(b) and (c). Furthermore, a conforming change to completely remove the word “merchantable” from §§ 984.22, 984.72, and 984.472(a) and (c) is necessary to add clarity to the Order. This conforming change will be further discussed in Material Issue #6.

Currently, § 984.50 requires that handlers must meet minimum grade, quality, and size regulations and §§ 984.51 and 984.52 require that outbound walnuts must be inspected and certified. The outbound inspection is carried out by the Dried Fruit Association of California (DFA), the Board's inspection agency of record. DFA supplies to the Board inspection records used to calculate handler assessment obligations.

Witnesses at the hearing, either serving as Board members and/or as members of the Board's Marketing Order Revision Committee explained that the proposed amendments would modernize and align the Order with current market-driven practices. This would result in a more efficient industry. Witnesses further explained that advancements in processing and packaging technologies have improved product quality, consistency and shelf-life and if implemented, the proposed amendments would remove redundancies, as well as reduce costs and administrative burden for both handlers and the Board. Evidence introduced at the hearing suggests that mandatory inspection and certification are no longer necessary to ensure orderly marketing; however, the authority should be retained in the Order in the event market conditions change and inspections and certification are deemed necessary to be reintroduced.

According to the hearing record, walnut production and sales have grown substantially over the past 73 years. The initial varieties regulated by the Order no longer exist and are not viable in either domestic or international markets. In addition, handlers have made significant investments in the technology and equipment necessary to maintain high quality walnuts that customers demand and that consumers expect. These investments helped to manage over 300,000 tons in increased production, according to a witness. Witnesses testified that current customer specifications exceed the grades and standards established when the Order was promulgated in 1948. The industry considers the minimum grade and size regulations as outdated and obsolete, and that the mandated outbound inspection has resulted in inefficient redundancies. The costs of the duplicative inspections outweigh their benefit to industry.

A moratorium of enforcement on mandatory inspection requirements is currently in effect. Under the moratorium, USDA's enforcement of mandatory inspection requirements under the Order are suspended. Accordingly, inspection and certification requirements for walnuts imported into the United States are also suspended. USDA exercised its discretion to issue the moratorium, effective September 1, 2021, following discussions with the Board. These discussions took place after the Board's Grades and Standards Committee recommended an action, subsequently passed by the Board, to request that USDA forego mandatory inspections in response to market disruptions associated with the Covid-19 pandemic, including labor and transportation interruptions, and ongoing tariff issues that have adversely affected market conditions across the California walnut industry. Witnesses explained that, in addition to external shipping constraints, DFA inspector shortages caused huge operational inefficiencies, because handlers cannot ship product that is not inspected, certified, and stamped. Further, eliminating outbound inspections would remove large expenditures by eliminating the duplicative inspections.

According to the record, mandated inspections identified as duplicative by witnesses cost the industry approximately $6 million annually (discussed further under Economic Impact of Eliminating Mandatory Inspection). Witnesses testified that the elimination of mandatory outgoing inspection would benefit all handlers immediately through lower expenditures and avoidance of shipping delays due to inspector unavailability. These handler benefits could also be passed on to producers and consumers.

According to the record, market demand for California walnuts continues to grow. Evidence introduced suggests that increased industry investments in infrastructure, as well as marketing and promotion, were in response to growing domestic and global walnut production. Over the past five years, increases in international production have affected U.S. market prices and net grower returns. Record evidence also indicates that total world production increased by over 235,000 metric tons from 2017/18 to 2021/22; however, California walnuts, even with increases in production, accounted for a smaller share of total world production, decreasing from 29 to 27 percent during the same time period. Other countries have experienced growth; most notably, China now accounts for 49 percent of world production compared to 42 percent in 2017/18. China's share of world trade has risen to 13 percent, a significant increase from 2 percent in 2016/17. Consequently, California walnuts account for a smaller share of world trade, falling from 68 to 54 percent between 2016/17 and 2020/21.

Hearing evidence included data from studies conducted by the University of California-Davis Cooperative Extension (UC Davis) that highlight changes in walnut farm profitability by comparing farm revenue per acre and cost of production. The UC Davis data, illustrated in Table 1, include two cost of production studies conducted in the 2011-2014 time period, and three studies between 2015 and 2018.

Table 1 shows the decline in walnut farm profitability by comparing two four-year periods with very different financial outcomes, 2011 to 2014 and 2015 to 2018. The average production cost per acre for 2011-2014 and 2015-2018 were $3,667 and $5,122, respectively, which appear in column (d) of Table 1. Average yields (1.83 and 2.01 tons per acre in the same time periods) appear in column(b) of Table 1. Producer gross returns per acre for each of the two four-year time periods column (c) were computed by multiplying average yield by average price. Subtracting cost of production in column (d) yields the producer net return in column (e).

The two producer net return numbers in column (e) of Table 1 are the key results of this cost and return analysis. Four years of walnut farm profitability, represented by producer net return per acre of $2,264 for 2011-2014, were followed by four years of difficult market conditions (2015-2018), with a negative average net return of (-$1,458). This analysis provides a numerical estimate that bears out witness testimony that emphasized a dramatic downward shift in their economic well-being.

The hearing record indicates that grower prices in 2019/20 and 2020/21, when compared to the cost of production in recent years shown in Table 1, indicate continuing negative net returns to California walnut growers, on average.

In 2020/21, walnut crop value fell to approximately $957 million, and the season average grower price of $1,220 per ton was the lowest since 2003/04. One witness testified that walnut farmers face challenging market conditions and that he does not foresee improvement in the current season (2021/22). Approximately, 80 percent of the Board's budget is allocated to domestic marketing; however, domestic consumption of walnuts has stayed the same for many years, at approximately one-half pound per person. Witnesses stated that handlers are struggling, and growers are losing their farms. Witnesses explained that if the proposal were implemented, the approximately $6 million in savings at the handler level could be distributed across the market through higher grower returns. Consumers are also expected to benefit through improved pricing.

According to the record, walnut varieties considered during the establishment of the Order no longer exist and are not viable in domestic and international markets. Evidence suggests that this is due to customer specifications that exceed the minimum grade, quality, and size regulations currently prescribed under the Order for shelled and inshell walnuts. Witnesses explained that consumers, especially in export markets, have high expectations due to the superior quality attributes of newer varieties. Production has declined for older varieties that do not contain the quality traits desired by consumers, notably those varieties that were considered when the Order was promulgated in 1948. Because they were based on lower quality walnuts, the minimum quality requirements prescribed under the Order are no longer consistent with current-day handling operations. In addition, witnesses testified that product packed to USDA minimum quality guidelines would most likely be rejected by their customers and result in complaints from consumers.

Increased demand for higher quality walnuts, both domestically and internationally, are driving the production of new varieties. One witness testified that over 90 percent of California walnut production is composed of three varieties, the Chandler, the Howard, and the Tulare. These varieties, notably the Chandler, which is 58 percent of total California walnut production, contains much less inedible material than previous varieties that were more susceptible to insect damage and low-quality kernels due to color and other factors.

According to the record, the harvest season generally begins in mid-September and concludes during the first week of November. Witnesses explained that when handlers receive harvested walnuts, they undertake an inbound inspection. Although the specific steps may vary between handlers, inbound inspection is considered a standard business practice. Evidence further suggests that due to consumer expectations and specifications, inbound inspection and quality control processes are much more stringent than the outbound inspection required under the Order. One witness testified that during the inbound inspection, the value of the product is assessed by taking an initial sample and testing for moisture, debris, and foreign material. Evidence suggests that this is a critical step in the inbound inspection process performed by almost all handlers. Witnesses testified that handlers either have a third-party perform the inbound inspection or conduct it themselves in-house, but the inspection process is routine within industry. Moisture testing has proven to be a key indicator of potential microbial growth, which can increase degradation rates, an important measurement of shelf-life.

Further evidence suggests that Board funding of research on behalf of the industry has contributed significantly to the quality advancements of walnuts produced and handled. According to the record, handlers consider product to be at “equilibrium” when moisture is below 8 percent. This is based on Board-funded research conducted by the UC Davis.

In addition, individual handler investments in technology and storage have also resulted in improved internal quality control across the industry. Evidence suggests that the evolution of inbound inspections and quality control processes are also due to higher customer specifications of quality. Both large and small handlers testified about the positive industry impact of adopting different methodologies that have been scientifically proven to reduce degradation, such as modified atmosphere storage, pasteurization, and fumigation. One witness testified that handlers employ their own quality assurance or quality control staff to inspect product, using quality specifications that exceed the USDA grade standards used by DFA in conducting inspections—inspections that the industry considers to be duplicative. The in-house quality control staff also conduct additional analytical tests for quality and condition, such as the moisture testing previously mentioned, microanalysis for microbial activity and measurement of peroxide and free fatty acid levels for rancidity. Additionally, investments in technology have facilitated advancements in electronic processing, such as laser or high-speed camera and x-ray machines that separate constituents on conveyor belts significantly reducing foreign material counts.

Witnesses explained that these advancements, coupled with highly trained quality assurance personnel, significantly increased walnut quality to a level that significantly exceeds USDA's minimum quality standards established in 1948. In addition, one handler witness that utilized both in-line (inspection prior to packing) and floor inspections (inspection after packing) offered by DFA, testified that both shelled and inshell walnuts rarely failed USDA inspection and that walnuts that do not meet the requirements of the Order accounted for a very small percent of total product processed. Therefore, the witness stated, handlers were only conducting outbound inspections to comply with the Order and to report the quantity of walnuts handled for the calculation of assessments as specified in § 984.69.

As evidenced by the record, walnut sales are driven by consumer demand for high quality product and marketplace competition, both domestically and internationally, which provide strong incentives to remove all substandard walnuts.

If implemented, the proposed amendment would result in greater cost efficiencies by eliminating inspection redundancy, significantly lowering cost and administrative burden for handlers and the Board.

For the reasons stated above, it is recommended that § 984.50 be amended to remove quality and size regulations and include only the Board's authority to recommend regulations in the future if market conditions warrant and eliminate §§ 984.51 and 984.52 inspection and certification of inshell and shelled walnuts and shelled walnuts for processing.

Section 984.69 should be revised to change the calculation of assessments from kernelweight to inshell pound in paragraph (a), lift the stay for paragraph (b) and add authority to establish an initial assessment rate for the new assessment mechanism in a new paragraph (b), and include authority to charge for late payments and/or interest as prescribed by the Board with approval from the Secretary in paragraph (c). The preamble in the notice of hearing incorrectly identified paragraph (b) as the authority to charge for late payments and/or interest. The recommended decision and the proposed regulatory text correctly refer to paragraph (c). Corresponding changes should be made to §§ 984.37, 984.48, 984.69, and 984.347. Specifically, §§ 984.37, 984.48, and 984.347 should be revised to modify the measure of weight for assessments from kernelweight to inshell pound.

In addition to the proposed new assessment mechanism, the Board is also recommending an initial assessment rate of $0.0125 to go into effect at the conclusion of this rulemaking. This proposed amendment is summarized further under Material Issue No. 3.

According to the record, a new mechanism for determining and collecting handler assessments would need to be established if the proposed elimination of mandatory inspection and certification summarized under Material Issue No. 1 were implemented. Witnesses at the hearing expressed that the elimination of mandatory inspection and certification, or the outgoing inspection, disables the Board's ability to collect assessments. This is due to provisions in § 984.69 which states that each handler's pro rata share is the assessment rate per kernelweight pound multiplied by the kernelweight of walnuts certified. Therefore, the Order as currently written ties the calculation of assessments to inspection and certification.

According to the record, the new assessment mechanism would be based on walnuts received instead of walnuts certified which would allow the Board to resume collecting assessments. Under the proposed mechanism, the calculation of assessments would be based on receipts submitted to the Board. All nine witnesses testified their support for the proposed amendment, citing that it is an equitable change that would decrease the administrative burden for handlers and the Board.

Witnesses testified that California Walnut Board (CWB) Form No. 1, which is supplied to handlers by the Board in their annual season packets, would be the basis for the application of the assessment rate to be paid by handlers under the proposed new assessment mechanism, and since this report is already provided to the Board, it would ensure there is no additional burden placed on handlers. On CWB Form No. 1, handlers report walnut receipts by county and variety in inshell pounds, and therefore evidence suggests that the proposed amendment to change the calculation of assessments from kernelweight to inshell pounds is to reflect the new assessment mechanism that would be based on walnut receipts reported on CWB Form No. 1.

Under the Order, § 984.473 requires each handler to report to the Board walnut receipts from growers on or before January 15 of each marketing year. Handlers fill out CWB Form No. 1 or the Crop Acquisition Report to report all walnuts received during the crop year. Currently, the Board uses this information for the purpose of developing an annual report that shows total crop acquisition in aggregate for the marketing year.

Alternatives to CWB Form No. 1 were also discussed, such as the CWB Form No. 6, the Report of Merchantable Walnuts Received, Committed, and Shipped. This report also includes an acquisition total; however, witnesses testified that CWB Form No. 6 is a monthly report and it conflicts with the structure of the proposed new assessment mechanism which would stagger billing throughout the year. In addition, using CWB Form No. 1 reduces the administrative burden for handlers and the Board as it is an annual report.

Additionally, the new assessment mechanism is modeled after the assessment method applied by the California Walnut Commission (Commission). One witness explained that the Commission's process is also based on receipts, and that it is a self-reported system where handlers submit forms during the year on behalf of growers. The Commission's assessment process is also based on inshell weight received or acquired, and consideration was taken to ensure that the staggering of assessments did not match the Commission's. This further ensures any inadvertent undue burden is not place on handlers.

According to the record, for the first time for the 2021-2022 marketing year, the Board has included handler audits in its compliance plan. This is to ensure receipts reported on CWB Form No. 1 are accurate. Under the proposed assessment mechanism, the Board plans to audit handler receiving records, and one witness testified that receipt numbers can also be cross-checked with information shared between the Board and the Commission. This is within the authority of the Board as § 984.80 provides that each handler shall maintain records of walnuts received, held, or disposed of as prescribed by the Board, and such records shall be retained and be available for examination by the Board and Secretary for a period of two years. In addition, § 984.91 provides that the Board may deliberate, consult, cooperate and exchange information with the Commission, whose activities complement the Board.

Under the proposed new assessment mechanism, invoicing would not begin until after January 15 which is when CWB Form No. 1 is due, and billings would be staggered later in the year to allow handlers to pay in three installments. Billings would be generated in January, April, and July and as prescribed by the Board, payments would be due in February, May, and August. This is contrary to the current billing system where handlers are invoiced monthly. One witness testified that under the current system, approximately 48 percent of the total revenue for the year is invoiced by January and when compared to the proposed mechanism, only 33.33 percent of the total annual revenue would be billed in that same timeframe.

The following is a sample calculation showing how assessments would be determined under the new proposed mechanism. In the sample calculation, handler A reported receipts of 1 million inshell pounds on CWB Form No. 1 for the 2023 crop year. To calculate handler A's total annual assessment under the proposed new assessment mechanism, multiply the proposed initial assessment rate by the total pounds received for a result of $12,500 (1 million × $0.0125 = $12,500). To calculate handler A's assessment billings, multiply the total annual assessment by 33.33 percent for a result of $4,166.66 to be invoiced in January, $4,166.67 to be invoiced in April, and a final sum of $4,166.67 to be invoiced in July.

Assessments to be invoiced as follows:

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2022-1306; Project Identifier AD-2022-01040-E” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Mark Taylor, Aviation Safety Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA was notified of an airplane that experienced an uncommanded dual engine shutdown upon landing, resulting in compromised braking capability due to the loss of engine power and hydraulic systems. A subsequent investigation determined that the sequence of the auto-throttle increasing throttle to maintain Mach number, immediately followed by pilot command to decrease throttle to idle, caused a transient disagreement between actual and commanded thrust. This disagreement triggered the thrust control malfunction (TCM) detection logic and resulted in dual engine shutdown once the weight on wheels signal was activated upon landing. The installed EEC FADEC software version latches the fault and allows the engine to continue operation as commanded but shuts down the engine upon landing. The manufacturer identified the situations that could trigger the TCM logic erroneously and updated the EEC FADEC software. This software update makes corrective improvements to the TCM logic, including revised criteria for triggering the TCM logic and establishing criteria that permit the TCM logic to unlatch during flight. This condition, if not addressed, could result in runway excursion.

The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

The FAA reviewed PW Service Bulletin (SB) PW1000G-A-73-00-0054-00A-930A-D, Issue No. 002, dated June 20, 2022. This service information specifies procedures for replacing or modifying the EEC to incorporate FADEC software version V2.11.14.

This proposed AD would require removal from service of certain EEC FADEC software versions and replacement with a software version eligible for installation.

The FAA estimates that this AD, if adopted as proposed, would affect 147 engines installed on airplanes of U.S. registry.

The FAA estimates the following costs to comply with this proposed AD:

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

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

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

For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

The Commission seeks comment on amendments to its existing Energy Labeling Rule at 16 CFR part 305. As discussed below, the Commission specifically seeks comment on whether it should add new consumer product categories to the labeling program, increase the availability of online labels and other energy information, and streamline existing requirements. The Commission also seeks comment on whether any Rule changes are necessary to ensure the Rule's labeling provisions are consistent with current consumer shopping behavior. Finally, the ANPR seeks comment on whether the Commission should amend the Rule to: (1) modify its label content and format, (2) require links to online Lighting Facts labels consistent with current EnergyGuide requirements, (3) update the electricity cost figure on the Lighting Facts and ceiling fan labels, (4) update the refrigerator and clothes washer labels to remove dated information about test procedures, and (5) ensure the Rule's consistency with Department of Energy (DOE) requirements.

The Commission issued the Energy Labeling Rule in 1979, 1 pursuant to the Energy Policy and Conservation Act of 1975 (EPCA). 2 The Rule requires energy labeling for major home appliances and other consumer products to help consumers compare the energy usage and costs of competing models. It also contains labeling requirements for refrigerators, refrigerator-freezers, freezers, dishwashers, water heaters, clothes washers, room and portable air conditioners, furnaces, central air conditioners, heat pumps, plumbing products, lighting products, ceiling fans, and televisions.

The Rule requires manufacturers to attach yellow EnergyGuide labels to many covered products and prohibits retailers from removing these labels or rendering them illegible. In addition, it directs sellers, including retailers, to post label information on websites and in paper catalogs from which consumers can order products. EnergyGuide labels for most covered products contain three main disclosures: estimated annual energy cost, a product's energy consumption or energy efficiency rating as determined by DOE test procedures, and a comparability range displaying the highest and lowest energy costs or efficiency ratings for all similar models. The Rule requires marketers to use national average costs for applicable energy sources ( e.g., electricity, natural gas, or oil), as calculated by DOE in all cost calculations. Under the Rule, the Commission periodically updates comparability range and annual energy cost information based on manufacturer data submitted pursuant to the Rule's reporting requirements. 3

The Commission seeks comment on whether to add several new product categories to the energy labeling program. Under EPCA, FTC has broad authority to require energy labels for consumer products. Specifically, in addition to products named in the statute or designated by DOE under that agency's authority, FTC may require labels pursuant to 42 U.S.C. 6292(a)(6) for any consumer product as long as a label “is likely to assist consumers in making purchasing decisions.”  4 The Commission seeks comment on potential new labels for (1) the product categories listed below, and (2) any other consumer products that may be appropriate for energy labels. The Commission has not made any final determination regarding whether energy labels are warranted for any of the products discussed below at III.A.2.

In considering the product types listed below or other potential products, commenters should address any issues relevant to whether the Commission should require labeling for specific product categories. Typically, energy labels are most likely to help consumers when the underlying products use a substantial amount of energy and exhibit a range of annual energy costs across competing similar models. In addition to requiring energy use figures, the Commission has authority to require disclosures of additional information relating to energy consumption, including instructions for maintenance, use, or repair. 42 U.S.C. 6294(c)(5). If no DOE test procedure exists for a particular product type, commenters should address whether competent and reliable test procedures exist that will yield adequate, consistent estimated energy use disclosures on the labels.

The Commission invites commenters to provide information and views on the following issues for the products listed below, as well as any other consumer products that may warrant energy labels. Where appropriate, commenters should provide evidence to support their views:

Clothes Dryers: EPCA designates clothes dryers as covered products in 42 U.S.C. 6292. In 1979, the Commission declined to require labels for clothes dryers after finding models on the market had a limited range of energy use. 5 In 2014, the Commission reconsidered clothes dryer labels, and again declined to require them, concluding that dryer information continued to suggest that model efficiency varied little across available models. 6 However, the Commission recognized that electric dryers using emerging heat pump technology had lower annual energy costs compared to conventional models. At that time, few, if any, such models were available in the U.S. Now, however, heat pump models appear to be more prevalent. For example, the U.S. Environmental Protection Agency (EPA) ENERGY STAR website ( www.energy.gov ) lists about two dozen heat pump models as qualifying under that program. This current data suggests the Commission should revisit requiring labels for clothes dryers.

Air Cleaners (“Air Purifiers”): Air purifiers use significant amounts of energy and exhibit a substantial range of energy use. In addition, in January 2022, DOE published a Request for Information on possible test procedures and conservation standards for these products. 7 In July 2022, DOE determined that that consumer air cleaners qualify as a “covered product” under EPCA. 8 Furthermore, the ENERGY STAR program covers room air cleaners and requires participating manufacturers to test the operating mode power of their models using “ANSI/AHAM AC-1-2015: Method of Measuring the Performance of Portable Household Electric Room Air Measurement of Operating Power Cleaners.” Recent data compiled by the ENERGY STAR program shows models rated for room sizes between 150 and 299 square feet range in annual energy use from about 50 kWh/yr to 360 kWh/yr, resulting in an estimated annual energy cost difference of more than $30 per year in energy costs (assuming $0.14/kWh). 9

Finally, media reports suggest there are ongoing concerns in the market about the consistency of advertised flow rate or capacity claims ( e.g., recommended room sizes). 10 FTC labeling requirements mandating specific test procedure requirements would ensure consumers have uniform information about competing models.

Miscellaneous Refrigerator Products: DOE has designated miscellaneous refrigerators (MREFs) as covered products under EPCA. The category includes coolers ( e.g., wine chillers) and combination cooler refrigeration products ( i.e., products with warm and cool compartments). Within this category, some similarly sized models appear to exhibit a significant range of energy use. For example, recent DOE data indicates freestanding compact cooler models between 3 and 7 cubic feet range in annual energy use between about 100 to 205 kWh/yr. 11 DOE currently has test procedures and standards for these products. 12

Additional Lamps (Light Bulbs): The Rule does not currently require labels for all types of lower-brightness lamps ( i.e., light bulbs). However, these products can consume a significant amount of energy. Specifically, the current coverage does not include lamps lower than 310 lumens and 30 watts. This leaves certain lamp types, particularly 25-watt incandescent bulbs, uncovered. A single such incandescent bulb can cost consumers more than $3 per year in electricity costs, which can add up if multiple bulbs are used in a home. The LED equivalent for such bulbs, however, has an annual energy cost of about 50 cents. These products are not currently covered by DOE standards. However, the FTC has authority to require labeling for them under 42 U.S.C. 6294(a)(6). In addition to the general questions listed above, commenters should address whether the Commission should amend the Rule's coverage to include such lower brightness bulbs or any other lighting products ( e.g., full color “tunable” lamps with adjustable color and CCT). 13

Residential Ice Makers: Consumers can purchase residential icemakers in various configurations, including portable, non-portable, uncooled storage, and non-portable, cooled storage units. Residential models generally produce fewer than 50 pounds of ice per hour. There are currently no DOE standards or test procedure requirements specifically for these models. DOE tested these products in 2014 and found tested models used significant energy. The DOE data also suggested a significant range of energy consumption may exist among models offered in the market. 14 Although DOE developed and applied a test procedure for ice makers for research purposes, it ultimately did not publish a test procedure for these products.

In addition to the general questions listed above, the Commission seeks comment on which capacity categories should apply to consumer (residential) models for labeling purposes, and whether DOE's test procedure for commercial icemakers can be used as a basis for EnergyGuide labels for residential models.

Humidifiers: Consumers use residential humidifiers, including portable and whole-house devices, either to increase or maintain the humidity levels in all or parts of the home or to ease illness symptoms. 15 There are currently no DOE standards or test procedures for these products. A 2012 EPA ENERGY STAR report suggested differences in energy consumption among competing humidifiers, particularly for whole- house models. 16 The report also stated there is “very little, if any, correlation between humidification capacity (in square feet) and watt rating.” The report concluded, by choosing energy-efficient humidifiers, consumers could collectively save an estimated 3.4 terawatts of electricity over the lifetime of these products, equating to nearly $400,000,000. However, the report indicated there was no standard test procedure for measuring the energy consumption of portable models.

Miscellaneous Gas Products (“Hearth Products”): In February 2022, DOE tentatively determined that miscellaneous gas products, which are comprised of decorative hearths and outdoor heaters, qualify as covered products under EPCA. 17 These products include fireplaces, fire pits, and other similar products that have decorative purposes, but can also provide heat. DOE proposed to define “decorative hearth product” as gas-fired appliances that: simulate a solid-fueled fireplace or present a flame pattern; include products designed for indoor and/or outdoor use; are not designed to be operated with a thermostat; are not designed to provide space heating to the indoor space in which they are installed; and are not designed to provide heat proximate to the unit. DOE estimates indicate that these products can consume substantial energy. 18 In addition to the general questions above, the Commission requests comment on whether the Commission should consider labeling for related products outside of DOE's current proposal ( e.g., electric models) and whether test procedures are or are likely to be available for such products. 19

Cooking Tops: EPCA lists “kitchen ranges and ovens” as covered products. 20 In 1979, the Commission decided not to require labels for cooking tops, as well as ranges and ovens, citing the small variability of energy use between models. 21 More recent information from DOE, however, suggests the Commission should revisit the issue. Specifically, DOE research found that energy consumption for gas cooking top models may vary significantly depending on burner and grate design. DOE also noted energy consumption among similar electric cooking top models can vary depending on whether the product employs induction or resistance heating or has smooth or coil elements. 22

In August 2020, DOE withdrew its test procedure for these products, 23 citing concerns about whether the procedure yielded representative results for average use. 24 In February 2021, DOE listed the cooking products test procedure withdrawal as one of thirteen rulemakings the agency would reconsider pursuant to Executive Order 13990. 25 In July 2022, DOE reestablished a test procedure for conventional cooking tops. 26

In addition to questions regarding whether labeling cooking tops would help consumers in their purchasing decisions, the Commission seeks comment on whether there is an alternative test procedure the agency could use for EnergyGuide labels.

Electric Spas: In February 2022, DOE published a tentative determination that portable electric spas qualify as a covered product under EPCA and followed up with a final coverage determination in September 2022. 27 DOE estimated more than 3 million households in the U.S. operate portable electric spas regularly, using approximately and an estimated average energy consumption of 1,699 kWh per year per household (~$238/yr).

The Commission also seeks comment on whether any Rule changes are necessary to ensure current labeling requirements are consistent with current consumer shopping behavior. For several product categories ( e.g., refrigerators, clothes washers, dishwashers, and televisions), the Rule currently requires manufacturers to affix labels to units themselves. However, of the millions of units produced each year, only a tiny fraction are actually displayed on a showroom floor. For products typically displayed in packaging ( e.g., room air conditioners, lighting, ceiling fans, and lighting products), the Rule requires manufacturers to incorporate the label on the packaging. For products sold online, the Rule requires retail sellers to include label information on product pages. To aid retailers with this function, manufacturers must make their EnergyGuide labels available on a website and report that website to the FTC, which they can do via the DOE Compliance Certification Management System (CCMS).

Under EPCA, the Commission must “require that each covered product in the type or class of covered products to which the rule applies bear a label” disclosing energy use information. 42 U.S.C. 6294(c)(1). However, EPCA provides flexibility for the Commission to determine the placement of labels in a manner likely to assist consumers in making purchasing decisions. 28 In addition, the statute gives FTC authority to require retailers to provide labels and other disclosures for consumers, both on websites and in stores. 29

Pursuant to this authority, the Commission seeks comment on whether it should amend the current approach in light of contemporary retail and consumer practices. Specifically, the Commission solicits comments on alternatives to the current “showroom-ready” approach. Such changes could include requiring retailers to affix showroom labels (provided by the manufacturer) for the small number of units that are displayed, allowing manufacturers to include labels on or in product packaging ( e.g., on product boxes, literature packs, instruction manuals, and through QR codes) in lieu of affixing labels separately to every unit itself, and/or requiring retailers to provide label information in some other method or location. The Commission additionally requests any recent research or data demonstrating when and where consumers typically make purchasing decisions for the types of products covered by the Rule. Examples of relevant information include:

The Commission also seeks comment on potential requirements related to repair instructions. Under EPCA (42 U.S.C. 6294(c)(5)), the Commission has authority to require manufacturers to provide consumers with “additional information relating to energy consumption, including instructions for the maintenance, use, or repair of the covered product” if the Commission finds such information would assist with purchase decisions or in the use of the product, and would not be unduly burdensome to manufacturers. The Commission seeks comment on whether, for any product covered, the Rule should require manufacturers to provide consumers with access to repair instructions (with updates). Specifically, comments should address whether lack of access to repair instructions for covered products is an existing problem for consumers; whether providing such information would assist consumers in their purchasing decisions or product use; whether providing such information would be unduly burdensome to manufacturers; and any other relevant issues.

The Commission also seeks comment on whether it should consider changes to the Rule's label content and format requirements. Specifically, commenters should consider:

The Commission also seeks comment on whether the Rule should require lamp manufacturers to include information regarding their Lighting Facts labels with their data reports required by the DOE. The Rule already requires manufacturers of other covered consumer products to provide a website address linking to their EnergyGuide labels as part of their required data reports, which manufacturers submit through the DOE reporting system. 31 The Commission did not extend this requirement to Lighting Facts labels in 2016 given appropriation restrictions at the time placed on DOE spending related to light bulbs. Instead, the Commission stated it would revisit the issue at “a later date should circumstances warrant.”  32 The DOE prohibition no longer exists. Accordingly, the Commission seeks comment on applying the requirements in section 305.11(a)(5) to Lighting Facts labels.

The Commission also seeks comment on whether it should update the electricity cost disclosure on the Lighting Facts and ceiling fan labels to reflect recent DOE national estimates. Currently, the Lighting Facts label uses 11 cents per kWh, while the ceiling fan label uses 12 cents. The current (2022) DOE national estimate for electricity (rounded) is 14 cents per kWh. 33 The Commission seeks comment on whether it should update these numbers and, if so, when the change should become effective to allow manufacturers to incorporate such changes into routine package updates and thus minimize any burden associated with such changes.

The Commission also seeks comment on whether it should phase out language on refrigerator and clothes washer labels that the Commission added in 2013 to help distinguish models tested with the current DOE procedure from those tested with an older version. 34 This language, which advises consumers to “Compare ONLY to other labels with yellow numbers,” is now obsolete and crowds the label with irrelevant information. The Commission seeks comment on when and how to smoothly transition back to the conventional label.

The Commission also seeks comment on whether any changes or updates are necessary to the Rule's requirements ( e.g., definitions, product coverage, capacity descriptions, etc.) to ensure consistency, where necessary, with DOE requirements.

The Rule at 16 CFR 305.23(b)(6) and 16 CFR 305.23(c)(4) currently offers guidance to manufacturers who choose to use bilingual labels for Lighting Facts, including guidance on label content and format. Should the Rule offer similar guidance on bilingual labels for the other consumer products covered by the Rule? Are there other improvements that could be made to the Rule that would help non-English speaking or multilingual consumers with their purchasing decisions?

You can file a comment online or on paper. For the FTC to consider your comment, we must receive it on or before December 27, 2022. Write “Energy Labeling Rule ANPR, Matter No. R611004” on your comment. Because of the public health emergency in response to the COVID-19 outbreak and the agency's heightened security screening, postal mail addressed to the Commission will be subject to delay. As a result, we strongly encourage you to submit your comments online through the https://www.regulations.gov website. To ensure that the Commission considers your online comment, please follow the instructions on the web-based form. Your comment—including your name and your state—will be placed on the public record of this proceeding, including the https://www.regulations.gov website. As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on that website.

If you file your comment on paper, write “Energy Labeling Rule ANPR, Matter No. R611004” on your comment and on the envelope, and mail it to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex J), Washington, DC 20580.

Because your comment will be placed on the publicly accessible website at www.regulations.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else's Social Security number; date of birth; driver's license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any “trade secret or any commercial or financial information which . . . is privileged or confidential”—as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule § 4.10(a)(2), 16 CFR 4.10(a)(2)—including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled “Confidential,” and must comply with FTC Rule § 4.9(c), 16 CFR 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule § 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted publicly at www.regulations.gov, we cannot redact or remove your comment unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule § 4.9(c), and the General Counsel grants that request.

The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before December 27, 2022. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Today, the Commission voted to issue an advance notice of proposed rulemaking seeking comment on proposed improvements to the Energy Labeling Rule. Among other areas, the Notice asks whether consumers and independent repair shops would benefit from repair information being more widely available on energy labels. As I noted when the Commission issued its Policy Statement on Right to Repair in July 2021, I believe it is vital that the Commission use every tool available to it to vindicate Americans' right to repair their own products, 1 and I am pleased that we are continuing to follow through on that commitment here.

The Energy Policy and Conservation Act of 1975 gives the Commission clear statutory authority to require manufacturers to provide consumers with “additional information relating to energy consumption, including instructions for the maintenance, use, or repair of the covered product” if the Commission finds such information would assist with purchasing decisions or in the use of the product. 2 For the first time, the Commission is deploying this tool to ask whether consumers and independent repair shops would benefit from having repair information more widely available on energy labels. Such a provision could help consumers more easily repair everything from refrigerators and dishwashers to washing machines, air conditioners, water heaters, and televisions—products currently covered under the Rule—as well as new products that the Commission is considering adding to the Rule, including clothes dryers, air purifiers, humidifiers, hearths and outdoor heaters, cooking tops, and electric spas.

As the FTC's work has documented, 3 companies routinely use a wide array of practices to restrict Americans from repairing their own products. These restrictions can raise costs for consumers, stifle innovation, close off business opportunity for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency. 4 Today's action demonstrates the Commission's commitment to using every tool it has available to advance Americans' ability to access independent repair. It builds on the Policy Statement on Right to Repair that the Commission issued in July 2021, affirming our intent to root out illegal repair restrictions. 5 The Commission has since brought numerous right to repair cases, addressing unlawful repair restrictions affecting a variety of products, including motorcycles and outdoor electric power generators. 6

I thank our staff for their work on this important matter and look forward to hearing from the public during this rulemaking proceeding.

Seventh time's a charm.

Today the Commission issues an advance notice of proposed rulemaking (ANPR) seeking comment on possible revisions to the Energy Labeling Rule. Specifically, the ANPR asks whether the Commission should add consumer products to the labeling program, whether the label location and other requirements should be updated to reflect current shopping patterns, and whether the label content should be revised to reduce unnecessary burdens. The document also addresses issues related to reporting and refrigerator labels.

Since 2018, I have urged the Commission to seek comment on the more prescriptive aspects of this Rule. 1 The Commission has a statutory mandate to issue a labeling Rule. I strongly believe, however, that this mandate does not require the Rule to include the highly detailed and prescriptive requirements in the current Rule. For example, the Rule specifies the trim size dimensions for labels, including the precise width (between 5 1/4 ″ to 5 1/2 ″) and length (between 7 3/8 ″ and 7 5/8 ″); the number of picas for the copy set (between 27 and 29); the type style (Arial) and setting; the weight of the paper stock on which the labels are printed (not less than 58 pounds per 500 sheets or equivalent); and a suggested minimum peel adhesive capacity of 12 ounces per square inch.

In 2020, the Commission sought comment on some of these prescriptive provisions and received some helpful and thoughtful comments. Unfortunately, the Commission did not make changes based on those comments but instead chose to make only required conforming changes at that time. 2 I applaud the decision today to seek comment on the Rule more broadly, to ask specifically about these highly prescriptive requirements, and to consider making changes to streamline the Rule. I look forward to reviewing the comments.

The Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the “MMA”) substantially modified the compulsory “mechanical” license for reproducing and distributing phonorecords of nondramatic musical works under 17 U.S.C. 115. 1 It did so by switching from a song-by-song licensing system to a blanket licensing regime that became available on January 1, 2021 (the “license availability date”), 2 administered by a mechanical licensing collective (the “MLC”) designated by the Copyright Office (the “Office”). 3 Digital music providers (“DMPs”) are able to obtain this new statutory mechanical blanket license (the “blanket license”) to make digital phonorecord deliveries of nondramatic musical works, including in the form of permanent downloads, limited downloads, or interactive streams (referred to in the statute as “covered activity” where such activity qualifies for a blanket license), subject to various requirements, including reporting obligations. 4 DMPs also have the option to engage in these activities, in whole or in part, through voluntary licenses with copyright owners.

The MMA did not address or amend the Copyright Act's rules governing termination or derivative works. The Copyright Act permits authors or their heirs, under certain circumstances and within certain windows of time, to terminate the exclusive or nonexclusive grant of a transfer or license of an author's copyright in a work or of any right under a copyright. 5 The statute, however, contains an exception with respect to “derivative works.” A derivative work is “a work based upon one or more preexisting works, such as a . . . musical arrangement, . . . sound recording, . . . or any other form in which a work may be recast, transformed, or adapted.”  6 The derivative works exception (the “Exception”) states that “[a] derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant.”  7 The Second Circuit observed that:

A question has arisen regarding the application of the Exception in the context of the blanket license when a songwriter exercises her right to terminate her agreement with a music publisher. Because the statute is silent on this issue and no court has addressed it, the Office is engaging in a rulemaking to ensure that there is a full airing of the issue and development of the relevant facts. The Office is undertaking this rulemaking to provide definitive guidance regarding the appropriate application of the Exception to the blanket license and to direct the MLC to distribute royalties consistent with the Office's guidance.

On September 17, 2020, as a part of its work to implement the MMA, the Office issued an interim rule adopting regulations concerning reporting requirements under the blanket license (the “September 2020 Rule”). 9 During proceedings to promulgate the September 2020 Rule, 10 the MLC submitted comments and a regulatory proposal directly implicating the Exception. The MLC proposed to require DMPs to report the date on which each sound recording is first reproduced by the DMP on its server. The MLC reasoned that, as a result of the new blanket licensing system, the server fixation date is “required to determine which rights owner is to be paid where one or more grants pursuant to which a musical work was reproduced in a sound recording has been terminated pursuant to Section 203 or 304 of the [Copyright] Act.”  11

As the MLC explained it, “because the sound recording is a derivative work, it may continue to be exploited pursuant to the `panoply of contractual obligations that governed pre-termination uses of derivative works by derivative work owners or their licensees.' ”  12 The MLC took the position that the new blanket license can be part of this “panoply,” and therefore, if the blanket license “was issued before the termination date, the pre-termination owner is paid. Otherwise, the post-termination owner is paid.”  13 The MLC further explained that “under the prior NOI regime, the license date for each particular musical work was considered to be the date of the NOI for that work,” but “[u]nder the new blanket license, there is no license date for each individual work.”  14 The MLC believed that “the date that the work was fixed on the DMP's server—which is the initial reproduction of the work under the blanket license—is the most accurate date for the beginning of the license for that work.”  15

The MLC's proposal attracted significant attention from groups representing songwriter interests, who were concerned with protecting termination rights and ensuring that those rights were not adversely affected by anything in the rulemaking proceeding or any action taken by the MLC. 16 For example, the Recording Academy voiced concerns that the MLC's proposal “ would diminish termination rights” and urged that the “rulemaking should not imply or assume that a terminated party necessarily continues to benefit from the blanket license after termination.”  17 Songwriters of North America (“SONA”) and Music Artists Coalition (“MAC”) jointly expressed “serious reservations about [the MLC's] approach, which would seemingly redefine and could adversely impact songwriters' termination rights.”  18 The Office shared those concerns and sought to account for them in its September 2020 Rule.

There, the Office adopted reporting requirements for DMPs, including the sound recording's “server fixation date,” “street date,” and “estimated first distribution date.”  19 However, the Office explained that it was requiring DMPs to provide such information to the MLC because the record suggested that the transition to the blanket license represented a significant change to the status quo that may eliminate certain dates, such as NOI dates, that may have historically been used in post-termination activities, such as the renegotiation and execution of new agreements between the relevant parties to continue their relationship on new terms. 20 The Office further made clear that it was not adopting or endorsing a specific proxy for a grant date with respect to termination. 21 As the Office explained, “[t]he purpose of this rule is to aid retention of certain information that commenters [including groups representing songwriter interests] have signaled may be useful in facilitating post-termination activities, such as via inclusion in letters of direction to the MLC, that may not otherwise be available when the time comes if not kept by the DMPs.”  22

In adopting the September 2020 Rule, the Office did not expressly address the question of how the blanket license interacts with the statutory termination provisions. There was no need to offer the Office's interpretation because that particular proceeding was focused on DMP reporting requirements rather than termination issues. The Office stressed that it was not making any substantive judgment about the proper interpretation of the termination provisions, the Exception, or their application to section 115. Nor was the Office opining on how the Exception, if applicable, may operate in the context of the blanket license, including with respect to what information may or may not be appropriate to reference in determining who is entitled to royalty payments. 23

At the same time, the Office cautioned the MLC that it was not convinced of the need for a default process for handling termination matters. 24 Rather, the Office agreed with other commenters that “it seems reasonable for the MLC to act in accordance with letters of direction received from the relevant parties, or else hold applicable royalties pending direction or resolution of any dispute by the parties.”  25 The Office explained that having a default method of administration for terminated works in the normal course “might stray the MLC from its acknowledged province into establishing what would essentially be a new industry standard based on an approach that others argue is legally erroneous and harmful to songwriters.”  26 Additionally, as requested by several commenters representing songwriter interests, the Office adopted express limiting language in the regulations to make clear that nothing in the related DMP reporting requirements should be interpreted or construed as affecting termination rights in any way or as determinative of the date of the relevant license grant. 27

In 2021, the MLC adopted a dispute policy concerning termination that does not follow the Office's rulemaking guidance. Instead, its policy established a default method for determining the recipient of post-termination royalties in the ordinary course where there is no resolution via litigation or voluntary agreement. 28 Declining to heed the Office's warning, the MLC's policy assumes that the Exception applies to the blanket license and uses various proxy dates to determine who to pay under the blanket license. 29 In meetings with the Office, the MLC described its policy as a middle ground and explained that the policy was intended, in part, to avoid circumstances where parties' disputes could cause blanket license royalty payments to be held, pending resolution of the dispute, to the disadvantage of both songwriters and publishers. The Office appreciates the MLC's interest in advancing the overarching goal of ensuring prompt and uninterrupted royalty payments. But, having reviewed the MLC's policy, the Office is concerned that it conflicts with the MMA, which requires that the MLC's dispute policies “shall not affect any legal or equitable rights or remedies available to any copyright owner or songwriter concerning ownership of, and entitlement to royalties for, a musical work.”  30

Because the MLC's policy embodies a legal interpretation of the Exception that conflicts with the Office's prior guidance, it is necessary to revisit the termination issue more directly and to squarely resolve the unsettled question of how termination law intersects with the blanket license. Specifically, the Office seeks to provide clarity concerning the application of the Exception to the blanket license. Doing so would provide much needed business certainty to music publishers and songwriters. It would enable the MLC to appropriately operationalize the distribution of post-termination royalties in accordance with existing law. Moreover, without the uniformity in application that a regulatory approach brings, the Office is concerned that the MLC's ability to distribute post-termination royalties efficiently would be negatively impacted. The Office appreciates that the MLC “welcomes guidance from the Office on the interpretation of the law [of termination]”  31 and hopes this proceeding will resolve the uncertainty surrounding this issue.

The Office believes that it is properly within its authority under the MMA and section 702 of the Copyright Act to resolve this unsettled question of law. To carry out the MMA's new blanket licensing regime, Congress invested the Office with “broad regulatory authority”  32 to “conduct such proceedings and adopt such regulations as may be necessary or appropriate to effectuate the provisions of [the MMA pertaining to the blanket license].”  33 The Office is to exercise this authority “in a manner that balances the need to protect the public's interest with the need to let the [MLC] operate without over-regulation.”  34 As Congress anticipated, “[a]lthough the legislation provides specific criteria for the [MLC] to operate, it is to be expected that situations will arise that were not contemplated by the legislation. The Office is expected to use its best judgment in determining the appropriate steps in those situations.”  35

Under the MMA, the MLC is to adopt (and has adopted) various policies and procedures in connection with its administration of the blanket license. Congress “expected that such policies and procedures will be thoroughly reviewed by the Register to ensure the fair treatment of interested parties in such proceedings given the high bar in seeking redress” under the MLC's limitation on liability contained in section 115(d)(11)(D). 36 In entrusting the Office with express authority to fill statutory gaps in connection with the blanket license, Congress recognized that “[t]he Copyright Office has the knowledge and expertise regarding music licensing through its past rulemakings and . . . assistance . . . during the drafting of [the MMA].”  37

While this proposed rule is primarily focused on termination issues, this rulemaking ultimately reflects the Office's oversight and governance of the MLC's reporting and payment obligations to copyright owners. The Office has previously promulgated regulations regarding the MLC's reporting and distribution of royalties to copyright owners. 38 In doing so, the Office observed that “[t]he accurate distribution of royalties under the blanket license to copyright owners is a core objective of the MLC” and concluded that “it is consistent with the larger goals of the MMA to prescribe specific royalty reporting and distribution requirements through regulation[ and] that the Register of Copyrights has the authority to promulgate these rules under the general rulemaking authority in the MMA.”  39

Beyond the MMA, the Office also has relevant authority under section 702 of the Copyright Act to “establish regulations not inconsistent with law for the administration of the functions and duties made the responsibility of the Register under [title 17].”  40 Courts have concluded that the Office has both authority to “issue regulations necessary to administer the Copyright Act” and “interpret the Copyright Act,” and its interpretations of the Copyright Act have been granted deference. 41 The Office's authority to interpret title 17 in the context of statutory licenses in particular has long been recognized and courts routinely defer to the Office's interpretations. 42

The current termination provisions were adopted as part of the Copyright Act of 1976 and grew out of frustration with the prior law's attempted protections against inadequate author remuneration. Those earlier provisions provided that, after an initial twenty-eight-year copyright term, the copyright in a work could be extended by the author or their heirs for a renewal term, if they complied with certain formalities. 43 As the Office had noted, these earlier provisions “largely failed to accomplish the purpose of protecting authors and their heirs against improvident transfers, and has been the source of much confusion and litigation.”  44 This was, in part, because it was “a common practice for publishers and others to take advance assignments of future renewal rights” at the time of the original license. 45

The aim of the revisions made by the 1976 Copyright Act “was to protect authors against unremunerative transfers and to get rid of the complexity, awkwardness, and unfairness of the renewal provision.”  46 In particular, Congress sought to address problems stemming from “the unequal bargaining position of authors and from the impossibility of determining a work's value until it has been exploited.”  47 The current termination provisions that resulted were the subject of much debate prior to their enactment. 48 When adopting the new provisions, Congress explained that the termination provisions “reflect[ ] a practical compromise that will further the objectives of the copyright law while recognizing the problems and legitimate needs of all interests involved.”  49 The Supreme Court would later comment on Congress's purpose in creating a termination right, stating:

While the application of the Exception can often be straight-forward ( e.g., “a film made from a play could continue to be licensed for performance after the motion picture contract had been terminated but any remake rights covered by the contract would be cut off”  51 ), there are instances where the Exception's operation is less clear. Few courts have addressed the Exception and, to the Office's knowledge, no court has dealt directly with the application of the Exception to a statutory license either before or after the passage of the MMA. Instead, the cases address the termination of voluntary licenses.

The most notable case addressing the Exception is the 1985 decision by the Supreme Court in Mills Music, Inc. v. Snyder. 52 In this case, a songwriter (Snyder) had assigned his copyright in a musical work to a publisher (Mills Music) and the publisher, pursuant to that grant, had then issued voluntary mechanical licenses to record companies. The sound recordings embodying the musical work prepared by the record companies pursuant to these mechanical licenses were the relevant derivative works. The songwriter's heirs timely terminated his grant to the publisher. In a 5-4 decision, the divided Court found that, under its interpretation of the Exception, the publisher was entitled to continue receiving royalties from the record companies under the voluntary mechanical licenses even after the songwriter's heirs terminated the underlying assignment with the publisher. The Court concluded that Congress did not intend for the Exception only to apply where there is a single direct grant ( e.g., from songwriter to publisher) and not to apply where there is a chain of successive grants ( e.g., from songwriter to publisher to record company). Rather, the Court reasoned that, where a derivative work had been prepared, the statute should be read “to preserve the total contractual relationship.”  53

The Court elaborated that, with respect to the particular facts in the case, defining the relevant “terms of the grant” as “the entire set of documents that created and defined each licensee's right to prepare and distribute derivative works” meant preserving not only the record companies' right to prepare and distribute the derivative works, but also their corresponding duty to pay the publisher any due royalties and the publisher's duty to pay the songwriter's heirs any due royalties. 54 The Court surmised that if the underlying assignment from the songwriter to the publisher is not included as part of the relevant “terms of the grant” preserved under the Exception, then there would be no contractual or statutory obligation on the publisher or record companies to pay the songwriter's heirs any royalties. 55 The Court also explained that the Exception is defined by both the terms of the grant and when the derivative work was prepared. 56

The Mills Music dissent would not have interpreted the Exception to permit the publisher to continue to benefit from the terminated grant ( i.e., continuing to collect its share of the royalties due from the record companies under their licenses with the publisher). 57 The dissent reasoned that the Copyright Act's termination right “encompasses not only termination of the grant of copyright itself, but also termination of the grant of `any right under' that copyright,” which in this case, included the right “to share in royalties paid by [the record company] licensees.”  58

In support of its conclusion, the dissent noted, among other points, that the majority's analysis of the Exception was inconsistent with the statutory mechanical license, observing that statutory mechanical license royalties are “payable to the current owner of the copyright,” who “[i]n this case, as all agree, . . . are the [songwriter's heirs].”  59 The majority opinion responded to this critique by explaining that no statutory license was at issue in the case. 60 It is noteworthy in connection with the current rulemaking that the majority did not disagree with the dissent's reasoning as it applies to the statutory mechanical license. 61 In discussing such licenses, the majority calls them “self-executing” and distinguishes them from the voluntary mechanical licenses at issue in the case. 62

In reviewing the Copyright Act's termination provisions and Mills Music, the Nimmer copyright treatise agrees with the Court that because the statutory mechanical license “is executed by operation of law,” rather than “by the consent of the author or his successors,” it is “not subject to termination.”  63 Nimmer observes that because a songwriter who terminates an assignment to a publisher becomes the “copyright owner” of the musical work and the publisher's copyright ownership “would cease” at the point of termination, statutory mechanical license royalties would then “be payable solely to” the terminating songwriter. 64 Goldstein's treatise takes a similar view. 65

In a subsequent appellate case, Woods v. Bourne Co., the Second Circuit stated that “[t]he effect of Mills Music, then, is to preserve during the post-termination period the panoply of contractual obligations that governed pre-termination uses of derivative works by derivative work owners or their licensees.”  66 Woods involved a more complicated series of agreements, but as with Mills Music, the preparation of the derivative work began with a grant in a musical work from a songwriter to a publisher that was terminated by the songwriter's heirs. The court ultimately found that the publisher was entitled to continue to receive a share of royalties from post-termination performances of the musical work embodied within pre-termination audiovisual derivative works that were prepared pursuant to synchronization licenses issued by the publisher. The court explained that “[u]nder our reading of Mills Music, the `terms of the grant' include the provisions of the grants from [the publisher] to ASCAP and from ASCAP to television stations. This pair of licenses is contemplated in the grant of the synch licenses from [the publisher] to film and television producers,” the terms of which “required the television stations performing the audiovisual works to obtain a second grant from either [the publisher] or ASCAP, licensing the stations to perform the Song contained in the audiovisual works.”  67

1. The Blanket License Cannot Be Terminated Under Section 203 or 304 of the Copyright Act

To be subject to termination, a grant must be executed by the author or the author's heirs. 68 The blanket license, however, is not executed by the author or the author's heirs. As a type of statutory license, the blanket license is “self-executing,” such that it cannot be terminated. 69 If a blanket license cannot be terminated, then it cannot be subject to an exception to termination; the license simply continues in effect according to its terms. 70

The plain language of the statute is in accord. The Exception refers to “the grant before its termination,” “the grant after its termination,” and “the terminated grant.”  71 Thus, the “grant” referenced in the statute is a terminated grant. Because the blanket license cannot be terminated, it cannot be the terminated “grant” referenced in the text to which the Exception applies.

Section 115's blanket licensing regime is premised on the assumption that DMPs are not preparing derivative works pursuant to their blanket licenses. Instead, the statute envisions that DMPs operating under the blanket license are obtaining and licensing sound recording derivatives  72 from record companies or other sound recording licensors. 73 In this standard situation, DMPs would generally have two distinct sets of licenses: one to use the sound recordings offered through their service and another to use the underlying musical works.

If no derivative work is prepared “under authority of the grant,” then the Exception cannot apply. Proponents of the Exception's application to the blanket license might argue that the blanket license should be construed as being included within a so-called “panoply” of grants pursuant to which a pre-termination derivative work of the musical work was prepared. However, the only panoply to which the blanket license could theoretically belong would be the grant (or chain of successive grants) emanating from the songwriter and extending to the record company (or other person) who prepared the sound recording derivative licensed to the DMP.

It is the Office's view that where no sound recording derivative is prepared pursuant to a DMP's blanket license, that blanket license is not part of any preserved grants that make the Exception applicable. The Exception, as interpreted by Mills Music, should not be read as freezing other grants related to, but outside of, the direct chain of successive grants providing authority to utilize the sound recording derivative, such as the musical work licenses obtained by DMPs.

First, any changes in, or even the loss of, a DMP's musical work licenses post-termination should not have any direct effect on a record company's authorization to continue utilizing a sound recording derivative under the terms of the preserved chain of pre-termination sound recording-related grants. While such a change or loss could affect a DMP's ability to utilize the sound recording—because it cannot make use of sound recording derivatives without the relevant musical work licenses—there does not appear to be any indication that the Exception is meant to preserve a DMP's ability to do so. 74

Public Participation: Submit your comments, identified by Docket No. EPA-R04-OAR-2021-0841, at https://www.regulations.gov. Once submitted, comments cannot be edited or removed from the docket. EPA may publish any comment received to its public docket. Do not submit to EPA's docket at https://www.regulations.gov any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system).

There are two dockets supporting this action, EPA-R04-OAR-2021-0841 and EPA-HQ-OAR-2021-0663. Docket No. EPA-R04-OAR-2021-0841 contains information specific to Alabama, Mississippi, Tennessee, and Kentucky, 1 including this notice of proposed rulemaking. Docket No. EPA-HQ-OAR-2021-0663 contains additional modeling files, emissions inventory files, technical support documents, and other relevant supporting documentation regarding interstate transport of emissions for the 2015 8-hour ozone NAAQS which are being used to support this action. All comments regarding information in either of these dockets are to be made in Docket No. EPA-R04-OAR-2021-0841. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

The indices to Docket No. EPA-R04-OAR-2021-0841 and Docket No. EPA-R04-OAR-2021-0663 are available electronically at www.regulations.gov. While all documents in each docket are listed in their respective index, some information may not be publicly available due to docket file size restrictions or content ( e.g., CBI).

The following provides background for EPA's proposed action related to the interstate transport requirements for the 2015 8-hour ozone NAAQS for Alabama.

On October 1, 2015, EPA promulgated a revision to the ozone NAAQS (2015 8-hour ozone NAAQS), lowering the level of both the primary and secondary standards to 0.070 parts per million (ppm). 2 Section 110(a)(1) of the CAA requires states to submit, within 3 years after promulgation of a new or revised standard, SIP submissions meeting the applicable requirements of section 110(a)(2). 3 One of these applicable requirements is found in CAA section 110(a)(2)(D)(i)(I), otherwise known as the “good neighbor” or “interstate transport” provision, which generally requires SIPs to contain adequate provisions to prohibit in-state emissions activities from having certain adverse air quality effects on other states due to interstate transport of pollution. There are two so-called “prongs” within CAA section 110(a)(2)(D)(i)(I). A SIP for a new or revised NAAQS must contain adequate provisions prohibiting any source or other type of emissions activity within the State from emitting air pollutants in amounts that will significantly contribute to nonattainment of the NAAQS in another State (prong 1) or interfere with maintenance of the NAAQS in another State (prong 2). EPA and states must give independent significance to prong 1 and prong 2 when evaluating downwind air quality problems under CAA section 110(a)(2)(D)(i)(I). 4

EPA is using the 4-step interstate transport framework (or 4-step framework) to evaluate the SIP submittal from the Alabama Department of Environmental Management (ADEM or Alabama) addressing the interstate transport provision for the 2015 8-hour ozone NAAQS. EPA has addressed the interstate transport requirements of CAA section 110(a)(2)(D)(i)(I) with respect to prior ozone NAAQS in several regional regulatory actions, including the Cross-State Air Pollution Rule (CSAPR), which addressed interstate transport with respect to the 1997 ozone NAAQS as well as the 1997 and 2006 fine particulate matter standards, 5 and the Cross-State Air Pollution Rule Update (CSAPR Update)  6 and the Revised CSAPR Update, both of which addressed the 2008 ozone NAAQS. 7

Through the development and implementation of the CSAPR rulemakings and prior regional rulemakings pursuant to the interstate transport provision, 8 EPA, working in partnership with states, developed the following 4-step interstate transport framework to evaluate a State's obligations to eliminate interstate transport emissions under the interstate transport provision for the ozone NAAQS: (1) Identify monitoring sites that are projected to have problems attaining and/or maintaining the NAAQS ( i.e., nonattainment and/or maintenance receptors); (2) identify states that impact those air quality problems in other ( i.e., downwind) states sufficiently such that the states are considered “linked” and therefore warrant further review and analysis; (3) identify the emissions reductions necessary (if any), applying a multifactor analysis, to eliminate each linked upwind state's significant contribution to nonattainment or interference with maintenance of the NAAQS at the locations identified in Step 1; and (4) adopt permanent and enforceable measures needed to achieve those emissions reductions.

In general, EPA has performed nationwide air quality modeling to project ozone design values which are used in combination with measured data to identify nonattainment and maintenance receptors. To quantify the contribution of emissions from specific upwind states on 2023 ozone design values for the identified downwind nonattainment and maintenance receptors, EPA performed nationwide, State-level ozone source apportionment modeling for 2023. The source apportionment modeling provided contributions to ozone at receptors from precursor emissions of anthropogenic nitrogen oxides (NO X ) and volatile organic compounds (VOCs) in individual upwind states.

EPA has released several documents containing projected ozone design values, contributions, and information relevant to evaluating interstate transport with respect to the 2015 8-hour ozone NAAQS. First, on January 6, 2017, EPA published a notice of data availability (NODA) in which the Agency requested comment on preliminary interstate ozone transport data including projected ozone design values and interstate contributions for 2023 using a 2011 base year platform. 9 In the NODA, EPA used the year 2023 as the analytic year for this preliminary modeling because that year aligns with the expected attainment year for Moderate ozone nonattainment areas for the 2015 8-hour ozone NAAQS. 10 On October 27, 2017, EPA released a memorandum (October 2017 memorandum) containing updated modeling data for 2023, which incorporated changes made in response to comments on the NODA, and noted that the modeling may be useful for states developing SIPs to address interstate transport obligations for the 2008 ozone NAAQS. 11 On March 27, 2018, EPA issued a memorandum (March 2018 memorandum) noting that the same 2023 modeling data released in the October 2017 memorandum could also be useful for identifying potential downwind air quality problems with respect to the 2015 8-hour ozone NAAQS at Step 1 of the 4-step interstate transport framework. 12 The March 2018 memorandum also included the then newly available contribution modeling data for 2023 to assist states in evaluating their impact on potential downwind air quality problems for the 2015 8-hour ozone NAAQS under Step 2 of the 4-step interstate transport framework. 13 EPA subsequently issued two more memoranda in August and October 2018, providing additional information to states developing interstate transport SIP submissions for the 2015 8-hour ozone NAAQS concerning, respectively, potential contribution thresholds that may be appropriate to apply in Step 2 of the 4-step interstate transport framework, and considerations for identifying downwind areas that may have problems maintaining the standard at Step 1 of the 4-step interstate transport framework. 14

Since the release of the modeling data shared in the March 2018 memorandum, EPA performed updated modeling using a 2016-based emissions modeling platform ( i.e., 2016v1). This emissions platform was developed under the EPA/Multi-Jurisdictional Organization (MJO)/State collaborative project. 15 This collaborative project was a multi-year joint effort by EPA, MJOs, and states to develop a new, more recent emissions platform for use by EPA and states in regulatory modeling as an improvement over the dated 2011-based platform that EPA had used to project ozone design values and contribution data provided in the 2017 and 2018 memoranda. EPA used the 2016v1 emissions to project ozone design values and contributions for 2023. On October 30, 2020, in the Notice of Proposed Rulemaking for the Revised CSAPR Update, EPA released and accepted public comment on 2023 modeling that used the 2016v1 emissions platform. 16 Although the Revised CSAPR Update addressed transport for the 2008 ozone NAAQS, the projected design values and contributions from the 2016v1 platform are also useful for identifying downwind ozone problems and linkages with respect to the 2015 8-hour ozone NAAQS. 17

Following the Revised CSAPR Update final rule, EPA made further updates to the 2016 emissions platform to include mobile emissions from EPA's Motor Vehicle Emission Simulator (MOVES3) model  18 and updated emissions projections for electric generating units (EGUs) that reflect the emissions reductions from the Revised CSAPR Update, recent information on plant closures, and other sector trends. The construct of the updated emissions platform, 2016v2, is described in the emissions modeling technical support document (TSD) included in the docket for this proposed rulemaking. 19 EPA performed air quality modeling of the 2016v2 emissions using the most recent public release version of the Comprehensive Air Quality Modeling with Extensions (CAMx) photochemical modeling, version 7.10. 20 EPA proposes to primarily rely on modeling based on the updated and newly available 2016v2 emissions platform in evaluating these submissions with respect to Steps 1 and 2 of the 4-step interstate transport framework. By using the updated modeling results, EPA is using the most recently available and technically appropriate information for this proposed rulemaking. Section III of this document and the Air Quality Modeling TSD for 2015 Ozone NAAQS Transport SIP Proposed Actions included in Docket No. EPA-HQ-OAR-2021-0663 contain additional detail on the modeling performed using the 2016v2 emissions modeling.

In this document, EPA is accepting public comment on this updated 2023 modeling, which uses the 2016v2 emissions platform. Comments on EPA's air quality modeling should be submitted in Docket No. EPA-R04-OAR-2021-0841. Comments are not being accepted in Docket No. EPA-HQ-OAR-2021-0663.

States may have chosen to rely on the results of EPA modeling and/or alternative modeling performed by states or MJOs to evaluate downwind air quality problems and contributions as part of their submissions. In Section III of this document, EPA evaluates how Alabama used air quality modeling information in their submission.

EPA proposes to apply a consistent set of policy judgments across all states for purposes of evaluating interstate transport obligations and the approvability of interstate transport SIP submittals for the 2015 8-hour ozone NAAQS. These policy judgments reflect consistency with relevant case law and past agency practice as reflected in CSAPR and related rulemakings. Nationwide consistency in approach is particularly important in the context of interstate ozone transport, which is a regional-scale pollution problem involving many smaller contributors. Effective policy solutions to the problem of interstate ozone transport going back to the NO X SIP Call have necessitated the application of a uniform framework of policy judgments in order to ensure an “efficient and equitable” approach. See EME Homer City Generation, LP v. EPA, 572 U.S. 489, 519 (2014).

In the March, August, and October 2018 memoranda, EPA recognized that states may be able to establish alternative approaches to addressing their interstate transport obligations for the 2015 8-hour ozone NAAQS that vary from a nationally uniform framework. EPA emphasized in these memoranda, however, that such alternative approaches must be technically justified and appropriate in light of the facts and circumstances of each particular State's submittal. In general, EPA continues to believe that deviation from a nationally consistent approach to ozone transport must be substantially justified and have a well-documented technical basis that is consistent with relevant case law. Where states submitted SIPs that rely on any such potential concepts as may have been identified or suggested in the past, EPA will evaluate whether the State adequately justified the technical and legal basis for doing so.

EPA notes that certain potential concepts included in an attachment to the March 2018 memorandum require unique consideration, and these ideas do not constitute Agency guidance with respect to transport obligations for the 2015 8-hour ozone NAAQS. Attachment A to the March 2018 memorandum identified a “Preliminary List of Potential Flexibilities” that could potentially inform SIP development. 21 However, EPA made clear in that attachment that the list of ideas were not suggestions endorsed by the Agency but rather “comments provided in various forums” on which EPA sought “feedback from interested stakeholders.”  22 Further, Attachment A stated, “EPA is not at this time making any determination that the ideas discussed below are consistent with the requirements of the CAA, nor are we specifically recommending that states use these approaches.”  23 Attachment A to the March 2018 memorandum, therefore, does not constitute Agency guidance, but was intended to generate further discussion around potential approaches to addressing ozone transport among interested stakeholders. To the extent states sought to develop or rely on these ideas in support of their SIP submittals, EPA will thoroughly review the technical and legal justifications for doing so.

The remainder of this section describes EPA's proposed framework with respect to analytic year, definition of nonattainment and maintenance receptors, selection of contribution threshold, and multifactor control strategy assessment.

In general, the states and EPA must implement the interstate transport provision in a manner “consistent with the provisions of [title I of the CAA.]” See CAA section 110(a)(2)(D)(i). This requires, among other things, that these obligations are addressed consistently with the timeframes for downwind areas to meet their CAA obligations. With respect to ozone NAAQS, under CAA section 181(a), this means obligations must be addressed “as expeditiously as practicable” and no later than the schedule of attainment dates provided in CAA section 181(a)(1). 24 Several D.C. Circuit court decisions address the issue of the relevant analytic year for the purposes of evaluating ozone transport air-quality problems. On September 13, 2019, the D.C. Circuit issued a decision in Wisconsin v. EPA, remanding the CSAPR Update to the extent that it failed to require upwind states to eliminate their significant contribution by the next applicable attainment date by which downwind states must come into compliance with the NAAQS, as established under CAA section 181(a). See 938 F.3d 303, 313.

On May 19, 2020, the D.C. Circuit issued a decision in Maryland v. EPA that cited the Wisconsin decision in holding that EPA must assess the impact of interstate transport on air quality at the next downwind attainment date, including Marginal area attainment dates, in evaluating the basis for EPA's denial of a petition under CAA section 126(b). Maryland v. EPA, 958 F.3d 1185, 1203-04 (D.C. Cir. 2020). The court noted that “section 126(b) incorporates the Good Neighbor Provision,” and, therefore, “EPA must find a violation [of section 126] if an upwind source will significantly contribute to downwind nonattainment at the next downwind attainment deadline. Therefore, the agency must evaluate downwind air quality at that deadline, not at some later date.” Id. at 1204 (emphasis added). EPA interprets the court's holding in Maryland as requiring the states and the Agency, under the good neighbor provision, to assess downwind air quality as expeditiously as practicable and no later than the next applicable attainment date, 25 which is now the Moderate area attainment date under CAA section 181 for ozone nonattainment. The Moderate area attainment date for the 2015 8-hour ozone NAAQS is August 3, 2024. 26 EPA believes that 2023 is now the appropriate year for analysis of interstate transport obligations for the 2015 8-hour ozone NAAQS, because the 2023 ozone season is the last relevant ozone season during which achieved emissions reductions in linked upwind states could assist downwind states with meeting the August 3, 2024, Moderate area attainment date for the 2015 8-hour ozone NAAQS.

EPA recognizes that the attainment date for nonattainment areas classified as Marginal for the 2015 8-hour ozone NAAQS was August 3, 2021. Under the Maryland holding, any necessary emissions reductions to satisfy interstate transport obligations should have been implemented by no later than this date. At the time of the statutory deadline to submit interstate transport SIPs (October 1, 2018), many states relied upon EPA modeling of the year 2023, and no State provided an alternative analysis using a 2021 analytic year (or the prior 2020 ozone season). However, EPA must act on SIP submittals using the information available at the time it takes such action. In this circumstance, EPA does not believe it would be appropriate to evaluate states' obligations under CAA section 110(a)(2)(D)(i)(I) as of an attainment date that is wholly in the past, because the Agency interprets the interstate transport provision as forward looking. See 86 FR 23054, 23074, April 30, 2021; see also Wisconsin, 938 F.3d at 322. Consequently, in this proposal EPA will use the analytical year of 2023 to evaluate Alabama's CAA section 110(a)(2)(D)(i)(I) SIP submission with respect to the 2015 8-hour ozone NAAQS.

In Step 1, EPA identifies monitoring sites that are projected to have problems attaining and/or maintaining the NAAQS in the 2023 analytic year. Where EPA's analysis shows that a site does not fall under the definition of a nonattainment or maintenance receptor, that site is excluded from further analysis under EPA's 4-step interstate transport framework. For sites that are identified as a nonattainment or maintenance receptor in 2023, EPA proceeds to the next step of the 4-step interstate transport framework by identifying the upwind state's contribution to those receptors.

EPA's approach to identifying ozone nonattainment and maintenance receptors in this action is consistent with the approach used in previous transport rulemakings. EPA's approach gives independent consideration to both the “contribute significantly to nonattainment” and the “interfere with maintenance” prongs of CAA section 110(a)(2)(D)(i)(I), consistent with the D.C. Circuit's direction in North Carolina v. EPA. 27

For the purpose of this proposal, EPA identifies nonattainment receptors as those monitoring sites that are projected to have average design values that exceed the NAAQS and that are also measuring nonattainment based on the most recent monitored design values. This approach is consistent with prior transport rulemakings, such as the CSAPR Update, where EPA defined nonattainment receptors as those areas that both currently measure nonattainment and that EPA projects will be in nonattainment in the future analytic year ( i.e., 2023). 28

In addition, in this proposal, EPA identifies a receptor to be a “maintenance” receptor for purposes of defining interference with maintenance, consistent with the method used in CSAPR and upheld by the D.C. Circuit in EME Homer City Generation, L.P. v. EPA, 795 F.3d 118, 136 (D.C. Cir. 2015). 29 Specifically, EPA identified maintenance receptors as those receptors that would have difficulty maintaining the relevant NAAQS in a scenario that takes into account historical variability in air quality at that receptor. The variability in air quality was determined by evaluating the “maximum” future design value at each receptor based on a projection of the maximum measured design value over the relevant base period. EPA interprets the projected maximum future design value to be a potential future air quality outcome consistent with the meteorology that yielded maximum measured concentrations in the ambient data set analyzed for that receptor ( i.e., ozone conducive meteorology). EPA also recognizes that previously experienced meteorological conditions ( e.g., dominant wind direction, temperatures, air mass patterns) promoting ozone formation that led to maximum concentrations in the measured data may reoccur in the future. The maximum design value gives a reasonable projection of future air quality at the receptor under a scenario in which such conditions do, in fact, reoccur. The projected maximum design value is used to identify upwind emissions that, under those circumstances, could interfere with the downwind area's ability to maintain the NAAQS.

Recognizing that nonattainment receptors are also, by definition, maintenance receptors, EPA often uses the term “maintenance-only” to refer to those receptors that are not nonattainment receptors. Consistent with the concepts for maintenance receptors, as described above, EPA identifies “maintenance-only” receptors as those monitoring sites that have projected average design values above the level of the applicable NAAQS, but that are not currently measuring nonattainment based on the most recent official design values. In addition, those monitoring sites with projected average design values below the NAAQS, but with projected maximum design values above the NAAQS are also identified as “maintenance-only” receptors, even if they are currently measuring nonattainment based on the most recent official design values.

In Step 2, EPA quantifies the contribution of each upwind state to each receptor in the 2023 analytic year. The contribution metric used in Step 2 is defined as the average impact from each State to each receptor on the days with the highest ozone concentrations at the receptor based on the 2023 modeling. If a State's contribution value does not equal or exceed the threshold of 1 percent of the NAAQS ( i.e., 0.70 ppb for the 2015 8-hour ozone NAAQS), the upwind state is not “linked” to a downwind air quality problem, and EPA, therefore, concludes that the State does not significantly contribute to nonattainment or interfere with maintenance of the NAAQS in the downwind states. However, if a State's contribution equals or exceeds the 1 percent threshold, the State's emissions are further evaluated in Step 3, considering both air quality and cost as part of a multi-factor analysis, to determine what, if any, emissions might be deemed “significant” and, thus, must be eliminated under CAA section 110(a)(2)(D)(i)(I).

EPA is proposing to rely in the first instance on the 1 percent threshold for the purpose of evaluating a State's contribution to nonattainment or maintenance of the 2015 8-hour ozone NAAQS ( i.e., 0.70 ppb) at downwind receptors. This is consistent with the Step 2 approach that EPA applied in CSAPR for the 1997 ozone NAAQS, which has subsequently been applied in the CSAPR Update when evaluating interstate transport obligations for the 2008 ozone NAAQS. EPA continues to find 1 percent to be an appropriate threshold. For ozone, as EPA found in CAIR, CSAPR, and the CSAPR Update, a portion of the nonattainment problems from anthropogenic sources in the U.S. results from the combined impact of relatively small contributions from many upwind states, along with contributions from in-state sources and, in some cases, substantially larger contributions from a subset of particular upwind states. EPA's analysis shows that much of the ozone transport problem being analyzed in this proposed rulemaking is the result of the collective impacts of contributions from many upwind states. Therefore, application of a consistent contribution threshold is necessary to identify those upwind states that should have responsibility for addressing their contribution to the downwind nonattainment and maintenance problems to which they collectively contribute. Continuing to use 1 percent of the NAAQS as the screening metric to evaluate collective contribution from many upwind states also allows EPA (and states) to apply a consistent framework to evaluate interstate emissions transport under the interstate transport provision from one NAAQS to the next. See 81 FR at 74518, October 26, 2016; see also 86 FR at 23085, April 30, 2021 (reviewing and explaining rationale from CSAPR, 76 FR at 48237-38, August 8, 2011, for selection of 1 percent threshold).

The following describes EPA's experience with alternative Step 2 thresholds. EPA's August 2018 memorandum recognized that in certain circumstances, a State may be able to establish that an alternative contribution threshold of 1 ppb is justifiable. Where a State relies on this alternative threshold, and where that State determined that it was not linked at Step 2 using the alternative threshold, EPA will evaluate whether the State provided a technically sound assessment of the appropriateness of using this alternative threshold based on the facts and circumstances underlying its application in the particular SIP submission.

EPA here shares further evaluation of its experience since the issuance of the August 2018 memorandum regarding use of alternative thresholds at Step 2. This experience leads the Agency to now believe it may not be appropriate to continue to attempt to recognize alternative contribution thresholds at Step 2. The August 2018 memorandum stated that “it may be reasonable and appropriate” for states to rely on an alternative threshold of 1 ppb at Step 2. 30 (The memorandum also indicated that any higher alternative threshold, such as 2 ppb, would likely not be appropriate.) However, EPA also provided that “air agencies should consider whether the recommendations in this guidance are appropriate for each situation.” Following receipt and review of 49 good neighbor SIP submittals for the 2015 8-hour ozone NAAQS, EPA's experience has been that nearly every State that attempted to rely on a 1 ppb threshold did not provide sufficient information and analysis to support a determination that an alternative threshold was reasonable or appropriate for that State.

For instance, in nearly all submittals, the states did not provide EPA with analysis specific to their State or the receptors to which its emissions are potentially linked. In one case, the proposed approval of Iowa's SIP submittal, EPA expended its own resources to attempt to supplement the information submitted by the State, in order to more thoroughly evaluate the state-specific circumstances that could support approval. 31 It was at EPA's sole discretion to perform this analysis in support of the State's submittal, and the Agency is not obligated to conduct supplemental analysis to fill the gaps whenever it believes a State's analysis is insufficient. The Agency no longer intends to undertake supplemental analysis of SIP submittals with respect to alternative thresholds at Step 2 for purposes of the 2015 8-hour ozone NAAQS.

Furthermore, EPA's experience since 2018 is that allowing for alternative Step 2 thresholds may be impractical or otherwise inadvisable for a number of additional policy reasons. For a regional air pollutant such as ozone, consistency in requirements and expectations across all states is essential. Based on its review of submittals to-date and after further consideration of the policy implications of attempting to recognize an alternative Step 2 threshold for certain states, the Agency now believes the attempted use of different thresholds at Step 2 with respect to the 2015 8-hour ozone NAAQS raises substantial policy consistency and practical implementation concerns. 32 The availability of different thresholds at Step 2 has the potential to result in inconsistent application of good neighbor obligations based solely on the strength of a State's implementation plan submittal at Step 2 of the 4-step interstate transport framework. From the perspective of ensuring effective regional implementation of good neighbor obligations, the more important analysis is the evaluation of the emissions reductions needed, if any, to address a State's significant contribution after consideration of a multifactor analysis at Step 3, including a detailed evaluation that considers air quality factors and cost. Where alternative thresholds for purposes of Step 2 may be “similar” in terms of capturing the relative amount of upwind contribution (as described in the August 2018 memorandum), nonetheless, use of an alternative threshold would allow certain states to avoid further evaluation of potential emission controls while other states must proceed to a Step 3 analysis. This can create significant equity and consistency problems among states.

Further, it is not clear that national ozone transport policy is best served by allowing for less stringent thresholds at Step 2. EPA recognized in the August 2018 memorandum that there was some similarity in the amount of total upwind contribution captured (on a nationwide basis) between 1 percent and 1 ppb. However, EPA notes that while this may be true in some sense, that is hardly a compelling basis to move to a 1 ppb threshold. Indeed, the 1 ppb threshold has the disadvantage of losing a certain amount of total upwind contribution for further evaluation at Step 3 ( e.g., roughly 7 percent of total upwind state contribution was lost according to the modeling underlying the August 2018 memorandum;  33 in EPA's updated modeling, the amount lost is 5 percent). Considering the core statutory objective of ensuring elimination of all significant contribution to nonattainment or interference of the NAAQS in other states and the broad, regional nature of the collective contribution problem with respect to ozone, there does not appear to be a compelling policy imperative in allowing some states to use a 1 ppb threshold while others rely on a 1 percent of the NAAQS threshold.

Consistency with past interstate transport actions such as CSAPR, and the CSAPR Update and Revised CSAPR Update rulemakings (which used a Step 2 threshold of 1 percent of the NAAQS for two less stringent ozone NAAQS), is also important. Continuing to use a 1 percent of NAAQS approach ensures that as the NAAQS are revised and made more stringent, an appropriate increase in stringency at Step 2 occurs, so as to ensure an appropriately larger amount of total upwind-state contribution is captured for purposes of fully addressing interstate transport. See 76 FR 48208, 48237-38, August 8, 2011.

Therefore, notwithstanding the August 2018 memorandum's recognition of the potential viability of alternative Step 2 thresholds, and in particular, a potentially applicable 1 ppb threshold, EPA's experience since the issuance of that memorandum has revealed substantial programmatic and policy difficulties in attempting to implement this approach. As discussed further below, the basis for disapproval of Alabama's SIP submission with respect to the Step 2 analysis is, in the Agency's view, warranted even under the terms of the August 2018 memorandum.

Consistent with EPA's longstanding approach to eliminating significant contribution or interference with maintenance, at Step 3, states linked at Steps 1 and 2 are generally expected to prepare a multifactor assessment of potential emissions controls. EPA's analysis at Step 3 in prior Federal actions addressing interstate transport requirements has primarily focused on an evaluation of cost-effectiveness of potential emissions controls (on a marginal cost-per-ton basis), the total emissions reductions that may be achieved by requiring such controls (if applied across all linked upwind states), and an evaluation of the air quality impacts such emissions reductions would have on the downwind receptors to which a State is linked; other factors may potentially be relevant if adequately supported. In general, where EPA's or alternative air quality and contribution modeling establishes that a State is linked at Steps 1 and 2, it will be insufficient at Step 3 for a State merely to point to its existing rules requiring control measures as a basis for approval. In general, the emissions-reducing effects of all existing emissions control requirements are already reflected in the air quality results of the modeling for Steps 1 and 2. If the State is shown to still be linked to one or more downwind receptor(s), states must provide a well-documented evaluation determining whether their emissions constitute significant contribution or interference with maintenance by evaluating additional available control opportunities by preparing a multifactor assessment. While EPA has not prescribed a particular method for this assessment, EPA expects states at a minimum to present a sufficient technical evaluation. This would typically include information on emissions sources, applicable control technologies, emissions reductions, costs, cost effectiveness, and downwind air quality impacts of the estimated reductions, before concluding that no additional emissions controls should be required. 34

At Step 4, states (or EPA) develop permanent and federally enforceable control strategies to achieve the emissions reductions determined to be necessary at Step 3 to eliminate significant contribution to nonattainment or interference with maintenance of the NAAQS. For a State linked at Steps 1 and 2 to rely on an emissions control measure at Step 3 to address its interstate transport obligations, that measure must be included in the State's implementation plan so that it is permanent and federally enforceable. See CAA section 110(a)(2)(D) (“Each such [SIP] shall . . . contain adequate provisions. . . .”). See also CAA section 110(a)(2)(A); Committee for a Better Arvin v. EPA, 786 F.3d 1169, 1175-76 (9th Cir. 2015) (holding that measures relied on by a State to meet CAA requirements must be included in the SIP).

The following section provides information related to Alabama's June 21, 2022, SIP submission addressing the interstate transport requirements for the 2015 8-hour ozone NAAQS, as well as information related to previous submittals for the 2015 8-hour ozone NAAQS.

On August 20, 2018, Alabama submitted multiple SIP revisions under one cover letter, including an interstate transport SIP revision for the 2015 8-hour ozone NAAQS which relied on modeling released with the March 2018 memorandum. EPA initially proposed approval of Alabama's interstate transport SIP revision for the 2015 8-hour ozone NAAQS, based on the modeling provided in the March 2018 memorandum. See 84 FR 71854, 71859 (December 30, 2019). When EPA completed updating the modeling of 2023 in 2020, using a 2016-based emissions modeling platform (2016v1), it became evident that Alabama was projected to be linked above 1 percent of the NAAQS to downwind nonattainment and maintenance receptors (see footnote 47 of this document).

As a result, EPA deferred acting on Alabama's interstate transport SIP submittal when EPA published a supplemental proposal in 2021 to approve four other southeastern states' good neighbor SIP submissions using the updated 2023 modeling. See 86 FR 37942, 37943 (July 19, 2021). The next update to the 2023 modeling used an updated 2016-based emissions modeling platform (2016v2), and it confirms the prior 2016-based modeling of 2023 in that it continues to show Alabama is linked to at least one downwind nonattainment or maintenance receptor above 1 percent of the NAAQS.

Subsequently, EPA proposed to disapprove Alabama's August 20, 2018, interstate transport SIP submission on February 22, 2022, based in part on the updated modeling using the 2016v2 emissions modeling platform, discussed in Section I.C. of this document. See 87 FR 9545, 9562. Additionally, EPA withdrew its 2019 proposed approval on Alabama's August 20, 2018, interstate transport SIP revision as published on December 30, 2019. See 84 FR 71854.

Subsequently, on April 21, 2022, ADEM withdrew the August 20, 2018, submission that EPA had proposed to disapprove. 35 On the same day, April 21, 2022, ADEM provided a replacement submission for its August 20, 2018, submission addressing the interstate requirements for the 2015 ozone standards. Based on EPA's review of that new submission and the completeness criteria for SIPs (40 CFR part 51, Appendix V), EPA determined Alabama's April 21, 2022, submission was incomplete and provided that determination to Alabama in a letter dated June 14, 2022. 36 On June 15, 2022, EPA signed a document (published in the Federal Register on June 22, 2022), finding that the State failed to submit a complete submission addressing the 2015 ozone interstate transport requirements through the transmission of Alabama's April 21, 2022, submittal. See 87 FR 37235.

On June 21, 2022, Alabama submitted a SIP revision addressing the CAA section 110(a)(2)(D)(i)(I) good neighbor interstate transport requirements for the 2015 8-hour ozone NAAQS. The SIP submission purported to address the issues identified in the EPA's June 15, 2022, incompleteness letter. The June 21, 2022, SIP submission provides Alabama's evaluation of its impact on downwind states and concludes that emissions from the State will not significantly contribute to nonattainment or interfere with maintenance of the 2015 8-hour ozone NAAQS in other states in 2023.

Alabama's June 21, 2022, submittal identifies existing SIP-approved regulations and Federal programs  37 that regulate ozone precursor emissions from sources in the State, including the CSAPR trading programs, which, according to Alabama, are the reason for the decline of ozone precursor emissions in the State. 38 Alabama's submission acknowledges that CSAPR does not address interstate transport for the 2015 ozone standard but does provide residual NO X emission reductions and notes that the CSAPR NO X ozone season trading programs were adopted into the Alabama SIP on August 31, 2016, and October 6, 2017. 39 Alabama notes that the implementation of the existing SIP-approved regulations and Federal programs provide for a decline in ozone precursor emissions in the State. Alabama also states there are no nonattainment or maintenance areas in Alabama and that ozone precursor emissions would continue to decline in the State.

Table of Contents I. Background II. The EPA's Evaluation of New York's Submittal III. Proposed Action IV. Incorporation by Reference V. Statutory and Executive Order Reviews I. Background

The EPA is proposing to approve New York's SIP submittal consisting of revisions to Title 6 of the New York Codes, Rules and Regulations (6 NYCRR) subpart 225-1, “Fuel Composition and Use—Sulfur Limitations,” which imposes limits on the sulfur content of distillate oil, residual oil, and coal fired in stationary sources and regulates the burning of waste oils in combustion, incineration, and process sources throughout New York State. In addition, the EPA is proposing to approve revisions to 6 NYCRR subpart 225-2, “Fuel Composition and Use,” and an attendant revision made to 6 NYCRR part 200, “General Provisions,” that moves the definition for “residual oil” from subpart 225-2, now entitled, “Fuel Consumption and Use—Waste Oil as a Fuel,” to part 200. The EPA is proposing to approve these revisions, requested by New York, to strengthen the effectiveness of New York's SIP.

On August 26, 2020, the New York State Department of Environmental Conservation (NYSDEC) submitted to the EPA proposed SIP revisions to 6 NYCRR part 225, “Fuel Composition and Use,” subpart 225-2, now entitled, “Fuel Composition and Use—Waste Oil as a Fuel,” and attendant revisions to part 200, “General Provisions,” sections 200.1, “Definitions,” and section 200.9, “Referenced material”. The attendant revisions to 6 NYCRR part 200, “General Provisions,” section 200.9, Table 1, “Referenced material,” for 6 NYCRR subpart 225-2 have been addressed under a separate rulemaking at 87 FR 52337, effective September 26, 2022. Additionally, on March 2, 2021, NYSDEC submitted to the EPA proposed SIP revisions to 6 NYCRR part 225, “Fuel Composition and Use,” subpart 225-1, “Fuel Composition and Use—Sulfur Limitations”. Each proposed SIP revision submitted to the EPA provided supplemental materials and the NYSDEC's responses to public comments. These materials are in the EPA's docket for this proposal.

The EPA is proposing to approve revisions to parts 225 and 200. The revisions to part 225 apply to fuel composition and use, and limits the sulfur content of distillate oil, residual oil, and coal fired in stationary sources and regulates the burning of waste oils in combustion, incineration, and process sources throughout New York. The EPA proposes to approve these revisions to strengthen New York's SIP. 1

The revisions to subpart 225-1, “Fuel Composition and Use—Sulfur Limitations,” will add process sources and incinerators as stationary emission sources to which these revisions will apply throughout New York State. The revisions also lower the sulfur-in-fuel limit for waste oil and correct minor typographical errors. The revisions remove 6 NYCRR subdivision 225-1.3(e) which had stated that, pursuant to Section 117 of Article 5 of the Energy Law, the Governor may pre-empt the requirements of 6 NYCRR subpart 225-1 if an energy or fuel supply emergency is declared. Finally, the revisions will remove paragraph 225-1.4(c)(2) which New York indicated, in the January 20, 2021 Notice of Adoption, was contradictory and less stringent than the sulfur-in-fuel requirements of the table in subdivision 225-1.2(b) of this subpart.

The revisions to subpart 225-2 that the EPA is proposing to approve, “Fuel Composition and Use—Waste Oil As A Fuel,” simplify and streamline implementation of the regulation by eliminating obsolete regulatory references; correcting typographical errors; updating the regulation's waste oil constituent limits; removing outdated work practices; expanding the number of facilities eligible to burn waste oil; updating the permitting process to include monitoring, recordkeeping, and reporting requirements, thus aligning it with part 201 and Title V criteria found in the Clean Air Act; and moving the definition of “residual oil” from existing subpart 225-2 to part 200. The existing SIP version of subpart 225-2 also contains references to liquid waste transportation regulations that no longer apply and need to be removed from the SIP. NYSDEC also now includes arsenic (5 ppm), cadmium (2 ppm), and chromium (10 ppm) and their corresponding limits in Table 1 of Proposed Subpart 225-2. The NYSDEC has removed the ninety-nine (99) percent combustion efficiency requirement. The revised subpart 225-2 no longer addresses the burning of chemical waste and “off-spec” waste oils ( i.e., Waste fuel B) that do not meet the limitations specified in Table 1 of existing subpart 225-2. Instead, burning chemical waste and off-spec waste oils is regulated under 6 NYCRR part 212, Process Operations or 6 NYCRR parts 370-376 as appropriate. New York State's subpart 225-2 revisions clarify the regulation's process for the burning of waste oil while removing the term “waste fuel.”

The EPA proposes to approve the revisions to 6 NYCRR subpart 225-2, “Fuel Composition and Use,” attendant revisions to part 200, “General Provisions,” section 200.1, “Definitions,” and revisions to 6 NYCRR part 225, “Fuel Consumption and Use,” subpart 225-1, “Fuel Composition and Use—Sulfur Limitations”, with State effective dates of April 2, 2020 (subpart 225-2 and section 200.1) and February 4, 2021 (part 225-1), into New York's SIP, in order to strengthen enforcement of the State's air pollution control regulations. The attendant revisions to 6 NYCRR part 200, “General Provisions,” section 200.9, Table 1, “Referenced material,” for 6 NYCRR subpart 225-2 have been addressed under a separate rulemaking at 87 FR 52337, effective September 26, 2022. The EPA is soliciting public comments on the issues discussed in this proposed rulemaking action. These comments will be considered before taking final action.

In this document, the EPA is proposing to include regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference revisions to 6 NYCRR part 225, “Fuel Composition and Use,” subpart 225-2, “Fuel Composition and Use,” attendant revisions to part 200, “General Provisions,” section 200.1, “Definitions,” and 6 NYCRR part 225, “Fuel Composition and Use,” subpart 225-1, “Fuel Composition and Use—Sulfur Limitations,” as described in Section II. and III. of this preamble. The EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 2 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

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

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

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

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

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

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

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

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

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

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

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

Atlantic mackerel recruitment has been declining since 1999 and has been below the long-term average since 2009. On November 29, 2019 (84 FR 58053), NMFS implemented a 5-year Atlantic mackerel rebuilding plan. At its July 2021 meeting, the Mid-Atlantic Fishery Management Council's Scientific and Statistical Committee (SSC) reviewed the 2021 Atlantic mackerel management track assessment results, which concluded that Atlantic mackerel remains overfished and overfishing is occurring. This management track assessment also determined that due to previous assumptions about potential recruitment that did not come to fruition, the original rebuilding plan no longer provides a realistic rebuilding approach. Stock biomass is estimated to have nearly tripled in size from 2014 to 2019 (from approximately 8 percent to 24 percent of a fully rebuilt Atlantic mackerel stock), but full rebuilding on the original schedule by 2023 now appears impossible; the stock is expected to be less than half rebuilt by 2023.

Amendment 23 is intended to implement a revised Atlantic mackerel rebuilding plan to fully rebuild the stock within 10 years ( i.e., 2032) and prevent overfishing by incorporating the findings from the 2021 Atlantic mackerel management track assessment. The proposed rebuilding plan assumes that recruitment starts low (similar to recruitment from 2009 to present) and then increases toward long-term typical recruitment as the stock rebuilds. This plan also assumes a fishing mortality rate of 0.12, which is predicted to have a 61 percent probability of rebuilding the Atlantic mackerel stock in 10 years. This action would set the overall rebuilding plan and the acceptable biological catch (ABC) for 2023 of 8,094 mt (metric tons). This rebuilding plan would also project the ABCs for the following years, but the ABC will be revisited each year during future specification setting.

Additionally, Amendment 23 proposes the 2023 Atlantic mackerel specifications and following measures, which are outlined in further detail in the EA prepared for this action (see ADDRESSES ):

• An ABC deduction of 2,197 mt to account for Canadian catch of the Atlantic mackerel stock;

• An ABC deduction of 2,143 mt to account for recreational catch;

• An estimated ABC deduction of 115 mt to account for commercial discards;

• A revised commercial fishery closure approach where before May 1, the directed commercial fishery would close with 886 mt of the quota remaining, and after May 1, the directed commercial fishery would close with 443 mt of the quota remaining which would result in reduced trip limits of 40,000 lb (18.14 mt) for Tier 1, 2, and 3 moratorium permits and 5,000 lb (2.27 mt) for open access permits;

• A final directed commercial fishery closure when 100 mt of the quota remains which would result in a reduced possession limit of 5,000 lb (2.27 mt) for all permits;

• A 20-fish per person recreational possession limit; and

• A status quo river herring and shad catch cap of 129 mt.

In accordance with section 304(a)(1) of the Magnuson-Stevens Act, we are soliciting public comments on Amendment 23 to the Mackerel, Squid, and Butterfish FMP and its incorporated documents through the end of the comment period specified in the DATES section of this notice of availability (NOA). Under this provision of the Magnuson-Stevens Act (section 304(a)(3)), the Secretary may approve, partially approve, or disapprove the amendment as submitted by the Council based on whether the measures are consistent with the fishery management plan, plan amendment, the Magnuson-Stevens Act and its National Standards, and other applicable law. As such, we are seeking comment on whether measures in Amendment 23 to the Mackerel, Squid, and Butterfish FMP are consistent with the Mackerel, Squid, and Butterfish FMP, the Magnuson-Stevens Act and its National Standards, and other applicable law. All comments received by the end of the comment period of the NOA will be considered in the approval/disapproval decision on the amendment. Comments received after the end of the comment period for the NOA will not be considered in the approval/disapproval decision.

A proposed rule to implement the amendment, including draft regulatory text, will also be published in the Federal Register for public comment. Public comments on the proposed rule received before the end of the comment period provided in this NOA will be considered in the approval/disapproval decision on the amendment. All comments received by December 27, 2022, whether specifically directed to Amendment 23 to the Mackerel, Squid, and Butterfish FMP or the proposed rule for this amendment, will be considered in the approval/disapproval decision on the amendment. Comments received after that date will not be considered in the decision to approve or disapprove the amendment. To be considered, comments must be received by close of business on the last day of the comment period.