Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches to maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

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

The Catalog of Federal Domestic Assistance (CFDA) number, also known as Assistance Listing number, assigned to the program is 10.770, Water and Waste Facility Loans and Grants to Alleviate Health Risks. The CFDA is available on the internet at https://sam.gov/content/assistance-listings. The Government Printing Office (GPO) prints and sells the CFDA to interested buyers. For information about purchasing the CFDA from GPO, call the Superintendent of Documents at 202-512-1800 or toll free at 866-512-1800, or access GPO's on-line bookstore at: U.S. Government Bookstore https://bookstore.gpo.gov/.

This program is subject to the provisions of Executive Order 12372 which requires intergovernmental consultation with State and local officials. Rural Development will conduct intergovernmental consultation using RD Instruction 1970-I, “Intergovernmental Review,” available in any Agency office, or at https://www.rd.usda.gov/sites/default/files/1970i.pdf and in 2 CFR part 415, subpart C. Note that not all States have chosen to participate in the intergovernmental review process. A list of participating States is available at: https://www.whitehouse.gov/omb/office-federal-financial-management/. Applications from Federally Recognized Indian Tribes are not subject to this requirement.

This rule contains no new reporting or recordkeeping burdens under OMB control number 0572-0121 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

In accordance with the National Environmental Policy Act of 1969, Public Law 91-190, this final rule has been reviewed in accordance with 7 CFR part 1970 (“Environmental Policies and Procedures”). The Agency has determined that (1) this action meets the criteria established in 7 CFR 1970.53(f); (2) no extraordinary circumstances exist; and (3) the action is not “connected” to other actions with potentially significant impacts, is not considered a “cumulative action” and is not precluded by 40 CFR 1506.1. Therefore, the Agency has determined that the action does not have a significant effect on the human environment, and therefore neither an Environmental Assessment nor an Environmental Impact Statement is required.

RUS certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities, as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The RUS Water and Waste low-interest loan and grant programs provide funds to eligible entities with a focus on promoting public water and waste access at reasonable user costs throughout rural America. RUS borrowers, as a result of obtaining federal financing, receive economic benefits that exceed any direct economic costs associated with complying with RUS regulations and requirements.

This rule has been reviewed under Executive Order 12988. In accordance with this rule: (1) unless otherwise specifically provided, all State and local laws that conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule except as specifically prescribed in the rule; and (3) administrative proceedings of the National Appeals Division of the Department of Agriculture (7 CFR part 11) must be exhausted before bringing suit in court that challenges action taken under this rule.

The policies contained in this rule do not have any substantial direct effect on 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. Nor does this rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the States is not required.

This executive order imposes requirements on the Agency in the development of regulatory policies that have tribal implications or preempt tribal laws. The Agency has determined that the rule may have a substantial direct effect on one or more Indian tribe(s) or on either the relationship or the distribution of powers and responsibilities between the Federal Government and Indian tribes. Thus, this rule is subject to the requirements of Executive Order 13175. GAO, during the preparation of their Audit Report described in the SUMMARY section of this notice, sought and received input from 22 Tribes. As part of the Agency's consultation process, the Agency hosted two listening sessions on November 30, 2021 and December 1, 2021. No substantive comments were received from Tribes during the listening sessions. If tribal leaders are interested in government-to-government consultation with the Agency on this rule, they are encouraged to contact RD's Tribal Coordinator at: AIAN@usda.gov. RD will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified herein are not expressly mandated by Congress.

Rural Development is committed to the E-Government Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

Rural Development has reviewed this rule in accordance with USDA Regulation 4300-4, “Civil Rights Impact Analysis,” to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex, disability, marital or familial status. Based on the review and analysis of the rule and all available data, issuance of this Final Rule is not likely to negatively impact low and moderate-income populations, minority populations, women, Indian tribes or persons with disability, by virtue of their age, race, color, national origin, sex, disability, or marital or familial status.

In accordance with Federal civil rights laws and USDA civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.

Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information ( e.g., Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, or staff office; the USDA TARGET Center at (202) 720-2600 (voice and TTY); or the 711 Relay Service.

To file a program discrimination complaint, a complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form, which can be obtained online at https://www.usda.gov/sites/default/files/documents/ad-3027.pdf from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant's name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to USDA by:

(1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410; or

(2) Fax: (833) 256-1665 or (202) 690-7442; or

(3) Email: program.intake@usda.gov .

Rural Development is a mission area within USDA comprised of the RUS, Rural Housing Service, and Rural Business-Cooperative Service. Rural Development's mission is to increase economic opportunity and improve the quality of life for all rural Americans. Rural Development meets its mission by providing loans, loan guarantees, grants and contracts through more than 40 programs aimed at creating and improving housing, business, and infrastructure throughout rural America.

The Water and Waste Facility Loans and Grants to Alleviate Health Risks program was established by Section 306C of the Consolidated Farm and Rural Development Act (ConAct). The ConAct established the program to provide loans and grants to low-income communities in eligible areas which face significant health risks, and lack access to safe, reliable drinking water and waste disposal facilities and services. For the purpose of this program, eligible projects include those that primarily benefit members of federally recognized Tribes, or are within areas recognized as a Colonia before October 1, 1989, that are located in a city, town, or unincorporated area with a population of no more than 10,000 residents.

A Government Accountability Office (GAO) Audit Report, GAO 18-309, “Drinking Water and Wastewater Infrastructure Opportunities Exist to Enhance Federal Agency Needs Assessment and Coordination on Tribal Projects” issued on May 15, 2018, and available at: https://www.gao.gov/products/gao-18-309 recommended that the Agency implement scoring criteria for the Native American funding within the Section 306C WWD Loans and Grants program, similar to those that currently exist for the Colonias. The specific scoring criteria cited provide additional points for projects that increase access to clean drinking water and reduce health risks. In addition to those changes, the Agency is updating the regulation to include current policies and procedures, and clarify terminology, including the per capita income and unemployment criteria.

This section discusses the key changes to the regulation.

To conform to Section 306C of the ConAct, the Agency has updated the name of Part 1777 to Water and Waste Facility Loans and Grants to Alleviate Health Risks. Key terms have been updated for consistency with other regulations and directives. The structure of Part 1777 has been reworked to provide easier usability by customers and to differentiate the different requirements of loans and grants that are for public infrastructure versus those for individuals.

As Section 306C governs the implementation of multiple fund allocations, including Tribal and Colonias allocations, § 1777.1(d) was revised to clarify that funds specifically appropriated for Tribes through this part will only be awarded to Tribes and entities serving Tribal members.

Per statute, Tribal entities eligible for Section 306D, “Water Systems for Rural Native Villages in Alaska Program” are not eligible to receive grant funding under this program. That statutory restriction is included at § 1777.1(e) to ensure applicants are aware of all requirements and restrictions.

Section 1777.4, “Definitions” was modified to update and conform definitions now used in part 1777.

Section 1777.11 was revised to update the section name and to include regulatory cross references to the appropriate regulations that govern application/processing of loans and servicing of loans for public infrastructure projects.

Section 1777.12 was modified as follows:

(a) The title of the section was changed to “Public Infrastructure—Eligibility”; and only provides information pertaining to loans and grants for facilities;

(b) The introductory text of paragraph (a) was re-worded to clarify which paragraphs apply only to Tribal funding under Section 306C and removes the reference to preapplications as the Agency no longer requires them. Additionally, “. . . RUS Assistant Administrator for Water and Environmental Program . . .” was added to indicate who may begin the process of using a source other than the current American Community Survey (ACS);

(c) Paragraph (a)(1) was revised by specifying “United States Department of Commerce, United States Census Bureau.”

(d) Paragraph (a)(3) was added to clarify that if an applicant is not a Federally Recognized Tribe, the project may still be considered eligible if more than 50 percent of the users in the project area are members of a Federally Recognized Tribe. Also, for applicants that are not Tribes, but are proposing to serve a Tribal area, a resolution or letter of support from the tribe is now required.

Section 1777.13 now contains requirements for how funds for public infrastructure projects may be used. The project priority and scoring information previously located in this section is moved to § 1777.14 for public infrastructure projects and to § 1777.33 for projects benefitting individuals and scoring has been updated to reflect current practice. In order to address the recommendation of the GAO audit to make scoring consistent between Colonia and Tribal applicants, points for access and health risks are now applied consistently to all project applications in § 1777.14(c)(5) and § 1777.33(c)(8).

Section 1777.15 has been added to provide rates and terms for public infrastructure loans. This information was previously found at § 1777.31.

Sections 1777.30 through 1777.34 now cover individual loan and grant eligibility, use of funds, administration of funds and rates and terms. These sections have been updated to document current process and practices.

Section 1777.42 was reworded for clarity.

Section 1777.43, Exception Authority, was added to allow the Administrator of Rural Utilities Service to make an exception to any requirement or provision of this part that is not inconsistent with statute or other applicable laws and is in the best interest of the government.

Background

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Model A318 series airplanes; Model A319-111, -112, -113, -114, -115, -131, -132, and -133 airplanes; Model A320-211, -212, -214, -216, -231, -232, and -233 airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. The NPRM published in the Federal Register on October 20, 2022 (87 FR 63715). The NPRM was prompted by AD 2021-0236, dated October 29, 2021, issued by EASA, which is the Technical Agent for the Member States of the European Union (EASA AD 2021-0236) (also referred to as the MCAI). The MCAI states that NLG sliding tube rupture, leading to NLG collapse during taxiing, occurred on a Model A320 airplane. Investigations identified overheat damage on that NLG, caused by incorrect accomplishment of a repair on the chromium-plated diameter of the sliding tube during the last NLG overhaul. Further investigations identified a batch of NLG and MLG sliding tubes that are possibly affected by a similar condition, which, if not detected and corrected, could lead to NLG or MLG structural failure and subsequent collapse of the gears, possibly resulting in damage to the airplane and injury to occupants.

In the NPRM, the FAA proposed to require inspection of certain NLG and MLG sliding tubes and applicable corrective actions and eventual replacement of all affected parts. The NPRM also proposed to prohibit the installation of affected parts under certain conditions. The FAA is issuing this AD to address NLGs and MLGs that may have been subject to the incorrect accomplishment of a repair, which, if not detected and corrected, could lead to NLG or MLG structural failure and subsequent collapse of the gears, possibly resulting in damage to the airplane and injury to occupants.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2022-1295.

The FAA received a comment from the Air Line Pilots Association, International (ALPA) who supported the NPRM without change.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data, considered the comment received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on this product. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

The FAA reviewed EASA AD 2021-0236, which specifies procedures for a detailed inspection of the visible chrome surface of affected NLG and MLG sliding tubes for any discrepancies (cracks), a magnetic particle inspection (MPI) and Barkhausen noise inspection (BNI) of affected parts for any discrepancies (cracks), eventual replacement of affected parts, and corrective actions. Corrective actions include immediate replacement of the NLG or MLG sliding tube or shock absorber. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in ADDRESSES .

The FAA estimates that this AD affects 1,825 airplanes of U.S. registry. Currently, there are no affected U.S.-registered airplanes that would need the required actions because the affected part is not installed on any U.S.-registered airplanes. U.S.-registered airplanes therefore would need to comply with only the parts prohibition specified in this AD.

If an affected airplane is imported and placed on the U.S. Register in the future, the FAA provides the following cost estimates to comply with the required actions in this AD:

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Helicopters Model AS350B, AS350BA, AS350B1, AS350B2, AS350B3, AS350D, AS355E, AS355F, AS355F1, AS355F2, AS355N, and AS355NP helicopters. The NPRM published in the Federal Register on August 2, 2022 (87 FR 47141). The NPRM was prompted by EASA AD 2021-0282, dated December 17, 2021 (EASA AD 2021-0282), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Helicopters, formerly Eurocopter and Aerospatiale, Model AS 350 B, AS 350 BA, AS 350 BB, AS 350 B1, AS 350 B2, AS 350 B3, AS 350 D, AS 355 E, AS 355 F, AS 355 F1, AS 355 F2, AS 355 N, and AS 355 NP helicopters, all serial numbers. EASA advises that an occurrence was reported where, during an inspection of a TRH pitch change spider, excessive play in the assembly and excessive wear on its parts were detected, which was due to an unwanted rotating motion. EASA advises that this condition, if not addressed, could result in loss of the TRH pitch change control and loss of control of the helicopter.

Accordingly, EASA AD 2021-0282 requires a one-time check (inspection) of the nut for correct installation, accomplishing a black paint index marking, 2 to 5 mm wide, on the rotating spider and on the bearing spacer of the TRH spider pitch change unit, repetitive checks (inspections) of the marking alignment, and depending on the findings, accomplishment of additional inspections and corrective actions. The additional inspections include inspecting the TRH spider pitch change unit for corrosion; inspecting for rotation and wear on the faces of the bushes; visually inspecting the rotating plate and the rotating plate threads for damage; and inspecting the TRH spider pitch change unit if the mark is misaligned. The corrective actions include removing parts with corrosion from service; replacing bushes that rotate or have wear; and replacing damaged rotating plates. EASA AD 2021-0282 also specifies certain procedures for installation of the affected TRH spider pitch change unit.

In the NPRM, the FAA proposed to require, for helicopters with certain part-numbered TRH spider pitch change units installed, inspecting for correct installation of the nut and depending on the results, inspecting the TRH spider pitch change unit for corrosion, inspecting for rotation and wear on the faces of the bushes, inspecting the rotating plate and the rotating plate threads for damage, and removing specified parts from service and replacing them with airworthy parts. In the NPRM, the FAA also proposed to require for helicopters with certain part-numbered TRH spider pitch change units installed, marking a 2 to 5 mm wide black paint index mark to identify the position of certain parts and after the initial marking, and thereafter at intervals not to exceed 10 hours time in service (TIS), visually inspecting the alignment of the marking; and additional inspections and corrective actions if necessary. Additionally, the NPRM proposed to allow an affected part to be installed on a helicopter if certain requirements of the NPRM are met.

You may examine EASA AD 2021-0282 in the AD docket at regulations.gov under Docket No. FAA-2022-0987.

The FAA received comments from three commenters. The following presents the comments received on the NPRM and the FAA's response to each comment.

All three individuals requested that the FAA revise the proposed AD to allow an owner/operator (pilot) to perform the 10 hour TIS repetitive inspection of the black index mark after the initial inspection and marking. Two of the individuals stated allowing a pilot with the correct training and accreditation to perform the repetitive 10 hour TIS visual inspection of the black index mark would be in line with the service information required by this AD.

The FAA disagrees. The inspection requires training, and the exception to the FAA's standard maintenance regulations for AD actions does not allow a pilot to accomplish actions, including inspections, that require training. Accordingly, those inspections must be accomplished by a mechanic that meets the requirements of 14 CFR part 65 subpart D.

These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA of the unsafe condition described in its AD. The FAA reviewed the relevant data, considered the comments received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

The FAA reviewed Airbus Helicopters Alert Service Bulletin (ASB) No. AS350-05.01.03, for Model AS350B, AS350BA, AS350B1, AS350B2, AS350B3, and AS350D helicopters and Airbus Helicopters ASB No. AS355-05.00.86, for Model AS355E, AS355F, AS355F1, AS355F2, AS355N, and AS355NP helicopters, both Revision 0 and dated December 16, 2021, which include Figure 1 that identifies the position of the TRH pitch change unit and of the bearing spacer to be marked with a 2 to 5 mm wide black paint index mark. The service information also specifies procedures for inspecting the condition and installation of the nut; and inspecting the application and alignment of the black index mark on the TRH pitch change unit and the bearing spacer.

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

The FAA also reviewed Airbus Helicopters Mechanical Repair Manual AS350 65-20-00-713, dated March 29, 2017, and Airbus Aircraft Maintenance Manual AS350 65-21-00, 4-9b, dated May 16, 2019, which specify disassembly and reassembly information for the TRH pitch change unit.

EASA AD 2021-0282 applies to Model AS350BB helicopters, whereas this AD does not because that model is not FAA-type certificated. EASA AD 2021-0282 requires accomplishing a certain inspection using a magnifying lens, whereas this AD requires using a 5X or higher power magnifying glass to inspect instead.

The FAA estimates that this AD affects 976 helicopters of U.S. Registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this AD.

Inspecting the nut for correct installation takes about 0.25 work-hour for an estimated cost of $21 per helicopter and up to $20,307 for the U.S. fleet.

Inspecting the alignment of the marking takes about 0.10 work-hour for an estimated cost of $8.50 per helicopter per inspection and up to $8,219.50 for the U.S. fleet per inspection.

Marking the position of the TRH pitch change unit with black paint takes about 0.25 work-hour for an estimated cost of $21 per helicopter and $20,307 for the U.S. fleet.

If required, inspecting the TRH spider pitch change unit for corrosion, inspecting the faces of the bushes for rotation and wear, and inspecting the rotating plate and rotating plate threads for damage takes about 13 work-hours for an estimated cost of $1,105 per helicopter.

If required, replacing the bushes takes about 1 work-hour and parts cost about $5,918, for an estimated cost of $6,003 per replacement.

If required, replacing the rotating plate takes about 1 work-hour and parts cost about $27,375 for an estimated cost of $27,460 per replacement.

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

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

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

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

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

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

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

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

The Entity List (supplement no. 4 to part 744 of the EAR (15 CFR parts 730-774)) identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States, pursuant to § 744.11(b). The EAR impose additional license requirements on, and limit the availability of, most license exceptions for exports, reexports, and transfers (in-country) when a listed entity is a party to the transaction. The license review policy for each listed entity is identified in the “License Review Policy” column on the Entity List, and the impact on the availability of license exceptions is described in the relevant Federal Register document that added the entity to the Entity List. The Bureau of Industry and Security (BIS) places entities on the Entity List pursuant to parts 744 (Control Policy: End-User and End-Use Based) and 746 (Embargoes and Other Special Controls) of the EAR.

The End-User Review Committee (ERC), composed of representatives of the Departments of Commerce (Chair), State, Defense, Energy and, where appropriate, the Treasury, makes all decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entry to the Entity List by majority vote and makes all decisions to remove or modify an entry by unanimous vote.

The ERC determined to add the following seven entities to the Entity List under the destination of Iran based on § 744.11 for activity contrary to U.S. national security and foreign policy interests under §§ 744.11 and 744.21 of the EAR: Design and Manufacturing of Aircraft Engines, Islamic Revolutionary Guard Corps Aerospace Force, Islamic Revolutionary Guard Corps Research and Self-Sufficiency Jihad Organization, Oje Parvaz Mado Nafar Company, Paravar Pars Company, Qods Aviation Industry, and Shahed Aviation Industries. These entities are designated by the Departments of State and/or the Treasury pursuant to Executive Order 13382 and other sanctions programs. They are also currently subject to restrictions set forth in part 744 of the EAR, such as those in §§ 744.8, 744.12, and 744.14. With this rule, these entities are added to the Entity List for contributing to Russia's military and defense industrial base through the production of Iranian unmanned aerial vehicles (UAVs), which are being transferred to Russia for use in Ukraine. This activity is contrary to U.S. national security and foreign policy interests under § 744.11(b) and these entities qualify as `military end-users' under § 744.21(g) of the EAR. These entities will receive a footnote 3 designation because the ERC has determined that they are Russian or Belarusian `military end users' in accordance with § 744.21. A footnote 3 designation subjects these entities to the Russia/Belarus-Military End User Foreign Direct Product (FDP) rule, detailed in § 734.9(g) of the EAR. These seven entities are added to the Entity List with a license requirement for all items subject to the EAR. BIS will review license applications for items for these entities under a policy of denial apart from food and medicine designated as EAR99, which will be reviewed on a case-by-case basis. No license exceptions are available for exports, reexports, or transfers (in-country) to these entities.

For the reasons described above, this final rule adds the following seven entities to the Entity List and includes, where appropriate, aliases:

• Design and Manufacturing of Aircraft Engines (DAMA);

• Islamic Revolutionary Guard Corps Aerospace Force;

• Islamic Revolutionary Guard Corps Research and Self-Sufficiency Jihad Organization;

• Oje Parvaz Mado Nafar Company;

• Paravar Pars Company;

• Qods Aviation Industry; and

• Shahed Aviation Industries.

For the changes being made in this final rule, shipments of items removed from eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on January 31, 2023, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) before March 3, 2023. Any such items not actually exported, reexported or transferred (in-country) before midnight, on March 3, 2023, require a license in accordance with this final rule.

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. 4801-4852). ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

1. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by OMB under control number 0694-0088, Simplified Network Application Processing System, which includes, among other things, license applications and commodity classifications, and carries a burden estimate of 29.6 minutes for a manual or electronic submission for a total burden estimate of 33,133 hours. Total burden hours associated with the PRA and OMB control number 0694-0088 are not expected to increase as a result of this rule.

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

4. Pursuant to section 1762 of the Export Control Reform Act of 2018, this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation, and delay in effective date.

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

Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

This document and additional information concerning OFAC are available on OFAC's website: www.treas.gov/ofac.

On December 23, 2020, OFAC issued GL 5F to further delay the effectiveness of the authorization that was previously contained in GL 5. GL 5F was the seventh iteration of GL 5 and superseded GL 5E (85 FR 76450). Subsequently, OFAC issued four further iterations of GL 5, each of which further delayed the effectiveness of the authorization that was previously contained in GL 5: on July 20, 2021, OFAC issued GL 5G, which superseded GL 5F; on September 10, 2021, OFAC issued GL 5H, which superseded GL 5G; on January 20, 2022, OFAC issued GL 5I, which superseded GL 5H; and on January 17, 2023, OFAC issued GL 5J, which superseded GL 5I. Each GL was made available on OFAC's website ( www.treas.gov/ofac ) when it was issued. The text of these GLs is provided below.

(a) Except as provided in paragraph (b) of this general license, on or after July 21, 2021, all transactions related to, the provision of financing for, and other dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond that would be prohibited by Subsection l(a)(iii) of Executive Order (E.O.) 13835 of May 21, 2018, as amended by E.O. 13857 of January 25, 2019, and incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), are authorized.

(b) This general license does not authorize any transactions or activities otherwise prohibited by the VSR, or any other part of 31 CFR chapter V.

(c) Effective December 23, 2020, General License No. 5E, dated October 6, 2020, is replaced and superseded in its entirety by this General License No. 5F.

This document and additional information concerning OFAC are available on OFAC's website: www.treas.gov/ofac.

On January 8, 2019, OFAC issued GL 6, and on January 28, 2019, OFAC issued GLs 10 and 11 to authorize certain transactions otherwise prohibited by Executive Order (E.O.) 13850 of November 1, 2018, “Blocking Property of Additional Persons Contributing to the Situation in Venezuela” (83 FR 55243, November 2, 2018). Subsequently, OFAC issued one further iteration of GL 6 and one of GL 10: on January 7, 2020, OFAC issued GL 6A, which superseded GL 6 and on August 5, 2019, OFAC issued GL 10A, which superseded GL 10 and authorized certain transactions otherwise prohibited by E.O. 13884 of August 5, 2019, “Blocking Property of the Government of Venezuela” (84 FR 38843, August 7, 2019) and by E.O. 13850. GLs 6A and 11 have now expired. Each GL was made available on OFAC's website ( www.treas.gov/ofac ) when it was issued. The text of these GLs is provided below.

(a) Except as provided in paragraph (d) of this general license, all transactions and activities otherwise prohibited by subsection 1(a) of Executive Order 13850 of November 1, 2018 (“Blocking Property of Additional Persons Contributing to the Situation in Venezuela”) (E.O. 13850), that are ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements, including the importation of goods, services, or technology into the United States, involving Globovision Tele C.A. or Globovision Tele CA, Corp., or any entity in which Globovision Tele C.A. or Globovision Tele CA, Corp. owns, directly or indirectly, a 50 percent or greater interest and that were in effect prior to January 8, 2019, are authorized through 12:01 a.m. eastern daylight time, January 8, 2020.

(b) Any payment to or for the direct or indirect benefit of a blocked person that is ordinarily incident and necessary to give effect to a transaction authorized in paragraph (a) of this general license must be made into a blocked, interest-bearing account located in the United States in accordance with 31 CFR part 591. Any such payment that is directly or indirectly to the account of a blocked U.S. person identified in paragraph (a) at a U.S. financial institution may be processed in accordance with the original wire transfer instructions, provided that those instructions are consistent with this general license.

(c) All funds in accounts of blocked U.S. persons identified in paragraph (a), including funds originating from authorized payments to such accounts received on or after January 8, 2019, may be used for maintenance or wind-down activities authorized by this general license.

(d) This general license does not authorize:

(1) The divestiture or transfer of debt, equity, or other holdings in, to, or for the benefit of the blocked persons identified above;

(2) Any transactions or dealings otherwise prohibited by E.O. 13850, Executive Order 13835 of May 21, 2018, Executive Order 13827 of March 19, 2018, Executive Order 13808 of August 24, 2017, Executive Order 13692 of March 8, 2015, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons identified in paragraph (a) of this general license;

(3) The unblocking of any property blocked pursuant to E.O. 13850, Executive Order 13692 of March 8, 2015, or any part of 31 CFR chapter V, except as authorized by paragraphs (a), (b), or (c); or

(4) The exportation of goods from the United States.

(e) U.S. persons participating in transactions authorized by this general license are required, within 10 business days after the expiration date of this general license, to file a comprehensive, detailed report of each transaction, including the names and addresses of parties involved, the type and scope of activities conducted, and the dates on which the activities occurred, with the Office of Foreign Assets Control, Office of Compliance and Enforcement, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman's Bank Building, Washington, DC 20220, or via email to OFACReport@treasury.gov.

(a) Except as provided in paragraph (d) of this general license, all transactions and activities prohibited by subsection 1(a) of Executive Order (E.O.) 13850, as amended by E.O. 13857 of January 25, 2019, that are ordinarily incident and necessary to the wind down of operations, contracts, or other agreements, including the importation of goods, services, or technology into the United States, involving Globovision Tele C.A. or Globovision Tele CA, Corp., or any entity in which Globovision Tele C.A. or Globovision Tele CA, Corp. owns, directly or indirectly, a 50 percent or greater interest and that were in effect prior to January 8, 2019, are authorized through 12:01 a.m. eastern standard time, January 21, 2020.

(b) Any payment to or for the direct or indirect benefit of a blocked person that is ordinarily incident and necessary to give effect to a transaction authorized in paragraph (a) of this general license must be made into a blocked, interest-bearing account located in the United States in accordance with 31 CFR part 591. Any such payment that is directly or indirectly to the account of a blocked U.S. person identified in paragraph (a) at a U.S. financial institution may be processed in accordance with the original wire transfer instructions, provided that those instructions are consistent with this general license.

(c) All funds in accounts of blocked U.S. persons identified in paragraph (a), including funds originating from authorized payments to such accounts received on or after January 8, 2019, may be used for wind-down activities authorized by this general license.

(d) This general license does not authorize:

(1) The divestiture or transfer of debt, equity, or other holdings in, to, or for the benefit of the blocked persons identified above;

(2) Any transactions or dealings otherwise prohibited by E.O. 13884 of August 5, 2019, or E.O. 13850, E.O. 13835 of May 21, 2018, E.O. 13827 of March 19, 2018, E.O. 13808 of August 24, 2017, or E.O. 13692 of March 8, 2015, each as amended by E.O. 13857, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons identified in paragraph (a) of this general license;

(3) The unblocking of any property blocked pursuant to E.O. 13884, or E.O. 13850 or E.O. 13692, each as amended by E.O. 13857, or any part of 31 CFR chapter V, except as authorized by paragraphs (a), (b), or (c); or

(4) The exportation of goods from the United States.

(e) U.S. persons participating in transactions authorized by this general license are required, within 10 business days after the expiration date of this general license, to file a comprehensive, detailed report of each transaction, including the names and addresses of parties involved, the type and scope of activities conducted, and the dates on which the activities occurred, with the Office of Foreign Assets Control, Office of Compliance and Enforcement, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman's Bank Building, Washington, DC 20220, or via email to OFACReport@treasury.gov.

(f) Effective January 7, 2020, General License No. 6, dated January 8, 2019, is replaced and superseded in its entirety by this General License No. 6A.

(a) Except as provided in paragraph (b) of this general license, U.S. persons in Venezuela are authorized to purchase refined petroleum products for personal, commercial, or humanitarian uses from PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.

(b) This general license does not authorize:

(1) Any commercial resale, transfer, exportation or reexportation of refined petroleum products; or

(2) Any transactions or dealings otherwise prohibited by Executive Order 13850 of November 1, 2018, Executive Order 13835 of May 21, 2018, Executive Order 13827 of March 19, 2018, Executive Order 13808 of August 24, 2017, Executive Order 13692 of March 8, 2015, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons identified in paragraph (a) of this general license.

(a) Except as provided in paragraph (b) of this general license, U.S. persons in Venezuela are authorized to purchase refined petroleum products for personal, commercial, or humanitarian uses from PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.

(b) All transactions involving the Government of Venezuela that would otherwise be prohibited by Executive Order (E.O.) of August 5 that are necessary for the activities set forth in paragraph (a) of this general license are authorized, including payment of taxes, fees, and import duties to, and purchase or receipt of permits, licenses, or public utility services from, the Government of Venezuela.

(c) This general license does not authorize:

(1) Any commercial resale, transfer, exportation, or reexportation of refined petroleum products; or

(2) Any transactions or dealings otherwise prohibited by E.O. of August 5, 2019 or E.O. 13850, E.O. 13835 of May 21, 2018, E.O. 13827 of March 19, 2018, E.O. 13808 of August 24, 2017, or E.O. 13692 of March 8, 2015, each as amended by E.O. 13857 of January 25, 2019, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons identified in paragraph (a) or (b) of this general license.

(c) Effective August 5, 2019, General License No. 10, dated January 28, 2019, is replaced and superseded in its entirety by this General License No. 10A.

(a) Except as provided in paragraph (c) of this general license, U.S. person employees and contractors of non-U.S. entities located in a country other than the United States or Venezuela are authorized to engage in all transactions and activities prohibited by Executive Order 13850 that are ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements involving PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, that were in effect prior to January 28, 2019. This authorization is valid through 12:01 a.m. eastern daylight time, March 29, 2019.

(b) Except as provided in paragraph (c) of this general license, U.S. financial institutions are authorized to reject funds transfers involving both (i) PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, and (ii) non-U.S. entities located in a country other than the United States or Venezuela, provided that the funds transfers originate and terminate outside the United States and that neither the originator nor the beneficiary is a U.S. person and the funds are not destined for a blocked account on the books of a U.S. person. This authorization is valid through 12:01 a.m. eastern daylight time, March 29, 2019.

(c) This general license does not authorize:

(1) Any transactions or dealings with ALBA de Nicaragua (ALBANISA) or any entity in which ALBANISA owns, directly or indirectly, a 50 percent or greater interest;

(2) Any transactions or dealings otherwise prohibited by Executive Order 13850 of November 1, 2018, Executive Order 13835 of May 21, 2018, Executive Order 13827 of March 19, 2018, Executive Order 13808 of August 24, 2017, Executive Order 13692 of March 8, 2015, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons identified in paragraphs (a) and (b) of this general license; or

(3) The unblocking of any property blocked pursuant to any part of 31 CFR chapter V, except as authorized by paragraphs (a) or (b).

This document and additional information concerning OFAC are available on OFAC's website: www.treas.gov/ofac.

On January 28, 2019, OFAC issued GL 14 to authorize certain transactions otherwise prohibited by Executive Order (E.O.) 13692 of March 8, 2015, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Venezuela” (80 FR 12747, March 11, 2015); E.O. 13808 of August 24, 2017, “Imposing Additional Sanctions With Respect to the Situation in Venezuela” (82 FR 41155, August 29, 2017); E.O. 13827 of March 19, 2018, “Taking Additional Steps to Address the Situation in Venezuela” (83 FR 12469, March 21, 2018); E.O. 13835 of May 21, 2018, “Prohibiting Certain Additional Transactions With Respect to Venezuela” (83 FR 24001, May 24, 2018); and E.O. 13850 of November 1, 2018, “Blocking Property of Additional Persons Contributing to the Situation in Venezuela” (83 FR 55243, November 2, 2018). On November 22, 2019, GL 14 was incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591.

On March 22, 2019, OFAC issued GL 15 to authorize certain transactions otherwise prohibited by E.O. 13850. Subsequently, OFAC issued three further iterations of GL 15: on April 17, 2019, OFAC issued GL 15A, which superseded GL 15; on August 5, 2019, OFAC issued GL 15B, which superseded GL 15A and authorized certain transactions otherwise prohibited by E.O. 13884 of August 5, 2019, “Blocking Property of the Government of Venezuela” (84 FR 38843, August 7, 2019) as well as those prohibited by E.O. 13850; and on March 12, 2020, OFAC issued GL 15C, which superseded GL 15B.

Each GL was made available on OFAC's website ( www.treas.gov/ofac ) when it was issued. The text of these GLs is provided below.

(a) Except as provided in paragraph (b) of this general license, all transactions that are for the conduct of the official business of the United States Government by employees, grantees, or contractors thereof are authorized.

(b) This general license does not authorize any transaction that is prohibited by any part of 31 CFR chapter V other than part 591.

(a) Except as provided in paragraph (b) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13850, as amended by E.O. 13857 of January 25, 2019 (“Taking Additional Steps to Address the National Emergency With Respect to Venezuela”), that are ordinarily incident and necessary to the activities of the following entities, and their subsidiaries, which involve Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela) or Banco Bicentenario del Pueblo, de la Clase Obrera, Mujer y Comunas, Banco Universal C.A. (Banco Bicentenario del Pueblo) are authorized through 12:01 a.m. eastern daylight time, March 22, 2020:

(b) This general license does not authorize:

(1) Any transactions or dealings with Banco de Desarrollo Economico y Social de Venezuela (BANDES) or Banco Bandes Uruguay S.A. (Bandes Uruguay);

(2) The unblocking of any property blocked pursuant to E.O. 13850, as amended by E.O. 13857, or any part of 31 CFR chapter V, except as authorized by paragraph (a); or

(3) Any transaction that is otherwise prohibited under E.O. 13850 of November 1, 2018, E.O. 13835 of May 21, 2018, E.O. 13827 of March 19, 2018, E.O. 13808 of August 24, 2017, E.O. 13692 of March 8, 2015, each as amended by E.O. 13857, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons described in paragraph (a) of this general license.

(a) Except as provided in paragraph (b) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13850, as amended by E.O. 13857 of January 25, 2019 (“Taking Additional Steps to Address the National Emergency With Respect to Venezuela”) (E.O. 13850), that are ordinarily incident and necessary to the activities of the following entities, and their subsidiaries, which involve Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela), Banco Bicentenario del Pueblo, de la Clase Obrera, Mujer y Comunas, Banco Universal C.A. (Banco Bicentenario del Pueblo), or Banco Central de Venezuela are authorized through 12:01 a.m. eastern daylight time, March 22, 2020:

(b) This general license does not authorize:

(1) Any transactions or dealings with Banco de Desarrollo Economico y Social de Venezuela (BANDES) or Banco Bandes Uruguay S.A. (Bandes Uruguay);

(2) The unblocking of any property blocked pursuant to E.O. 13850 or any part of 31 CFR chapter V, except as authorized by paragraph (a); or

(3) Any transaction that is otherwise prohibited under E.O. 13850, E.O. 13835 of May 21, 2018, E.O. 13827 of March 19, 2018, E.O. 13808 of August 24, 2017, E.O. 13692 of March 8, 2015, each as amended by E.O. 13857, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons described in paragraph (a) of this general license.

(c) Effective April 17, 2019, General License No. 15, dated March 22, 2019, is replaced and superseded in its entirety by this General License No. 15A.

(a) Except as provided in paragraph (b) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13850, as amended by E.O. 13857 of January 25, 2019, or E.O. of August 5, 2019, that are ordinarily incident and necessary to the activities of the following entities, and their subsidiaries, which involve Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela), Banco Bicentenario del Pueblo, de la Clase Obrera, Mujer y Comunas, Banco Universal C.A. (Banco Bicentenario del Pueblo), Banco del Tesoro, C.A. Banco Universal (Banco del Tesoro), or Banco Central de Venezuela are authorized through 12:01 a.m. eastern daylight time, March 22, 2020:

(b) This general license does not authorize:

(1) Any transactions or dealings with Banco de Desarrollo Economico y Social de Venezuela (BANDES) or Banco Bandes Uruguay S.A. (Bandes Uruguay);

(2) The unblocking of any property blocked pursuant to E.O. of August 5, 2019, or E.O. 13850, as amended, or any part of 31 CFR chapter V, except as authorized by paragraph (a); or

(3) Any transaction that is otherwise prohibited by E.O. of August 5, 2019, or E.O. 13850, E.O. 13835 of May 21, 2018, E.O. 13827 of March 19, 2018, E.O. 13808 of August 24, 2017, or E.O. 13692 of March 8, 2015, each as amended by E.O. 13857, or any part of 31 CFR chapter V, or any transactions or dealings with any blocked person other than the blocked persons identified in paragraph (a) of this general license.

(c) Effective August 5, 2019, General License No. 15A, dated April 17, 2019, is replaced and superseded in its entirety by this General License No. 15B.

(a) Except as provided in paragraph (b) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13850 of November 1, 2018, as amended by E.O. 13857 of January 25, 2019, or by E.O. 13884 of August 5, 2019, each as incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), that are ordinarily incident and necessary to the activities of the following entities, and their subsidiaries, which involve Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela), Banco Bicentenario del Pueblo, de la Clase Obrera, Mujer y Comunas, Banco Universal C.A. (Banco Bicentenario del Pueblo), Banco del Tesoro, C.A. Banco Universal (Banco del Tesoro), or Banco Central de Venezuela are authorized:

(b) This general license does not authorize:

(1) Any transactions or activities with Banco de Desarrollo Economico y Social de Venezuela (BANDES) or Banco Bandes Uruguay S.A. (Bandes Uruguay);

(2) The unblocking of any property blocked pursuant to the VSR, or any other part of 31 CFR chapter V, except as authorized by paragraph (a); or

(3) Any transactions or activities otherwise prohibited by the VSR, or any other part of 31 CFR chapter V, or any transactions or activities with any blocked person other than the blocked persons identified in paragraph (a) of this general license.

(c) Effective March 12, 2020, General License No. 15B, dated August 5, 2019, is replaced and superseded in its entirety by this General License No. 15C.

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 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 from copyright owners.

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”). 5 As relevant here, those interim regulations included requirements governing annual reporting and the ability to make adjustments to monthly and annual reports and related royalty payments, including to correct errors and replace estimated inputs with finally determined figures. 6

After enactment of the September 2020 Rule, the Office received a request from the DLC to modify it, prompted by operational and compliance concerns. After carefully evaluating the DLC's request and the then-existing rulemaking record, the Office decided to make various amendments through a supplemental interim rule and request for comments issued on May 24, 2022 (the “May 2022 Rule”). 7 The May 2022 Rule provided extensive background on requirements relating to monthly reports of usage, annual reports of usage (“AROUs”), and reports of adjustment (“ROAs”), including with respect to timing, invoices, and response files. 8 The Office assumes familiarity with both the September 2020 Rule and May 2022 Rule and their detailed explanations of these issues. 9

In brief, and as relevant here, the May 2022 Rule established an invoice and response file process for ROAs (and by extension, AROUs that are combined with ROAs). 10 Under these regulations, if there is an underpayment of royalties, the DMP must pay the difference to the MLC either contemporaneously with delivery of the ROA or promptly after receiving an invoice from the MLC. 11 In those circumstances where the DMP will receive a response file from the MLC, the MLC must deliver the invoice to the DMP contemporaneously with the response file. 12 The MLC must otherwise deliver the invoice to the DMP in a reasonably timely manner. 13 If requested by the DMP, the MLC must deliver a response file no later than 45 days after receiving the ROA, unless the ROA is combined with an AROU, in which case the response file must be delivered within 60 days. 14 Acknowledging that the MLC would need time to implement these regulations, the May 2022 Rule provided a transition period ending on February 24, 2023, during which the MLC is not required to deliver invoices or response files within the specified timeframes. 15

In response to the May 2022 Rule, the Office received relevant comments from only the MLC and DLC. 16 At a high level, the MLC objected to the invoice and response file timelines in the rule. It asserted operational concerns related to waste, inefficiency, and burden if required to comply with the May 2022 Rule's timeframes for delivering invoices and response files to DMPs for ROAs. 17 The DLC did not object to the MLC's position on this issue. 18 The MLC also proposed that, instead of permitting DMPs to pay additional royalties promptly after receiving an invoice from the MLC, they should always have to pay adjusted royalties contemporaneously with delivery of the ROA to the MLC. 19 The DLC disagreed on this point, stating that “the option [for DMPs] to make royalty payments for adjustments only after receiving an invoice from the MLC should remain in place.”  20

Having reviewed these comments, the Office is considering revising the May 2022 Rule. However, as discussed below, because at least some of the issues surrounding adjustments may be impacted by the unresolved issue of the relationship between adjustments and late fees, the Office has concluded that it should conduct further proceedings before proposing any amendments.

The issue of late fees is not new to this proceeding. As previously detailed by the Office, stakeholders, including the MLC and DLC, disagree about whether late fees adopted by the CRJs for late payments of royalties apply to adjustments. 21 The Office previously declined to adopt a rule addressing the interplay between the CRJs' late fee regulation and the Office's provisions for adjustments because it was not clear at the time of the September 2020 Rule that doing so would be the best course “particularly where the CRJs may wish themselves to take the occasion of [the Phonorecords III ] remand or otherwise update their operative regulation in light of the [September 2020 Rule].”  22 At the time, the Office said it would instead “monitor the operation of this aspect of the [September 2020 Rule], and as appropriate in consultation with the CRJs.”  23

Since the September 2020 Rule, however, the CRJs have not taken any action on the late fee issue and have not indicated an intent that they plan to do so. At the same time, the MLC's and DLC's comments in response to the May 2022 Rule again raised the issue and confirmed their continued disagreement on the issue. 24 Both the MLC and DLC requested the Office provide guidance. 25 The DLC requested that the Office “specify that when both the initial estimated payments and the later adjustment of such payments to account for the updated and finalized information are made according to the timelines established in the regulations, such payments are proper and have been made by the `due date for payment' as set forth in 17 U.S.C. 115(d)(8)(B)(i).”  26 The MLC opposed the DLC's position  27 and instead proposed regulatory language providing that nothing in the adjustment provisions “shall change a blanket licensee's liability for late fees, where applicable.”  28 Other parts of the MLC's comments on adjustments also touched on the issue of late fees. For example, discussing its opposition to allowing DMPs to avoid paying adjusted royalties until after receiving an invoice, the MLC argues that “[f]ull payment of royalties is due and owing from the original due date of each month's royalties.”  29

In sum, resolution of when royalties are “due” and when late fees are incurred could be relevant to the adjustment issues being considered by the Office. The Office therefore finds it prudent to consider both issues concurrently. It intends to publish a notification of inquiry in the near future to expand the public record on the late fee issue before publishing a proposed rule. Once it has evaluated the relevant comments, the Office plans to issue a notice of proposed rulemaking that jointly addresses both late fees and the other concerns raised in response to the May 2022 Rule ( e.g., regarding the timing of royalty payments, invoices, and response files for adjustments).

One component of the May 2022 Rule, however, must be amended immediately to provide the Office with sufficient time to conduct these further public proceedings: the current February 24, 2023 expiration of the MLC's transition period. Based on the MLC's and DLC's comments discussed above, the Office is extending the length of the MLC's transition period during the pendency of the Office's further rulemaking activity in this area. To provide flexibility, the new rule provides that the MLC's transition period ends 30 days after receiving written notice from the Office. Prior to that time, as noted above, the Office expects to issue a superseding rule addressing the underlying issues as part of further public proceedings surrounding adjustments.

Because of the short amount of time remaining before the expiration of the MLC's current transition period on February 24, 2023, and based on the MLC's unopposed assertions that complying with the May 2022 Rule's timelines is operationally problematic, the Office finds that there is good cause to adopt this supplemental interim rule without public notice and comment, and to make it effective immediately upon publication. 30

For the reasons set forth in the preamble, the U.S. Copyright Office amends 37 CFR part 210 as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

This rule approves Wisconsin's April 8, 2022, submission to update chapter NR 404 of Wisconsin's ambient air quality rule to incorporate the 2015 primary and secondary ozone national ambient air quality standards (NAAQS) and the chapter NR 484 incorporation by reference rule with the monitoring requirements related to the NAAQS to make Wisconsin's rules consistent with the Federal rules in the Wisconsin SIP. In addition, WDNR revised sections of chapters NR 407 (Operation permits), 408 (Construction permits for direct major sources in nonattainment areas) and 428 (nitrogen oxides (NO X ) reasonably available control technologies (RACT)), to ensure implementation of the Federal ozone NAAQS in areas currently or formerly designated as nonattainment for any ozone standard, in a manner consistent with CAA requirements. An explanation of the CAA requirements, a detailed analysis of the revisions, and EPA's reasons for approval are provided in EPA's notice of proposed rulemaking (NPRM), dated August 16, 2022 (87 FR 50280), and will not be restated here.

EPA provided a 30-day review and comment period in the NPRM. The comment period ended on September 15, 2022. We received no comments on the proposed rule.

EPA is approving the revision to chapters NR 404, 407, 408, 428, and 484, as submitted on April 8, 2022, into the Wisconsin SIP. Specifically, EPA is approving NR 404.04(5)(d) and (Note), NR 407.02(4)(c)1. and Note, NR 408.02(24)(c), NR 408.02(32)(a)6., NR 428.20, NR 428.21(3), NR 428.255 and NR 484.04 Table 2(7s), as published in the Wisconsin Register #794, effective March 1, 2022.

In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the Wisconsin Regulations discussed in Section I and listed in Section III of this preamble and set forth in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available through www.regulations.gov and at the EPA Region 5 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, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

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

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

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

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

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

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

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

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

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

This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 3, 2023. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

For the reasons stated in the preamble, 40 CFR part 52 is amended as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Clean Air Act (CAA) section 181(b)(2) requires EPA to determine, based on the design value of an ozone nonattainment area as of the area's attainment deadline, whether the area has attained the ozone standard by that date. 1 On August 3, 2018, EPA designated the Detroit area, consisting of Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne Counties, as a Marginal nonattainment area for the 2015 ozone NAAQS (83 FR 25776). On April 13, 2022, EPA proposed to determine that the Detroit area failed to attain the 2015 ozone NAAQS by August 3, 2021, the applicable attainment date for Marginal areas, and did not qualify for a 1-year attainment date extension (87 FR 21842). The proposed determination was based upon complete, quality-assured and certified ozone air quality monitoring data that showed that the design value for the area exceeded 0.070 parts per million (ppm) for the 2018-2020 period. EPA proposed that the Detroit area would be reclassified as a Moderate nonattainment area by operation of law on the effective date of a final action finding that the area failed to attain the 2015 ozone NAAQS by the applicable attainment date for Marginal areas. Once reclassified as Moderate, the Detroit area would be required to attain the 2015 ozone NAAQS “as expeditiously as practicable” but no later than 6 years after the initial designation as nonattainment, which in this case would be no later than August 3, 2024.

In the April 13, 2022, proposal, EPA solicited comment on adjusting the due dates, in accordance with CAA section 182(i), for submission and implementation deadlines for all SIP requirements that apply to Moderate areas. On October 7, 2022, EPA finalized its proposed action for 22 Marginal areas that failed to attain by the applicable attainment date (87 FR 60897). In the October 7, 2022, rulemaking, EPA provided a response to comments relevant to all areas subject to reclassification.

Once a nonattainment area is reclassified as Moderate, the responsible state agency must subsequently submit a SIP revision that satisfies the air quality planning requirements for a Moderate area under CAA section 182(b). SIP requirements that apply to Moderate areas are cumulative of CAA requirements for the Marginal classification and include additional Moderate area requirements as interpreted and described in the final SIP Requirements Rule for the 2015 ozone NAAQS (see CAA sections 172(c)(1) and 182(a) and (b), and 40 CFR 51.1300 through 51.1319). These requirements include reasonably available control measures and reasonably available control technology (RACM/RACT) and vehicle inspection and maintenance (I/M).

EPA's April 13, 2022, proposed rule discusses EPA's basis for establishing deadlines for Moderate area SIP revisions and implementation of RACM/RACT and Basic I/M programs (87 FR 21842, 21852). With respect to SIP requirements for Moderate areas, we proposed that for any of the Moderate area controls to influence attainment by the Moderate area attainment date, they would need to be implemented by the beginning of the 2023 ozone season at the latest. With respect to implementation deadlines for RACM/RACT, we proposed that the modeling and attainment demonstration requirements for 2015 ozone NAAQS nonattainment areas classified Moderate or higher require that a state must provide for implementation of all control measures needed for attainment no later than the beginning of the attainment year ozone season, notwithstanding any alternative deadline established per 40 CFR 51.1312. 2 For reclassified areas, EPA's implementing regulations for the 2015 ozone NAAQS require that the state shall provide for implementation of RACT as expeditiously as practicable, but no later than the start of the attainment year ozone season associated with the area's new attainment deadline, or January 1 of the third year after the associated SIP submission deadline, whichever is earlier, or the deadline established by the Administrator in the final action issuing the area reclassification. 3 With respect to I/M, EPA proposed to allow areas newly required to implement Basic I/M up to 4 years after the effective date of designation and classification to fully implement the I/M program for states that do not intend to rely upon emission reductions from their Basic I/M program in attainment or reasonable further progress (RFP) SIPs.

EPA also discussed CAA section 182(i), under which the Administrator may adjust applicable deadlines for reclassified areas “to the extent such adjustment is necessary or appropriate to assure consistency among the required submissions.” In the April 13, 2022, rulemaking, which proposed reclassification for Detroit as well as 23 other areas, EPA noted that the ozone season begins in either January or March for the various areas. 4 To avoid inconsistencies between areas with various ozone season start dates, EPA proposed under CAA section 182(i) to set a deadline of January 1, 2023, for Moderate area SIP revisions and implementation of RACM/RACT for all areas.

To avoid the impractical outcome whereby EPA might finalize a January 1, 2023, due date that has already passed for the Detroit area, and because March is the start of the ozone season in Michigan, EPA is instead finalizing March 1, 2023, as the due date for SIP revisions addressing Moderate requirements for the Detroit area. RACM/RACT for the area must be implemented as expeditiously as practicable, but no later than the same date.

Regarding the requirement for a Basic I/M program, EPA is finalizing an implementation deadline of no later than 4 years after the effective date of reclassification should EGLE not intend to rely upon emission reductions from their Basic I/M program in attainment or reasonable further progress (RFP) SIPs.

If an area attains the 2015 ozone NAAQS, the relevant state may request redesignation to attainment, provided the state can demonstrate that the criteria under CAA section 107(d)(3)(E) are met. 5 On March 14, 2022, EPA proposed to approve a January 3, 2022, request from EGLE to redesignate the Detroit area to attainment based on 2019-2021 monitoring data showing attainment of the 2015 ozone NAAQS (87 FR 14210). The comment period on EPA's proposed action closed on April 13, 2022, and EPA is currently reviewing all public comments to further assess whether Michigan adequately addressed all requirements applicable to redesignation that applied to Detroit on the date of EGLE's submittal.

EPA is finalizing its proposed determination that the Detroit area failed to attain the 2015 ozone NAAQS by the applicable attainment date of August 3, 2021. Therefore, upon the effective date of this final action, the Detroit area will be reclassified by operation of law as Moderate for the 2015 ozone NAAQS. Once reclassified as Moderate, the Detroit area will be required to attain the standard “as expeditiously as practicable” but no later than 6 years after the initial designation as nonattainment, which in this case would be no later than August 3, 2024. Pursuant to CAA section 182(i), EPA is requiring Michigan to submit SIP revisions to address Moderate area requirements by the beginning of the ozone season, or March 1, 2023.

EPA finds there is good cause for this action to become effective less than 30 days after publication. The March 1, 2023, effective date is authorized under 5 U.S.C. 553(d)(3) of the APA, which allows an effective date less than 30 days after publication as provided by the agency for good cause found and published with the rule. EPA believes that there is “good cause” to make this rule effective less than 30 days after publication in the Federal Register to avoid any additional delay in development and implementation of the SIP requirements under 182(b), given the closeness to the beginning of the 2023 ozone season and the proximity of EPA's final action to the submission and implementation deadlines described in this rule. The agency believes that establishing an effective date of this action simultaneous with due dates resulting from this action will reconcile the competing statutory interests by minimizing a potentially impractical outcome in which the area might otherwise be subject to Moderate nonattainment area statutory and regulatory due dates that would already have passed prior to the normal 30 days post-publication effective date. Further, although this action will become effective less than 30 days after publication, a state need not wait until EPA's finding of failure to attain and reclassification is made effective before beginning to develop an attainment plan for a higher classification of an air quality standard.

This action is exempt from review by the Office of Management and Budget (OMB) because it responds to the CAA requirement to determine whether areas designated nonattainment for an ozone NAAQS attained the standard by the applicable attainment date, and to take certain steps for areas that failed to attain.

This rule does not impose any new information collection burden under the PRA not already approved by the Office of Management and Budget. This action does not contain any information collection activities and serves only to make final: (1) determinations that the Detroit Marginal nonattainment area failed to attain the 2015 ozone standards by the August 3, 2021, attainment date where such areas will be reclassified as Moderate nonattainment for the 2015 ozone standards by operation of law upon the effective date of the final reclassification action; and (2) adjust any applicable implementation deadlines.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. The determination of failure to attain the 2015 ozone standards (and resulting reclassifications), do not in and of themselves create any new requirements beyond what is mandated by the CAA. This final action would require the State to adopt and submit SIP revisions to satisfy CAA requirements and would not itself directly regulate any small entities.

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

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government. The division of responsibility between the Federal Government and the states for purposes of implementing the NAAQS is established under the CAA.

This action does not have tribal implications as specified in Executive Order 13175. This action does not apply on any Indian reservation land, any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, or non-reservation areas of Indian country. Thus, Executive Order 13175 does not apply to this action.

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

This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

Executive Order 12898 establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. There is no information in the record indicating that this action would be inconsistent with the stated goals of Executive Order 12898 of achieving environmental justice for people of color, low-income populations, and indigenous peoples.

This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 3, 2023. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, 40 CFR part 81 is amended as follows:

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Office of the Federal Register's e-CFR site at https://www.ecfr.gov/current/title-40.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2021-0449 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before April 3, 2023. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2021-0449, by one of the following methods:

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

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

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at https://www.epa.gov/dockets.

Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at https://www.epa.gov/dockets.

In the Federal Register of September 22, 2021 (86 FR 52624) (FRL-8792-03-OCSPP), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 1E8932) by the Interregional Research Project Number 4 (IR-4), Project Headquarters, North Carolina University, 1730 Varsity Drive, Venture IV, Suite 210, Raleigh, NC 27606. The petition requests to amend 40 CFR 180.661(a)(1) by establishing tolerances for residues of the fungicide fluopyram, N -[2-[3-chloro-5-(trifluoromethyl)-2-pyridinyl]ethyl]-2-(trifluoromethyl)benzamide, in or on the following raw agricultural commodities: Brassica, leafy greens, subgroup 4-16B at 50 parts per million (ppm); celtuce at 20 ppm; coffee, green bean at 0.03 ppm; fennel, Florence, fresh leaves and stalk at 20 ppm; kohlrabi at 4 ppm; leafy greens subgroup 4-16A at 40 ppm; leaf petiole vegetable subgroup 22B at 20 ppm; papaya at 1.5 ppm; peppermint, dried leaves at 0.8 ppm; peppermint, fresh leaves at 0.6 ppm; spearmint, dried leaves at 0.8 ppm; spearmint, fresh leaves at 0.6 ppm; spice group 26 at 70 ppm; vegetable, Brassica, head and stem, group 5-16 at 4 ppm; individual commodities of proposed crop subgroup 6-XXA; edible podded bean legume vegetable subgroup at 4 ppm; individual commodities of proposed crop subgroup 6-XXB edible podded pea legume vegetable subgroup at 4 ppm; individual commodities of proposed crop subgroup 6-XXC: succulent shelled bean subgroup at 0.2 ppm; individual commodities of proposed crop subgroup 6-XXD: succulent shelled pea subgroup at 0.2 ppm; and the individual commodities of proposed crop subgroup 6-XXE: dried shelled bean, except soybean, subgroup at 0.7 ppm. Due to the length of the list of commodities, please refer to the document EPA issued in the Federal Register on September 22, 2021, for a complete list of the tolerances requested. The petition also requested the removal of the tolerances for residues of fluopyram in or on bean, dry at 0.70 ppm; Brassica, head and stem, subgroup 5A at 4.0 ppm; Brassica, leafy greens, subgroup 5B at 50 ppm; dill, seed at 70 ppm; leafy greens subgroup 4A at 40 ppm; leafy petioles subgroup 4B at 20 ppm; pea and bean, succulent shelled, subgroup 6B at 0.20 ppm; and vegetable, legume, edible podded, subgroup 6A at 4.0 ppm. That document referenced a summary of the petition prepared by IR-4, the petitioner, which is available in the docket, https://www.regulations.gov. Three comments were received on the Notice of Filing; however, the comments were not relevant to the petition for fluopyram tolerances that are the subject of this action.

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

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

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The toxicological database for fluopyram has been re-evaluated as part of registration review and relevant studies were updated in accordance with current practices. The fluopyram database is considered complete.

Liver effects, thyroid effects, and decreased body weight were the most common and frequent findings in the subchronic and chronic oral toxicity studies in rats, mice, and dogs, and appeared to be the most sensitive effects in the fluopyram toxicological database. Increased liver tumors were observed in female rats in the carcinogenicity study at the highest dose tested (89 mg/kg/day). Thyroid effects (increased thyroid weight along with follicular cell hypertrophy and hyperplasia) were observed at dose levels similar to those that produced liver effects in rats and mice. In male mice, there was an increased incidence of thyroid adenomas at the highest dose tested (105 mg/kg/day). Fluopyram induces liver enzymes following constitutive androstane receptor and pregnane X receptor (CAR/PXR) activation, which causes increased metabolism of thyroid hormones. These changes lead to liver and thyroid hypertrophy and proliferation, eventually leading to liver tumors (female rat) and thyroid tumors (male mice). EPA classified fluopyram as “Not Likely to be Carcinogenic to Humans” at doses that do not induce cellular proliferation in the liver or thyroid glands. This classification was based on evidence that non-genotoxic modes of action for liver tumors in rats and thyroid tumors in mice have been established and that the carcinogenic effects have been demonstrated as a result of a mode of action dependent on activation of the CAR/PXR receptors. EPA determined that quantification of risk is not required. There is sufficient data to ascertain the mode of action of fluopyram. The chronic Reference Dose (RfD) is derived using the no-observed adverse-effect level (NOAEL) of 6 mg/kg/day as the POD which is below the dose of 11 mg/kg/day that caused cell proliferation in the liver (a key event in tumor formation) and the subsequent liver tumors at a higher dose (89 mg/kg/day). Additionally, there is no concern for mutagenicity.

Fluopyram did not elicit developmental or offspring effects, nor did it adversely affect reproductive parameters. No evidence of increased qualitative or quantitative susceptibility was observed in developmental or reproduction toxicity studies. There is no evidence of neurotoxicity.

Specific information on the studies received and the nature of the adverse effects caused by fluopyram as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found in the document titled “Fluopyram. Human Health Risk Assessment for Proposed Uses on Coffee, Green Bean, Papaya, Peppermint, Spearmint and Crop Group Expansions/Conversions.” (hereinafter “Fluopyram Human Health Risk Assessment”) on pages 43-52 in docket ID number EPA-HQ-OPP-2021-0449.

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

A summary of the toxicological endpoints and PODs for fluopyram used for human risk assessment can be found in the Fluopyram Human Health Risk Assessment on pages 25-26.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to fluopyram, EPA considered exposure under the petitioned-for tolerances as well as all existing fluopyram tolerances in 40 CFR 180.661. EPA assessed dietary exposures from fluopyram in food as follows:

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

In estimating acute dietary exposure, EPA used the Dietary Exposure Evaluation Model software using the Food Commodity Intake Database (DEEM-FCID) Version 4.02, which uses the 2005-2010 food consumption data from the United States Department of Agriculture's (USDA's) National Health and Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA). As to residue levels in food, a partially refined acute dietary exposure assessment was conducted, incorporating field trial residues for coffee and the commodities of crop group 15 and crop subgroup 20A, and tolerance-level residues for all other crop commodities. One hundred percent crop treated (PCT) was assumed.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment, EPA used the food consumption data from the USDA's 2005-2010 NHANES/WWEIA and DEEM-FCID; version 4.02. As to residue levels in food, the chronic dietary exposure assumed tolerance-level residues for mint and papaya and used mean field trial data and empirical processing factors for all other commodities. Average PCT estimates were used for some crops.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that fluopyram does not pose a cancer risk to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv. Anticipated residue and PCT information. Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require, pursuant to FFDCA section 408(f)(1), that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if the following conditions are met:

• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition c: Data are available on pesticide use and food consumption in a particular area, and the exposure estimate does not understate exposure for the population in such area.

In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by FFDCA section 408(b)(2)(F), EPA may require registrants to submit data on PCT.

The Agency estimated the PCT for existing uses as follows: almonds, 20%; apples, 25%; apricots, 5%; artichoke, 15%; broccoli, 2.5%; cabbage, 2.5%; carrots, 1%; cauliflower, 1%; cherries, 25%; cotton, 1%; dry beans and peas, 1%; grapefruit, 10%; grapes, raisins, 1%; table grapes, 5%; wine grapes; 20%; lemons, 1%; lettuce, 1%; onions, 1%; oranges, 15%; peaches, 1%; peanuts, 2.5%; pears, 5%; peppers, 5%; pistachios, 15%; potatoes, 20%; strawberries, 10%; tomatoes, 1%; walnuts, 10%; and watermelons, 15%. EPA assumed 100 PCT for all other commodities included in the chronic assessment.

In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and California Department of Pesticide Regulation (CalDPR) Pesticide Use Reporting (PUR) for the chemical/crop combination for the most recent 10 years. EPA uses an average PCT for chronic dietary risk analysis and a maximum PCT for acute dietary risk analysis. The average PCT figure for each existing use is derived by combining available public and private market survey data for that use, averaging across all observations, and rounding to the nearest 5%, except for those situations in which the average PCT is less than 1% or less than 2.5%. In those cases, the Agency would use less than 1% or less than 2.5% as the average PCT value, respectively. The maximum PCT figure is the highest observed maximum value reported within the most recent 10 years of available public and private market survey data for the existing use and rounded up to the nearest multiple of 5%, except where the maximum PCT is less than 2.5%, in which case, the Agency uses less than 2.5% as the maximum PCT.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which fluopyram may be applied in a particular area.

2. Dietary exposure from drinking water. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for fluopyram in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of fluopyram. Further information regarding EPA drinking water models used in pesticide exposure assessments can be found at https://www.epa.gov/pesticide-science-and-assessing-pesticide-risks/pesticide-risk-assessment.

Based on the Surface Water Concentration Calculator (SWCC) and Pesticide Root Zone Model—Ground Water (PRZM-GW) model, the estimated drinking water concentrations (EDWCs) of fluopyram for acute exposures are estimated to be 50.6 parts per billion (ppb) for surface water and 97.6 ppb for ground water. For chronic exposures for non-cancer assessments, the EDWCs of fluopyram are estimated to be 17.3 ppb for surface water and 90.5 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 97.6 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of 90.5 ppb was used to assess the contribution to drinking water.

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

There are no residential exposures associated with the proposed uses of fluopyram on coffee, mint, and papaya in this action; however, residential post-application exposures are anticipated from other registered uses of fluopyram on golf course turf, residential lawns, fruit trees, nut trees, ornamentals, and gardens. From the reevaluation of the toxicity database, the endpoints selected for residential exposures include incidental oral and short- and intermediate-term inhalation endpoints, but a dermal endpoint is no longer selected. A dermal endpoint was not selected as there were no adverse effects observed in the route-specific dermal toxicity study, which included evaluation of fluopyram target organs, up to the limit dose of 1,000 mg/kg/day. Additionally, there was no evidence of increased quantitative susceptibility in the fluopyram database.

EPA assessed residential exposure using the following assumptions. Residential handler exposures and risk are not assessed in this document because the existing registered uses for residential sites are from end-use products that require handlers to wear specific clothing and personal protective equipment (PPE). Thus, EPA has assumed that those products are not for homeowner use and a quantitative residential handler assessment is not warranted at this time. There are residential post-application exposures from existing turf uses that have been previously assessed. The residential exposure for use in the children 1 to less than 2 years old aggregate assessment reflects incidental oral hand-to-mouth post-application exposure to treated lawns. The MOE is 5,400, which is greater than the level of concern of 100 and therefore is not of concern. Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at https://www.epa.gov/pesticide-science-and-assessing-pesticide-risks/operating-procedures-residential-pesticide.

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

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

For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at https://www.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

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

2. Prenatal and postnatal sensitivity. There is no evidence of increased susceptibility following in utero and/or postnatal exposure in the developmental toxicity studies in rats or rabbits, or in the 2-generation rat reproduction study. There is no evidence of neurotoxicity, and there are no residual uncertainties in the exposure database. While thyroid effects are observed throughout the database, EPA determined that the comparative thyroid assay (CTA) be waived based on a weight-of-evidence approach.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced from 10X to 1X. That decision is based on the following findings:

i. The toxicology database for fluopyram is complete and adequate for risk assessment. EPA waived the subchronic inhalation toxicity study requirement and the previously required CTA for fluopyram for the following reasons: (1) the margins of exposure are low using the current endpoints; (2) thyroid effects are well-characterized and protected for using the current endpoints; and (3) acute inhalation toxicity is low and the compound is unlikely to volatilize. The toxicology database includes acceptable developmental toxicity studies in the rat and rabbit and an acceptable reproductive toxicity study in the rat, as well as acute and subchronic neurotoxicity studies.

ii. Potential signs of neurotoxicity were observed in the rat acute neurotoxicity study (decreased motor activity) and in the rat chronic/carcinogenicity study (reduced use of hind-limbs and limited motor activity). However, these effects are not specific to neurotoxicity, occur in the presence of other effects, and can also be attributed to systemic toxicity. There is a low degree of concern for potential neurotoxic effects since (1) clear NOAELs were identified for these effects, (2) no other neurotoxic effects were identified in the database, (3) potentially neurotoxic effects are not the most sensitive effect in the toxicity database, and (4) the endpoints chosen for risk assessment are protective of these potentially neurotoxic effects.

iii. The available developmental toxicity studies in rats and rabbits and the multi-generation reproduction in rats demonstrate no evidence of increased susceptibility in the developing or young animals which were exposed during pre- or post-natal periods. No developmental or offspring effects were noted in these studies.

iv. There are no residual uncertainties in the exposure database. The acute dietary exposure assessment was performed using conservative exposure inputs, including field trial residue levels or tolerance level residues for all crops; and average field-trial residue levels were assumed for all crops in the chronic dietary exposure assessment. The acute dietary assessment assumed 100 PCT, whereas the chronic dietary assessment utilized average PCT numbers for some crops. Both acute and chronic dietary assessments incorporated empirical or default processing factors. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to fluopyram in drinking water. EPA used similarly conservative assumptions to assess post application exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by fluopyram.

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

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to fluopyram will occupy 25% of the aPAD for children 1 to 2 years old, the population group receiving the greatest exposure. The aggregate acute risk estimate includes only exposure to residues of fluopyram in food and drinking water, which is below the Agency's level of concern of 100% of the aPAD and is not of concern.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to fluopyram from food and water will utilize 16% of the cPAD for all infants less than 1 year old, the population group receiving the greatest exposure. Chronic residential exposure to residues of fluopyram is not expected. Therefore, the chronic aggregate exposure is equivalent to the chronic dietary exposure, which is below the Agency's level of concern of 100% of the cPAD and is not of concern.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Fluopyram is currently registered for uses that could result in short-term residential post-application exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to fluopyram. Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 2,100 for children (1 to less than 2 years old). Because EPA's level of concern for fluopyram is an MOE of 100 or below, the short-term aggregate risk is not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

The short-and intermediate-term PODs are the same and the intermediate-term exposures are smaller than the short-term exposures, thus, the short-term aggregate exposure assessment is protective of any intermediate-term exposures.

5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, fluopyram is not expected to pose a cancer risk to humans.

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

Adequate enforcement methodology DFG Method S19 using GC/MSD (gas chromatography with mass-selective detection) is available to enforce the tolerance expression.

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

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

There are no established Codex MRLs for Brassica, leafy greens, subgroup 4-16B; celtuce; coffee, green bean; fennel, Florence, fresh leaves and stalk; kohlrabi; leaf petiole vegetable subgroup 22B; mint; papaya; or edible podded peas. The U.S. tolerance for spice group 26 is harmonized with the Codex MRL of 70 ppm in/on dill seed, which is the representative crop for spice group 26. The U.S. tolerances for the succulent shelled bean subgroup 6-22C and succulent shelled pea subgroup 6-22D are harmonized with the Codex MRL of 0.2 ppm for the commodities in those subgroups.

For the remaining commodities (leafy greens subgroup 4-16A; vegetable, Brassica, head and stem, group 5-16; edible podded bean subgroup 6-22A; and dried shelled bean, except soybean, subgroup 6-22E), the established Codex MRLs are lower than the U.S. tolerances. Harmonization is not possible because decreasing the U.S. tolerances would put U.S. growers at risk of having violative residues despite legal use of fluopyram according to the label.

Because the final Phase VI crop group rule has been published, EPA is establishing tolerances for new subgroups in legume vegetable crop group 6-22 rather than for each individual commodity in those subgroups as requested by the petitioner. The Phase VI crop group rule allows the commodities to be covered as part of the new group or subgroups instead of needing to be listed separately. The Phase VI crop group was published on September 21, 2022, and was effective on November 21, 2022 (87 FR 57627) (FRL-5031-13-OCSPP).

Therefore, tolerances are established for residues of fluopyram, N -[2-[3-chloro-5-(trifluoromethyl)-2-pyridinyl]ethyl]-2-(trifluoromethyl)benzamide, in or on Brassica, leafy greens, subgroup 4-16B at 50 ppm; celtuce at 20 ppm; fennel, Florence, fresh leaves and stalk at 20 ppm; kohlrabi at 4 ppm; leaf petiole vegetable subgroup 22B at 20 ppm; leafy greens subgroup 4-16A at 40 ppm; papaya at 1.5 ppm; peppermint, dried leaves at 0.8 ppm; peppermint, fresh leaves at 0.6 ppm; spearmint, dried leaves at 0.8 ppm; spearmint, fresh leaves at 0.6 ppm; spice group 26 at 70 ppm; vegetable, Brassica, head and stem, group 5-16 at 4 ppm; vegetable, legume, bean, edible podded, subgroup 6-22A at 4 ppm; vegetable, legume, pea, edible podded, subgroup 6-22B at 4 ppm; vegetable, legume, bean, succulent shelled, subgroup 6-22C at 0.2 ppm; vegetable, legume, pea, succulent shelled, subgroup 6-22D at 0.2 ppm; and vegetable, legume, pulse, bean, dried shelled, except soybean, subgroup 6-22E at 0.7 ppm. The tolerance for coffee, green beans at 0.03 ppm is revised to remove the footnote. The following tolerances are removed: bean, dry at 0.70 ppm; Brassica, head and stem, subgroup 5A at 4.0 ppm; Brassica, leafy greens, subgroup 5B at 50 ppm; dill, seed at 70 ppm; leafy greens subgroup 4A at 40 ppm; leafy petioles subgroup 4B at 20 ppm; pea and bean, succulent shelled, subgroup 6B; and vegetable, legume, edible podded, subgroup 6A.

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

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

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

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

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

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

Contract-level Risk Adjustment Data Validation (RADV) audits are our main corrective action for overpayments made to Medicare Advantage organizations (MAOs) when there is a lack of documentation in the medical record to support the diagnoses reported for risk adjustment. The purpose of this final rule is to outline our audit methodology and related policies for the contract-level RADV program. Specifically, this final rule codifies in regulation our approach to the use of extrapolation, our decision to not apply an FFS Adjuster in RADV audits, and the payment years in which these policies will apply.

We are finalizing that, as part of the RADV audit methodology, CMS will extrapolate RADV audit findings. We are not adopting any specific sampling or extrapolated audit methodology, but will rely on any statistically valid method for sampling and extrapolation that is determined to be well-suited to a particular audit. Rather than applying extrapolation beginning for payment year (PY) 2011 audits as we proposed, we are finalizing a policy whereby we will not extrapolate RADV audit findings for PYs 2011 through 2017 and will begin extrapolation with the PY 2018 RADV audit. As a result, CMS will only collect the non-extrapolated overpayments identified in the CMS RADV audits and Department of Health and Human Services Office of Inspector General (HHS-OIG) audits between PY 2011 and PY 2017, and will begin collection of extrapolated overpayment findings for any CMS and OIG audits conducted in PY 2018 and any subsequent payment year. We believe that this is an appropriate policy because it recognizes our fiduciary duty to protect taxpayer dollars from overpayments, and preserves our ability to collect on potentially significant amounts of overpayments made to plans beginning in PY 2018 using an extrapolation methodology. This final rule will also allow CMS to focus on conducting future RADV audits as soon as practicable after an MAO payment year concludes, which was the topic of significant public comment to the proposed rule. Lastly, we have determined that it is in the best interest of all parties to ensure that the contract-level RADV appeals process, which is also outlined in regulation, is able to successfully process all RADV appeals. By not using an extrapolation methodology prior to PY 2018, we expect to better control the total number of active appeals that are submitted in the first few years following finalization of this rule, which will alleviate burden on MAOs and CMS.

We are also finalizing a policy whereby CMS will not apply an FFS Adjuster in RADV audits because we have determined that an FFS Adjuster is not appropriate. As described at great length in this final rule, we have decided not to apply an FFS Adjuster in RADV audits because: (1) we believe, consistent with the D.C. Circuit's decision in UnitedHealthcare ( UnitedHealthcare Insurance Co. v. Becerra, 16 F.4th 867 (D.C. Cir. August 13, 2021, reissued November 1, 2021), cert. denied, 142 S. Ct. 2851 (U.S. June 21, 2022) (No. 21-1140)), that the actuarial equivalence provision of the statute applies only to how CMS risk adjusts the payments it makes to MAOs and not to the obligation of MAOs to return improper payments (for example, payments for unsupported diagnosis codes); and (2) it would not be reasonable to read the Social Security Act (the Act) as requiring a reduction in payments to MAOs by a statutorily-set minimum adjustment in the coding pattern adjustment, while at the same time prohibiting CMS from enforcing longstanding documentation requirements by requiring an offset to the recovery amounts calculated for CMS audits.

We are also codifying in regulation the requirement that MAOs remit improper payments identified during RADV audits in a manner specified by CMS. After the effective date of this final regulation, on a rolling basis (over a period of months, which will be communicated to MAOs by CMS), we will begin issuing the enrollee-level audit findings from the CMS RADV audits that have been completed, as well as recovering the enrollee-level improper payments identified in HHS-OIG audits.

Nothing in this rule changes the longstanding principle that a diagnosis code that is not documented in a patient's medical record is not a valid basis for CMS risk adjustment payments to an MAO. UnitedHealthcare Ins. Co. v. Becerra, 16 F.4th 867, 869 (D.C. Cir. 2021) (“Neither Congress nor CMS has ever treated an unsupported diagnosis for a beneficiary as valid grounds for payment to a Medicare Advantage insurer.”). Nor does this rule change the longstanding obligation of an insurer to refund payments to CMS if it learns through any means that a diagnosis lacks support in the beneficiary's medical record. Id.

The Balanced Budget Act of 1997 (BBA), Public Law (Pub. L.) 105-33, established a new Part C of the Medicare program, known then as the Medicare+Choice (M+C) program, which became effective in January 1999. As part of the M+C program, the BBA authorized CMS to contract with public or private organizations to offer a variety of health plan options for Medicare beneficiaries. These health plans provide all Medicare Part A and Part B (also known as “Original Medicare,” or “Medicare FFS”) benefits, and most offer additional benefits beyond those covered under the Medicare FFS program. The M+C program in Part C of Medicare was renamed the Medicare Advantage (MA) program under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173), enacted in December 2003. The MMA updated and improved the choice of plans for beneficiaries under Part C and changed the way benefits are established and payments are made. As of August 2022, over 29 million individuals receive their Medicare benefits through MA, which represents nearly half of the total Medicare beneficiary population. 1

Section 1853(a)(1)(C) of the Act requires that CMS risk-adjust payments made to MAOs. Risk adjustment strengthens the MA program by ensuring that accurate payments are made to MAOs based on the health status and demographic characteristics of their enrolled beneficiaries, and that MAOs are paid appropriately for their plan enrollees (that is, less for healthier enrollees who are expected to incur lower health care costs, and more for less healthy enrollees who are expected to incur higher health care costs). Making accurate payments to MAOs also ensures we are safeguarding Federal taxpayer dollars.

The current risk adjustment model employed to adjust MAO payments is known as the CMS Hierarchical Condition Category (CMS-HCC) model. This model functions by categorizing International Classification of Disease, Clinical Modification (ICD-CM)  2 diagnosis codes into disease groups called Hierarchical Condition Categories, or HCCs. Each HCC includes diagnosis codes that are related clinically and have similar cost implications. There are approximately 9,875 diagnoses mapped to 86 HCCs in the CMS-HCC Risk Adjustment Model for 2022. 3 MA enrollee HCCs are assigned based on data submitted to CMS by MAOs. The HCCs contribute to an enrollee's risk score, which is used to adjust a base payment rate. Essentially, the higher the risk score for an enrollee, the higher the expected health care cost for the enrollee and the greater payment that is received by the MAO.

The CMS-HCC model was first used for payment in 2004 and has been recalibrated numerous times since then. When CMS recalibrates the CMS-HCC risk adjustment model, it uses data from Medicare FFS claims, using diagnoses in one year to predict the following year's expenditures. Claims data from beneficiaries enrolled in the Medicare FFS program are used to calibrate the CMS-HCC model, which produces a set of coefficients (also known as risk factors) that represent the marginal (additional) cost of each medical condition and demographic factor reported for a given beneficiary. (For additional information, see the Medicare Managed Care Manual, Ch. 7, section 70.1. 4 ) Each beneficiary's risk coefficients are added together to form a risk score for that beneficiary that is used to adjust the insurer's base payment rate for that beneficiary.

The diagnosis data that MAOs submit to CMS do not undergo a validation review by CMS before being relied on by CMS to calculate each enrollee's risk score and make payments. Because there is an incentive for MAOs to potentially over-code diagnoses to increase their payments, that is, to code diagnoses not properly substantiated by medical record documentation, CMS conducts post-payment audits of MAO-submitted diagnosis data from a selection of MAOs for specific payment years to ensure that the diagnoses they submitted are supported by their enrollees' medical records. These audits are called contract-level Risk Adjustment Data Validation (RADV) program audits. While RADV audits are intended to identify improper risk adjustment payments, they are not specifically designed to detect fraud, 5 nor are they intended to identify all improper diagnosis submissions made by MAOs for risk adjustment payment. 6

The improper payment measurements conducted each year by CMS that are included in the HHS Agency Financial Report, as well as audits conducted by the HHS-OIG, have demonstrated that the MA program is at high risk of improper payments. In fiscal year (FY) 2021 (based on calendar year 2019 payments), we calculated that CMS made over $15 billion in Part C overpayments, a figure representing nearly 7 percent of total Part C payments. 7 The HHS-OIG has also released several reports over the past few years that demonstrate a high risk of improper payments in the MA program, 8 and for several years has identified the MA program as one of the top management and performance challenges facing HHS due to the high amount of improper payments. 9 The Medicare program, including MA, has also been identified by the Government Accountability Office (GAO) as a high-risk program due to the risk of substantial improper payments. 10

RADV audits are our main corrective action for overpayments made to MAOs when there is a lack of documentation in the medical record to support the diagnoses reported for risk adjustment. We select MAOs for RADV audits using a risk-based approach that focuses on HCCs that are more likely to be in error as identified by prior RADV audits, Part C Improper Payment Measurements, and OIG findings, and other vulnerability analyses. RADV audits occur after the final risk adjustment data submission deadline for the MA contract year and after CMS recalculates the risk factors for affected individuals to determine if payment adjustments are necessary, as described at 42 CFR 422.310(g). 11 RADV audits are intended to confirm the presence of risk adjustment conditions (that is, diagnoses that map to HCCs) as reported by MAOs in medical record documentation. RADV audits confirm the presence of the diagnoses related to the enrollee's HCC profile through the review of certain categories of medical records submitted by the MAOs for the purpose of a RADV audit; specifically, inpatient hospital, hospital outpatient facility, and physician/practitioner (excluding suppliers of durable medical equipment, prosthetics, orthotics, and supplies) medical records. Risk adjustment discrepancies are identified when an enrollee's HCCs used for payment, which are based on MAO self-reported data, differ from the HCCs assigned based on the medical record review performed by CMS through the RADV audit process. Risk adjustment discrepancies can be aggregated to determine an overall level of payment error. In turn, payment error for a sample of contract enrollees can be used to calculate a total payment error estimate, for the larger universe of enrollees within an MAO contract from which a sample is drawn, within specified confidence intervals using statistical extrapolation.

RADV audits have existed in various forms and approaches for over 20 years. RADV audits began for payment year (PY) 1999, when the amount of payment made to MAOs on a risk-adjusted basis was small (10 percent). During the audit period from PY 1999 until PY 2003, our RADV activity had an educational focus and was primarily intended to provide information that could be used by MAOs to improve the accuracy of the risk adjustment data submitted to CMS for payment. Payment adjustments (recoveries) were limited to enrollee-level adjustments for those enrollees sampled in the audits and were not extrapolated to the overall error of the contract. As a result, for the few MA plans we audited, payment recovery amounts were small.

Risk adjustment payments using the CMS-HCC risk adjustment model began for the first time in PY 2004. Because of various risk adjustment payment methodology changes required in the BBA and the Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), we provided a payment “phase-in” under the new risk adjustment methodologies from 2000 to 2007, when MAOs' payments were 100 percent risk-adjusted under the current methodology. 12 Under the new methodology that began in PY 2004, MAOs were required to submit diagnoses from multiple sites of care, which increased the administrative data burden on MAOs. Because of this burden and the associated phase-in of the new methodology, CMS considered PYs 2004 through 2006 as pilot years for the purpose of the RADV program and did not seek to recover improper payments for those payment years based on the audit results.

Improper payment recovery resumed for PY 2007, when we conducted two sets of RADV audits: (1) Pilot 2007, which involved 5 MA contracts; and (2) Targeted 2007, which involved 32 MA contracts. CMS began with the Pilot 2007 audit to test the methodology and make any needed changes before conducting the Targeted 2007 audit. CMS selected MA contracts after measuring the weighted average change in disease scores (risk scores) over the preceding 3-year period and grouping MAO contracts as high, medium, or low relative to other MA contracts that were eligible for a RADV audit. Through these two sets of audits, we recouped $13.7 million. Payment adjustments were again limited to enrollee-level adjustments for those enrollees sampled in the audits and not extrapolated to the overall contract error. After CMS' findings were reported to each MAO, any MAO that disagreed with CMS' determinations could challenge them through an administrative dispute and appeals process that was established by regulation (75 FR 19678). This dispute and appeals process, as subsequently amended (75 FR 32858 and 79 FR 29844), remains in effect and allows for the appeal of the medical record review determination and/or the payment error calculation through a three-level administrative review process, as outlined in 42 CFR 422.311. To date, CMS has not recovered based on RADV audit findings for audit years after PY 2007, as described more fully in this section of this rule.

After the RADV audits were conducted for PY 2007, CMS paused RADV audits for PYs 2008, 2009, and 2010. CMS used those years to continue refining the methodology for the RADV audits, including the consideration of statistical methods to calculate extrapolated improper payments based on the individual errors identified. The use of extrapolation would enable us to make contract-level payment adjustments rather than simply adjusting payments for specific enrollees from an audit sample, as we had done previously.

On December 20, 2010, we published an informal proposal on the CMS website that outlined our intended RADV methodology for: (1) selecting a statistically valid sample of enrollees from each audited MA contract; and (2) calculating a contract-level payment adjustment by extrapolating the results of that sample. We invited public comment on this proposed methodology.

In response to the December 2010 informal proposal, some MAOs suggested that CMS cannot lawfully enforce the requirement of medical record documentation for diagnosis codes while making payments at the published rates. These MAOs argued that there is a difference in auditing standards between Medicare FFS and MA diagnosis data because, in contrast to the MAO-submitted diagnoses data, Medicare FFS data is “unaudited” by CMS. This difference purportedly exists because most FFS payments are made on the basis of the item or service provided and not the beneficiary's diagnosis or diagnoses. For example, an office visit is paid based on whether the evaluation and management service billed met Medicare coverage and payment rules, not based on what diagnoses are listed on the claim or in the medical record. As a result, they argued, the Medicare FFS data used to calculate MAO payments will understate the cost of treating various conditions and, because erroneous diagnoses in the FFS claims data are used to calibrate the MA payment model, CMS must either adjust payment rates (by raising them) or adjust documentation standards (by loosening them) to resolve the alleged incompatibility between the payment rates and documentation standards. This proposed adjustment to the MAO payment rates and/or documentation standard is referred to as an “FFS Adjuster.”

To understand the MAOs' argument about why an FFS Adjuster is needed, some background is important. These MAOs ground their arguments in section 1853(a)(1)(C)(i) of the Act, which requires the Secretary to adjust payments to MAOs for demographic and health-related risk factors so as to ensure “actuarial equivalence.” As described previously, the Act requires that we calculate risk-adjusted payments to MAOs to ensure that MAOs are paid appropriately based on the enrollees' health status and demographic characteristics. The current risk adjustment model does this by calculating plan enrollees' risk scores and, in turn, using them to adjust the MAOs' base payment rates, which are the rates for the average beneficiary.

This system of risk adjustment rests on two important principles. First, MAOs' payments are calculated using the CMS-HCC risk adjustment model, which is published each time it is updated (see section 1853(b) of the Act). 13 Second, an MAO may only report a diagnosis when that diagnosis is properly supported by the beneficiary's medical records. As we noted in our April 15, 2022 Health Plan Management System (HPMS) memorandum, Reminder of Existing Obligation to Submit Accurate Risk Adjustment Data, MAOs must submit data that conforms to all relevant national standards, including the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) Guidelines for Coding and Reporting requirement that diagnoses be documented in patients' medical records. ( See 42 CFR 422.310(d)(1); 45 CFR 162.1002(c)(2) and (c)(3).) The diagnosis codes and other risk adjustment information that MAOs submit directly affect the calculation of CMS payments to the MAO. A diagnosis code that is not documented in a patient's medical record is not a valid basis for CMS risk adjustment payments to an MAO. UnitedHealthcare Ins. Co. v. Becerra, 16 F.4th 867, 869, 877 (D.C. Cir. 2021). Medical records properly support a reported diagnosis when they comply with all CMS data and documentation requirements, which are described in current agency policy documents, including the Medicare Managed Care Manual. 14 In their annual contracts with CMS, MAOs agree to operate in accordance with applicable Federal statutes, regulations, and policies, including policies described in the Medicare Managed Care Manual. MAOs are also required to submit a sample of medical records for the validation of this risk adjustment data, as required by CMS (see 42 CFR 422.310(e)).

The feedback received from industry in response to the informal proposal in 2010 was considered by CMS, and on February 24, 2012, we issued on our website  15 what we described as a final methodology for RADV contract-level payment error calculation, to begin with PY 2011 RADV audits (referred to herein as the “2012 methodology”). That methodology described sampling techniques and a statistical calculation to extrapolate from the sample selected, as well as the use of an FFS Adjuster. 16 (Although the use of an FFS Adjuster beginning with PY 2011 RADV audits was included in the 2012 methodology, CMS has not issued final RADV audit results for PY 2011 audits or any subsequent year, and therefore, an FFS Adjuster has not been applied to any RADV audits issued by CMS to date.)

Sampling Technique: Under the 2012 methodology, up to 201 enrollees from each audited MA contract would be selected according to certain criteria. These criteria included, but were not limited to, the enrollee's: (1) continuous enrollment in the MA contract for the entire data collection year and January of the payment year; (2) lack of end-stage renal disease (ESRD) or hospice status for the entire data collection year and January of the payment year; (3) enrollment in Medicare Part B coverage for the entire data collection year; and (4) assignment of at least one CMS-HCC based on diagnoses submitted by the MAO for risk-adjustment payment. The RADV-eligible enrollees would then be ranked by risk score and divided into three equal strata (low risk score, average risk score, and high risk score), with an equal number of enrollees randomly selected from each stratum (for example, 67 enrollees per stratum in the case of an audit of 201 enrollees).

Payment Error Calculation: After medical records were reviewed, payment errors would be calculated for each selected enrollee based on the number of months the person was enrolled in the selected MA contract (and also was not in ESRD or hospice status) during the payment year. A payment error amount for each stratum would be calculated, which could include both RADV-identified overpayments and underpayments, and an overall payment error estimate for the audited contract would be derived, along with a 99 percent confidence interval around the payment error estimate.

FFS Adjuster: As part of the 2012 methodology, we also stated that we would apply an FFS Adjuster before finalizing audit recovery. The 2012 methodology stated that the actual value of the FFS Adjuster would be calculated by CMS based on a RADV-like review of records submitted to support FFS claims data.

CMS subsequently conducted an extensive study regarding the impact of such errors in Medicare FFS claims data for the purpose of determining the appropriate value of an FFS Adjuster. This study found that, in fact, errors in Medicare FFS claims data did not have any systematic effect on the risk scores calculated by the CMS-HCC risk adjustment model and, therefore, did not have any systematic effect on the payments made to MAOs. On October 26, 2018, we published an Executive Summary and Technical Appendix of our FFS Adjuster study findings on the CMS website, which are available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-Risk-Adjustment-Data-Validation-Program/Resources.html. Additional information on this study can also be found in the November 2018 proposed rule.

In the 2018 proposed rule, to enhance transparency and provide ample notice to MAOs, we proposed to codify in regulation our methodological approach to RADV audits that would apply to all of the payment year audits that have not yet been finalized. These methodologies would apply to PY 2011 and subsequent years and include our proposals to use extrapolation and not apply an FFS Adjuster to our RADV audit findings.

Since publication of the 2018 proposed rule, we have published several related notices to further enhance transparency and encourage robust public comment:

• On December 27, 2018, we announced in the Federal Register (83 FR 66661) an extension of the comment period for the proposed RADV provisions until April 30, 2019, as well as a plan to release data underlying the October 26, 2018, FFS Adjuster Study. 17

• On March 6, 2019, we issued a notice in the Federal Register (84 FR 8069) announcing the release of additional data underlying the FFS Adjuster Study, both on the CMS website and to those organizations who established data use agreements (DUAs) with the CMS Office of Enterprise Data Analytics (OEDA). 18

• On April 25, 2019, we posted updates to existing documentation related to the study data, as well as additional data on the CMS website. 19

• On April 30, 2019, we issued a notice in the Federal Register (84 FR 18215) granting an additional extension of the comment period for the proposed RADV provisions until August 28, 2019. We also announced that we would be releasing additional data underlying the FFS Adjuster study, including data containing Protected Health Information (PHI), to all parties who entered an applicable DUA with CMS and paid the required fee. 20

• On June 28, 2019, we issued a notice in the Federal Register (84 FR 30983)  21 that we replicated the FFS Adjuster Study and published a summary of that replication as an addendum to the study on the CMS website. 22 The purpose of this replication was to allow us to test our initial results and release a more complete set of underlying data. (Certain intermediate data elements, not saved as part of the implementation of the initial study, were preserved and published in the addendum.) The results of the replication were broadly consistent with the initial implementation of the study. In addition, the addendum contained further discussion of the study's assumptions and methodology. We also released the programming language used to implement the replication of the study, and a description of the technical requirements for use of that programming language.

• In the October 21, 2021 Federal Register (86 FR 58245), we issued a notice that provided a 1-year extension of the timeline for publication of the final rule. 23

As part of this extension, we explained our determination that we were unable to meet the 3-year timeline for publication. 24 Based on extensive public comments received on the 2018 proposed rule and subsequent FFS Adjuster study and related data, along with delays resulting from the agency's focus on the COVID-19 public health emergency, we determined that additional time was needed to address the complex policy and operational issues that were raised. As such, we extended the timeline to publish the final rule from November 1, 2021 to November 1, 2022.

• In the November 1, 2022 Federal Register (87 FR 65723), we issued a notice that provided a 3-month extension of the timeline for publication of the final rule. 25 We explained that we were unable to meet the November 1, 2022, timeline for publication of the previously referenced RADV-audit related provisions. We explained that we continued to have ongoing delays resulting from the agency's focus on the COVID-19 public health emergency, and we determined that additional time continued to be needed to address the complex policy and operational issues that were raised. As such, we extended the timeline to publish the final rule from November 1, 2022, to February 1, 2023.

We received approximately 154 timely pieces of correspondence in response to the 2018 proposed rule and the subsequent notices and data releases. Summaries of the public comments that respond to the RADV provisions, and our responses to those public comments, are set forth in the discussion that follows. Additional public comments outside of the scope of the RADV proposed provisions were not considered and are not addressed in this final rule.

Extrapolation, or the act of estimating a value (such an overpayment amount for a Medicare provider) based on a statistically valid sample of units (such as Medicare claims), has historically been a standard part of auditing practice at CMS. There is significant guidance, including case law and best practices from HHS and other Federal agencies, stating that extrapolation may be utilized as a valid part of calculating improper payments. In particular, courts have held that sampling and extrapolation are a valid method of calculating improper Medicare payments, so long as statistically valid methods are used. See United States v. Lahey Clinic Hosp., Inc., 399 F.3d 1, 18 n.19 (1st Cir. 2005) (noting that “sampling of similar claims and extrapolation from the sample is a recognized method of proof” for the United States in an affirmative case seeking recovery under a common-law theory). See also Ratanasen v. California Dep't of Health Servs., 11 F.3d 1467, 1469-71 (9th Cir. 1993) (collecting cases in which sampling and extrapolation have been approved in the Medicaid context, and “join[ing] other circuits in approving the use of sampling and extrapolation as part of audits in connection with Medicare and other similar programs”); Chaves Cnty. Home Health Serv. v. Sullivan, 931 F.2d 914, 917-23 (D.C. Cir. 1991). The authority to use sampling and extrapolation in Medicare audits is grounded in our statutory and regulatory authority to audit providers and recoup improper payments. See Chaves, 931 F.2d at 919 (interpreting the Medicare statute to allow for a “sample adjudication procedure” followed by extrapolation from that sample, which “is reasonable given the logistical imperatives recognized by courts in other comparable circumstances”).

Sampling and extrapolation have been used to calculate improper payments in Medicare FFS (Part A and Part B) for decades. CMS formally approved of this technique in 1986 (HCFA Ruling 86-1), but Medicare Administrative Contractors (MACs), which are responsible for determining medical necessity and paying Medicare FFS claims, have been using it “at least since 1972.” Chaves, 931 F.2d at 921; see id. at 913 (explaining that “sample adjudication has been used in previous instances involving post-payment review of `coverage determinations' under Part A,” and that HCFA Ruling 86-1 “simply reiterated [the agency's] belief that it had the latitude to employ sample audits on post-payment review to efficiently recoup overpayments for non-covered services”). In 1991, the United States Court of Appeals for the District of Columbia Circuit, in Chaves, upheld the use of this audit methodology against arguments that the Medicare statute required individualized review of claims submitted by providers ( Id. at 922).

The MMA imposed limits on the use of sampling and extrapolation in Medicare payment decisions in the context of Part A and Part B, when a settlement to resolve improper payments is not reached. Since 2003, Medicare Part A and Part B extrapolation under section 1893(f)(3) of the Act has been limited to instances in which the Secretary determines either that “there is a sustained or high level of payment error” or that “documented educational intervention has failed to correct the payment error.” No similar limitation applies to the MA program.

As previously discussed, sampling and extrapolation is a generally accepted audit technique in the Medicare context, and the Act does not apply any limits to the use of extrapolation in the MA program. Therefore, we believe that CMS has the authority to implement this audit methodology in RADV audits for any case in which a RADV audit identifies improper risk-adjusted payments. We also believe that this is a reasonable approach to our RADV audits, given the sustained and high level of risk adjustment payment error, as previously described.

In the 2018 proposed rule, CMS proposed to extrapolate contract-level RADV audit findings using statistically valid random sampling techniques. CMS proposed to extrapolate findings in PY 2011 and all subsequent payment years, but specifically sought comment on how to treat the audits for PYs 2011, 2012, and 2013. In the proposed rule, we explained that we had conducted RADV audits for PYs 2011-2013 according to the sampling and extrapolation methodology described in the 2012 methodology but that these audits were not yet finalized because we had not yet issued the audit findings to the MAOs. 26 For PYs 2011 through 2013, we estimated that audited MA contracts received $650 million in improper payments.

In the 2018 proposed rule, we stated that, given the amount of improper payments identified under the MA program, interest in determining an accurate recovery amount for each audited MA plan, and importance of protecting the overall integrity of the program, we believed that it was in the public interest for CMS to apply the RADV payment error methodology(ies) adopted through this rulemaking to PY 2011 and all subsequent years. We stated that CMS would be acting in compliance with the improper payment obligations under the Act (most recently updated as part of the Payment Integrity Information Act of 2019 (PIIA)), as well as our fiduciary responsibility to recover funds due to the Medicare Trust Funds. We also noted that our February 2012 publication put MAOs on notice that CMS expected to calculate a contract-level payment error for PY 2011 and subsequent payments years by extrapolating from its review of a statistically valid sample of enrollees, and that MAOs have never been entitled to receive or retain payments associated with HCCs that cannot be validated by medical records.

We also proposed that MAOs would be required to remit extrapolated recovery amounts from RADV audit findings through CMS' payment system, the Medicare Advantage and Prescription Drug system (MARx), as offsets to MA plans' monthly capitation payments. In the event that the recovery amount exceeds the payment in one month, we proposed that the recovery would be spread across adjustments for multiple months until the full amount is recovered. We also proposed that CMS might likewise require MAOs to remit such recovery amounts based upon audit findings by the HHS-OIG.

We explained in the 2018 proposed rule that CMS is not required to set forth the methodology for calculating an extrapolated payment error through regulatory provisions. However, we explained that, in the interest of transparency, we were choosing to inform MAOs about our plans to use various sampling and extrapolation methodologies in RADV audits, as CMS deems appropriate, through rulemaking.

In addition to codifying in regulation our existing authority to use extrapolation techniques in the RADV context, we also used the 2018 proposed rule as a means to gather public feedback on sampling methodologies that could be employed for purposes of extrapolation. We explained that, in addition to the contract-level approach described in the 2012 RADV Methodology, we have identified other potential methodologies for sampling and extrapolation that are based on a particular sub-cohort or sub-cohorts in a given payment year. For example, a sub-cohort could be the enrollees for whom a particular HCC or one of a related set of HCCs (such as the three diabetes HCCs) was reported.

After choosing an MA contract and a sub-cohort or sub-cohorts to audit, we would select a statistically significant sample of enrollees in the sub-cohort or sub-cohorts. After reviewing these enrollees' medical records that are submitted by the MAO, we would use statistical extrapolation to calculate and recoup the improper payments made to the audited MA contract for all enrollees in the sub-cohort or sub-cohorts in that payment year.

We noted in the 2018 proposed rule that using a sub-cohort methodology, such as one focused on enrollees with high-risk HCCs, could allow us to use a much smaller sample size to calculate a statistically valid extrapolated improper payment amount. This is possible because, when selecting a sample from a smaller population (that is, a sub-cohort of enrollees), one can still achieve an acceptable level of statistical confidence with that smaller sample size. This sub-cohort-based audit methodology would also allow us to spread our audit resources across a wider range of MA contracts and focus on cohorts of enrollees that raise programmatic concerns, while also reducing operational burden on both CMS and the MAOs due to the reduced sample size needed to calculate improper payments.

In the 2018 proposed rule, we invited comment on both the contract-level audit methodology published in February 2012 and our proposal for an extrapolated audit methodology based on sub-cohorts of enrollees. We also sought comment on whether there are particular situations in which one methodology may be preferable to the other. We emphasized that neither proposed methodology was meant to displace our longstanding authority to audit the medical records of particular enrollees who we believe may be associated with improper payments or to use any statistically valid audit methodology. We also stated that, if we finalize one or more sampling and extrapolation methodologies through this rulemaking, we would announce any future changes to that methodology (or those methodologies) through the Health Plan Management System (HPMS).

In addition, we stated that we may begin to conduct RADV audits for PYs 2014 and 2015 before finalizing the policies in the proposed rule, pursuant to our longstanding authority to review the medical records of any MA enrollee and recoup improper payments identified. We also sought comment on whether the use of sampling and extrapolation for certain payment years would require the exercise of our statutory authority to engage in retroactive rulemaking, as set out in section 1871(e)(1)(A) of the Act, which authorizes retroactive application of rules where “failure to apply the change would be contrary to the public interest.”

We also discussed proposed changes to our RADV dispute and appeals regulations in 42 CFR 422.311 to conform with the finalized RADV provisions. Specifically, consistent with our other proposed policies, we proposed to amend § 422.311 by adding language to clarify that recovery of improper payments from MAOs will be conducted according to the Secretary's payment error extrapolation and recovery methodologies, and that CMS will apply extrapolation to RADV audits beginning with PY 2011. We also requested comment on whether to explicitly expand the MAOs' RADV appeal rights, such as by permitting appeal of the RADV payment error calculation methodology used in a RADV audit, similar to practices in Medicare FFS. A summary of the comments received and our responses follow.

Comment: Several commenters supported CMS' proposal to use extrapolation in RADV audits, as well as our proposal to begin extrapolation for PY 2011 audits. Commenters indicated that this is the most effective way to address improper payments in MA.

Response: We thank commenters for their support. While we plan to finalize our proposal to apply extrapolation to RADV audits, we are making a change to the years in which to apply extrapolation to achieve what we believe is an appropriate final policy that still takes into consideration our obligation to address potentially significant improper payments in the MA program. Extrapolation will now begin with the PY 2018 RADV audits rather than PY 2011, as proposed. This change, as further described in this section of this rule, is being made due to our fiduciary duty to protect taxpayer dollars from overpayments, certain operational considerations, and public comments on the timeliness of RADV audits.

Comment: Several commenters opposed the use of extrapolation in RADV audits. Some commenters questioned whether we had the statutory authority to use sampling and extrapolation in RADV audits. These commenters suggested that, because section 1893(f)(3) of the Act grants CMS the authority to use sampling and extrapolation in certain circumstances when conducting audits in Medicare Part A and Part B, CMS cannot use those techniques in Part C audits without an equivalent grant of statutory authority.

Several commenters challenged the statistical and methodological validity of both the contract-level sampling and extrapolation techniques described in the 2012 methodology, as well as an approach based on sub-cohorts of enrollees. A commenter stated that it is more difficult for plans to determine results from extrapolation in MA than in Medicare FFS because RADV audits can include the review of multiple medical records to validate one diagnosis from various providers with “disparate methods of documentation.”

Some comments focused on the application of extrapolation beginning in PY 2011. Several commenters asserted that increased liabilities of MAOs from retroactive application of an extrapolated payment error recovery would deter future participation by MAOs in the MA program and reduce benefits to beneficiaries. Several commenters expressed concern that extrapolation for past payment years will destabilize physician care. Specifically, the concern is that providers participating in risk-sharing contracts with MAOs that have not yet completed a final settlement may be at risk for losses. The same commenters believe that recovering improper payments when the audit methodology has been revised several times is inequitable to the MAOs.

Response: We appreciate these comments and considered them when finalizing the timing and content of these extrapolation policies. As discussed previously, CMS has the authority to use sampling and extrapolation in its RADV audits. Federal courts have held that sampling and extrapolation are a valid method of calculating improper Medicare payments, so long as statistically valid methods are used. The MMA added section 1893(f)(3) of the Act, which specifically applies to Medicare Part A and Part B and limits the use of extrapolation to determine overpayment amounts for recoupment under certain circumstances. This provision did not confer new authority to use extrapolation, but limited our preexisting audit authority in Medicare Part A and Part B. No similar limitation has been applied to audits in Medicare Part C. However, CMS will continue to focus its RADV efforts on MAOs identified as being at higher risk of improper payments.

In the implementation of this authority to use sampling and extrapolation in RADV, CMS will employ statistical methods to determine statistically valid sample sizes, accurately identify payment error, and extrapolate to the universe of enrollees from which the sample is selected. These statistically valid methods may include applying one or more RADV audit methodologies for any given RADV audit. In addition, while CMS views extrapolation as a statistically valid methodology for RADV audits, the agency may, at times, use its discretion to not utilize extrapolation in a particular instance. For example, there may be unforeseen circumstances in which the statistical validity of the sample is disturbed (such as the need to exclude a large number of cases from the sample due to the loss of medical records in a natural disaster) and extrapolation is no longer possible, despite the initial intent to do so. There may be other limited instances in which CMS seeks to collect overpayments associated only with enrollees in a given sample, or wishes to perform only a probe sample of RADV reviews without the use of a statistically valid sample and yet will seek to recover any identified, non-extrapolated overpayments. The OIG may also independently decide not to extrapolate for reasons outside the control of CMS, and CMS will still recover those overpayments in accordance with the provisions in this final rule. To account for this, we are finalizing § 422.311(a)(2) to read “CMS may [emphasis added] apply extrapolation to audits for payment year 2018 and subsequent payment years,” rather than “CMS will apply extrapolation . . .” as proposed. This language is not intended to signal that it would be a frequent occurrence to not extrapolate in PY 2018 and future audits; rather, extrapolation is expected to be the standard practice for RADV audits beginning in PY 2018.

As previously stated, we believe that it is in the best interest of the Federal Government and our efforts to protect taxpayer dollars to extrapolate in our RADV audits, given the substantial amount of improper payments in MA and the fact that RADV is CMS' main corrective action used to address the submission of inaccurate diagnosis data. However, we also have decided not to extrapolate for PY 2011 through 2017 audits, as originally proposed, due to certain operational considerations and public comments on the timeliness of RADV audits. The reasoning for this decision is discussed in greater detail later in this final rule.

In addition, we do not agree with the comment that RADV audits include the review of multiple medical records with “disparate methods of documentation.” We reemphasize that the policies we are finalizing in this rule do not impose new documentation requirements on providers. The core component of a RADV audit is ensuring that all diagnoses reported to CMS are properly supported by medical record documentation. CMS' existing regulatory documentation standards, 42 CFR 422.310(d)(1); 45 CFR 162.1002(c)(2) and (c)(3), including the RADV-specific authority to validate risk adjustment data through the review of a sample of medical records at § 422.310(e), remain unchanged under this final rule and are described in current agency policy documents, including the Medicare Managed Care Manual (with which MAOs agree, in their MA contracts, to comply). MAOs are also already required to ensure that contracted providers meet MA documentation requirements.

We respectfully disagree with commenters' assertions that liabilities will increase. We are not imposing additional liabilities, penalties or retroactive application of new requirements or policy. We only seek to recover improper payments received by MAOs for HCCs that are not substantiated by enrollees' medical records. We continue to rely on existing program methods to establish auditing practices that encourage proper payment recovery consistent with established audit practices. We recognize that MAOs enter into agreements with providers, including those with a risk-sharing component, and we encourage all parties to those agreements to take steps to mitigate the submission of diagnosis codes that are not properly supported in the medical record.

We emphasize that nothing in this rule changes the longstanding principle that a diagnosis code that is not documented in a patient's medical record is not a valid basis for CMS risk adjustment payments to an MAO. Nor does this rule change the longstanding obligation of an insurer to refund payments to CMS if it learns that a diagnosis lacks support in the beneficiary's medical record.

Comment: Many comments were received on the proposed extrapolation methodologies, mainly focused on our proposed sub-cohort approach. Some commenters requested clarity on the sub-cohort methodology, while others expressed support for this methodology with various suggestions to improve it. Commenters questioned whether the proposed sub-cohort methodology will replace the existing contract-level methodology, which utilizes a general, non-targeted sampling methodology, and how CMS will determine which HCC groups will be used in the identification of sub-cohorts. A commenter requested that CMS confirm whether RADV will consist of a single audit methodology or whether MAOs will be subject to multiple audit methodologies.

Some commenters believe that applying a sub-cohort extrapolation methodology of enrollees would produce inaccurate results in RADV audits because of differences between plans with regard to size and risk characteristics. For example, several commenters argued that plans with a higher than average risk score are at increased risk for RADV audit because high-risk enrollees are more likely to have more HCCs. Other commenters believe that a small sample size, which CMS sees as a benefit of a sub-cohort methodology, will result in inaccuracies. Others commented that an extrapolation methodology based on sub-cohorts of enrollees would violate the statutory mandate of “actuarial equivalence” between payments made under MA and Medicare FFS because it would generate recoveries based on random outcomes without regard to specific characteristics of MA plans' diagnostic mix, enrollment size, and risk scores. A commenter requested that, if CMS adopts a sub-cohort extrapolation methodology, it uses a pilot period first before implementing the program on a large scale and extrapolating results.

Other comments spoke to extrapolation methods more generally, including the appropriate confidence interval, potential for plans of certain sizes to be unduly chosen for RADV audits, and perceived inability to assess potential liability for RADV audits already performed if CMS abandons the extrapolation methodology set forth in the 2012 methodology.

Other comments on our proposed extrapolation methodologies were focused on the impact of underpayments. A commenter objected to the RADV audit sampling methodology, arguing that it results in a purported payment recovery bias against MAOs. The commenter believes the results of the RADV audit sample are “asymmetric,” thus incorrectly representing the improper payment rate. More specifically, the commenter asserted that “[t]hough there is no upper limit for how high the payment recovery amount can be, there is no balancing negative recovery amount.” In other words, the commenter objected that MAOs cannot receive a payment from CMS based on a RADV audit if, overall, the risk scores should have been higher because, for instance, there were more supported diagnoses that had not been submitted (that is more under-coding) than unsupported diagnoses that had been submitted (that is over-coding). Other commenters shared these concerns, as well as voiced concern that RADV audit samples do not account for the reported bias that exists for enrollees who have no diagnosis codes submitted during the year but have existing documentation to support a diagnosis that could have been submitted. The same commenters perceive the audit methodology as being random and indiscriminate, believing that the results will incorrectly estimate the risk profile of enrollees.

A commenter requested information related to the sampling methodology used to select enrollees for the PY 2014 RADV audit. Specifically, the commenter requested details on the development of the regression model used to predict payment error and on the sampling criteria from which the RADV audit currently extrapolates. This commenter also contended that the PY 2014 methodology appears to maximize the probability of selecting individuals with coding errors.

Response: As previously explained, extrapolation is an established auditing practice and remains a valid method for addressing audit recoveries. In this final rule, we are clarifying the scope of our authority to strengthen the integrity of the MA program by identifying improper payments. Our initiatives are designed to ensure fair and accurate recovery efforts by focusing on the areas at highest risk of improper payments. We will use statistically valid methodologies to extrapolate improper payment findings to the universe of enrollees from which a sample is selected. These statistically valid methodologies may include applying one or more RADV audit methodologies for any given RADV audit. As previously discussed, we may also determine that extrapolation will not be applied in certain limited instances. We emphasize that, in this final rule, we are not adopting either the contract-level sampling and extrapolation technique described in the 2012 methodology or a specific extrapolated audit methodology based on sub-cohorts of enrollees. Instead, for future RADV audits, CMS will rely on any statistically valid method for sampling and extrapolation that it determines to be well-suited to a particular audit. We described the sub-cohort methodology in the 2018 proposed rule to provide the industry with transparency on potential audit methodologies. In addition, while not required, CMS will continue to disclose our extrapolation methodology to MAOs through HPMS memos or other appropriate means, providing MAOs with the information sufficient to understand the means by which CMS extrapolated the improper payment determination.

Any sampling and extrapolation methodologies adopted by CMS for RADV audits will be focused on MAO contracts and enrollees' HCCs that, through statistical modeling and/or data analytics, are identified as being at highest risk for improper payments. This is an appropriate approach to any Federal MA audit that seeks to recoup taxpayer dollars that have been inappropriately paid to MAOs for diagnoses that are not supported in the medical record. This approach was also recommended by the GAO in a 2016 report titled “Fundamental Improvements Needed in CMS's Effort to Recover Substantial Amounts of Improper Payments.”  27 The GAO recommended that CMS “modify [its] selection of contracts for contract-level RADV audits to focus on those contracts most likely to have high rates of improper payments by taking actions such as the following: selecting more contracts with the highest coding intensity scores; excluding contracts with low coding intensity scores; selecting contracts with high rates of unsupported diagnoses in prior contract-level RADV audits; if a contract with a high rate of unsupported diagnoses is no longer in operation, selecting a contract under the same MAO that includes the service area of the prior contract; and selecting some contracts with high enrollment that also have either high rates of unsupported diagnoses in prior contract-level RADV audits or high coding intensity scores.”  28

We also note that the purpose of RADV audits is to validate that diagnoses submitted by MAOs for risk-adjusted payment are properly supported by medical record documentation. See 42 CRF 422.310(e). RADV audits are the main corrective action used to address the submission of inaccurate diagnosis data. Occasionally, upon review of these medical records, CMS will uncover “additional” diagnoses supported by the medical records that were not submitted for payment by MAOs during the data collection period for enrollees selected in the sample. Under current contract-level RADV policy, when CMS uncovers these additional diagnoses that map to CMS-HCCs during medical record review of audited CMS-HCC(s), these newly-discovered diagnosis codes are used to recalculate risk scores in certain circumstances, which may result in an updated (reduced) improper payment calculation.

MAOs are required by CMS regulations (§§ 422.503 and 422.504) and MAO contracts to establish compliance programs and processes to ensure accurate diagnosis coding and the submission of accurate diagnosis data. These processes should enable MAOs to identify not only instances where diagnoses submitted for risk-adjustment payment are not supported by the medical record, but also diagnoses that may not have been submitted to CMS. MAOs can submit additional diagnoses for risk-adjusted payment up until the final risk adjustment data submission deadlines described at § 422.310(g)(2)(ii). As with overpayment recoveries under the Affordable Care Act and CMS's Overpayment Rule, the purpose of RADV audits is not to reopen submission deadlines and for CMS to make additional payments. 29 RADV audits identify overpayments after the final risk adjustment data submission deadline.

Comment: Some comments were focused on the scope and number of plans selected for RADV audit. A commenter objected to an increase in the number of plans selected for the RADV audits. Another commenter requested an explanation of how sample sizes will be determined for Program of All-Inclusive Care for the Elderly (PACE) organizations, most of which have fewer than 500 enrollees.

Response: As previously described, any extrapolation methodology adopted by CMS for RADV audits will be focused on MAO contracts that, through statistical modeling and/or data analytics, are identified as being at highest risk for improper payments. Examples of MAO contracts that may be deemed higher risk for the purposes of RADV audit selection are discussed later in this section. This is also the best approach to ensure that MAOs that do not show indications of being at high risk of improper payments are not exposed to audit burden to the exclusion of higher-risk plans. In addition, as noted previously, such an approach was recommended by the GAO in its April 2016 report. 30 CMS does not currently subject PACE organizations to RADV audits and CMS' selection methodology for each year will describe any adjustments made for PACE or other low enrollment contracts.

Comment: Several commenters noted that implementing these proposed policies would lead to more audit burden for providers because of an increase in documentation standards for treating providers. For example, commenters believe that this is a “more stringent audit expectation” that will increase administrative burden at a time in which there is already a physician shortage, thereby impacting patients. Another commenter contended that our extrapolation methodology should reflect that certain HCCs are more difficult to substantiate in medical record documentation than others.

Response: RADV audits will not impose new documentation requirements on health care providers and, therefore, we believe there will be no additional audit impact on providers that contract with MAOs to provide services to MA plan enrollees. As previously stated, nothing in this rule changes the longstanding principle that a diagnosis code that is not documented in a patient's medical record is not a valid basis for CMS risk adjustment payments to an MAO. In addition, there is a longstanding requirement under § 422.310(e), in place since the beginning of the MA program, that “[MAOs] and their providers and practitioners will be required to submit a sample of medical records for the validation of risk adjustment data, as required by CMS,” which is unaffected by this final rule. This requirement is consistent with longstanding requirements applicable to Medicare Part A and Part B providers that they furnish sufficient information to support payment. 42 U.S.C. 1395(g) (Effective July 7, 2004) (“[No]. . . . payments shall be made to any provider unless it has furnished such information as the Secretary may request in order to determine the amounts due such provider . . .”); Clinic Res. Mgmt. v. Burwell, 2015 WL 3932657, at *2 (S.D. Tex. June 26, 2015) (“The provider is responsible for maintaining and submitting adequate information to substantiate medical necessity and entitlement to payment.”). 31

Background

The Atlantic mackerel fishery is managed under the Mackerel, Squid, and Butterfish Fishery Management Plan (FMP) through an annual quota, possession limits, and a catch cap for bycatch of river herring and shad. In-season accountability measures (AM), including closures of the fishery through possession limit reductions, help ensure catch does not exceed the Atlantic mackerel annual catch limit (ACL) or the river herring and shad catch cap. Reactive AMs require a pound-for-pound payback the following year if landings exceed the Atlantic mackerel ACL.

Current regulations require the Council's Mackerel, Squid, and Butterfish Monitoring Committee to develop specifications recommendations based upon the acceptable biological catch (ABC) advice of the Council's Scientific and Statistical Committee (SSC). Specifications are the combined suite of commercial and recreational catch levels and management measures necessary to prevent such catch levels from being exceeded. As part of this process, total allowable levels of foreign fishing, joint venture processing, and commercial and recreational annual catch targets (ACT) for up to 3 years. These specifications are reviewed annually, and may be revised by the Council based on updated information.

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), as requested by the Council, NMFS implemented a 5-year Atlantic mackerel rebuilding plan. However, using data through 2019, a July 2021 Atlantic mackerel management track assessment concluded that the Atlantic mackerel stock remained overfished and subject to overfishing and that because previous assumptions about potential recruitment that did not come to fruition, the 2019 rebuilding plan no longer provided 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 rebuilt), but full rebuilding on the original schedule, by 2023, now appears impossible. The stock is expected to be less than half rebuilt by 2023. The final assessment summary report is available on the Northeast Fishery Science Center website ( https://www.fisheries.noaa.gov/new-england-mid-atlantic/population-assessments/fishery-stock-assessments-new-england-and-mid-atlantic ).

In response to the 2021 Atlantic mackerel management track assessment, the SSC recommended that measures be implemented to eliminate or minimize additional catch to reduce the potential biological impacts of catch levels while the Council developed a revised Atlantic mackerel rebuilding plan. On January 12, 2022 (87 FR 1700), NMFS published an interim rule that reduced the 2022 domestic annual harvest (DAH) of Atlantic mackerel from 17,312 mt to 4,963 mt in order to limit U.S. commercial catch to approximately the levels realized during 2021. These interim measures were extended on July 6, 2022 (87 FR 40139), to remain effective for the entire 2022 Atlantic mackerel fishing year and expired on January 13, 2023.

In response to the 2021 Atlantic mackerel management track assessment, the Council developed Amendment 23 to revise the Atlantic mackerel rebuilding plan to prevent overfishing and rebuild the stock, as required by section 303 of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). At its June 2022 meeting, the Council recommended to establish a 10-year Atlantic mackerel rebuilding plan and the 2023 Atlantic mackerel specification through Amendment 23. On August 19, 2022, the Council submitted the amendment and draft EA to NMFS for preliminary review. The Council reviewed the regulations in this rule, as drafted by NMFS, and deemed them to be necessary and appropriate, as specified in Section 303(c) of the Magnuson-Stevens Act. This action also includes 2023 Atlantic mackerel specifications based on the Amendment 23 Atlantic mackerel rebuilding plan, including a modified fishery closure approach, a status quo river herring and shad catch cap, and a new recreational possession limit, as described further below.

A notice of availability (NOA) for the amendment published in the Federal Register on October 25, 2022 (87 FR 64430), with a comment period ending on December 27, 2022. We published a proposed rule in the Federal Register on November 2, 2022 (87 FR 66120), with a comment period ending on January 3, 2023.

When a Council approves and then transmits a fishery management plan or amendment to NMFS, NMFS publishes a notice of availability in the Federal Register announcing a 60-day comment period. Within 30 days of the end of the comment period, NMFS must approve, disapprove, or partially approve the plan or amendment based on consistency with law. After considering public comment on the NOA and proposed rule, we approved Amendment 23. This final rule implements the management measures in Amendment 23. The details of the development of the measures in Amendment 23 were described in the NOA and proposed rule, and are not repeated here.

This final rule also announces previously-approved goals and objectives to the Mackerel, Squid, and Butterfish FMP that were developed in Amendment 22 to the FMP. The focus of Amendment 22 was to revise the number and type of Illex squid permits and to update the goals and objectives of the FMP. An NOA for Amendment 22 was published in the Federal Register on June 7, 2022 (87 FR 34629). No proposed rule was published for Amendment 22 pending a final decision on the Amendment. On September 6, 2022, NMFS informed the Council that, in accordance with section 304(a)(3) of the Magnuson-Stevens Act, while the management actions of Amendment 22 were disapproved, we would revise the FMP goals and objectives in a future rulemaking. These updates to the FMP do not require associated federal regulations.

This action implements an Atlantic mackerel rebuilding plan that is predicted to have a 61-percent probability of rebuilding the Atlantic mackerel stock in 10 years. This rebuilding plan assumes a fishing mortality rate of 0.12, and that recruitment starts low (similar to recruitment from 2009 to present) and then increases toward long-term typical recruitment as the stock rebuilds. Table 1 shows the projected ABCs for the duration of the rebuilding plan. The 2023 ABC specified in Table 1 is implemented through this action, but the other ABCs provided are projections that will be revisited during future specification setting. A new stock assessment in 2023 will inform the quotas set beyond 2023.

While less or zero catch would rebuild the Atlantic mackerel stock faster, the Council recommended a rebuilding plan that is as short a time as possible given the stock's status, biology, needs of fishing communities, and the interaction of the stock within the marine ecosystem. This rebuilding alternative and associated 2023 ABC will set a quota 41-percent lower than the 2019-2021 average landings of 6,187 mt with an associated $3.62 million average ex-vessel revenue. However, given the relatively few vessels participating in the Atlantic mackerel fishery in recent years, the relatively low landings, and the small reduction in quota from recent landings, the impacts would be slightly negative in the short term. However, from a long-term perspective, a rebuilt Atlantic mackerel stock could return about $7.1 million annually to the Atlantic mackerel fishery.

Based on the above Atlantic mackerel rebuilding plan, the 2023 ABC is 8,094 mt. The 2023 Atlantic mackerel specifications include ABC deductions for expected Canadian catch (2,197 mt), recreational catch (2,143 mt), and estimated commercial discards (115 mt) to set a commercial quota of 3,639 mt as shown in Table 2. This commercial quota is a 27-percent decrease from the interim 2022 commercial quota.

The Canadian catch deduction is based on recent Canadian landings. The 2021 Canadian landings were 4,395 mt. Canada closed its directed Atlantic mackerel fishery for 2022 and therefore may have minimal landings in 2022. The Council decided to deduct 2,197 mt from the 2023 ABC, which represents half of the 2021 Canadian landings. The 2,143-mt recreational deduction is the 2019-2021 average recreational catch minus 17 percent to account for an expected reduction in recreational catch due to the new recreational possession limit. The 115-mt commercial discard deduction is based on the average discard rate from 2017-2019. There have been no ABC overages in the mackerel fishery, so it was determined that a management uncertainty buffer is not necessary at this time, and the modified in-season closure measures below are expected to effectively manage catch and prevent overages.

To address the lower quota available to the U.S. commercial Atlantic mackerel fishery, this action implements a modified closure approach. This modified closure approach includes an initial closure with different thresholds based on the time of year, and a final closure when the fishery is close to harvesting the full commercial quota (see Table 3). This action retains the existing measures in the regulations that provide NMFS with the discretion to not close the fishery in November and December if performance suggests that a quota overage is unlikely.

Because of the low Atlantic mackerel ABCs needed, at least at the beginning of the rebuilding period, a recreational possession limit was deemed necessary to ensure recreational catch is reduced to commensurate with the reduction in the commercial quota. This action implements a 20-fish per person Atlantic mackerel possession limit. This limit applies to all Atlantic mackerel charter/party permit holders (including crew members) and private anglers. The 20-fish recreational possession limit is estimated to reduce recreational catch by 17 percent compared to average 2019-2021 recreational catch which is expected to assist in achieving a rebuilt stock.

The Council has been working closely with the states of Maine, New Hampshire, and Massachusetts, as the majority of recreational Atlantic mackerel catch occurs in these state waters (there has been minimal recreational mackerel catch south of Massachusetts in recent years). The Council has coordinated with the aforementioned states in the development of these recreational measures, and it appears likely that these states will mirror the Federal recreational possession limit. This coordination is needed in order to achieve the necessary reduction in catch.

In 2014, Amendment 14 to the FMP (February 24, 2014; 79 FR 10029) implemented a catch cap to manage the bycatch of river herring and shad in the Atlantic mackerel fishery. Once this cap is reached in a given fishing year, Atlantic mackerel commercial possession limits are reduced to 20,000 lb (9.08 mt) for the rest of the year. The catch caps are monitored based on river herring and shad bycatch recorded in observer and portside sampling data for mackerel trips by limited access vessels, or trips in which at least 20,000 lb (9.08 mt) of Atlantic mackerel are landed.

This action implements a river herring and shad catch cap in the Atlantic mackerel fishery of 129 mt.

This action announces the previously-approved updated and revised goals and objectives of the Mackerel, Squid, and Butterfish FMP as follows:

Goal 1: Maintain sustainable mackerel, squid, and butterfish stocks.

• Objective 1.1: Prevent overfishing and maintain sustainable biomass levels that achieve optimum yield in the mackerel, squid, and butterfish fisheries.

• Objective 1.2: Consider and, to the extent practicable, account for the roles of mackerel, squid, and butterfish species/fisheries in the ecosystem.

Goal 2: Acknowledging the difficulty in quantifying all costs and benefits, achieve the greatest overall net benefit to the Nation, balancing the needs and priorities of different user groups and effects of management on fishing communities.

• Objective 2.1: Provide the greatest degree of freedom and flexibility to harvesters and processors (including shoreshide infrastructure) of mackerel, squid, and butterfish resources consistent with attainment of the other objectives of this FMP, including minimizing additional restrictions.

• Objective 2.2: Allow opportunities for commercial and recreational mackerel, squid, and butterfish fishing, considering the opportunistic nature of the fisheries, changes in availability that may result from changes in climate and other factors, and the need for operational flexibility.

• Objective 2.3: Consider and strive to balance the social and economic needs of various sectors of the mackerel, squid, and butterfish fisheries (commercial including shoreside infrastructure and recreational) as well as other fisheries or concerns that may be ecologically linked to mackerel, squid, and butterfish fisheries.

• Objective 2.4: Investigate opportunities to access international/shared resources of mackerel, squid, and butterfish species.

Goal 3: Support science, monitoring, and data collection to enhance effective management of mackerel, squid, and butterfish fisheries.

• Objective 3.1: Improve data collection to better understand the status of mackerel, squid, and butterfish stocks, the role of mackerel, squid, and butterfish species in the ecosystem, and the biological, ecological, and socioeconomic impacts of management measures, including impacts to other fisheries.

• Objective 3.2: Promote opportunities for industry collaboration on research.

• Objective 3.3: Encourage research that may lead to practicable opportunities to further reduce bycatch in the mackerel, squid, and butterfish fisheries.

We received 11 comments on the NOA and proposed rule from individual constituents and non-governmental organizations including from The Pew Charitable Trusts, Oceans North, Wild Oceans, Conservation Law Foundation, Bennet Nickerson Environmental Consulting, and Natural Resource Defense Council. One comment was not relevant to the proposed rule and is not discussed further. One comment was not relevant to the rule itself, but had questions about how industry is involved in the rule making process. Five comments supported the Atlantic mackerel rebuilding plan, four opposed the rebuilding plan. Those opposed to the rebuilding plan advocated for disapproval of Amendment 23 and to have the Council select a different rebuilding alternative, and one comment opposed to the action advocated for only subsistence fishing for Atlantic mackerel.

We received zero comments on the updated FMP goals and objectives in response to the Amendment 22 NOA. Some of the comments received in response to the Amendment 22 NOA referenced the updated goals and objectives, but there were no comments on the goals and objectives themselves.

Comment 1: Five commenters support the proposed Atlantic mackerel rebuilding plan. One stated that it was in alignment with the Magnuson-Stevens Act, one noted the importance of protecting historical food sources, and one noted that this action is a good first step, but would like to see more done to protect the long-term population of Atlantic mackerel and to protect other marine species. Additionally, one comment supported the rebuilding plan, but would like to see more animal welfare taken into account.

Response: We have approved the proposed Atlantic mackerel rebuilding plan and the 2023 specifications. We will continue to monitor the Atlantic mackerel stock status through regular stock assessments and base future catch limits on the most recent stock information available.

Comment 2: One comment requested clarification on how commercial and recreational fishermen's input is collected and used during the development of this action.

Response: The public, including industry members, are invited to participate several times through the development of any amendment. For this action, public comments were solicited at Council meetings in August and December 2021 and June 2022; two informational webinars were hosted by Council staff on January 11 and 12, 2021, to provide background and gather public input; the Council also hosted five public hearings throughout April and May of 2022; and, finally, the public was asked to provide comment on the NOA and proposed rule. Comments were accepted both orally and/or written at these various opportunities. Public comments were presented to the Mackerel, Squid, and Butterfish Monitoring Committee and the Council prior to meetings and taken into account by those members when making recommendations and decisions on this action. The comments on the NOA and proposed rule were provided directly to NMFS to ensure the public had the opportunity to comment and notify the government of any proposed action that would not satisfy applicable statues.

Comment 3: Three comments opposed the proposed Atlantic mackerel rebuilding plan and advocated that NMFS disapprove this action and either close the fishery, develop a new rebuilding plan, or have the Council select a different alternative. Two of these comments claimed that the best available science was not taken into consideration when selecting the preferred alternatives for this action. One of these comments goes on to further claim that the Council violated the Magnuson-Stevens Act by selecting a rebuilding alternative that was not the recommendation of the SSC. This comment also opined that the EA drafted for this action did not conduct a thorough evaluation of the cumulative impacts of climate change and the Atlantic Ocean ecosystem in the face of a depleted forage base and advocated that the 129-mt river herring and shad catch cap be disapproved and that a 3-inch (7.62-cm) minimum codend mesh size be required for the Atlantic mackerel fishery.

Response: Amendment 23 was developed using the best available science, including new information provided in the 2021 Atlantic mackerel management track assessment results and the 2021 Canadian Atlantic mackerel assessment. The SSC endorsed that all the rebuilding plan alternatives in this action are expected to rebuild Atlantic mackerel within 10 years based on the best scientific information available, which is consistent with the Magnuson-Stevens Act and the National Standards. The SSC also identified that the 2023 ABCs for each potential rebuilding plan were consistent with the best scientific information available.

The EA for this action did evaluate the cumulative impacts of climate change and the Atlantic Ocean ecosystem as describe in section 7.6. Additionally, the Council developed this action under the guidance of their Ecosystem Approach to Fisheries Management and in reference to the most recent State of the Ecosystem Reports.

The river herring and shad catch cap of 129 mt is the No Action alternative and we do not have the authority to select a different alternative through the amendment process. This alternative was selected by the Council because lower caps may be impracticable to monitor. Additionally, the revised commercial fishery closure approach will have added benefits to river herring and shad by lowering the possession limits for mackerel will below the 20,000-lb (9.08-mt) possession limit required when reaching the river herring and shad catch cap. The 3-inch (7.62-cm) minimum mesh requirement measure that was considered, but ultimately rejected during the development of this action due to the lack of gear selectivity studies for Atlantic mackerel that would allow quantitative analysis of this measure. Additional investigation of the effects of a minimum mesh may be evaluated in the future.

Finally, if this action were to be disapproved, it would have the opposite desired effect of both this action and these comments received. A disapproval of this action would result in the implementation of the No Action alternative that reverts the Atlantic mackerel quota to 2021 levels including a DAH of 17,312 mt due to the rollover provisions found in § 648.22(d)(1) and the expiration of the 2022 interim rule on January 13, 2023. Disapproval of Amendment 23 would be detrimental to the Atlantic mackerel stock because it would allow for potential overfishing to continue throughout the 2023 fishing year. Moreover, the alternative that the commenters prefer has a lower likelihood of accomplishing rebuilding than the one implemented in this final rule.

Comment 4: One comment opposed the proposed action advocating for a closure of the Atlantic mackerel commercial fishery and to only allow subsistence fishing for Atlantic mackerel.

Response: This comment did not supply any rationale or evidence in support of closing the Atlantic mackerel commercial fishery and for subsistence fishing for Atlantic mackerel.

There are no changes to the regulatory text from the proposed rule, but this final rule announces the approval of the updated FMP goals and objectives which were not included in the proposed rule. The updated goals and objectives were the subject of public notice and comment in the NOA for Amendment 22. This change to the FMP is solely administrative, and does not necessitate associated Federal regulations, and therefore did not require additional public comment.

Pursuant to section 304(b)(3) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this final rule is consistent with the Mackerel, Squid, and Butterfish FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

The Assistant Administrator for Fisheries finds that the need to implement these measures in a timely manner constitutes good cause, under the authority contained in 5 U.S.C. 553(d)(3), to waive the 30-day delay in effective date of this action. This action implements the Atlantic mackerel rebuilding plan and the 2023 Atlantic mackerel specifications. This rule is being issued at the earliest possible date following a 2021 Atlantic mackerel management track assessment that identified the need for a revised rebuilding plan. The Council took immediate action to develop this revised rebuilding plan which was developed throughout 2022. Additionally, we implemented an interim rule to reduce the catch limits of Atlantic mackerel for the 2022 fishing year and that interim rule expired January 13, 2023, after which the original 2022 harvest quotas became effective. Failure to implement the new lower quotas of this rule creates a risk of additional overfishing in a stock that is the subject of rebuilding because until this rule is implemented, the Atlantic mackerel quota reverts back to 17,312 mt which is almost five times the quota calculated for this year in order to rebuild the stock. Additionally, approximately 500 mt of Atlantic mackerel has already been harvested for the 2023 fishing year, and a delay in implementation could lead to the 2023 quota being exceeded.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared.

This final rule contains no information collection requirements under the Paperwork Reduction Act of 1995.

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows: