This action, pursuant to 5 U.S.C. 553, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This rule is issued under Marketing Order No. 920, as amended (7 CFR part 920), regulating the handling of kiwifruit grown in California. Part 920 (referred to as “the Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of growers operating within the area of production, and a public member.

The Agricultural Marketing Service (AMS) is issuing this rule in conformance with Executive Orders 12866 and 13563. 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 that 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, reducing costs, harmonizing rules, and promoting flexibility. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review.

This rule has been reviewed under Executive Order 13175—Consultation and Coordination with Indian Tribal Governments, which requires agencies to consider whether their rulemaking actions would have tribal implications. AMS has determined that this rule is unlikely to have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, California kiwifruit handlers are subject to assessments. Funds to administer the Order are derived from such assessments. The assessment rate established herein will be applicable to all assessable kiwifruit beginning August 1, 2022, and continue until amended, suspended, or terminated.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with the Department of Agriculture (USDA) a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed no later than 20 days after the date of the entry of the ruling.

The Order authorizes the Committee, with the approval of AMS, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are familiar with the Committee's needs and with the costs for goods and services in their local area and are able to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting, and all directly affected persons have an opportunity to participate and provide input.

This rule increases the assessment rate established for the 2022-23 and subsequent fiscal periods from $0.025 to $0.035 per 9-kilo volume-fill container or equivalent of kiwifruit handled. The higher rate is the result of the significantly smaller expected 2022 kiwifruit crop. The higher rate will allow the Committee to fund 2022-23 fiscal period budgeted expenditures without depleting its financial reserve.

For the 2018-19 and subsequent fiscal periods, the Committee recommended, and AMS approved, an assessment rate that continued in effect from fiscal period to fiscal period unless modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other information available to AMS.

The Committee met on July 26, 2022, and unanimously recommended 2022-23 fiscal period expenditures of $132,200 and an assessment rate of $0.035 per 9-kilo volume-fill container or equivalent of kiwifruit handled to fund Committee expenses. In comparison, last year's budgeted expenditures were $101,200. The assessment rate of $0.035 is $0.010 more than the rate currently in effect. The Committee recommended increasing the assessment rate due to a much lower than expected volume of kiwifruit produced as a result of strong north winds and late spring frosts during the growing season. The abnormal weather impacted the crop in varying degrees throughout the state, from an estimated 100-percent crop loss of some blocks in the north to lesser effect in the south. In addition, the Committee's budget increased $31,000 over the previous year to cover increased management costs and the expense of the Committee hosting the International Kiwifruit Organization (IKO) event this year in Sacramento.

The Committee's crop estimate for the 2022-23 fiscal period of 3,181,818 9-kilo volume-fill containers or equivalent, multiplied by the previous assessment rate of $0.025 per container, would not generate sufficient assessment income to fund anticipated expenses. The assessment rate of $0.035 per 9-kilo volume-fill container or equivalent is expected to generate assessment income of approximately $111,364. Assessment income, combined with $20,836 in financial reserve funds and interest income, should provide sufficient funds for the Committee to meet its budgeted expenses while maintaining its financial reserve within the limit authorized under the Order (§ 920.42).

Major expenditures recommended by the Committee for the 2022-23 fiscal period include: $90,000 for management expenses; $25,000 for the IKO membership and hosting, planning, and staffing of the IKO conference to be held in Sacramento; and $9,700 for administrative expenses. Major budgeted expenses for the 2021-22 fiscal period were $80,000 for management expenses, $8,700 for administrative expenses, and $7,500 for financial audits.

The assessment rate recommended by the Committee was derived by reviewing anticipated expenses, expected shipments of California kiwifruit, and the level of funds in reserve. Kiwifruit shipments for the year are estimated at 3,181,818 9-kilo volume-fill containers, which should provide $111,364 in assessment income at the $0.035 rate. Anticipated income derived from handler assessments, along with $20 in interest income and $20,816 from the Committee's authorized financial reserve, should provide sufficient funding to cover budgeted expenses. The Committee anticipates that $53,749 will remain in the financial reserve at the end of 2022-23 fiscal period on July 31, 2023, which would be within the maximum amount permitted by the Order of approximately one fiscal period's expenses (§ 920.42).

The assessment rate will continue in effect indefinitely unless modified, suspended, or terminated by AMS upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate will be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. Dates and times of Committee meetings are available from the Committee and AMS. Committee meetings are open to the public and interested persons may express their views at these meetings. AMS evaluates Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2022-23 budget, and those for subsequent fiscal periods, are reviewed and, as appropriate, approved by AMS.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are 124 kiwifruit growers in the production area and 20 handlers subject to regulation under the Order. Small kiwifruit growers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $3.5 million, and small agricultural service firms are defined as those whose annual receipts that are less than $34 million (13 CFR 121.201). The SBA threshold for small growers and handlers was changed in between the publication of the proposed rule and this final rule. Thus, AMS has changed the RFA to reflect the new amount in this final rule. However, the change did not impact the number of growers and handlers considered to be small.

According to the National Agricultural Statistics Service (NASS), total California kiwifruit production reported for the 2022 season was 39,940 tons, with an average price of $2,440 per ton, or $1.22 per pound ($2,440 per ton divided by 2,000 pounds per ton). Based on the kiwifruit production and price information from NASS, as well as the total number of California kiwifruit growers, average annual grower revenue is approximately $785,916 (39,940 tons multiplied by $2,440 per ton divided by 124 growers), which is less than the $3,500,000 SBA threshold. Thus, the majority of California kiwifruit growers may be classified as small businesses.

In addition, according to AMS Market News data, the reported average terminal market price for California kiwifruit for 2021 was $24.23 per 9-kilo container. After converting the NASS 2021 California kiwifruit production estimate of 39,940 tons to 9-kilo containers (39,940 tons times 2,000 pounds divided by 19.8 pounds per 9-kilo container yields 4,034,343 containers) and multiplying that quantity by $24.23, the total value of the 2021 California kiwifruit shipments is estimated to be $97,752,141. Dividing this figure by the 20 regulated handlers yields estimated average annual handler receipts of $4,887,607, well below the $34 million SBA threshold for small agricultural service firms. Therefore, using the above data, the majority of handlers of California kiwifruit may be classified as small businesses.

This rule increases the assessment rate collected from handlers for the 2022-23 and subsequent fiscal periods from $0.025 to $0.035 per 9-kilo volume-fill container or equivalent of kiwifruit. The Committee unanimously recommended 2022-23 expenditures of $132,200 and an assessment rate of $0.035 per 9-kilo volume-fill container. The assessment rate of $0.035 is $0.010 higher than the 2021-22 fiscal period rate. The quantity of assessable kiwifruit for the 2022-23 fiscal period is estimated at 3,181,818 9-kilo volume-fill containers. Thus, the $0.035 rate should provide $111,364 in assessment income (3,181,818 containers multiplied by $0.035). Income derived from handler assessments, along with the Committee's financial reserve funds and interest income, would be adequate to cover budgeted expenses, while maintaining its financial reserve within the maximum amount permitted by the Order of approximately one fiscal period's expenses (§ 920.42).

Major expenditures recommended by the Committee for the 2022-23 fiscal period include: $90,000 for management expenses; $25,000 for the International Kiwifruit Organization (IKO) membership and hosting, planning, and staffing of the IKO conference to be held in Sacramento; and $9,700 for administrative expenses. Budgeted expenses for the 2021-22 fiscal period were $80,000 for management expenses, $8,700 for administrative expenses, and $7,500 for financial audits.

Prior to arriving at the recommended assessment rate, the Committee considered alternative levels of assessment, including maintaining the current assessment rate, but ultimately determined that such alternative rates would not generate sufficient revenue to meet budgeted expenses. The recommended assessment rate of $0.035 per 9-kilo container or equivalent of assessable kiwifruit was derived by considering anticipated expenses, the projected volume of assessable kiwifruit, the Committee's financial reserve, and additional pertinent factors.

According to data from NASS, the 2021 season average grower price was $2,440 per ton, or $24.16 per 9-kilo container ($2,440 divided by 2,000 pounds times 19.8 pounds (9 kilograms equals approximately 19.8 pounds)). With an assessment rate of $0.035 per 9-kilo container, assessments as a percentage of revenue will be approximately 0.145 percent ($0.035 divided by $24.16).

This action increases the assessment obligation imposed on handlers. While assessments impose additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to growers. However, these costs are expected to be offset by the benefits derived by the operation of the Order.

The Committee's meeting was widely publicized throughout the California kiwifruit industry, and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the July 26, 2022, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Additionally, interested persons were invited to submit comments on the proposed rule, including the regulatory and informational impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C Chapter 35), the Order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189 Fruit Crops. No changes in those requirements will be necessary as a result of this rule. Should any changes become necessary, they will be submitted to OMB for approval.

This rule imposes no additional reporting or recordkeeping requirements on either small or large California kiwifruit handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A proposed rule concerning this action was published in the Federal Register on January 3, 2023 (88 FR 16). Copies of the proposed rule were also mailed or sent via email to all California kiwifruit handlers. A copy of the proposed rule was made available through the internet by USDA and the Office of the Federal Register. A 30-day comment period ending February 2, 2023, was provided for interested persons to respond to the proposal. No comments were received. Accordingly, no changes have been made to the rule as proposed.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant material presented, including the information and recommendations submitted by the Committee and other available information, AMS has determined that this rule tends to effectuate the declared policy of the Act.

For the reasons set forth in the preamble, the Agricultural Marketing Service amends 7 CFR part 920 as follows:

DOE incorporates by reference the following industry standards into part 430:

ANSI/IES LM-9-20, Approved Method: Electrical and Photometric Measurement of Fluorescent Lamps, approved February 7, 2020 (“IES LM-9-20”).

ANSI/IES LM-54-20, Approved Method: IES Guide to Lamp Seasoning, approved February 7, 2020 (“IES LM-54-20”).

ANSI/IES LM-75-19, Approved Method: Guide to Goniometer Measurements and Types, and Photometric Coordinate Systems, approved November 22, 2019 (“IES LM 75-19”).

ANSI/IES LM-78-20, Approved Method: Total Luminous Flux Measurement of Lamps Using an Integrating Sphere Photometer, approved February 7, 2020 (“IES LM-78-20”).

ANSI/IES LM-79-19, Approved Method: Optical and Electrical Measurements of Solid-State Lighting Products, approved February 28, 2019 (“IES LM-79-19”).

Copies of IES LM-9-20, IES LM-54-20, IES LM-75-19, IES LM-78-20, and IES LM-79-19 can be obtained by going to store.ies.org or webstore.ansi.org.

For a further discussion of these standards, see section IV.N of this document.

DOE's energy conservation standards and test procedures for CFLKs are currently prescribed at 10 CFR part 430 section 32(s); 10 CFR, part 430 section 23(x); 10 CFR part 430, subpart B, appendix V (“appendix V”); and 10 CFR part 430, subpart B, appendix V1 (“appendix V1”), respectively. The following sections discuss DOE's authority to establish test procedures for CFLKs and relevant background information regarding DOE's consideration of test procedures for this equipment.

The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”), 1 authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291-6317) Title III, Part B of EPCA  2 established the Energy Conservation Program for Consumer Products Other Than Automobiles, which sets forth a variety of provisions designed to improve energy efficiency. These products include CFLKs, the subject of this document. (42 U.S.C. 6291(50), 6293(b)(16)(A)(ii), 6295(ff)(2)-(5))

The energy conservation program under EPCA consists essentially of four parts: (1) testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

The testing requirements consist of test procedures that manufacturers of covered products must use as the basis for (1) certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA (42 U.S.C. 6295(s)) and (2) making other representations about the efficiency of those products (42 U.S.C. 6293(c)). Similarly, DOE must use these test procedures to determine whether the products comply with any relevant standards promulgated under EPCA. (42 U.S.C. 6295(s))

Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of EPCA. (42 U.S.C. 6297(d))

Under 42 U.S.C. 6293, EPCA sets forth the criteria and procedures DOE must follow when prescribing or amending test procedures for covered products. EPCA requires that any test procedures prescribed or amended under this section shall be reasonably designed to produce test results which measure energy efficiency, energy use, or estimated annual operating cost of a covered product during a representative average use cycle (as determined by the Secretary) or period of use and shall not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3))

EPCA, as codified, directs DOE to establish test procedures for CFLKs based on the test procedures referenced in the ENERGY STAR® specifications for Residential Light Fixtures and Compact Fluorescent Light Bulbs, as in effect on August 8, 2005. EPCA also specifies that once established, DOE may review and revise the test procedures. (42 U.S.C. 6293(b)(16))

EPCA also requires that, at least once every seven years, DOE evaluate test procedures for each type of covered product, including CFLKs, to determine whether amended test procedures would more accurately or fully comply with the requirements for the test procedures to not be unduly burdensome to conduct and be reasonably designed to produce test results that reflect energy efficiency, energy use, and estimated operating costs during a representative average use cycle. (42 U.S.C. 6293(b)(1)(A))

If the Secretary determines, on her own behalf or in response to a petition by any interested person, that a test procedure should be prescribed or amended, the Secretary shall promptly publish in the Federal Register proposed test procedures and afford interested persons an opportunity to present oral and written data, views, and arguments with respect to such procedures. The comment period on a proposed rule to amend a test procedure shall be at least 60 days and may not exceed 270 days. In prescribing or amending a test procedure, the Secretary shall take into account such information as the Secretary determines relevant to such procedure, including technological developments relating to energy use or energy efficiency of the type (or class) of covered products involved. (42 U.S.C. 6293(b)(2)) If DOE determines that test procedure revisions are not appropriate, DOE must publish its determination not to amend the test procedures.

In addition, EPCA requires that DOE amend its test procedures for all covered products to integrate measures of standby mode and off mode energy consumption into the overall energy efficiency, energy consumption, or other energy descriptor, unless the current test procedure already incorporates the standby mode and off mode energy consumption, or if such integration is technically infeasible. (42 U.S.C. 6295(gg)(2)(A)) If an integrated test procedure is technically infeasible, DOE must prescribe separate standby mode and off mode energy use test procedures for the covered product, if a separate test is technically feasible. ( Id. ) Any such amendment must consider the most current versions of the International Electrotechnical Commission (“IEC”) Standard 62301  3 and IEC Standard 62087  4 as applicable. ( Id. )

DOE is publishing this final rule in satisfaction of the seven-year review requirement specified in EPCA. (42 U.S.C. 6293(b)(1)(A))

DOE's existing test procedures for CFLKs appear at title 10 of the CFR part 430, subpart B, section 23(x); title 10 of the CFR part 430, subpart B, appendix V (“Uniform Test Method for Measuring the Energy Consumption of Ceiling Fan Light Kits With Pin-Based Sockets for Fluorescent Lamps”) and title 10 of the CFR part 430, subpart B, appendix V1 (“Uniform Test Method for Measuring the Energy Consumption of Ceiling Fan Light Kits Packaged With Other Fluorescent Lamps (not Compact Fluorescent Lamps or General Service Fluorescent Lamps), Packaged With Other SSL Lamps (not Integrated LED [light-emitting diode] Lamps), or With Integrated SSL Circuitry”). Use of appendix V is required for CFLKs with pin-based sockets that are manufactured on or after January 1, 2007, and prior to January 21, 2020. All CFLKs manufactured as of January 21, 2020, must be tested according to current appendix V1. See 80 FR 80209, 80220 (December 24, 2015) and 81 FR 580 (January 6, 2016).

On December 24, 2015, DOE published a final rule (“December 2015 Final Rule”) making two key updates to its CFLK test procedure. 80 FR 80209. First, DOE updated the CFLK test procedure to require that representations of efficacy, including certifications of compliance with CFLK standards, be made according to the corresponding DOE lamp test procedures, where they exist ( e.g., for a CFLK with medium screw base sockets that is packaged with compact fluorescent lamps (“CFLs”), the CFLK test procedure references the DOE test procedure for CFLs at 10 CFR 430.23(y)). 80 FR 80209, 80211. Second, DOE updated the CFLK test procedure by establishing in a separate appendix ( i.e., appendix V1) the test procedure for CFLKs packaged with inseparable light sources that require luminaire efficacy testing ( e.g., CFLKs with integrated SSL circuitry) and for CFLKs packaged with lamps for which DOE test procedures did not exist. 80 FR 80209, 80212. With these changes, the December 2015 Final Rule aligned CFLK requirements for measuring efficacy of lamps and/or light sources in CFLKs with current DOE lamp test procedures.

The December 2015 Final Rule also replaced references to superseded ENERGY STAR requirements with the latest versions of industry standards in appendix V, the test procedure for measuring system efficacy of the lamp-and-ballast platform. Additionally, for ease of reference, the final rule replaced references to ENERGY STAR requirements in existing CFLK standards contained in 10 CFR 430.32(s)(3)-(4) with the specific requirements. 80 FR 80209, 80211. Further, in that final rule, DOE determined that it accounts for standby mode energy consumption of CFLKs under the efficiency metric for ceiling fans rather than under the CFLK efficiency metric and, therefore, did not specify a standby mode test procedure for CFLKs. 80 FR 80209, 80212. Representations regarding CFLKs subject to the January 21, 2020, standards must be based on the amended test procedure, including appendix V1. See 80 FR 80209, 80220 and 81 FR 580.

As specified in section I.A of this document, EPCA requires DOE to review test procedures for covered products at least once every seven years. 42 U.S.C. 6293(b)(1)(A) DOE initiated the first step in the seven-year review process by publishing a request for information (“RFI”) document on May 4, 2021. 86 FR 23635. On March 10, 2022, DOE published a NOPR (“March 2022 NOPR”) proposing to update referenced industry standards to their latest versions and incorporate industry standards necessary for executing the test; to modify appendix V1 to allow for the use of a goniophotometer; to revise definitions regarding CFLKs with SSL light sources in appendix V1 to clarify the scope and test methods for CFLKs; and to remove appendix V, which is now obsolete, and rename appendix V1 as appendix V. 87 FR 13648, 13651. DOE held a public meeting via webinar related to the March 2022 NOPR on April 11, 2022 (hereafter, the “NOPR public meeting”).

DOE received one comment in response to the March 2022 NOPR, as indicated in Table I.1.

A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record. 5 To the extent that interested parties have provided written comments that are substantively consistent with any oral comments provided during the NOPR public meeting, DOE cites the written comments throughout this final rule. Any oral comments provided during the NOPR public meeting that are not substantively addressed by written comments are summarized and cited separately throughout this final rule.

In this final rule, DOE is amending 10 CFR 430.23(x), appendix V, and appendix V1 as follows: (1) update references to industry standards to their latest versions and incorporate industry standards necessary for executing the test; (2) modify appendix V1 to allow for the use of a goniophotometer; (3) revise definitions in appendix V1 regarding CFLKs with SSL light sources to clarify the scope and test methods for CFLKs; and (4) remove appendix V, which is now obsolete, and rename appendix V1 as appendix V.

DOE's amended actions are summarized and compared to the current test procedure in Table II.1, along with the reason for the amended change.

DOE has determined that the amendments described in section III and adopted in this document will not alter the measured efficiency of CFLKs or require retesting or recertification solely as a result of DOE's adoption of the amendments to the test procedures. Additionally, DOE has determined that the amendments will not increase the cost of testing. DOE's actions are addressed in detail in section III of this document.

The effective date for the amended test procedures adopted in this final rule is 30 days after publication of this document in the Federal Register . Representations of energy use or energy efficiency must be based on testing in accordance with the amended test procedures beginning 180 days after the publication of this final rule.

This rulemaking addresses the DOE test procedure for CFLKs. DOE defines CFLKs as equipment designed to provide light from a ceiling fan that can be: (1) integral, such that the equipment is attached to the ceiling fan prior to the time of retail sale, or (2) attachable, such that at the time of retail sale, the equipment is not physically attached to the ceiling fan but may be included inside the ceiling fan at the time of sale or sold separately for subsequent attachment to the fan. 10 CFR 430.2.

ALA recommended that in the second part of the CFLK definition DOE add “package” following the phrase “but may be included inside the ceiling fan” to read “but may be included inside the ceiling fan package ” [emphasis added]. ALA stated this replacement would eliminate any ambiguity about whether a CFLK needs to be physically inside a ceiling fan. (ALA, No. 9 at p. 1).

DOE notes that EPCA defines CFLK ( see 42 U.S.C. 6291(50)). Specifically, the phrasing “not physically attached to the ceiling fan” in the definition of CFLK indicates that the CFLK does not need to be physically inside of the ceiling fan ( i.e., already attached to the ceiling fan) at the time of retail sale. This is understood within the context of the phrasing that “at the time of retail sale, the equipment is not physically attached to the ceiling fan but may be included inside the ceiling fan at the time of sale.” ALA's comment correctly reflects that the term “ceiling fan” in the second part of the CFLK definition refers to the entirety of the ceiling fan product as provided to the consumer at the time of sale, i.e., the “ceiling fan package.” Given DOE's understanding of the definition of CFLK in that the CFLK does not need to be physically attached to the ceiling fan ( i.e., already attached to the ceiling fan) at the time of retail sale, and in deference to the statutorily established definition, DOE has determined that the definition does not require the additional clarity recommended by ALA.

Appendix V1 specifies instructions for measuring the lamp efficacy or luminaire efficacy, as applicable. Appendix V1 incorporates by reference the 2009 version of Illuminating Engineering Society (“IES”) Lighting Measurement and Testing (“LM”)-9 (“IES LM-9-09”)  6 for testing “other fluorescent lamps” ( i.e., not compact fluorescent lamps or general service fluorescent lamps (“GSFLs”)) and the 2008 version of IES LM-79 (“IES LM-79-08”)  7 for testing “other SSL products” ( i.e., not integrated LED lamps) and CFLKs with integrated SSL circuitry. 10 CFR part 430, subpart B, appendix V1. Appendix V1 references these industry standards for test conditions and measurements. In the March 2022 NOPR, DOE identified updated versions of these referenced industry test standards. 87 FR 13648, 13652.

IES LM-9-09, which provides methods for taking electrical and photometric measurements of fluorescent lamps, has been updated with a 2020 version  8 (“ANSI/IES LM-9-20). In the March 2022 NOPR, DOE identified no major changes in ANSI/IES LM-9-20 compared to IES LM-9-09, except for updates to certain relevant references. These updates were: (1) section 6.2 of IES LM-9-20 updates its reference of IES LM-54, the industry standard for lamp seasoning, from the 1999 version  9 (“IESNA LM-54-99”) to the 2020 version  10 (“ANSI/IES LM-54-20”); and (2) section 7.0 of IES LM-9-20 updates its references of IES LM-78, the industry standard for measurements in an integrating sphere, from the 2007 version  11 (“IESNA LM-78-07”) to the 2020 version  12 (“IES LM-78-20”). In the March 2022 NOPR, DOE tentatively concluded that these updates in IES LM-9-20 would not change final measured values and proposed to update references from the 2009 version of IES LM-9 to the 2020 version in appendix V1 of this document. 87 FR 13648, 13652-13653.

In the March 2022 NOPR, DOE also noted that IES LM-79-08, which provides methods for taking electrical and photometric measurements of SSL products, has been updated with a 2019 version  13 (“IES LM-79-19”). DOE's initial review indicated several changes in IES LM-79-19 compared to IES LM-79-08 relating to testing conditions, instrumentation, test circuits, electrical measurements, stabilization, use of spectroradiometer system, and an update to the reference of IES LM-78 from its 2007 to 2017 version. 14 In the March 2022 NOPR, DOE tentatively concluded that updates in IES LM-79-19 would not change final measured values and proposed to update references from the 2008 version of IES LM-79 to the 2019 version in appendix V1 of this document. 87 FR 13648, 13653-13654.

Additionally, in the March 2022 NOPR, DOE noted that sections 2 through 9.2 of IES LM-79-08 were reorganized in IES LM-79-19 into sections 4 through 6 and 7.2. Hence, in the March 2022 NOPR, DOE proposed to update in appendix V1 the references of IES LM-79-08 sections 2 through 9.2 to IES LM-79-19 sections 4 through 6 and 7.2. In addition, in the March 2022 NOPR, DOE proposed to allow the use of the goniophotometer method ( see section III.C.2 of this document); accordingly, DOE also proposed to reference all of section 7.0 of IES LM-79-19 to include subsections addressing the goniophotometer method. 87 FR 13648, 13654.

Further, in the March 2022 NOPR, DOE proposed to incorporate by reference IES LM-54-20, 15 IES LM-78-20, 16 IES LM-78-17, and IESNA LM-75-01/R12  17 for appendix V1. 87 FR 13648, 13652. As noted, IES LM-9-20 references IES LM-54-20, the industry standard for lamp seasoning. Because lamp seasoning is a necessary part of testing fluorescent lamps in CFLKs, DOE proposed in the March 2022 NOPR to incorporate by reference IES LM-54-20 for appendix V1 and to reference it when referencing IES LM-9-20 in appendix V1 of this document. 87 FR 13648, 13653. Similarly, IES LM-9-20 references ANSI/IES LM-78-20. Because an integrating sphere is a method used to make necessary photometric measurements of fluorescent lamps in CFLKs, DOE proposed in the March 2022 NOPR to incorporate by reference IES LM-78-20 for appendix V1 and to reference it when referencing IES LM-9-20 directly in appendix V1 of this document. 87 FR 13648, 13653.

IES LM 79-19 references IES LM-78-17. Hence, in the March 2022 NOPR, DOE proposed to incorporate by reference IES LM-78-17 for appendix V1 and to reference it when referencing IES LM-79-19 in appendix V1 of this document. Although IES LM-78-17 has been updated to IES LM-78-20, DOE proposed to incorporate by reference IES LM-78-17 for appendix V1, as it is the version directly referenced in IES LM-79-19. In the March 2022 NOPR, DOE tentatively determined that changes in IES LM-78-20 compared to IES LM-78-17 are minor and do not impact final measured values. 87 FR 13648, 13654. Finally, because IES LM-79-19 references IESNA LM-75-01/R12 for general recommendations and requirements on making measurements with goniophotometers, DOE proposed in the March 2022 NOPR to incorporate by reference IESNA LM-75-01/R12 for appendix V1 and to reference it when referencing ANSI/IES LM-79-19 in appendix V1. 87 FR 13648, 13654.

As specified in the previous paragraph, in the March 2022 NOPR, DOE proposed incorporating by reference IES LM-78-17 and IESNA LM-75-01/R12 because they are specifically referenced in IES LM-79-19. 87 FR 13648, 13654. However, in this final rule analysis, DOE determined that only the latest versions of these standards,/IES LM-78-20 and IES LM-75-19  18 are publicly available and IES LM-78-17 and IESNA LM-75-01/R12 cannot be obtained by the public. Therefore, in this final rule, DOE is not incorporating by reference IES LM-78-17 and IESNA LM-75-01/R12. Instead, DOE is incorporating by reference the latest versions of these standards, IES LM-78-20 and IES LM-75-19 and specifying in the DOE test procedure that where IES LM-79-19 references IES LM-78-17 and IESNA LM-75-01/R12 to use respectively, IES LM-78-20 and IES LM-75-19. DOE finds that referencing the latest versions of these standards when using IES LM-79-19 will not impact final measured values or the test procedure as compared to that proposed in the March 2022 NOPR and details its reasoning in the following paragraphs.

Regarding referencing IES LM-78-20 instead of IES LM-78-17, DOE determined, in the March 2022 NOPR, that changes in ANSI/IES LM-78-20 compared to IES LM-78-17 are minor and do not impact final measured values. 87 FR 13648, 13654. DOE received no comments and no new information regarding referencing ANSI/IES LM-78-20 instead of IES LM-78-17. Therefore, in this final rule, DOE finds this conclusion to remain valid.

Regarding referencing IES LM-75-19 instead of IESNA LM-75-01/R12, DOE compared the two versions and identified several additions in the latest version. Specifically, IES LM-75-19 differs from IESNA LM-75-01/R12 by including sections on (1) the type D goniophotometer method, (2) calibration, (3) integrated measurements, and (4) stray light correction. Firstly, compared to IESNA LM-75-01/R12, ANSI/IES LM-75-19 adds a section that describes type D goniophotometer design and operation setup for using the goniophotometer. The type A, B, and C design and operation setups described in IESNA LM-75-01/R12 are maintained in IES LM-75-19 and can be continued to be used for measurements. Secondly, the section on calibration in ANSI/IES LM-75-19 adds instructions on calibrating goniophotometric test data using absolute or relative photometry. Thirdly, the integrated measurements section in ANSI/IES LM-75-19 shows a method of calculating lumens— i.e., by integrating lumens over smaller solid angles, not shown in IESNA LM-75-01/R12. Fourthly, the section in ANSI/IES LM-75-19 on stray light correction adds techniques to correct light that may potentially scatter around walls, floors, and/or the ceiling and back into the goniophotometer. These are all basic methodologies that are known and used by the lighting industry when taking lighting measurements. Further, IES LM-75-19 compared to IESNA LM-75-01/R12, in its foreword, states that it is an update to reflect current use of goniophotometers in industry. Hence, DOE has determined that these additions are codifying industry best practices already being used and therefore, would not change final measured values. Compared to IESNA LM-75-01/R12, ANSI/IES LM-75-19 also adds a section on definitions and adds further information on determining the frame of reference for the measurement setup. DOE has determined that these additions only further clarify the test setup and methodology and therefore, would not change final measured values. Hence, DOE has concluded that referencing IES LM-75-19 instead of IESNA LM-75-01/R12 will not impact final measured values of efficacy using a goniophotometer.

Therefore, in this final rule, DOE is incorporating by reference and specifying the use of IES LM-78-20 and IES LM-75-19 when using IES LM-75-19. This change does not impact final measured values and ensures that all industry standards referenced in the DOE test procedure are accessible to the public.

In the March 2022 NOPR, DOE tentatively concluded that the updates to industry test standard references do not involve substantive changes to the test setup and methodology and therefore would not pose additional test burden and would have no impact on test costs. Further, DOE tentatively determined that incorporation by reference of the latest versions would not change measured values, would better align DOE test procedures with industry practice, and would further increase the clarity of the test methods. 87 FR 13648, 13652.

ALA stated that it supported the adoption of the proposed updated industry standards so long as additional testing is not required or updated industry standards do not exclude existing products. (ALA, No. 9 at p. 2).

DOE has determined that, because these updates to industry standard references do not involve substantive changes to the test setup and methodology, but rather are clarifications that align DOE's test procedures with latest industry best practices, they will not affect measured values and will not exclude existing products or require additional testing. In this final rule, based on the discussion in the preceding paragraphs and in the March 2022 NOPR, DOE incorporates by reference the industry standards IES LM-9-20, IES LM-54-20, IES LM-78-20, IES LM-79-19, and IES LM-75-19.

In this final rule, as proposed in the March 2022 NOPR, DOE adopts changes to appendix V1 to clarify definitions regarding CFLKs with SSL technology, as discussed in section III.C.1 of this document. This final rule also arranges all definitions in appendix V1 in alphabetical order and allows for the use of the goniophotometer method to make photometric measurements as discussed in section III.C.2 of this document.

In appendix V1, CFLKs that use SSL circuitry are differentiated as either “CFLKs with integrated SSL circuitry” or “other SSL products” and have different methods to measure efficacy. Section 3 of appendix V1 specifies two ways the lumens per watt ( i.e., “efficacy”) of a CFLK with SSL technology can be tested: the light source tested separately ( i.e., “lamp efficacy”) or the light source tested within the CFLK ( i.e., “luminaire efficacy”).

Because the SSL in a CFLK with circuitry integrated in the light kit will require the cutting of wires or similar methods to remove and test the light source, it cannot be restored to the same condition it was prior to testing. Hence, section 3 of appendix V1 identifies these products as “CFLKs with integrated SSL circuitry” and directs manufacturers to test their efficacy with the light source in the CFLK, i.e., luminaire efficacy. Accordingly, under section 2.1 of appendix V1, the term “CFLKs with integrated SSL circuitry” is defined as a CFLK that has SSL light sources, drivers, heat sinks, or intermediate circuitry (such as wiring between a replaceable driver and a replaceable light source) that is not consumer replaceable.

For certain CFLK products, the SSL in the CFLK is one unit that can be removed, tested, and placed back into the CFLK. This is so that the light kit is the same product as it was when it was sold, i.e., consumer replaceable. Section 3 of appendix V1 identifies these light sources in CFLKs as “other SSL products” and directs manufacturers to test the efficacy of the light source, i.e., lamp efficacy. Accordingly, under section 2.4 of appendix V1, the term “other SSL products” is defined as an integrated unit consisting of a light source, driver, heat sink, and intermediate circuitry that uses SSL technology (such as light-emitting diodes (“LED”) or organic light-emitting diodes (“OLED”)) and is consumer replaceable. The term does not include LED lamps with ANSI-standard bases. Examples of “other SSL products” include OLED lamps and LED lamps with non-ANSI-standard bases, such as Zhaga interfaces and LED light engines.

Responses received to an RFI published June 4, 2021, as well as manufacturer interviews conducted as part of the ongoing rulemaking reviewing energy efficiency standards for CFLKs, indicated that these terms and their definitions were not clear and could lead to confusion in classifying products and determining the required efficacy measurement. Particularly, these responses indicated that it is not clear that DOE's CFLK test procedure directs CFLKs with consumer replaceable SSL light sources without ANSI bases to be tested individually using lamp efficacy, similar to the required efficacy measurement for CFLKs with ANSI base lamps.

To address these concerns, in the March 2022 NOPR, DOE proposed to amend the terms “CFLK with integrated SSL circuitry” and “other SSL products” and to clarify the definitions of these terms. 87 FR 13648, 13655.

Specifically, in the March 2022 NOPR, DOE proposed to change the term “CFLK with integrated SSL circuitry” to “CFLK with non-consumer-replaceable SSL circuitry” for additional clarity. Further, DOE proposed to modify the definition of this term by specifying that the light sources and all necessary components in these CFLKs cannot be replaced without permanently altering the product and by specifying that the light sources in these CFLKs do not have an ANSI base. 87 FR 13648, 13655.

DOE also proposed to change the term “other SSL products” to “CFLK with consumer-replaceable SSL circuitry” for additional clarity. Further, DOE proposed to modify the definition by specifying that the light sources and all necessary components in these CFLKs can be replaced without permanently altering the product and by specifying that the light sources in these CFLKs do not have an ANSI base. 87 FR 13648, 13655.

In response to DOE's request for comment on the proposed definitions for “CFLK with consumer-replaceable SSL circuitry” and “CFLK with non-consumer-replaceable SSL circuitry,” ALA recommended that DOE be flexible with the definition of “replaceable,” versus establishing a rigid standard for the definition. ALA stated that the definition of “replaceable” should not exclude common assembly practices used by consumers to install the ceiling fan and CFLK ( e.g., connecting/disconnecting wire nuts, connecting/disconnecting quick connect fasteners, screwing/unscrewing screws, and using other fasteners). ALA further stated that reversing the processes used by a consumer to assemble the ceiling fan and CFLK should not fall under the definition of “non-replaceable,” as DOE indicated in the March 2022 NOPR: “. . . the SSL light source is an integrated unit that can be removed, tested, and placed back into the CFLK so it is the same product as it was when sold, i.e., consumer replaceable.” (ALA, No. 9 at p. 2).

During the NOPR public meeting, Hinkley, Inc. (“Hinkley”) stated that regarding the proposed definitions, they would like further clarification on the use of items such as wire nuts—in which the consumer is required to maintain polarity between different wired connections using nuts—or whether manufacturers are required to provide keyed connectors to prevent any consumer involvement with specific wires between the fan harness and the CFLK. (Hinkley, Public Meeting Transcript, No. 8 at p. 11).

DOE's intention with the existing definitions and modifications proposed in the March 2022 NOPR was to ensure that the testing of CFLKs specified in appendix V1 could be replicated and provide reproducible test results. If one tester can remove, test, and replace the light source in the CFLK so the light kit is the same product as it was when sold, then all else being equal, another tester can repeat the same test on that CFLK and obtain the same results. When the removal of the light source from the CFLK requires the cutting of wires or any action that alters any component of the CFLK, there is no guarantee it is the same product as when it was sold and, therefore, the reproducibility of the test and results come into question.

Upon review of the comments received in response to the March 2022 NOPR regarding the proposed definitions, DOE has determined that additional clarification is required for these terms and definitions beyond those that were proposed in the NOPR. Therefore, in this final rule, DOE is modifying the proposed terms and definitions to better clarify the intent and application of the March 2022 NOPR proposals. First, DOE is removing the term “circuitry” from the proposed terms “CFLK with non-consumer-replaceable SSL circuitry” and “CFLK with consumer-replaceable SSL circuitry.” These terms are meant to refer to CFLKs with an SSL product. DOE has determined that inclusion of the word “circuitry” is not necessary to distinguish these CFLKs from CFLKs without SSL products and further may cause confusion regarding whether these terms are referring to only circuitry or a complete SSL product. Second, to address comments regarding assembly practices for CFLKs, DOE is specifying that the cutting of wires, use of a soldering iron, or damage to or destruction of the CFLK constitutes permanently altering the product, whereas connecting or disconnecting wire nuts, fasteners, or screws, or preserving the CFLK as it was sold, does not constitute permanently altering the product. Finally, DOE is removing examples from the definition of the proposed term “CFLKs with consumer-replaceable SSL circuitry,” as they have the potential to cause confusion and obscure the intent of these definitions, which is to determine whether the SSL light source and associated components necessary for operation can be removed from the light kit without permanently altering the CFLK. DOE has determined that these changes will simplify the terms and definitions and further clarify what actions constitute permanently altering the CFLK.

Additionally, DOE notes that these definitions are for the purposes of executing the DOE test procedure ( i.e., whether luminaire efficacy or lamp efficacy must be tested) and not how the installation or replacement of CFLK products is specified or marketed to the consumer. Specifically, these definitions are to identify actions, whether they be common assembly practice or reverse process, that either do or do not result in a permanent alteration of the CFLK such that it is not the exact same as it was when sold. If a permanent alteration per the definitions is required to remove the SSL light source, that product is a CFLK with non-consumer-replaceable SSL, and the manufacturer must test its luminaire efficacy. If a permanent alteration per the definitions is not required to remove the SSL light source, that product is a CFLK with consumer-replaceable SSL, and the manufacturer must test its lamp efficacy.

Thus, in this final rule, DOE adopts the following modifications to the terms and definitions of “CFLKs with integrated circuitry” and “other SSL products,” respectively, as follows:

In the March 2022 NOPR, DOE proposed changes in appendix V1 that would replace all references of “CFLK with integrated SSL circuitry” and “other SSL products” with, respectively, “CFLK with non-consumer-replaceable SSL circuitry” and “CFLK with consumer-replaceable SSL circuitry.” 87 FR 13648, 13655. As noted in the preceding paragraphs, in this final rule, DOE is removing the word “circuitry” from these terms. To replace all applicable references, DOE is amending the title and scope section of appendix V1 and the definition of “cover” in section 2.2 of appendix V1 to include the updated terms as specified in this final rule.

In the March 2022 NOPR, DOE also proposed to add a row to the table in section 2 of appendix V1 for “other SSL lamps that have an ANSI-standard base and are not integrated LED lamps” and specify that their lamp efficacy be tested. 87 FR 13648, 13655. This clarification is needed as the current and adopted definition for lamps that were once labeled as “other SSL products” (renamed “CFLKs with consumer-replaceable SSL” in this final rule) did not include ANSI-standard base lamps. Accordingly, DOE also proposed to include the category of other SSL lamps that have an ANSI-standard base and are not integrated LED lamps in the title and scope section of appendix V1.

DOE did not receive any comments regarding these specific proposals. In this final rule, DOE adopts these amendments as proposed in the March 2022 NOPR.

Industry tests efficacy by either using a goniophotometer or an integrating sphere. Section 3 of appendix V1 specifies that the use of a goniophotometer is not allowed, which subsequently leaves manufacturers with only the option of using an integrating sphere. In the March 2022 NOPR, DOE proposed to allow the use of a goniophotometer, in addition to an integrating sphere, to test the luminaire or lamp efficacy of CFLKs. DOE had tentatively concluded that the difference in measured efficacy using a goniophotometer versus an integrating sphere was not significant. DOE also noted that allowing both test methods would give flexibility to manufacturers and would align with DOE's other lamp test procedures, such as for general service fluorescent lamps. 87 FR 13648, 13656.

DOE requested comment on the allowance of both goniophotometer and integrating sphere methods and any data on the difference in efficacy measurements when testing the same lamp with goniophotometer versus integrating sphere. Id.

ALA stated that the use of the integrating sphere method would continue, but that DOE's allowance of using the goniophotometer would provide additional flexibility to manufacturers who elect to use the method. (ALA, No. 9 at p. 2).

Thus, in this final rule, as proposed in the March 2022 NOPR, DOE is amending appendix V1 to allow the use of a goniophotometer to test the lamp efficacy or luminaire efficacy of CFLKs, as applicable.

All CFLKs manufactured as of January 21, 2020, must be tested according to current appendix V1. See 80 FR 80209, 80220 and 81 FR 580. Therefore, appendix V is no longer applicable, and removing this appendix would not result in any change to the current test procedure. In the March 2022 NOPR, DOE proposed to remove appendix V and rename appendix V1 as appendix V. 87 FR 13648, 13656.

DOE did not receive any comments on this proposal. In this final rule, as proposed in the March 2022 NOPR, DOE is removing appendix V as it is obsolete, and subsequently renaming appendix V1 as appendix V.

The terms “other SSL products” and “integrated SSL circuitry” are used in 10 CFR 429.33, which specifies the CFLK sampling plan, represented values, and certification requirements; 10 CFR 430.23(x), which provides references to DOE test procedures for lamps in CFLKs not covered in appendix V1; and 10 CFR 430.32(s)(6), which specifies CFLK energy conservation standards manufactured on or after January 21, 2020. In the March 2022 NOPR, to align with the proposed revised terms for “other SSL products” and “CFLKs with integrated circuitry” in appendix V1 ( see section III.C.1), DOE proposed to replace the terms “other SSL products” and “integrated SSL circuitry” in 10 CFR 429.33, 10 CFR 430.23(x), and 10 CFR 430.32(s)(6) with, respectively, “consumer-replaceable SSL circuitry” and “non-consumer-replaceable SSL circuitry.” 87 FR 13648, 13656.

DOE received no comments on this proposal. In this final rule, DOE has modified these terms slightly by removing the word “circuitry” in accordance with the modifications of the definitions of the related terms ( see section III.C.1). Accordingly, in this final rule, DOE is replacing the terms “other SSL products” and “integrated SSL circuitry” with, respectively, “consumer-replaceable SSL” and “non-consumer-replaceable SSL” in 10 CFR 429.33, 10 CFR 430.23(x), and 10 CFR 430.32(s)(6).

In the March 2022 NOPR, DOE also proposed to explicitly state the term “other SSL light sources with ANSI bases (not integrated LED lamps)” in 10 CFR 429.33 and 10 CFR 430.23(x) to clarify instructions for these lamps. 87 FR 13648, 13656.

DOE received no comments on this proposal. Thus, in this final rule, DOE is adopting these terminology updates in 10 CFR 429.33 and 10 CFR 430.23(x) as proposed in the March 2022 NOPR.

In this final rule, DOE is amending the existing test procedure for CFLKs by (1) updating references to industry standards to their latest versions and incorporating by reference industry standards necessary for executing tests; (2) modifying appendix V1 to allow for the use of a goniophotometer in testing; (3) revising definitions in appendix V1 regarding CFLKs with SSL light sources to clarify the scope and test methods; and (4) removing appendix V, the obsolete test procedure that was used for CFLKs with pin-based sockets manufactured on or after January 1, 2007, and prior to January 21, 2020, and renaming appendix V1 as appendix V.

In the March 2022 NOPR, DOE stated that the proposed updates and incorporation of industry standards are only minor changes to certain testing specifications and do not change the method of testing CFLKs. DOE explained that these changes do not require the purchase of additional equipment, nor do they increase test burden, and subsequently do not impact testing costs. Regarding the proposed change to allow the use of a goniophotometer in testing, DOE noted that this use is optional and does not require manufacturers to change their current testing methodology, and therefore would not impact testing costs. DOE also notes the proposed revisions to definitions regarding CFLKs with SSL technology would only clarify the existing test methodology, and therefore would not impact testing costs. Finally, DOE stated that removing appendix V because it is obsolete would not impact the current test procedure, and therefore would not impact testing costs. 87 FR 13648, 13656.

In response to DOE's request for comments on the benefits and burdens of the proposed updates in the March 2022 NOPR, ALA stated that it supported DOE updating references to industry standards and making other minor changes to provide clarity for manufacturers without burdening them. (ALA, No. 9 at p. 2).

For the reasons specified in the March 2022 NOPR, DOE has determined that the amendments being adopted in this final rule will not impact test burden or test costs.

DOE's established practice is to adopt relevant industry standards as DOE test procedures, unless such methodology would be unduly burdensome to conduct or would not produce test results that reflect the energy efficiency, energy use, water use (as specified in EPCA), or estimated operating costs of that product during a representative average use cycle or period of use. See section 8(c) of 10 CFR part 430, subpart C, appendix A. In cases where the industry standard does not meet EPCA statutory criteria for test procedures, DOE will make modifications through the rulemaking process to these standards as the DOE test procedure.

In this final rule, DOE is updating currently referenced industry standards in appendix V1 to their latest version. For the electrical and photometric measurement of CFLKs, DOE is incorporating by reference IES LM-9-20 and IES LM-79-19. For seasoning instructions for CFLKs, DOE is incorporating IES LM-54-20. For integrating sphere measurements for CFLKs, DOE is incorporating IES LM-78-20. For goniophotometer measurements for CFLKs, DOE is incorporating IES LM-75-19. See section III.B for further details.

The effective date for the adopted test procedure amendment will be 30 days after publication of this final rule in the Federal Register . EPCA prescribes that all representations of energy efficiency and energy use, including those made on marketing materials and product labels, must be made in accordance with an amended test procedure, beginning 180 days after publication of the final rule in the Federal Register . (42 U.S.C. 6293(c)(2)) EPCA provides an allowance for individual manufacturers to petition DOE for an extension of the 180-day period if the manufacturer may experience undue hardship in meeting the deadline. (42 U.S.C. 6293(c)(3)) To receive such an extension, petitions must be filed with DOE no later than 60 days before the end of the 180-day period and must detail how the manufacturer will experience undue hardship. ( Id. )

Executive Order (“E.O.”) 12866, “Regulatory Planning and Review,” as supplemented and reaffirmed by E.O. 13563, “Improving Regulation and Regulatory Review,” 76 FR 3821 (Jan. 21, 2011), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. DOE emphasizes as well that E.O. 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs (“OIRA”) in the Office of Management and Budget (“OMB”) has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, this final regulatory action is consistent with these principles.

Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to OIRA for review. OIRA has determined that this final regulatory action does not constitute a “significant regulatory action” under section 3(f) of E.O. 12866. Accordingly, this action was not submitted to OIRA for review under E.O. 12866.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of a final regulatory flexibility analysis (“FRFA”) for any final rule where the agency was first required by law to publish a proposed rule for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the DOE rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's website: www.energy.gov/gc/office-general-counsel. DOE reviewed this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003.

DOE has recently conducted a focused inquiry into small business manufacturers of the CFLKs covered by this rulemaking. DOE used available public information to identify potential small manufacturers. DOE accessed the Compliance Certification Database  19 to create a list of companies that import or otherwise manufacture the CFLKs covered by this proposal as well as the websites of identified companies. DOE relied on the Small Business Administration (“SBA”) size standards for determining the threshold for an entity to be a small business. The SBA size standards are listed by the North American Industry Classification System (“NAICS”) code and industry description and are available at www.sba.gov/document/support--table-size-standards. For NAICS code 335131, described as “residential electric lighting fixture manufacturing,” the size threshold is 750 employees for an entity to be a small business. The size threshold is based on enterprise-wide employment, which includes enterprise subsidiaries and branches, as well as unrelated establishments of the parent company. DOE referenced market research tools for employment estimates and identified 30 domestic small businesses manufacturing or importing CFLKs.

DOE has concluded that the updates to DOE's test procedure for CFLKs being adopted in this final rule do not involve substantive changes to the test setup and methodology and will not pose any additional test burden or additional test costs for any CFLK manufacturers, large or small. Therefore, DOE concludes that the cost effects accruing from the final rule would not have a “significant economic impact on a substantial number of small entities,” and that the preparation of a FRFA is not warranted. DOE has submitted a certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

Manufacturers of CFLKs must certify to DOE that their products comply with any applicable energy conservation standards. To certify compliance, manufacturers must first obtain test data for their products according to the DOE test procedures, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including CFLKs. ( See generally 10 CFR part 429.) The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (“PRA”). This requirement has been approved by OMB under OMB control number 1910-1400. Public reporting burden for the certification is estimated to average 35 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

DOE is not amending the certification or reporting requirements for CFLKs in this final rule.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

In this final rule, DOE establishes test procedure amendments that it expects will be used to develop and implement future energy conservation standards for CFLKs. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and DOE's implementing regulations at 10 CFR part 1021. Specifically, DOE has determined that adopting test procedures for measuring energy efficiency of consumer products and industrial equipment is consistent with activities identified in 10 CFR part 1021, appendix A to subpart D, A5 and A6. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The Executive order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE examined this final rule and determined that it 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. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further action is required by Executive Order 13132.

Regarding the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that executive agencies make every reasonable effort to ensure that the regulation (1) clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in sections 3(a) and 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (“UMRA”) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action resulting in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820; also available at www.energy.gov/gc/office-general-counsel. DOE examined this final rule according to UMRA and its statement of policy and determined that the rule contains neither an intergovernmental mandate, nor a mandate that may result in the expenditure of $100 million or more in any year, so these requirements do not apply.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule will not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights” 53 FR 8859 (March 18, 1988), that this regulation will not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving Implementation of the Information Quality Act (April 24, 2019), DOE published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use if the regulation is implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

This regulatory action is not a significant regulatory action under Executive Order 12866. Moreover, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.

Under section 301 of the Department of Energy Organization Act (Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the Federal Energy Administration Act of 1974, as amended by the Federal Energy Administration Authorization Act of 1977. (15 U.S.C. 788; “FEAA”) Section 32 essentially provides in relevant part that, where a proposed rule authorizes or requires use of commercial standards, the notice of proposed rulemaking must inform the public of the use and background of such standards. In addition, section 32(c) requires DOE to consult with the Attorney General and the Chairman of the Federal Trade Commission (“FTC”) concerning the impact of the commercial or industry standards on competition.

The modifications to the test procedure for CFLKs adopted in this final rule incorporates testing methods contained in certain sections of the following commercial standards:

(1) IES LM-9-20— Approved Method: Electrical and Photometric Measurement of Fluorescent Lamps, approved February 7, 2020;

(2) IES LM-54-20— Approved Method: IES Guide to Lamp Seasoning, approved February 7, 2020;

(3) IES LM-75-19— Approved Method: Guide to Goniometer Measurements and Types, and Photometric Coordinate Systems, approved November 22, 2019;

(4) IES LM-78-20— Approved Method: Total Luminous Flux Measurement of Lamps Using an Integrating Sphere Photometer, approved February 7, 2020; and

(5) IES LM-79-19— Approved Method: Optical and Electrical Measurements of Solid-State Lighting Products, approved February 28, 2019.

DOE has evaluated these standards and is unable to conclude whether it fully complies with the requirements of section 32(b) of the FEAA ( i.e., whether it was developed in a manner that fully provides for public participation, comment, and review). DOE has consulted with both the Attorney General and the Chairman of the FTC about the impact on competition of using the methods contained in these standards and has received no comments objecting to their use.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule before its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

IES LM-9-20 is an industry-accepted standard that describes methods for taking electrical and photometric measurement of fluorescent lamps. Specifically, the test procedure codified by this final rule references IES LM-9-20 for testing the performance of fluorescent lamps.

IES LM-54-20 is an industry-accepted test standard that specifies a method for seasoning lamps. Specifically, the test procedure codified by this final rule references IES LM-9-20 for testing fluorescent lamps, which in turn references IES LM-54-20 for seasoning lamps.

IES LM-75-19 is an industry-accepted test standard that specifies goniophotometer measurements and types, and photometric coordinates. Specifically, the test procedure codified by this final rule references IES LM-79-19 for testing CFLKs with SSL, which in turn references IESNA LM-75-01/R12 for general recommendations and requirements on making measurement with goniophotometers. The test procedure codified by this final rule requires that when referencing IES LM-79-19, where IESNA LM-75-01/R12 is referenced use IES LM-75-19.

IES LM-78-20 is an industry accepted test standard that specifies a method for measuring lumen output in an integrating sphere. Specifically, the test procedure codified by this final rule references IES LM-9-20 for testing the performance of fluorescent lamps, which in turn references IES LM-78-20 for integrating sphere photometer calibration and measurements. Additionally, the test procedure codified by this final rule requires that when referencing IES LM-79-19, where IES LM-78-17 is referenced use IES LM-78-20.

IES LM-79-19 is an industry-accepted standard that describes methods for taking electrical and photometric measurements of SSL products. Specifically, the test procedure codified by this final rule references IES LM-79-19 for testing of CFLKs with SSL.

These test standards are all reasonably available from ANSI ( webstore.ansi.org ) or IES ( www.store.ies.org ).

The Secretary of Energy has approved publication of this final rule.

This document of the Department of Energy was signed on March 30, 2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

For the reasons stated in the preamble, DOE amends parts 429 and 430 of Chapter II of Title 10, Code of Federal Regulations as set forth below:

I. Background Information

The mission of SBA is to “aid, counsel, assist and protect the interests of small business concerns in order to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.” 15 U.S.C. 631(a). SBA accomplishes this mission, in part, through Capital Access programs that bridge the financing gap in the private market to help small businesses start and grow; and help businesses of all sizes to recover from disasters. 15 U.S.C. 636(a) and (b). SBA determined that changing conditions in the American economy, technological developments, and a constantly evolving small business community necessitate the need to revise regulations to improve program efficiency and the customer experience for the 7(a) and 504 Loan Programs. Additionally, SBA determined that revisions for similar purposes to SBA regulations on affiliation determinations should also apply to the Microloan Program, the Intermediary Lending Pilot Program (ILP Program), the Surety Bond Guarantee Program (SBG Program), and the Business Disaster Loan Programs, which consist of Physical Disaster Business Loans, Economic Injury Disaster Loans (EIDL), and Military Reservist Economic Injury Disaster Loans (MREIDL) (but do not include COVID EIDL Disaster Loans).

Accordingly, on October 26, 2022, SBA published a notice of proposed rulemaking with a request for comments in the Federal Register (87 FR 64724) to streamline and modernize the 7(a) and 504 Loan Program regulations setting forth use of proceeds regarding partial changes of ownership, lending criteria, hazard insurance requirements, and reconsiderations. Specifically, SBA is amending 13 CFR 120.130 on “Restrictions on uses of proceeds”; 13 CFR 120.150 on “What are SBA's lending criteria?”; 13 CFR 120.160 on “Loan conditions”; 13 CFR 120.193 on “Reconsideration after denial”; 13 CFR 120.202 on “Restrictions on loans for changes of ownership”.

Regarding 13 CFR 120.130 on “Restrictions on uses of proceeds” and 13 CFR 120.202 “Restrictions on loans for changes of ownership” except for where an employee stock ownership plan or Qualified Employee Trust (ESOP) purchases a controlling interest (51 percent or more) in the employer small business from the current owner(s), SBA's current regulations do not permit 7(a) loan proceeds to be used for partial changes of ownership. Therefore, SBA is amending restrictions on borrowers using 7(a) loan proceeds to effect partial changes of ownership to assist small businesses and to expand pathways to ownership.

Regarding 13 CFR 120.150 on “What are SBA's lending criteria?” SBA stated that streamlining and modernizing regulations on lending criteria and loan conditions for its 7(a) and 504 Loan Programs can better position the Agency and participating lenders to meet the needs of America's small businesses, create jobs, assist with recovery from the COVID-19 pandemic, and grow the economy, fueling American entrepreneurship. SBA is amending this section to provide capital in the form of 7(a) and 504 loans to more small businesses.

Regarding 13 CFR 120.193 on “Reconsideration after denial” SBA is amending the process for reconsideration after denial of a loan application or loan modification request in its 7(a) and 504 Loan Programs to provide the Director, Office of Financial Assistance, with the authority to delegate decision making to designees. SBA is also amending the regulation to allow the Administrator, solely within their discretion, to review these matters and make the final agency decision on reconsideration. Such discretionary authority of the Administrator would not create additional rights of appeal on the part of an applicant not otherwise specified in SBA regulations.

Further, SBA is simplifying 13 CFR 121.301, which sets forth the principles for determining affiliation in the 7(a) Loan Program, 504 Loan Program, Microloan Program, ILP Program, SBG Program, and Business Disaster Loan Programs (except for the COVID EIDL Disaster Loan Program). Specifically, SBA is removing the provisions on affiliation arising from management and control, franchise or license agreements, and identity of interest and to streamline affiliation determinations based on ownership. SBA is streamlining the provisions on affiliation to remove paragraph (f)(5), affiliation based on franchise and license agreements. Because SBA is removing the principle of control of one entity over another from its affiliation consideration, this paragraph is no longer needed. Upon the effective date of this rule, SBA will no longer publish the SBA Franchise Directory. This final rule redefines affiliation for all these programs, thereby simplifying affiliation determinations.

SBA received 146 comments on the proposed rule. Of these, 51 comments were from lenders, 21 were from cooperatives, 19 were from individuals who were making personal comments, 13 were from nonprofit organizations that were not lenders or trade groups, 11 were from trade groups, eight were from individuals supporting a trade group or other entity's comments, and 23 were anonymous or did not indicate an organization type.

SBA received a total of 14 comments from six trade groups, six lenders or employees of lenders, and two comments from individuals or businesses objecting to the confluence of the proposed changes in the notice of proposed rulemaking in the Federal Register (87 FR 64724 October 26, 2022) to streamline and modernize the 7(a) and 504 Loan Program regulations, the notice of proposed rulemaking published in the Federal Register (87 FR 66964 November 7, 2022) to lift the moratorium on licensing new Small Business Lending Companies (SBLCs), to add a new type of entity called a Mission-Based SBLC, and to remove the requirement for a Loan Authorization (SBLC Proposed Rule), and SBA's announcement of an upcoming revision to the Standard Operating Procedures (SOP) 50 10, Lender and Development Company Loan Programs. The comments stated the confluence of these revisions are problematic as proposed because SBA would immediately invite additional non-federally regulated entities to participate as 7(a) Lenders without first testing whether the streamlining of provisions such as lending criteria and hazard insurance will have an adverse effect on SBA's loan portfolio. One trade group requested the Administrator to temporarily withdraw both proposed rules.

SBA received 54 comments requesting changes to SBA's regulations and procedures for loans to ESOPs and cooperatives. Many of these comments were based on a template letter that stated for loans to cooperatives, SBA should remove SBA's regulation at § 120.160, paragraph (a), which requires personal guarantees from holders of at least 20 percent ownership interest in the small business concern that receives SBA funding. SBA requires a personal guaranty from owners of 20 percent or more of the borrower as a prudent and reasonable risk mitigation measure. SBA applies the requirements for personal guarantees at § 120.160 to all SBA business loans unless otherwise prohibited by law. Because the Internal Revenue Service (IRS) prohibits ESOPs from guarantying a loan, SBA does not require ESOPs to provide guarantees for SBA loans. There is no legal prohibition on requiring a guaranty of repayment from a business organized as a cooperative. Further, eliminating the requirement for a guaranty of repayment for loans to cooperatives would unfairly transfer the burden of the increased risk from these loans to the rest of the SBA portfolio. Comments also requested that SBA eliminate the requirement for sellers to guaranty a loan made to a cooperative that is buying a business from the seller. The only time SBA requires a seller to provide a repayment guaranty is in a change of ownership when the seller will retain an ownership interest in the business after the sale. Under SBA's current rules, it is only possible for a seller to retain ownership in a business after a change of ownership when the purchaser is an ESOP or equivalent trust. SBA requires a personal guaranty from a seller that retains an ownership interest in the business after a change of ownership to prevent unjust enrichment to the selling owner such as when the selling owner personally benefits from the SBA loan proceeds and retains ownership in the business without providing any repayment guaranty on the loan. Changes to the personal guaranty requirements at 120.160 advanced by these comments are outside the scope of the changes in the proposed rule and will not be addressed in this final rule. Comments also requested that SBA reduce equity or equity injection requirements for loans to ESOPs and cooperatives. The proposed revisions to the equity requirements in § 120.150, “What are SBA's lending criteria?” are sufficient to provide SBA and lenders with the flexibility to underwrite loans to ESOPs and cooperatives in a reasonable and prudent manner, including determining what equity or equity injection requirements should be placed on a loan for risk mitigation. SBA will provide further guidance in its Loan Program Requirements.

SBA has addressed in detail the comments received on specific proposed regulatory changes within the section-by-section analysis below.

Current § 120.130 details restrictions on uses of loan proceeds. Paragraph (g) refers to § 120.202 regarding restrictions on borrowers from using loan proceeds to purchase a portion of a business or another owner's interest in a business. Because SBA is revising § 120.202, as described below, to allow 7(a) loan proceeds to fund partial changes of ownership, SBA is also revising § 120.130, paragraph (g), to remove the reference to section 120.202 so that 7(a) loan proceeds may be used for partial changes of ownership. Because the revisions to § 120.130 are being made to support the revisions at § 120.202 that will allow partial changes of ownership, the comments on this section are discussed below in the section-by-section analysis for § 120.202.

Several comments stated that § 120.130(a) currently prohibits payments, distributions, or loans to associates (as defined in § 120.10) of the applicant (except for ordinary compensation for services rendered), and this paragraph would also need to be modified to permit payments, distributions, or loans to associates of the applicant to facilitate partial changes of ownership. SBA had already addressed the prohibition in § 120.130(a) that prohibits payments, distributions, or loans to associates of the applicant by the proposed revision to § 120.202, which, as proposed, would state: “Notwithstanding § 120.130(a), a borrower may use 7(a) loan proceeds to purchase a portion of or the entirety of an owner's interest in a business, or a partial or full purchase of a business itself.” However, the comments infer that there would be some confusion in interpreting the proposed revisions to §§ 120.130 and 120.202 regarding restrictions on uses of proceeds for partial changes of ownership. Accordingly, SBA is revising § 120.130, paragraph (a) for clarity to state that payments, distributions, or loans to associates of the applicant are restricted except for ordinary compensation for services rendered or to facilitate changes of ownership in accordance with § 120.202. SBA is revising § 120.202 as stated below. SBA is also revising § 120.130(g) to remove the reference to section 120.202 to permit partial changes of ownership to assist small businesses and provide a path of ownership for employees.

Current § 120.150 states that SBA's lending criteria for 7(a) and 504 loans requires that the applicant (including the Operating Company) must be creditworthy; loans must be so sound as to reasonably assure repayment; and SBA will consider nine specific factors in its lending criteria. The factors consist of: (a) Character, reputation, and credit history of the applicant (and the Operating Company, if applicable), its associates, and guarantors; (b) Experience and depth of management; (c) Strength of the business; (d) Past earnings, projected cash flow, and future prospects; (e) Ability to repay the loan with earnings from the business; (f) Sufficient invested equity to operate on a sound financial basis; (g) Potential for long-term success; (h) Nature and value of collateral (although inadequate collateral will not be the sole reason for denial of a loan request); and (i) The effect any affiliates (as defined in part 121 of this chapter) may have on the ultimate repayment ability of the applicant. SBA is revising this regulation as discussed below. In revising § 120.150, SBA retains the requirement that the applicant (including an Operating Company) must be creditworthy and that loans must be so sound as to reasonably assure repayment, consistent with section 7(a)(6) of the Small Business Act.

SBA is streamlining its lending criteria by reducing the number of factors that are required to be applied in determining creditworthiness and reasonable assurance of repayment. SBA is revising this section to state that, as part of considering whether the applicant (including an Operating Company) is creditworthy and the loan is so sound as to reasonably assure repayment, SBA, Lenders (as defined in § 120.10), and Certified Development Companies (CDC) may consider (as applicable) any of the three specific criteria individually or any combination of the three specific criteria when approving loans: (a) The credit score or credit history of the applicant (and the Operating Company, if applicable), its associates and any guarantors; (b) The earnings or cashflow of the applicant; or (c) Where applicable, any equity or collateral of the applicant.

First, SBA is incorporating into the regulation a new requirement that SBA Lenders must use appropriate and prudent generally acceptable commercial credit analysis processes and procedures consistent with those used for their similarly-sized, non-SBA guaranteed commercial loans. In using such appropriate and prudent processes and procedures, SBA Lenders will be required to underwrite SBA loans in the same manner in which the SBA Lenders underwrite their similarly-sized, non-SBA guaranteed commercial loans.

SBA received 48 comments on this amendment. Twenty-seven of the comments supported the proposed changes as-is or that expressed support and requested modifications; twenty comments expressed opposition; and one comment sought clarification on the changes without offering a position of support or opposition. Some comments, including one from a trade group, expressed concern that, where SBA requires SBA Lenders to underwrite SBA loans in the same manner in which they underwrite their similarly-sized, non-SBA guaranteed loans, SBA Supervised Lenders and CDCs will not have processes and procedures for underwriting non-SBA guaranteed commercial loans because they only make SBA guaranteed loans. The trade group expressed concern that, if the SBLC Proposed Rule is adopted, the number of SBA Supervised Lenders could be greatly expanded at the same time SBA's requirements for a consistent underwriting framework are abandoned. The trade group expressed concern that SBA Supervised Lenders will be able to decide individual loan applications based completely on their own credit policies and practices that would result in the deterioration of the 7(a) loan portfolio's credit quality and adverse impacts to borrower and 7(a) Lender fees while possibly creating the need for Congress to provide appropriations to cover the increased costs of 7(a) loans. Other comments argued that allowing SBA Supervised Lenders and CDCs that only make SBA-guaranteed loans to set their own policies would create an unfair playing field for these lenders over federally-regulated lenders that must apply credit policies in accordance with their federal regulator's standards. SBA Supervised Lenders and CDCs (as defined in 13 CFR 120.10) that do not make non-SBA guaranteed commercial loans will continue as they do now, to submit their credit policies, including credit scoring models, for review by SBA prior to approval to participate in the program(s), during lender oversight and review processes, when proposing any changes to their policies or practices, in accordance with Loan Program Requirements as defined in 13 CFR part 120. SBA may at its discretion review the policies of any participating SBA Lender to ensure appropriate use of the policies and procedures.

Some comments argued against the elimination of the review of “character and reputation” in lending criteria, fearing past bankruptcies will not be adequately captured in underwriting, or that people with a past background of criminal behavior are likely to lapse back into criminal activities that could place the loan repayment at risk. Some comments expressed concern that an error by a lender or credit reporting agency could unfairly negatively impact an individual's or entity's credit history, and without consideration of character or reputation, the individual or entity may be denied a loan that they would have otherwise received. For SBA, “character” is used to determine whether an individual may have past criminal history or activities that may pose a risk to repayment ability. However, the lending industry uses character and credit history interchangeably, which creates confusion as to which factor is more relevant. In order to provide an objective rationale for credit review, the credit history has clearer meaning and relevance in loan underwriting. The use of reputational risk is subject to individual interpretation where an objective measure such as credit history, as a component of loan underwriting and credit review results in less variability. SBA's regulations set a minimum standard, beyond which SBA Lenders may take additional steps in underwriting a loan, including considering mitigating factors for negative credit histories, such as a reporting error by a credit reporting agency. SBA currently has a regulation at § 120.110 that addresses criminal background. Additionally, SBA Lenders may continue to make their own credit decisions based on the criminal background of an applicant and its associates.

Some comments, including one from a trade group, opposed allowing lenders to use their own business credit scoring models for 7(a) loans of all sizes. However, SBA will only permit those business credit scoring models that are predictive of the borrower's ability to repay the loan at the proposed loan sizes, and SBA Lenders may continue to underwrite loans without using credit scoring models. Additionally, SBA will provide guidance in Loan Program Requirements stating the maximum loan sizes that may be underwritten using credit scoring and what other credit factors must be addressed in addition to documenting a satisfactory credit score.

One trade group and several comments expressed concern that SBA may impose a minimum credit score requirement and argued that traditional underwriting can overcome the reasons that an applicant or individual may have a low credit score. Other comments stated that lenders who continue to fully underwrite their loans will be on an uneven playing ground versus those lenders that rely on credit scoring models. These commenters stated that traditional comprehensive credit underwriting is more reliable than credit scoring models. Some of the comments in support of the revisions stated the proposed rule will allow SBA to fully leverage the process, skillset and experience of participating lenders without constraining them with SBA-specific lending criteria and will align lender processes for guaranteed and non-guaranteed loans. SBA did not propose to include a requirement for a minimum credit score in the proposed rule.

SBA has historically provided lenders with an alternative underwriting path that may be used to fully underwrite a loan where the applicant has an unacceptable credit score, see for example, the 7(a) Small Loan delivery method and the Community Advantage Pilot Program. SBA considered the comments regarding traditional credit underwriting being more reliable; however, technological advances and modeling are providing more accurate methods of calculating risk, and lenders employing these measures are better able to provide small businesses access to capital, especially those businesses owned by underserved communities. The revisions provide options to SBA Lenders that incorporate the use of modern underwriting tools currently employed in the lending industry.

Current § 120.160(c) states that for 7(a) and 504 loans SBA requires hazard insurance on all collateral and does not distinguish this requirement by loan size. SBA has determined that the hazard insurance requirement can be burdensome for the smallest businesses borrowing the smallest amount of money. SBA proposed to modify the requirement for hazard insurance for all 7(a) and 504 loans $150,000 and under to create flexibility for SBA Lenders. SBA proposed to include guidance in the Loan Program Requirements for loans of $150,000 or under that SBA Lenders must follow the hazard insurance policies and procedures they have established and implemented for their similarly-sized, non-SBA-guaranteed commercial loans. For all loans greater than $150,000, SBA stated it will continue to require hazard insurance on all collateral. SBA Lenders must continue ensuring that borrowers obtain flood insurance per § 120.170 when required under the Flood Disaster Protection Act of 1973 (Sec. 205(b) of Pub. L. 93-234; 87 Stat. 983 (42 U.S.C. 4000 et seq. )).

SBA received 43 comments on the proposed revision. Thirty-eight comments supported the proposed change as-is or supported the change with some modifications, and five comments opposed the proposed change. Some comments stated that regardless of loan amount, hazard insurance should be required to mitigate risk for all loans, or for all loans where real estate or improved real estate is collateral, or for all loans where equipment is being purchased with loan proceeds. Other comments stated that $150,000 as a threshold is too low, and suggested the threshold should be set at $500,000, because even with hazard insurance in place, the lender and/or SBA's recovery on assets in this dollar range is minimal after the costs of liquidation and litigation are considered. SBA agrees with the comments that state the threshold for requiring hazard insurance should be set at a higher level. Therefore, SBA is revising the rule to require hazard insurance for collateral on 7(a) loans greater than $500,000 and 504 projects greater than $500,000. SBA will include guidance in the Loan Program Requirements for loans of $500,000 or under that SBA Lenders must follow the hazard insurance policies and procedures they have established and implemented for their similarly sized, non-SBA-guaranteed commercial loans.

Some comments expressed concern that SBA would not honor a guaranty purchase request if an event such as a fire caused a borrower to default on a loan. SBA would not cite lack of hazard insurance as a reason to deny a guaranty purchase request if the SBA Lender was acting in accordance with Loan Program Requirements. For example, in the scenario where a loan is $500,000 or under and the use of proceeds is for working capital, and the lender's policy for similarly-sized, non-SBA guaranteed loans is that it does not require hazard insurance for working capital loans, if a calamitous event such as a fire occurs and the borrower defaults on the loan because it is unable to resume business due to a lack of hazard insurance, SBA would not cite lack of hazard insurance as a reason to deny the guaranty purchase request. Other comments supported requiring lenders to follow their own hazard insurance policy on similarly-sized, non-SBA guaranteed commercial loans, with one comment stating the revision will align lender processes for guaranteed and non- guaranteed loans. For the reasons stated above, SBA is moving forward with the rule applying the $500,000 threshold.

Some comments, including one from a trade group representing hazard insurance providers, requested that SBA clarify whether the amendment would apply to loans that are already in existence and whether lenders could apply the amendment to a loan once the outstanding balance is paid down to the $150,000 threshold. SBA will provide further guidance in its Loan Program Requirements. Some of these comments requested that SBA make further changes to its requirements for flood insurance, which is outside the scope of the rule.

Under current § 120.193, the process for reconsideration after denial of a loan application or loan modification request in the 7(a) and 504 Loan Programs states that final reconsideration is made by the Director of the Office of Financial Assistance. To facilitate fair and expeditious reconsiderations, SBA is revising this regulation to state that the Director of the Office of Financial Assistance or the Director's designee(s) may make the final decision on reconsideration. From time to time, SBA may change the designee(s) and would do so in accordance with published Delegations of Authority. Further, SBA is revising this regulation to provide the Administrator with the authority, solely within the Administrator's discretion, to review a reconsideration request and make the final Agency decision. Finally, SBA is revising this regulation to state that the Administrator's discretionary authority does not create any additional appeal rights for the applicant that are not otherwise specified in regulation.

SBA received 34 comments on the proposed rule change. Twenty-one comments supported the proposed rule as-is, and eight comments supported the rule but requested modifications. Most of the comments requesting modification supported allowing the Director to designate a career employee (such as the Chiefs of 7(a) or 504 Loan Policy) to make the final Agency decision but opposed allowing the Administrator to make the final Agency decision for fear that this would politicize decision making. Five comments opposed any delegation because they stated the decision-making authority should stay with the Director. Other comments stated SBA should expand the delegation of authority to include servicing actions. For the reasons stated above, SBA is moving forward with the rule to permit the delegation of Authorities.

Current § 120.202 restricts borrowers from using 7(a) loan proceeds to purchase a portion of a business or a portion of another owner's interest. SBA is revising this section to allow borrowers to use 7(a) loan proceeds to fund partial changes of ownership in addition to full changes of ownership. The revision will allow a borrower to purchase a portion of the business or a portion of an owner's interest in a business, or to purchase the entire business or an owner's entire interest. A borrower could also purchase the partial or entire interests of multiple owners. This revision will allow borrowers to use 7(a) loan proceeds to fund partial changes of ownership and will help provide employees a path to ownership.

SBA received 48 comments regarding the proposed changes to §§ 120.130 and 120.202 to permit partial changes of ownership, including 15 comments supporting the proposal as-is and another 17 comments, including one from a trade group, supporting the proposal and requesting that the 504 Loan Program also be permitted to fund partial changes of ownership. The 504 Loan Program only permits loans for a change of ownership when the 504 project finances only the costs associated with eligible long-term fixed assets. As stated in §§ 120.801(c) and 120.934, generally, permanent financing of the Project consists of a loan made with the proceeds of a CDC Debenture for up to 40 percent of the Project costs collateralized by a second lien on the Project Property, and a Third Party Loan with a first lien position. The debentures are then sold to investors that expect the debenture to be secured by a second lien position on collateral. The success of the 504 Loan Program is dependent on investors being willing to purchase these debentures. Loans for partial changes of ownership will generally have collateral and collateral lien positions that are incompatible with the debenture sale process. Amending the 504 Loan Program to permit 504 loans to fund partial changes of ownership is outside the scope of the rule.

One trade group appeared to be neutral as to whether SBA should implement the proposed change, but stated if SBA moves forward with this proposal, SBA should state clearly that 7(a) funds may not be used for investment purposes. It should be noted that SBA already has a regulation at § 120.130(d) that states SBA will not authorize nor may a borrower use loan proceeds for the purpose (including the replacement of funds used for any such purpose) of investments in real or personal property acquired and held primarily for sale, lease, or investment (except for a loan to an Eligible Passive Company or to a small contractor under § 120.310).

The remaining 15 comments opposed the amendment. One trade group stated the principle underlying the current prohibition against distributing proceeds of a 7(a) loan to an associate of the applicant business protects against sham transactions where an individual personally receives 7(a) loan proceeds while continuing to play a key role in the operations of the business. One comment expressed opposition to the rule, stating that a loan for the purpose of a partial change of ownership is by its very nature a personal loan, not a business loan. One of the examples provided in one of the comments was a business with three owners, where one of the owners wishes to retire and only one of the remaining owners wishes to purchase the outgoing owner's portion of the business. The comment stated there is no benefit to the third owner that was remaining on as owner of the business but that was not purchasing the outgoing owner's portion of the business. However, since SBA's Standard Operating Procedure 50 10 6 went into effect on October 1, 2020, SBA has permitted one or more current owners to purchase the entire interest of another current owner, resulting in 100 percent ownership of the business by the remaining owners; in this type of change of ownership, the small business and the individual owner(s) who is acquiring the ownership interest must be co-borrowers while the remaining owner(s) remain unaffected. The same comment expressed the concern that the lien may not be properly perfected. SBA's Loan Program Requirements currently address adequacy of collateral, including loans for changes of ownership between existing owners, working capital, purchase of stock, and intangible assets such as good will. SBA will provide guidance on adequacy of collateral for loans for partial changes of ownership in its Loan Program Requirements and lender outreach activities. The same comment provided alternative solutions for ensuring the success of changes of ownership, including some already under consideration in the proposed rule, such as allowing greater flexibility in equity requirements in § 120.150.

Several comments requested clarifying information that SBA will include in Loan Program Requirements and in lender outreach, including training events. For example, several comments asked whether sellers would be allowed to remain as employees in a complete or partial change of ownership. Some of these comments stated that allowing the seller to remain in place, either as a part owner or employee, will allow the seller to provide guidance and expertise to ensure the success of the business. For a complete change of ownership, SBA's Loan Program Requirements currently permit the seller to remain as an officer, director, stockholder or Key Employee of the business for a period not to exceed 12 months, and SBA also currently permits a seller to remain as an employee indefinitely in the rare circumstance when the seller will not be an officer, director, stockholder or Key Employee of the business. For partial changes of ownership, SBA intends to allow the selling owner to remain as an owner and involved in the day to day business, including as an officer, director, Key Employee, or employee.

Some comments inquired whether the partial change of ownership would be treated similarly to a stock purchase transaction where both the individual purchasing ownership and the business entity are required to be co-borrowers on the loan. SBA will require the business to be the borrower or co-borrower with any entity purchasing a partial interest. SBA will provide further guidance on these and other questions in its Loan Program Requirements and lender outreach activities.

As described above, SBA received comments on section 120.130(a), which currently prohibits payments, distributions, or loans to associates of the applicant (except for ordinary compensation for services rendered). These comments pointed out that in order to facilitate the use of 7(a) loan proceeds to be used for partial changes of ownership, section 120.130 paragraph (a) would also need to be modified to permit payments, distributions, or loans to associates of the applicant. SBA had already addressed the prohibition in § 120.130(a) that prohibits payments, distributions, or loans to associates of the applicant by the proposed revision to § 120.202, which, as proposed, would state: “Notwithstanding § 120.130(a), a Borrower may use 7(a) loan proceeds to purchase a portion of or the entirety of an owner's interest in a business, or a partial or full purchase of a business itself.” However, the comments make it clear that there would be some confusion in interpreting the proposed revisions to §§ 120.130 and 120.202 regarding restrictions on uses of proceeds for partial changes of ownership. Accordingly, SBA is revising § 120.130, paragraph (a) for clarity as stated above, and is revising the proposed revision to § 120.202 to delete the introductory phrase “Notwithstanding § 120.130(a)”.

Section 121.301 states the size standards and affiliation principles that are applicable to SBA's financial assistance programs. Paragraph (f) details how affiliation principles are applied for the 7(a) Loan Program, the 504 Loan Program, the Microloan Program, the ILP Program, the Business Disaster Loan Programs (except for the COVID EIDL Disaster Loan Program), 1 and the SBG Program. This paragraph currently has seven sub-paragraphs, each of which details a separate affiliation principle that must be applied to the applicant and other entities to determine whether the entities are affiliated. The determination of affiliation is necessary to ensure that an applicant is “small” for purposes of eligibility for SBA financial assistance and to ensure that the applicant (including affiliates) does not exceed the maximum guaranty amount available. Currently, paragraphs (f)(1) through (f)(7) consider: (1) affiliation based on ownership, including the principle of control of one entity over another; (2) affiliation arising under stock options, convertible securities, and agreements to merge, including the principle of control of one entity over another; (3) affiliation based on management, including the principle of control of one entity over another; (4) affiliation based on identity of interest between close relatives; (5) affiliation based on franchise and license agreements, including the principle of control of one entity over another; (6) determining the concern's size; and (7) exceptions to affiliation.

SBA is revising § 121.301 affiliation provisions to simplify the program requirements, streamline the application process for SBA's programs, and facilitate the review of such applications. SBA is specifically removing the principle of control of one entity over another as a separate basis for finding affiliation because the concept of control as it exists requires understanding and expert consideration of business entity relationships well beyond what is owned by the applicant business or its owners. These considerations are complex and require judgement calls that confuse and unnecessarily burden small business applicants and lenders, and ultimately result in inconsistent application of this concept. For example, determining whether an entity has control over another requires in-depth analyses of the contractual relationships an applicant may have, including relationships established by franchise, license, and management agreements deemed necessary and appropriate by an independent small business owner to operate. The determination of whether one or more managers hired to assist the applicant small business have control over the business, and further requiring review of the business type and business ownership of family members who may be deemed affiliates based on NAICS code and proximity to the applicant increases costs, delays application processing, and/or prevents an otherwise eligible small business from receiving support. SBA instead believes that affiliation based on ownership is the customary basis for considering who is deemed to control a business. Accordingly, SBA has determined that issues of control and familial relationships as separate bases for finding affiliation are not necessary.

SBA is revising § 121.301 to add an introductory paragraph at the beginning to include the Small Business Act definition of a small business concern as one which is independently owned and operated, and which is not dominant in its field of operation. SBA interprets this statutory definition to require, in certain circumstances, the inclusion of other entities (“Affiliates”) owned by the applicant or an owner of the applicant in determining the size of the applicant. SBA is revising § 121.301(f)(1), “Ownership,” to remove the principle of control of one entity over another absent ownership over that entity when determining affiliation. SBA is expanding upon the definition of “ownership” under paragraph (f)(1) to clarify the thresholds of ownership at which SBA considers an applicant to be affiliated with an individual or another business. SBA is also clarifying that certain instances of affiliation by ownership will only arise if the applicant and another business operate in the same three-digit NAICS subsector to restrict affiliates to businesses in the same field. Paragraph (f)(1)(i) will state that businesses in which the applicant is a majority owner are affiliates of the applicant. Paragraph (f)(1)(ii) describes affiliation with businesses that own a majority of the applicant as well as businesses in the same three-digit NAICS subsector that are majority-owned by the applicant's owner. Paragraph (f)(1)(iii) describes affiliation with another business when the applicant and the other business are both majority-owned by the same individual and operate in the same three-digit NAICS subsector. Paragraph (f)(1)(iv) describes a 20 percent threshold of ownership for affiliation with the applicant when the applicant does not have a majority owner if a 20 percent owner also operates in the same three-digit NAICS subsector as the applicant. Paragraph (f)(1)(v) will state that if the applicant does not have a majority owner and an individual owns 20 percent or more of the applicant, businesses that are majority-owned by that owner and operate in the same three-digit NAICS subsector will be affiliates of the applicant. Paragraph (f)(1)(vi) will state that ownership interests of spouses and minor children will be combined when determining ownership interest (as interests may be held in trust by parents for minors). Finally, SBA is revising Paragraph (f)(1)(vii) to state that SBA will analyze the pro rata ownership of entities to determine affiliation and provide an example of the combined interest of an individual and an entity that is wholly-owned by the same individual.

Because SBA is revising its regulation generally by removing the principle of control of one entity over another as a separate basis for finding affiliation, SBA is also revising § 121.301(f)(2), “Stock options, convertible securities, and agreements to merge,” paragraphs (f)(2)(i) and (iv). Where paragraph (f)(2)(i) currently states that SBA considers stock options, convertible securities, and agreements to merge (including agreements in principle) to have a present effect on the power to control a concern, the revised paragraph (f)(2)(i) will state that, for purposes of that paragraph, the items will have a present effect on ownership of the entity. SBA is revising paragraph (f)(2)(iv) by deleting the first sentence where SBA currently states SBA will consider whether an individual, concern or other entity that controls one or more other concerns cannot use options, convertible securities, or agreements to appear to terminate such control before actually doing so. SBA is removing the first sentence of paragraph (f)(2)(iv) because it is unnecessary; the remaining sentence of the paragraph clearly states that SBA will not give present effect to the ability of an entity to divest in the future to avoid a finding of ownership.

SBA is removing paragraph (f)(3), affiliation based on management, because SBA is revising its regulation generally by removing the principle of control of one entity over another without ownership from consideration of affiliation. SBA believes it should not interfere in a business owner's right to enter into a service agreement with a management company. The decision to hire a management company is the sole responsibility of the independent business owner(s).

SBA is also removing paragraph (f)(4), affiliation based on identity of interest, because SBA believes it is inherently unfair and inappropriate to require close relatives that do not have an ownership interest in the applicant to provide financial statements for review by a lender and by SBA in determining the size of the applicant business. For example, the current rule requires a sole proprietor who is requesting an SBA direct or guaranteed loan to provide their sibling's business's financial statements for review when the sibling is in the same or similar industry in the same geographic area. SBA believes this requirement imposes a chilling effect on applicants that may be forced to consider alternative predatory lending sources because relatives bear no legal responsibility to disclose their business financial statements for transactions in which they have no ownership interest. However, as stated above, SBA is combining the ownership interests of spouses and minor children when determining affiliation by ownership.

SBA is removing paragraph (f)(5), affiliation based on franchise and license agreements. Because SBA is removing the principle of control of one entity over another from its affiliation consideration, this paragraph is no longer needed. Upon the effective date of this rule, SBA will no longer publish the SBA Franchise Directory.

As is the requirement for all loans, SBA Lenders will continue to be required to examine Franchised businesses for affiliation based on ownership. For example, when lending to a Franchised business, the SBA Lender must determine who owns the applicant business and any businesses the applicant owns in accordance with these regulations. However, neither the SBA Lender nor SBA will review the applicant Franchised business for affiliation with other entities beyond ownership; the applicant business will not be considered affiliated with the Franchisor or other Franchised businesses except by ownership.

SBA received 54 comments on the proposed revisions of § 121.301, paragraph (f). Twelve comments expressed overall support for the proposed rule. Thirty-four comments requested modifications to the proposed rule, with the most frequent comment expressing opposition to no longer publishing an SBA Franchise Directory. The remaining eight comments expressed general opposition.

One comment expressed support of all proposed affiliation changes, but asked how lenders would determine if a business is dominant in its field of operation. This comment is referencing the introductory paragraph that SBA is adding to § 121.301 that includes the Small Business Act definition of a small business concern as one which is independently owned and operated, and not dominant in its field of operation. This introductory paragraph was added to help frame the requirements at § 121.301(f). SBA interprets the statutory definition of a small business concern as requiring, in certain circumstances, the inclusion of other entities known as Affiliates that are owned by the applicant or an owner of the applicant in determining the size of the applicant.

Several comments stated support of the overall revisions to § 121.301 but objected to the inclusion of NAICS codes in the proposed rule for § 121.301(f)(1)(ii) through (v). One comment stated that SBA Lenders use affiliation as a guide to determine which entities to analyze for credit purposes and that removing industries outside of an applicant's NAICs code will skew the SBA Lender's analysis. However, SBA provides the criteria for lenders to underwrite loans in § 120.150. SBA Lenders have historically and will continue to be required to follow the regulation at § 120.150 when analyzing a loan for credit purposes.

A trade group expressed concerns that the proposed amendments may result in larger, more complex, and more sophisticated business structures qualifying for multiple SBA-guaranteed loans. The trade group stated that it does not oppose the proposed change regarding ownership thresholds. However, the trade group also stated it does not concur with removing control as part of the consideration of whether two entities are affiliated. The comment stated the existing regulatory requirements for control should continue because they believe both common ownership and common control are essential factors in determining whether a small business operates on an independent basis.

Regarding the proposed change to paragraph (f)(1)(vii), one comment stated that when multiple business entities own an applicant business, and when the entity owners are owned by entity owners, it can be difficult to trace back to the natural person to determine percentage of ownership. Currently, SBA requires this disclosure of the applicant owners to identify which owners are required under the 20 percent ownership rule to guarantee a loan. The inclusion of this information in the Final Rule merely codifies what is currently a program requirement. The vast majority of SBA loans are made to businesses with a simple ownership structure, and the existence of a very small percentage of applicants with a complex ownership structure as compared to SBA's overall business loan portfolio is not a compelling reason to remove the requirement from this final rule.

One comment stated that the revisions will cause all Eligible Passive Companies (EPCs) and Operating Companies (OCs) to be unaffiliated. While the ownership of an EPC may be different from the OC, the EPC's sole purpose is to hold assets for the benefit of an eligible OC that is the qualifying entity on which cash flow and repayment of the loan is based. The OC is required to be a co-borrower or guarantor on any loan to an EPC.

Regarding the proposed change to paragraph (f)(3), affiliation based on management, SBA received ten comments, with six comments supporting the change as-is, three comments opposing the change, and one comment requesting clarification. Those that opposed the change, including a trade group, stated that this would allow SBA loan proceeds to fund investors that would passively manage businesses. However, as stated above, SBA already has a regulatory prohibition on funding investors at § 120.130, which states SBA will not authorize nor may a borrower use loan proceeds for the purposes (including the replacement of funds used for any such purpose) of investments in real or personal property acquired and held primarily for sale, lease, or investment.

Regarding the proposed change at § 121.301(f)(4), affiliation based on identity of interest, there was nearly universal support for this change, except for one comment that opposed the proposed revision, stating repeal of the identity of interest rule is an overcompensation by SBA that will open the program to abuse by unscrupulous borrowers and unwitting lenders. SBA does not agree with this concern.

Most of the comments that opposed the revisions to § 121.301 were focused on the removal of paragraph(f)(5), affiliation based on franchise and license agreements and specifically opposed SBA's intention to no longer publish an SBA Franchise Directory while requiring SBA Lenders to retain the responsibility for ensuring that the applicant meets all Loan Program Requirements, including but not limited to obtaining proper lien position on collateral and ensuring the applicant does not have discriminatory hiring practices. Of the 53 comments that directly addressed the proposed changes to § 121.301(f)(5), only four comments supported the proposal as-is with the remainder expressing opposition to the proposed change mainly on the grounds that they opposed discontinuance of an SBA Franchise Directory.

The general concern was that lenders would be required to determine franchise eligibility. If SBA were to discontinue publishing a franchise directory without modifying the current affiliation rules, SBA agrees that SBA would be transferring the responsibility for determining affiliation based on control to lenders. However, the comments did not take into consideration the fact that SBA is removing as part of this rule the concept of affiliation based on control, including control by a Franchisor of a franchisee's business. In point of fact, as a result of this rule, SBA will update Standard Operating Procedure 50 10, Lender and Development Company Loan Programs, by deleting Part 2, Section A, Chapter 1, Paragraph D. 6, Affiliation Based on Franchise, License, Dealer, Jobber, and Similar Agreements, and eliminate SBA's Addendum to Franchise Agreement and its process identified therein. SBA has determined that franchise business models would not be made ineligible for SBA business loans based on § 120.110, which states the businesses that are ineligible for SBA business loans. For example, ineligible businesses include, among others, non-profit organizations, life insurance companies, government entities, speculative businesses (such as wildcatting), use of proceeds for stock and real estate speculation, passive businesses, and prurient businesses.

SBA Lenders must evaluate all applicants for eligibility and must ensure proper lien position on all loans, regardless of whether the applicant is a franchise or non-franchise business. Under the current rules, if SBA determines the franchisor exercises excess control over the franchisee, SBA will consider the franchisor and franchisee to be affiliated, which in most cases would mean the applicant would not be eligible for an SBA loan because it would not meet SBA's size standards. The purpose for publishing an SBA Franchise Directory was to prevent SBA Lenders and SBA from repeatedly reviewing the same franchise documents for the issue of excessive control. Because SBA was already reviewing the franchise documents for the issue of excessive control, SBA also reviewed the franchise documents for other business model eligibility requirements that apply to all applicants, including non-franchisee applicants, such as non-discriminatory hiring practices and providing the applicant purchaser the right to encumber the applicant's property with liens. These revisions remove the principle of control of one entity over another from consideration of affiliation; therefore, the mere fact that an applicant may be a franchisee is not in itself a reason that would render the applicant ineligible for an SBA loan, and thus there is no longer a compelling reason to maintain the SBA Franchise Directory. Additionally, the mere fact that a franchise is listed on the SBA Franchise Directory does not, under current policies nor under the proposed policies, relieve the SBA Lender from determining whether the applicant meets all eligibility and other Loan Program Requirements, including but not limited to; certifying that the applicant does not have the ability to obtain some or all of the requested loan funds on reasonable terms from non-Federal, non-State, or non-local government sources, ensuring that applicants are U.S. citizens or Legal Permanent Residents and that the applicant business is located in the United States, obtaining personal and corporate guaranties, confirming that the applicant business has the ability to repay the loan through cash flow of the business, has eligible uses of proceeds, verifying financial information, obtaining proper collateral and lien position, determining whether there is a direct or indirect impact on historic properties, compliance with environmental policies and procedures, and closing the loan in accordance with SBA program requirements.

One comment stated that SBA's review of franchise documents for excess control by the franchisor has led to indirect benefits for franchisees, which “resulted in significant improvements in franchise lending” providing greater assurance that the franchisee has the right to profit from their efforts and that the franchisor would not impose objectionable terms such as approvals on changes of ownership, forced sale of assets, restrictive covenants on real estate, and control of employees. While SBA appreciates this perceived indirect benefit, SBA maintains that it is solely an applicant's business decision whether it wishes to operate as a franchise or non-franchise business. All purchase agreements, even purchase agreements of non-franchise businesses, may potentially include these terms that the comment describes as objectionable, and it is incumbent on all parties to fully understand the terms of any contract they sign. Further, SBA does not have the statutory authority to act as a regulator of franchises, only guarantees a small percentage of loans to franchisees relative to the number of franchise businesses that are started and operate in the U.S., and only uses the Federal Trade Commission definition of franchise in SBA's policies and procedures. For the reasons stated above, SBA is moving forward with the rule as proposed.

The Office of Management and Budget has determined that this rule is a “significant regulatory action” under Executive Order 12866. SBA performed a comprehensive Regulatory Impact Analysis in the proposed rule for the public's information. Because SBA is not substantially changing any of the proposed amendments, the final analysis is unchanged and is synopsized below. Each section begins with a core question.

Is there a need for this regulatory action?

SBA performed a comprehensive cost benefit analysis in the proposed rule. SBA is moving forward with only minor adjustments that will not have a significant impact on the cost benefit analysis that was published in the proposed rule; therefore, the cost benefit analysis is updated where appropriate or synopsized below.

The Agency believes it needs to streamline and reduce regulatory burdens to facilitate robust participation in the business loan programs that assist small and underserved U.S. businesses and the disaster loan programs that assist businesses of all sizes with recovery from disasters.

Regarding modernization of lending criteria, as a result of the emergency lending programs mandated to address economic impacts of the pandemic, SBA significantly leveraged the use of technology in loan delivery to capture efficiencies that can be applied across programs to increase access and lower costs for both participating lenders and the public. SBA also understands that lenders are currently leveraging data analytics tools and machine learning modelling in their conventional lending criteria models, particularly for small dollar loans, and that by modernizing SBA's lending criteria to match lending practices already being implemented by its participating lenders, SBA will encourage more lender participation in its programs. For these reasons, among others, SBA is moving forward with the changes to SBA's lending criteria rules at 13 CFR 120.150.

By dispensing with the requirement for hazard insurance for all 7(a) and 504 loans of $500,000 or less, SBA will eliminate a burdensome regulatory requirement for small loans while providing SBA Lenders with the flexibility to use their own policies for similarly-sized non-SBA guaranteed loans regarding hazard insurance on these loans.

By permitting the Director, Office of Financial Assistance, to delegate reconsideration requests to a designee, SBA will facilitate fair and expeditious review of reconsideration requests and provide finality to applicants that are in the process of making important financial decisions.

SBA is revising its affiliation regulations in response to continuing requests by SBA's participating lenders and the public. SBA believes that revising its affiliation regulations will result in expansion of credit to those who cannot obtain credit elsewhere and increased understanding of and compliance with program rules while decreasing time spent reviewing an applicant for eligibility.

There is also a need for SBA to address financing for changes of ownership. Orderly transitions of business ownership are beneficial both to the small business and its employees. Employees acquiring partial ownership interest in small businesses assists with transitions of ownership, especially when there is more than one current owner and one of the current owners intends to sell their equity stake in the small business to one or more employees who may not have an equity ownership interest at that time. The small business benefits by remaining in operation when it might otherwise be forced to close, and the employees benefit by having a path to ownership in a small business that remains in operation. Partial changes of ownership among existing owners of a small business permit such businesses to attract new employees as partial owners. Financing for changes of ownership also allows family members to purchase partial ownership in a family-run small business to ensure continuation of the small business after the retirement or death of an owner. Currently, SBA does not fully meet the financing needs of small businesses regarding partial changes of ownership due to current restrictions, necessitating this rule.

Historically, SBA has permitted loan proceeds for use only in three situations involving a change of ownership: (1) A complete change of ownership; (2) a Partner Buyout; and (3) where an ESOP purchases a controlling interest (51 percent or more) in the employer small business from the current owner(s). Outside of loans to ESOPs, SBA's current regulations do not permit 7(a) loan proceeds to be used for partial changes of ownership.

Over the past 4 completed fiscal years (FY 2018 through FY 2021), SBA approved 31,940 7(a) loans where loan proceeds were used to affect a change of ownership. ESOP loans (loans to assist an ESOP trust in acquiring 51 percent or more of the equity ownership in the small business concern) accounted for only 17 of the 31,940 loans used for a change of ownership in the four years between FY 2018 and FY 2021, or fewer than five loans per year. Therefore, ESOP loans have not made the anticipated impact in transitioning small businesses to employee ownership as originally intended by the Agency. For these reasons, SBA is moving forward with lifting the prohibition on partial changes of ownership. SBA will include detailed guidance in the Loan Program Requirements to accomplish partial changes of ownership.

The changes will reduce regulatory burdens, modernize program delivery using data analytics tools and machine learning modelling, reduce the number of hours spent processing an application to deliver a loan for both SBA and lenders and increase access to capital.

What are the potential benefits and costs of this regulatory action?

SBA does not anticipate significant additional costs or impact on the subsidy to operate the 7(a), 504, Microloan, ILP, SBG and Business Disaster Loan Programs under these revisions to the regulations.

SBA anticipates a minor impact to the subsidy as a result of approximately 800 new loans per year in 7(a) loan activity for loans involving a partial change of ownership. In revising SBA's lending criteria at 13 CFR 120.150, SBA anticipates that modernizing SBA's lending criteria to include credit scoring will not compromise the credit quality of the overall 7(a) and 504 portfolios. When using a credit scoring model other than the FICO® Small Business Scoring Service SM (SBSS) model, SBA Lenders must be able to validate the credit scoring model and must document that their credit analysis procedures are predictive of loan performance; therefore, no reduction in credit quality is anticipated as a result of using credit scoring models. Streamlining the number of criteria lenders consider when approving loans, and for regulated lenders, using the same commercial credit analysis processes and procedures consistent with those used for their similarly-sized, non-SBA guaranteed commercial loans will not negatively impact the credit quality of the 7(a) and 504 Loan Program portfolios and will provide a time saving ranging from zero to several hours per loan depending on the size and complexity of the loan. SBA anticipates that modernizing SBA's lending criteria and allowing SBA Lenders to use their own processes and procedures will result in an increase in the number of participating lenders and loans in both programs, which would mean increased access to capital for small businesses.

The primary goal driving the revisions to 13 CFR 120.150 is to encourage and facilitate more lenders to make more small dollar loans. SBA believes these streamlined rules will result in increased lender participation, particularly for community banks, credit unions and other mission-based lenders that generally serve more rural communities and underserved populations with smaller dollar loans.

By revising 13 CFR 120.160 to state that SBA requires hazard insurance only for loans greater than $500,000, SBA anticipates a de minimis impact on annual subsidy calculation for the 7(a) and 504 Loan Programs. The primary benefit to removing the requirement for hazard insurance on these small loans is to increase the speed with which lenders can disburse loan proceeds after loan approval. Hazard insurance is only impactful when it is protecting collateral. Currently, SBA does not require collateral for loans $25,000 or less, so these loans are not impacted by the revision to hazard insurance requirements. Further, lenders will continue to require hazard insurance for loans of $500,000 and under when tangible assets such as real estate or equipment are financed with the loan in accordance with their non-SBA guaranteed policies and federal regulators. As such, although lenders will continue to require hazard insurance in accordance with their similarly-sized non-SBA guaranteed policies, they will experience a time savings by no longer providing SBA with documentation of proof of hazard insurance as part of SBA's loan origination and monitoring requirements. Further, even with hazard insurance in place, the lender and/or SBA's recovery on assets in this dollar range is minimal after the costs of liquidation and litigation are considered. The benefit to SBA for requiring hazard insurance at this amount is minimal, while lenders will save time and be able to disburse loan proceeds more quickly after loan approval by using their own procedures and not having to provide additional documentation evidencing insurance to SBA.

Revising 13 CFR 120.193 will allow the Director of the Office of Financial Assistance to delegate to a designee the authority to make final decisions on reconsideration after denial of a loan application or loan modification request in the 7(a) and 504 Loan Programs. SBA does not anticipate any additional costs or impact on the subsidy to operate the 7(a) and 504 Loan Programs under this final rule. Additionally, the number of loans impacted by this change is very low in comparison to the number of loans processed in both loan programs. On average, the 7(a) Loan Program accounts for 10 to 12 reconsideration requests per year, and the 504 Loan Program accounts for 28 to 41 requests per year. For comparison, in fiscal year 2021, the 7(a) Loan Program approved 51,856 loans, and the 504 Loan Program approved 9,676 loans. SBA Lenders and applicants will benefit in a faster turn time for decision-making.

SBA does not anticipate significant additional costs or impact on the subsidy to operate the 7(a), 504, Microloan, ILP, SBG and Business Disaster Loan Programs under the revised regulations at 13 CFR 121.301 regarding affiliation. Complex affiliation rules limit accessibility to SBA's business loan programs, with an outsized impact on underserved borrowers who may struggle to access traditional capital or other resources such as attorneys and certified public accountants. SBA anticipates that providing clear and streamlined regulatory guidance for its affiliation rules will result in an increase in the number of participating lenders and loans and will encourage more businesses to apply. SBA anticipates that participating lenders will spend less time screening applicants for eligibility under SBA Size Standards because lenders and applicants will readily be able to determine which entities they are affiliated with, and lenders will have fewer documents to examine.

What alternatives have been considered?

SBA considered eliminating even more regulatory burdens and determined the final rule strikes the right balance in responsibly streamlining regulations without substantially increasing the risk of waste, fraud, or abuse of the programs or otherwise threatening the integrity of the business loan programs or taxpayer dollars. Regarding affiliation, SBA has implemented several variations of its affiliation rules as discussed above, and SBA has determined the simplest affiliation rules were the least burdensome.

SBA also considered limiting partial changes of ownership to employees of the business; however, the Agency believes this may restrict small businesses in need of additional expertise from providing a percentage of ownership as an incentive to recruit and retain new highly skilled employees. For example, an existing dental practice may recruit a new dentist by offering the dentist an equity ownership in the business as a hiring incentive. For this reason, SBA determined that partial changes of ownership should not be exclusive to existing employees of the business.

This action meets applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have preemptive effect or retroactive effect.

This rule does not have federalism implications as defined in Executive Order 13132. 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, as specified in the Executive Order. As such it does not warrant the preparation of a Federalism Assessment.

A description of the need for this regulatory action and benefits and costs associated with this action, including possible distributional impacts that relate to Executive Order 13563, are included above in the Regulatory Impact Analysis under Executive Order 12866.

SBA has determined that this rule will require that the following forms be revised: SBA Form 1919, “Borrower Information Form,” SBA Form 1920, “Lender's Application for Loan Guaranty for all 7(a) Loan Programs,” SBA Form 1244, “Application for Section 504 Loans,” SBA Form 5—Disaster Business Loan Application, and SBA Form 5C—Disaster Home/Sole Proprietor Loan Application.

SBA Forms 1919 and 1920 are approved under OMB Control number 3245-0348. SBA Form 1244 is approved under OMB Control number 3245-0071. SBA Form 5 is approved under OMB Control number 3245-0017 and SBA Form 5C is approved under OMB Control number 3245-0018.

SBA will revise SBA Form 1919, SBA Form 1920, and SBA Form 1244 to conform to the lending criteria changes at 13 CFR 120.150. When lenders choose to use a credit scoring model in accordance with 13 CFR 120.150, the estimated hour burden for lenders will decrease when the credit score incorporates consideration of certain lending criteria ( e.g., the earnings and cashflow of an applicant), in which case those factors would not necessarily be separately considered by a lender unless otherwise specified by Loan Program Requirements. However, SBA expects that SBA Lenders will make more small dollar loans due to the ability to use credit scoring models, which increase the estimated overall burden hours due to the increase in number of loans. This reporting requirement will be included in the OMB information collection submissions for the affected forms. The other revisions to 120.150 ( i.e., requirement that SBA Lenders use appropriate and prudent generally acceptable commercial credit analysis processes and procedures consistent with those used for their similarly-sized, non-SBA guaranteed commercial loans, and criteria that may be considered in lending criteria), will have a de minimis impact on the estimated hour burden because regulated lenders must comply with more rigorous lending criteria requirements from their federal regulators, and SBA-Supervised Lenders and CDCs must continue to comply with the credit policies submitted to OCRM.

SBA will revise SBA Form 1920 to conform to revisions at 13 CFR 120.130 and 13 CFR 120.202 to permit partial changes of ownership.

SBA will revise SBA Form 1919, SBA Form 1920, SBA Form 1244, and SBA Form 5 to conform to the affiliation rule changes at 13 CFR 121.301, which will reduce the estimated hour burden for applicants and lenders because SBA anticipates fewer entities will fall under the definition of “affiliate.”

SBA will submit these revisions to OMB and provide public notice of such revisions at a later date.

Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act or CRA, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. SBA 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. A major rule under the CRA cannot take effect until 60 days after it is published in the Federal Register . The Office of Information and Regulatory Affairs has determined that this rule is not a “major rule” as defined by 5 U.S.C. 804(2). Therefore, this rule is not subject to the 60-day restriction.

When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires the agency to “prepare and make available for public comment a final regulatory analysis” which will “describe the impact of the final rule on small entities.” SBA published a complete regulatory analysis in the proposed rule. The regulatory analysis is synopsized here. For the reasons stated below, SBA certifies that this rulemaking will not have a significant economic impact on a substantial number of small entities. Although the rulemaking will impact all of the 2,897 7(a) Lenders, all of the 216 CDCs, all of the 150 Microloan Intermediaries, all of the 35 ILP Intermediaries, and all of the 44 Sureties that participate in the SBG Program, SBA does not believe the impact will be significant because this final rule modifies and streamlines existing regulations and procedures. However, there may be impacts due to increased 7(a) loans for partial changes of ownership.

The estimated burden for completing the SBA Form 1919, including time for reviewing instructions, gathering data needed, and completing and reviewing the form remains unchanged at 15 minutes per response. SBA anticipates the revised rules will result in an increase to loan volume by a potential 800 loans per year  2 representing 800 unique small business applicants.

An applicant completing the SBA Form 1919 will spend approximately fifteen minutes per response in completing the form, at a cost of $23.55 per loan application. 3 The final rules will not change the time costs of completing the revised SBA Form 1919 as the rule changes will not require the applicant small business to provide any additional responses in completing SBA Form 1919 other than those already required.

In revising 13 CFR 120.130 and 120.202 to permit partial change of ownership, SBA will update the SBA Form 1920, “Lender's Application for Loan Guaranty for all 7(a) Loan Programs”, in Section “O”, to add a question for the 7(a) Lender to indicate that the change of ownership is a partial change of ownership, and to revise or combine the second bulleted question in Section O with the new partial ownership question. The current estimated burden for the 7(a) Lender in completing SBA Form 1920, including time for reviewing instructions, gathering data needed, and completing and reviewing the form is 25 minutes per response. Section “O” of SBA Form 1920 is required to be completed in cases involving a change of ownership using the loan proceeds. SBA Form 1920 currently requires the 7(a) Lender to check an “N/A” box if the loan does not finance a change of ownership and answer an additional six “Yes” or “No” questions about the circumstances for the change of ownership. It is anticipated the additional language will be similar in length to the existing questions of approximately 30 words per question, which should add approximately 10 seconds per application to read and respond to the question by checking the yes or no box, 4 which represents a cost increase to lenders of approximately 11 cents per application. 5

Based on industry feedback, SBA estimates SBA Lenders will save anywhere from zero to 2 hours per loan under the revision of 13 CFR 120.150 to require that SBA Lenders must use appropriate and prudent generally acceptable commercial credit analysis processes and procedures consistent with those used for their similarly-sized, non-SBA guaranteed commercial loans. The range in time saving is due to the size and complexity of the loan and federally regulated lenders continuing to underwrite loans in accordance with their own procedures. Based on the average of the most recent 3 fiscal years, each year the 7(a) Loan Program approves 48,687 loans and the 504 Loan Program approves 7,631 loans, for a total of 56,318 loans approved per year. The mean hourly wage of a loan officer is $36.99 according to the May 2020 U.S. Bureau of Labor Statistics. SBA estimates a cost saving ranging from $0 to $2,083,215 per year for SBA Lenders, calculated by multiplying 56,318 (total loans approved per year) by $36.99 (mean hourly wage of a loan officer). This revision will have no direct impact on applicants and possibly an indirect impact due to faster processing times that could lead to faster loan approval.

SBA anticipates the final rule will allow SBA Lenders to use a credit scoring model will increase the number of small loans approved while generally decreasing the length of time required to process a loan. Not all lenders will use credit scoring, and those that do will limit credit scoring to small loans. SBA estimates lenders will save from 2 to 4 hours per loan when they elect to use a credit scoring model.

SBA estimates SBA Lenders will save anywhere from 0.25 to 6 hours per loan over the life of the loan under the revision of 13 CFR 120.160 to eliminate the requirement for hazard insurance on loans $500,000 or less. The range in time saving is due to whether lenders require hazard insurance on similarly-sized non-SBA guaranteed loans in accordance with their own procedures. Lenders that do not require hazard insurance may save up to 6 hours over the life of the loan when including the time required to monitor whether the policy remains in place each year. Lenders that continue requiring insurance will experience a time savings by no longer documenting proof of insurance for SBA.

The Director of the Office of Financial Assistance processes an average of 10 to 12 reconsideration requests for the 7(a) Loan Program and 28 to 41 reconsideration requests for the 504 Loan Program each year. Revising this rule will have a minimal impact on the overall portfolio; however, to the individual applicants that are impacted by reconsideration requests, a faster decision will allow the applicants to quickly move forward with financing with a positive decision or pursue other financing options with a negative decision.

The revisions to 13 CFR 121.301 will impact all of the approximately 1,738 7(a) Lenders and 186 CDCs that make an SBA loan annually (based on FY 2021 data), all of the approximately 150 Microloan Intermediaries, all of the approximately 44 Sureties that participate in the SBG Program, and all of the applicants for each of these programs and SBA's Disaster programs. SBA's revisions to streamline its affiliation rules will increase the overall number of loans made while simultaneously reducing the time required to process each loan.

For the reasons stated in the preamble, SBA is amending 13 CFR parts 120 and 121 as follows:

Section 864 of the National Defense Authorization Act for Fiscal Year 2022 (NDAA 2022) authorized the U.S. Small Business Administration's (SBA) Office of Hearings and Appeals (OHA) to decide all appeals from HUBZone status protest determinations, which are currently decided by SBA's Associate Administrator of Government Contracting and Business Development. Section 864 also required SBA to publish a rule implementing this authority. SBA published a proposed rule on December 15, 2022. 87 FR 76585. SBA did not receive any comments on the proposed rule. Accordingly, this final rule implements the changes as proposed.

The final rule revises the HUBZone regulations at 13 CFR 126.805 to specify that HUBZone appeals are processed by OHA in accordance with the procedures in part 134. The final rule also amends the regulations pertaining to OHA's jurisdiction at subparts A and B of 13 CFR part 134 to include appeals from HUBZone status protest determinations. Finally, the final rule creates a new subpart M in 13 CFR part 134 to set out the rules of practice for appeals from HUBZone status protest determinations.

This final rule amends the HUBZone regulations at § 126.103 by deleting the definition for “AA/GC&BD” which is the Associate Administrator for Government Contracting and Business Development. The only references to this role in the HUBZone regulations are in relation to deciding appeals of HUBZone status protest determinations, and the Associate Administrator for Government Contracting and Business Development will no longer have this responsibility. SBA notes that “AA/GCBD” also appears several times in the regulations, and this final rule removes all references to both “AA/GC&BD” and “AA/GCBD” in Part 126. This final rule also deletes the definition for “DAA/GC&BD” because this term does not appear anywhere else in Part 126.

This final rule amends the §§ 126.309 and 126.803(e) to reference appeal decisions made by OHA rather than appeal decisions made by the AA/GCBD.

The final rule revises § 126.805, which addresses the procedures for appeals of HUBZone status protest determinations, to provide that such appeals may be filed in accordance with part 134 of title 13 of the Code of Federal Regulations.

The final rule amends §  134.102 by adding a new paragraph (x), to add appeals from HUBZone status protest determinations, as a new type of proceeding over which OHA has jurisdiction.

The final rule amends §  134.201(b) by adding a new paragraph (10) to include appeals from HUBZone status protest determinations. As a result of this new paragraph, existing §  134.201(b)(10) has been redesignated as §  134.201(b)(11).

The final rule creates a new subpart M to cover the procedures for filing appeals of HUBZone status protest determinations.

Section 134.1301 provides that appeals under this new subpart include any of the grounds for a HUBZone status protest specified in § 126.801 of this chapter, as well as appeals from dismissals of HUBZone status protests by the D/HUB based on a finding that the protest was premature, untimely, nonspecific, not based upon protestable allegations, moot, or not filed by an interested party. This section also provides that the provisions of subparts A and B of part 134 apply to appeals of HUBZone status protest determinations. Finally, this section provides that appeals from HUBZone status protest determinations are separate from appeals from size determinations.

Section 134.1302 establishes standing to file an appeal from a HUBZone status protest determination.

Section 134.1303 provides that an appeal from a HUBZone status protest determination must be filed within ten (10) business days after the appellant receives the protest determination.

Section 134.1304 provides that if a timely appeal of a HUBZone status protest determination is filed after contract award, the contracting officer must consider whether performance can be suspended until an appellate decision is rendered. This section also provides that where an appeal is filed before contract award, the contracting officer must withhold award until the appellate decision is rendered, unless the contracting officer has determined that award and performance of the contract is in the best interests of the government.

Section 134.1305 provides that an appeal petition must include the following: a copy of the protest determination; the date the appellant received the protest determination; a statement that the petitioner is appealing a HUBZone status protest determination issued by the D/HUB; a full and specific statement as to why the HUBZone status protest determination is alleged to be based on a clear error of fact or law, together with argument supporting such allegation; the solicitation number, the contract number (if applicable), and the name, address, and telephone number of the contracting officer; and the name, address, telephone number, facsimile number, and signature of the appellant or its attorney. This section also provides that the appellant must serve copies of the appeal upon the D/HUB, the contracting officer, protested concern or the protester, and SBA's Associate General Counsel for Procurement Law, and that all appeal petitions must include a certificate of service. OHA may dismiss appeal petitions that do not meet all the requirements of §  134.1305.

Section 134.1306 states that the provisions in §  134.204, regarding the service and filing requirements of all pleadings and submissions, apply to appeals from HUBZone status protest determinations unless otherwise indicated.

Section 134.1307 requires the D/HUB to send OHA the entire case file relating to the protest decision upon receipt of an appeal petition.

Section 134.1308 provides that the standard of review for an appeal of a HUBZone status protest determination is whether the D/HUB's determination was based on clear error of fact or law. This section also provides that the appellant bears the burden of proof by a preponderance of the evidence.

Section 134.1309 provides that an appeal from a HUBZone status protest determination will be dismissed if the appeal is untimely under § 134.1303, or if the matter has been decided or is the subject of adjudication before a court of competent jurisdiction over such matters.

Section 134.1310 states that responses to an appeal are to be filed within fifteen (15) business days after service of the appeal petition.

Section 134.1311 states that there will not be discovery or oral hearings in appeals from HUBZone status protest determinations.

Section 134.1312 prohibits new evidence in appeals from HUBZone status protest determinations.

Section 134.1313 provides that the record for a HUBZone status protest appeal will close when the time to file a response to an appeal petition expires.

Section 134.1314 provides that OHA will decide an appeal within forty-five (45) calendar days after the close of record.

Section 134.1315 provides that OHA's decision in an appeal from a HUBZone status protest determination is the final agency decision and provides that the effects of the decision on the procurement at issue are explained in 13 CFR 126.803(e).

Section 134.1316 provides that OHA may reconsider an appeal decision within twenty (20) calendar days after the decision is issued, or OHA may remand a proceeding to the D/HUB for a new HUBZone status protest determination.

The Office of Management and Budget has determined that this rule is not a “significant regulatory action” under Executive Order No. 12866. This rule amends the rules of practice for the SBA's OHA to implement procedures for appeals from HUBZone status protest determinations. As such, the rule has no effect on the amount or dollar value of any federal contract requirements or of any financial assistance provided through SBA. Therefore, the rule is not likely to have an annual economic effect of $100 million or more, result in a major increase in costs or prices, or have a significant adverse effect on competition or the United States economy. In addition, this rule does not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency, materially alter the budgetary impact of entitlements, grants, user fees, loan programs or the rights and obligations of such recipients, nor raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

This action meets applicable standards set forth in section 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

This rule does not have Federalism implications as defined in Executive Order 13132. It does not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in the Executive Order. As such, it does not warrant the preparation of a Federalism Assessment.

The SBA has determined that this rule does not impose additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

The Regulatory Flexibility Act of 1980, as amended (RFA), 5 U.S.C. 601-612, requires federal agencies to prepare an initial regulatory flexibility analysis (IRFA) to consider the potential impact of the regulations on small entities. Small entities include small businesses, small not-for-profit organizations, and small governmental jurisdictions. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an IRFA, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

This rule revises the regulations governing cases before SBA's OHA, SBA's administrative tribunal. These regulations are procedural by nature. Specifically, the rule establishes rules of practice for the SBA's OHA to hear appeals from HUBZone status protest determinations. While did not receive any comments from any small business indicating that they would be affected by it economically. Therefore, the Administrator of SBA certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act or CRA, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. SBA 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. A major rule under the CRA cannot take effect until sixty (60) days after it is published in the Federal Register . The Office of Information and Regulatory Affairs has determined that this rule is not a “major rule” as defined by 5 U.S.C. 804(2). Therefore, this rule is not subject to the 60-day restriction.

For the reasons set forth in the preamble, SBA amends parts 126 and 134 of title 13 of the Code of Federal Regulations as follows:

Authority for This Rulemaking

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

The FAA published a notice of proposed rulemaking for Docket No. FAA-2023-0037 in the Federal Register (88 FR 3936; January 23, 2023) amending the Class E airspace at Sulphur Springs, TX. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order JO 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71 modifies the Class E airspace extending upward from 700 feet above the surface at Sulphur Springs Municipal Airport, Sulphur Springs, TX, by removing the Brashear radio beacon (RBN) and associated airspace extension as they are no longer needed; and adds an extension 2 miles each side of the 190° bearing from the airport extending from the 6.5-mile radius of the airport to 9.4 miles south of the airport.

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

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

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

Authority for This Rulemaking

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

The FAA published an NPRM for Docket No. FAA 2023-0039 in the Federal Register (88 FR 8378; February 9, 2023), amending the Class E airspace at Altoona, PA. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraphs 6002 and 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022 and effective September 15, 2022. FAA Order JO 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This action amends 14 CFR part 71 by:

Modifying the Class E surface airspace to within a 9.3-mile (increased from a 4.7-mile) radius of Altoona/Blair County Airport, Altoona, PA; removing the extension northeast of the airport as it is no longer required; and updating the name (previously Altoona-Blair County Airport) of the airport to coincide with the FAA's aeronautical database;

And modifying the Class E airspace extending upward from 700 feet above the surface to within an 11.8-mile (increased from an 11.2-mile) radius of Altoona/Blair County Airport; adding an extension 2 miles each side of the 196° bearing from the airport extending from the 11.8-mile radius to 12 miles south of the airport; and updating the name (previously Altoona-Blair County Airport) of the airport to coincide with the FAA's aeronautical database.

This action is the result of an airspace review caused by the decommissioning of the Revloc VOR, which provided navigation information for the instrument procedures at this airport, as part of the VOR MON Program, and will support instrument flight rule operations at this airport.

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

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

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

Authority for This Rulemaking

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

The FAA published a notice of proposed rulemaking for Docket No. FAA-2023-0035 in the Federal Register (88 FR 3935; January 23, 2023) amending the Class D and Class E airspace at Bloomington/Normal, IL. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class D and E airspace designations are published in paragraphs 5000 and 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order Jo 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71:

Modifies the Class D airspace to within a 4.4-mile (decreased from a 7-mile) radius of Central Illinois Regional/Bloomington-Normal Airport, Bloomington/Normal, IL; updates the header of the airspace legal description from “Bloomington, IL” to “Bloomington/Normal, IL” to coincide with the FAA's aeronautical database; updates the name (previously Bloomington/Normal Airport) and geographic coordinates of the airport to coincide with the FAA's aeronautical database; and updates the outdated terms “Notice to Airmen” to “Notice to Air Missions” and “Airport/Facility Directory” to “Chart Supplement”;

And modifies the Class E airspace extending upward from 700 feet above the surface to within a 6.9-mile (decreased from a 7.3-mile) radius of Central Illinois Regional/Bloomington-Normal Airport; updates the header of the airspace legal description from “Bloomington, IL” to “Bloomington/Normal, IL” to coincide with the FAA's aeronautical database; and updates the name (previously Central Illinois Regional Airport at Bloomington-Normal) and geographic coordinates of the airport to coincide with the FAA's aeronautical database.

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

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

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

Authority for this Rulemaking

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

The FAA published a notice of proposed rulemaking for Docket No. FAA-2023-0034 in the Federal Register (88 FR 3932; January 23, 2023) amending the Class E airspace at Watertown, SD. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraphs 6002 and 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order Jo 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71:

Modifies the Class E surface airspace at Watertown Regional Airport, Watertown, SD, by updating the name (previously Watertown Municipal Airport) and geographic coordinates of the airport to coincide with the FAA's aeronautical database;

And modifies the Class E airspace extending upward from 700 feet above the surface at Watertown Regional Airport by removing the Watertown VOR/tactical air navigation (VORTAC) and the associated extension to the north of the airport; removing the extension south of the airport as it is no longer required; removing the airspace extending 1,200 feet above the surface from the airspace legal description as it is redundant with the airspace extending 1,200 feet above the surface over the State of South Dakota and State of Minnesota; and updating the name (previously Watertown Municipal Airport) and geographic coordinates of the airport to coincide with the FAA's aeronautical database.

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

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

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

Authority for This Rulemaking

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

The FAA published a notice of proposed rulemaking (NPRM) for Docket No. FAA-2023-0038 in the Federal Register (88 FR 2869; January 18, 2023) amending the Class E airspace at Antlers, OK. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Subsequent to publication, the FAA discovered that the geographic coordinates had been incorrectly published. This update is administrative and does not impact the airspace as proposed.

Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order Jo 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71 modifies the Class E airspace by extending upward from 700 feet above the surface to within a 6.4-mile (increased from a 6.3-mile) radius of Antlers Municipal Airport, Antlers, OK; and updates the geographic coordinates of the airport to coincide with the FAA's aeronautical database.

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

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

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

Authority for This Rulemaking

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

The FAA published a notice of proposed rulemaking (NPRM) for Docket No. FAA-2023-0036 in the Federal Register (88 FR 2870; January 18, 2023) amending the Class E airspace at Rantoul, IL. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Subsequent to publication, the FAA discovered that the geographic coordinates required updating. This update is administrative and does not impact the airspace as proposed.

Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order Jo 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71 modifies the Class E airspace extending upward from 700 feet above the surface to within a 6.8-mile (increased from a 6.7-mile) radius of Rantoul National Aviation Center-Frank Elliot Field, Rantoul, IL; removes the exclusion areas from the airspace legal description as they are not required; and updates the name (previously Rantoul National Aviation Center Airport) and geographic coordinates of the airport to coincide with the FAA's aeronautical database.

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

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

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

Authority for This Rulemaking

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

The FAA published a notice of proposed rulemaking for Docket No. FAA-2023-0077 in the Federal Register (88 FR 2867; January 18, 2023) amending the Class E airspace at St. James, MI. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order Jo 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to 14 CFR part 71 modifies the Class E airspace by extending upward from 700 feet above the surface to within a 7-mile (increased from a 6.2-mile) radius of Beaver Island Airport, Beaver Island, MI; removes the extension to the east as it is no longer required; updates the header from “St. James, MI” to “Beaver Island, MI” to coincide with the FAA's aeronautical database; and updates the geographic coordinates to coincide with the FAA's aeronautical database.

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

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

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

History

The FAA published a final rule for Docket No. FAA-2022-1424 in the Federal Register (88 FR 18026; March 27, 2023), amending VOR Federal airways V-268 and V-474, revoking Jet Route J-518 and VOR Federal airway V-119, and establishing RNAV route Q-178 due to the planned decommissioning of the VOR portion of the Indian Head, PA, VOR/Tactical Air Navigation (VORTAC) navigational aid (NAVAID). Subsequent to publication, the FAA determined that the environmental review categorical exclusion references listed in the preamble were incorrect. The final rule Environmental Review section in the preamble listed FAA Order 1050.1F, paragraphs 5-6.5a and 5-6.5k as the supporting categorical exclusion references; however, upon further review, the FAA determined the references should be FAA Order 1050.1F, paragraphs 5-6.5a and 5-6.5i. This rule corrects the preamble discussion of the categorical exclusion references listed in the Environmental Review section of the final rule.

This action does not alter the alignment of the amended, revoked, or established Air Traffic Service (ATS) routes listed in the final rule.

 Accordingly, pursuant to the authority delegated to me, the first sentence in the Environmental Review section contained in the preamble in Docket No. FAA-2022-1424, as published in the Federal Register of March 27, 2023 (88 FR 18026), FR Doc. 2023-06101, is corrected as follows:

1. In FR Doc. 2023-06101, appearing on page 18027, in the second and third columns, replace the first sentence in the Environmental Review section to read,

“The FAA has determined that this action of amending VOR Federal airways V-268 and V-474, revoking Jet Route J-518 and VOR Federal airway V-119, and establishing RNAV route Q-178, due to the planned decommissioning of the VOR portion of the Indian Head, PA, VORTAC NAVAID, qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points); and paragraph 5-6.5i, which categorically excludes from further environment impact review the establishment of new or revised air traffic control procedures conducted at 3,000 feet or more above ground level (AGL); procedures conducted below 3,000 feet AGL that do not cause traffic to be routinely routed over noise sensitive areas; modifications to currently approved procedures conducted below 3,000 feet AGL that do not significantly increase noise over noise sensitive areas; and increases in minimum altitudes and landing minima. For modifications to air traffic procedures at or above 3,000 feet AGL, the Noise Screening Tool (NST) or other FAA-approved environmental screening methodology should be applied.”

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the route structure as necessary to preserve the safe and efficient flow of air traffic within the NAS.

The FAA published a NPRM for Docket No. FAA-2023-0049, in the Federal Register (88 FR 7901; February 7, 2023), amending RNAV route Q-101 in the eastern United States.

Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. One comment was received. The commenter expressed support for the proposal.

RNAV routes are published in paragraph 2006 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. FAA Order JO 7400.11G is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This action amends 14 CFR part 71 by expanding RNAV route Q-101 in the eastern United States. This action supports the Northeast Corridor Atlantic Coast Route Project by linking Q-101 to other east coast Air Traffic Service routes to enhance air traffic flows.

The route amendment is as follows:

Q-101: Q-101 currently extends between the SKARP, NC, waypoint (WP), and the TUGGR, VA, WP. The FAA is extending Q-101 approximately 10 nautical miles to the north of the TUGGR WP, to the KALDA, VA, Fix. This provides additional routing options for northbound and southbound air traffic.

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

The FAA has determined that this action of extending RNAV route Q-101 qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points); and paragraph 5-6.5b, which categorically excludes from further environmental impact review “Actions regarding establishment of jet routes and Federal airways (see 14 CFR 71.15, Designation of jet routes and VOR Federal airways ) . . .”. As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

Eutylone Control

Eutylone (also known as 1-(1,3-benzodioxol-5-yl)-2-(ethylamino)butan-1-one or bk-EBDB) is a chemical substance which is structurally related to pentylone (also known as 1-(1,3-benzodioxol-5-yl)-2-(methylamino)pentan-1-one or bk-MBDP). Pentylone is listed as a hallucinogenic substance in schedule I at 21 CFR 1308.11(d)(64). The introductory text to paragraph (d) provides: (1) A listed substance includes “any of its salts, isomers, and salts of isomers whenever the existence of such salts, isomers, and salts of isomers is possible within the specific chemical designation,” and (2) the term “isomer” includes the optical, position[al], and geometric isomers.

When compared to the chemical structure of pentylone, eutylone meets the definition of a positional isomer in 21 CFR 1300.01(b), which cross-references the term “positional isomer” in 21 CFR 1308.11(d). Both pentylone and eutylone possess the same molecular formula and core structure, and they have the same functional groups. They only differ from one another by a rearrangement of an alkyl moiety between functional groups. Accordingly, under 21 CFR 1308.11(d), eutylone, as a positional isomer of pentylone, has been and continues to be a schedule I controlled substance. 1

This rule is prompted by a letter dated May 27, 2022, in which the United States government was informed by the Secretariat of the United Nations that eutylone has been added to Schedule II of the Convention on Psychotropic Substances of 1971 (1971 Convention). This letter was prompted by a decision at the 65th Session of the Commission on Narcotic Drugs (CND) in March 2022 to schedule eutylone under Schedule II of the 1971 Convention (CND Dec/65/3). Preceding this decision, the Food and Drug Administration (FDA), on behalf of the Secretary of Health and Human Services and pursuant to 21 U.S.C. 811(d)(2), published two notices in the Federal Register with an opportunity to submit domestic information and opportunity to comment on this action, July 23, 2021, 86 FR 39038 and February 15, 2022, 87 FR 8586. In every instance, FDA noted that eutylone was already controlled in schedule I of the Controlled Substances Act (CSA) as a positional isomer of pentylone, and the February 2022 notice stated that no additional permanent controls for eutylone under the CSA would be necessary to fulfill United States' obligations as a party to the 1971 Convention.

As discussed above in this final rule, eutylone—by virtue of being a positional isomer of pentylone—has been controlled in schedule I of the CSA temporarily since March 7, 2014 (79 FR 12938), and permanently since March 1, 2017 (82 FR 12171). Therefore, all regulations and criminal sanctions applicable to schedule I substances have been and remain applicable to eutylone. Drugs controlled in schedule I of the CSA satisfy and exceed the required domestic controls of Schedule II under Article 2 of the 1971 Convention.

As discussed above, this rule does not affect the continuing status of eutylone as a schedule I controlled substance in any way. This action, as an administrative matter, merely establishes a separate, specific listing for eutylone in schedule I of the CSA and assigns a DEA controlled substances code number (drug code) for the substance. This action will allow DEA to establish an aggregate production quota and grant individual manufacturing and procurement quotas to DEA-registered manufacturers of eutylone, who had previously been granted individual quotas for such purposes under the drug code for pentylone.

An agency may find good cause to exempt a rule from certain provisions of the Administrative Procedure Act (APA) (5 U.S.C. 553), including notice of proposed rulemaking and the opportunity for public comment, if it is determined to be unnecessary, impracticable, or contrary to the public interest. Eutylone is currently controlled in schedule I as a positional isomer of pentylone, and eutylone has no currently accepted medical use in treatment to qualify for placement in a schedule other than schedule I ( see 21 U.S.C. 812(b)(2)-(5)).

Pursuant to 5 U.S.C. 553(b)(3)(B), DEA finds that notice and comment rulemaking is unnecessary and that good cause exists to dispense with these procedures. The addition of a separate listing for eutylone and its DEA controlled substances code number in the list of schedule I substances in 21 CFR 1308.11(d) makes no substantive difference in the status of this drug as a schedule I controlled substance, but instead is “a minor or merely technical amendment in which the public is not particularly interested.” National Nutritional Foods Ass'n v. Kennedy, 572 F.2d 377, 385 (2d Cir. 1978) (quoting S. Rep. No. 79-752, at 200 (1945)). See also Utility Solid Waste Activities Group v. E.P.A., 236 F.3d 749, 755 (D.C. Cir. 2001) (the “unnecessary” prong “is confined to those situations in which the administrative rule is a routine determination, insignificant in nature and impact, and inconsequential to the industry and public”) (internal quotations and citation omitted). This rule is a “technical amendment” to 21 CFR 1308.11(d) as it is “insignificant in nature and impact, and inconsequential to the industry and public.” Therefore, publishing a notice of proposed rulemaking and soliciting public comment are unnecessary.

In addition, because eutylone is already subject to domestic control under schedule I as a positional isomer of pentylone and no additional requirements are being imposed through this action, DEA finds good cause exists to make this rule effective immediately upon publication in accordance with 5 U.S.C. 553(d)(3). DEA is concerned that delaying the effective date of this rule potentially could cause confusion regarding the regulatory status of eutylone. Eutylone is currently controlled as a schedule I controlled substance, and this level of control does not change with this rulemaking.

This regulation has been drafted and reviewed in accordance with the principles of Executive Orders (E.O.) 12866 and 13563. This rule is not a significant regulatory action under E.O. 12866. Eutylone already is a controlled substance in the United States under schedule I, as it is a positional isomer of a schedule I hallucinogen, pentylone. In this final rule, DEA is merely making an administrative change by amending its regulations to separately list eutylone in schedule I and to assign the DEA controlled substances code number 7549 to the substance. A separate listing for eutylone and its DEA controlled substances code number will not alter the status of eutylone as a schedule I controlled substance. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of E.O. 12988 to eliminate drafting errors and ambiguity, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.

This rulemaking does not have federalism implications warranting the application of E.O. 13132. The rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule does not have tribal implications warranting the application of E.O. 13175. It does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) applies to rules that are subject to notice and comment under section 553(b) of the APA or other laws. As noted in the above section regarding the applicability of the APA, DEA determined that there was good cause to exempt this final rule from notice and comment. Consequently, the RFA does not apply.

This action does not impose a new collection of information requirement under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action would not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1532, DEA has determined that this action would not result in any Federal mandate that may result “in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year.” Therefore, neither a Small Government Agency Plan nor any other action is required under UMRA of 1995.

This rule is not a major rule as defined by the Congressional Review Act (CRA), 5 U.S.C. 804. However, pursuant to the CRA, DEA is submitting a copy of this rule to both Houses of Congress and to the Comptroller General.

For the reasons set out above, DEA amends 21 CFR part 1308 as follows:

This document of the Drug Enforcement Administration was signed on April 3, 2023, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of DEA. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

The Coast Guard will enforce the Safety Zone; Annual Events Requiring Safety Zones in the Captain of the Port Lake Michigan Zone listed in 33 CFR 165.929, Table 4, row (3) for the operations at Marinette Marine on April 15, 2023, from 7:30 a.m. to 2:00 p.m. This action is being taken to protect the safety of life and property on navigable waterways of the Menominee River, WI, for the launching of a naval vessel. The safety zone will encompass all waters of the Menominee River in the vicinity of Marinette Marine Corporation, from the U.S. HWY 41 Bridge to the Ogden Street Bridge.

Pursuant to 33 CFR 165.23 and 165.929, entry into, transiting, or anchoring within the safety zone during an enforcement period is prohibited unless authorized by the Captain of the Port Lake Michigan or a designated representative. Those seeking permission to enter the safety zone may request permission from the Captain of Port Lake Michigan via channel 16, VHF-FM. Vessels and persons granted permission to enter the safety zone shall obey the directions of the Captain of the Port Lake Michigan or a designated representative.

This notification of enforcement is issued under authority of 33 CFR 165.929 and 5 U.S.C. 552(a). In addition to this notification of enforcement in the Federal Register , the Coast Guard will provide the maritime community with advance notification of this enforcement period via Broadcast Notice to Mariners or Local Notice to Mariners. If the Captain of the Port Lake Michigan determines that the safety zone need not be enforced for the full duration stated in this notification, permission to enter the safety zone may be granted using a Broadcast Notice to Mariners.

The Captain of the Port Lake Michigan or a designated representative will inform the public through a Broadcast Notice to Mariners of any changes in the planned schedule. The Captain of the Port Lake Michigan or a representative may be contacted via Channel 16, VHF-FM or at (414) 747-7182.

I. General Information A. Does this action apply to me?

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 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-2021-0274 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 June 9, 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-2021-0274, 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/where-send-comments-epa-dockets#express.

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 June 1, 2021 (86 FR 29229) (FRL-10023-95), EPA issued a document pursuant to FFDCA section 408, 21 U.S.C. 346a, announcing the filing of a pesticide petition (PP IN-11493) by ADAMA Makhteshim Ltd., 3120 Highwoods Blvd., Suite 100, Raleigh, NC 27604. The petition requested that the existing exemption in 40 CFR 180.920 for residues of acetophenone (CAS Reg. No. 98-86-2) be amended to include additional uses for acetophenone as a solvent or co-solvent inert ingredient in pesticide formulations applied to growing crops. That document referenced a summary of the petition prepared by ADAMA Makhteshim Ltd., the petitioner, which is available in the docket, https://www.regulations.gov. There were no comments received in response to the notice of filing.

Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for 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(c)(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. When making a safety determination for an exemption for the requirement of a tolerance FFDCA section 408(c)(2)(B) directs EPA to consider the considerations in section 408(b)(2)(C) and (D). 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 . . . .” Section 408(b)(2)(D) lists other factors for EPA consideration making safety determinations, e.g., the validity, completeness, and reliability of available data, nature of toxic effects, available information concerning the cumulative effects of the pesticide chemical and other substances with a common mechanism of toxicity, and available information concerning aggregate exposure levels to the pesticide chemical and other related substances, among others.

EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no harm to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

Consistent with FFDCA section 408(c)(2)(A), and the factors specified in FFDCA section 408(c)(2)(B), 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 acetophenone including exposure resulting from the exemption established by this action. EPA's assessment of exposures and risks associated with acetophenone follows.

EPA has evaluated the available toxicity data and considered their 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. Specific information on the studies received and the nature of the adverse effects caused by acetophenone as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies are discussed in this unit.

Available acute studies on acetophenone show moderate oral and low dermal toxicity. An inhalation toxicity study showed moderate inhalation toxicity. Acetophenone was shown to be a mild irritant to the skin and a severe eye irritant but was not reported to be a dermal sensitizer.

Several repeat dose oral studies ( i.e., a 17-week dietary toxicity study in rats, a 90-day gavage study in rats, two developmental toxicity studies in rats and rabbits and a repeat dose toxicity test combined with a reproductive/developmental screening test in rats) have been conducted with acetophenone. The most sensitive effect in the acetophenone database is decreased body weight, which was observed starting at 300 mg/kg/day in a developmental gavage study in rats and at 500 mg/kg/day in the 90-day gavage study in rats.

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 dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the 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/overview-risk-assessment-pesticide-program.

No effects attributed to a single exposure were seen in the studies provided and therefore, a point of departure (POD) for acute dietary risk was not determined. The most sensitive effect in the acetophenone database is decreased body weight, which was observed starting at 300 mg/kg/day in a developmental gavage study in rats and at 500 mg/kg/day in the 90-day gavage study in rats. Therefore, both studies are considered co-critical. The chronic dietary, incidental oral, dermal and inhalation endpoints are selected from the NOAEL of 250 mg/kg/day based on body weight changes observed starting at 300 mg/kg/day in rats.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to acetophenone, EPA considered exposure under the proposed exemption from the requirement of a tolerance. EPA assessed dietary exposures from acetophenone in food as follows:

Because no acute endpoint of concern was identified, a quantitative acute dietary exposure assessment is unnecessary. In conducting the chronic dietary exposure assessment using the Dietary Exposure Evaluation Model DEEM-FCID TM , Version 4.02, EPA used food consumption information from the U.S. Department of Agriculture's National Health and Nutrition Examination Survey, What we eat in America, (NHANES/WWEIA). This dietary survey was conducted from 2005 to 2010. The Inert Dietary Exposure Evaluation Model (I-DEEM) is a highly conservative model with the assumption that the residue level of the inert ingredient would be no higher than the highest tolerance for a given commodity. Implicit in this assumption is that there would be similar rates of degradation between the active and inert ingredient (if any) and that the concentration of inert ingredient in the scenarios leading to these highest of tolerances would be no higher than the concentration of the active ingredient. The model assumes 100 percent crop treated (PCT) for all crops and that every food eaten by a person each day has tolerance-level residues. A complete description of the general approach taken to assess inert ingredient risks in the absence of residue data is contained in the memorandum entitled “Update to D361707: Dietary Exposure and Risk Assessments for the Inerts.” (12/21/2021) and can be found at https://www.regulations.gov in docket ID number EPA-HQ-OPP-2018-0090-0002.

2. Dietary exposure from drinking water. For the purpose of the screening level dietary risk assessment to support this request for an exemption from the requirement of a tolerance for acetophenone, a conservative drinking water concentration value of 100 ppb based on screening level modeling was used to assess the contribution to drinking water for the chronic dietary risk assessments for parent compound. These values were directly entered into the dietary exposure model.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure ( e.g., textiles (clothing and diapers), carpets, swimming pools, and hard surface disinfection on walls, floors, tables). Based on the pesticide product labels reviewed, in a conservative effort to assess exposure, the EPA has conducted a screening level assessment using high-end exposure scenarios for pesticidal use on lawns/turf and antimicrobial cleaning products.

Risks were calculated using the Margin of Exposure (MOE) approach. This is a ratio of the body burden to the toxicological Point of Departure (POD). A MOE greater than 100 indicates that the exposure scenario does not demonstrate a risk of concern for acetophenone. For all residential handler and post-application scenarios, for both adults and children, for application of pesticides containing this inert ingredient to lawns and turf and use in cleaning produces, the MOEs were greater than 100 and therefore, there is no risk of concern.

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.”

EPA has not found acetophenone to share a common mechanism of toxicity with any other substances, and acetophenone does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that acetophenone does not have 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. No evidence of offspring susceptibility was observed in the available developmental studies in rats and rabbits or the reproductive/developmental toxicity study in rats. The offspring effects observed in all three studies occurred only in the presence of maternal toxicity.

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 toxicity database for acetophenone is complete.

ii. Acetophenone is a known hypnotic. Clinical signs of neurotoxicity were observed in the available studies. However, these effects were seen at the same or higher doses than the body weight changes. Therefore, the POD is protective of any potential neurotoxicity effects.

iii. There is no evidence that acetophenone results in increased susceptibility in in utero rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100% CT and tolerance-level residues. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to acetophenone 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 acetophenone.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (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. An acute aggregate risk assessment takes into account acute exposure estimates from dietary consumption of food and drinking water. No adverse effect resulting from a single oral exposure was identified and no acute dietary endpoint was selected. Therefore, acetophenone is not expected to pose an acute risk.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to acetophenone from food and water will utilize 41.2% of the cPAD for children 1 to 2 years old, the population group receiving the greatest exposure. Based on the explanation in this unit, regarding residential use patterns, chronic residential exposure to residues of acetophenone is not expected.

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). Acetophenone is currently used as an inert ingredient in pesticide products that are registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to acetophenone.

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 120 for adults and 110 for children 1 to 2 years old. These MOEs are not of concern because EPA's level of concern for acetophenone is a MOE of 100 or below.

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). An intermediate-term adverse effect was identified; however, acetophenone is not currently used as an inert ingredient in pesticide products that are registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for acetophenone.

5. Aggregate cancer risk for U.S. population. Based on the lack of structural alerts for carcinogenicity coupled with the result from the studies indicating low concern for mutagenicity, there is low concern for carcinogenicity with acetophenone. Therefore, acetophenone is not expected to pose a cancer risk to humans.

6. Determination of safety. Based on these risk assessments, 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 acetophenone residues.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

Therefore, an exemption from the requirement of a tolerance established under 40 CFR 180.920 for acetophenone (CAS Reg. No. 98-86-2) can be amended to include the use as an inert ingredient (solvent or co-solvent) in pesticide formulations applied pre-harvest to growing crops only.

This action establishes an exemption from the tolerance requirement 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 tolerance 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:

In FR Doc. 2023-04991, appearing on page 17379 in the Federal Register of Thursday, March 23, 2023, the following correction is made:

Background

The annual management measures for the 2022-2023 ocean salmon fisheries (87 FR 29690, May 16, 2022) govern the commercial and recreational fisheries in the area from the U.S./Canada border to the U.S./Mexico border, effective from 0001 hours Pacific Daylight Time (PDT), May 16, 2022, until the effective date of the 2023-2024 management measures, as published in the Federal Register . NMFS is authorized to implement inseason management actions to modify fishing seasons and quotas as necessary to provide fishing opportunity while meeting management objectives for the affected species (50 CFR 660.409). Inseason actions in the salmon fishery may be taken directly by NMFS (50 CFR 660.409(a)—Fixed inseason management provisions) or upon consultation with the Chairman of the Pacific Fishery Management Council (Council), and the appropriate State Directors (50 CFR 660.409(b)—Flexible inseason management provisions).

Management of the salmon fisheries is divided into two geographic areas: north of Cape Falcon (NOF) (U.S./Canada border to Cape Falcon, OR), and south of Cape Falcon (SOF) (Cape Falcon, OR, to the U.S./Mexico border). The actions described in this document affect the SOF commercial and recreational salmon fisheries, as set out under the heading Inseason Actions below.

Consultations with the Council Chairperson on these inseason actions occurred on March 9, 2023. Representatives from NMFS, Oregon Department of Fish and Wildlife (ODFW), California Department of Fish and Wildlife (CDFW) and Council staff participated in these consultations. The Salmon Advisory Subpanel and Salmon Technical Team (STT) were also present.

These inseason actions were announced on NMFS' telephone hotline and U.S. Coast Guard radio broadcast on the date of the consultations (50 CFR 660.411(a)(2)).

At its March 4-10, 2023, meeting, the STT presented updated stock abundance forecasts for salmon stocks managed under the Pacific Coast Salmon Fishery Management Plan (FMP). Based on the STT's report, SOF ocean salmon fisheries will be constrained in 2023 by the very low abundance forecasts for Klamath River fall-run Chinook (KRFC) salmon and Sacramento River fall-run Chinook (SRFC) salmon. KRFC salmon continue to meet the criteria as overfished, which was determined under the Magnuson-Stevens Fishery Conservation and Management Act (MSA) in 2018, and SRFC salmon is currently at risk of approaching an overfished condition. KRFC Chinook salmon expected abundance is low enough that the stock will be managed under the de minimus provisions of the harvest control rule in the Pacific Coast Salmon Fishery Management Plan (FMP). In addition, the abundance of these stocks has been substantially over-forecast in recent years, and escapements have been much lower than anticipated preseason. The forecast of potential spawner abundance is derived from the ocean abundance forecasts, ocean natural mortality rates, age-specific maturation rates, stray rates, and the proportion of escapement expected to spawn in natural areas. To reduce the impacts on KRFC salmon and SRFC salmon and respond to the forecasts, NMFS took three inseason actions on March 9, 2023, concurrent with the March Council meeting to restrict some fisheries that were previously scheduled to open prior to May 16, 2023 (87 FR 29690, May 16, 2022).

The NMFS West Coast Regional Administrator (RA) considered the abundance forecasts for Chinook salmon stocks and the projected impacts in the ocean salmon fisheries, as modeled by the STT, and determined that the inseason actions described below are necessary to meet management and conservations goals set preseason. These inseason actions modify quotas and/or fishing seasons under 50 CFR 660.409(b)(1)(i).

Description of the action: Inseason action #48 modifies the SOF commercial salmon troll fishery from Cape Falcon, OR, to the Heceta Bank Line (lat. 43°58′00″ N), OR; Heceta Bank Line (lat. 43°58′00″ N), OR, to Humbug Mountain, OR; and Humbug Mountain, OR, to the Oregon/California border, previously scheduled to open on March 15, 2023. This fishery is closed through May 15, 2023.

Effective date: Inseason action #48 took effect on March 15, 2023, at 12:01 a.m. and remains in effect until superseded.

Description of the action: Inseason action #49 modifies the SOF ocean salmon recreational fishery from Cape Falcon, OR, to Humbug Mountain, OR, previously scheduled to open on March 15, 2023. This fishery is closed through May 15, 2023.

Effective date: Inseason action #49 took effect on March 15, 2023, at 12:01 a.m. and remains in effect until superseded.

Description of the action: Inseason action #50 modifies the ocean salmon recreational fishery and the salmon troll commercial fishery from the Oregon/California border to the U.S./Mexico border. These fisheries are closed through May 15, 2023.

Effective dates: Inseason action #50 takes effect for the following areas and dates, and remains in effect until superseded.

• Effective May 1, 2023 at 12:01 a.m. for the salmon troll commercial fishery from the Oregon/California border to Humboldt South Jetty (California Klamath Management Zone).

• Effective April 16, 2023 at 12:01 a.m. for the salmon troll commercial fishery from lat. 40° 10′ N to Point Arena, CA (Fort Bragg management area).

• Effective May 1, 2023 at 12:01 a.m. for the salmon troll commercial fishery from Point Arena, CA, to Pigeon Point, CA (San Francisco management area).

• Effective May 1, 2023 at 12:01 a.m. for the salmon troll commercial fishery from Pigeon Point, CA, to the U.S./Mexico border (Monterey management area).

• Effective May 1, 2023 at 12:01 a.m. for the ocean salmon recreational fishery from the Oregon/California border to lat. 40° 10′ N (California Klamath Management Zone management area).

• Effective April 1, 2023 at 12:01 a.m. for the ocean salmon recreational fishery from lat. 40° 10′ N to Point Arena, CA (Fort Bragg management area).

• Effective April 1, 2023 at 12:01 a.m. for the ocean salmon recreational fishery from Point Arena, CA, to Pigeon Point, CA (San Francisco management area).

• Effective April 1, 2023 at 12:01 a.m. for the ocean salmon recreational fishery from Pigeon Point, CA to the U.S./Mexico border (Monterey management area).

All other restrictions and regulations remain in effect as announced for the 2022-2023 ocean salmon fisheries (87 FR 29690, May 16, 2022), as modified by previous inseason actions (87 FR 41260, July 12, 2022; 87 FR 49534, August 11, 2022; 87 FR 52353, August 25, 2022; 87 FR 54171, September 2, 2022; 87 FR 60105, October 4, 2022; 87 FR 66609, November 4, 2022).

The RA determined that these inseason actions were warranted based on the best available information on Pacific salmon abundance forecasts, landings to date, anticipated fishery effort and projected catch, and the other factors and considerations set forth in 50 CFR 660.409. The states and tribes manage the fisheries in state waters adjacent to the areas of the U.S. exclusive economic zone (3-200 nautical miles; 5.6-370.4 kilometers) off the coasts of the states of Washington, Oregon, and California consistent with these Federal actions. As provided by the inseason notice procedures at 50 CFR 660.411, actual notice of the described regulatory actions was given, prior to the time the actions became effective, by telephone hotline numbers 206-526-6667 and 800-662-9825, and by U.S. Coast Guard Notice to Mariners broadcasts on Channel 16 VHF-FM and 2182 kHz.

NMFS issues these actions pursuant to section 305(d) of the Magnuson-Stevens Fishery Conservation and Management Act (MSA). These actions are authorized by 50 CFR 660.409, which was issued pursuant to section 304(b) of the MSA, and are exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(3)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest. Prior notice and opportunity for public comment on this action was impracticable because NMFS had insufficient time to provide for prior notice and the opportunity for public comment between the time Chinook and coho salmon abundance, catch, and effort information were developed and fisheries impacts were calculated, and the time the fishery modifications had to be implemented in order to ensure that fisheries are managed based on the best scientific information available. As previously noted, actual notice of the regulatory actions was provided to fishers through telephone hotline and radio notification. These actions comply with the requirements of the annual management measures for ocean salmon fisheries (87 FR 29690, May 16, 2022), the Pacific Salmon Fishery Management Plan (FMP), and regulations implementing the FMP under 50 CFR 660.409 and 660.411.

There is good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effective date, as a delay in effectiveness of this action would allow fishing at levels inconsistent with the goals of the FMP and the current management measures.