Comments Invited

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include “FAA-2024-0760; Project Identifier AD-2024-00175-E” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Sungmo Cho, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

On March 7, 2024, the FAA received a report of electrical arcing on certain life-limited critical parts for CFM Model CFM56-2, CFM56-3, CFM56-5, CFM56-5B, CFM56-5C, and CFM56-7B engines. A maintenance facility reported evidence of electrical arcing and identified the root cause as the use of a certain induction heater during maintenance, which resulted in unintended electrical arcing to those parts. The manufacturer determined that certain CDP seals, HPC stage 3 disks, and HPT rear shafts were subject to the same induction heater during maintenance and may also have electrical arcing damage. This condition, if not addressed, could result in premature fracture of certain CDP seals, HPC stage 3 disks, and HPT rear shafts, with consequent uncontained part release, damage to the engine, damage to the airplane, and loss of the airplane. The FAA is issuing this AD to address the unsafe condition on these products.

The FAA is issuing this AD because the agency has determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires replacing certain CDP seals, HPC stage 3 disks, and HPT rear shafts. This AD also prohibits installation of certain CDP seals, HPC stage 3 disks, and HPT rear shafts on any engine, and prohibits installation of any engine with certain CDP seals, HPC stage 3 disks, and HPT rear shafts installed on any airplane.

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

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies forgoing notice and comment prior to adoption of this rule due to maintenance anomalies that could result in premature fracture of certain life-limited critical parts, with consequent uncontained part release, damage to the engine, damage to the airplane, and loss of the airplane. The compliance time for replacement of these parts is before further flight after the effective date of this AD. The longer these parts remain in service, the higher the probability of failure. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B).

In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forgo notice and comment.

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

The FAA estimates that this AD affects 3 engines installed on airplanes of U.S. registry. The FAA estimates that three engines installed on airplanes of U.S. registry require replacement of the CDP seal. The FAA estimates that two engines installed on airplanes of U.S. registry require replacement of the HPC stage 3 disk and HPT rear shaft.

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

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

We are amending our regulations to provide additional reasons that may be the basis for FDA to determine that an FCN is no longer effective and to provide the manufacturer or supplier of the substance an opportunity to provide input before we make such a determination. These changes will create administrative mechanisms to improve the efficiency of the premarket notification program for food contact substances (FCSs). We are also amending related confidentiality of information regulations.

The final rule provides reasons other than safety as the basis on which we may determine that an FCN is no longer effective. These reasons include instances where the production, supply, or use of the FCS for its intended use by the manufacturer or supplier has ceased or will cease (referred to in this rule as “abandonment”), or where the use of an FCS identified in an FCN is either authorized by a food additive regulation or is the subject of an issued Threshold of Regulation (TOR) exemption. The final rule also provides the manufacturer or supplier, who submitted an FCN, the opportunity to address our safety concerns or to otherwise show why an FCN should continue to be effective before we could determine that an FCN is no longer effective, resulting in the use no longer being authorized. Additionally, the final rule amends the confidentiality of information provisions to provide for the disclosure of certain information relating to our determination that an FCN is no longer effective.

We are issuing the final rule consistent with our authority in sections 201, 409, and 701(a) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 321, 348, and 371(a)).

The final rule amends the food additive regulations relating to premarket notifications for FCSs also known as Food Contact Notifications (FCNs) and the procedures by which we determine that an FCN is no longer effective. The final rule will allow manufacturers or suppliers of FCSs to request that FDA determine that an FCN is longer effective for reasons other than safety. We expect that cost savings of the final rule take the form of a reduced time burden to FCS manufacturers and suppliers responding to FDA's safety concerns with information that they no longer produce, use, or supply the FCS for the intended use. The final rule will also reduce the time burden to FDA for the review of such information. We estimate that cost savings of the final rule to manufacturers and suppliers and FDA range from zero to $0.4 million, with a central estimate of $0.1 million, annualized over 10 years at a 2 percent discount rate. We estimate that there will be little to no costs associated with the final rule.

Our regulations at § 170.105 set forth the process by which FDA may determine that an FCN is no longer effective. This determination currently only applies when data or other information demonstrating the intended use of an FCS is no longer safe. Presently, our regulations do not provide reasons other than safety as the basis for FDA to determine that an FCN is no longer effective. Also, our regulations do not provide manufacturers or suppliers the opportunity to show why an FCN should continue to be effective prior to FDA making a determination that the FCN is no longer effective. Rather, manufacturers and suppliers must respond to FDA after we provide notice of our determination that the FCN is no longer effective.

In the Federal Register of January 26, 2022 (87 FR 3949), we published a proposed rule that would amend § 170.105 to address these issues and better enable FDA to respond to new information on the safety and use of FCSs. We proposed additional reasons to permit us to make a determination that an FCN is no longer effective for reasons other than safety. We proposed that a manufacturer or supplier could request that we determine an FCN to no longer be effective because it has ceased (or intends to cease) producing, supplying, or using an FCS for the intended use. To reduce confusion created by duplicative authorizations, we proposed to remove effective FCNs for intended uses already authorized by food additive regulations or the subject of an issued TOR exemption. We proposed to provide the manufacturer or supplier of an FCS an opportunity to provide information before FDA makes a determination that an FCN is no longer effective. Additionally, we explained that the proposed changes to § 170.105 would create administrative efficiencies in the FCN program. We also proposed to amend the confidentiality of information provisions in § 170.102 to address the disclosure of certain information related to FDA's determination that an FCN is no longer effective.

The proposed rule provided a 60-day comment period. We received fewer than 20 comments on the proposed rule. The comments were from individuals, a consumer advocacy group, a law firm, and an industry trade association. The comments addressed topics including: (1) improved efficiency and the reduced burden on industry; (2) FDA's authority to provide additional reasons for determining that an FCN is no longer effective; (3) the circumstances under which FDA would make a determination based on abandonment; (4) providing manufacturers or suppliers the opportunity to respond to FDA's safety questions before determining an FCN is no longer effective; (5) the confidentiality provisions; (6) providing an opportunity for affected parties to comment on the timeframe for food packaging to clear the market; and (7) requesting an additional basis for declaring an FCN no longer effective.

The final rule establishes procedures to enable FDA to respond better to new information on the safety and use of FCSs. The final rule ensures that a manufacturer or supplier has the opportunity to provide relevant information to FDA before we make a safety determination. The final rule also permits us to make a determination that an FCN is no longer effective for reasons other than safety. FDA can reduce duplicative authorizations by removing effective FCNs for intended uses authorized by food additive regulations or the subject of an issued TOR exemption. In addition, the final rule will allow FDA to determine that an FCN is no longer effective based on abandonment either: (1) in response to a request from a manufacturer or supplier because it has ceased (or intends to cease) producing, supplying, or using an FCS for the intended use or (2) based on other information available to FDA that a manufacturer or supplier has stopped producing, supplying, or using an FCS for the intended use.

We anticipate that a manufacturer or supplier may make such a request because it no longer needs the authorization or because abandonment could be less burdensome than addressing potential safety concerns. Further, because the FCS would no longer be produced, supplied, or used for the intended use, declaring an FCN as no longer effective based on abandonment rather than based on safety may be a more effective and efficient use of FDA's resources. However, we may decline such a request if we determine there is a safety concern that would be more appropriately addressed by FDA making a declaration that an FCN is no longer effective based on a determination that the intended use of the FCS is no longer safe. We would not declare an FCN no longer effective based on abandonment if the manufacturer or supplier temporarily ceases production or marketing and informs us of their intention to resume producing, supplying, or using the FCS for the intended use in the future. Additionally, the final rule amends the confidentiality of information provisions to provide for the disclosure of certain information relating to our determination that an FCN is no longer effective.

We are issuing this final rule consistent with our authority in sections 201, 409, and 701(a) of the FD&C Act. The final rule provides reasons other than safety as the basis for which we may determine that an FCN is no longer effective. The final rule modifies the procedures by which FDA determines that an FCN is no longer effective and amends the regulation relating to confidentiality of information.

The FD&C Act defines “food additive,” in relevant part, as any substance, the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component of food or otherwise affecting the characteristics of any food (including any substance intended for use in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding food; and including any source of radiation intended for any such use), if such substance is not generally recognized by experts as safe under its intended use (section 201(s) of the FD&C Act). Food additives include “food contact substances,” which are defined as any substance intended for use as a component of materials used in manufacturing, packing, packaging, transporting, or holding food if such use is not intended to have any technical effect in such food (section 409(h)(6) of the FD&C Act).

A food additive is deemed unsafe unless that substance and its use conform with a regulation issued under section 409 of the FD&C Act or there is an FCN submitted under section 409(h) of the FD&C Act that is effective (section 409(a) of the FD&C Act). Section 409(h) of the FD&C Act sets forth the procedure for FCNs.

Under section 409(i) of the FD&C Act, FDA must prescribe by regulation the procedure by which FDA may deem an FCN to no longer be effective (sections 409(i) and 1003(d) of the FD&C Act) (21 U.S.C. 348(i) and 393(d)). Section 701(a) of the FD&C Act gives us the authority to issue regulations for the efficient enforcement of the FD&C Act.

We received fewer than 20 comments on the proposed rule. The comments were from individuals, a consumer advocacy group, a law firm, and an industry trade association.

We describe and respond to the comments in sections B through G of this document. We have numbered each comment to help distinguish between different comments. We have grouped similar comments together under the same number, and, in some cases, we have separated different issues discussed in the same comment and designated them as distinct comments for purposes of our responses. The number assigned to each comment or comment topic is purely for organizational purposes and does not signify the comment's value or importance or the order in which comments were received.

Several comments made general remarks supporting or opposing the proposed rule without focusing on a particular proposed provision.

(Comment 1) Some comments expressed general support for the proposed rule. One comment stated that the proposed rule “would make FDA more efficient as well as putting less strain on manufacturers.” Another comment said that “there are cost savings to both manufacturers and suppliers as well as the FDA.” Another comment stated that the rule would “be an overall help to public health.”

(Response 1) We agree that the final rule will improve the efficiency of FDA's oversight of FCSs. This improved efficiency may benefit public health in helping FDA to use its resources better on oversight of the FCN program and FCS regulation.

The proposed rule, at § 170.105(a)(1)(i), stated that we would inform the manufacturer or supplier specified in the FCN, in writing, of our concerns regarding the safety of the intended use of the FCS. We proposed that we would specify a date by which the manufacturer or supplier must provide data or other information to address the safety concerns. The proposed rule, at § 170.105(a)(1)(ii), stated that if the manufacturer or supplier fails, by the specified date, to supply the data or other information necessary to address the safety concerns regarding the notified use, we may determine that the FCN is no longer effective because there is no longer a basis to conclude that the intended use is safe.

(Comment 2) One comment questioned the need for a procedural change allowing a manufacturer or supplier to provide data or other information to respond to our safety concerns, given the current authorities provided by § 170.105. The comment stated that manufacturers already have the opportunity to provide input before FDA makes a determination that an FCN is no longer effective based on safety.

(Response 2) We agree that a manufacturer or supplier already has the opportunity to provide input to FDA; however, presently, we are not required to provide a manufacturer or supplier an opportunity to address safety concerns until after FDA has made a determination. We proposed a procedural change to the existing regulation at § 170.105(b) to help ensure that we have all the relevant information before making a determination on whether an FCN should remain effective. In the final rule, if the manufacturer or supplier fails to supply either the data or other information necessary to address our safety concerns, by the specified date, we may make a determination that the FCN is no longer effective. However, we will make the determination only after we have given the manufacturer or supplier an opportunity to provide data or other information to respond to our safety questions.

(Comment 3) Two comments opposed giving a manufacturer or supplier the opportunity to respond to safety concerns. One comment stated that a manufacturer or supplier should not have a say in whether an FCN is effective and making a safety determination. One comment asserted that this would “give manufacturers more room for exemptions from safety precautions.”

(Response 3) The final rule provides manufacturers and suppliers the opportunity to demonstrate whether an FCN should remain effective, including by providing information pertaining to safety. The manufacturer or supplier has the responsibility to demonstrate that the intended use of the FCS is safe. FDA will evaluate the information provided by manufacturers and suppliers before making a determination about the status of an FCN or the safety of an FCS use. The final rule continues to provide that we can declare an FCN no longer effective if the manufacturer or supplier fails to supply the necessary data or information to address our safety concerns.

The proposed rule would provide that a manufacturer or supplier may request in writing that FDA determine that an FCN is no longer effective on the basis that it has ceased, or intends to cease by a specified date, producing, supplying, or using an FCS for the intended food contact use in the United States (see proposed § 170.105(a)(2)(i)(A)). It also proposed that if other data or information available to FDA demonstrate that a manufacturer or supplier no longer produces, supplies, or uses an FCS for the intended use in the United States, we would inform, in writing, the manufacturer or supplier specified in the FCN and provide them an opportunity to respond before we could determine that the FCN is no longer effective (see proposed § 170.105(a)(2)(ii)(A)).

(Comment 4) One comment disagreed with our proposal but stated that there is a need for clarity regarding the status of an FCN after a manufacturer or supplier notifies FDA of its intent to withdraw products from the market that are the subject of such an FCN. The comment recommended an alternate amendment. The comment's proposed amendment would require a manufacturer or supplier—if it previously notified FDA in writing of its intent to cease introduction into interstate commerce and delivery for introduction into interstate commerce of any FCS that is the subject of an effective FCN—to submit a new FCN before reintroducing the FCS for the same intended use into interstate commerce.

(Response 4) We do not agree with the amendment offered by the comment because it would create duplicate authorizations. Under our existing regulations, if a manufacturer or supplier notifies us of their intent to cease production, supply, or use of an FCS for reasons other than a determination by FDA that an FCN is no longer effective due to safety concerns, the FCN remains effective for its intended use. In the proposal submitted in the comment, an FCN would remain effective after the listed manufacturer or supplier informs FDA of their intent to cease introduction of the FCS into interstate commerce. The proposal would also require a new FCN to be submitted if the manufacturer or supplier would reintroduce the FCS into interstate commerce; however, the original FCN is still effective. Therefore, the proposed amendment would create duplicative authorizations. In contrast, FDA's final rule will allow us to declare that an FCN is no longer effective for reasons other than safety. If a manufacturer or supplier decides to reintroduce the FCS into interstate commerce after we determined it no longer effective, they would be required to submit a new FCN.

(Comment 5) One comment stated that a manufacturer or supplier may withdraw products covered by FCNs from the market for any reason, and that it can also “voluntarily withdraw the FCN and dispose of the notification if it so desires.” The comment noted that under the statute such companies “may” file an FCN and therefore withdrawal of an FCN should also be permitted. The comment provided as example that under section 6(f) of the Federal Insecticide, Fungicide, and Rodenticide Act [Pub. L. 80-104] an applicant may initiate cancellation of a registration. The comment stated that it is “not appropriate for manufacturers/suppliers of FCSs covered by effective FCNs to be constrained by FDA in their business decisions.”

(Response 5) We agree that a company may remove products covered by FCNs from the market. The final rule does not regulate a company's decision to stop the production, supply, or use of FCSs that are authorized under effective FCNs. However, we disagree that a manufacturer or supplier may withdraw an effective FCN under the current regulation. Furthermore, the comment does not explain what the regulatory status of the FCS would be under such a scenario. Section 409 of the FD&C Act does not provide for withdrawal of an effective FCN and directs FDA to prescribe, by regulation, the procedure by which we are to deem an FCN to no longer be effective. Consistent with the statute, we are amending our procedural regulations to provide for abandonment as a basis for determining that an FCN is no longer effective. Under the final rule, a manufacturer or supplier will be able to request that we determine that an FCN is no longer effective based on abandonment.

(Comment 6) A few comments opposed the provision to allow FDA to declare an FCN no longer effective for reasons of abandonment and asserted that FDA does not have this authority. The comments asserted that, under section 409 of the FD&C Act, we can only determine an FCN to no longer be effective based on safety. One comment stated that it would be appropriate to grant a request based on abandonment from the manufacturer or supplier. Another comment asserted that the FD&C Act limits FDA's food additive review to safety. The comment also referred to our regulation at 21 CFR 171.130, which allows for food additive regulations to be repealed or amended for reasons other than safety. The comment asserted that section 409(i) of the FD&C Act, which states that FDA shall, by regulation, prescribe the procedure by which FDA may deem an FCN to no longer be effective, means that FCNs are to be treated differently from food additive regulations and that FDA is bound by the safety standard in section 409(c)(3)(A) of the FD&C Act for FCNs.

(Response 6) We disagree with the comments. The final rule is consistent with our authority in sections 201, 409, and 701(a) of the FD&C Act. Section 201(s) of the FD&C Act defines “food additive.” Section 409(h) of the FD&C Act specifies the procedures for the FCN program. Food additives include “food contact substances,” which are defined in section 409(h)(6) of the FD&C Act as any substance intended for use as a component of materials used in manufacturing, packing, packing, transporting, or holding food if such uses is not intended to have any technical effect in such food. Under section 409(i) of the FD&C Act, FDA must prescribe by regulation the procedure by which FDA may deem an FCN to no longer be effective. In addition, section 701(a) of the FD&C Act gives FDA the authority to issue regulations for the efficient enforcement of the FD&C Act. These provisions provide us authority to establish and modify administrative procedures to ensure the efficiency of the food contact notification program. As one comment noted, FDA has already established a regulation under which we may repeal a food additive regulation based on abandonment. Likewise, nothing in section 409(i) of the FD&C Act precludes FDA from establishing procedures by regulation to deem an FCN no longer effective based on reasons other than safety.

(Comment 7) Some comments opposed the proposed revisions that would allow FDA to determine that an FCN is no longer effective because production, supply, or use of the FCS has stopped or will stop. One comment expressed concerns that FDA would determine that an FCN is no longer effective without considering whether a manufacturer or supplier or their customer has significant stock of an FCS on hand. The comment questioned whether FDA would make the determination without regard to whether the manufacturer or supplier intends to resume production, at a future date, based on market conditions. Another comment expressed concerns about the reasons third parties might provide information and data to FDA to support a determination that an FCN is no longer effective based on abandonment. For example, the commenter stated, “if any third party can provide FDA with information that a product that is the subject of an effective FCN is not now being manufactured for food-contact applications, such substances could be targeted for removal without demonstrating a safety concern.”

(Response 7) We expect that, in most cases, a determination based on abandonment will be in response to a request from a manufacturer or supplier, rather than based on information from a third party. However, to address the concerns raised by the comments with respect to information provided by a third party, we have amended the provision for abandonment that is based on other data or information available to FDA. We have added “or intends to continue in the future” to make clear that FDA would not make a determination based on abandonment if the manufacturer or supplier informs us that it intends to resume in the future the production, supply, or use of an FCS for the intended use in the United States (see § 170.105(a)(2)(ii)(A) and (B)). If we receive information from a third party or through other means, as outlined in § 170.105(a)(2)(ii)(A), we will inform, in writing, the affected manufacturer or supplier specified in the FCN before we could determine that the FCN is no longer effective. In cases where a manufacturer or supplier informs us that its suspension of the production, supply, or use is only temporary, we will not declare an FCN no longer effective on the basis of abandonment. This information must be provided to FDA in writing, within the specified timing, as required under § 170.105(a)(2)(ii).

With respect to the comments about supplies of an FCS held by a manufacturer or supplier, or its customers, the final rule provides for compliance dates to address these situations. When a manufacturer or supplier requests that we determine that an FCN is no longer effective because it has ceased or plans to cease producing, supplying, or using an FCS, we will confirm with the manufacturer or supplier the date it has ceased or that it intends to cease production, supply, or use. Under the final rule, if we determine that an FCN is no longer effective, we will publish a notice announcing the determination in the Federal Register . The FCN will no longer be effective on the date of publication of the notice. If the manufacturer or supplier informs us that it intends to cease production, supply, or use at a future date, we will provide for a separate compliance date that is the future date specified by the manufacturer or supplier, and this compliance date will be reflected in the Federal Register . To take into consideration inventory held by downstream customers, as provided in § 170.105(b), FDA may also include a separate compliance date in the Federal Register for the use of the FCS in food contact articles.

(Comment 8) One comment opposed the provision to allow FDA to determine an FCN is no longer effective based on abandonment, absent a request by the manufacturer or supplier, because, according to the comment, it would cause potential harm to a business.

(Response 8) We anticipate that a determination that an FCN is no longer effective based on abandonment will not cause potential harm to businesses because the majority of these actions will be in response to a manufacturer or supplier's specific request because it has ceased or plans to cease production of the FCS. However, there may be rare cases where the manufacturer or supplier is not available because the business no longer exists. In such instances, we may determine that an FCN is no longer effective based on abandonment. We note that § 170.100(d) (21 CFR 170.100(d)) requires a manufacturer or supplier for which a notification is effective to keep a current address on file with FDA.

(Comment 9) One comment stated that the proposed rule does not assure that a manufacturer or supplier will have adequate time to respond to our request for data and information to demonstrate that they continue to produce, supply, or use the FCS for the intended use in the United States. The comment stated that a “manufacturer or supplier may be forced to comply with an arbitrary or inadequate deadline” to provide information to FDA.

(Response 9) In response to this comment, we revised § 170.105(a)(2)(ii), which describes the response of a manufacturer or supplier to FDA, to remove the reference to providing “data and information to demonstrate” a continued use, and instead are requiring that the manufacturer or supplier respond in writing indicating whether it continues, or intends to continue in the future, to produce, supply, or use an FCS for the intended use in the United States. We anticipate that there will be minimal burden on a manufacturer and supplier to provide us with such a statement. We will provide an appropriate amount of time for manufacturers and suppliers to respond, based on the information available to us at that time. We will consider a request for additional time from a manufacturer or supplier.

(Comment 10) One comment stated that if an FCN is declared no longer effective based on abandonment, a “substantially-delayed compliance deadline would be appropriate, to assure that lawfully manufactured food packaging has a sufficient opportunity to work its way through channels of trade.” The comment further stated that affected parties must be provided with an opportunity to provide comments to FDA on the length of time that will be required for food contact articles to clear channels of trade.

(Response 10) As provided in § 170.105(b), if we determine it would be protective of public health, we may include a separate compliance date for the use of the FCS in food contact articles. We believe the manufacturer or supplier is in a position to estimate the time it will take for the affected FCS and food contact articles to clear the U.S. market. We expect that the manufacturer or supplier will confer with its downstream customers to ascertain the time it will take to exhaust their inventory and clear the U.S. market. Therefore, in response to the comment, we revised § 170.105(a)(2)(i)(A) to require that the request from a manufacturer or supplier include information or a basis to support the estimated date for the FCS, as well as food contact articles that contain such FCS, produced, supplied, or used by the manufacturer or supplier, to clear the U.S. market. This information will help to inform a separate compliance date for the use of an FCS in food contact articles.

The proposed rule would create a new provision by which we may determine that an FCN is no longer effective because the intended use of the FCS is authorized by a food additive regulation (see proposed § 170.105(a)(3)). We explained that issuing a food additive regulation can be more efficient than reviewing multiple FCNs for the same FCS and for the same use.

Additionally, the proposed rule would create a new provision by which we may determine that an FCN is no longer effective because the intended use of the food contact substance is covered by a TOR exemption (see proposed § 170.105(a)(4)). We explained that FCNs are effective only for a specific manufacturer or supplier, and multiple manufacturers or suppliers often request FCNs for the same intended use of an FCS. In contrast, a TOR exemption can cover the use of an FCS for any manufacturer or supplier who meets the requirements of the TOR. We also explained that we will grant a TOR exemption only if the likelihood or extent of migration to food of a substance used in a food-contact article ( e.g., food-packaging or food processing equipment) is so trivial as not to require regulation of the substance as a food additive (see 21 CFR 170.39).

(Comment 11) One comment opposed the new provisions. The comment stated that the existing FCN program does not accept FCNs for review when the proposed use of the substance is authorized through a food additive regulation or the subject of an issued TOR exemption. The comment said that the new provision would therefore only be applicable to FDA-initiated authorizations for the purpose of determining that an existing effective FCN is no longer effective. The comment stated that section 409(h)(3)(A) of the FD&C Act requires that the FCN process be used except when we determine that submission and review of a petition is necessary to provide adequate assurance of safety. The comment said that we may not determine that an FCN is no longer effective because the intended use is authorized by a food additive regulation or the subject of an issued TOR exemption because the process “runs counter to Congressional intent” and “contravenes Congress' explicit requirement that the FCN process shall be used for authorizing the marketing of a food-contact substance . . .”

(Response 11) We disagree with the comment. Section 409 of the FD&C Act establishes an FCN process as the primary means by which FDA regulates food additives that are FCSs. However, it does not preclude us from relying on authorizations provided under food additive regulations or issued TOR exemptions as a basis to determine that an FCN authorization is duplicative and may be declared no longer effective. Section 409(i) of the FD&C Act gives FDA authority to prescribe by regulation the procedure by which FDA may determine an FCN to no longer be effective. Further, section 701(a) of the FD&C Act gives FDA the authority to issue regulations for the efficient enforcement of the FD&C Act. Through these provisions, Congress provided FDA with the discretion and authority to establish and modify administrative procedures to ensure the efficiency of the authorization of the safe use of FCSs. The TOR exemption provides an alternative to regulate food additives that are FCSs. As described in the Senate report associated with the Food and Drug Administration Modernization Act of 1997 (Pub. L. 105-115), the legislation by which Congress amended the FD&C Act to add the FCN program, explicitly left in place TOR exemptions and food additive regulations for FCSs (S. Rep. No. 105-43, at 46 (1997)).

Furthermore, authorizations of FCSs through food additive regulations or TOR exemptions, rather than through FCNs, may improve efficiency of our premarket programs because they are not specific to one manufacturer or supplier. As such, having these authorizations may reduce administrative burdens on FDA and on new manufacturers and suppliers of FCS for uses that we already determined are safe when manufactured or supplied for uses that comply with the listed limitations and specifications. Because an FCN would be duplicative of these authorizations, removing a duplicative FCN may help avoid confusion from other manufacturers or suppliers about whether they would also need to obtain authorization through the FCN program. Therefore, under the final rule we may determine that an FCN is no longer effective and remove the duplicate FCN from the inventory of effective FCNs, if it is the subject of a food additive regulation or the subject of an issued TOR exemption.

FDA would only take action after we inform the manufacturer or supplier specified in the FCN, in writing, that the intended use of the FCN is authorized by a food additive regulation or the subject of an issued TOR exemption. As explained in the proposed rule, the manufacturer or supplier would have the opportunity to demonstrate that the intended use is not authorized by a food additive regulation or the subject of an issued TOR exemption (87 FR 3949 at 3952 through 3954).

(Comment 12) One comment opposed the provision in the proposed rule that would allow us to determine that an FCN is no longer effective if it is the subject of an issued TOR exemption. The comment expressed concern about the process for granting TOR exemptions.

(Response 12) Our FCN regulations (see § 170.100(b)(2)) provide that FDA may choose not to accept an FCN if there is an issued TOR exemption for the intended use. Unlike an authorization provided under an effective FCN, which is specific to the manufacturer or supplier specified in the notification, a TOR exemption can be relied on for uses that comply with the limitations and specifications listed in the TOR exemption. The final rule, at § 170.105(a)(4), provides a corresponding provision that would allow FDA to declare an FCN no longer effective on the basis that this use is covered by an issued TOR exemption.

As for the comment pertaining to the process for granting a TOR exemption, we note that the process for granting a TOR exemption is not the subject of this rulemaking.

(Comment 13) One comment asserted that promulgating food additive regulations or issuing a TOR exemption to replace FCNs would result in the loss of manufacturer-specific information because new manufacturers would come to market without notification to FDA and that FDA would no longer have the benefit of the “knowledge of which food contact substances have entered the market, who manufactured such substances, and in what amount.” The comment said that this lack of notice and information would result in the loss of public safety benefits.

(Response 13) FDA would conduct research, gather and evaluate all relevant data, and complete the necessary analysis of an FCS before promulgating a food additive regulation or issuing a TOR exemption. We expect that we would have significant data or other information to support proposing a new food additive regulation or TOR exemption before doing so. Therefore, we do not agree that the loss of manufacturer-specific information would negatively affect public health.

(Comment 14) One comment stated that declaring an FCN as no longer effective based on an issued TOR exemption or food additive regulation would create undue burdens for industry because business documentation commonly includes references to FCN numbers. The comment stated that if FDA deems an FCN no longer effective for nonsafety reasons, this could create confusion in the marketplace. In addition, the comment stated that the companies who submitted an FCN would bear the burden and cost of data development to demonstrate safety, whereas if FDA issues a TOR exemption or a food additive regulation for that use, other companies will benefit. The comment noted that Congress specifically created a manufacturer-specific notification process for FCNs.

(Response 14) As we explained in response to Comment 12, section 409 of the FD&C Act does not preclude us from issuing a TOR exemption or a food additive regulation for the use of an FCS or from relying on these authorizations as a basis to determine that duplicative FCNs may be declared no longer effective.

FDA intends to establish and maintain a list of FCNs that are no longer effective (and the reason for the FDA's determination) on its website to limit confusion. The list will be available along with the current inventory of effective FCNs.

The proposed rule would amend § 170.102(e) to address the disclosure of certain information related to a notification, including information related to FDA's determination that an FCN is no longer effective. Specifically, proposed § 170.102(e)(1) would continue to make all safety and functionality data and information submitted with or incorporated by reference into the notification as well as all correspondence and written summaries of oral discussions relating to the notification available for public disclosure. Proposed § 170.102(e)(5) also would make all data, correspondence and written summaries of oral discussions relating to FDA's determination that an FCN is no longer effective available for public disclosure, unless the information is exempt under 21 CFR 20.61 (pertaining to trade secrets and commercial or financial information that is privileged or confidential).

(Comment 15) One comment disagreed with the proposed amendments to § 170.102. The comment stated that, besides the manufacturer's notice of market withdrawal, no new information would be provided to the FCN file, and, as such, the proposed amendments are not warranted.

(Response 15) The amendments to the confidentiality of information regulations are necessary to provide for disclosure of information related to manufacturer or supplier notifications and FDA's determination that an FCN is no longer effective for its intended use. Thus, the final rule contains the revisions to § 170.102 from the proposed rule with minor editorial changes.

(Comment 16) One comment supported the proposed change to § 170.102(e) to make publicly available data and information related to our determination that an FCN is no longer effective. The comment requested that this public disclosure not be limited to FCNs that are deemed no longer effective by FDA and be expanded to include all FCNs. The comment also emphasized that the public disclosure should entail timely publication to FDA's website, rather than public disclosure in response to a request under the Freedom of Information Act (FOIA).

(Response 16) The comment may have misunderstood our proposed change to § 170.102(e), which already addresses the public disclosure of information related to FCNs. The proposed rule would revise § 170.102(e) to address explicitly FCNs that FDA has determined are no longer effective; however, there is no difference in the public disclosure of this information. To make this clearer, we are further revising § 170.102(e) to include the reference to FCNs that are no longer effective in the same sentence as other FCNs. With respect to the comment asking FDA to disclose information about FCNs proactively on FDA's website instead of in response to a FOIA request, decisions about proactive disclosures are based on available resources and policy priorities. To ensure transparency, FDA will continue to maintain an inventory on its website that lists effective FCNs, and intends to maintain a second inventory that will list FCNs that are no longer effective (and the reason for FDA's determination).

(Comment 17) Some comments stated that there is no need for this rule because the U.S. Department of Agriculture (USDA) can “oversee such issues.”

(Response 17) We disagree. Pursuant to section 409(i) of the FD&C Act we, rather than USDA, have authority over FCSs.

(Comment 18) One comment asked about a pending citizen petition related to FDA's evaluation of cumulative effects of related substances. The pending citizen petition requests revisions to our regulations, including 21 CFR 170.101 (Information in a premarket notification for a food contact substance (FCN)).

(Response 18) The comment is outside of the scope of this rulemaking, as the purpose is to amend the process that we use to determine that an FCN is no longer effective.

(Comment 19) Some comments discussed the use of plastic and Styrofoam in food packaging generally.

(Response 19) The comments are outside the scope of this rulemaking and so we decline to address them.

(Comment 20) One comment requested that FDA revise the proposed rule to “include notifiers' failure to systematically identify the class of chemically- or pharmacologically-related substances in the diet as sufficient for FDA to determine an FCN is no longer effective.” The comment also made several recommendations for a “revised proposed rule regarding food contact substance notifications.” The recommendations for a revised proposed rule include: (1) requiring FDA to post our evaluation of the FCN as well as the FCN itself; (2) requesting periodic updates; (3) requiring manufacturers and suppliers to submit samples of their FCSs to FDA upon request; (4) including FDA's need for a sample as a reason to determine an FCN no longer effective; and (5) that FDA “sunset an FCN to prompt an update.”

(Response 20) We decline to issue a revised proposed rule at this time and are not including these recommendations in the final rule because they are outside the scope of our rulemaking. With respect to the request that we post our evaluation of an FCN, as discussed in response to Comment 16, decisions about proactive disclosures are generally based on available resources and policy priorities.

On our own initiative, to maintain consistency and provide clarity with existing FCN program notifications and TOR exemptions, we are making nonsubstantive changes to the following:

• In § 170.102(e), we are making clarifying edits to the provision.

• In § 170.105(a)(2), we are replacing the words “stopped” and “stop” with “ceased” or “cease,” the terms used in the FCN program identifying the FCNs that are not in interstate commerce.

• In § 170.105(a)(2)(ii)(A), because an FCN is specific to a manufacturer or supplier, we are revising the first sentence to add a reference to the manufacturer or supplier specified in the FCN.

• In § 170.105(a)(3)(i), we are revising the second sentence to clarify the data and information the manufacturer or supplier is to provide.

• In § 170.105(a)(4), we are replacing the words “covered by a threshold of regulation exemption” to “the subject of an issued threshold of regulation exemption.”

• § 170.105(a)(4)(i), we are revising the second sentence to clarify the data and information the manufacturer or supplier is to provide.

The preamble to the proposed rule stated that we would make any final rule resulting from this rulemaking effective 60 days after its date of publication in the Federal Register (87 FR 3949 at 3954).

We did not receive any comments on the proposed effective date for the final rule. Therefore, the final rule will become effective on May 21, 2024.

We have examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, Executive Order 14094, the Congressional Review Act/Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801, Pub. L. 104-121), the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Orders 12866, 13563, and 14094 direct us to assess all benefits, costs, and transfers of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). Rules are “significant” under Executive Order 12866, section 3(f)(1) (as amended by Executive Order 14094), if they “have an annual effect on the economy of $200 million or more (adjusted every 3 years by the Administrator of [the Office of Information and Regulatory Affairs (OIRA)] for changes in gross domestic product); or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or tribal governments or communities.” OIRA has determined that this final rule is not a significant regulatory action under Executive Order 12866, section 3(f)(1).

A rule is “major” under the Congressional Review Act/Small Business Regulatory Enforcement Fairness Act if it has resulted or is likely to result in an annual effect on the economy of $100 million or more or meets other criteria specified in the Congressional Review Act. OIRA has determined that this final rule is not a major rule under the Congressional Review Act/Small Business Regulatory Enforcement Fairness Act.

The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the final rule is unlikely to impose a substantial burden on the affected small entities, we certify that the final rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated impacts, before issuing “any rule that includes 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 one year.” The current threshold after adjustment for inflation is $183 million, using the most current (2023) Implicit Price Deflator for the Gross Domestic Product. We do not expect this final rule to result in any 1-year expenditure that will meet or exceed this amount.

We expect the final rule to lead to cost savings for manufacturers and suppliers of FCSs and FDA. The final rule would revise FDA's current process of determining whether an FCN is no longer effective. The final rule would provide manufacturers and suppliers the opportunity to demonstrate why an FCN should continue to be effective before we could determine that an FCN is no longer effective. Additionally, the final rule would revise the current process to cover situations in which it is determined that an FCN is no longer effective for reasons other than safety, including that a manufacturer or supplier may request that FDA determine that an FCN is no longer effective on the basis that the manufacturer or supplier no longer produces, supplies, or uses the FCS for the intended use. Cost savings will be incurred by manufacturers and suppliers of FCSs who will be able to request that FDA determine the FCN is no longer effective for reasons other than safety. Cost savings will take the form of a decreased time burden to FCS manufacturers and suppliers responding to FDA's safety concerns with information that they no longer produce, use, or supply the FCN for the intended use. FDA will also experience cost savings from being able to act more efficiently upon such a request by the manufacturer or supplier. As the revisions in the final rule would not require significant additional action to be taken by manufacturers and suppliers, we expect the costs of the final rule to be minimal.

The estimated total cost savings of the final rule are estimated in 2021 U.S. dollars and range from zero to $0.4 million, with a central estimate of $0.1 million, annualized at 2 percent over 10 years. We estimate that the costs of the final rule are minimal. The cost savings and costs of the final rule are summarized in table 1.

We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the final rule. The full analysis of economic impacts is available in the docket for this final rule (Ref. 1) and at https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.

We have determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

The final rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The title, description, and respondent description of the information collection provisions are shown in the following paragraphs with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information.

Title: Food Contact Substance Notification System; OMB Control Number 0910-0495—Revision.

Description: Section 409(h) of the FD&C Act establishes a premarket notification process for FCSs. Section 409(h)(6) of the FD&C Act defines a “food contact substance” as any substance intended for use as a component of materials used in manufacturing, packing, packaging, transporting, or holding food if such use is not intended to have any technical effect in such food. Section 409(h)(3) of the FD&C Act states that the notification process be utilized for authorizing the marketing of FCSs except when: (1) the Secretary of HHS (Secretary) determines that the submission and premarket review of a food additive petition (FAP) under section 409(b) of the FD&C Act is necessary to provide adequate assurance of safety or (2) the Secretary and the manufacturer or supplier agree that an FAP should be submitted. Section 409(h)(1) of the FD&C Act requires that a notification include: (1) information on the identity and the intended use of the FCS and (2) the basis for the manufacturer's or supplier's determination that the FCS is safe under the intended use. FDA regulations at part 170 (21 CFR part 170) specify the information that a notification must contain.

The final rule amends the procedure by which we determine that an FCN is no longer effective. The information collection will cover situations that entail the potential reporting of additional data or other information by manufacturers or suppliers of FCSs. The final rule will augment the existing information collection that covers the FCN program at part 170, subpart D.

Description of Respondents: Respondents to the information collection are manufacturers and suppliers of FCSs sold in the United States. Respondents are from the private sector (for-profit businesses).

We estimate the burden of this collection of information as follows:

The burden estimates in table 2 are based on our experience with our Food Contact Substance Notification Program and are unchanged from our estimates in the proposed rule.

We will inform the affected manufacturers or suppliers of the specified FCN about data or other information that their FCSs may: (1) not be safe for its intended use; (2) have stopped being produced, supplied, or used as an FCS for its intended use; (3) be authorized by a food additive regulation; or (4) be the subject of an issued TOR exemption. As such, we may determine that the specified FCN may no longer be effective for its intended use unless the affected manufacturer or supplier provides additional data or other information to demonstrate that the FCN should continue to be effective. In row 1, we estimate that, annually, two respondents will each spend about 75 hours preparing a written response followed by submission of additional data or information to demonstrate that the FCN should continue to be effective for a total of 150 hours (2 respondents × 75 hours). In the existing information collection for our Food Contact Substance Notification Program (OMB control number 0910-0495; 87 FR 7190 (February 8, 2022)), we estimate that it may take up to 150 hours to prepare and submit an FCN depending on the complexity of the submittal. We assume the time to prepare a response will take about half the time of the initial submittal because the manufacturer or supplier should already have compiled and have access to most, if not all the information demonstrating that their FCN should continue to be effective and remains safe for its intended use.

The final rule will allow a manufacturer or supplier to request that FDA determine that their FCN is no longer effective on the basis that the manufacturer or supplier no longer produces, supplies, or uses the FCS for the intended use. We believe a manufacturer or supplier will not need much time to prepare such a request as it should already have access to information that it has ceased or intends to no longer produce, supply, or use the FCS for the intended use. Based on the Final Regulatory Impact Analysis, we estimate that five respondents will voluntarily request that FDA determine that their FCN is no longer effective (Ref. 1). Accordingly, in row 2, we estimate that five respondents will each submit 1 request to us per year with each request taking 2 hours to prepare for a total of about 10 hours (2 respondents × 5 hours).

The information collection provisions in this final rule have been submitted to OMB for review as required by section 3507(d) of the Paperwork Reduction Act of 1995. Before the effective date of this final rule, FDA will publish a notice in the Federal Register announcing OMB's decision to approve, modify, or disapprove the information collection provisions in this final rule.

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.

We have analyzed this final rule in accordance with the principles set forth in Executive Order 13132. We have determined that the rule does not contain policies that 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. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

We have analyzed this rule in accordance with the principles set forth in Executive Order 13175. We have determined that the rule does not contain policies that 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. Accordingly, we conclude that the rule does not contain policies that have Tribal implications as defined in the Executive order and, consequently, a Tribal summary impact statement is not required.

The following reference is on display at the Dockets Management Staff (see ADDRESSES ) and is available for viewing by interested persons between 9 a.m. and 4 p.m. Monday through Friday; it is also available electronically at https://www.regulations.gov/. Although FDA verified the website addresses in this document, please note that websites are subject to change over time.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 170 is amended as follows:

This document corrects minor technical errors in 26 CFR 301.6721-0.

The final regulations (TD 9984) subject to this correction are issued under section 6045(g), 6721, 6722, and 6724 of the Internal Revenue Code.

Accordingly, 26 CFR part 301 is corrected by making the following correcting amendments:

Background

The final regulations (TD 9984) subject to this correction are issued under section 6045(g), 6721, 6722, and 6724 of the Internal Revenue Code.

On January 30, 2024, the Office of the Federal Register published a rule to correct an error that appeared in the most recent annual revision of the Code of Federal Regulations (89 FR 5768). The CFR correction amended § 301.6721-1 of Title 26 of the Code of Federal Regulations, Parts 300 to 499, revised as of April 1, 2023, by reinstating paragraph (b)(6), which was mistakenly omitted.

In response to this request by the SDDC, and pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat 266; 33 U.S.C. 1) and Chapter XIX of the Army Appropriations Act of 1919 (40 Stat 892; 33 U.S.C. 3), the Corps is amending paragraph (a) of 33 CFR 334.1110 to expand the boundaries of the existing MOTCO restricted area. The existing boundary at the western terminus is shifted approximately 700 yards west along the shoreline so that it encompasses the mouth of Hastings Slough and eliminates a potential route of unauthorized encroachment into the MOTCO installation. Along the central and eastern parts of the restricted area, the existing boundary is shifted bayward to the edge of an existing navigation channel (Roe Island Channel, Port Chicago Reach, and Middle Ground West Reach). The revised eastern boundary follows the southern edge of the navigation channel, and will not encroach into or impact vessel traffic in the navigation channel. The eastern shoreline terminus remains at its original location.

The proposed rule to expand the existing MOTCO restricted area was published in the January 11, 2023, edition of the Federal Register (88 FR 1532) and the regulations.gov docket number was COE-2022-0012. No comments were received in response to the proposed rule. The January 11, 2023, proposed rule included coordinates of reference points A through G along the revised boundary. Minor adjustments to the coordinates of boundary points D and E have been made in this final rule to locate the points just outside the boundaries of the adjacent navigation channel, and ensure that the restricted area does not encroach on the navigation channel. Additional formatting changes were made to the coordinates of other points to ensure data consistency. All coordinates are now shown in decimal degrees to four decimal places, which did not alter the locations of the points that were not changed by this final rule.

a. Regulatory Planning and Review. This final rule is not a “significant regulatory action” under Executive Order 12866 (58 FR 51735, October 4, 1993) and Executive Order 13563 (76 FR 3821, January 21, 2011) and it was not submitted to the Office of Management and Budget for review.

b. Review Under the Regulatory Flexibility Act. This final rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354). The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice-and-comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities ( i.e., small businesses and small governments). The Corps expects that the changes to the boundaries of this restricted area will have no appreciable economic impact on the public, will result in no anticipated navigational hazards, and will not interfere with existing waterway traffic. Small entities can still utilize navigable waters outside of the restricted area. The Corps therefore certifies that this final rule would have no significant economic impact on small entities.

c. Review Under the National Environmental Policy Act. The Corps has determined that this rule will not have a significant impact on the quality of the human environment and, therefore, preparation of an environmental impact statement is not required. An environmental assessment was prepared for the final rule and may be reviewed by contacting the Corps' San Francisco District office at CESPN-RG-Info@usace.army.mil.

d. Unfunded Mandates Act. The final rule does not impose an enforceable duty among the private sector and, therefore, is not a federal private sector mandate, and is not subject to the requirements of Section 202 or 205 of the Unfunded Mandates Reform Act (Pub. L. 104-4, 109 Stat. 48, 2 U.S.C. 1501 et seq. ). The Corps has also found under Section 203 of the Act, that small governments will not be significantly or uniquely affected by this rulemaking.

e. Congressional Review Act. The Congressional Review Act, 5 U.S.C. 801 et seq., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The Corps will submit a report containing the final 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 cannot take effect until 60 days after it is published in the Federal Register . This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

For the reasons set out in the preamble, the Corps amends 33 CFR Part 334 as follows:

The Great Lakes St. Lawrence Seaway Development Corporation (GLS) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Tariff of Tolls (Schedule of Fees and Charges in Canada) in their respective jurisdictions.

The Tariff sets forth the level of tolls assessed on all commodities and vessels transiting the facilities operated by the GLS and the SLSMC. The GLS is revising 33 CFR 402.12, “Schedule of tolls”, to reflect the fees and charges levied by the SLSMC in Canada beginning in the 2024 navigation season.

Regulatory Notices: Privacy Act: Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit https://www.Regulations.gov.

This regulation involves a foreign affairs function of the United States and therefore, Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities. The St. Lawrence Seaway Regulations and Rules primarily relate to commercial users of the Seaway, the vast majority of whom are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels.

This regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et seq. ) because it is not a major Federal action significantly affecting the quality of the human environment.

The Corporation has analyzed this rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and has determined that this proposal does not have sufficient federalism implications to warrant a Federalism Assessment.

The Corporation has analyzed this rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives.

This regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review.

Accordingly, the Great Lakes St. Lawrence Seaway Development Corporation is amending 33 CFR part 402 as follows:

I. Background

The regulation at 37 CFR 1.4(d) sets forth the signature requirements for patent correspondence. Section 1.4(d)(1) and (2) set forth the requirements for handwritten signatures and S-signatures, respectively. An S-signature is a signature that is inserted between forward slash marks by the signer and is not a handwritten signature. An S-signature must consist only of letters, or Arabic numerals, or both, with appropriate spaces and commas, periods, apostrophes, or hyphens for punctuation, and the signer's name must be printed or typed, preferably immediately below or adjacent to the S-signature. Section 1.4(d)(3) provides for a graphic representation of a handwritten signature or an S-signature for correspondence submitted electronically via the USPTO patent electronic filing system. The USPTO has been accepting certain electronic signatures as graphic representations pursuant to § 1.4(d)(3), if the correspondence was submitted via the USPTO patent electronic filing system. The signer must personally make their own signature, regardless of what type of signature is used.

Prior to the effective date of this final rule, the USPTO did not permit patent correspondence to be electronically signed by methods other than the electronic entry of S-signatures under § 1.4(d)(2) and the graphic representation method of § 1.4(d)(3). Furthermore, it only permitted the graphic representation method of § 1.4(d)(3) if the correspondence was being submitted via the USPTO patent electronic filing system. In recent years, however, other methods of electronic signature, such as methods using third-party software, have become more prevalent, reliable, and secure. For example, some software platforms include document-signing features with digital certificates or authenticity trails for the electronic signatures, resulting in the increased reliability and security of electronically generated signatures.

To simplify and streamline the USPTO's processes for patent applicants and owners, practitioners, and other parties who sign patent-related correspondence and to more closely align the signature requirements for patent and trademark correspondence, the USPTO is adding § 1.4(d)(4) as a new rule to provide an additional option for electronic signatures in patent correspondence. In addition, this new rule is aimed at addressing stakeholder input received, including during multilateral forums such as IP5 and Trilateral, and is directed towards increasing harmonization of practices and procedures amongst intellectual property offices globally. More information about the IP5 and Trilateral forums is available at www.uspto.gov/ip-policy/patent-policy/ip5 and www.uspto.gov/ip-policy/patent-policy/patent-trilateral-activities.

Under this new rule, “the person named as the signer” may sign patent correspondence electronically using any form of electronic signature specified by the Director. Moreover, the electronic signature under newly added § 1.4(d)(4) may be used whether the correspondence is being submitted via the USPTO patent electronic filing system, mailed, faxed, or hand delivered. At this time, the electronic signatures specified by the Director in newly added § 1.4(d)(4) consist of electronic signatures generated via third-party document-signing software that meet the requirements outlined in section II of this preamble. Signatures created using other types of software, such as graphic editing software, are not acceptable under newly added § 1.4(d)(4).

Subsection II(A) provides the requirements for third-party document-signing software, and subsection II(B) provides the USPTO procedures for determining whether electronically signed patent correspondence complies with newly added § 1.4(d)(4). Taken together, the subsections set out when patent correspondence signed using third-party document-signing software may be accepted under newly added § 1.4(d)(4). The final rule does not change any other requirements for signatures on patent correspondence, including that a signature must be personally inserted or generated by the named signer. Another person may not use document-signing software to create or generate the electronic signature of the named signer. The final rule also does not change which USPTO personnel have the responsibility for reviewing signatures on patent correspondence. This final rule is effective on publication and supersedes any previous USPTO guidance on this topic to the extent there are any conflicts.

Parties using third-party document-signing software must ensure that the underlying software meets the following requirements:

(1) The software must be specifically designed to generate an electronic signature and preserve signature data for later inspection in the form of a digital certificate, token, or audit trail. USPTO personnel may presume that the document-signing software preserves signature data for later inspection in the required form, unless the Office of the Deputy Commissioner for Patents (Legal) notifies USPTO personnel otherwise.

(2) The software must result in the signature page or electronic submission form bearing an indication that the page or form was generated or electronically signed using document-signing software.

The USPTO recommends that the software generate the date on which the signature was applied. While providing a date is not generally required in patent matters, the date is required for electronic signatures signed using document-signing software in trademark matters before the USPTO. Using software that generates the date will benefit practitioners that work in both patent and trademark matters, as the signatures will be acceptable in both patents and trademarks at the USPTO. Regardless of the date the correspondence was signed, the date of receipt will be based on §§ 1.6 through 1.10.

When reviewing a signature on a document that was generated using document-signing software, USPTO personnel must first determine compliance with other signature requirements, such as whether it was signed by a proper person ( e.g., § 1.33(b)). The Manual of Patent Examining Procedure (MPEP) (9th Edition, Rev. 07.2022, February 2023) provides more information on signatures by proper parties at section 714.01. Submissions must be personally signed by the individual identified in the signer name field. A person may not use document-signing software to enter or electronically generate someone else's signature. See newly added § 1.4(d)(4), redesignated § 1.4(d)(5)(ii), and MPEP 502.02. The electronic signatures of newly added § 1.4(d)(4) do not require the forward slashes of § 1.4(d)(2).

USPTO personnel must ensure that the signature block for a signature under newly added § 1.4(d)(4) meets the following requirements:

(1) Name. The name of each person who signed the document must be presented in printed or typed form, preferably immediately below or adjacent to the signer's adopted signature. The signer's name must be reasonably specific enough so that the identity of the signer can be readily recognized.

(2) Practitioner registration number. The registration number of each patent practitioner (§ 1.32(a)(1)) who signed the document pursuant to § 1.33(b)(1) or (2), must be supplied, either as part of the signature or immediately below or adjacent to the signature. The design patent practitioner status of each design patent practitioner must be indicated by placing the word “design” (in any format) adjacent to the signature.

(3) Acceptable software type. The software used by the signer must meet the requirements for third-party document-signing software listed in Section II(A).

If the submission is signed by a proper party and all the elements listed above are satisfied, USPTO personnel may presume the signature meets the requirements of newly added § 1.4(d)(4) for an acceptable electronic signature, unless directed otherwise by the Office of the Deputy Commissioner for Patents (Legal). If one or more of these requirements are not met, the signature block is noncompliant.

Notwithstanding the provisions above, USPTO personnel retain the discretion to inquire about the acceptability of a signature on a submission or require ratification, confirmation, or evidence of authenticity of such signature, where the USPTO has reasonable doubt as to the authenticity (veracity) of the signature.

The MPEP will be updated in due course to incorporate these requirements.

The following is a discussion of the amendments to 37 CFR part 1.

Section 1.4: The introductory text of § 1.4(d)(1) is revised to provide to a reference to redesignated § 1.4(d)(5) and delete a reference to § 1.4(e), which was reserved in a prior rulemaking.

New § 1.4(d)(4) provides an additional option for electronic signatures in patent correspondence. The electronic signatures of newly added § 1.4(d)(4) must be of a form specified by the Director and personally entered by the person named as the signer on the correspondence being filed for a patent application, patent or other patent proceeding in the USPTO. Newly added § 1.4(d)(4)(i) requires a patent practitioner (§ 1.32(a)(1)), signing pursuant to § 1.33(b)(1) or (2), to supply their registration number either as part of the electronic signature or immediately below or adjacent to the electronic signature. Newly added § 1.4(d)(4)(i) also requires a design patent practitioner to additionally indicate their design patent practitioner status by placing the word “design” (in any format) adjacent to the electronic signature. Newly added § 1.4(d)(4)(ii)(A) requires the signer's name to be presented in printed or typed form, preferably immediately below or adjacent to the electronic signature. Newly added § 1.4(d)(4)(ii)(B) requires the signer's name to be reasonably specific enough so that the identity of the signer can be readily recognized.

The provisions pertaining to certifications of prior § 1.4(d)(4) have been redesignated as § 1.4(d)(5). Redesignated § 1.4(d)(5)(ii) has been revised to include references to newly added § 1.4(d)(4) and gender specificity has been removed.

The provisions pertaining to forms of prior § 1.4(d)(5) have been redesignated as § 1.4(d)(6).

A. Administrative Procedure Act: The changes proposed by this rulemaking involve rules of agency practice and procedure, and/or interpretive rules, and do not require notice-and-comment rulemaking. See Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 97, 101 (2015) (explaining that interpretive rules “advise the public of the agency's construction of the statutes and rules which it administers” and do not require notice and comment when issued or amended); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), do not require notice-and-comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice”); and JEM Broadcasting Co. v. F.C.C., 22 F.3d 320, 328 (D.C. Cir. 1994) (explaining that rules are not legislative because they do not “foreclose effective opportunity to make one's case on the merits”).

In addition, the Office finds good cause pursuant to authority at 5 U.S.C. 553(b)(B), to adopt the change to § 1.4 without prior notice and an opportunity for public comment, as such procedures would be unnecessary and contrary to the public interest. This final rule provides another means for patent applicants and owners, practitioners, and other parties who sign patent-related correspondence to provide a signature. It merely involves rules of agency procedure or practice within the meaning of 5 U.S.C. 553(b)(A) and is a non-substantive change to the regulations. Accordingly, this final rule is adopted without prior notice and opportunity for public comment. Furthermore, the Office finds good cause to waive the 30-day delay in effectiveness period, as provided by 5 U.S.C. 553(d)(3), because this final rule would promote harmonization of signature requirements to reduce confusion and increase convenience for impacted parties as set forth here.

B. Regulatory Flexibility Act: As prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553 (or any other law), neither a Regulatory Flexibility Act analysis nor a certification under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) is required. See 5 U.S.C. 605(b).

C. Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993), as amended by E.O. 14094 (April 6, 2023).

D. Executive Order 13563 (Improving Regulation and Regulatory Review): The USPTO has complied with Executive Order 13563 (January 18, 2011). Specifically, and as discussed above, the USPTO has, to the extent feasible and applicable: (1) made a reasoned determination that the benefits justify the costs of the rule; (2) tailored the rule to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole, and provided online access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes.

E. Executive Order 13132 (Federalism): This rulemaking pertains strictly to federal agency procedures and does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (August 4, 1999).

F. Executive Order 13175 (Tribal Consultation): This rulemaking will not: (1) have substantial direct effects on one or more Indian tribes, (2) impose substantial direct compliance costs on Indian tribal governments, or (3) preempt tribal law. Therefore, a Tribal Summary Impact Statement is not required under Executive Order 13175 (November 6, 2000).

G. Executive Order 13211 (Energy Effects): This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001).

H. Executive Order 12988 (Civil Justice Reform): This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (February 5, 1996).

I. Executive Order 13045 (Protection of Children): This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (April 21, 1997).

J. Executive Order 12630 (Taking of Private Property): This rulemaking will not affect a taking of private property or otherwise have taking implications under Executive Order 12630 (March 15, 1988).

K. Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq. ), prior to issuing any final rule, the USPTO will submit a report containing the rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this rulemaking are not expected to result in an annual effect on the economy of $100 million or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this rulemaking is not a “major rule” as defined in 5 U.S.C. 804(2).

L. Unfunded Mandates Reform Act of 1995: The changes set forth in this rulemaking do not involve a Federal intergovernmental mandate that will result in the expenditure by state, local, and tribal governments, in the aggregate, of $100 million (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of $100 million (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

M. National Environmental Policy Act of 1969: This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

N. National Technology Transfer and Advancement Act of 1995: The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions that involve the use of technical standards.

O. Paperwork Reduction Act of 1995: The Paperwork Reduction Act of 1995 (44 U.S.C. 3501) requires that the USPTO consider the impact of paperwork and other information collection burdens imposed on the public. This rulemaking does not involve any new information collection requirements, or impact any existing information collection requirements, that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Notwithstanding any other provision of 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 Paperwork Reduction Act unless that collection of information has a valid OMB control number.

For the reasons set forth in the preamble, the USPTO amends 37 CFR part 1 as follows:

The JWOD Act, 41 U.S.C. 8501, et seq., leverages the purchasing power of the Federal Government to create employment opportunities through the AbilityOne Program for individuals who are blind or have significant disabilities. The Program is administered by the 15-member, presidentially appointed Commission that, as an independent Federal agency, maintains a PL of products and services that Federal agencies must purchase from participating NPAs who employ individuals who are blind or have significant disabilities. See 41 U.S.C.8503 and 8504. CNAs are responsible for distributing orders to Commission-approved NPAs to provide products and services to Federal agencies. See 41 CFR parts 51-2.4(a)(3) & 51-3.4. NPAs must meet initial qualification requirements and maintain those qualifications throughout their participation in the AbilityOne Program. See 41 CFR parts 51-4.2 and 51-4.3.

The Commission has five roles stated in the JWOD Act. First, the Commission decides on the addition or removal of products and services on the PL. See 41 U.S.C. 8503(a). Second, the Commission sets the FMP that the Federal Government will pay for the products or services. See 41 U.S.C. 8503(b). Third, the Commission designates nonprofit agencies to serve as CNAs, who are responsible for “facilitating the distribution of orders” for products or services among participating NPAs. See 41 U.S.C. 8503(c). Fourth, the Commission promulgates regulations “on other matters as necessary” to carry out the JWOD Act. See 41 U.S.C. 8503(d)(1). Fifth, the Commission engages in a “continuing study and evaluation of its activities” to ensure effective administration of the JWOD Act. See 41 U.S.C. 8503(e).

At present, pursuant to the JWOD Act, the Commission has designated National Industries for the Blind (NIB) and SourceAmerica as the CNAs responsible for distributing orders to participating NPAs. See 41 CFR 51-1.3 (definition of CNA); see also 41 CFR 51-3.2 (describing duties of a CNA). The CNAs provide information to the Commission as needed and otherwise assist the Commission in implementing the Commission's regulations. NPAs associated with NIB primarily employ individuals who are blind or visually impaired; NPAs associated with SourceAmerica primarily employ individuals with other significant disabilities, including intellectual and developmental disabilities (IDD). As of September 30, 2023, NIB represents 58 NPAs participating in the AbilityOne Program, and SourceAmerica represents 355 NPAs.

In making its determination on whether to add a product or service to the PL, the Commission assesses four suitability criteria. See 41 CFR 51-2.4. First, the Commission considers whether there is the potential for the NPA to employ enough individuals who are blind or have significant disabilities as needed to carry out the contract. Second, the Commission determines whether the recommended NPAs meet all the qualification requirements set forth in 41 CFR part 51-4. Third, the Commission assesses the capability of the recommended NPAs to provide the product or service, including the required labor operations, Government quality standards, and delivery schedules. Finally, if there is a current contractor providing the product or service, the Commission determines if there would be an adverse impact on that contractor if the proposed requirement is placed on the PL.

Section 898(a)(1) of the National Defense Authorization Act (NDAA) for Fiscal Year 2017 [Hereinafter referred to as the Act]  1 directed the Secretary of Defense to establish a panel of senior level representatives from the Department of Defense (DoD) agencies, the Commission, and other Federal Government agencies to address the effectiveness and internal controls of the AbilityOne Program related to DoD contracts [Hereafter referred to as the Panel]. The Panel consisted of representatives from the Office of the Secretary of Defense and its DoD Inspector General, the Commission, and the Commission's Inspector General, as statutory members. The Panel's membership also consisted of senior leaders and representatives from the military service branches, Department of Justice, Department of Veterans Affairs, Department of Labor, the General Services Administration, the Department of Education, and the Defense Acquisition University.

The primary mission of the Panel was to identify both vulnerabilities and opportunities in DoD contracting within the AbilityOne Program and, at a minimum, recommend improvements in the oversight, accountability, and integrity of the Program. Of specific relevance to this rulemaking, the Panel was directed to make recommendations for increasing employment opportunities for individuals who are blind or have significant disabilities, especially service-disabled veterans, and recommend ways to explore opportunities for competition among qualified NPAs to ensure equitable selection in work allocations. The Panel was required to provide an annual report to Congress on its activities not later than September 30, 2017, and annually thereafter for the next three years. 2

The first annual report from the Panel was submitted to Congress in July 2018 and its final report was submitted in January 2022. During its four-year tenure, the Panel established seven subcommittees that aligned with the duties described in Section 898(c), with the Acquisition and Procurement subcommittee, also known as Subcommittee Six, addressing the acquisition and procurement duties. Subcommittee Six identified ten findings that led to initial recommended actions for implementation.

The most germane finding from Subcommittee Six called on the Commission to implement price-inclusive NPA selection procedures and conduct pilot tests that include DoD and Commission-led evaluations and recommendations.

Although the Panel's recommendations were not binding on the Commission, subsection (f)(2) of the Act directed the Commission to make a good faith effort to implement its recommendations. 3 If the Commission unduly delayed or ignored the Panel's recommendations, the Secretary of Defense was given the authority to “suspend compliance with the requirement to procure a product or service in Section 8504 of title 41, United States Code.”  4 Currently, DoD procurements represent more than half of the Program's annual sales, which creates procurement opportunities that employ over 18,275 individuals with significant disabilities or who are blind. 5 If the DoD were to withdraw from the Program, or even reduce participation, the results would greatly harm the objectives of the Commission.

In October 2018, the Commission partnered with officials from the Army's Mission Installation Contracting Command (MICC) and Installation Management Command (IMCOM) to work on a competitive NPA selection process incorporating the key aspects of recommendations from Subcommittee Six. 6 The parties selected the Facility Support and Operations Service (FSOS) contract at Fort Bliss, TX, for the first pilot and selected a second pilot, for similar services, at Fort Meade, MD, the following year. At the time, the Fort Bliss FSOS contract, valued at over $300 million in total contract value, was the highest dollar value contract in the AbilityOne Program. 7 The Fort Meade requirement had a total contract value of approximately $98 million.

The Commission had three objectives for conducting both pilots: first, to test a way to include price as a factor in the NPA selection process; second, to determine how to integrate personnel and resources from the requesting Federal agency into the NPA evaluation process; and third, to explore ways to compete, and potentially authorize a different NPA to perform on an existing PL requirement. 8 Both pilots were instructive in providing positive insights to the subcommittee and the Commission as to the last two questions. But the pilot at Fort Meade provided another equally valid insight to the first question, when the Commission was enjoined from completing the competitive pilot at Fort Meade due to a successful challenge at the Court of Federal Claims (COFC). 9

The petitioner raised several arguments against the permissibility of conducting the Fort Meade pilot, but the COFC focused on a narrow provision at 41 CFR part 51.2-7(a) of the regulatory language that signaled a preference for bilateral negotiations. The same regulation permitted use of other pricing methodologies, but COFC opined that other pricing methodologies could only be used “if agreed to by the negotiating parties.” The COFC further reasoned that the negotiating parties were limited to the NPA, the contracting activity, and the central nonprofit agency. As a result of this reading, the COFC found that the price component at issue in that case conflicted with the “collaborative pricing process” contemplated under 41 CFR part 51-2.7. The Commission posits that such an interpretation is not consistent with the Commission's statutory authority to establish the FMP, or the general thrust of the regulation. The JWOD Act unambiguously authorizes the Commission, not the negotiating parties, to establish the FMP and to revise it “in accordance with changing market conditions.”  10

The proposed changes to § 51-2.7 are intended to harmonize the statute and regulation to eliminate any ambiguity surrounding the Commission's authority to establish the FMP, by making it clear that it is not limited to an agreement between the parties when the Commission utilizes other pricing methodologies to establish or change the FMP. 11 In the Fourth Panel Report to Congress, the Commission Chairperson acknowledged the regulatory impasse created by the COFC decision, but explained that the Commission would be taking steps “to strengthen its authority in this area.”  12 This rulemaking is an effort to carry out that pledge.

Despite some setbacks, the Commission was encouraged by the results of the pilots because each test demonstrated that including price as a factor, coupled with a “customer focused” NPA selection ethos, can provide promising results for the Federal customer and the Program. However, the Commission was also mindful of the COFC decision and the need to ensure that competition within the Program does not frustrate other modernization initiatives and the Commission's ability to encourage employment growth for employees who have significant disabilities and who are blind. 13

The Notice of Proposed Rule Making (NPRM) explained how this rulemaking was also heavily informed by the Commission's Strategic Plan for Fiscal Year (FY) 2022-2026, issued in June 2022. 14 The Strategic Plan, a policy road map for next five years, is anchored by four Strategic Objectives:

(1) Expand competitive integrated employment (CIE) for people who are blind or have other significant disabilities.

(2) Identify, publicize, and support the increase of good jobs and optimal jobs in the AbilityOne Program. 15

(3) Ensure effective governance across the AbilityOne Program.

(4) Partner with Federal agencies and AbilityOne stakeholders to increase and improve CIE opportunities for individuals who are blind or have other significant disabilities.

These four objectives represent a deliberate shift to align the Program with contemporary disability policy and modern business practices. 16 The Commission realizes that some reforms will require specific legislative actions to fully implement, such as potential changes to the seventy-five percent direct labor hour ratio requirement. See 41 U.S.C. 8501(6)(C) & (7)(C). Other reforms, however, can be made by updating existing regulations and policies. For example, in November 2023, the Commission finalized Commission Policy 51.400, which introduced the long-term objective of providing job individualizations, employee career plans, and career advancement programs. 17 The Commission has also made numerous regulatory changes throughout its history, the most recent being the elimination of 14(c) certificates within the Program in 2022. 18

Although Section 898 authorizes the Secretary of Defense to suspend compliance with the Program if the Commission does not substantially implement the Panel recommendations, that isn't the only risk the Program faces. 19 Even if the DoD does not withdraw from the Program, it has other alternatives even for existing AbilityOne requirements. Increased competition can help to serve as a countermeasure to better protect existing PL work from other procurement actions or insourcing. 20 According to a 2018 Government Accountability Office (GAO) study, the DoD “budgets about $25 billion annually to operate its installations,” but it has been under pressure since 1997 to “reduce its installation support cost.”  21 The GAO further noted that the “DoD needed to show measurable and sustained progress in reducing installation support costs and achieving efficiencies in installation support.”  22 In 2013, Congress provided military services the authority to enter into Intergovernmental Support Agreements (IGSAs) with local and state governments to receive and provide or share installation support services. 23 The Army, with a current portfolio of approximately 122 IGSAs, routinely uses IGSAs as a procurement tool to reduce administrative burdens and achieve greater cost savings as compared to traditional government contracting. 24 Although the DoD has placed some local policy limitations on the use of IGSAs to displace a contract in the AbilityOne Program, 25 those limitations are not absolute. 26

For example, in 2017, the Army and the incumbent NPA were embroiled in a dispute over the price of the follow-on AbilityOne contract for installation support at Fort Polk (renamed Fort Johnson effective June 13, 2023) in Louisiana. The Army estimated the new contract price at $75 million over five years, whereas the NPA's price estimate was approximately $115 million. After eight months of unsuccessful negotiations, the Army stated they were considering the conversion of the Fort Polk requirement to an IGSA with the City of Leesville, LA. Only after direct intervention by the Deputy Assistant Secretary of the Army for Procurement (DASA(P)), were the two sides able to agree on a price. 27 A new contract was awarded on May 31, 2018, for a price of $75,984,926 over five years—thus averting the conversion to an IGSA. The Commission believes that for certain high dollar contracts it is far more advantageous for the Government to create a competitive environment where NPAs are competing against other NPAs, rather than risk the Federal customer converting an existing requirement within the Program to performance under an IGSA. Simply put, when competition leads to the addition of a new requirement to the Program or the retention of an existing requirement, it is a gain. When the lack of competition leads the DoD to move an existing requirement to an IGSA, it is a loss to the Program.

In November 2022, using prior pilots, the Commission's Strategic Plan, and the COFC decision as a roadmap, the Commission authorized the execution of a pilot at Fort Knox that supported several objectives described in the Commission's 5-year strategic plan, such as creating good and optimal jobs while providing the “best value” to the Federal customer. 28 To accomplish this goal, the pilot was divided into two distinct, but interdependent phases. Phase I began in mid-January of 2023 with the issuance of an Opportunity Notice (ON), 29 which fully explained the ground rules for participation. After responses were received, SourceAmerica, the responsible CNA, assessed and recommended two capable nonprofit agencies to the Commission for consideration as authorized sources. 41 CFR 51-3.2(d). Phase I ended when the Commission, after considering the suitability criteria at § 51-2.4, authorized both NPAs to compete in Phase II. The decision to authorize the NPAs was based on both NPAs meeting or exceeding the necessary management capability, experience, demonstration of employment potential through proposed placement program participation, 30 and having an effective workforce integration plan. 31

On June 5, 2023, Phase II commenced. In Phase II, SourceAmerica was directed to select the NPA providing the best value to the Federal customer, after considering technical capability, past performance, and price. Although price was a selection factor, the Commission directed SourceAmerica to ensure that price did not have greater weight than the non-price factors in the final NPA selection decision. 32 For the evaluation, the Army provided technical expertise to assist with all evaluation factors, and SourceAmerica made its selection on October 19, 2023. After the NPA selection, the Commission received the pricing information and a recommendation from SourceAmerica for the FMP. In early November, the Commission established the FMP, principally relying on the results of the Phase II price competition to support its determination. 33

The execution and results of this test pilot illustrate one of several potential approaches to address the Panel objectives. The NPA selected for the Total Facilities Maintenance (TFM) contract will create nearly fifty percent more jobs for individuals who have significant disabilities than the predecessor contractor. 34 The other NPA in the competition would have created approximately the same number of jobs for individuals with significant disabilities, but at a somewhat higher cost than the selected NPA. 35

Like the previous two pilots, Fort Knox was identified and executed after senior leader coordination and approval from the Army and the AbilityOne Commission. 36 This approach ensured excellent lines of communication and robust responsiveness from the early stages of requirement development to NPA selection and contract award. Once this rule is finalized, similar coordination, collaboration, and approval will be a critical component for implementing this rule.

On March 13, 2023, the Commission issued an NPRM in the Federal Register . 37 The proposed rule clarified the Commission's authority to consider different pricing methodologies in establishing the FMP for PL additions and changes to the FMP; defined the parameters for conducting competitive distributions among multiple qualified NPAs; clarified the Commission's authority to authorize or deauthorize a NPA; and provided a right of first refusal of employment to the current employees of an incumbent NPA who are blind or have other significant disabilities for positions for which they are qualified.

The initial comment period was open for 60 days but was extended another 30 days for additional comments. After the comment period closed on June 12, 2023, the Commission had received 95 comments from various stakeholders and interested parties. 38 Comments were received from NPAs (50), both CNAs (2), private individuals (27), disability rights organizations (2), NPA advocacy groups (3), and anonymous commenters (11). The level of support also varied, with 6 commenters supporting the rule unconditionally, 40 others supported the rule subject to certain conditions, 45 commenters opposed the rule, and 4 comments were neutral or administerial in nature. One additional comment was received during the interagency review period from a disability rights advocacy group opposing the rule.

Of the 50 responding NPAs, 16 NPAs provided a comment signaling complete opposition to the proposed rule. The most significant concern for most commenters was the proposed rule's deviation from the Panel's recommendations. Commenters pointed out the proposed rule's lower threshold to trigger competition of $10 million total contract value, 39 not limiting competitions to government owned facilities/properties, not limiting competition to once every ten years, and the lack of consideration of a social impact factor in the NPA selection decision for a competitive distribution.

There were several commenters who also stated concerns about potential job losses due to competition. These commenters stated that if price is included in the NPA selection process, NPAs will cut costs at the expense of employees who are blind and have significant disabilities. In fact, nearly all private individuals who responded to the NPRM are employed by NPAs and feared that increased competition might cause them to lose their job. The disability rights advocacy group that offered a comment during the interagency review period, voiced a similar concern.

Section II provides a detailed explanation of the scope of comments received and the changes made in response. In summary, the most significant changes are as follows:

• The threshold to trigger competition has been bifurcated. For DoD and its components, the threshold at which the Commission may consider a request for competition under this regulation will apply to projects valued at greater than $50 million. The threshold at which the Commission may consider a request for competition under this regulation by civilian agencies remains at greater than $10 million total project value in recognition of the lower base value of their contracts. 40

• As recommended, the final rule now states that if a competitive distribution is approved by the Commission, the CNA shall not permit price to have greater weight than the non-price factors when making an NPA selection decision.

• The final rule does not adopt the term “social impact,” but, in response to NPA comments, it now directs the CNA to consider criteria or subcriteria related to training and placements, and employment opportunities for all competitive distribution decision approved in accordance with § 51-3.4(d).

• The final rule requires that a competition shall not be approved by the Commission due to failed good faith bilateral price negotiations (price impasse), until the parties have exhausted all administrative remedies required by the Commission's pricing policies and procedures. The final rule also limits those impasse related competitions to service requirements that exceed $1 million in total project value.

• The final rule clarifies that all requests for competition must come from a Federal agency Senior Executive or Flag or General Officer and must be approved by the Commission. The rule also explains that the Commission must, at a minimum, consider the criteria under § 51-2.4 before approving a competitive distribution.

• The final rule is reorganized, and terms are amended to ensure consistency throughout the rule, where appropriate.

The Commission carefully considered all of the comments related to this rulemaking. We summarized the commenters' views and, where appropriate, responded to all significant issues raised by the commenters that were within the scope of this rule. This means that we did not respond to every aspect of every comment. Instead, we focused on the most significant comments that related to the essential thrust of this rule; namely, use of a price component in the NPA selection process and the use of price competition for establishing the FMP. We also did not summarize or respond to comments that were administerial or outside the scope of the proposed rule. An analysis of the public comments received and of the changes in the regulations since publication of the NPRM follows.

Comments: Several commenters requested that the Commission withdraw the NPRM and substitute it with an ANPRM and requested a public hearing to allow for greater dialogue, outreach, and a more detailed analysis on the costs, benefits, and alternatives to competition. Some who made similar comments to withdraw the NPRM also requested a public hearing to discuss the proposed rule further. Other commenters cited Executive Order (E.O.) 12866 which requires proactive engagement of interested or affected parties to inform the development of regulatory agendas and plans and stated that the Commission has not complied with the E.O. because there had not been adequate engagement with stakeholders.

Discussion: There is no requirement for a Federal agency to issue an ANPRM before a NPRM, especially when, as in this case, the agency's decision has been informed by the four-years of work conducted by a Congressionally mandated Panel and a 5-year Strategic Plan that specifically called for these changes. 41 The purpose of an ANPRM is to gauge the public's interest in a rule and to help the Federal agency decide if a new rule is necessary. 42 As noted earlier, the main reason for this rule change was to address the basis for the COFC's enjoinment to the Commission's interim policies and previous efforts to introduce competition into the Program. 43 As such, there was no doubt that the agency needed to amend its regulations to carry out the Panel's recommendations and the guidance set forth in the Commission's 5-year Strategic Plan. Nevertheless, it has been the practice of this agency to consider stakeholders' interests and to actively engage the public whenever there is a significant change to the way the Commission administers the Program.

For this rulemaking, the use of an NPRM provided a sufficient avenue for comment on the proposed changes. We initially granted 60 days to provide comment on the proposed rule. Subsequently, in response to requests for additional time, we provided an additional 30 days for public comment. Although the Commission did not hold a public hearing, members of the Commission staff attended conferences held by both CNAs to discuss the merits and challenges of introducing a price-inclusive competition into the Program. Additionally, the Commission routinely discussed this issue during public meetings and devoted the Commission's entire July 13, 2023, public meeting to listen to public concerns and support for the proposed rule. The issues raised during that public meeting largely mirrored comments received during the public comment period for the NPRM, but the engagement was useful for all involved. This is the type of engagement contemplated by E.O. 12866, fulfilled through actively listening to each stakeholder and making decisions informed by the interests of all involved.

Changes to the Rule: None.

Comments: A few commenters stated the proposed rule goes beyond the scope of the JWOD Act. In particular, NPAs asserted that price competition is a departure from how Congress intended the Program to operate, creates potential negative incentives that could harm the mission of the Program and individuals it intends to serve, and criticized the lack of consultation with Congress in part due to a perception that the Commission has offered no methodology for which contracts would be eligible for competition.

Other commenters in support of the proposed rule disagreed and acknowledged there is nothing that prevents the AbilityOne Commission from approving FMPs resulting from price competition.

Discussion: The final regulation addresses many of the concerns raised by commenters regarding possible adverse impacts from the proposed rule. In addition, in establishing the Panel, Congress gave DoD broad authority to suspend compliance with the Program if the Commission did not substantially implement the recommendations of the Panel. Not implementing the recommendation, and risking DoD suspension, would be directly inconsistent with the purpose of the JWOD Act. 44 The authority to act on the Panel's recommendations, through regulation, has also been recognized by the COFC. 45 The court wrote that “Congress granted AbilityOne formal rulemaking authority, which it can and has used to establish the procurement scheme it desires.” It went on to write “[g]ranted [the Commission] must submit its rules to formal notice-and-comment procedures but at the end of the day, AbilityOne likely has the rulemaking authority to craft procurement procedures that include a price component.”  46 In issuing an NPRM, receiving and considering public comments, and publishing this final rule, the Commission has met its obligations under the statute and all applicable regulations.

Changes to the Rule: No substantive changes.

Comments: Many commenters expressed opposition to the proposed rule's competition threshold of $10 million in total contract value instead of the Panel's recommendation of $10 million annual value. A few commenters noted that the Panel focused only on DoD procurements and that the proposed rule's lower threshold went far beyond the Panel's focus and recommendations. Of particular concern to many commenters is the increased number of eligible contracts for competition from 46 to 346 due to the lower threshold in the proposed rule. Commenters stated that participating in price competition is costly for NPAs and lowering the threshold exposes smaller NPAs to competition that may not have the ability to compete with larger NPAs. Commenters also argued that over time larger NPAs will dominate these competitive contracts, resulting in less competition among NPAs in the Program.

Largely, commenters recommended adopting the Panel's competition threshold of $10 million annual value, because as one CNA stated, “the 898 Panel struck the correct compromise in providing an opportunity for competition on the largest contracts with the greatest opportunity for savings.” Alternatively, one NPA recommended a $15 million threshold for existing contracts to further protect small NPAs, while another commenter recommended the Commission consider adding an escalation rate to the contract value that aligns with required minimum wage increase requirements for Federal contractors under the Executive Order 14026.

The Commission also received comments in support of the proposed rule's $10 million total contract value threshold for competition. One commenter, for example pointed out that the Panel's recommended price competition threshold was mandatory and did not meet civilian Federal customer needs. The same commenter praised the Commission's decision to make competition discretionary as opposed to mandatory. Another supportive commenter believed the proposed rule would create new opportunities for other NPAs in the Program, thereby creating more jobs for individuals who are blind or have significant disabilities.

Discussion: Although it is generally true the Panel sought to create a policy that targeted service requirements valued at $10 million or greater annually, it did not foreclose the possibility of competing requirements under that threshold. On February 2020, Subcommittee Six established a policy working group to develop the proposed framework for executing the NPA selection process. 47 This included, but was not limited to, establishing business rules for competition and assignment of work among AbilityOne Program NPAs. The policy working group compiled its final analysis and completed a draft policy shortly before the Panel's sunset in January 2022. 48 The draft policy expressly stated that competition “automatically applied to new and existing Procurement List actions for services estimated to exceed $10 million annually.”  49 The policy also permitted the Commission, through written vote, to allow competition for “new and existing PL actions for services with an estimated value less than $10 million.”  50 In essence, the Panel's intention was to make competition mandatory for all requirements greater than $10 million annually, but discretionary for any service requirement below the threshold. In contrast, the threshold described in the NPRM is fully discretionary and limited to those requirements with a total contract value of $10 million or greater, except in the case of a price impasse. Both the Commission's NPRM and final rule threshold are more targeted and ultimately less expansive than the Panel's and Subcommittee Six's intended competition framework, subjecting far fewer service requirements to potential competition.

In setting the $10 million threshold, the Commission sought to make the Program more responsive to civilian Federal agencies. This decision was based on balancing the needs of civilian federal agencies and providing some measure of predictability to service-providing NPAs. For example, in SourceAmerica's 2022 Federal Customer Survey Final Report, the surveyed Federal customers reported an average 86% overall Program satisfaction rate for the five survey periods referenced in the report. 51 Over the same period, however, approximately 40.5% of surveyed Federal customers reported that the Program's products and services were overpriced when compared to other non-AbilityOne contractors. 52 Additionally, 25% of the surveyed customers reported it was unlikely they would pursue new contract opportunities through the AbilityOne Program, and 30% of the surveyed customers responded they were unlikely to expand current contracts with the Program. 53 When asked what ways the Program could be improved, several survey participants mentioned pricing, noting that “similar services with non-NPAs are much less expensive.”  54 The surveyed customers recommended the Commission provide for competition between NPAs, because the ability for Federal customers to compare market prices is not possible when they are compelled to negotiate price with one vendor. 55 Comments, recommendations, and survey results like this have led the Commission to conclude that the desire for competition was not limited to the DoD and its instrumentalities, thereby supporting a need for a lower requesting threshold for civilian Federal agencies. Therefore, in addition to the final rule incorporating the work of the Panel, the Commission determined that it was prudent to retain a threshold low enough to be responsive to the concerns and needs of civilian Federal agencies, but not so low that every or most requirements could be subject to the type of competition described in this rulemaking.

Changes to the Rule: The final rule bifurcates the thresholds to trigger competition eligibility for non-DoD Federal agencies and the DoD. The threshold will remain at $10 million total project value for the former but increased to $50 million total project value for the DoD and its components. The Commission also notes that the term “contract” has been replaced with the word “project,” because the threshold is tied to a specific requirement identified on the PL, rather than the value of a contract which could contain several requirements under a single contract, or one large project issued under multiple contracts.

Comments: Commenters expressed concern over how often contracts would be recompeted, stating that competing contracts too often creates instability and administrative burden. Many commenters recommended adding a provision that a contract could not be recompeted for a 10-year period. Commenters stated longer contract periods allow the NPAs to extend major purchases over a longer period which provides cost savings to the Federal customer. One commenter also stated that recompeting too often potentially makes it harder to partner with commercial partners who are attracted to long-term contracts, especially at a time when the Commission has expressed interest in increasing partnering and subcontracting opportunities to expand competitive employment options. Some commenters also noted that routine competitions provide less incentives for NPAs to make major investments, because the NPA may not recoup the cost of those investments if it loses the order after the period of performance ends.

Discussion: After an initial competitive distribution has been completed, there would be little basis for the Commission to authorize another competition five years later, unless there are persistent concern(s) that had not been addressed from the last competition or new problems emerge. Although there is nothing in the rule to preclude a Federal agency from requesting competition every time a contract is up for renewal, it is highly unlikely that the Commission would approve routine requests for the same requirement. The Commission expects most Federal customers to be highly satisfied with their AbilityOne contractors and to prefer awarding sole source contracts as permitted by 10 U.S.C. 3204(a)(5) or 41 U.S.C. 3304(a)(5). Furthermore, Commission regulations already encourage agencies to “to use the longest contract term available by law . . . in order to minimize the time and expense devoted to formation and renewal of these contracts.” 41 CFR 51-6.3. The Commission will continue to promote the use of long-term agreements, especially where it provides lower administrative expenses for the Federal government and the service providing NPA.

As noted previously, the Fort Knox pilot was identified and executed after senior leader coordination and approval from the Army and the AbilityOne Commission. This approach ensured excellent lines of communication and robust responsiveness from the early stages of requirement development to NPA selection and contract award. Once this rule is finalized, similar coordination, collaboration, and approval will be a critical component for implementing this rule. The Commission also believes that senior level coordination will help to mitigate the frequency of competition, by requiring request to be vetted by the requesting Federal agency at least one level above the user level prior to submission to the Commission.

Changes to the Rule: The Commission has revised the final rule at § 51-3.4(b) to clarify that a request for competition must come from members of the Senior Executive Service or Flag or General Officers in acquiring Federal agencies and require approval from the Commission.

Comments: A significant number of commenters expressed concern that the proposed rule did not adopt the Panel's recommendation to include social impact as a factor for selecting an NPA. The commenters stated that omission of social impact in the proposed rule meant it would not be a factor in the competition process of selecting an NPA and that this would lead to a race to the lowest price at the expense of the mission of the Program. In large part, these commenters suggested that the Commission adopt the Panel's recommendation and make clear in the final rule that the best value trade-off includes an analysis of social impact in the final selection of an NPA to provide the requirement.

Some commenters also recommended adding explicit weighting criteria for each factor, with a handful of commenters requesting that social impact be the most heavily weighted factor and price be the least heavily weighted factor. Other commenters recommended prioritizing all non-price factors above price but did not recommend that social impact be the most heavily weighted factor. The purpose of these approaches, as described by the commenters, was to protect the Program's mission of employing individuals who are blind or have significant disabilities and ensuring that actions by NPAs to provide career development for employees were taken into account as a positive factor.

Additionally, multiple commenters recommended that the social impact include consideration of such things as maximizing job opportunities for individuals who are blind or have significant disabilities, direct labor ratios, NPA size, Quality Work Environment (QWE) certification, mentorship programs, teaming opportunities, and quality of employment. Other commenters suggested alternative criteria that should be considered under social impact, specifically, retention of employees who previously earned subminimum wage and potential disruption to the current workforce if there was a change in the NPA selected for the project. Other social impact factors recommended for consideration included the creation of impact-oriented safeguards to protect AbilityOne employees, such as no loss of seniority, no benefit changes, transportation to and from the job site, and preservation of career ladders and upward mobility.

Discussion: The term “social impact” is not used in the AbilityOne Program. It is an umbrella term created by Subcommittee Six to account for various Program-specific priorities described as follows:

The Commission considered using the term “social impact” and creating a definition but concluded that even if it were to do so, social impact is a broad idea that might mean many different things to the different members of the Federal acquisition community as well as other Program stakeholders. The Federal Acquisition Regulation (FAR) lists guiding principles for the Federal Acquisition System (FAR 1.102). One of these guiding principles is fulfilling public policy objectives. Nearly every single public policy objective is about having a positive social impact.

As examples, Federal acquisition seeks a social impact in promoting economic resiliency through the Buy America Act, Trade Agreements Act, and local purchasing during major disasters under the Stafford Act. Another set of public policy objectives with a social impact are in the sustainable purchasing space. Examples include Bio-based purchasing through USDA and EPA's Comprehensive Procurement Guidelines. Federal acquisition seeks a social impact in supporting small businesses and underserved socio-economic communities through a host of efforts including set-asides for small, disadvantaged, woman-owned small businesses, purchases to service-disabled veteran-owned small businesses, etc. There are many more examples. Out of concern that it is too broad of an umbrella term which would never be understood, the Commission did not adopt or attempt to define the term social impact.

However, a clearly stated social policy objective of the Program is to increase training, employment and placement opportunities for individuals who are blind or have other severe disabilities through the purchase of commodities and services from qualified nonprofit agencies employing persons who are blind or have other severe disabilities. 41 CFR 51-1.1. Strategic Objective II of the Commission's Strategic Plan for FY 2022-2026 reinforces this policy objective by seeking an increase in the number of “good jobs” and “optimal jobs,” as defined in the Strategic Plan, throughout the Program. 57 The Commission's work on updating its compliance policies, following issuance of the Strategic Plan, further solidified the Commission's commitment to enhancing the employment aspects of the Program. For example, in November 2023, the Commission finalized Commission Policy 51.400, which introduced the long-term objective of providing job individualizations, employee career plans, and career advancement programs. 58

Until the Commission updates its regulations with terminology addressing the activities described above, 59 the Commission has determined that the most appropriate way to promote these types of activities is to use existing regulatory language regarding training and placements opportunities. 60 The rule makes clear that the Commission will approve criteria or subcriteria in support of these types of opportunities.

The final rule also requires that the selection official consider criteria or subcriteria related to employment opportunities for each competitive distribution. 61 This addresses the concern of many commenters that price competition between NPAs might reduce the number of individuals who are blind or have significant disabilities who are hired or may result in the substitution of employees whose disabilities are not as significant as those of other employees.

Finally, the rule makes clear that an NPA's capacity to create good and optimal jobs will be taken into account early in the competition process as well. If the Commission decides that a competitive distribution is appropriate, it will authorize at least two nonprofit agencies to serve as mandatory sources. In determining these authorizations, the Commission will apply the suitability criteria described at § 51-2.4. As the Commission made clear during the July 2023 public meeting, the “special considerations” referenced in Commission Policy 51.301 may include an NPA's record and capability in providing elements of employee training and career development. Indeed, these factors were considered during the Fort Knox pilot project.

Changes to the Rule: The final rule now directs the CNA to consider the capability of the NPA to provide training and placement, as well as employment opportunities, in making the selection decision. The rule also explains that the Commission must consider the criteria under § 51-2.4 before approving a competitive distribution and authorizing NPAs for the distribution.

Comments: Several commenters recommended adopting the Panel's recommendation that competition be limited to work performed on Federal property or at government owned facilities. Commenters raised the concern that the proposed rule did not consider the significant investment in infrastructure required when services are performed at an NPA location and are not portable or easily moved to another NPA location without significant unfavorable consequences.

Discussion: The Commission is aware that many NPAs have made significant investments in equipment, supplies, facilities, and personnel to perform work at NPA-owned or NPA-leased facilities. That was the principal reason this rule excludes products, because of the significant capital investments required to start and maintain a production line.

The Commission believes some of the future growth of the Program will come in knowledge-based jobs or in other jobs which can be performed remotely. Limiting this regulation to jobs which will be performed from a Government facility does not reflect the changing nature of many jobs.

Changes to the Rule: None.

Comments: Several commenters expressed concern that there is nothing in the proposed rule that would prevent a requirement from simply going to the NPA offering the lowest price and that approach would lead to a “race to the bottom.” NPAs were concerned that if price becomes the deciding factor or the sole differentiator among technically capable bidders, the results of a competition could cause irreparable harm to the Program and the individuals who depend on it for support.

Other commenters raised similar concerns, such as stating that the proposed rule promoted price competition alone without considering other factors such as accommodating disabilities, productivity levels, costs of workforce integration and empowering individuals with disabilities, and costs of transitioning employees with disabilities into the private sector.

Commenters recommended a variety of guardrails to reduce the possibility of Lowest Price Technically Acceptable (LPTA) determinations. These recommendations included: requiring the Federal customer and incumbent NPA to engage in good faith bilateral negotiations prior to requesting price competition, not allowing re-competition if quality of service is not a factor, incorporating a best value tradeoff social impact criterion, and including language in the proposed rule that addresses when the LPTA is acceptable, similar to language in the FAR. 62

Discussion: To address the concerns raised by commenters, the Commission has added language in the final rule to ensure that price will not have greater weight than the non-price factors for competitive distributions. It should also be noted that limiting the weight that price might have in a competitive distribution is a departure from the Panel's recommendation. The Panel left open the possibility of price having equal weight than the non-price factors. However, the final rule departs from this recommendation, which will serve as a signal to the NPA community and Federal agencies that price can be “a” factor, but it must be subordinate to the non-price factors for NPA selection. Lastly, but most importantly, nothing in this rulemaking is intended to supplant the Commission's statutory authority and responsibility to set the FMP. 63 For instance, if the Commission determines that the price resulting from a competition is dangerously low or out of synch with other Commission priorities, it retains the authority to adjust the final price or allow for additional price protections as necessary.

Changes to the Rule: Under § 51-3.4(d), the final rule now states that if a competitive distribution is approved by the Commission, the CNA shall not permit price to have greater weight than the non-price factors (combined) when making an NPA selection decision.

Comments: Several commenters were concerned about the downward effect of price competition on jobs in the Program, fearing individuals who are blind or have significant disabilities would be negatively impacted by the reduction of labor positions in response to their NPA providing competitive pricing. One of the CNAs argued that the proposed rule touted the benefits of competition without addressing the potential impact on employees with disabilities and that “increased competition may force NPAs to evaluate who they can hire to support lower contract costs and greater efficiency.” Several NPAs similarly stated that price competition incentivizes NPAs to focus on achieving the lowest price by hiring the most efficient workers with less significant disabilities, subcontracting out work, hiring on a part-time basis rather than employing individuals with the most significant disabilities, or transitioning individuals who are blind or have significant disabilities into employment outside of the Program. A few commenters also expressed concern about competition causing consolidation of NPAs which could also negatively impact jobs for individuals with disabilities. Two commenters requested there be a post-final-rule study on the impact on job loss for individuals with disabilities.

Discussion: The rule changes described in this rulemaking open the potential for attracting new and emerging jobs from Federal agencies. The changes also contain a number of protections to ensure a robust review before any competitions are accepted, discussed above. Finally, the rule now includes a requirement that the CNA consider training, placements, and employment opportunities in making the selection decision.

Changes to the Rule: The final rule directs the CNA to consider NPA capability of providing training, placements, and placement, as well as employment opportunity, as criteria or subcriteria for each NPA selection decision. In addition, as discussed above, the changes ensure a robust review before requests for competition are accepted.

Comments: Several commenters disagreed with the provision allowing competition due to a price impasse. A primary concern voiced was that it gives the Federal customer little to no reason to avert impasse and as one NPA argued “any contract could be approved for competition under the proposed rule . . . effectively opening the door for any government customer to prefer impasse as a means to render the contract eligible for competition.” Commenters also expressed concern about the lack of criteria for when price competition would be directed and that the mere threat of competition would cause NPAs to accept prices below fair market value to the detriment of the NPA and employees. Many commenters that opposed the provision asked the Commission to remove the option from the proposed rule and leave the current impasse procedures in place.

Conversely, two commenters in support of the provision requested the price impasse provision only apply when other conditions are satisfied such as limiting it to contracts valued at $10 million annually and services operating on government-owned sites/facilities.

Discussion: During fiscal year 2023, the Commission oversaw the resolution of three price disputes between an NPA and a Federal agency using the Commission's current price impasse procedures. None of those impasse actions were for service contracts. 64 This is consistent with the annual average of two to three price impasse decisions over the last five years. The Commission does not expect the number of impasses to increase because of this rule change, since Federal agencies will still be required to exhaust the Commission's existing administrative procedures before a competitive option is considered. Even then, a competitive distribution would only be directed for requirements exceeding $1 million in total project value and when other methods for resolving a price impasse have proven ineffective.

Changes to the Rule: We have modified and reorganized § 51-3.4. First, we moved the impasse provision in the final rule from paragraph (c) to (e). We also added language clarifying that the Commission shall not direct a competition because of a price impasse until bilateral price negotiations consistent with § 51-2.7(b) are attempted in good faith, and that a Federal agency may not request competition until the parties have exhausted all administrative remedies required by the Commission's pricing policies and procedures. Lastly, we added language to the final rule that limits those impasse related competitions to service requirements that exceed $1 million in total project value.

Comments: Several commenters expressed concern that the proposed rule did not include an adequate cost benefit analysis to the NPA community. Commenters largely argued that the proposed rule underestimated the costs to the NPA network to prepare bids, the cost to the Program for competition and re-competition, and the costs of stranded assets and trying to recapture those costs over a 5-year period. They further argued that the money to prepare the bids and proposals to compete would take funds away from NPAs spending to support their social mission.

Commenters argued the proposed rule did not adequately consider the impact and interaction with other simultaneous changes in the Program's policies and the new requirements upon NPAs that may impose additional costs. These commenters expressed concern that the proposed rule did not address the impact on an incumbent NPA, particularly when the NPA loses a contract that makes up a significant portion of the NPA's total revenue and the impact on subcontracting NPAs if the incumbent loses the contract.

A few commenters recommended the Commission evaluate using the Program Fee collected by the CNAs to mitigate the costs for the NPAs, with one commenter specifically recommending that the responsible CNA share in the increased cost burden by modifying the fees collected when competition occurs to help mitigate costs, while another commenter recommended eliminating the CNA Program Fee after the fifth year of a service contract on contracts valued at more than $10 million.

Discussion: The cost to prepare a response to an Opportunity Notice (proposal) may not be an insignificant matter for a competitive distribution. However, the Commission has, on balance, determined that any additional costs associated with competition are offset by the potential cost savings benefit Federal Government and the ability to attract new work performed by employees who are blind or have significant disabilities and retain existing requirements in the Program.

If an incumbent NPA is displaced by a competitive distribution, such displacement would result in a net loss to the outgoing NPA, but not to the Program. In addition, as noted throughout, Federal agencies may request a competitive distribution, but it will ultimately be up to the Commission to decide whether competition will occur. Commission discretion coupled with the relative infrequency of competitions, should result in an overall net gain for the Program and the ordering agency. Simply put, competitions will not be approved simply for the sake of competing, but when the overall benefits of competing reasonably outweigh other options.

Lastly, the Commission will continue to study the results of previous and future pilots, to best gauge how to offset unnecessary cost burdens associated with competition. However, comments related to mitigating cost through changes in CNA Program Fees is beyond the scope of this rulemaking.

With regard to the impact and interaction between this rule and other simultaneous changes in the Program's policies, the final rule requires the CNA to consider the NPA's activities in making some of these changes.

Changes to the Rule: The Commission has revised the final rule language at § 51-3.4(d) to limit frequency of competition through an approval process and inclusion of NPA capability regarding training and placements, as well as employment opportunities.

Comments: Several commenters claimed that the cost savings achieved by the pilots were exaggerated, costs to workers were ignored, and the results of two pilots were not sufficient information on which to base long-term changes to the Program. These commenters argued that cost savings and results did not capture or include the effect competition had on the incumbent NPA's retention of jobs or availability of training. One commenter noted that the pilot at Fort Bliss cost 60 jobs for people with significant disabilities and the curtailment of social impact support services and other programs designed to benefit the workforce.

Additionally, a few commenters contended that the discussion of the pilot savings was misleading and that the existing performance work statements (PWSs) and contractual vehicles were significantly different from the original PWS and contracts issued in the competition. Commenters claimed these scope reductions and other substantial changes lowered the price regardless of price competition. Other commenters argued the blocked Fort Meade pilot resulted in bilateral negotiations which saved the Federal customer more money than the projected pilot savings.

Discussion: Like any complex Government requirement in which there are almost always changes from one year to the next, we agree that there were changes made to the PWSs for the pilot test requirements. Such changes are especially likely when the Government restructures a follow-on contract from the prior effort. Some commenters have asserted that changes to the requirement, rather than the impact of a price-inclusive NPA selection, are the reason for the cost savings from the pilots described in the NPRM. We disagree with this characterization. The Commission believes the best measure for the savings achieved with the pilots is seen when the price of the successful (or would be successful) NPA is compared to the Independent Government Cost Estimate (IGCE) and the proposed prices of the other NPAs involved in the competition. 65 When compared to the IGCE, the cost savings for Fort Bliss were approximately 12.7 percent. The NPRM stated that the cost savings were 12 percent. For Fort Meade, the savings were 14 percent when compared to the IGCE. The NPRM erroneously stated the cost savings were 17 percent, but the NPRM correctly stated the applicable totals; namely, $19.6 million estimated annual contract value compared to the $16.8 million annual contract value offered by NPA 4 (14 percent).

Under an IGSA, the DoD already has authority to use an alternative to the AbilityOne Program. Ensuring the DoD has a means to give it confidence that its use of the AbilityOne Program will result in good service at a fair market price is critical to ensuring the DoD's future use of the Program. The true benefit of the competition process, regardless of cost savings, was the requirement remained with AbilityOne.

Another point raised by some commenters was the claim that the price-inclusive competition at Fort Bliss caused 60 workers with significant disabilities to lose employment. The Commission rejects this assertion. First, the same commenter noted that the cost savings at Fort Bliss were the result of reductions in the scope of the requirement. As noted above, every contract undergoes changes in scope from one contract period of performance to the next. Sometimes the scope of work increases, and the contractor will need to employ a larger workforce to accomplish the mission. On other occasions, the scope is reduced, necessitating a reduction in the number of workers performing on the contract. In any event, if the loss in jobs was the result of a reduction in scope ( i.e., less work) the loss in jobs cannot be attributed to the competition. In fact, another commenter noted that it was able to achieve greater cost savings for the Federal agency through bilateral negotiations, but the commenter did not indicate that those cost savings adversely impacted AbilityOne employees.

Second, the Fort Bliss competitive pilot concluded in 2019. 66 Since that time, the entire nation experienced one of the most life-altering events in the history of the world—the COVID-19 pandemic. The pandemic not only caused a reduction in certain service requirements across the Federal Government, but many employees, those with and without disabilities, were fearful about returning to work. The pandemic caused unprecedented job losses across the country and employers in the AbilityOne Program and throughout the nation have struggled to bring employment levels back up to pre-pandemic levels. As such, it does not follow that every worker that is no longer working at Fort Bliss (or elsewhere) is not working because of the competition pilot in 2019. 67 There are numerous reasons impacting employee participation in the workforce, and employees in the AbilityOne Program are no exception. 68 In fact, the Commission authorized the selected NPA for the Fort Knox pilot to operate at a lower project level ratio not only to encourage the creation of integrated work environments, but to also address the challenges NPAs are experiencing in recruiting qualified personnel with disabilities in the current job market. 69

Lastly, although it is permissible to use profits from an AbilityOne contract to finance social endeavors to support employees who are blind or have significant disabilities, it is generally not permissible to treat such costs as directly chargeable to the Government. With that said, the Commission does not dictate to an NPA how it should use its net proceeds. However, an NPA's decision to discontinue or reduce workforce development activities for workers who are blind or have significant disabilities will have a detrimental effect on its ability to compete for AbilityOne work in the future.

Changes to the Rule: None.

Comments: A few commenters commended the Commission for protecting the jobs of employees who are blind or have significant disabilities by including a right of first refusal. However, other commenters raised concerns that this provision was not sufficient to protect employees. Commenters argued that even with this provision, there is concern that employees will lose their jobs due to pressure to reduce operating costs. Additional concerns were raised such as the same vocational supports the employee received not being available from the successful contractor, the disruptive nature of changing employers for some employees, and the NPA not having the primary opportunity to retain the employee.

These commenters asked that the rule include how these individuals will be supported, as well as specifications and funding for appropriate assistance and training to help displaced individuals with disabilities find new employment opportunities. Commenters also made recommendations that included using Executive Order 14055 Nondisplacement of Qualified Workers Under Service Contracts as a guide and revising the proposed rule to include specifications and funding for the provision of appropriate assistance and training to help displaced individuals with disabilities find new employment opportunities. One commenter suggested expansion of the right of first refusal provision to all projects on the PL regardless of project type. In contrast, another commenter recommended applying proposed § 51-5.1(f) to only service contracts, while another commenter recommended including a requirement that the employee only have the right of refusal if the employee decided to move to the new NPA and/or the losing NPA does not have an equal or better opportunity for continued employment for that individual.

Discussion: The right of first refusal is not limited to those authorizations where the change in NPA is the result of a competitive distribution. Any instance where an NPA is replaced by another NPA would trigger a participating employee's right of first refusal (for products or services). Although providing employee accommodations and supports are beyond the scope of this rule, there are other Commission policies and procedures aimed to ensure that there is standardized level of support NPAs are expected to provide to their AbilityOne workforce. This means that once a new NPA assumes responsibility for the existing workforce of an AbilityOne requirement it should be just as conscientious in supporting its inherited workforce as the incumbent. However, the Commission does recognize that there may be some instances where some NPAs are better at providing specific types of support to a given workforce than another. There is nothing in this rule that would preclude an incumbent NPA from offering an individual another job to retain his or services with its NPA. However, the right of first refusal is an employee's right that they may choose to exercise if they do not choose to seek other opportunities elsewhere.

Lastly, this regulatory change is designed to work in concert with Executive Order 14055 or any other Executive Order or rule aimed at protecting an incumbent workforce. The significance of this rule is that it directs NPAs to prioritize incumbent workers who are blind or have significant disabilities over all others when the work is being performed under a PL requirement. Although the potential funding needs of individual employees are beyond the scope of this rulemaking, the Commission will continue to collect and review data to determine if there is an unmet workforce need that might require additional funding to rectify.

Changes to the Rule: None.

Comments: Several commenters expressed concern that the Commission and CNAs do not have the resources or the staff to handle the potential volume of competitions with a lower threshold and re-competitions due to the price impasse provision. Commenters also argued that the proposed rule lacked sufficient guardrails to limit the number of competitions to protect Commission and CNA resources. One commenter argued that the Commission and CNA do not have the expertise to conduct price competitions. This commenter recommended the procuring Federal agencies should be delegated authority to conduct the price competition, like the Small Business Act (SBA) competitive 8(a) Program at FAR 19.800, and that the Commission or CNAs should only provide the “pool” of qualified NPA candidates. One commenter recommended identifying and approving new distributions at least 24 months out so that the Commission, CNAs, and NPAs would have enough lead time to plan and execute.

Another commenter argued that while the NPRM stated that price competition would only be utilized in complex projects or cases that had unique requirements, the history of the pilot projects suggests that price competition is not intended for a select few items on the PL and that price competition is likely to be broadly applied and overwhelm Commission resources.

Discussion: Approving and managing competitive distributions, especially for existing requirements, may increase the workload for CNA and Commission staff. This means that the process for implementing changes will need to be done in a deliberate manner from initial approval to execution. The Commission currently has an existing framework for identifying and granting approval for complex projects. Complex projects must generally be identified and approved 24 months before project execution. A similar approach could be used for identifying and approving candidates for competition.

It is true that the Fort Bliss and Fort Meade pilots created additional workload for the Commission staff. The Fort Knox pilot was significantly less burdensome for Commission staff, but in turn required more work from the CNAs and the Federal customer in terms of overall management and evaluative support. Both CNAs have indicated that this additional workload would not come without cost in terms of time and other resources. The Commission recognizes planning will be important, as well as deliberate coordination with CNAs and Federal agencies desirous of pursuing a price-inclusive competitive option. The Federal customer provided expertise in pricing and technical support for all three pilots. When the final rule is implemented, the Federal customer will be expected to provide similar support. Lastly, the Commission believes the fact that approval of a competitive distribution is discretionary will allow the Commission to manage the workload of the number of requests approved on an annual basis.

Changes to the Rule: The Commission revised § 51-3.4(b) to clarify that requests for competition must come from members of the Senior Executive Service or Flag or General Officers in acquiring Federal agencies and that the Commission determines whether to approve the request. Availability of resources to conduct the competition is appropriately part of the decision process.

Comments: Several commenters recommended the Commission consider alternative methods to price competition to address the Federal customers' needs.

These same commenters provided the following alternatives to competition: analysis of supply schedules, approved indirect rate or a safe harbor based on the audit with a default rate, pricing methodologies that account for accommodations, use of FAR 15.404-1(b)(2) which includes guidance on factors to consider in determining “fair and reasonable” price outside of competition and which lists price analysis techniques, and use of an AbilityOne Supply Schedule. Additional recommendations included modernizing the Commission's and CNA's pricing methods and processes, training NPAs and contracting officers in best practices for bilateral negotiations and using the Contractor Performance Assessment Reporting System (CPARS) to improve contractor performance. One commenter noted that all agencies are exempt from the use of CPARS except DoD and suggested this exemption should be removed and thoroughly explored before engaging in re-competition.

Alternatively, another commenter suggested, rather than using price competition to establish the FMP, the Commission should improve the price impasse process. In addition to similar recommendations as above, the commenter recommended strict time limits to prevent years-long impasses and a single appeal process where the Commission decides the price. The NPA would then accept the price or pass on the opportunity, and a competitive process that excludes price competition between NPAs would occur to replace the NPA. Another commenter stated that if the Commission's concerns about price relate to overhead and general and administrative (G&A) rates, then mechanisms already existed to control these concerns such as adding audited/accepted/certified indirect rates.

In contrast, one NPA proposed a procedure to address price or performance concerns not in lieu of competition, but as a prerequisite before the Commission would authorize a re-competition. This recommended process would require the contracting officer to submit a formal request to the Commission for a review at the mid-point of the contract period and the Federal customer would either document specific shortcomings for performance-based concerns or provide an IGCE or other price analysis for price-based concerns. The Commission would then authorize the CNA to conduct an independent pricing analysis or best practices assessment and conduct sessions with the Federal customer and NPA to address concerns with the NPA, submitting a plan to address these concerns. Only then would the Commission have the option to authorize a re-competition.

Discussion: The inclusion of price competition at § 51-2.7 as a tool for establishing the fair market price is just one option of the numerous options already available to the Commission. In fact, the most significant change in this rulemaking is to clarify the pricing tools available to the Commission. The Commission's current procedures encourage bilateral price negotiations between the NPA and contracting agency to establish price reasonableness. Currently, the Commission relies almost exclusively on these negotiations. The existing regulation also stated that other methodologies can be used, “if agreed to by the negotiating parties.” In interpreting this provision, the COFC found that, absent a change in the regulation, the Commission cannot consider other methodologies unless the NPA and contracting activity also agree. 70 The changes to § 51-2.7 eliminate this ambiguity and clarify the statutory authority of the Commission. The larger point here is that the changes proposed in this rulemaking provide the Commission with the flexibility to use price competition, in concert with other methodologies, for distribution decisions covered under this section.

Changes to the Rule: None.

Comments: A small number of commenters also took issue with the removal of the phrase “fair and equitable” from § 51.3-4 in the proposed rule, believing that the removal meant prioritizing the needs of the requesting Federal agency would come at the expense of the NPA's equity interest.

Discussion: In most instances, only one NPA will be authorized to provide a good or service, based on the Commission's public policy objectives at the time a requirement is added to the PL. When a competition is requested, the CNA will still be expected to make recommendation decisions in a manner that is “fair and equitable” to the NPAs responding to the Opportunity Notice. For instance, there may be times when it might be advantageous to limit an Opportunity Notice to NPAs of a specific size, geographical area, or other special considerations approved by the Commission. Once a recommendation is made, the Commission will also consider the equity interest of each NPA when making an authorization decision. Again, in most instances the Commission will only be authorizing a single NPA to serve as a mandatory source. The change in language at § 51-3.4 was only meant to distinguish how CNAs will distribute orders when more than one NPA is authorized. However, for clarity, the Commission is adopting this comment and retaining the “fair and equitable” language from the existing § 51-3.4 into § 51-3.4(a) of the final rule.

Changes to the Rule: The Commission has moved “fair and equitable” language from the existing § 51-3.4 into § 51-3.4(a) of the final rule and makes clear that the distribution will also provide the best value for the requiring Federal agency and for the mission of the Program.

Comments: Some commenters took issue with the change in § 51-5.2 that clarified the Commission's authority to authorize and deauthorize mandatory sources.

Discussion: Only the Commission can authorize an NPA, and once an NPA is authorized, it naturally stands that the Commission has the authority to deauthorize an NPA if it has a legitimate basis for doing so. For example, this may occur if an NPA fails to maintain qualifications, no longer desires or is no longer capable of providing products or services to the Government, or is otherwise not performing up to the standards of the Commission or the Federal customer.

Changes to the Rule: None.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives. E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; tailor the regulation to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and promoting flexibility. E.O. 13563 further recognizes that some benefits are difficult to quantify and provided that, where appropriate and permitted by law, agencies may consider and discuss qualitative values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. The Office of Information and Regulatory Affairs in the Office of Management and Budget has determined that this is a significant regulatory action and, therefore, was subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.

In the NPRM, the Commission acknowledged that the proposed rule changes were applicable to all NPAs and estimated the proposed rule change would have the most impact on 27 percent of NPAs, approximately 122 out of 450 NPAs. However, the final rule bifurcates the price competition threshold from $10 million in total project value for all service requirements on the PL to $50 million for DoD agencies and $10 million for non-DoD agencies. This change from the NPRM significantly reduces the final rule's impact and scope by over 50 percent, from approximately 346 to 155 PL service requirements. Additionally, the final rule's bifurcated price competition threshold substantially reduces the percentage of NPAs potentially impacted to 15 percent, approximately 63 NPAs. 71

As discussed in the NPRM, an average of one-fifth of all applicable AbilityOne service contracts would be eligible for price competition in any given year. With the changes to the total annual contract value threshold, a maximum of approximately 31 contracts per year would be eligible for competitive distribution on an annualized basis. The exact number of price competitions will still be based on how many requests for price competition the Commission receives and ultimately approves. In SourceAmerica's 2022 Federal Customer Survey Final Report, the surveyed Federal customers reported satisfaction ranged from on average approximately 84% to 89% of Federal customers who responded to the survey were overall satisfied with their AbilityOne contractor. 72 Therefore, based on this data, of the 155 PL service requirements eligible for competition under this rule, the Commission generally anticipates that 11%-16% or 17-25 requirements may yield a request for competition over a 5-year period. As a result, the Commission estimates that the number of requests for price-inclusive competitions will likely fall somewhere between 3 to 5 per year in the first several years of implementation. This number could increase with the inclusion of the price impasse trigger. But as previously noted, the Commission receives an average of 2 price impasse requests on an annual basis, and a vast majority of those are for products which are outside the scope of this regulatory change.

The Commission believes the benefits of introducing a price component into the competitive distribution process includes increasing transparency in the NPA selection process, engaging the Federal customer in the process, and incentivizing better NPA performance and more competitive pricing. Most PL service requirements above the $10 million threshold are DoD contracts. Therefore, as discussed above, in response to public comments regarding the number of service requirements subject to potential price competition, the potential negative impact on smaller NPAs, and requests to align the rule's threshold to the Panel recommendation, the Commission raised the final rule's threshold to $50 million total project value for DoD agencies. However, the final rule preserves a lower threshold of $10 million total project value for non-DoD agencies and allows the Commission to remain responsive to the needs of civilian Federal agencies and the Commission's Strategic Plan.

As discussed earlier in response to comments, competition is not mandatory, and the Commission's determination to approve a competition will be done on a case-by-case and informed basis. For both new and existing PL additions, if the Commission ultimately approves a request for a competitive distribution, authorized NPAs will incur the cost of preparing a competitive proposal. An incumbent NPA may also incur transition costs if it loses a competitive distribution, however, transition costs may be reimbursable under the existing Federal contract. Additionally, the competitive distribution process means an incumbent NPA is at risk of losing the revenue from a service requirement. However, the Commission notes that while the lost revenue is a cost for the incumbent NPA, the revenue would remain within the Program because the service requirement would go to another authorized NPA. For new PL additions, the cost of preparing a proposal is significantly outweighed by the new revenue stream into the Program.

SourceAmerica initially reported it would need 14 full-time equivalents (FTEs) in additional staff or $1.5 million annually to handle 336 potential price-inclusive competitive allocations. However, under the final rule's bifurcated threshold, CNAs would incur costs based on the approximately 155 service requirements that are eligible for a price competitive distribution, 150 of which fall under SourceAmerica. Based on this new reduced scope, if the Commission approved every request for a competitive distribution, SourceAmerica would need six full-time equivalents FTEs in additional staff or $670,000. But as noted above, approval of all 150 possible competitions over the 5-year period is highly improbable, based on available customer satisfaction data and the fact that Commission approval lies at the heart of every request. Additionally, even when a competition is approved, the CNAs' costs would likely be offset by the Federal customer's involvement and support. For instance, in support of each pilot, the requesting agency provided several FTEs of assistance in the form of price analyst, technical evaluators, and other subject matter experts.

Once the final rule is implemented, the Commission expects that if the Federal customer requests a competitive distribution, it will provide personnel to assist with the evaluation of technical capability, past performance, and price analysis. The cost to the Federal customer will ultimately vary based on how much support it provides to the Commission and applicable CNA. The Federal customer may also incur costs due to the disruption in contract performance or administrative costs associated with replacing an incumbent contractor, however, that is a calculation the Federal customer must make prior to requesting a competitive distribution.

The Commission initially estimated that it will need an additional budget of $1.75 million annually to support a competitive allocation. 73 Like the CNA estimate, these numbers were based on the worst-case scenario of 336 possible competitions. However, due to the reduced scope and the expectation that the Commission would likely process no more than 3 to 5 request per year, the cost to the agency would be no greater than a fourth of the original estimate or 3 to 4 additional FTEs ( i.e., a competition lead, a contract specialist, and up to two additional price analysts).

As discussed throughout this rulemaking, subsection (f)(2) of the Act directed the Commission to make a good faith effort to implement the Panel's recommendations. If the Commission unduly delayed or ignored the Panel's recommendations, in subsection (g)(1)(A) of the Act, the Secretary of Defense was given the authority to “suspend compliance with the requirement to procure a product or service in Section 8504 of title 41, United States Code.” Currently, DoD's spending represents over half of the Program's $4 billion portfolio, which creates tens of thousands of jobs for individuals with significant disabilities or who are blind. Introducing competition prevents DoD's withdrawal from, or reduced participation in, the Program, thereby protecting the jobs and objectives of the Program.

The Commission believes that the potential costs from implementation of the final rule are greatly outweighed by the benefits to the NPA community, the CNAs, and the Federal customer. As noted elsewhere, making the Program responsive to the Panel's recommendations will help to secure the jobs the Program currently creates and increase the agency's prospects of adding more opportunities.

Under the Regulatory Flexibility Act (RFA), 74 an agency can certify a rule if the rulemaking does not have a significant economic impact on a substantial number of small entities. This final rule only imposes a burden on NPAs with contracts that fall within the bifurcated threshold of $50 million in total project value for DoD agencies and $10 million in total project value for non-DoD agencies. In total, approximately 63 NPAs out of 413 participating NPAs have applicable contracts that may be impacted by this rule. This number, however, is only applicable if every possible contract is competed and, as discussed above, competition is not mandatory and is at the discretion of the Commission. Moreover, this rule only establishes business rules to improve the AbilityOne Program processes and does not require any new reporting, recordkeeping, or other compliance requirements for small entities.

Accordingly, the Commission certifies this rule will not have a significant economic impact on a substantial number of small entities, and, therefore, no final regulatory flexibility analysis has been prepared.

This final rule will not result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments.

This final rule does not contain an information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Accordingly, it does not impose any burdens under the Paperwork Reduction Act and does not require further OMB approval.

This final rule would not constitute a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This final rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of the United States-based companies to compete with foreign based companies in domestic and export markets.

Accessible Format: On request to the program contact person listed under FOR FURTHER INFORMATION CONTACT , individuals with disabilities can obtain this document and a copy of the application package in an accessible format. The Commission will provide the requestor with an accessible format that may include Rich Text Format (RTF) or text format (txt), a thumb drive, an MP3 file, braille, large print, audiotape, or compact disc, or other accessible format.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register . You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site you can view this document, as well as all other documents of this Commission published in the Federal Register , in text or PDF. To use PDF you must have Adobe Acrobat Reader, which is available at no cost to the user at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

The Executive Director of the Commission, Kimberly M. Zeich, having reviewed and approved this document, is delegating the authority to electronically sign this document to Michael R. Jurkowski, for purposes of publication in the Federal Register .

For reasons set forth in the preamble, the Commission amends 41 CFR parts 51-2, 51-3, and 51-5 as follows:

This is a synopsis of the Commission's Order, adopted March 12, 2024, and released March 12, 2024. The full text of this Commission decision is available online at https://apps.fcc.gov/ecfs/. The full text of this document can also be downloaded in Word or Portable Document Format (PDF) at https://www.fcc.gov/edocs. This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. The Commission will not send a copy of the Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because these allotments were previously reported.

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:

The New England Fishery Management Council adopted Framework Adjustment 38 to the Atlantic Sea Scallop FMP on December 6, 2023. The Council submitted Framework 38, including a draft EA, for NMFS review and approval on February 26, 2024. NMFS published a proposed rule for Framework 38 on February 12, 2024 (89 FR 9819). To help ensure that the final rule would be implemented before the start of the fishing year on April 1, 2024, the proposed rule included a 15-day public comment period that closed on February 27, 2024. Except as explained below with respect to section 305(d), NMFS is issuing this rule pursuant to 304(b)(1)(A) rulemaking authority. NMFS has approved all of the measures in Framework 38 recommended by the Council. This final rule implements Framework 38, which sets scallop specifications and other measures for fishing years 2024 and 2025, including changes to the catch, effort, and quota allocations and adjustments to the rotational area management program for fishing year 2024, and default specifications for fishing year 2025. The Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) allows NMFS to approve, partially approve, or disapprove measures proposed by the Council based on whether the measures are consistent with the FMP, the Magnuson-Stevens Act and its National Standards, and other applicable law. Details concerning the development of these measures were contained in the preamble of the proposed rule and are not repeated here. This final rule also addresses regulatory text that is unnecessary, outdated, or unclear pursuant to section 305(d) of the Magnuson-Stevens Act.

The Council set the OFL based on a fishing mortality rate (F) of 0.61, equivalent to the F threshold updated through the Northeast Fisheries Science Center's most recent scallop benchmark stock assessment that was completed in September 2020. The ABC and the equivalent total ACL for each fishing year are based on an F of 0.45, which is the F associated with a 25-percent probability of exceeding the OFL. The Council's Scientific and Statistical Committee (SSC) recommended scallop fishery ABCs of 47.4 million pounds (lb; 21,497 metric tons (mt)) for 2024 and 49.8 million lb (22,586 mt) for the 2025 fishing year, after accounting for discards and incidental mortality. The SSC will reevaluate and potentially adjust the ABC for 2025 when the Council develops the next framework adjustment.

Table 1 outlines the scallop fishery catch limits.

This action deducts 1.275 million lb (578 mt) of scallops annually for 2024 and 2025 from the respective ABC for use as the Scallop RSA to fund scallop research. Vessels participating in the Scallop RSA are compensated through the sale of scallops harvested under RSA projects. Of the 1.275 million-lb (578-mt) allocation, NMFS has already allocated 125,941 lb (57,126 kg) to previously funded multi-year projects as part of the 2023 RSA awards process. NMFS reviewed proposals submitted for consideration of 2024 RSA awards and intends to announce project selections in late March. Details on the 2024 RSA awards will be posted on our website when announced.

This action also deducts one percent of the ABC for the industry-funded observer program to help defray the cost to scallop vessels that carry an observer. The observer set-aside is 473,994 lb (215 mt) for 2024 and 498,245 lb (226 mt) for 2025. The Council may adjust the 2025 observer set-aside when it develops specific, non-default measures for 2025. In fishing year 2024, the compensation rates for limited access vessels in open areas fishing under days-at-sea (DAS) is 0.12 DAS per DAS fished. For access area trips, the compensation rate is 250 lb (113.4 kg), in addition to the vessel's possession limit for the trip for each day or part of a day an observer is onboard.

For LAGC IFQ trips less than 24 hours, a vessel will be able to harvest the trip limit and the daily compensation rate on the observed trip, or the vessel could harvest any unfished compensation on a subsequent trip while adhering to the commercial possession limit. LAGC IFQ vessels may possess an additional 250 lb (113.4 kg) per trip on trips less than 24 hours when carrying an observer.

For trips exceeding 24 hours, the daily compensation rate of 250 lb (113.4 kg) will be prorated at 12-hour increments. The amount of compensation a vessel can receive on one trip will be capped at 2 days (48 hours) and vessels fishing longer than 48 hours will not receive additional compensation allocation. For example, if the observer compensation rate is 250 lb/day (113.4 kg/day) and an LAGC IFQ vessel carrying an observer departs on July 1 at 2200 and lands on July 3 at 0100, the length of the trip would equal 27 hours, or 1 day and 3 hours. In this example, the LAGC IFQ vessel would be eligible for 1 day plus 12 hours of compensation allocation, i.e., 375 lb (170.1 kg).

For NGOM trips, a vessel will be able to harvest the trip limit and the daily compensation rate on the observed trip. NGOM vessels may possess an additional 125 lb (56.7 kg) per trip when carrying an observer.

NMFS may adjust the compensation rate throughout the fishing year, depending on how quickly the fleets are using the set aside.

This action implements vessel-specific DAS allocations for each of the three limited access scallop DAS permit categories ( i.e., full-time, part-time, and occasional) for 2024 and 2025 (table 2). The 2024 DAS allocations are less than those allocated to the limited access fleet in 2023. Framework 38 sets 2025 DAS allocations at 75 percent of fishing year 2024 DAS allocations as a precautionary measure. This is to avoid over-allocating DAS to the fleet in the event that the 2025 specifications action is delayed past the start of the 2025 fishing year. The allocations in table 2 exclude any DAS deductions that are required if the limited access scallop fleet exceeds its 2023 sub-ACL.

For fishing year 2024 and for the start of 2025, Framework 38 combines and expands the boundaries of the Nantucket Lightship-West and Nantucket Lightship-North to form one area called the Nantucket Lightship Rotational Area (table 3). This expanded area is closed to better support rotational access in the future.

For fishing year 2024 and the start of 2025, Framework 38 divides Area I into three separate areas ( i.e., Area I, Area I-Sliver, and Area I-Quad). Area I (table 4) will be closed to the limited access fleet, but is available for LAGC IFQ fishing until the Regional Administrator has determined that the total number of LAGC IFQ access area trips have been or are projected to be taken. Area I-Sliver (table 5) will remain closed to all scallop fishing to protect small scallops. Area I-Quad (table 6) will also be closed to all scallop fishing to protect transplanted scallops related to an ongoing RSA project. The Area I-Quad closure will remain in place for one year, and then revert to being part of the Area I Rotational Area.

Framework 38 keeps the Area II Scallop Rotational Area open for fishing year 2024. In addition, it opens the New York Bight Scallop Rotational Area (table 7) to scallop fishing as part of the Rotational Area Program. The New York Bight Scallop Rotational Area was previously closed to optimize growth of the several scallop year classes within the closure area and to support scallop fishing and is now ready for fishing.

Framework 38 reverts the Elephant Trunk Scallop Rotational Area to part of the open area. This area was previously managed as part of the area rotation program; however, there is not enough biomass to support rotational access, nor was there enough recruitment seen in the 2023 annual survey to support keeping this area as part of the program. Based on this information, it no longer meets the criteria for either closure or controlled access as defined in 50 CFR 648.55(a)(6). This area will become part of the open area and could be fished as part of the DAS program or on LAGC IFQ open area trips.

Table 8 provides the limited access full-time allocations for all of the access areas for the 2024 fishing year and the first 60 days of the 2025 fishing year. These allocations could be landed in as many trips as needed, so long as vessels do not exceed the possession limit (also in table 8) on any one trip.

Framework 38 allows full-time limited access vessels to exchange access area allocation in 6,000-lb (2,722-kg) increments. The owner of a vessel issued a full-time limited access scallop permit may exchange unharvested scallop pounds allocated into an access area for another full-time limited access vessel's unharvested scallop pounds allocated into another access area. For example, a full-time vessel may exchange 6,000 lb (2,722 kg) from one access area for 6,000 lb (2,722 kg) allocated to another full-time vessel for another access area. Further, a full-time vessel may exchange 12,000 lb (5,443 kg) from one access area for 12,000 lb (5,443 kg) allocated to another full-time vessel for another access area. These exchanges may be made only between vessels with the same permit category; a full-time vessel may not exchange allocations with a part-time vessel, and vice versa. Part-time vessels may not exchange access area allocations.

Table 9 provides the limited access part-time allocations for all of the access areas for the 2024 fishing year and the first 60 days of the 2025 fishing year. Vessels may fish the allocation in either of the open access areas ( i.e., Area II and New York Bight). These allocations can be landed in as many trips as needed, so long as a vessel does not exceed the possession limit (table 9) or its available allocation on any one trip.

The proposed rule for Framework 38 incorrectly listed the possession limit for part-time vessels on access area trips as 7,200 lb (3,266 kg) per trip. The correct possession limit is 14,400 lb (6,532 kg) per trip.

Framework 38 requires that all scallop vessels with active VMS units be subject to constant reporting at 5-minute intervals when seaward of the VMS demarcation line on a federal scallop declaration. When inshore of the VMS demarcation line, vessels will report at a 30-minute interval. The increased VMS reporting rate is not intended to apply to vessels participating in state-waters scallop fisheries and excludes any scallop trip associated with the scallop state water exemption program. VMS is used in the scallop fishery as an enforcement and management tool. Increasing the VMS reporting rate to 5-minutes on declared scallop trips will improve enforcement of access area and closure boundaries by substantially reducing the window in which a vessel could enter or fish a closed area or access area undetected. VMS is also an important source of fishery effort data for the scallop fishery. Increasing the VMS reporting rate in the scallop fishery will improve data quality by increasing the spatial resolution of the data, which could lead to more effective management and enforcement.

To better enforce the Sea Scallop Rotational Area Management Program, Framework 38 prohibits all vessels fishing under a scallop declaration from entering or transiting any scallop rotational areas (unless the vessel is on a declared trip into that area, or otherwise specified) and the Western Gulf of Maine Closure Area. For fishing year 2024, the Area I (table 4) and the Area I-Quad (table 6) Scallop Rotational Areas will be corridors for continuous transiting, and transit will be permitted. Continuous transit means that a vessel has fishing gear stowed and not available for immediate use and travels through an area with a direct heading, consistent with navigational safety, while maintaining expeditious headway throughout the transit without loitering or delay. Prohibiting vessels on declared scallop trips from entering or transiting scallop rotational areas (unless otherwise specified) and the Western Gulf of Maine Closure Area will reduce the likelihood of fishing occurring inside these areas.

1. ACL and IFQ Allocation for LAGC Vessels with IFQ-Only Permits. This action implements a 2.26 million-lb (1,024-mt ACL for 2024 and a 2.40 million-lb (1,089-mt) default ACL for 2025 for LAGC vessels with IFQ-only permits (table 1). These sub-ACLs have no associated regulatory or management requirements but provide a ceiling on overall landings by the LAGC IFQ fleets. If the fleet were to reach this ceiling, any overages would be deducted from the following year's sub-ACL. The annual allocation to the LAGC IFQ-only fleet for fishing years 2024 and 2025 based on APL will be 1.28 million lb (580 mt) for 2024 and 959,011 lb (435 mt) for 2025 (table 1). Each vessel's IFQ will be calculated from these allocations based on APL.

2. ACL and IFQ Allocation for Limited Access Scallop Vessels with IFQ Permits. This action implements a 227,076-lb (103-mt) ACL for 2024 and a default 240,304-lb (109-mt) ACL for 2025 for limited access scallop vessels with IFQ permits (table 1). These sub-ACLs have no associated regulatory or management requirements but provide a ceiling on overall landings by this fleet. If the fleet were to reach this ceiling, any overages would be deducted from the following year's sub-ACL. The annual allocation to limited access vessels with IFQ permits will be 127,868 lb (58 mt) for 2024 and 97,003 lb (44 mt) for 2025 (table 1). Each vessel's IFQ will be calculated from these allocations based on APL.

3. LAGC IFQ Trip Allocations for Scallop Access Areas. Framework 38 will allocate LAGC IFQ vessels a fleet-wide number of trips for fishing year 2024 and no default trips for fishing year 2025 (table 10). The scallop catch associated with the total number of trips for all areas combined (856 trips) for fishing year 2024 is equivalent to 5.5 percent of total projected catch from access areas.

LAGC Access Area trips can be taken in any of the available areas (Area I, Area II, or New York Bight). Once the Regional Administrator has determined that the total number of LAGC IFQ access area trips have been or are projected to be taken all of the access areas will then be closed to LAGC IFQ fishing.