HSACU Institutions for Fiscal Year 2024: This rule makes changes to the existing list of institutions in appendix B of 7 CFR part 3434. The list of institutions is amended to reflect the institutions that are granted HSACU certification by the Secretary and are eligible for HSACU programs for the period starting July 1, 2024, and ending July 1, 2025.

Certification Process: As stated in 7 CFR 3434.4, an institution must meet the following criteria to receive HSACU certification: (1) Be a Hispanic-Serving Institution (HSI), (2) offer agriculture-related degrees, (3) not be designated an 1862 land-grant institution, (4) not appear on the Excluded Parties List System (EPLS), (5) be accredited, and (6) award at least 15% of agriculture-related degrees to Hispanic students over the two most recent academic years.

NIFA obtained the latest report from the U.S. Department of Education's National Center for Education Statistics that lists all HSIs and the degrees conferred by these institutions (completion data) during the 2021-22 academic year. NIFA used this report to identify HSIs that conferred a degree in an instructional program that appears in appendix A of 7 CFR part 3434 and to confirm that over the 2020-21 and 2021-22 academic years at least 15% of the degrees in agriculture-related fields were awarded to Hispanic students. NIFA further confirmed that these institutions were nationally accredited.

The updated list of HSACUs is based on (1) completions data from 2020-21 and 2021-22, and (2) enrollment data from Fall 2022. NIFA identified 240 institutions that met the eligibility criteria to receive HSACU certification for FY 2024 (July 1,2024 to July 1, 2025).

Section 7102 of the Agriculture Act of 2018 (Pub. L. 115-334) amended Section 1404(14) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3103(14)) to remove the opt-in, opt-out language for Hispanic Serving Agricultural Colleges and Universities (HSACU) in order to apply for Non Land-Grant College of Agriculture (NLGCA) designation.

Appeal Process: As set forth in 7 CFR 3434.8, NIFA will permit HSIs that are not granted HSACU certification to submit an appeal within 30 days of the publication of this notice.

Classification: This rule relates to public property, loans, grants, benefits, or contracts. Accordingly, pursuant to 5 U.S.C. 553, notice of proposed rulemaking and opportunity for comment are not required, and this rule may be made effective less than 30 days after publication in the Federal Register . This rule also is exempt from the provisions of Executive Order 12866. This action is not a rule as defined by the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601 et seq., or the Congressional Review Act, 5 U.S.C. 801 et seq., and thus is exempt from the provisions of those Acts. This rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Title 7 of the Code of Federal Regulations is amended accordingly as set forth below:

Table of Contents I. Authority II. Consumer Clothes Dryers Direct Final Rule A. Background III. Comments on the Direct Final Rule A. General Comments B. Anti-Backsliding C. Economic Justification 1. Manufacturer and Consumer Impacts 2. Energy Price Trends 3. Consumer Behavior 4. Product Reliability 5. SCC-GHG Analysis D. Unavailability of Performance Characteristics E. Stakeholder Representation F. Formal Rulemaking G. Conforming Updates To Test Procedure Introductory Notes IV. Impact of Any Lessening of Competition V. Conclusion I. Authority

The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”), 1 authorizes DOE to issue a direct final rule establishing an energy conservation standard for a product on receipt of a statement submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary of Energy (“Secretary”), that contains recommendations with respect to an energy or water conservation standard that are in accordance with the provisions of 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. (42 U.S.C. 6295(p)(4))

The direct final rule must be published simultaneously with a notice of proposed rulemaking (“NOPR”) that proposes an energy or water conservation standard that is identical to the standard established in the direct final rule, and DOE must provide a public comment period of at least 110 days on this proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) Not later than 120 days after issuance of the direct final rule, DOE shall withdraw the direct final rule if: (1) DOE receives one or more adverse public comments relating to the direct final rule or any alternative joint recommendation; and (2) based on the rulemaking record relating to the direct final rule, DOE determines that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule. (42 U.S.C. 6295(p)(4)(C)) If DOE makes such a determination, DOE must proceed with the NOPR published simultaneously with the direct final rule and publish in the Federal Register the reasons why the direct final rule was withdrawn. ( Id. )

After review of comments received, DOE has determined that it did receive adverse comments on the direct final rule. However, based on the rulemaking record, the comments did not provide a reasonable basis for withdrawing the direct final rule under the provisions in 42 U.S.C. 6295(p)(4)(C). As such, DOE did not withdraw this direct final rule and the direct final rule remains effective. Although not required under EPCA, where DOE does not withdraw a direct final rule, DOE typically publishes a summary of the comments received during the 110-day comment period and its responses to those comments. This document contains such a summary, as well as DOE's responses to the comments.

In a direct final rule published on April 21, 2011, (“April 2011 Direct Final Rule”), DOE prescribed the current energy conservation standards for consumer clothes dryers manufactured on or after January 1, 2015. 76 FR 22454. 2 These standards are set forth in DOE's regulations at title 10 of the Code of Federal Regulations (“CFR”) section 430.32(h)(3).

DOE's current energy conservation standards for consumer clothes dryers are expressed in terms of combined energy factor (“CEF”), measured in pounds per kilowatt-hour (“lb/kWh”). To demonstrate compliance with the current energy conservation standards, manufacturers must use either the test procedure provided at 10 CFR part 430, subpart B, appendix D1 (“appendix D1”) or the test procedure provided at 10 CFR part 430, subpart B, appendix D2 (“appendix D2”). Appendix D1 tests timed drying cycles, and accounts for clothes dryers with automatic termination controls by applying a higher field use factor to units that have this feature. Appendix D2 tests “normal” automatic termination cycles and more accurately measures the effects of automatic cycle termination.

On August 23, 2022, DOE published a NOPR (“August 2022 NOPR”) proposing to establish amended standards for consumer clothes dryers expressed in terms of CEF as determined in accordance with the appendix D2 test procedure (denoted as CEF D2 ). 87 FR 51734.

On September 25, 2023, DOE received a joint statement (“Joint Agreement”) recommending standards for consumer clothes dryers that was submitted by groups representing manufacturers, energy and environmental advocates, consumer groups, and a utility. 3 In addition to the recommended standards for consumer clothes dryers, the Joint Agreement also included separate recommendations for several other covered products. 4 The amended standard levels recommended in the Joint Agreement for consumer clothes dryers are presented in table II.1. Details of the Joint Agreement recommendations for other products are provided in the Joint Agreement posted in the docket for this rulemaking. 5

After carefully considering the recommended energy conservation standards for consumer clothes dryers in the Joint Agreement, DOE determined that these recommendations were in accordance with the statutory requirements of 42 U.S.C. 6295(p)(4) for the issuance of a direct final rule and published a direct final rule on March 12, 2024 (“March 2024 Direct Final Rule”). 89 FR 18164. DOE evaluated whether the Joint Agreement satisfies 42 U.S.C. 6295(o), as applicable, and found that the recommended standard levels would result in significant energy savings and are technologically feasible and economically justified. Id. at 89 FR 18230-18240. Accordingly, DOE adopted the recommended efficiency levels for consumer clothes dryers as the amended standard levels in the March 2024 Direct Final Rule. Id.

The standards adopted in the March 2024 Direct Final Rule apply to product classes listed in table II.2 and that are manufactured in, or imported into, the United States starting on March 1, 2028. The March 2024 Direct Final Rule provides a detailed discussion of DOE's analysis of the benefits and burdens of the new and amended standards pursuant to the criteria set forth in EPCA. Id. at 89 FR 18230-18240.

As required by EPCA, DOE also simultaneously published a NOPR proposing the identical standard levels contained in the March 2024 Direct Final Rule. 89 FR 18244. DOE considered whether any adverse comment received during the 110-day comment period following the publication of the March 2024 Direct Final Rule provided a reasonable basis for withdrawal of the direct final rule under the provisions in 42 U.S.C. 6295(p)(4)(C).

As discussed in section I of this document, not later than 120 days after publication of a direct final rule, DOE shall withdraw the direct final rule if: (1) DOE receives one or more adverse public comments relating to the direct final rule or any alternative joint recommendation; and (2) based on the rulemaking record relating to the direct final rule, DOE determines that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule. (42 U.S.C. 6295(p)(4)(C)(i))

DOE received comments in response to the March 2024 Direct Final Rule from the interested parties listed in table III.1.

A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record. 6 The following sections discuss the substantive comments DOE received on the March 2024 Direct Final Rule as well as DOE's determination that the comments do not provide a reasonable basis for withdrawal of the direct final rule.

NYSERDA and CEC reiterated their sustained support for the recommendations issued in their October 5, 2023 letter. 7 (NYSERDA and CEC, No. 68 at p. 1)

Smith supported DOE's proposal to apply energy conservation standards to consumer clothes dryers and to periodically determine whether stricter standards are feasible. Smith commented that the benefits of the March 2024 Direct Final Rule outweigh manufacturer concerns regarding initial costs. (Smith, No. 65 at p. 1)

AHAM and ASAP et al. supported the March 2024 Direct Final Rule for consumer clothes dryers because it establishes standards that are consistent with recommendations submitted in the Joint Agreement. (AHAM, No. 69 at p. 1, ASAP et al. No. 72 at pp. 1-2) AHAM commented that it finds DOE has satisfied all EPCA criteria for issuing the March 2024 Direct Final Rule because the recommended energy conservation standards were designed by the Joint Stakeholders (including manufacturers of various sizes as well as consumer, environmental, and efficiency advocacy groups; a utility; and some States) to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified in accordance with the provisions of 42 U.S.C. 6295(o); and because DOE issued the March 2024 Direct Final Rule together with a proposed rule identical to the standard established in the March 2024 Direct Final Rule and allowed 110 days for public comment, which is consistent with EPCA requirements. AHAM agreed with DOE's determination that the amended energy conservation standards levels in the March 2024 Direct Final Rule can be reached through technology options identified in the March 2024 Direct Final Rule, or through other pathways, and that under the March 2024 Direct Final Rule, about half of existing consumer clothes dryer shipments already meet the amended conservation standards. AHAM added that because the March 2024 Direct Final Rule levels for many product classes are equivalent to current ENERGY STAR levels, there are a wide range of these products currently on the market. (AHAM, No. 69 at pp. 4, 5-6)

AHAM further commented that DOE satisfactorily responded to AHAM's comments and concerns regarding clothes dryer performance, product classes, consideration of low-income consumers, the new Energy Information Administration's (“EIA's”) Residential Energy Consumption Survey of 2020 (“RECS 2020”) data, supply chain challenges, and harmonization of compliance dates for other laundry products. AHAM stated that the compliance timeline reduces the cumulative regulatory burden of this rulemaking and those for other major appliances. (AHAM, No. 69 at pp. 2-3, 6-7)

CFA et al. supported the March 2024 Direct Final Rule, which they noted is one of many completed and pending efficiency standards that will together significantly reduce consumer costs and climate pollution, as well as reduce emissions of nitrogen oxides, which cause health issues. (CFA et al., No. 71 at p. 1)

Rep. Bice submitted a comment in opposition to the standards adopted in the March 2024 Direct Final Rule. (Rep. Bice, No. 67 at p. 1)

The AGs of TN et al. asserted that the March 2024 Direct Final Rule over-regulates American households and requested that DOE reconsider it. (AGs of TN et al., No. 73 at p. 1) The AG of MT expressed agreement with the AGs of TN et al.' s comments. (AG of MT, No. 70, p. 1)

As discussed in more detail below, DOE has determined that these comments do not provide a reasonable basis to withdraw the March 2024 Direct Final Rule.

EPCA, as codified, contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1))

The AG of MT commented that the fact the Joint Agreement is contingent upon other parts being implemented conflicts with the anti-backsliding provision of EPCA. (AG of MT, No. 70 at pp. 1-2). The AG of MT further implied that DOE's efficiency standards may violate the anti-backsliding prohibition in the EPCA when the full fuel cycle costs of shorter lifespans are taken into account. ( Id. at p. 4)

The AG of MT stated that DOE must consider energy efficiency over the entire product lifecycle. The AG of MT agreed with DOE's statement that conscientious energy use is more complicated than increasing efficiency alone, and the AG of MT referenced documents with quotes from DOE officials testifying to this sentiment. (AG of MT, No. 70 at p. 3)

As discussed previously, DOE may not prescribe an amended standard that increases the maximum allowable energy use or decreases the energy efficiency of a covered product. Further, EPCA defines the term “energy use” to mean the quantity of energy directly consumed by a consumer product at point of use, determined in accordance with test procedures under 42 U.S.C. 6293. (42 U.S.C. 6291(4)) EPCA similarly defines “energy efficiency” to mean the ratio of the useful output of services from a consumer product to the energy use [as that term is defined] of such product, determined in accordance with test procedures under 42 U.S.C. 6293. (42 U.S.C. 6291(5)) Neither the energy use nor the energy efficiency of a product, as those terms are defined in EPCA, or measured under the applicable test procedure, is dependent upon the lifespan of the product or the energy costs upstream from the point of use, i.e., full fuel cycle costs. As a result, product lifespan has no effect on whether an amended standard violates the anti-backsliding provision in 42 U.S.C. 6295(o)(1).

Additionally, DOE addressed its approach to implementing the Joint Agreement in the March 2024 Direct Final Rule. As discussed there, the Joint Agreement was contingent upon DOE initiating rulemaking processes to adopt all of the recommended standards. In other words, DOE could not pick and choose which recommendations in the Joint Agreement to implement. See 89 FR 18164, 18173. However, the Joint Agreement also acknowledged that DOE may evaluate and implement each of the package of recommended standard in separate rulemakings under the applicable statutory criteria. As described, DOE's adoption of the recommended standards conforms with the anti-backsliding provision in 42 U.S.C. 6295(o)(1).

For the aforementioned reason, DOE has determined that the comments provided by the AG of MT does not provide a reasonable basis for withdrawal of the March 2024 Direct Final Rule.

DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including consumer clothes dryers. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors:

(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;

(3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the covered products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy and water conservation; and

(7) Other factors the Secretary considers relevant.

DOE received several comments on its determination of economic justification under the statutory criteria.

Rep. Bice asserted that increased standards will lead to increased production costs for manufacturers, which will subsequently lead to increased costs to consumers. Rep. Bice added that the adopted standards will limit consumer choice, drive up prices, and impose onerous regulations on American manufacturers, many of whom are small businesses. (Rep. Bice, No. 67, p. 1)

The AGs of TN et al. commented that the March 2024 Direct Final Rule does not weigh heavily enough the appliance cost increase that the rule will cause and that will be borne by American consumers. (AGs of TN et al., No. 73 at p. 2) The AGs of TN et al. commented that DOE expects great savings over the life cycle of new, energy-efficient clothes dryers while failing to take into account the upfront costs to consumers and the preferences of lower socioeconomic buyers. The AGs of TN et al. commented that prior to the Joint Agreement, Whirlpool and AHAM expressed concern about the affordability of clothes dryers for low-income households and the fact that for most consumers, purchase cost is the leading factor in their purchase decision. The AGs of TN et al. added that many will opt to repair old machines rather than purchasing more expensive newer models. ( Id. at pp. 3-4)

DOE considered the impacts to manufacturers, including the potential increase in manufacturing costs, in the manufacturing impact analysis in the March 2024 Direct Final Rule. 89 FR 18164, 18199-18202, 18217-18224. DOE estimates that approximately 48 percent of annual shipments currently meet the adopted standard levels. Id. at 89 FR 18236-18237. DOE notes that it did not identify any small business manufacturers of consumer clothes dryers. 89 FR 18244, 18258-18259. In the March 2024 Direct Final Rule, the life-cycle cost (“LCC”) analysis calculated the distribution of impacts across a nationally representative sample of U.S. households. As demonstrated by the LCC analysis, at the adopted standard, the LCC savings is positive for nearly all consumers; the fraction of consumers experiencing a net LCC cost is less than 2 percent; the fraction of low-income households and senior-only households experiencing a net LCC cost is approximately 1.5 percent and 2.5 percent, respectively. Id. Therefore, the March 2024 Direct Final Rule did consider the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard (42 U.S.C. 4296(o)(2)(B)(i)(I)), and DOE has determined that the comments provided by the AGs of TN et al. and Rep. Bice do not provide a reasonable basis for withdrawal of the March 2024 Direct Final Rule.

AHAM commented that under the standards adopted in the March 2024 Direct Final Rule, only 2 percent of consumers would experience a net cost. AHAM commented that on average, consumers will save $223 with a payback period of 1.2 years, across all product classes. ( Id. )

ASAP et al. commented that the amended standards will particularly benefit low-income consumers, who spend three times more of their income on energy costs compared to non-low-income households. ASAP et al. commented that the standards will also benefit renters, whose landlords might not otherwise purchase energy-saving clothes dryers. (ASAP et al., No. 72 at p. 2)

CFA et al. commented that clothes dryers are one of the biggest energy users in many homes, with today's least efficient models consuming nearly one-tenth of the average home's total electricity use. CFA et al. also commented that renters, who are disproportionately low-income households, are often unable to choose their own clothes dryer yet pay the utility bills—a problem more pronounced in multifamily housing, which is predominantly occupied by renters. CFA et al. further commented that the standards adopted in the March 2024 Direct Final Rule will reduce energy use by 40 percent relative to the least efficient clothes dryers sold today, benefiting homeowners and renters alike; for a household replacing an inefficient electric clothes dryer, the new standards will provide annual electricity bill savings of $44 on average. CFA et al. noted that the standards will also help ensure that clothes dryers don't over-dry clothes, which can shrink or otherwise damage them. CFA et al. added that for low-income households, the average payback period for electric clothes dryers, which make up about 80 percent of sales, is just four months; for gas clothes dryers, the average payback period is one year. (CFA et al., No. 71 at p. 1)

The AG of MT stated that DOE's reliance on 2022 data for energy prices and the EIA's Annual Energy Outlook 2023 (“ AEO2023 ”) for pricing trends is faulty due to Federal rulemakings being issued that will force existing generating capacity offline, spike electricity demand, and decrease fossil fuel supply, as illustrated with several documents attached to the comment. (AG of MT, No. 70 at p. 5)

DOE contends that AEO2023 remains the best available source for projections of future energy price trends based on adopted energy policies. DOE also performed sensitivity analyses using alternate AEO2023 growth scenarios with low and high energy prices relative to the reference scenario in the March 2024 Direct Final Rule to assess the impact of alternative energy price projections. 89 FR 18164, 18198. The results of these scenarios are available in appendix 10C of the March 2024 Direct Final Rule technical support document (“TSD”) and show that consumers of consumer clothes dryers would still experience positive cumulative net present value (“NPV”) even when considering lower and higher energy prices.

Therefore, the March 2024 Direct Final Rule did take into account energy price variability in its analysis, and DOE has determined that the comment provided by the AG of MT does not provide a reasonable basis for withdrawal of the March 2024 Direct Final Rule.

The AG of MT stated that DOE acknowledges but disregards consumer preference and assumes consumers are ignorant. The AG of MT attached studies demonstrating consumer preference for product lifetime over energy consumption, and the AG of MT commented that these longer-life appliances may use less energy over the entire life cycle and be lower cost to the consumer, yet DOE did not address those issues. (AG of MT, No. 70, p. 2)

DOE did not disregard consumer preference but rather noted in the March 2024 Direct Final Rule that the economics literature provides a wide-ranging discussion of how consumers trade off up-front costs and energy savings in the absence of government intervention. 89 FR 18164, 18231. Much of this literature explains why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of (1) a lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant delaying or altering purchases; (4) excessive focus on the short term, in the form of inconsistent weighting of future energy cost savings relative to available returns on other investments; (5) computational or other difficulties associated with the evaluation of relevant trade-offs; and (6) a divergence in incentives (for example, between renters and owners, or builders and purchasers). Id. Having less-than-perfect foresight and a high degree of uncertainty about the future, consumers may trade off these types of investments at a higher-than-expected rate between current consumption and uncertain future energy cost savings. Id.

Potential changes in the benefits and costs associated with a standard due to changes in consumer purchase decisions were included in the analysis for the March 2024 Direct Final Rule in two ways. Id. First, if consumers forgo the purchase of a product in the standards case, as estimated based on price elasticity related to empirical data on appliances, this decreases sales for product manufacturers, and the impact on manufacturers attributed to lost revenue is included in the manufacturer impact analysis. Id. Second, DOE accounts for energy savings attributable only to products actually used by consumers in the standards case; if a standard decreases the number of products purchased by consumers, leading to repair existing clothes dryers or purchase of used ones, this decreases the potential energy savings from an energy conservation standard.

Further, the AG of MT stated that the reliability of products affected by the rulemaking will decrease due to complexity increases, which the commenter asserted is supported by engineering facts illustrated in a document attached to their comment, yet DOE does not address this issue. The AG of MT also commented that complexity increases will lead to less economic viability of repair, which is not reflected in DOE's assumption that the rulemaking will have no impact on lifespan. The AG of MT commented DOE disregards the fact that reliability can be increased by lightening the electrical, mechanical, thermal, and other conditions of operation of the components, which tends to decrease energy efficiency but results in less repair downtime and longer times before replacement and, therefore, decreased costs, as illustrated in attached documents. (AG of MT, No. 70, pp. 3-5)

The AG of MT referenced a previous comment made by Whirlpool  8 in which Whirlpool asserted that consumers may continue replacing cheaper components well into the life of an electromechanically controlled clothes dryer, extending its life, while they may not decide to make a more expensive electronic component repair, like a user interface assembly, after several years of ownership of an electronic control clothes dryer. The AG of MT reiterated Whirlpool's statement that DOE's previously proposed standards may effectively shorten the useful life of a consumer clothes dryer because of this repair-versus-replacement calculus, resulting in loss of time-saving benefits of clothes dryer ownership. ( Id. at p. 4) The AG of MT commented that DOE's use of a single lifespan in its analysis for this rulemaking was in error. ( Id. at p.3)

ASAP et al. commented that they do not expect the standards in the March 2024 Direct Final Rule to have any impact on product reliability because the amended standards can be met with simple design changes that have already been incorporated in many models on the market today. ASAP et al. presented a figure of historical RECS data showing that the distribution of clothes dryer age remained largely unchanged between 2005 and 2020 as clothes dryer efficiency improved. (ASAP et al., No. 72 at pp. 3-4)

AHAM commented that the recommended standards are economically justified as required by 42 U.S.C. 6295(o)(2)(B)(i)(I) and will not result in lessening of utility, reliability, performance or availability of the clothes dryers considered under 42 U.S.C. 6295(o)(2)(B)(i)(IV).

In contrast to the comment from the AG of MT and as noted in the March 2024 Direct Final Rule, DOE's review of clothes dryer product reliability information provides no indication that higher-efficiency products are less reliable at the adopted standard levels— i.e., ENERGY STAR efficiency level products relative to baseline products. Hence, notwithstanding theoretical conjecture that higher-efficiency products may have poor reliability based on simplified textbook models, no real-world evidence or data related to the technologies used at the adopted standard levels can be found clearly supporting such a correlation. The AG of MT did not specify how the referenced documents on network node analysis and reliability theory correspond to the technologies used at the adopted standard levels for consumer clothes dryers. In the absence of data specific to the technologies used in clothes dryer products, DOE has no practical basis to model the theoretical concern from the AG of MT at the adopted standard levels.

As described in the March 2024 Direct Final Rule, DOE did not use a single lifespan in its analysis for the consumer clothes dryer rulemaking. Instead, DOE assigned a range of lifespan from 1 to 30 years, based on the Weibull lifetime distribution. DOE further notes that the lifetime distribution used in the March 2024 Direct Final Rule is based on actual lifetime values in the field, which were developed from historical shipments data and surveys. DOE observed that from the 2015 RECS to the 2020 RECS, there was a 6 percent increase in the number of consumer clothes dryers retiring before reaching 4 years of age, and an additional 1 percent lasting beyond 15 years. However, DOE did not find that the average lifetime for consumer clothes dryers has significantly changed, as the increase in the Weibull distribution is reflected in both early appliance retirement and extended use beyond 15 years. Therefore, the estimated average lifetime for consumer clothes dryers remains at 14 years. 89 FR 18164, 18191. In addition, DOE is unaware of data that suggests a different lifetime associated with the technology options considered in the March 2024 Direct Final Rule, and no such data was provided by stakeholders.

In response to the March 2024 Direct Final Rule, AHAM commented that the adopted standard will not impact the reliability of products at the adopted level, and it further stated that the standard levels are achievable by technology readily available on the market. (AHAM, No. 69 at p. 5)

As discussed in the March 2024 Direct Final Rule, DOE did take into account product reliability, lifetimes, and cost of repair when considering the LCC of more efficient products when supported by available data. See 89 FR 18164, 18190. Therefore, the March 2024 Direct Final Rule did take into account consumer purchase decisions in its analysis, and DOE has determined that the comment provided by the AG of MT does not provide a reasonable basis for withdrawal of the March 2024 Direct Final Rule.

The AG of MT commented that greenhouse gas (“GHG”) emissions and climate change impacts should not be part of EPCA rulemakings, but given their inclusion, DOE must consider them throughout the entire life cycle of the product, including manufacturing and potential reductions in lifespan due to increased complexity. (AG of MT, No. 70 at p. 6) The AG of MT also referred to a statement made to the U.S. Senate Subcommittee on Energy to indicate that 40 to 60 percent of the carbon footprint for many consumer products can be attributed to the supply chain. 9

However, the McKinsey report, which is the primary source for the statement made to the U.S. Subcommittee on Energy, is only referring to the manufacturing company's energy and carbon footprint that can reside upstream in its supply chain and does not include the energy and emissions associated with the usage phase of the appliance life cycle, which represents more than 90 percent of the total for large appliances. 10 As such, the energy and carbon footprint associated with supply chain likely accounts for approximately 4 to 6 percent of the overall carbon footprint of a product. In the March 2024 Direct Final Rule, DOE accounted for the environmental and public health benefits associated with the more efficient use of energy, including those connected to global climate change, as they are important to take into account when considering the need for national energy conservation under EPCA. ( See 42 U.S.C. 6295(o)(2)(B)(i)(IV)) 89 FR 18164, 18228-18230. This analysis focused on the estimated reduced emissions expected to result during the lifetime of consumer clothes dryers shipped during the projection period. Id.

The AG of MT stated that the Interagency Working Group's (“IWG's”) social cost of GHG (“SC-GHG”) based on global impacts is inconsistent with EPCA's requirements for standards to consider economic implications to U.S. consumers. The AG of MT claimed that DOE erroneously appears to assume that all benefits accrue to U.S. citizens, despite using global values. The AG of MT cited the case of Louisiana v. Biden to demonstrate questions related to the accuracy of the IWG's SC-GHG estimates. (AG of MT, No. 70, p. 6)

First, as stated in the March 2024 Direct Final Rule, DOE determined that the rule was economically justified without accounting for the social cost of greenhouse gases. 89 FR 18164, 18232. DOE, however, reiterates its view that the environmental and public health benefits associated with more efficient use of energy, including those connected to global climate change, are important to take into account when considering the need for national energy conservation. ( See 42 U.S.C. 6295(o)(2)(B)(i)(IV)) In addition, Executive Order 13563, which was reaffirmed on January 21, 2021, stated that each agency must, among other things, “select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity).” Regarding the use of global SC-GHG values, many climate impacts that affect the welfare of U.S. citizens and residents are better reflected by global measures of SC-GHG. In addition, assessing the benefits of U.S. GHG mitigation activities requires consideration of how those actions may affect mitigation activities by other countries, as those international mitigation actions will provide a benefit to U.S. citizens and residents by mitigating climate impacts that affect U.S. citizens and residents.

The AG of MT stated the monetized GHG benefits largely accrue centuries in the future, well beyond the rulemaking analysis period. Furthermore, the AG of MT stated that DOE improperly mixed discount rates in its cost-benefit analysis. (AG of MT, No. 70 at p. 6)

DOE's March 2024 Direct Final Rule analysis considers the costs and benefits associated with 30 years of shipments of a covered product. Because a portion of products shipped within this 30-year period continue to operate beyond 30 years, DOE accounts for energy cost savings and reductions in emissions until all products shipped within the 30-year period are retired. 89 FR 18164, 19167, 19169. In the case of carbon dioxide emissions, which remain in the atmosphere and contribute to climate change for many decades, the benefits of reductions in emissions likewise occur over a lengthy period; to not include such benefits would be inappropriate. Id.

With regards to discount rates used, the IWG found that the use of the social rate of return on capital (7 percent under current Office of Management and Budget Circular A-4 guidance) to discount the future benefits of reducing GHG emissions inappropriately underestimates the impacts of climate change for the purposes of estimating the SC-GHG. Consistent with the findings of the National Academies and the economic literature, the IWG continued to conclude that the consumption rate of interest is the theoretically appropriate discount rate in an intergenerational context and recommended that discount rate uncertainty and relevant aspects of intergenerational ethical considerations be accounted for in selecting future discount rates. With regards to “mixing discount rates” (which DOE understands to refer to use of different discount rates for monetizing climate-related benefits and for estimating the NPV consumer benefits), DOE consulted the National Academies' 2017 recommendations on how SC-GHG estimates can “be combined in Regulatory Impact Analyses (“RIAs”) with other cost and benefits estimates that may use different discount rates.” The National Academies reviewed several options, including “presenting all discount rate combinations of other costs and benefits with [SC-GHG] estimates.” 89 FR 18164, 18206. 11 DOE's approach is consistent with the National Academies' recommendations and is not improper.

Therefore, DOE has determined that the comments provided by the AG of MT does not provide a reasonable basis for withdrawal of the March 2024 Direct Final Rule.

EPCA specifies the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Rep. Bice asserted that the adopted standards will limit consumer choice. (Rep. Bice, No. 67 at p. 1). The AGs of TN et al. also commented that the adopted standards will limit consumer choice. (AGs of TN et al., No. 73 at p. 9)

DOE's data demonstrates that manufacturers of consumer clothes dryers currently offer units that meet or exceed the adopted standards. As such, DOE determined the March 2024 Direct Final Rule would not result in the unavailability of products that are substantially the same as those currently available in the United States. 89 FR 18164, 18226-18227. Therefore, DOE has determined that the comments provided by Rep. Bice and the AGs of TN et al. do not provide a reasonable basis for withdrawal of the March 2024 Direct Final Rule.

ASAP et al. commented that the amended standards, combined with the new test procedure, will ensure that consumer clothes dryers adequately dry clothing and will not negatively impact performance. ASAP et al. added that consumer clothes dryers that already meet the new standards provide improved drying performance relative to less-efficient models, as demonstrated by Consumer Reports studies and test data. (ASAP et al., No. 72 at pp. 2-3)

ASAP et al. noted that the amended standards will not preclude the use of electro-mechanical controls, allowing consumers a preferred user experience. ( Id. at p. 3)

ASAP et al. noted that the amended standards will not require an increase in cycle time. ASAP et al. noted that there is no evidence that the frequency of running multiple clothes dryer cycles has increased over time or will increase in the future as a result of the amended standards. ( Id. )

AHAM commented that it supported the energy conservation standards in the March 2024 Direct Final Rule because DOE's data demonstrate that when tested under the applicable test procedure for amended standards, there is no significant difference in cycle time between clothes dryers in its data set that are less efficient than the amended standards and those that just meet the amended standard levels. AHAM cited as an example the difference in average cycle time of only about 2 minutes between electric standard clothes dryers in DOE's data set that are less efficient than AHAM's recommended standard and those that just meet its recommended standard level (with CEFs of 3.93 and 3.94, respectively). Thus, AHAM commented that it supported the energy conservation standards adopted in the March 2024 Direct Final Rule. (AHAM, No. 69 at pp. 1-2)

AHAM commented that the energy conservation standards adopted in the March 2024 Direct Final Rule will not result in significant lessening of utility, reliability, performance, or availability of the covered products as prohibited under the so-called “safe harbor” exception of 42 U.S.C. 6295(o)(2)(B)(IV). ( Id. at pp. 4-5)

AHAM commented that the test procedure used to determine compliance with amended standards for consumer clothes dryers ( i.e., appendix D2) requires that clothes dryers meet a threshold for “final moisture content” to be certified as compliant—the final moisture content requirement ensures that compliant clothes dryers will adequately dry clothes. AHAM added that more than 400 electric clothes dryer models and nearly 200 gas clothes dryer models meet the final moisture content threshold and are certified to the current ENERGY STAR specification, which is equivalent to AHAM's recommended standard levels and is based on appendix D2. AHAM therefore does not anticipate that the energy conservation standards recommended in the Joint Agreement and established in the March 2024 Direct Final Rule will negatively affect features or performance, including cycle time. (Id. at p. 5)

NYSERDA and CEC reiterated their support for the recommendations in the Joint Agreement and echoed the clarification regarding “short cycle” products made in the February 15, 2024 letter to DOE by ASAP and AHAM. This clarification specified that the recommendations in the Joint Agreement did not address “short cycle” products for clothes washers, clothes dryers, and dishwashers as so-called “short cycle” product classes did not exist at the time the recommendations were submitted to DOE and do not exist at this time. 12 This letter also highlighted that the signatories to the Joint Agreement do not anticipate that amended standards will negatively affect features or performance, including cycle time. (NYSERDA and CEC, No. 68 at p. 1)

Under 42 U.S.C. 6295(p)(4), interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by DOE, may submit a joint recommendation to DOE for new or amended energy conservation standards.

The AGs of TN et al. questioned the expertise and relevancy of several advocacy groups who contributed to the Joint Agreement ( i.e., the Alliance for Water Efficiency, Earthjustice, the Northwest Energy Efficiency Alliance, the Natural Resources Defense Council, and the National Consumer Law Center). The AGs of TN et al. asserted that most of the advocacy groups have no expertise in setting energy efficiency standards for consumer clothes dryers, and failed to raise concerns related to the upfront cost of more efficient appliances to low-income households. (AGs of TN et al., No. 73 at p. 3)

The AGs of TN et al. commented that 42 U.S.C. 6295(p)(4) requires a joint statement from “interested persons that are fairly representative of the relevant points of view,” and it must include “representatives of . . . States.” The AGs of TN et al. asserted that the Joint Agreement does not meet that standard, as very few States supported DOE's consumer clothes dryer regulations and were not signatories to the Joint Agreement. The AGs of TN et al. stated that interested persons should include more States, which are the direct representatives of consumers. The AGs of TN et al. added that State entities are direct purchasers of these appliances and thus will directly bear the burden of increased costs for appliances, and the March 2024 Direct Final Rule also preempts State procurement standards with less stringent energy-efficiency rules in contradiction of Federal law. ( Id. at pp. 4-5)

The AG of MT agreed with the AGs of TN et al.' s concerns over the participants in the Joint Agreement underlying the March 2024 Direct Final Rule, along with their concerns that the group does not comply with EPCA. (AG of MT, No. 70 at pp. 1-2)

AHAM commented that the stakeholders who submitted the Joint Agreement are representative of a wide range of expert and relevant points of view—including manufacturers of various sizes representing nearly 100 percent of the market for consumer clothes dryers; consumer, environmental, and efficiency advocacy groups; a utility; and several States that participated in the negotiation discussions and filed comments in support of the agreement. AHAM concluded that the March 2024 Direct Final Rule benefits both the manufacturers and consumers that these organizations represent. (AHAM, No. 69 at pp. 3-4)

In response to the comments regarding whether the Joint Agreement was submitted by persons fairly representative of relevant points of view, DOE reiterates that 42 U.S.C. 6295(p)(4) states that if the criteria in 42 U.S.C. 6295(o) are met, the Secretary may issue a final rule that establishes an energy conservation standard “[o]n receipt of a statement that is submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary.” (42 U.S.C. 6295(p))

As stated in the March 2024 Direct Final Rule, DOE determined that this requirement was met. 89 FR 18164, 18174-18175. The Joint Agreement included a trade association, AHAM, which represents 11 manufacturers of the subject covered products—consumer clothes dryers. Id. The Joint Agreement also included environmental and energy-efficiency advocacy organizations, consumer advocacy organizations, and a gas and electric utility company. Id. Additionally, DOE received a letter in support of the Joint Agreement from the States of New York, California, and Massachusetts ( see comment No. 56). Id. DOE also received a letter in support of the Joint Agreement from the gas and electric utility, San Diego Gas and Electric, and the electric utility, Southern California Edison ( see comment No. 57). Id. Each of the listed categories of persons described in 42 U.S.C. 6295(p)(4) supported the Joint Agreement.

DOE has ample authority to accept a joint statement in these circumstances. EPCA does not require that the Joint Agreement be representative of every point of view. Nor does it require that a statement be submitted by all interested persons. Rather, it requires a statement from a sufficient number and diversity of “interested persons” such that the statement is “fairly representative of relevant points of view.” The Joint Agreement presented here is such a statement, as the Secretary determined.

Contrary to the commenters' suggestion, EPCA does not include any requirement that “relevant points of view” must include ideologically opposed points of view. Rather, EPCA ensures a diversity of opinions and interests by requiring that parties that provide a joint agreement must be fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary. (42 U.S.C. 6295(p)(4)(A))

Moreover, regardless of whether amended energy conservation standards are recommended as part of a joint agreement or proposed by DOE, the standards have to satisfy the same criteria in 42 U.S.C. 6295(o). Thus, once DOE has determined that a joint agreement was submitted by interested persons that are fairly representative of relevant points of view, DOE then determines whether the joint agreement satisfies the relevant statutory criteria. As a result, in evaluating whether comments provide a reasonable basis for withdrawing a direct final rule, it is the substance of the comments, not the number of stakeholders that submit statements in favor of, or opposed to, the joint agreement, that determines whether a rule should be withdrawn.

DOE also finds meritless the contention that the Joint Agreement parties are not competent to present a statement for purposes of section 6295(p). Contrary to the characterizations by the AGs of TN et al. and AG of MT, the parties to the Joint Agreement have an established historical record of participation in DOE rulemakings and have submitted detailed comments in the past that demonstrate a thorough understanding of technical, legal, and economic aspects of appliance standards rulemakings, including factors affecting specific groups such as low-income households.

In a follow-up letter from the parties to the Joint Agreement, each organization provided a brief description of its background. American Council for an Energy-Efficient Economy is a nonprofit research organization and its independent analysis advances investments, programs, and behaviors that use energy more effectively and help build an equitable clean energy future. Alliance for Water Efficiency is a nonprofit dedicated to efficiency and sustainable use of water that provides a forum for collaboration around policy, information sharing, research, education, and stakeholder engagement. ASAP organizes and leads a broad-based coalition effort that works to advance new appliance, equipment, and lighting standards that cut emissions that contribute to climate change and other environmental and public health harms, save water, and reduce economic and environmental burdens for low- and moderate-income households. AHAM represents more than 150 member companies that manufacture 90 percent of the major, portable and floor care appliances shipped for sale in the United States. CFA is an association of more than 250 non-profit consumer and cooperative groups that advances the consumer interest through research, advocacy, and education. Consumer Reports is a mission-driven, independent, nonprofit member organization that empowers and informs consumers, incentivizes corporations to act responsibly, and helps policymakers prioritize the rights and interests of consumers in order to shape a truly consumer-driven marketplace. Earthjustice is a nonprofit public interest environmental law organization advocating to advance clean energy and combat climate change. National Consumer Law Center supports consumer justice and economic security for low-income and other disadvantaged people in the United States through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training. National Resources Defense Council is an international nonprofit environmental organization with expertise from lawyers, scientists, and other environmental specialists. Northwest Energy Efficiency Alliance is a collaboration of 140 utilities and efficiency organizations working together to advance energy efficiency in the Northwest on behalf of more than 13 million consumers. Pacific Gas and Electric Company represents one of the largest combined gas and electric utilities in the Western United States, serving over 16 million customers across northern and central California. 13

Finally, DOE notes that it had no role in requesting that the parties to the Joint Agreement submit the Joint Agreement or in negotiating the terms of the Joint Agreement. As noted in the Joint Agreement itself, the parties negotiated and accepted the agreement based on the totality of the agreement. DOE's participation was limited to evaluating the joint submission under the criteria set forth in 42 U.S.C. 6295(p). DOE also notes that the preemptive effect of Federal energy conservation standards on State laws is clearly described in EPCA. See 42 U.S.C. 6297.

Therefore, DOE reaffirms its determination that the Joint Agreement was submitted by interested persons that are fairly representative of relevant points of view.

The AGs of TN et al. recommended that before enacting these stringent new standards for consumer clothes dryers, DOE return to formal rulemaking or, at a minimum, to proceed with informal notice-and-comment rulemaking to allow States and other relevant parties to participate in rulemaking processes that affect nearly every household appliance and also ensure a minimal level of political accountability by giving visibility to internal agency deliberations. The AGs of TN et al. further commented that the lack of a formal process does not allow people the opportunity to comment on rules that touch the lives of nearly all Americans. (AGs of TN et al., No. 73 at pp. 5-8) The AG of MT similarly recommended that DOE halt the rulemaking. (AG of MT, No. 70 at p. 7)

The AG of MT expressed concern about pretext and circumvention of the Administrative Procedure Act, regarding DOE's conduct in this rulemaking and in recent litigations. ( Id. at pp. 1-2)

AHAM stated that interested parties have had ample opportunity to comment through multiple stages of rulemaking. AHAM noted that, in fact, the March 2024 Direct Final Rule process provided an extra 110 days for interested parties to review DOE's final rule and submit comments—which met EPCA requirements. (AHAM, No. 69 at pp. 3-4)

In response, DOE notes that Congress granted DOE the authority to issue energy conservation standards as direct final rules subject to certain conditions and procedural requirements. As discussed in the March 2024 Direct Final Rule, DOE determined that Joint Agreement was submitted jointly by interested persons that are fairly representative of relevant points of view and the adopted energy conservation standards as recommended in the Joint Agreement would result in significant energy savings and are technologically feasible and economically justified as required under 42 U.S.C. 6295(o) and provided supporting analysis. 89 FR 18164, 18174-18175.

Additionally, DOE notes it followed the procedures in 42 U.S.C. 6295(p)(4) to publish a direct final rule in the Federal Register simultaneously with a NOPR proposing identical standards and allowed 110 days for public comment. See 89 FR 18164 and 89 FR 18244. Regarding the comment about formal rulemaking, DOE has met all of its statutory requirements under its direct rule authority, which does not require formal rulemaking. 14

The test procedures at appendix D1 and appendix D2 contain introductory notes that specify that either appendix D1 or appendix D2 must be used to determine compliance with energy conservation standards for clothes dryers manufactured on or after January 1, 2015, among other details.

The amended standards promulgated by the March 2024 Direct Final Rule are denoted in terms of CEF as determined in accordance with appendix D2 ( i.e., appendix D1 may not be used to determine compliance with the amended standards). Accordingly, in this document, DOE updates the introductory notes to both appendix D1 and appendix D2 to specify that use of appendix D2 is required to demonstrate compliance with the amended standards promulgated by the March 2024 Direct Final Rule, which are codified at 10 CFR 430.32(h)(4). The amended introductory note to appendix D2 also specifies that manufacturers may use appendix D2 to certify compliance with the clothes dryer standards provided at 10 CFR 430.32(h)(4) prior to the applicable compliance date for those standards.

In addition, the introductory note in appendix D2 specifies using the value for the representative average number of clothes dryer cycles in a year as defined in section 4.5.1(a) of that appendix until the compliance date of any amended standards for these products; and using a revised value of this number as defined in section 4.5.1(b) of that appendix beginning on the compliance data of any amended standards for these products. This document also updates the introductory note of appendix D2 to specify explicitly the date ranges during which section 4.5.1(a) or 4.5.1(b) must be used, corresponding to the compliance date of March 1, 2028 for the amended standards promulgated by the March 2024 Direct Final Rule.

EPCA directs DOE to consider any lessening of competition that is likely to result from new or amended standards. (42 U.S.C. 629(p)(4)(A)(i) and (C)(i)(II); 42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General of the United States (“Attorney General”) to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) To assist the Attorney General in making this determination, DOE provided the Department of Justice (“DOJ”) with copies of the March 2024 Direct Final Rule, the corresponding NOPR, and the March 2024 Direct Final Rule TSD for review. DOE has published DOJ's comments at the end of this document.

In its letter responding to DOE, DOJ concluded that, based on its review, the direct final rule standards for consumer clothes dryers are unlikely to have significant adverse impact on competition.

In summary, based on the previous discussion, DOE has determined that the comments received in response to the direct final rule for amended energy conservation standards for consumer clothes dryers do not provide a reasonable basis for withdrawal of the direct final rule. As a result, the energy conservation standards set forth in the direct final rule became effective on July 10, 2024. Compliance with these standards is required on and after March 1, 2028.

This document of the Department of Energy was signed on September 30, 2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

For the reasons set forth in the preamble, DOE amends part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, to read as set forth below:

Table of Contents I. Executive Summary A. Overview of Final Rule B. Summary of the Costs and Benefits II. Authority for This Rulemaking III. Background A. Statement of the Problem B. Summary of the NRPM C. General Overview of Comments IV. Discussion of Comments and the Final Rule A. Request for Use of the Defined Term “U.S. agent address” B. Request for Exception From the U.S. Agent for Service Requirement for U.S. Government Employees, Military Members, and Special Purpose Pilot Authorization (SPPA) Holders C. Request for Pilots To Have Alternatives to a U.S. Agent for Service Such as Email or Voluntary and Temporary Certificate Surrender When Pilots Go Abroad D. Miscellaneous Issues V. Regulatory Notices and Analyses A. Regulatory Impact Analysis B. Regulatory Flexibility Act C. International Trade Impact Assessment D. Unfunded Mandates Assessment E. Paperwork Reduction Act F. International Compatibility G. Environmental Analysis VI. Executive Order Determinations A. Executive Order 13132, Federalism B. Executive Order 13175, Consultation and Coordination With Indian Tribal Governments C. Executive Order 13211, Regulations That Significantly Affect Energy Supply, Distribution, or Use D. Executive Order 13609, Promoting International Regulatory Cooperation VII. Privacy VIII. Additional Information A. Electronic Access and Filing B. Small Business Regulatory Enforcement Fairness Act I. Executive Summary A. Overview of Final Rule

This final rule adds subpart C to part 3 of title 14 of the Code of Federal Regulations (14 CFR). Subpart C requires individuals who have a foreign address and no U.S. physical address of record on file with the FAA to designate a U.S. agent for service if they apply for a certificate, rating, or authorization issued under 14 CFR part 47, 61, 63, 65, 67, or 107, or hold a certificate, rating, or authorization issued under any of these parts. 1

The U.S. agent will receive service of FAA documents on behalf of the certificate, rating, or authorization holder or applicant. This final rule facilitates the FAA's ability to accomplish prompt and cost-effective service of process and service of other safety-critical or time-sensitive documents to individuals abroad through service on their U.S. agents. 2 This will conserve agency resources, ensure that lengthy delays in service of process do not compromise aviation safety, and provide individuals abroad with timely notice of FAA actions and the opportunity for more expedient due process.

Approximately 115,000 individuals outside the U.S. as of July 2022 hold certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107 and do not have a U.S. physical address of record on file with the FAA. Service of process abroad imposes burdensome costs on the FAA. This rule will eliminate a majority of the costs of affecting international service and transfer some of these transaction costs back to the individual applicant or certificate holder by requiring designation of a U.S. agent. The costs experienced by these individuals will depend on the arrangements made ( e.g., hiring a professional U.S. agent for service of process could cost $50 to $200 annually). Although there may be some initial costs to the FAA to revise its systems to accommodate the change, these costs will be offset by avoiding the foreign service of process costs that include international mailings and foreign translations.

The FAA's authority to issue rules on aviation safety, such as the rules governing service that are addressed in this notice, is found in title 49 of the United States Code. Subtitle I, section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority, including the authority to issue regulations.

This rulemaking is issued under the authority described in 49 U.S.C. 44701(a)(5), which establishes the authority of the Administrator to prescribe regulations and minimum standards for other practices, methods, and procedures the Administrator finds necessary for safety in air commerce and national security. These regulations are within the scope of that authority and are consistent with 49 U.S.C. 46103, which governs the FAA's service of notice, process, and actions, and provides that the FAA may effectuate service on an agent.

Previously, only U.S. air carriers, foreign air carriers and foreign persons operating a U.S.-registered aircraft in common carriage solely outside the United States were required to designate a U.S. agent for service of FAA documents. 3 However, individuals across the world can hold and apply for FAA certificates, ratings, and authorizations. As of July 2022, there were approximately 115,000 individuals holding certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107 who had a foreign address and did not have a U.S. physical address of record on file with the FAA. Serving certain documents on these individuals outside of the U.S. presented a challenge for the FAA. Accomplishing valid service of process abroad requires compliance with international service requirements under multi-lateral treaties  4 or by other means that comport with the receiving country's laws and the U.S.'s applicable laws regulating extraterritorial service.

The FAA's service of process abroad triggers these international service requirements, specifically when the FAA sends documents abroad that compel compliance and are subject to administrative or judicial review. Such documents may include notices of proposed civil penalties, orders of suspension or revocation, and emergency orders of suspension or revocation. International service requirements can significantly delay service of these documents for months (and in some cases over a year), and also impose additional costs on the agency. Document recipients cannot waive these international service requirements, nor can they be circumvented with electronic service.

The NPRM was published in the Federal Register on June 12, 2023, and the comment period for the NPRM closed on August 11, 2023. 5 The comment period was reopened on October 13, 2023, until October 30, 2023, due to a commenter's request to extend the comment period. 6

The NPRM proposed adding a new subpart C to part 3 of 14 CFR to require individuals who have a foreign address and no U.S. physical address of record on file with the FAA to designate a U.S. agent for service if they apply for a certificate, rating, or authorization issued under 14 CFR part 47, 61, 63, 65, 67, or 107, or hold a certificate, rating, or authorization issued under any of these parts. A U.S. agent for service was defined as an entity or an adult (18 or older) with a U.S. address who is designated to receive FAA service on their behalf. Accordingly, the NPRM proposed allowing individuals to hire any entity, including registered agent service companies, with a U.S. address to be their designated U.S. agent. Alternatively, it proposed permitting individuals to designate any adult who is 18 or older with a U.S. address, including a relative or associate, to be their U.S. agent. The rule also provided requirements on what type of U.S. address the FAA would accept as sufficient for a U.S. agent.

The NPRM proposed that a U.S. agent would receive service of process, and other time-sensitive or safety-critical documents from the FAA on behalf of the individual certificate, rating, or authorization holder or applicant. The U.S. agent would be responsible for timely transmitting all documents the FAA served on the U.S. agent to the individual who designated them. For this reason, the NPRM proposed the requirement that a U.S. agent be mentally competent to assume this duty. The NPRM also proposed that an individual must ensure their U.S. agent understands the requirements for serving as a U.S. agent and agrees to serve in that capacity. As explained in the NPRM, the responsibility for ensuring these requirements are met would fall on the individual designating the U.S. agent. Individuals designating U.S. agents would be required to certify to the FAA, under penalty of perjury, that a U.S. agent has accepted the responsibility of receiving FAA service on behalf of the individual.

Additionally, the NPRM emphasized that the individual who designates a U.S. agent would be responsible for ensuring that the FAA can serve documents to their U.S. agent. An individual designating a U.S. agent for service would be required to provide the U.S. agent's full name; their U.S. address; their email address, should electronic service be feasible; their fax number (optional); and their phone number (optional), in the event of service issues. Individuals would be required to keep their U.S. agent designation current. Absent extraordinary circumstances, the FAA would consider service on an individual's U.S. agent the equivalent of service directly on the individual, triggering all appeal and reply deadlines provided in the document being served.

The NPRM explained that the rule would facilitate the FAA's ability to accomplish prompt and cost-effective service of process and service of other safety-critical or time-sensitive documents to individuals abroad through service on their U.S. agents. This would conserve agency resources, ensure that lengthy delays in service of process do not compromise aviation safety, and provide individuals abroad with timely notice of FAA actions and the opportunity for more expedient due process.

The FAA received a total of 14 comments, two of which were duplicates. All comments were from individual anonymous commenters. Five of the commenters opposed the rule. Three of these commenters suggested changes, as did one additional commenter who neither supported nor opposed the proposed rule. The commenters' suggested changes are discussed more fully in the Discussion of Comments and the Final Rule section. Seven of the comments were outside the scope of the rule.

A commenter noted that the proposed rule defined the term “U.S. agent address” in proposed § 3.302, the definition section, but the term was not used in the proposed regulation. The FAA agrees and amends proposed § 3.303(b) in the final rule to include the term “U.S. agent address” for clarification. This is a non-substantive change.

Two commenters requested full exception from the applicability of the rule for certain certificate holders. Specifically, the commenters suggested that U.S. Government employees, military members, and special purpose pilot authorization (SPPA) holders should be excepted from the rule because the FAA should easily be able to find and contact them through their employers (such as the U.S. Government, military, or private companies). The FAA notes the purpose of the rule is to provide service of documents within the U.S. to designated agents of individuals, including those whose location abroad may already be known, such as U.S. Government employees, military members, and SPPA holders. More importantly, service on an individual's employer that has not been designated as their agent does not satisfy service of process requirements under 49 U.S.C. 46103. The rule, however, does not preclude that individual from designating their employer as their U.S. agent for service if the employer agrees and meets the requirements provided by this rule in 14 CFR part 3, subpart C. Accordingly, the FAA is adopting the rule as proposed, without the requested exceptions.

One commenter requested that the FAA consider alternatives to the rule that would only apply to pilots. Specifically, the commenter requested that the FAA consider email service for pilots or allow pilots to temporarily and voluntarily surrender their certificate(s) to the FAA for the time they are abroad. The FAA notes that alternatives to the rule that would only apply to pilots, as the commenter proposed, rather than all the applicable certificate, rating, and authorization holders and applicants impacted by this rule would be unequal because there is not any justification for favoring pilots over other impacted groups. Nevertheless, the FAA considered the proposed alternatives, in case they could be viable options for all individuals impacted by the rule. The FAA determined that neither option is a viable alternative to a U.S. agent.

The NPRM already addressed why email service was not a viable alternative to this rule. Specifically, the NPRM explained that international service conventions do not expressly authorize email service of process abroad, and that email service abroad could violate the domestic law of the receiving state and potentially result in judgments that are unenforceable in foreign courts. 7 Accordingly, the FAA did not adopt the commenter's proposed email alternative to a U.S. agent.

The commenter's second proposed alternative of temporary and voluntary certificate surrender to the FAA does not remedy the issue the rule is addressing. The purpose of the rule is to assist the FAA with efficient and effective service of documents to individuals abroad. An individual's temporary and voluntary certificate surrender for the time they are abroad would not assist the FAA with serving a document to the individual once they are outside the United States. For example, if an individual violates the Federal Aviation Regulations before going to live abroad for a year, the FAA may need to take enforcement action and serve the individual with a notice or order for that violation when they are abroad. This would be true regardless of whether the individual decides to put their certificate on hold with the FAA temporarily and voluntarily for the time they are abroad. Lastly, the FAA's regulations do not provide for temporary and voluntary certificate surrenders because to create a system to receive, temporarily store, and return an individual's physical certificates would be costly. The FAA, therefore, has not adopted the commenter's proposed alternative of temporary and voluntary certificate surrender to the FAA.

Two commenters generally opposed the rule, without proposing any changes, which the FAA believes is based on a misunderstanding of current requirements or the rule, as proposed. Both commenters asserted that an individual with a U.S. address of record with the FAA does not have to designate a U.S. agent or be reachable at their U.S. address, and, therefore, questioned why an individual abroad, with no U.S. postal address, would need to establish more reliable postal communication with the FAA by designating a U.S. agent. The underlying assumption that certificate, rating, and authorization holders do not have to be reachable at their address of record with the FAA, whether in the U.S. or abroad, is incorrect. The FAA's responsibility of ensuring a safe National Airspace System requires that the agency be able to reach certificate, rating, and authorization holders. 8 Individuals are expected to be reachable at their address of record on file with the FAA.

However, the purpose of this rule is not to address the reliability of individuals' addresses, regardless of location. Rather, this rule is intended to provide the FAA with a means to provide timely and cost-effective service to individuals located abroad in light of international service requirements. The FAA can more effectively and efficiently send mail to a U.S. address than abroad due to international service requirements that are discussed in the NPRM. 9 This distinction justifies the requirement of U.S. agents for individuals who have a foreign address of record on file with the FAA and no U.S. physical address of record on file with the FAA.

The FAA believes the second commenter also misunderstood the proposed rule as requiring individuals to designate a secondary U.S. agent in the event their primary U.S. agent is on vacation. The NPRM did not propose to require individuals to designate two U.S. agents. Rather, the NPRM explained the importance of ensuring reachability in the event a designated U.S. agent for service is temporarily unable to accept service and offered an example of a proposed solution that did not require the designation of a back-up U.S. agent. The NPRM provided that U.S. agents could have a friend or associate collect the mail and notify the individual of the service. Therefore, the FAA is not making any changes to the rule as a result of the comments.

The FAA received three comments that asked about the public availability of the Privacy Impact Assessment (PIA), which was addressed by reopening the comment period when the PIA became publicly available on the Department of Transportation's website. Another comment, received after the comment period was reopened, stated that 15 days was not enough time to comment on the PIA. The FAA considered 15 days to be sufficient time to comment on the PIA. The document was publicly available since August 23, 2023, almost two months before the reopening of the comment period and is not a document that requires public comment under the Administrative Procedure Act.

Finally, three comments were about the Civil Aircraft Registry Electronic Services (CARES) requirements and availability of that system for U.S. agent designation. These comments are out of scope and premature because they did not specifically discuss the implementation of the NPRM, but rather were about the CARES system, which is not the system of collection for the U.S. agent information. The PIA simply identified CARES as one potential system FAA could use to collect U.S. agent information at some point in the future. The FAA has not made changes in the final rule based on these comments and recommends certificate holders and applicants reference Advisory Circular (AC) 3-1  10 for further information on the information that the FAA will collect and how it will do so in accordance with this final rule.

This final rule changes the compliance date noted in the NPRM, which was six months after the date of publication in the Federal Register to nine months after the date of publication in the Federal Register . The final rule clarifies there are two compliance dates. The compliance dates for this final rule are as follows: January 6, 2025, for applicants of any certificate, rating, or authorization issued under part 47, 61, 63, 65, 67, or 107, and July 7, 2025 for holders of any certificate, rating, or authorization issued under part 47, 61, 63, 65, 67, or 107. This additional time for current certificate, rating, or authorization holders is provided to ensure FAA preparedness for the collection of U.S. agent designations and to provide more time for individuals to come into compliance with the final rule.

The FAA is publishing an Advisory Circular, U.S. Agents for Service, with this final rule. 11 It specifies the acceptable form and manner for individuals to submit their designation of a U.S. agent. The following FAA Advisory Circulars will also be updated, as necessary, to reflect this final rule: AC 61-65H, AC 61-135A, AC 61-143, AC 65-30B, AC 65-23A, AC 65-32A and AC 65-34A. The FAA's Advisory Circulars are publicly available on FAA's website. 12

Federal agencies consider impacts of regulatory actions under a variety of Executive orders and other requirements. First, Executive Order 12866 and Executive Order 13563, as amended by Executive Order 14094 (“Modernizing Regulatory Review”), direct that each Federal agency propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a 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 $183,000,000, using the most current (2023) Implicit Price Deflator for the Gross Domestic Product. This portion of the preamble summarizes the FAA's analysis of the economic impacts of this rulemaking.

In conducting these analyses, the FAA has determined that this final rule: (i) will result in benefits that justify costs; (ii) is not an economically “significant regulatory action” as defined in section 3(f) of Executive Order 12866; (iii) will not have a significant economic impact on a substantial number of small entities as amended; (iv) will not create unnecessary obstacles to the foreign commerce of the United States; and (v) will not impose an unfunded mandate on State, local, or tribal governments, or on the private sector.

On June 12, 2023, the FAA published a NPRM and received 14 comments. None of the comments expressed concerns with economic impacts of the proposal except one. One commenter expressed concern that the rule's cost to individual pilots would be between $15 million and $30 million annually, and also expressed concern about the cost of enacting the proposed regulatory change. However, the commenter does not provide an explanation for the cost estimate, therefore the FAA continues to use the estimate provided in the NPRM.

However, FAA has updated the cost of hiring a registered U.S. agent service company based on a more recent source. In the NPRM, FAA reported this cost could range from $150 to $300. The updated source reports this could be between $50 and $200.

In July 2022, approximately 115,000 individuals applied for or held certificates, ratings, and authorizations issued under 14 CFR parts 47, 61, 63, 65, 67, and 107, had a foreign address, and did not have a U.S. physical address of record on file with the FAA. The FAA estimates that approximately 97 percent of these individuals that used a foreign address are citizens of foreign countries. The FAA notes service of process abroad imposes costs on the agency. The FAA estimates that it sends over 8,000 documents abroad annually, including both service of process and other documents, at a cost close to $600,000 including mailing costs, staff time, and translation services when required. 13 Examples of documents that have been sent abroad are as follows:

1. Aerospace Medicine's Letters: a. All Denial Letters, b. Withdrawal of Special Issuance (SI) Authorization Letters, c. Special Issuance Authorization Letters, d. Re-examination/Request for Information Letters, e. Lack of Qualification Letters with Referral to Legal, f. Letters of Investigation, and g. Federal Drug and Alcohol Testing Letters of Investigation,

2. Enforcement action documents: a. Notice of Proposed Civil Penalty (NOPCP), b. Final Notice of Civil Penalty (FNPOCP), c. Order Assessing Civil Penalty (OACP), d. Notice of Proposed Assessment (NOPA), e. Civil Penalty Letter, f. Notice of Proposed Certificate Action (NOPCA), g. Order of Suspension (OS), h. Order of Revocation (OR), i. Emergency Order of Revocation (EOR), and j. Emergency Order of Suspension (EOS),

3. Flight Standards Reexamination Letters,

4. All FAA Program Office's Letters of Investigation, and

5. Aircraft Registry Letters: a. Notices to Aircraft Owners of Ineffective Aircraft Registration, and b. Notices to Aircraft Owners of Invalid Aircraft Registration.

The benefits of the final rule include prompt and cost-effective service of these documents to individuals abroad through service on their U.S. agents. Prompt service will conserve agency resources, ensure that lengthy delays in service do not compromise aviation safety, and provide individuals abroad timely notice of the FAA's actions. However, these benefits are not quantified because the ultimate impacts on aviation are not known.

Under this final rule, the affected individuals will bear the transaction costs associated with having a foreign address on file with the FAA. There is a minimal cost associated with designating a new U.S. agent and any updates thereafter. Individuals may designate an entity or an adult (18 or older) with a U.S. address to serve as their U.S. agent. The FAA determined that the cost of hiring a registered U.S. agent service company may range from $50 to $200 annually. 14 However, as discussed in the NPRM, many individuals with foreign addresses may have a friend or family member residing in the U.S. whom they may choose to designate as their U.S. agent, resulting in no annual costs to those individuals for hiring a U.S. agent for service.

The FAA will incur implementation costs to collect the U.S. agent information. However, the FAA anticipates developing an automated system that would not require agency staff processing time. The initial implementation costs will then be offset by saving the baseline foreign service process costs and avoiding the costs of translation services (required by contracting parties to the Hague Service Convention or IACAP).

In summary, the FAA expects that the benefits of prompt document service, which could affect aviation safety, will exceed any costs associated with implementing this rule. Costs associated with designating a U.S. agent for affected individuals abroad will be largely incurred by the individual who holds, or is applying for, the certificate, rating, or authorization, rather than the FAA. This final rule will eliminate a majority of the FAA's current costs of affecting international service and transfer some of these transaction costs back to the individual being served by requiring designation of a U.S. agent.

The Regulatory Flexibility Act (RFA) of 1980, Public Law 96-354, 94 Stat. 1164 (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857, Mar. 29, 1996) and the Small Business Jobs Act of 2010 (Pub. L. 111-240, 124 Stat. 2504, Sept. 27, 2010), requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The FAA did not identify any small entities that would be affected by this rule because it concerns only individuals and not their employers or entities or businesses the individuals are associated with. The FAA did not receive any comments on the basis for this certification during the public comment period after the publication of the associated NPRM. Therefore, the FAA certifies that this rule will not have a significant economic impact on a substantial number of small entities. International Trade Impact Assessment

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has determined that this rule is not considered an unnecessary obstacle to trade.

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million 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. The FAA determined that this final rule will not result in the expenditure of $187 million or more by State, local, or tribal governments or by the private sector, in the aggregate, or the private sector, in any one year.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. According to the 1995 amendments to the Paperwork Reduction Act (5 CFR 1320.8(b)(2)(vi)), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement, unless it displays a currently valid Office of Management and Budget (OMB) control number.

This action contains the following new information collection requirements. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has submitted the information collection to OMB for its review.

Summary: The FAA is requiring individuals who hold or apply for certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107 and who have a foreign address and no U.S. physical address of record on file with the FAA to designate a U.S. agent.

Use: The information collected and maintained in FAA databases is used to serve various documents to the designated U.S. agents of individuals with a foreign address.

Respondents: As of July 2022, there were 115,132 individuals who held certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107 with a foreign address and who did not have a U.S. physical address of record on file with the FAA. After the implementation of the rule in Year 1, the FAA expects that the number of new applicants who would be required to designate a U.S. agent would be 4,362 annually. In addition, the FAA estimates that annually approximately 4,606 respondents might process a change of U.S. agent designation or an update to their U.S. agents' contact information.

Frequency: All 115,132 individuals with a foreign address, with no U.S. physical address, who currently hold certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107 are required to designate a U.S. agent once during the implementation of the rule in Year 1. Similarly, 4,362 respondents identified as applicants who do not currently hold any certificates, ratings, or authorization, would be required to designate a U.S. agent at the time of their application in Year 2. Additionally, 4,606 respondents might need to change their U.S. agent or update the information for their current U.S. agent. This would require submission of a new U.S. agent designation.

Annual Burden Estimate: The FAA estimates that it would take an individual 10 minutes to submit a U.S. agent designation. In Year 1, the number of annual burden hours would be 19,189 [(115,132 individuals × (10 minutes ÷ 60 minutes)], and 1,495 hours each year afterwards (=[(4,362 + 4,606) × (10 minutes ÷ 60 minutes)]). The annual cost of this U.S. agent designation requirement to individuals would be $1,195,761 in Year 1 and $93,131 each year afterwards. 15

The collection of the U.S. agent designation will be fully automated. Therefore, there will be no new annual cost to the government.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effects of this rule and determined that it will not create unnecessary obstacles to the foreign commerce of the United States.

FAA Order 1050.1F identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 5-6.6f and involves no extraordinary circumstances.

The FAA has analyzed this final rule under the principles and criteria of Executive Order (E.O.) 13132, Federalism. The FAA has determined that this action will not have a substantial direct effect on the states, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government, and, therefore, will not have federalism implications.

Consistent with Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, 16 and FAA Order 1210.20, American Indian and Alaska Native Tribal Consultation Policy and Procedures, 17 the FAA ensures that Federally Recognized Tribes (Tribes) are given the opportunity to provide meaningful and timely input regarding proposed Federal actions that have the potential to have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes; or to affect uniquely or significantly their respective tribes. At this point, the FAA has not identified any unique or significant effects, environmental or otherwise, to Indian tribes resulting from this final rule.

The FAA analyzed this final rule under E.O. 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The FAA has determined that it is not a “significant energy action” under the executive order and is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

Executive Order 13609, Promoting International Regulatory Cooperation, promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of Executive Order 13609, and has determined that this action will have no effect on international regulatory cooperation.

With regard to the information persons may submit in accordance with this final rule's requirements, the FAA conducted a privacy impact assessment (PIA) under section 522(a)(5) of division H of the FY 2005 Omnibus Appropriations Act, Public Law 108-447, 118 Stat. 3268 (Dec. 8, 2004) and section 208 of the E-Government Act of 2002, Public Law 107-347, 116 Stat. 2889 (Dec. 17, 2002). The PIA found the NPRM's proposed requirements affecting privacy include the collection of personally identifiable information (PII) of U.S. agents designated by individuals with a foreign address and no U.S. physical address on file with the FAA that hold or apply for certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107. The rule collects the U.S. agent's full name, U.S. address, fax number (optional), phone number (optional), and email address.

As part of the PIA, the FAA analyzed the effect the rule would have on collecting, storing, and disseminating personally identifiable information (PII) of U.S. agents designated by individuals with a foreign address and no U.S. physical address on file with the FAA that hold or apply for certificates, ratings, or authorizations issued under 14 CFR part 47, 61, 63, 65, 67, or 107. The FAA also examined and evaluated protections and alternative information-handling processes in developing the rule to mitigate potential privacy risks. A copy of PIA is posted on DOT's website. 18

A copy of the NPRM, all comments received, this final rule, the AC for designation of U.S. agents, and all background material may be viewed online at www.regulations.gov using the docket number listed above. A copy of this final rule will be placed in the docket. Electronic retrieval help and guidelines are available on the website. It is available 24 hours each day, 365 days each year. An electronic copy of this document may also be downloaded from the Office of the Federal Register's website at www.federalregister.gov and the Government Publishing Office's website at www.govinfo.gov. A copy may also be found at the FAA's Regulations and Policies website at www.faa.gov/regulations_policies.

Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW, Washington, DC 20591, or by calling (202) 267-9677. Commenters must identify the docket or notice number of this rulemaking.

All documents the FAA considered in developing this final rule, including economic analyses and technical reports, may be accessed in the electronic docket for this rulemaking.

The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires the FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document may contact its local FAA official, or the person listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the internet, visit www.faa.gov/regulations_policies/rulemaking/sbre_act/.

For reasons discussed in the preamble, the Federal Aviation Administration amends title 14, Code of Federal Regulations as follows:

This action confirms the effective date of the Modernization of Passenger Information Requirements Relating to “No Smoking” Sign Illumination direct final rule. 1 Currently, crewmembers must be able to manually turn aircraft “No Smoking” signs on and off. This requirement was implemented prior to the prohibition on smoking in passenger cabins during all phases of flight. As a general matter, there is no longer a need for the signs to indicate two different states of smoking permissibility because smoking is not typically permitted at any time on most transport category aircraft operated commercially in the United States. However, when smoking is permitted on aircraft, such as when they are operated privately, crewmembers still must be able to manually turn “No Smoking” signs on and off to inform passengers when it is acceptable to smoke. This direct final rule provides more flexibility by allowing “No Smoking” signs to be illuminated continuously. This direct final rule revises five sections of regulations that affect aircraft manufacturers and aircraft operators.

Aircraft manufacturers will benefit from relieving changes in title 14 of the Code of Federal Regulations (14 CFR), part 25. In addition, pilots and aircraft operators will benefit from relieving changes to regulations in parts 91, 121, and 125. The revisions to these five sections of 14 CFR will allow for “No Smoking” signs to be illuminated continuously without the requirement for a physical or software switch to be built into the aircraft at the factory or used by a crewmember during an aircraft operation. Specifically, the revision to part 25 imposes no new requirements on manufacturers; they may continue to make aircraft with manually operated “No Smoking” signs. However, as an alternative, the revision to part 25 allows aircraft on which the “No Smoking” signs remain illuminated continuously to receive type certification from the FAA without having to request relief from the current regulations. Similarly, with this direct final rule, operators will be able to operate aircraft where signs can either be manually operated by crewmembers or remain continuously illuminated.

The FAA has long recognized the incongruity between the prohibition on smoking in most commercial aircraft and the requirement for manufacturers to construct, and operators to operate, aircraft with “No Smoking” signs that can be turned on and off. For almost 30 years, the FAA has addressed this incongruity through equivalent level of safety (ELOS) findings  2 and regulatory exemptions, 3 which allows aircraft to have “No Smoking” signs that are continuously illuminated during flight operations. This rule makes such ELOS findings and regulatory exemptions unnecessary. Manufacturers will be able to continue to manufacture, and pilots and operators will be able to continue to operate, aircraft with “No Smoking” signs that can be turned on and off or “No Smoking” signs that are illuminated continuously.

Additionally, to align with the final rule Use of Supplemental Restraint Systems (89 FR 67834), effective October 21, 2024, the authority citation to part 91 in the direct final rule is corrected to remove the reference to 49 U.S.C. 106(g) which was removed and reserved by section 202 of Public Law 118-63.

The “No Smoking” signs direct final rule was published August 23, 2024, and provided a period for public comment until September 23, 2024. The FAA received three comments related to this direct final rule. Two comments were from individual commenters, and one comment was from Airlines for America (A4A). A4A supported the direct final rule as proposed.

One individual commenter appreciated the anticipated stakeholder relief once regulated entities need no longer apply for exemptions for “No Smoking” signs. The commenter asserted that the FAA should consider using more direct final rulemaking actions, as appropriate, to revise regulations when there are numerous variances or exemptions from a CFR section. The commenter specifically noted, by way of example, numerous variances for EXIT signs that could be found in the Federal Register . 4

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 777-200, -200LR, -300, -300ER, and 777F series airplanes. The NPRM published in the Federal Register on March 28, 2024 (89 FR 21446). The NPRM was prompted by a report indicating multiple findings of cracks in the fuselage skin common to the UWL. In the NPRM, the FAA proposed to require external or internal (depending on configuration) inspections for any cracking of the left and right side fuselage skin common to the UWL, and applicable on-condition actions. The FAA is issuing this AD to address fuselage skin cracking caused by cold work surface upset that is not removed from the mating parts and high joint load transfer or significant local bending stresses at critical fastener locations. The unsafe condition, if not addressed, could result in an inability of a principal structural element (PSE) to sustain limit load, leading to reduced structural integrity of the airplane and possible loss of control of the airplane.

The FAA received a comment from FedEx Express, who found no issues that could interfere with the timely implementation of the proposed actions in the NPRM.

The FAA received additional comments from three commenters, including American Airlines, Boeing, and United Airlines. The following presents the comments received on the NPRM and the FAA's response to each comment.

Boeing requested that paragraph (h)(3) of the proposed AD be clarified to specify that only the fuel tank side of fastener locations that penetrate the fuel tank boundary require cap seal dimensions to meet the dimensions given in Figure 1 to paragraph (h)(3) of the proposed AD. Boeing stated that the service information referenced in Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023, contain instructions for applying cap seals to fasteners that penetrate a fuel tank boundary and fasteners that do not penetrate a fuel tank boundary. Boeing added that for fasteners that do not penetrate a fuel tank boundary, fastener sealing is used as a pressure seal to help mitigate corrosion and have sealing specifications that include minimum thickness requirements less than the amount shown in paragraph (h)(3) of the proposed AD that are acceptable for their intended function outside of the fuel tank. Boeing stated that for fasteners that penetrate the fuel tank, the cap seals on the interior side of the fuel tank act as a primary fuel seal, providing fault tolerance against electromagnetic effects (electrical fault currents and lightning currents), and are also cap sealed on the exterior side for corrosion prevention.

Boeing concluded that only the cap seals on the interior side of the fuel tank require the dimensions specified in Figure 1 of paragraph (h)(3) of the proposed AD to perform their intended function, which is consistent with the labels shown in Figure 1 of paragraph (h)(3) of the proposed AD. Boeing recommended replacing the text “applying a cap seal (sealant) to a fastener, fastener head, and fastener threads and collars, for this AD, during application of any cap seal to a fastener, fastener head, or fastener threads and collars” with the text “applying a cap seal (sealant) to a fastener location that penetrates the fuel tank boundary, for this AD, during application of any cap seal to a fastener, fastener head, or fastener threads and collars inside the fuel tank.”

The FAA agrees to clarify paragraph (h)(3) of this AD for the reasons provided by the commenter. Locations that do not penetrate the fuel tank boundary do not require the same sealant application procedures. The FAA has added the text “inside the fuel tank” to paragraph (h)(3) of this AD. However, the FAA did not replace the text “to a fastener, fastener head, and fastener threads and collars” with the text “to a fastener location that penetrates the fuel tank boundary,” as recommended by the commenter, because the text “to a fastener, fastener head, and fastener threads and collars inside the fuel tank” better aligns with the language within the service information.

American Airlines requested that the FAA provided a comprehensive list of all service information that will be impacted by paragraph (h)(3) of the proposed AD. American Airlines stated that the statement “Where any service information referenced in Boeing Alert Requirements Bulletin 777-53A0100 RB” is vague and could potentially lead to confusion.

The FAA agrees to specify the service information affected by paragraph (h)(3) of this AD. In addition, the FAA notes that paragraph (h)(2) of this AD has similar language (“Where . . . any service information referenced in Boeing Alert Requirements Bulletin 777-53A0100 RB”). The FAA has added a note to paragraphs (h)(2) and (3) of this AD to specify that Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023, refers to Boeing Service Bulletin 777-53-0084, Revision 2, dated December 9, 2020; Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020; and Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021.

Boeing requested that the FAA add a note to paragraph (h)(3) of the proposed AD to refer to Boeing Model 777 Aircraft Maintenance Manual (AMM) section 28-11-00 as an acceptable cap sealing procedure to accomplish the actions required in that paragraph. Boeing stated it has received numerous queries from operators on Figure 1 to paragraph (h)(4) of AD 2023-17-14, which is identical to Figure 1 to paragraph (h)(3) of the proposed AD. Operators have asked whether Boeing Model 777 AMM section 28-11-00 would be an acceptable procedure for accomplishing the requirements of paragraph (h)(4) of AD 2023-17-14. Boeing stated it believes that AMM 28-11-00 is an acceptable procedure for performing cap sealing inside the fuel tank because the AMM is the source material for the contents in Figure 1 to paragraph (h)(3) of the proposed AD and contains the same minimum seal thickness dimensions as shown in Figure 1.

The FAA agrees. Boeing 777 AMM 28-11-00 meets the sealant requirements of Figure 1 to paragraph (h)(3) of this AD. As such, it would be an acceptable procedure to follow when sealing inside the fuel tank in accordance with paragraph (h)(3) of this AD. The FAA has added a note to paragraph (h)(3) of this AD accordingly.

United Airlines (United) requested removal of the exceptions in paragraphs (h)(4) through (6) of the proposed AD that are for service information other than Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023. United stated that it agrees with the intention of the proposed AD, but found the exceptions stated in paragraphs (h)(4) through (6) of the proposed AD to be unclear. United stated that it has other ongoing projects that use the instructions of Boeing Service Bulletin 777-53-0084, Revision 2, dated December 9, 2020; Boeing Service Bulletin 777 53-0087, Revision 1, dated March 4, 2020; and Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021; to comply with the requirements of AD 2019-11-02, Amendment 39-19648 (84 FR 28722, June 20, 2019) (AD 2019-11-02) and AD 2023-17-14, Amendment 39-22541 (88 FR 60111, August 31, 2023) (AD 2023-17-14). United pointed out that ADs 2019-11-02 and 2023-17-14 have not been updated to include the exceptions in those AD requirements and recommends that the exceptions removed from paragraphs (h)(4) through (6) of the proposed AD be added to the requirements of ADs 2019-11-02 and 2023-17-14.

The FAA disagrees with the request to remove the exceptions in paragraphs (h)(4) through (6) of this AD. If cracking is found during certain inspections required by Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023, then certain actions in Boeing Service Bulletin 777-53-0084, Revision 2, dated December 9, 2020; Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020; or Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021; might be required as corrective actions. In order to address the identified unsafe condition, the service information, as applicable, must be accomplished with the exceptions specified in (h)(4) through (6) of this AD. There are no new requirements for AD 2019-11-02 and AD 2023-17-14. However, as stated in paragraph (i) of this AD, for airplanes on which a front spar lower chord modification specified in Boeing Alert Requirements Bulletin 777-57A0122 RB is done as part of the requirements of paragraphs (g) and (h)(6) of this AD, the modification requirements of paragraph (g) of AD 2023-17-14 are terminated for the applicable side (left or right) on which the modification was done.

In addition, in the “Approval” paragraphs of Boeing Service Bulletin 777-53-0084, Revision 2, dated December 9, 2020; Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020; and Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021; it specifies that certain actions are an alternative method of compliance (AMOC) to the inspection and corrective action requirements of paragraph (g) of AD 2019-11-02, for modified longerons only. The FAA has not changed this AD in this regard.

American Airlines requested that the FAA add a paragraph similar to paragraph (i) of the proposed AD for terminating action for AD 2023-17-14 that refers to Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020, as the terminating action to AD 2019-11-02.

The FAA does not agree. As previously stated, the “Approval” paragraph of Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020, already includes an approval paragraph for the requirements of AD 2019-11-02. The FAA has not revised this AD in this regard.

American Airlines requested that the FAA add a paragraph clarifying that “If SB 777-53-0087 Rev 1 is accomplished due to findings from the inspections described in SB 777-53A0081 R02 (AD 2019-11-02), and NO skin repair is done, the repetitive inspections IAW SB 777-53A0100 will still be required since terminating action for those inspections is only valid if the underwing longeron AND fuselage skin modification is accomplish in accordance with SB 777-53-0087 R01.”

The FAA concurs with American Airlines' statement that repetitive inspections continue until the fuselage skin modification is done. The UWL with fuselage skin modification is terminating action to the repeat inspections in Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023. If Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020, is accomplished without the fuselage skin modification, repeat inspections in accordance with Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023, continue to apply. The FAA notes that flagnote (a) in the tables in the “Compliance” paragraph of Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023, specifies “Accomplishment of the left side UWL with fuselage skin modification in accordance with Revision 1 of Boeing Service Bulletin 777-53-0087 is terminating action for this repeat inspection.”

The FAA also notes where in the second paragraph of “Other Relevant Rulemaking” of the NPRM states “The accomplishment of the longeron modification specified in Boeing Service Bulletin 777-53-0084, Revision 2, dated December 9, 2020, or Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020” the text should state “The accomplishment of the longeron modification with fuselage skin modification specified in Boeing Service Bulletin 777-53-0084, Revision 2, dated December 9, 2020, or Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020.” However, the “Other Relevant Rulemaking” paragraphs are not restated in this AD. The FAA has not revised this AD in this regard.

American Airlines requested that the FAA allow the use of future revisions of Boeing Service Bulletin 777-53-0087, Revision 1, dated March 4, 2020. American Airlines stated the Revision 2 of Boeing Service Bulletin 777-53-0087 will add new replacement and supplemental kits, add fastener installation instructions, update bracket installation instructions, correct fastener callouts and correct typographical errors.

The FAA does not agree. Revision 2 of Boeing Service Bulletin 777-53-0087 has not yet been FAA approved nor been published. The FAA may not refer to any document that does not yet exist in an AD. To allow operators to use later revisions of the referenced document (issued after publication of the AD), either the FAA must revise the AD to reference specific later revisions, or operators must request approval to use later revisions as an alternative method of compliance with this AD under the provisions of paragraph (j) of this AD.

American Airlines requested that the FAA clarify if paragraph (h)(5) of the proposed AD is exclusive to the center wing fuel tank location, or whether adjustments should also be made to the other steps that offer the choice to utilize Boeing Material Specification (BMS) 5-95 sealant or other sealants.

The FAA agrees to clarify. The exception in paragraph (h)(5) of this AD is applicable to sealant application in the center wing fuel tank only. The use of BMS 5-95 sealant instead of BMS 5-45 sealant is only a concern when the location being sealed is inside a fuel tank such that the sealant is directly exposed to fuel. Only Figure 13 and Figure 49 describe sealing operations inside a fuel tank using BMS 5-95 sealant. As such, paragraph (h)(5) of this AD is specifically limited to flagnote (f) of Figure 13 and Figure 49. Other locations ( i.e., other flagnotes and figures) in the service information that provide an option of BMS 5-45 and BMS 5-95 are acceptable as written. The FAA also notes that a similar rationale applies to the exception in paragraph (h)(4) of this AD. The FAA has not changed this AD in this regard.

The FAA reviewed the relevant data, considered any comments received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products. Except for minor editorial changes, and any other changes described previously, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

The FAA reviewed Boeing Alert Requirements Bulletin 777-53A0100 RB, dated March 16, 2023. This material specifies procedures for external or internal (depending on configuration) detailed and ultrasonic or surface high frequency eddy current (HFEC) inspections for any cracking of the left and right side fuselage skin common to the UWL, and applicable on-condition actions. On-condition actions include, among other things, modification of the fuselage skin, and post-modification inspections and applicable corrective actions (repairs of cracking). Compliance times for on-condition actions depend on inspection type, inspection findings, and modification status.

The FAA also reviewed Boeing Multi Operator Message MOM-MOM-24-0054-01B, dated January 26, 2024. This material specifies corrections for Boeing Alert Requirements Bulletin 777-57A0122 RB, dated October 8, 2021, that address a non-destructive test manual (NDTM) error, fastener callout errors, inadequate cap seal instructions, figure orientation errors, minimum gap errors, missing fasteners on certain figures, affected groups missing from certain figures, and typographical errors.

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

The FAA estimates that this AD affects 272 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of the inspection. The agency has no way of determining the number of aircraft that might need these actions:

The FAA has received no definitive data on which to base the cost estimates for the on-condition repairs specified in this AD.

The FAA has included all known costs in its cost estimate. According to the manufacturer, however, some or all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected operators.

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

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

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

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

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

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2009-01-02, Amendment 39-15780 (74 FR 4117, January 23, 2009) (AD 2009-01-02). AD 2009-01-02 applied to certain Boeing Model 737-600, -700, -700C, -800, and -900 series airplanes. The NPRM published in the Federal Register on September 25, 2023 (88 FR 65637). The NPRM was prompted by numerous reports of multiple cracks in the frame around the attachment holes of the support bracket of the A/C outlet extrusion and the determination that certain repairs might develop fatigue cracks that could result in the inability of the frame to sustain limit load and therefore must be inspected. In the NPRM, the FAA proposed to continue to require a one-time general visual inspection of frames between BS 360 and BS 907 to determine if certain support brackets of the A/C outlet extrusions are installed; medium- and high-frequency eddy current inspections for cracking of the frames around the attachment holes of the subject brackets; repair if necessary; and installation of new, improved fittings for all support brackets of the A/C outlet extrusions between BS 360 and BS 907. The NPRM also proposed to require repetitive inspections for cracking of certain repairs, and repair if necessary. The FAA is issuing this AD to prevent frame cracking, which, if not corrected, could lead to a severed frame that, combined with cracking of the chemically milled steps in the skin above the Stringer 10 lap splice, could result in rapid decompression of the airplane.

The FAA received a comment from an individual who supported the NPRM without change.

The FAA received additional comments from Aviation Partners Boeing, The Boeing Company (Boeing), Southwest Airlines (SWA), United Airlines (UAL), and an individual. The following presents the comments received on the NPRM and the FAA's response to each comment.

An individual commented that the NPRM stated that there is no definitive data on which to estimate the labor cost (for the repairs), so the basis for this estimated cost is unclear. The commenter suggested an estimate using cost data for operations similar to those required by this AD, making estimates more robust.

The FAA cannot pre-determine on-condition actions before the inspections required by this AD are actually completed. The work-hours to complete repairs will be unique to each airplane. For the other actions required by this AD, the FAA used estimated costs that were provided by the design approval holder. No changes have been made to this AD in this regard.

Aviation Partners Boeing stated that incorporation of Supplemental Type Certificate (STC) ST00830SE for installation of blended or split scimitar winglets does not affect the accomplishment of the manufacturer's service instructions.

The FAA agrees with the commenter that STC ST00830SE does not affect the accomplishment of the manufacturer's service instructions. Therefore, the installation of STC ST00830SE does not affect the ability to accomplish the actions required by this AD. The FAA has not changed this AD in this regard.

Boeing stated that the NPRM incorrectly identified the location of the skin lap splice. The NPRM referred to “cracking of the skin lap splice above stringer 10.” Boeing requested that language be corrected to “cracking of the chemically milled steps in the skin above Stringer 10 lap splice” to match the language in Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022.

The FAA agrees with the request and has revised the “Background” section of this final rule and the “Unsafe Condition” in paragraph (e) of this AD accordingly.

Boeing noted that Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022, requires a general visual inspection (GVI) to detect cracks, not just to determine if certain support brackets of the A/C outlet extrusions are installed at certain frames. Boeing requested that a GVI be required to also detect cracks.

The FAA agrees with the request. The inspections specified in Part 2 of Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022, include a GVI to detect cracks. The “Material Incorporated by Reference under 1 CFR part 51” section of this final rule and paragraph (g)(2) of this AD have been revised to include a GVI as an inspection method.

Boeing stated that paragraph (c), “Applicability,” of the proposed AD incorrectly identified the referenced service information as Boeing “Special Attention” Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022, and explained that Revision 4 of this service information is an “alert” service bulletin. The correct reference is Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022.

The FAA agrees and has revised paragraph (c) of this AD accordingly.

Boeing stated that a certain Boeing special attention service bulletin is incorrectly identified under “Actions Since AD 2009-01-02 Was Issued” of the NPRM. Boeing pointed out that the NPRM incorrectly identified the service bulletin number as “737-25A1544.” The correct service bulletin number is “737-25-1544.”

The FAA partially agrees. The FAA agrees that the specified service bulletin number was stated incorrectly in the NPRM. However, since that section of the NPRM is not restated in this final rule, no change is necessary in this regard.

SWA stated that paragraph (j) of the proposed AD requires inspection of repairs installed on the BS 907 frame at the compliance times given in Table 2 of Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022. SWA mentioned that Table 2 requires post-repair inspections for repairs that were installed per Boeing Special Attention Service Bulletin 737-25-1544, Revision 3, dated May 16, 2016; or Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022; and does not address repairs that were installed by any other means. SWA proposed revising paragraph (m)(4) of the proposed AD to extend alternative method of compliance (AMOC) approval to paragraph (j) of the proposed AD, provided the AMOC approval contains a damage tolerance evaluation. SWA believes that individually approved repairs that contain an AMOC to AD 2009-01-02, with a damage tolerance analysis as a Category A or Category B repair (as defined in Boeing SRM 51-00-06), provide an equivalent level of safety.

The FAA disagrees with the request. Only repairs installed per Boeing Special Attention Service Bulletin 737-25-1544, Revision 3, dated May 16, 2016; or Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022; are subject to the requirements of paragraph (j) of this AD. Repairs installed by any other means are not subject to the requirements of paragraph (j) of this AD, so the proposed AMOC to paragraph (j) would not be applicable. The FAA has not changed this AD in this regard.

UAL supported the NPRM, and requested clarification of the airplanes affected by paragraph (j) of the proposed AD. UAL stated that some airplanes had repairs to the STA 907 frame performed before release of Boeing Special Attention Service Bulletin 737-25-1544, Revision 3, dated May 16, 2016. UAL added that these repairs were coordinated with Boeing and received Form 8100-9 approvals as AMOCs to paragraph (g) of AD 2009-01-02 and are considered Category B damage tolerance repairs that also require additional inspections as defined in the 8100-9 approval. UAL stated that Table 2 of the “Compliance” paragraph of Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022 (as specified in paragraph (j) of the proposed AD), applies only to airplanes on which a frame repair has been done at STA 907 in accordance with Boeing Special Attention Service Bulletin 737-25-1544, Revision 3, dated May 16, 2016; or Boeing Alert Service Bulletin 737-25-1544, Revision 4, dated February 15, 2022. UAL therefore stated that Category B repairs via Form 8100-9 should be excluded from paragraph (j) of the proposed AD.

The FAA provides the following clarification. As stated previously, only repairs installed per Boeing Special Attention Service Bulletin 737-25-1544, Revision 3, dated May 16, 2016; or Boeing Alert Service Bulletin 747-25A1544, Revision 4, dated February 15, 2022; are subject to the requirements of paragraph (j) of this AD. Repairs installed by any other means are not subject to the requirements of paragraph (j) of this AD. Therefore, no change to this AD is necessary.

The FAA reviewed the relevant data, considered any comments received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products. Except for minor editorial changes, and any other changes described previously, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

The FAA reviewed Boeing Alert Service Bulletin 737-25A1544, Revision 4, dated February 15, 2022. This material specifies procedures for a one-time general visual inspection of frames between BS 360 and BS 907 to determine if certain support brackets of the A/C outlet extrusions are installed; a general visual inspection and low-, medium-, and high-frequency eddy current inspections for cracking of the frames around the attachment holes of the subject brackets, and repair if necessary; and installation of new, improved fittings for all support brackets of the A/C outlet extrusions between BS 360 and BS 907. This material also specifies procedures for repetitive detailed and high-frequency eddy current inspections for cracking of certain repairs at BS 907 and repair if necessary.

This AD also requires Boeing Special Attention Service Bulletin 737-25-1544, Revision 1, dated January 16, 2008, which the Director of the Federal Register approved for incorporation by reference as of February 27, 2009 (74 FR 4117, January 23, 2009).

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

The FAA estimates that this AD affects 738 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has received no definitive data on which to base the cost estimates for the on-condition repairs that would be required based on the results of the inspections specified in 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,

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model AS332C, AS332C1, AS332L, AS332L1, and SA330J helicopters. The NPRM published in the Federal Register on June 18, 2024 (89 FR 51468). The NPRM was prompted by a series of ADs, the most recent being EASA AD 2023-0076, dated April 11, 2023 (EASA AD 2023-0076), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition on Airbus Helicopters Model SA 330 J, AS 332 C, AS 332 C1, AS 332 L, and AS 332 L1 helicopters.

In the NPRM, the FAA proposed to require inspecting or measuring the MGB forward and rear suspension bar attachment plates and, depending on the results, taking corrective action. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine EASA AD 2023-0076 in the AD docket at regulations.gov under Docket No. FAA-2024-1686.

The FAA received no comments on the NPRM or on the determination of the costs.

These products have been approved by the aviation authority of another country and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the EASA AD referenced above. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products.

EASA AD 2023-0076 requires measuring the thickness of the MGB forward suspension bar attachment plate and inspecting the LH and RH MGB rear suspension bar attachment plates. Depending on the results, EASA AD 2023-0076 requires contacting AH [Airbus Helicopters] for approved corrective action instructions and accomplishing those instructions accordingly.

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

The FAA reviewed Airbus Helicopters Alert Service Bulletin (ASB) No. AS332-53.02.15, Revision 0, dated March 6, 2023, and ASB No. SA330-53.56, Revision 0, dated April 3, 2023. This material specifies procedures for measuring the thickness of the MGB front suspension bar attachment plate and visually checking the LH and RH MGB rear suspension bar attachment plate versions. Depending on the results, this material specifies procedures for contacting Airbus Helicopter to get an approved repair.

If, during the inspection or measurement, any discrepancy is detected, EASA AD 2023-0076 specifies contacting AH [Airbus Helicopters] to obtain approved corrective action instructions and accomplishing those instructions, and the material referenced in EASA AD 2023-0076 specifies contacting Airbus Helicopters to get an approved repair, whereas this AD requires accomplishing the corrective action before further flight in accordance with a method approved by the FAA, EASA, or Airbus Helicopters' EASA Design Organization Approval.

The FAA estimates that this AD affects 38 helicopters of U.S. registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this AD.

Measuring the thickness of the MGB forward suspension bar attachment plate and inspecting the LH and RH MGB rear suspension bar attachment plates will take approximately 2 work-hours for an estimated cost of $170 per helicopter and $6,460 for the U.S. fleet.

The corrective action that may be needed as a result of the inspection or measurement could vary significantly from helicopter to helicopter. The FAA has no data to determine the costs to accomplish the corrective action or the number of helicopters that may require corrective action.

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

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

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

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

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

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all The Boeing Company Model 787-8, 787-9, and 787-10 airplanes. The NPRM published in the Federal Register on February 6, 2024 (89 FR 8109). The NPRM was prompted by a determination that the flight deck door decompression panel can strike the captain's seat headrest if a flight deck or below the flight deck rapid decompression event occurs when the seat is in a certain position. In the NPRM, the FAA proposed to require, for certain airplanes, replacing the affected captain's seat assembly. The FAA also proposed to prohibit the installation of affected parts. The FAA is issuing this AD to address the possibility that the decompression panel could strike the captain's head or face. The unsafe condition, if not addressed, could result in serious or potentially fatal injury to the captain after a flight deck or below the flight deck rapid decompression event.

The FAA received comments from Air Line Pilots Association, International (ALPA) and United Airlines who supported the NPRM without change.

The FAA received additional comments from six commenters, including American Airlines, Air France, Boeing, British Airways, KLM Royal Dutch Airlines, and an individual. The following presents the relevant comments received on the NPRM and the FAA's response to each comment.

American Airlines requested that the applicability of the proposed AD be limited to the Boeing airplanes with line numbers in the effectivity of Boeing Special Attention Requirements Bulletin B787-81205-SB250294-00 RB, Issue 001, dated June 14, 2023. The commenter stated that the Boeing Illustrated Parts Data (IPD) does not allow the installation of the captain's seat having Ipeco part number (P/N) 3A380-0007-01-7 on Boeing airplanes with line numbers that are not in the effectivity of Boeing Special Attention Requirements Bulletin B787-81205-SB250294-00 RB, Issue 001, dated June 14, 2023.

The FAA does not agree with the request. As explained in the NPRM, the FAA has determined there is a rotability issue, and the actions required by this AD can be accomplished on Boeing airplanes that are not identified in the effectivity of Boeing Special Attention Requirements Bulletin B787-81205-SB250294-00 RB, Issue 001, dated June 14, 2023. It is physically possible to install a captain's seat having Boeing P/N S632Z301-21 (Ipeco P/N 3A380-0007-01-7) on airplanes initially delivered with the acceptable seat assemblies. The FAA has not changed this AD in response to this request.

Air France, KLM Royal Dutch Airlines, British Airways, and an individual requested the proposed AD be revised to allow using procedures or modifications similar to those in the existing Boeing Flight Crew Operations Manual (FCOM). Air France requested an alternative method of compliance (AMOC) that could consist of marking limits on the flight deck based on existing Boeing FCOM instructions and adding procedures (which the commenter stated Boeing is developing) into the Airplane Flight Manual (AFM). KLM Royal Dutch Airlines requested that, as an alternative to the proposed AD, the FAA consider allowing instructions similar to those in the existing Boeing FCOM, along with revising the procedures in the AFM to include installation of a placard limiting seat recline and providing information to aid accurate seat positioning. British Airways noted that the proposed AD allows installing later-approved part numbers and claimed that the later-approved part will be a seat with a placarding solution as proposed by Boeing that will essentially revert the part number back to a “-7.” British Airways requested that the proposed AD be revised to allow for the Boeing proposal using a placard as a means of compliance. An individual requested an AMOC-type approach that allows operators to enhance procedural compliance with the existing Boeing FCOM using procedures (including FCOM guidance around limiting the recline/aft movement of the seat), flight deck markings, and crew awareness training. The individual also requested a longer-term approach to the decompression panel issue that allow time for Boeing to come up with a permanent engineering solution to the door panel which will avoid the need to artificially limit the captain's seat recline. Air France stated that the seat modification makes it impossible for pilots to achieve effective rest and may force the operator to add a third pilot on the operated routes or change the Boeing 787 fleet network, which can cause significant costs. KLM Royal Dutch Airlines stated that the seat modification limits seat recline to the point that it reduces the ability for pilots to have a controlled rest, which can negatively affect flight safety. KLM Royal Dutch Airlines suggested that its proposal would achieve the same level of safety as the proposed seat hardware modification. British Airways noted that the mechanical limiting device is more restrictive for tilt and recline than the guidance in Boeing's existing FCOM, meaning pilots can't effectively rest in the operating seat, increasing operational risk due to pilot fatigue. British Airways suggested the increased risk due to pilot fatigue outweighs the low risk of a flight deck decompression while the pilot's seat is in the most rearward and tilted position. The individual stated that the risk analysis appears to be exaggerated given the likelihood of a decompression event occurring with a taller pilot without an alternative crew member available to safely continue flight, which the commenter stated is not likely given in-service experience of modern jet aircraft. The individual stated that the seat recline is restricted more than what would be required for 99.9% of the pilot cohort to avoid contact with the decompression panel in the event of an in-flight decompression. The individual suggested that the mechanical limiter doesn't account for the fore/aft position of the seat and assumes an absolute worst-case scenario with a pilot in the 0.01 percentile.

The FAA does not agree with the commenters' requests. The FAA evaluated fleet data and determined through risk analysis that the risk to flight crew is unacceptable and that delaying this action would be inappropriate. Additionally, the FAA notes that the flight deck door decompression panel may strike a taller or shorter pilot during a flight deck decompression event because the captain's seat headrest is in the path of the decompression panel when the seat is in the aft track position with full recline and full seat pan tilt. The commenters' proposals do not include supporting data that demonstrates an acceptable level of safety. However, under the provisions of paragraph (k) of this AD, operators may submit AMOC proposals that include supporting data that demonstrates an acceptable level of safety. Regarding a commenter's request to revise the AD to allow Boeing's proposed placard as a means of compliance, the FAA notes that this AD allows installing later-approved parts that meet the criteria specified in paragraph (h)(2) of this AD. A later-approved part may have a placard solution, but a placard solution alone is not the same as a later-approved part. The FAA has not changed this AD in response to these requests.

Boeing requested that the FAA clarify text regarding the rapid decompression event that could lead to the unsafe condition. Boeing requested that the FAA revise the text “flight deck decompression event” to instead say “flight deck or below the flight deck rapid decompression event” when referring to events that could cause the flight deck door decompression panel to strike the captain's seat headrest. Boeing stated that each event would cause the flight deck door to open in the forward direction, either partially or fully.

The FAA agrees with the request for the reasons provided. The FAA has revised this AD accordingly.

British Airways requested that the compliance time be extended. British Airways noted that it relies on subcontractor suppliers to modify the seats, with limited extra seats to use while replacement seats are being provided, and the supplier may not have capacity to ramp up to conversion rate. British Airways added that Boeing does not have stock of the captain's seat having Boeing P/N S632Z301-31 (Ipeco P/N 3A380-0007-01-8) to support a fleet-wide campaign within the 3-year compliance time.

The FAA does not agree with the request. After considering all the available information, the FAA has determined that the compliance time, as proposed, represents an appropriate interval of time in which the required actions can be performed in a timely manner within the affected fleet, while still maintaining an adequate level of safety. In developing an appropriate compliance time, the FAA considered the safety implications, parts availability, and normal maintenance schedules for timely accomplishment of the modifications. The FAA has not changed this AD in response to this request.

The FAA reviewed the relevant data, considered any comments received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products. Except for minor editorial changes, and any other changes described previously, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.

The FAA reviewed Boeing Special Attention Requirements Bulletin B787-81205-SB250294-00 RB, Issue 001, dated June 14, 2023. This material specifies procedures for replacing the affected captain's seat assembly part number (P/N) S632Z301-21 (Ipeco P/N 3A380-0007-01-7) with captain's seat assembly P/N S632Z301-31 (Ipeco P/N 3A380-0007-01-8).

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

The FAA estimates that this AD affects 155 airplanes of U.S. registry. 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,

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2023-11-01, Amendment 39-22446 (88 FR 44042, July 11, 2023) (AD 2023-11-01). AD 2023-11-01 applied to certain Bombardier, Inc., Model BD-100-1A10 airplanes. AD 2023-11-01 required a records check and replacement of affected LH DCPC units, and provided optional terminating action for those actions. The FAA issued AD 2023-11-01 to address erratic indications, which could cause the flight crew to turn off fully-operational electrical power sources, leading to partial or complete loss of electrical power resulting in loss of flight displays and reduced controllability of the airplane.

The NPRM published in the Federal Register on April 26, 2024 (89 FR 32380). The NPRM was prompted by AD CF-2023-35, dated May 26, 2023, issued by Transport Canada, which is the aviation authority for Canada (Transport Canada AD CF-2023-35) (also referred to as the MCAI). The MCAI states that airplanes could experience misleading electrical system status indications (PBA and EICAS) as a result of contamination of electrical contacts in the LH DCPC internal communication data bus.

In the NPRM, the FAA proposed to continue to require checking the airplane records and replacement of affected LH DCPC units. The NPRM also proposed to require modification of certain LH DCPC units, prohibit installation of affected parts, and expand the applicability of AD 2023-11-01. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-1003.

The FAA received a comment from Bombardier, Inc. (Bombardier), who also stated its support for the NPRM. The following presents the comment received on the NPRM and the FAA's response to that comment.

Bombardier requested that the proposed AD be revised to extend the proposed compliance time to March 31, 2026. Bombardier asserted that, due to changes made in the airplane flight manual (AFM), which introduced the “Unexpected Electrical Indications” procedure instructing pilots not to act on erratic indications related to the electrical power generation and distribution system, the medium risk was mitigated and the severity of a misleading indication event was lowered from potentially catastrophic to major. Even if such events still occur after the implementation of Bombardier Service Bulletins 100-24-30 and 350-24-005, following implementation of the AFM revision, Bombardier considers these events a reliability issue and stated its commitment to work with the supplier to correct the effects of such events. Bombardier further asserted that, when analyzed in conjunction with the probability of occurrence, the risk becomes low. Additionally, Bombardier attested that, based on its provisions, a shorter compliance time will create additional pressure on the U.S. operators, exposing them to a potential grounding scenario, necessitating the need for Bombardier to apply for an alternative method of compliance (AMOC) to support this AD.

The FAA disagrees with the request. Bombardier provided no substantiating data to support the need for an extension of the proposed compliance time. In developing an appropriate compliance time for this action, the FAA considered the safety implications, the time necessary to accomplish the required actions, the availability of required parts, and normal maintenance schedules for timely accomplishment of the required actions. Considering these items, the FAA has determined that the specified compliance time, as proposed, is appropriate to ensure an acceptable level of safety. The FAA has not changed this AD because of this comment. However, under the provisions of paragraph (m)(1) of this AD, the FAA will consider requests for approval of alternative compliance times if sufficient data are submitted to substantiate that the change would provide an acceptable level of safety.

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

The FAA reviewed Bombardier Service Bulletins 100-24-29 and 350-24-004, both Revision 01, both dated July 27, 2023. This material specifies procedures for a records check to determine the total flight hours and replacement of affected LH DCPC units (part numbers 975GC02Y04, 975GC0Y05, 975GC02Y06, and 975GC02Y07). These documents are distinct since they apply to different airplane configurations.

The FAA also reviewed Subject 24-61-01 DC Power Center (DCPC)—Removal/Installation, Chapter 24—Electrical Power, Bombardier Challenger 300 Aircraft Maintenance Manual, Part Two, Publication No. CH 300 AMM, Revision 82, dated November 9, 2023, which specifies:

• procedures for removing DCPC units in Task 24-61-01-000-801 Removal of the DC Power Center (DCPC);

• procedures for installing DCPC units in Task 24-61-01-400-801 Installation of the DC Power Center (DCPC); and

• procedures for testing DCPC units in Task 24-61-01-720-801 Functional Test of the DC Power Center (DCPC).

For obtaining these tasks for the Bombardier Challenger 300 Aircraft Maintenance Manual, Part Two, Publication No. CH 300 AMM, use Document Identification No. CH 300 AMM.

The FAA also reviewed Subject 24-61-01 DC Power Center (DCPC)—Removal/Installation, Chapter 24—Electrical Power, Bombardier Challenger 350 Aircraft Maintenance Manual, Part Two, Publication No. CH 300 AMM, Revision 38, dated November 9, 2023, which specifies:

• procedures for removing DCPC units in Task 24-61-01-000-801 Removal of the DC Power Center (DCPC);

• procedures for installing DCPC units in Task 24-61-01-400-801 Installation of the DC Power Center (DCPC); and

• procedures for testing DCPC units in Task 24-61-01-720-801 Functional Test of the DC Power Center (DCPC).

For obtaining these tasks for the Bombardier Challenger 350 Aircraft Maintenance Manual, Part Two, Publication No. CH 350 AMM, use Document Identification No. CH 350 AMM.

This AD would also require the following material, which the Director of the Federal Register approved for incorporation by reference as of August 15, 2023 (88 FR 44042, July 11, 2023).

• Bombardier Service Bulletin 100-24-29, dated April 9, 2021.

• Bombardier Service Bulletin 100-24-30, dated November 29, 2022.

• Bombardier Service Bulletin 350-24-004, dated April 9, 2021.

• Bombardier Service Bulletin 350-24-005, dated November 29, 2022.

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

The FAA estimates that this AD affects 356 airplanes of U.S. registry.

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

The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of any required actions. The FAA has no way of determining the number of aircraft that might need this on-condition action:

According to the manufacturer, some or all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected operators. The FAA does not control warranty coverage for affected operators. As a result, the FAA has included all known costs in the cost estimate.

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

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

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

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

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

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc., Model BD-700-2A12 airplanes. The NPRM published in the Federal Register on February 14, 2024 (89 FR 11228). The NPRM was prompted by AD CF-2023-53, dated July 14, 2023, issued by Transport Canada, which is the aviation authority for Canada (referred to after this as the MCAI). The MCAI states that the fan in a TRU can become inoperative in a manner that is not detectable by the fan monitoring circuit. An inoperative fan leads to higher TRU operating temperatures, which can trigger the activation of the load shed function to reduce the electrical load and temperature in the TRU. If the TRU temperature continues to rise and exceeds the maximum temperature threshold, the TRU will automatically disconnect. The shed electrical load will be transferred to the remaining two TRUs, which could lead to overheating and cascading failures on the remaining TRUs.

In the NPRM, the FAA proposed to require replacement of the existing TRU Number 2 with a new part number that incorporates a correction to the fan and the monitoring circuit. The NPRM also proposed to prohibit the installation of affected parts. The FAA is issuing this AD to address the inability of a TRU to detect the fan failure. The unsafe condition, if not addressed, could lead to overheating and failures on the remaining TRUs, which could contribute to additional pilot workload and adversely affect the safe operation of the airplane.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-0227.

The FAA received comments from NetJets Inc. The following presents the comments received on the NPRM and the FAA's response to the comments.

NetJets requested that paragraphs (g) and (i) of the proposed AD be revised to change Bombardier Service Bulletin 700-24-7507, Revision 1, dated May 19, 2023, to Bombardier Service Bulletin 700-24-7507, Revision 2, dated October 16, 2023.

The FAA agrees with the request. For airplanes on which the actions of Revision 1 of the service bulletin have already been done, no more work is required by Revision 2. The FAA clarified with Bombardier that credit can be given for the accomplishment of actions specified in Bombardier Service Bulletin 700-24-7507, Revision 1, dated May 19, 2023. The FAA has therefore revised this AD to require Revision 2 and to add credit in paragraph (i) of this AD for accomplishment of the actions specified in Bombardier Service Bulletin 700-24-7507, Revision 1, dated May 19, 2023, if completed before the effective date of this AD.

NetJets noted that the Bombardier Service Bulletin 700-24-7507, Revision 2, dated October 16, 2023, limits the installation of TRU part number (P/N) G02404521-001 to the Number 2 position. NetJets requested that an exception be added to paragraph (h) of the proposed AD to also allow the installation of TRU P/N G02404521-001 for TRU Number 1 and TRU Number 3.

The FAA does not agree to allow installation of TRU P/N G02404521-001 for TRU Number 1 or Number 3. The TRU P/N G02404521-001 design fails to detect a fan failure. Bombardier Service Bulletin 700-24-7507, Revision 2, dated October 16, 2023, replaces only TRU Number 2 position because it has a higher electrical load and is more susceptible to the fan inoperative condition. TRU P/N G02404521-001 is no longer manufactured. The new production airplanes are all installed with TRU P/N G02404521-003. All TRUs that are removed from service ( e.g., for repair) are upgraded to TRU P/N G02404521-003. Therefore, this AD has not been changed regarding this request.

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

The FAA reviewed Bombardier Service Bulletin 700-24-7507, Revision 2, dated October 16, 2023. This material specifies procedures for replacing the existing TRU Number 2 P/N G02404521-001 with new P/N G02404521-003, including removal of the secondary layer of insulation blanket ENM386519113C or P/N ENM386519113D in front of the TRU Number 2 fan air inlet, reidentifying the blanket installation by ink stamp, checking the electrical bond resistance for TRU Number 2, and performing the operational test.

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

The FAA estimates that this AD affects 56 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has included all known costs in its cost estimate. According to the manufacturer, however, some or all the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected operators.

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

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

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

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

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

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain serial-numbered Embraer Model EMB-505 airplanes. The NPRM published in the Federal Register on June 20, 2024 (89 FR 51853). The NPRM was prompted by ANAC AD 2023-07-01, effective August 10, 2023, as corrected by ANAC Airworthiness Directive Errata, effective August 10, 2023 (ANAC AD 2023-07-01) (also referred to as the MCAI) issued by National Civil Aviation Agency of Brazil, which is the aviation authority for Brazil. The MCAI states that analysis identified that the LH refreshment center and LH forward cabinet might not withstand the loads expected for specific emergency landing conditions, which may cause the detachment of mass items and cause injuries to the airplane occupants. In addition, the MCAI includes errata to correct a printing error in the original English version of the MCAI. The MCAI requires installing structural reinforcements.

In the NPRM, the FAA proposed to require installing structural reinforcements, as specified in ANAC AD 2023-07-01. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2024-1484.

The FAA received no comments on the NPRM or on the determination of the costs.

These products have been approved by the aviation authority of another country and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products. This AD is adopted as proposed in the NPRM.

The FAA reviewed ANAC AD 2023-07-01, which specifies procedures for installing structural reinforcements.

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

The material specified in ANAC AD 2023-07-01 allows the use of alternative or similar parts in place of the ones specified in the kits, provided these alternative or similar parts are approved by Embraer, but this AD requires approval from either the Manager, International Validation Branch, FAA; ANAC; or ANAC's authorized Designee.

The FAA estimates that this AD affects 229 airplanes of U.S. registry.

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

Authority for This Rulemaking

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

The FAA published a notice of proposed rulemaking for Docket No. FAA-2024-0517 in the Federal Register (89 FR 18854; March 15, 2024), proposing to amend VOR Federal Airways V-233 and V-420 in the vicinity of Gaylord, MI, due to the planned decommissioning of the VOR portion of the Gaylord, MI, VOR/DME NAVAID. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

VOR Federal Airways are published in paragraph 6010(a) of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11J, dated July 31, 2024, and effective September 15, 2024. FAA Order JO 7400.11J is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

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

This action amends 14 CFR part 71 by amending VOR Federal Airways V-233 and V-420 due to the planned decommissioning of the VOR portion of the Gaylord, MI, VOR/DME. The airway actions are described below.

V-233: V-233 extends between the Spinner, IL (SPI), VOR/Tactical Air Navigation (VORTAC) and the Roberts, IL (RBS), VOR/DME; and between the Mount Pleasant, MI (MOP), VOR/DME and the Pellston, MI (PLN), VORTAC. The airway segment between the Mount Pleasant VOR/DME and the Pellston VORTAC is removed. As amended, the airway is changed to now extend between the Spinner VORTAC and the Roberts VOR/DME.

V-420: V-420 extends between the Green Bay, WI (GRB), VORTAC and the Alpena, MI (APN), VORTAC. The airway segment between the Traverse City, MI (TVC), VOR/DME and the Alpena VORTAC is removed. As amended, the airway is changed to now extend between the Green Bay VORTAC and the Traverse City VOR/DME.

The NAVAID radials listed in the V-233 description in the regulatory text of this final rule are unchanged and stated in degrees True north.

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

The FAA has determined that this action amending VOR Federal Airways V-233 and V-420, due to the planned decommissioning of the VOR portions of the Gaylord, MI, VOR/DME NAVAID, qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points); and paragraph 5-6.5i, which categorically excludes from further environmental impact review the establishment of new or revised air traffic control procedures conducted at 3,000 feet or more above ground level (AGL); procedures conducted below 3,000 feet AGL that do not cause traffic to be routinely routed over noise sensitive areas; modifications to currently approved procedures conducted below 3,000 feet AGL that do not significantly increase noise over noise sensitive areas; and increases in minimum altitudes and landing minima. As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

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

The FAA published a notice of proposed rulemaking for Docket No. FAA-2024-1048 in the Federal Register (89 FR 31667; April 25, 2024), proposing to amend Jet Routes J-35 and J-101; amend VOR Federal Airways V-9, V-48, V-69, V-227, and V-313; and revoke VOR Federal Airway V-586 due to the planned decommissioning of the VOR portion of the Pontiac, IL, VOR/DME NAVAID. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

Subsequent to the NPRM, the FAA published a rule for Docket No. FAA-2023-2483 in the Federal Register (89 FR 48504; June 7, 2024), amending VOR Federal Airway V-48 by removing the airway segment between the Ottumwa VOR/DME and the Burlington, IA, VOR/DME. That airway amendment, effective September 5, 2024, is included in this rule.

Jet Routes are published in paragraph 2004 and VOR Federal Airways are published in paragraph 6010(a) of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11J, dated July 31, 2024, and effective September 15, 2024. FAA Order JO 7400.11J is publicly available as listed in the ADDRESSES section of this document. These amendments will be published in the next update to FAA Order JO 7400.11.

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

This action amends 14 CFR part 71 by amending Jet Routes J-35 and J-101; amending VOR Federal Airways V-9, V-48, V-69, V-227, and V-313; and revoking VOR Federal Airway V-586 due to the planned decommissioning of the Pontiac, IL, VOR. The ATS route actions are described below.

J-35: J-35 extends between the Leeville, LA, VOR/Tactical Air Navigation (VORTAC) and the Northbrook, IL, VOR/DME. The route segment between the Spinner, IL, VORTAC and the Joliet, IL, VOR/DME is removed due to the planned decommissioning of the VOR portion of the Pontiac VOR/DME. Additionally, the route segment between the Farmington, MO, VORTAC and the St. Louis, MO, VORTAC is removed due to that route segment overlapping J-151; the route segment between the St. Louis VORTAC and the Spinner VORTAC is removed due to that route segment overlapping J-101; and the route segment between the Joliet VOR/DME and the Northbrook VOR/DME is removed due to that route segment overlapping J-87. The overlapped J-151, J-101, and J-87 route segments will remain charted and provide navigational guidance between the affected NAVAIDs. As amended, the route is changed to now extend between the Leeville VORTAC and the Farmington VORTAC.

J-101: J-101 extends between the Humble, TX, VORTAC and the Sault Ste Marie, MI, VOR/DME. The route segment between the Spinner, IL, VORTAC and the Joliet, IL, VOR/DME is removed due to the planned decommissioning of the VOR portion of the Pontiac VOR/DME. Additionally, the route segment between the Joliet VOR/DME and the Northbrook, IL, VOR/DME is removed due to that route segment overlapping J-87. As amended, the route is changed to now extend between the Humble VORTAC and the Spinner VORTAC, and between the Northbrook VOR/DME and the Sault Ste Marie VOR/DME.

V-9: V-9 extends between the Leeville, LA, VORTAC and the Pontiac, IL, VOR/DME; and between the Janesville, WI, VOR/DME and the Houghton, MI, VOR/DME. The airway segment between the Spinner, IL, VORTAC and the Pontiac VOR/DME is removed. As amended, the airway is changed to now extend between the Leeville VORTAC and the Spinner VORTAC, and between the Janesville VOR/DME and the Houghton VOR/DME.

V-48: V-48 extends between the Burlington, IA, VOR/DME and the Pontiac, IL, VOR/DME. The airway segment between the Peoria, IL, VORTAC and the Pontiac VOR/DME is removed. As amended, the airway is changed to now extend between the Burlington VOR/DME and the Peoria VORTAC.

V-69: V-69 extends between the El Dorado, AR, VOR/DME and the Joliet, IL, VOR/DME. The airway segment between the Spinner, IL, VORTAC and the Joliet VOR/DME is removed. As amended, the airway is changed to now extend between the El Dorado VOR/DME and the Spinner VORTAC.

V-227: V-227 extends between the Boiler, IN, VORTAC and the intersection of the Pontiac, IL, 006° and Bradford, IL, 058° radials (PLANO Fix). The airway segment between the Roberts, IL, VOR/DME and the intersection of the Pontiac, IL, 006° and Bradford, IL, 058° radials (PLANO Fix) is removed. As amended, the airway is changed to now extend between the Boiler VORTAC and the Roberts VOR/DME.

V-313: V-313 extends between the Centralia, IL, VORTAC and the Pontiac, IL, VOR/DME. The airway segment between the Adders, IL, VORTAC and the Pontiac VOR/DME is removed. As amended, the airway is changed to now extend between the Centralia VORTAC and the Adders VORTAC.

V-586: V-586 extends between the Peoria, IL, VORTAC and the Joliet, IL, VOR/DME via the Pontiac, IL, VOR/DME. The airway is removed in its entirety.

All NAVAID radials listed in the VOR Federal airway descriptions in the regulatory text of this final rule are unchanged and stated in degrees True north.

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

The FAA has determined that this action amending Jet Routes J-35 and J-101; amending VOR Federal Airways V-9, V-48, V-69, V-227, and V-313; and revoking VOR Federal Airway V-586 due to the planned decommissioning of the Pontiac, IL, VOR NAVAID, qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points); and paragraph 5-6.5i, which categorically excludes from further environmental impact review the establishment of new or revised air traffic control procedures conducted at 3,000 feet or more above ground level (AGL); procedures conducted below 3,000 feet AGL that do not cause traffic to be routinely routed over noise sensitive areas; modifications to currently approved procedures conducted below 3,000 feet AGL that do not significantly increase noise over noise sensitive areas; and increases in minimum altitudes and landing minima. As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

This document amends the Income Tax Regulations (26 CFR part 1) by adding final regulations under section 6011 of the Internal Revenue Code (Code) to identify certain syndicated conservation easement transactions and substantially similar transactions as listed transactions, a type of reportable transaction (final regulations).

Section 6001 of the Code provides an express delegation of authority to the Secretary of the Treasury or her delegate (Secretary), requiring every taxpayer to keep the records, render the statements, make the returns, and comply with the rules and regulations that the Secretary deems necessary to demonstrate tax liability and prescribes, either by notice served or by regulations.

Section 6011 of the Code provides an express delegation of authority to the Secretary, requiring every taxpayer to “make a return or statement according to the forms and regulations prescribed by the Secretary” and “include therein the information required by such forms or regulations.”

In addition, section 6707A(c)(1) of the Code, in defining the term “reportable transaction” relating to the imposition of penalties under section 6707A(a) on “[a]ny person who fails to include on any return or statement any information with respect to a reportable transaction which is required under section 6011 to be included with such return or statement,” provides an express delegation of authority to the Secretary, stating that, “[t]he term `reportable transaction' means any transaction with respect to which information is required to be included with a return or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion.” Section 6707A(c)(2), in defining the term “listed transaction” provides an express delegation of authority to the Secretary, stating that, “[t]he term `listed transaction' means a reportable transaction which is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of section 6011.”

The final regulations are also issued under the express delegation of authority under section 7805(a) of the Code.

On December 8, 2022, the Department of the Treasury (Treasury Department) and the IRS published a notice of proposed rulemaking (REG-106134-22) in the Federal Register (87 FR 75185) proposing regulations that would identify certain syndicated conservation easement transactions and substantially similar transactions as “listed transactions” for purposes of § 1.6011-4(b)(2) and sections 6111 and 6112 of the Code (proposed regulations). The provisions of the proposed regulations are explained in greater detail in the preamble to the proposed regulations. The Treasury Department and the IRS received 26 comments in response to the proposed regulations and notice of public hearing that are the subject of this final rulemaking. The comments are available for public inspection at https://www.regulations.gov or upon request. A public hearing on the proposed regulations was held by teleconference on March 1, 2023, at 10 a.m. Eastern Time, at which five speakers provided testimony.

After full consideration of the comments received and the testimony provided, these final regulations adopt the proposed regulations with certain revisions described in the Summary of Comments and Explanation of Revisions.

The SECURE 2.0 Act of 2022 (SECURE 2.0 Act), enacted as Division T of the Consolidated Appropriations Act, 2023, Public Law 117-328, 136 Stat. 4459 (December 29, 2022), was enacted just 15 days after publication of the proposed regulations. Section 605(a) of the SECURE 2.0 Act added section 170(h)(7)(A) to the Code, which provides that a contribution by a partnership (whether directly or as a distributive share of a contribution of another partnership) is not treated as a qualified conservation contribution for purposes of section 170 if the amount of such contribution exceeds 2.5 times the sum of each partner's relevant basis in such partnership, as defined in section 170(h)(7)(B). Section 170(h)(7)(F) states that the rules of section 170(h)(7) apply equally to S corporations and other pass-through entities.

Section 605(a) of the SECURE 2.0 Act also added section 170(h)(7)(C) through (E) to the Code, which provide three exceptions to the general disallowance rule in section 170(h)(7)(A). Section 170(h)(7)(C) creates an exception for contributions by a pass-through entity that satisfy a three-year holding period; section 170(h)(7)(D) creates an exception for contributions made by family pass-through entities; and section 170(h)(7)(E) creates an exception for contributions made to preserve a building that is a certified historic structure (as defined in section 170(h)(4)(C)).

Section 605(b) of the SECURE 2.0 Act added section 170(f)(19) to the Code, creating additional reporting requirements for any qualified conservation contribution (1) the conservation purpose of which is the preservation of any building which is a certified historic structure (as defined in section 170(h)(4)(C)), (2) which is made by a partnership (whether directly or as a distributive share of a contribution of another partnership), and (3) the amount of which exceeds 2.5 times the sum of each partner's relevant basis (as defined in section 170(h)(7)) in the partnership making the contribution. Section 170(f)(19)(C) states that, except as may be otherwise provided by the Secretary, the rules of section 170(f)(19) apply to S corporations and other pass-through entities in the same manner as such rules apply to partnerships.

Section 170(f)(19)(A) provides that no deduction is allowed for such a contribution unless the entity making the contribution (1) includes on its return for the taxable year in which the contribution is made a statement that the entity made such a contribution and (2) provides such information about the contribution as the Secretary may require.

Section 605(c) of the SECURE 2.0 Act provides that no inference is intended as to the appropriate treatment of contributions made in taxable years ending on or before the date of the SECURE 2.0 Act's enactment (December 29, 2022), or as to any contribution for which a deduction is not disallowed by reason of section 170(h)(7).

On November 20, 2023, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-112916-23) in the Federal Register (88 FR 80910) proposing regulations concerning the statutory disallowance rule enacted by the SECURE 2.0 Act, including the calculation of relevant basis. On June 28, 2024, the Treasury Department and the IRS finalized these regulations in TD 9999 (89 FR 54284).

This Summary of Comments and Explanation of Revisions summarizes all significant comments addressing the proposed regulations, and describes and responds to comments concerning: (1) the listed transaction system generally; (2) conservation easements generally; (3) the continued necessity of finalizing these regulations following passage of section 605 of the SECURE 2.0 Act; (4) the elements of the listed transaction identified in these final regulations; and (5) the role of donee organizations under these final regulations.

Comments outside the scope of this rulemaking are not adopted.

Many comments addressed rules that apply generally to any listed transaction. While these comments are outside the scope of this rulemaking, the Treasury Department and the IRS have nonetheless considered these comments in finalizing these regulations.

Several commenters argued that the proposed regulations' listed transaction designation is impermissibly retroactive because taxpayers who previously filed tax returns (or amended tax returns) reflecting their participation in syndicated conservation easement transactions but that did not disclose their participation pursuant to Notice 2017-10 will be required to disclose those transactions once these final regulations are published in the Federal Register . The commenters opined that this so-called retroactive reach of the proposed listed transaction designation is unfair and likely a violation of law under various theories, including that it may be a taking under the Fifth Amendment or constitute involuntary servitude under the Thirteenth Amendment, and that it undermines the purpose of the Administrative Procedure Act's (APA) notice and comment process. Several commenters noted that the Tax Court has not determined whether a listed transaction designation can be applied retroactively; thus, their theory has not been resolved judicially.

The reporting rules for listed transactions are outside the scope of these final regulations, which merely identify a listed transaction. The reporting rules for listed transactions are found in § 1.6011-4, which was issued pursuant to notice and comment and finalized most recently in TD 9350 (72 FR 43146), published in 2007 and which is not amended by these final regulations. Section 1.6011-4(e)(2)(i) requires reporting of transactions entered into prior to the publication of guidance identifying a transaction as a listed transaction if the statute of limitations for assessment of tax is still open when the transaction becomes a listed transaction. While the reporting mandated by § 1.6011-4 may be with respect to prior periods, the disclosure obligation is itself not retroactive—it is a current reporting obligation. Thus, the comments regarding an impermissible retroactive burden required by § 1.6011-4 are without merit.

Several commenters requested additional guidance on what constitutes an “open year” for purposes of reporting the listed transaction. These commenters opined that the final regulations should not be able to hold open (or re-open) a statute of limitations for a return that was filed before the relevant transaction became a listed transaction. One commenter stated that such a rule would result in taxpayers currently under audit and disputing penalties based on an expired statute of limitations finding one legal basis of their case evaporated, undoing months or years of analysis and evaluation.

Guidance on open years for purposes of applying § 1.6011-4 is outside the scope of these final regulations, which merely identify a listed transaction. However, if a taxpayer who is required to disclose a listed transaction for a taxable year for which the statute of limitations has not expired prior to the identification of the listed transaction fails to do so, then the taxpayer's statute of limitations will continue to stay open for that taxable year as provided in section 6501(c)(10) of the Code. Section 6501(c)(10) provides that, if a taxpayer fails to include on any return or statement for any taxable year any information with respect to a listed transaction (as defined in section 6707A(c)(2) of the Code) which is required under section 6011 to be included with such return or statement, the time for assessment of any tax imposed by the Code with respect to such transaction does not expire before the date that is one year after the earlier of (1) the date the taxpayer provides the required information or (2) the date that a material advisor meets the requirements of section 6112 with respect to a request by the Secretary under section 6112(b) relating to such transaction with respect to such taxpayer. Section 301.6501(c)-1(g)(3)(iii) of the Procedure and Administration Regulations (26 CFR part 301), which was issued pursuant to notice and comment and finalized most recently in TD 9718 (80 FR 16973), published in 2015, and which is not amended by these final regulations, provides (1) that the taxable years to which the failure to disclose relates include each taxable year that the taxpayer participated (as defined under section 6011 and the regulations thereunder) in a transaction that was identified as a listed transaction and for which the taxpayer failed to disclose the listed transaction as required under section 6011, and (2) if the taxable year in which the taxpayer participated in the listed transaction is different from the taxable year in which the taxpayer is required to disclose the listed transaction under section 6011, the taxable years to which the failure to disclose relates include each taxable year for which the taxpayer participated in the transaction.

Several commenters asked for guidance as to what constitutes an “open” tax year for taxpayers that took the position they were not required to file a Form 8886, Reportable Transaction Disclosure Statement, because Notice 2017-10 was invalidated. This requested guidance is also outside the scope of these final regulations for the reasons discussed in the prior paragraph.

One commenter expressed concern that there are no adequate procedures or policies for abating section 6707A penalties with respect to listed transactions. This comment is outside the scope of these final regulations as the regulations merely identify a listed transaction. The rules concerning section 6707A penalties are found in § 301.6707A-1, which was issued pursuant to notice and comment and finalized most recently in TD 9853 (84 FR 11217), published in 2019 and which is not amended by these final regulations.

The proposed regulations provided no special rules for material advisors. However, the effect of identifying a listed transaction is, in part, to require certain disclosures from material advisors.

One commenter asked that the final regulations provide guidance to appraisers on the application of any material advisor requirements, and suggested that, if an appraiser is engaged after an easement is put in place, the appraiser should not be considered a material advisor.

The requested guidance is outside the scope of these final regulations; however, the Treasury Department and the IRS note that the definition of material advisor is found in § 301.6111-3(b), which was issued pursuant to notice and comment and finalized in TD 9351 (72 FR 43157), published in 2007 and which is not amended by these final regulations. A material advisor is a person who makes a “tax statement,” as defined in § 301.6111-3(b)(2)(ii), and derives gross income in excess of the “threshold amount,” as defined in § 301.6111-3(b)(3) (generally, $10,000 for listed transactions). Section 301.6111-3 contains no exception for providing advice “after” the transaction is entered into. Section 301.6111-3(b)(4)(i) provides that a person will be treated as becoming a material advisor when all of the following events have occurred (in no particular order): (1) the person provides material aid, assistance, or advice as described in § 301.6111-3(b)(2); (2) the person directly or indirectly derives gross income in excess of the threshold amount as described in § 301.6111-3(b)(3); and (3) the transaction is entered into by the taxpayer to whom or for whose benefit the person provided the tax statement, or in the case of a tax statement provided to another material advisor, when the transaction is entered into by a taxpayer to whom or for whose benefit that material advisor provided a tax statement. Thus, an appraiser that is engaged after an easement is put in place can be a material adviser based on statements or actions after an easement is put in place.

A few commenters argued that the “retroactivity component” to material advisors (due to required disclosures) is impermissible or burdensome. This comment is without merit and outside the scope of these final regulations; however, the Treasury Department and the IRS note that § 301.6111-3(b)(4)(iii) provides that, if a transaction that was not a reportable transaction is identified as a listed transaction in published guidance after the occurrence of the events described in § 301.6111-3(b)(4)(i), the person will be treated as becoming a material advisor on the date the transaction is identified as a listed transaction. As the resulting obligations imposed are limited to actions the person must take thereafter, the requirement is not retroactive.

Several commenters addressed aspects of conservation easements that are outside the scope of these final regulations but have nonetheless been considered in adopting these final regulations. This part II of this Summary of Comments and Explanation of Revisions describes and responds to comments relating to: (1) the consistency of these final regulations with the congressional intent to conserve land; (2) overvaluation abuse in abusive syndicated conservation easement transactions; (3) whether disclosure of the listed transactions is needed since taxpayers must file Form 8283, Noncash Charitable Contributions; and (4) requests for enforcement data on syndicated conservation easement transactions.

One commenter noted that abusive syndicated conservation easement transactions are antithetical to the concept of charity that section 170(h) was designed to enable. The Treasury Department and the IRS agree.

However, several commenters opined that identification of syndicated conservation easement transactions as listed transactions is inconsistent with congressional intent to promote conservation. These commenters argued that the proposed regulations disincentivize conservation by increasing the audit risk of taxpayers involved in syndicated conservation easement transactions and that the uncertainty relating to what is considered a “substantially similar” transaction has a chilling effect. These commenters further argued that the proposed regulations go beyond the scope of section 170(h)(7), violate the separation of powers, and are contrary to the priorities of the Administration.

The Treasury Department and the IRS do not agree with the comments criticizing the identification of syndicated conservation easement transactions as listed transactions. Contrary to the commenters' assertions, Congress has made it clear that it is concerned with abusive syndicated conservation easement transactions. See, e.g., Syndicated Conservation-Easement Transactions, S. Prt. 116-44 (August 2020). The minimal impact on taxpayers who claim legitimate charitable contribution deductions for qualified conservation contributions and who may decide to file a protective disclosure is far outweighed by the benefit of requiring disclosure for the identified transactions. In addition, combatting abusive tax shelters is a priority for the Federal government.

Several commenters noted that the central problem with abusive syndicated conservation easements is inaccurate, inflated, and flawed appraisals and the associated overvaluation of conservation easements. A few commenters asked that these final regulations be replaced with “meaningful guidance” on valuation or appraisal methodology, including modifications to the rules for qualified appraisals under § 1.170A-17 and guidance on how to determine the highest and best use of properties for purposes of easement valuation. One commenter suggested that the IRS litigate fraudulent appraisal practices as an alternative to “questioning the long-standing conservation practices of donee organizations.” One commenter suggested establishing an enhanced appraisal process similar to the process the IRS has established for the art community.

Any guidance on valuation is outside the scope of these final regulations, which are limited to identifying a listed transaction. The purpose of these final regulations is to require taxpayers and material advisors to report transactions for which the claimed value of a syndicated conservation easement contribution strongly indicates overvaluation and thus tax avoidance. The Treasury Department and the IRS have challenged and will continue to challenge abusive appraisal practices and overvaluation.

Some commenters questioned why the IRS needs to identify certain syndicated conservation easements as a listed transaction when contributions of conservation easements are already disclosed on the Form 8283, which contains, among other information, the easement's appraised value, when and how the property was acquired, the donor's cost or adjusted basis, the amount deducted, and the date of the contribution. The commenters noted that the Form 8283 must be prepared completely and accurately because a deduction will be disallowed if any information is missing.

The Form 8283, which is filed as a part of a taxpayer's tax return, does not include all the information contained on Form 8886. It also does not alert the Office of Tax Shelter Analysis to the taxpayer's participation in an abusive transaction, nor does it trigger disclosure and other obligations of material advisors to the transaction. Accordingly, these comments are not adopted.

Some commenters, citing to an issue in the remand of CIC Services, LLC v. IRS, 592 F. Supp. 3d 677 (E.D. Tenn. 2022), asserted that the proposed regulations are arbitrary and capricious because, in their opinion, the APA requires numerical data on syndicated conservation easement transactions as part of the rationale for identifying a listed transaction. The commenters requested the number of past syndicated conservation easement transactions, the number of syndicated conservation easement transactions challenged, the status and/or outcome of every current syndicated conservation easement challenge, the number of syndicated conservation easement transactions deemed abusive by courts, the dollar amounts involved in syndicated conservation easement transactions, the number of taxpayers affected by syndicated conservation easement transactions, the nature and amount of the contributions involved, the value and acreage of the property conserved by syndicated conservation easement transactions, and the effect of syndicated conservation easement transactions on nature and wildlife.

CIC Services and other authorities do not require the public release of enforcement data, or the other analysis commenters requested, as a part of rulemaking. Section 6011 and the regulations thereunder require that the IRS (1) determine that a transaction is a tax avoidance transaction and (2) identify the transaction as a listed transaction by notice, regulation, or other form of published guidance. The Treasury Department and the IRS have consistently maintained, since the issuance of Notice 2017-10, that certain syndicated conservation easement transactions are tax avoidance transactions and have identified them as such by notice or regulation. An offer to potentially be allocated a charitable contribution deduction that is at least 2.5 times one's investment, likely resulting in a positive after-tax financial benefit from what is supposed to be a charitable contribution, is strongly indicative of a tax avoidance transaction and has been identified by Congress as such. See, e.g., section 170(h)(7). Further, the data requested by commenters is unrelated to whether the identified transactions are tax avoidance transactions.

Several commenters questioned the need for the proposed regulations to be adopted as final regulations, given the enactment in December of 2022 of section 605 of the SECURE 2.0 Act, which added section 170(h)(7) to the Code to disallow a deduction for “the vast majority” of the abusive syndicated conservation easement transactions identified in the proposed regulations. Commenters asked that, in light of the legislation, the proposed regulations either be withdrawn or be revised to take a “more surgical approach” that is in accordance with the new statute (and addresses other concerns).

Some of these commenters opined that the proposed regulations were overbroad and inconsistent with congressional intent, in part because the proposed regulations did not include the three exceptions to section 170(h)(7)(A) that Congress included in section 170(h)(7)(C) through (E). These commenters argued that syndicated conservation easement transactions that meet an exception to section 170(h)(7)(A) should also be excepted from the definition of the listed transaction identified in the proposed regulations.

Other commenters supported adopting final regulations to help the IRS identify promoters, material advisors, and donee organizations involved in abusive syndicated conservation easement transactions. The commenters noted that section 605 of the SECURE 2.0 Act is prospective only. These commenters, however, suggested a few modifications to the proposed rules, which are discussed later in this part III and in part IV of this Summary of Comments and Explanation of Revisions.

The Treasury Department and the IRS have concluded that it is in the interest of sound tax administration to continue to identify abusive syndicated conservation easement transactions as listed transactions, notwithstanding passage of section 605 of the SECURE 2.0 Act. However, in adopting the proposed regulations as final regulations, the Treasury Department and the IRS have made several modifications to the proposed rules, as described in this Summary of Comments and Explanation of Revisions. Thus, these final regulations are consistent with the commenters' recommendation that the final regulations take “a more surgical approach” to the definition of the syndicated conservation easement listed transaction following the enactment of section 170(h)(7).

Specifically, these final regulations cover three major classes of abusive syndicated conservation easement transactions (and substantially similar transactions): (1) those that involve contributions occurring before December 30, 2022; (2) those for which a charitable contribution deduction is not automatically disallowed by section 170(h)(7); and (3) those that substitute the contribution of a fee simple interest in real property for the contribution of a conservation easement.

Section 170(h)(7)(A) does not apply to contributions made on or before December 29, 2022. As a result, these final regulations are necessary to obtain reporting of transactions that are the same as, or substantially similar to, syndicated conservation easement transactions in cases in which the conservation easements were contributed before December 30, 2022, and the taxpayers did not disclose the transaction pursuant to Notice 2017-10. Thus, these final regulations impose reporting requirements on taxpayers who had not previously disclosed their participation in transactions that are the same as, or substantially similar to, syndicated conservation easement transactions to the extent that a taxpayer's participation in the transaction occurred in one or more taxable years as to which the statute of limitations had not run as of the date these final regulations identify the transaction as a listed transaction.

Some commenters contended that, since many taxpayers have already reported their transactions under Notice 2017-10, the IRS already has the information reporting targeted by the proposed regulations. The Treasury Department and the IRS agree that, in such cases, duplicative reporting under these final regulations is unnecessary. Accordingly, these final regulations explicitly provide that taxpayers who fully disclosed their participation in syndicated conservation easement transactions pursuant to Notice 2017-10 do not need to disclose again under these final regulations for any taxable years covered by the prior disclosure.

The final regulations do not include an exception for transactions that are excluded from the automatic disallowance rule in section 170(h)(7). Of note, the SECURE 2.0 Act, which was enacted after the proposed regulations were issued, does not provide that the exceptions to section 170(h)(7)(A) contained in section 170(h)(7)(C) through (E) are also exceptions for purposes of the listed transaction rules. To the contrary, section 605(c)(2) of the SECURE 2.0 Act explicitly states: “No inference is intended as to the appropriate treatment of . . . any contribution for which a deduction is not disallowed by reason of section 170(h)(7) of the Internal Revenue Code of 1986, as added by this section.” Thus, Congress has indicated that the fact that such transactions are not automatically disallowed does not mean that such transactions could not be abusive.

There are at least two types of conservation easement transactions for which a charitable contribution deduction is not automatically disallowed by section 170(h)(7) that are appropriately considered listed transactions. First, transactions satisfying any of the three exceptions found in section 170(h)(7)(C) through (E) that also contain all the elements of a transaction identified as a listed transaction under these final regulations continue to be transactions that the Treasury Department and the IRS view as likely to be abusive. Thus, the final regulations do not include any exceptions for transactions described in section 170(h)(7)(C) through (E).

Second, any syndicated conservation easement transaction for which a charitable contribution deduction is not automatically disallowed by section 170(h)(7) because the amount of the partnership's contribution does not exceed 2.5 times the sum of each partner's relevant basis in the partnership is nevertheless a listed transaction with respect to any partner who received promotional materials offering the possibility of being allocated a share of the contribution that equals or exceeds 2.5 times that partner's investment.

The preamble to the proposed regulations stated that transactions in which the contributed property is described in section 170(h)(2)(A) or (B), or is a fee interest in real property, are transactions substantially similar to the listed transaction identified in proposed § 1.6011-9(b). Several commenters noted that this language appears to imply that any transaction that meets the elements of the listed transaction identified in the proposed regulations, but that consists of the contribution of real property, is substantially similar to the listed transaction identified in the proposed regulations.

One commenter supported the inclusion of fee simple contributions in the preamble to the proposed regulations and asked that fee simple transactions be expressly identified in the regulatory text of the final regulations. Another commenter asked that the final regulations “clarify” whether fee simple contributions are considered substantially similar to syndicated conservation easement transactions, stating that “the preamble language is not law.” However, several other commenters questioned why contributions of fee simple interests in property would be considered transactions that are substantially similar to the syndicated conservation easement transaction identified in the proposed regulations. One commenter contended that the tax consequences, specifically taxpayer contribution base limitations and carryover periods, are different for fee simple contributions and conservation easement contributions.

The Treasury Department and IRS continue to believe that a transaction that meets the elements of the listed transaction identified in these final regulations, but consists of the contribution of a fee simple interest rather than of a conservation easement, is substantially similar to the listed transaction identified in these final regulations. The commenters questioning the treatment of contributions of fee simple interests as substantially similar transactions failed to address the broad definition of substantially similar found in § 1.6011-4(c)(4), which was issued after notice and comment; that Congress specifically adopted the term “substantially similar” in its subsequent enactment of section 6707A(c)(2); and that Congress specifically referenced the definition in § 1.6011-4(c)(4) when explaining that provision. See Footnote 232 of House Report 108-548(I), 108th Cong., 2nd Sess. 2004, at 261 (June 16, 2004) (House Report) (emphasis added):

In particular, despite the differing taxpayer contribution base limitations and carryover periods between a fee simple donation and a conservation easement donation, the transactions can result in similar types of tax consequences and be either factually similar or based on the same or a similar tax strategy.

In sum, the Treasury Department and the IRS agree that any contribution of real property (including contributions of fee simple interests and contributions described in section 170(h)(2)(A) or (B)) that meets the elements of the listed transaction identified in the proposed regulations is a transaction that is substantially similar to the listed transaction identified in the proposed regulations. Accordingly, § 1.6011-9(c)(7) of these final regulations explicitly states that a transaction that meets all the elements described in § 1.6011-9(b), except that the transaction involves the contribution of a fee simple interest or the contribution of a real property interest described in section 170(h)(2)(A) or (B) instead of a conservation easement, is substantially similar (within the meaning of § 1.6011-4(c)(4)) to the transaction described in § 1.6011-9(b). The final regulations contain an example showing a transaction involving the contribution of a fee simple interest that is substantially similar to the transaction described in § 1.6011-9(b).

Multiple commenters raised general concerns about the potential scope of transactions that are “substantially similar” to the listed transaction identified in the proposed regulations. Several of those commenters opined that the substantially similar rule is void for vagueness or overbroad, and some commenters requested that the term be made more specific. Several commenters asked whether the 2.5 times rule in proposed § 1.6011-9(b)(1) is a bright-line rule; in other words, whether transactions for which the highest estimate of charitable contribution deduction in the promotional materials is less than 2.5 times a taxpayer's investment could be substantially similar to the listed transaction identified in these regulations.

As previously discussed, the term “substantially similar” is part of the statutory definition of a listed transaction in section 6707A(c)(2); furthermore, the regulatory definition found in § 1.6011-4(c)(4) was adopted after notice and comment and has been viewed favorably by Congress. Under § 1.6011-4(c)(4), whether a transaction is “substantially similar” to a syndicated conservation easement transaction depends on the tax consequences, the tax strategy, and other facts and circumstances related to the transaction. Section 1.6011-4(c)(4) further provides that the term substantially similar must be broadly construed in favor of disclosure.

The “substantially similar” rule provides an important backstop against advisors' and promoters' attempts to avoid the reporting requirements. Consistent with that objective, these final regulations generally do not circumscribe the types of transactions that may be substantially similar to the listed transaction identified in these final regulations. Nonetheless, as discussed in part IV.A.3. of this Summary of Comments and Explanation of Revisions, these final regulations do provide that the 2.5 times rule is a bright-line rule. Thus, transactions in which the promotional materials offer investors the possibility of being allocated a charitable contribution deduction of anything less than 2.5 times a taxpayer's investment generally are not substantially similar to the listed transaction identified in these final regulations. However, if the taxpayer is nonetheless allocated a charitable contribution deduction that equals or exceeds 2.5 times the taxpayer's investment, the rebuttable presumption in § 1.6011-9(d)(3) would apply.

Several commenters asked whether transactions that involve contributions other than real property, such as those that involve contributions of artwork or other non-cash items, are listed transactions. The Treasury Department and the IRS have determined that such transactions are not “substantially similar” for purposes of these final regulations because this listed transaction relates to contributions of real property, not of personal property. The Treasury Department and the IRS will continue to evaluate whether the transactions raised by commenters are tax avoidance transactions and may propose to identify such transactions as listed transactions in future guidance.

A few commenters asked whether transactions that do not involve a contribution by a pass-through entity (such as a transaction involving a contribution by an individual or a corporation) are “substantially similar” transactions. The Treasury Department and the IRS have determined that transactions that do not involve a contribution by a pass-through entity are not considered substantially similar transactions; however, these transactions likewise could be proposed to be identified as tax avoidance transactions in future guidance.

One commenter asked whether transactions that involve deductions other than under section 170 (that is, transactions involving the “use of different Code provisions”), are considered “substantially similar” to the syndicated conservation easement transaction identified in the proposed regulations. It is possible that a pass-through entity could use a deduction other than allowed under section 170 to obtain the same or a similar type of tax consequences, and that such transaction would either be factually similar or based on the same or similar tax strategy to the listed transaction identified in these final regulations. Therefore, the Treasury Department and IRS conclude it is possible that a transaction that abuses the application of a section of the Code other than section 170, for example, section 642(c), could be a substantially similar transaction. Under § 1.6011-4(f)(1), taxpayers who are uncertain whether a particular transaction is substantially similar to a syndicated conservation easement transaction may request a private letter ruling from the IRS.

Several commenters expressed concern that, given the uncertainty about whether a particular transaction would be substantially similar to a listed transaction, the regulations could have a chilling effect on the willingness of qualified organizations to accept contributions of conservation easements if the section 4965 carveout were eliminated in the final regulations. As described in part V of this Summary of Comments and Explanation of Revisions, these final regulations maintain the section 4965 carveout for qualified organizations, which addresses those concerns.

Several comments focused on the elements of the listed transaction identified in the proposed regulations. This part IV describes and responds to these comments, specifically comments regarding (1) the 2.5 times rule; (2) application of the 2.5 times rule; (3) timing rules; and (4) definitions.

Commenters addressed the rationale for the 2.5 times multiple, interaction with the 2.5 times rule in section 170(h)(7), and whether 2.5 times is a bright line.

Several commenters questioned the rationale for the 2.5 times multiple in the proposed regulations. Some commenters argued that, depending on the top marginal tax rate, a 2.5 times multiple would result in minimal, if any, tax benefit to the investor. One commenter opined that, because there is no explanation for how the multiple was determined, there is no way to determine whether this criterion is reasonable.

The Treasury Department and the IRS have concluded, consistent with Notice 2017-10, that once a transaction offers the possibility of a charitable contribution deduction that equals or exceeds an amount that is 2.5 times the amount of the taxpayer's investment, the transaction is a tax avoidance transaction that justifies a reporting obligation. At this 2.5 times threshold, a taxpayer in the highest current marginal tax bracket claiming a charitable contribution deduction for a qualified conservation contribution will approximately break even before considering State tax benefits, and, for any amounts above 2.5 times, will have an economic gain directly from making the charitable contribution deduction. This multiple is also aligned with the 2.5 times threshold established by Congress in section 605 of the SECURE 2.0 Act, which disallows certain deductions at the partnership level for contributions exceeding 2.5 times the sum of each partner's relevant basis. Thus, the Treasury Department and the IRS conclude that it is reasonable and in the sound interest of tax administration to adopt the 2.5 times threshold as proposed.

Several commenters addressed the interaction of the 2.5 times rule with section 170(h)(7) and asked whether only transactions in which the charitable contribution deduction promised in the promotional materials is exactly 2.5 times the investment need to be disclosed (because transactions in which the deduction amount exceeds 2.5 times the investment are generally disallowed by section 170(h)(7)). Under these final regulations, both transactions in which the charitable contribution deduction promised in the promotional materials is exactly 2.5 times the investment and transactions in which the charitable contribution deduction promised in the promotional materials exceeds 2.5 times the investment must be disclosed.

As discussed in part III of this Summary of Comments and Explanation of Revisions, certain transactions for which a deduction is not disallowed by section 170(h)(7) are nevertheless considered listed transactions.

As noted in part III.D. of this Summary of Comments and Explanation of Revisions, several commenters asked whether 2.5 times is a bright line; in other words, whether transactions for which the highest estimate of charitable contribution deduction in the promotional materials is less than 2.5 times a taxpayer's investment could be considered substantially similar transactions. One of these commenters encouraged the IRS to clarify that the 2.5 times rule is not intended to create or imply a safe harbor for excessive valuations below the 2.5 times threshold and that the 2.5 times rule does not implicitly approve charitable contribution deduction amounts less than 2.5 times a taxpayer's investment. This commenter noted that, regardless of whether a contribution is a listed transaction pursuant to § 1.6011-4(b)(2), it remains subject to all the relevant requirements of law, including those regarding valuation and substantiation of that valuation by means of a qualified appraisal by a qualified appraiser pursuant to § 1.170A-17 that is subject to review by the IRS for its accuracy. A few commenters asked the IRS to pick an actual number (for example, 2.0, 2.25, 2.45, or 2.49 times) at which a transaction will incur greater IRS scrutiny.

The Treasury Department and the IRS agree that taxpayers need some certainty on which transactions need to be disclosed to the IRS. The Treasury Department and the IRS have determined that a transaction in which the promotional materials offer the taxpayer the possibility of being allocated a charitable contribution deduction of only an amount less than 2.5 times the taxpayer's investment and for which the taxpayer is actually allocated a charitable contribution deduction of an amount less than 2.5 times the taxpayer's investment (so that the rebuttable presumption in § 1.6011-9(d)(3) does not apply) generally is not “substantially similar” to the listed transaction identified in these final regulations. This determination takes into account both the need for taxpayer certainty on reporting obligations and the possibility of being allocated a charitable contribution deduction the amount of which is less than 2.5 times the amount of the taxpayer's investment presents less risk of the type of net-positive financial benefit to investors that exists at and above the 2.5 times threshold. This bright-line rule does not imply that valuations giving rise to an amount less than 2.5 times a taxpayer's investment are properly valued. The Treasury Department and the IRS agree with the commenter that, regardless of whether a contribution is a reportable transaction pursuant to § 1.6011-4, it remains subject to all the relevant requirements of law. For example, a claimed charitable contribution deduction amount that is 2.0 times the partner's investment may still be overvalued or unsubstantiated, and the valuation remains subject to review by the IRS for accuracy.

In view of the foregoing, these final regulations add new § 1.6011-9(d)(1) to state that the 2.5 times threshold is a bright line. However, this new rule also provides that, if a pass-through entity engages in a series of transactions (for example, contribution of an easement followed by contribution of a fee simple interest) with a principal purpose of avoiding the application of this bright-line rule, the series of transactions may be disregarded, or the arrangement may be recharacterized in accordance with its substance. Whether a series of transactions has a principal purpose of avoiding the application of this bright-line rule is determined based on all the facts and circumstances.

The proposed regulations contained three rules to address potential avoidance of the 2.5 times rule. Taxpayers commented on each of these rules.

The proposed regulations contained a rule that, if the promotional materials suggest or imply a range of possible charitable contribution deduction amounts that may be allocated to the taxpayer, the highest suggested or implied deduction amount will determine whether the 2.5 times rule is met. In addition, if one piece of promotional materials (for example, an appraisal or oral statement) suggests or implies a higher charitable contribution deduction amount than suggested or implied by other promotional materials, then the highest suggested charitable contribution deduction amount determines whether the 2.5 times rule is met. As the preamble to the proposed regulations explained, this rule is intended to prevent promoters from circumventing the 2.5 times rule by having promotional materials contain language that is inconsistent as to the amount of the potential charitable contribution deduction.

One commenter stated that the proposed rule “does not apply to ambiguities in the taxpayer's materials, it allows the Treasury to create ambiguities in the taxpayer's materials.” However, another commenter asked whether a transaction that meets the elements of the listed transaction identified in the proposed regulations, except that the partnership merely promises that the investment will “grow by” 2.5 times without mentioning a charitable contribution deduction, is considered a “substantially similar” transaction. The intent of the rule is to prevent promoters from circumventing the 2.5 times rule by creating ambiguous promotional materials, and the transaction described in the preceding sentence would be a substantially similar transaction. Thus, these final regulations adopt the rule as proposed.

The proposed regulations included a rebuttable presumption deeming the 2.5 times rule to be met if (1) the pass-through entity donates a conservation easement within three years following a taxpayer's investment in the pass-through entity, (2) the pass-through entity allocates a charitable contribution deduction to the taxpayer the amount of which equals or exceeds two and one-half times the amount of the taxpayer's investment, and (3) the taxpayer claims a deduction the amount of which equals or exceeds two and one-half times the amount of the taxpayer's investment. The proposed regulations provided that this presumption may be rebutted if the taxpayer establishes to the satisfaction of the Commissioner that none of the promotional materials contained a suggestion or implication that investors might be allocated a charitable contribution deduction the amount of which equals or exceeds an amount that is two and one-half times the amount of their investment in the pass-through entity.

Several commenters objected to the rebuttable presumption rule, stating that it is “arbitrary and capricious;” that taxpayers cannot prove a negative (particularly with respect to oral representations); that any attempt to prove in court that oral representations were not made is hearsay; that the regulations do not speak to how a taxpayer is able to rebut the presumption; that it seems to be attempting to switch the penalty burden from the IRS to taxpayers; and that the IRS has demonstrated to taxpayers that it will neither be fair nor listen to reasonable evidence in syndicated conservation easement tax disputes. Commenters asked for guidance on how taxpayers may be able to rebut the rebuttable presumption.

The Treasury Department and the IRS conclude that the rebuttable presumption is reasonable because it is unlikely that a taxpayer would claim a deduction for 250 percent of their investment in a pass-through entity within three years of making that investment and not have received promotional materials offering the possibility to do so. This presumption is needed to address transactions with respect to which taxpayers and promoters are not forthcoming about the content or receipt of the promotional materials. While the Treasury Department and the IRS decline to provide a specific method to rebut the presumption in these final regulations because such rebuttal would necessarily be dependent on the taxpayer's specific facts and circumstances, the Treasury Department and the IRS expect that, in appropriate cases, taxpayers will be able to establish to the satisfaction of the Commissioner that none of the promotional materials contained a suggestion or implication that investors might be allocated a charitable contribution deduction the amount of which equals or exceeds an amount that is two and one-half times the amount of their investment in the pass-through entity. For example, a taxpayer may be able to rebut the presumption by establishing that the partnership was not open to other investors (and thus the only promotional materials were documents needed to execute the transaction) or that similar properties in the same area had increased significantly in value in the period between the time the taxpayer invested in the partnership and the date the conservation easement was contributed.

Contrary to commenters' assertions, nothing in the proposed regulations suggested that the Commissioner will disregard evidence rebutting the presumption. Section 7803(a)(3)(D) and (J) of the Code require the Commissioner to ensure that employees of the IRS are familiar, and act in accordance, with taxpayer rights, including the right to challenge the position of the IRS, the right to be heard, and the right to a fair and just tax system. Furthermore, the phrase “to the satisfaction of the Commissioner” does not preclude future judicial review, and the Commissioner bears the burden of demonstrating that each of the other elements of the listed transaction has been fulfilled and may have the burden of production under section 7491(c) of the Code in a court proceeding regarding the imposition of a penalty, depending on the party against whom it is asserted. In the view of the Treasury Department and the IRS, evidence regarding oral promotional materials generally would not constitute inadmissible hearsay because the oral promotional materials would not be offered for the truth of the matters asserted therein, but rather as evidence of what was stated. See Fed. R. Evid. 801(c)(2).

Some commenters asked whether the rebuttable presumption implies that taxpayers do not need to report if (1) at least three years have passed between the taxpayer's investment in the pass-through entity and the pass-through's contribution of a conservation easement or (2) if the deduction amount is less than 2.5 times the amount of an investor's investment. The rebuttable presumption does not carry either of these implications.

The Treasury Department and the IRS have decided to retain the rebuttable presumption in the final regulations because the administrative need for a rebuttable presumption outweighs the concerns raised by the commenters. Taxpayers and promoters are the persons with access to and knowledge of the promotional materials involved in their transactions. Taxpayers should not be able to escape the requirements of these final regulations because their syndicators were effective in masking their promises. Accordingly, the final regulations retain the rebuttable presumption rule.

The proposed regulations contained an anti-stuffing rule providing that, for purposes of determining whether a transaction is a listed transaction, the amount of a taxpayer's investment in the pass-through entity is limited to the portion of the taxpayer's investment that is attributable to the portion of the real property on which a conservation easement is placed and that produces the charitable contribution deduction.

A few commenters noted that the term “investment” in proposed § 1.6011-9(b)(1) is not defined, while one commenter stated that the anti-stuffing rule found in proposed § 1.6011-9(d)(3) provides the taxpayer's investment for purposes of the 2.5 times rule. Several commenters stated that the anti-stuffing rule in the proposed regulations is inconsistent with the relevant basis rule in section 170(h)(7)(B), and others suggested that the anti-stuffing rule in the proposed regulations should be replaced with the relevant basis rule in section 170(h)(7)(B).

The Treasury Department and the IRS note that the term “investment” is not generally defined within the Code. However, the Treasury Department and the IRS agree with the commenter stating that the anti-stuffing rule found in proposed § 1.6011-9(d)(3) provides the taxpayer's investment for purposes of the 2.5 times rule. Further, in response to comments that relevant basis should also be permitted to be used to determine investment, these final regulations provide that a taxpayer may determine the amount of their investment in the pass-through entity using one of the methods provided in § 1.6011-9(d)(4), which identifies the anti-stuffing method and, for contributions occurring on or after December 30, 2022, adds the relevant basis method in section 170(h)(7)(B) as another method to determine the amount of the taxpayer's investment in the pass-through entity. No other methods may be used.

In response to commenters asserting that relevant basis should replace the anti-stuffing rule, the relevant basis computations under section 170(h)(7) do not apply to all transactions for which disclosure is required under these final regulations (such as to contributions before the effective date of section 170(h)(7) in taxable years for which the statute of limitations is still open); thus, these final regulations retain the anti-stuffing method as one method to determine investment for purposes of the 2.5 times rule.

As mentioned before in part IV.B.3 of this Summary of Comments and Explanation of Revisions, several commenters addressed the anti-stuffing rule found in the proposed regulations, which these final regulations rename the “anti-stuffing method” to determine investment for purposes of the 2.5 times rule. For example, one commenter requested clarification on how to determine the portion of the investment that is “attributable” to the real property on which the conservation easement is placed. Another commenter stated that the proposed anti-stuffing rule may give rise to constitutional challenges because it requires the separation of investment assets, creating more cost for investment managers and for investors, which they contended is a limitation on interstate commerce, a power reserved only for the legislative branch. One commenter opined that the anti-stuffing rule will be impossible to apply in practice; the commenter noted that the example of the anti-stuffing rule in the proposed regulations involved marketable securities with an identifiable fair market value and questioned how to apply the anti-stuffing rule if the pass-through entity holds multiple pieces of property. Another commenter stated that the example in the proposed regulations illustrating the anti-stuffing rule was merely an example of the basis allocation rules under section 755 of the Code and that allocation rules under section 755 do not require additional explanation.

The Treasury Department and the IRS conclude that the anti-stuffing rule provides a reasonable method to determine the taxpayer's investment in the pass-through entity by looking only to amounts attributable to the property generating the charitable contribution deduction. In response to comments requesting additional guidance on the determination of the amount of a taxpayer's investment, these final regulations provide that, under the anti-stuffing method, if an investor uses non-cash assets to acquire its interest in the pass-through entity, then the fair market value of such assets, rather than their basis, is the relevant measure. In particular, under § 1.6011-9(d)(4)(ii) of these final regulations, the amount of a taxpayer's investment in the pass-through entity is the portion of the cash and fair market value of the assets the taxpayer uses to acquire its interest in the pass-through entity that is attributable to the real property on which a conservation easement is placed (or the portion thereof, if an easement is placed on a portion of the real property) and that produces the charitable contribution deduction described in § 1.6011-9(b)(3).

The Treasury Department and the IRS disagree that the anti-stuffing rule is impossible to apply in practice. Syndicated conservation easement transactions often involve scenarios similar to the example provided in the proposed regulations, in which the pass-through entity owns only cash and marketable securities in addition to its real property. Moreover, these regulations apply to transactions in which the promotional materials offer the possibility of charitable contribution deductions, and thus the parties involved will have necessarily considered the possible allocation of charitable contribution deductions based on the taxpayer's cost of acquiring the interest in the pass-through entity. Accordingly, in the view of the Treasury Department and the IRS, it is not unduly burdensome to require the parties to determine the amount of the taxpayer's acquisition cost that is allocable to the property giving rise to the charitable contribution deduction that is being offered.

The Treasury Department and the IRS recognize that partnerships and S corporations that engage in syndicated conservation easement transactions occurring on or after December 30, 2022, will need to calculate relevant basis for purposes of section 170(f)(19), and, in addition, each investor will need to calculate the amount of the investor's investment for purposes of these listed transaction regulations. To mitigate the burden of potentially duplicative calculations, these final regulations add an alternative method to determine the amount of a taxpayer's investment. These final regulations provide that, for contributions occurring on or after December 30, 2022, taxpayers may use their relevant basis, as determined under section 170(h)(7)(B) and the regulations thereunder, as the amount of their investment for purposes of § 1.6011-9(b)(1).

One commenter stated that the proposed anti-stuffing rule did not adequately consider the difference between qualified conservation contributions protecting historic structures and those protecting natural open space or settings. This commenter stated that, because historic preservation projects protect the historic character of a building, they often require additional investment for rehabilitation; however, the proposed rule did not consider cash raised for, and invested into, the preservation, rehabilitation and maintenance of certified historic structures in the calculation of the investment. The commenter further stated that the proposed regulations did not account for additional monies that need to be invested in a project after an easement is placed to ensure that the conservation purpose is protected in perpetuity. The commenter stated that cash, if invested in the real property, should be considered part of the taxpayer's investment in the real property when applying the 2.5 times rule.

The Treasury Department and the IRS conclude that the commenter's proposed changes to the anti-stuffing method are not warranted. In general, one key element in determining whether a transaction constitutes a syndicated conservation easement listed transaction is the ratio of the amount of the charitable contribution deduction allocation that an investor is offered to the amount the investor pays to obtain that charitable contribution deduction allocation. To that end, the anti-stuffing method measures the amount of the taxpayer's cost of acquiring the interest in the pass-through entity that is attributable to the real property on which a conservation easement is placed (or the portion thereof, if an easement is placed on a portion of the real property) and that gives rise to the charitable contribution deduction. Charitable contribution deductions are based on either the fair market value or adjusted basis of the property that is contributed as of the time of the contribution. See, e.g., section 170(e). Therefore, in the view of the Treasury Department and the IRS, it is inappropriate, in determining the amount of a taxpayer's investment, to look to the amounts expended on the property after the time of the charitable contribution.

In general, every taxpayer that contributes a conservation easement will be required to expend some amounts on the property after the contribution, such as for property taxes. However, amounts of cash that are held for expenditures after the date the conservation easement is contributed, whether for property taxes, repairs, or anything else related to the property, are not as directly related to the resultant charitable contribution deduction that a taxpayer claims as the expenditures related to the property that precede the conservation easement contribution. The Treasury Department and the IRS have concluded that it is appropriate for the anti-stuffing method to maintain its focus on the amounts invested in the property giving rise to the deduction as of the time of the charitable contribution. In addition, the Treasury Department and the IRS have concluded that a rule that treats certain cash holdings as attributable to the real property if they are “earmarked” for future expenditures related to the property would be difficult to administer. Such a rule would require factually intensive estimations and projections about the amount of future expenditures that would be necessary to fulfill the purposes of the conservation easement (as opposed to merely enhancing the value of the building). For these reasons, the Treasury Department and the IRS have concluded that the final regulations should not adopt this comment. Therefore, the final regulations add a clarification to § 1.6011-9(d)(4)(ii), which states that assets retained to pay for costs related to the operation and maintenance of the real property on which the conservation easement is placed, including costs that may be incurred in future years, are not attributable to the contributed real property.

The Treasury Department and the IRS will continue to consider whether any additional clarifications or modifications to the anti-stuffing method or the alternative relevant basis method of determining the amount of the taxpayer's investment in the pass-through entity would be beneficial in the context of qualified conservation contributions protecting historic structures.

Comments addressed both the timing of the pass-through entity's acquisition of the real property and whether holding the real property for a period of time before the contribution of the conservation easement is made should result in the transaction being excluded from the listed transaction identified in these regulations.

Proposed § 1.6011-9(b)(2) provided that one of the steps of a syndicated conservation easement is that the taxpayer acquires an interest directly, or indirectly through one or more tiers of pass-through entities, in the pass-through entity that owns real property (that is, becomes an investor in the entity). A few commenters asked whether this step is met with respect to investors who acquire an interest in an entity that does not hold real estate at the time the interest in the pass-through entity is acquired. One of these commenters requested that the IRS clearly state if it intends proposed § 1.6011-9(b)(2) to be met in the case of an investor who acquires an interest in a pass-through entity that subsequently acquires real estate or an interest in a pass-through entity holding real estate. The commenter also stated that, if the real property is purchased after the investor invests in the pass-through entity, the transaction would fall outside of the anti-stuffing rule and therefore would be less likely to trigger the 2.5 times rule (because the amount of the taxpayer's investment would never be reduced by the anti-stuffing rule).

The Treasury Department and the IRS note that the proposed regulations clearly stated that the transaction falls within the definition of a syndicated conservation easement transaction “regardless of the order” in which the steps occur; therefore, the proposed regulations already encompassed the scenario in which a taxpayer acquires an interest in the pass-through entity before the pass-through entity acquires the real property. However, for additional clarity, these final regulations make that point explicit in § 1.6011-9(b)(2).

The Treasury Department and the IRS do not agree with the commenter that, if the real property is purchased after the investor invests in the pass-through entity, the transaction falls outside of the reach of the anti-stuffing method. The proposed and final regulations specifically provide that the order in which the four steps of a syndicated conservation easement transaction occur is not relevant. In response to this comment, an example in these final regulations illustrates the application of the anti-stuffing method if the pass-through entity acquires the real property after a taxpayer invests in the pass-through entity.

The proposed regulations did not contain any exceptions from the disclosure requirements for property held on a long-term basis. Several commenters asked that the final regulations include an exception for such transactions. One commenter questioned why investors who have held interests in a pass-through entity for over one year would be required to report the syndicated conservation easement transaction because such investors would not need to rely on a tacked holding period to avoid the limitations of section 170(e). One commenter contended that contributions of land held for less than three years will generally not be made. Several commenters observed that contributions with a long-term holding period are excepted from the disallowance rule of section 170(h)(7)(A) pursuant to section 170(h)(7)(C). One commenter opined that a hypothetical transaction in which the promotional materials state that the property will be worth more than 2.5 times the taxpayer's investment in ten years should not give rise to a listed transaction. This commenter asked that the final regulations specify the amount of time that must elapse between the purchase of the property interest and the contribution of the easement for a transaction to be listed. Another commenter asked about a taxpayer that inherited land that is then in his possession for over twenty years and decides to donate the land for the benefit and protection of the environment.

The Treasury Department and the IRS conclude that it is not necessary to modify the proposed rules to provide an exception for property that has been held for a period of time. First, tax abuse in syndicated conservation easement transactions is not limited to mismatches between an investor's holding period in its interest in the pass-through entity and the pass-through entity's holding period in the real property on which the conservation easement is placed. For example, even for transactions in which investors may otherwise be eligible to claim a deduction of the fair market value of the conservation easement, the deduction is nonetheless abusive if the easement is improperly overvalued.

Second, as discussed in part III.B. of this Summary of Comments and Explanation of Revisions, the exception to the disallowance rule in section 170(h)(7) for contributions outside of a three-year holding period does not necessitate a similar exception in these final regulations, and these final regulations do not provide an exception for syndicated conservation easements that are described in section 170(h)(7)(C).

Third, notwithstanding the commonly anticipated appreciation of real property values over time, it is not the case that property values always increase. The period a property is held is one element of a fact-intensive inquiry into whether the property has been overvalued. Attempting to craft an exception based on a holding period would result in a rule that is over-inclusive and/or under-inclusive, depending on the specific facts. The proposed hypotheticals for property held for ten or twenty years seems unlikely to meet all elements of the listed transaction identified in these regulations (for example, it might not be held in a pass-through entity or involve promotional materials). Therefore, the final regulations do not include an exception for long-term holding periods.

Commenters addressed the definitions of (1) charitable contribution deduction, (2) conservation easement, (3) participant, (4) promotional materials, and (5) syndicated conservation easement transaction.

The proposed regulations defined “charitable contribution deduction” as “a deduction under section 170 of the Internal Revenue Code (Code), which includes a deduction arising from a qualified conservation contribution as defined in section 170(h)(1).”

One commenter stated that this definition is inconsistent with the listed transaction identified in the proposed regulations, which is limited to contributions of conservation easements. This commenter suggested that the definition should be limited to “the deduction arising from a qualified conservation contribution as defined in section 170(h)(1).”

The Treasury Department and the IRS decline to adopt this suggestion, because some substantially similar transactions will involve real property contributions other than qualified conservation contributions.

The proposed regulations defined a “conservation easement” as “a restriction, within the meaning of section 170(h)(2)(C), exclusively for conservation purposes, within the meaning of section 170(h)(1)(C) and section 170(h)(4), granted in perpetuity, on the use that may be made of the specified property.” One commenter stated that, in all cases that the commenter defended, the IRS had taken the position that the conservation easement did not meet one or more of the requirements in this definition. The commenter opined that, if an investor fails to disclose a syndicated conservation easement transaction, the pass-through's return is selected for audit, and the IRS determines that the donated conservation easement fails to meet one or more elements of the definition in the proposed regulations, then the investor would not have had any reporting obligation because the investor had not claimed a deduction for a “conservation easement” as that term was defined in the proposed regulations. The commenter added that if this was not the intent of the proposed regulation, then the final regulation should clearly so state.

The Treasury Department and the IRS note that the third element of the listed transaction identified in these regulations is that “the pass-through entity that owns the real property contributes an easement on such real property, which it treats as a conservation easement, to a qualified organization and allocates, directly or through one or more tiers of pass-through entities, a charitable contribution deduction to the taxpayer” (emphasis added), and that the fourth element of the listed transaction is that “the taxpayer claims a charitable contribution deduction with respect to the contribution of the real property interest on the taxpayer's Federal income tax return.” In the commenter's hypothetical, the taxpayer's treatment of the contribution as a conservation easement and claim of a charitable contribution deduction with respect to the conservation easement makes the transaction a listed transaction. Whether the IRS asserts that the conservation easement is invalid and whether the charitable contribution deduction claimed on the taxpayer's Federal income tax return is ultimately allowed do not affect this outcome.

To more clearly track the language in section 170(h), the final regulations modify the definition of conservation easement to provide that it is a restriction (granted in perpetuity) on the use that may be made of the real property, within the meaning of section 170(h)(2)(C), exclusively for conservation purposes, within the meaning of section 170(h)(1)(C) and (h)(4).

The proposed regulations stated that a taxpayer participating, within the meaning of § 1.6011-4(c)(3)(i)(A), in a syndicated conservation easement transaction described in proposed § 1.6011-9(b) includes (1) an owner of a pass-through entity, (2) a pass-through entity (any tier, if multiple tiers are involved in the transaction), and (3) any other taxpayer whose tax return reflects tax consequences or a tax strategy arising from the syndicated conservation easement transaction described in the proposed regulations. The proposed regulations provided, consistent with Notice 2017-10, that a qualified organization to which a syndicated conservation easement described in proposed § 1.6011-9(b) is donated is not treated as a participant under § 1.6011-4(c)(3)(i)(A) with respect to the listed transaction.

One commenter stated that it is unclear whether a participant who reports the tax consequences of a transaction that is substantially similar to a syndicated conservation easement transaction is a member of the class of participants described under proposed § 1.6011-9(e)(2). The commenter opined that the plain language of the proposed regulation referred only to taxpayers who have the tax consequences of a syndicated conservation easement transaction. To address this comment, the final regulations clarify that the class of participants includes participants in transactions that are the same as, or substantially similar to, syndicated conservation easement transactions.

One commenter requested additional guidance on the meaning of the term “arising from” in proposed § 1.6011-9(e)(2)(iii), stating that it is ambiguous whether an IRS attorney that was hired to enforce syndicated conservation easement transactions would be required to report the transaction because his or her income “arose from” the conservation easement transaction. The Treasury Department and the IRS conclude that further clarification is not needed.

The proposed regulations stated that “promotional materials” include materials described in § 301.6112-1(b)(3)(iii)(B) and any other written or oral communication regarding the transaction provided to investors, such as marketing materials, appraisals (including preliminary appraisals, draft appraisals, and the appraisal that is attached to the taxpayer's return), websites, transactional documents such as the deed of conveyance, private placement memoranda, tax opinions, operating agreements, subscription agreements, statements of the anticipated value of the conservation easement, and statements of the anticipated amount of the charitable contribution deduction.

One commenter supported this definition, but several commenters thought it was overbroad, stating that it would be effectively impossible for a taxpayer to prove that he or she did not receive promotional materials. Some commenters objected to particular types of communication being included within the scope of promotional materials. Specifically, commenters expressed concern regarding oral communications, websites, and documents required by law. For example, one commenter stated that, since promotional materials are described to include “websites” and “oral communication,” every taxpayer would theoretically have received “promotional materials” relating to conservation easement donations because every taxpayer has access to the internet. In addition, one commenter stated that, under the proposed regulations, promotional materials would include an oral communication made to any other investor. The commenter also stated that any one oral communication, regardless of accuracy, would “render the deduction unavailable” to all investors. The commenter recommended that the final regulations remove all references to oral communications.

In response, the Treasury Department and the IRS note that receipt of promotional materials by one investor does not automatically trigger receipt of such materials by other investors (although it is circumstantial evidence that may be relevant to showing receipt of promotional materials by other investors). In addition, the broad definition of promotional materials does not mean that the 2.5 times rule will always be met; the quantity of promotional materials is not directly relevant to whether the promotional materials offer the investor the possibility of being allocated a charitable contribution deduction that equals or exceeds an amount that is two and one-half times the amount of the taxpayer's investment in the pass-through entity. Moreover, even if the 2.5 times rule is met, the effect is not to render the deduction unavailable to all investors but to meet one element of this listed transaction. The Treasury Department and the IRS conclude that a broad definition of promotional materials is warranted; otherwise, taxpayers may contend that they do not meet the elements of the listed transaction identified in these final regulations because promoters made offers via oral communications, websites, or other documents.

Some commenters noted that Congress did not mention promotional materials in section 170(h)(7) and asked that the final regulations explain the requirement's significance in the listed transaction. The Treasury Department and the IRS conclude that the lack of reference to promotional materials in section 170(h)(7) is of no significance to this listed transaction, given that the purpose and scope of section 170(h)(7), which is to disallow a deduction, are different from those of these regulations, which is for the IRS to identify tax avoidance transactions.

One commenter noted that a taxpayer can claim a greatly inflated deduction regardless of whether the taxpayer receives promotional materials and stated that the promotional material requirement appears to be unnecessary and could be removed altogether. The Treasury Department and the IRS have determined that promotional materials are an important attribute of the listed transaction identified in these final regulations because the existence of promotional materials offering investors the possibility of a charitable contribution deduction that equals or exceeds an amount that is 2.5 times the amount of the taxpayer's investment, on its own, is an element that illustrates tax avoidance. Thus, the final regulations adopt the proposed definition of promotional materials without changes.

One commenter stated that the broad definition of promotional materials does not promote compliance with the law if an attorney that created promotional materials, such as the deed of conveyance, is considered a material advisor to the transaction. This commenter asked for clarity on how the definition of promotional materials in the proposed regulations relates to the definition of a material advisor.

As discussed in part I.D. of this Summary of Comments and Explanation of Revisions, these final regulations do not change the description of a material advisor provided in § 301.6111-3(b). A material advisor is a person who makes a tax statement, as defined in § 1.6111-3(b)(2)(ii), and derives gross income in excess of the threshold amount, as defined in § 301.6111-3(b)(3) (generally, $10,000 for listed transactions). In general, a deed of conveyance would not be a “tax statement” under § 301.6111-3(b)(2)(ii) because it is not a statement “that relates to a tax aspect of a transaction that causes the transaction to be a reportable transaction.” In addition, in general, the deed does not contain any statements related to a tax aspect of the transaction that causes the transaction to be reportable, such as stating that an investor may be eligible to claim a deduction amount of 2.5 times the investor's investment. 1 As a result, the final regulations make no modifications to the definition of promotional materials in response to the comment.

One commenter stated that “syndication itself is not bad and is often encouraged by the government” (such as in the context of historic tax credits, low-income housing tax credits, and new market tax credits). The commenter opined that the proposed regulations sow confusion because the focus should be on abuse, not on syndication.

The Treasury Department and the IRS agree with the commenter that syndication in itself is not necessarily abusive. However, the Treasury Department and the IRS do not agree with the commenter that the definition of syndicated conservation easement transaction in § 1.6011-9(b) needs to explicitly use the word “abusive.” The identification of a listed transaction occurs only after the Treasury Department and the IRS have determined that the transaction is a tax avoidance transaction. If a syndicated conservation easement transaction does not meet the elements of the transaction defined in § 1.6011-9(b), such as that the partnership's promotional materials do not offer investors the possibility of being allocated a charitable contribution deduction the amount of which equals or exceeds an amount that is 2.5 times the amount of the taxpayer's investment in the partnership (and the partnership does not in fact allocate a charitable contribution deduction the amount of which equals or exceeds an amount that is 2.5 times the amount of the taxpayer's investment in the partnership), then the transaction is not a listed transaction.

Commenters addressed both the section 4965 carveout found in the proposed regulations and the lack of a carveout to the definition of material advisor in the proposed regulations for qualified organizations.

The proposed regulations included, consistent with Notice 2017-10, the section 4965 carveout to exclude a qualified organization  2 from treatment as a party to a syndicated conservation easement transaction under section 4965 but requested comments on whether the final regulations should eliminate or limit the section 4965 carveout.

Several commenters advocated for maintaining the section 4965 carveout for various reasons, including that section 170(h)(7)(A) will disallow deductions for most transactions that these regulations seek to deter, that receipt of a donated conservation easement generally would not constitute “net income” or “proceeds” within the meaning of section 4965, and that limiting or eliminating the section 4965 carveout could discourage qualified organizations from accepting contributions of conservation easements (particularly due to uncertainty as to what constitutes a “substantially similar” transaction). With respect to the Treasury Department and the IRS's request for comments on limiting the carveout to qualified organizations that conduct an adequate amount of due diligence (and on what would constitute adequate due diligence for this purpose), several commenters argued that qualified organizations are not equipped to exercise the due diligence that could be required to qualify for a more limited carveout. Several commenters also claimed that because only a “small number” of qualified organizations continue to facilitate syndicated conservation easement transactions, it would be unfairly burdensome to all other qualified organizations if the section 4965 carveout were limited or eliminated.

Given the addition of section 170(h)(7) to the Code, which disallows charitable contribution deductions for some of the most overvalued syndicated conservation easements, as well as other considerations raised by the commenters, the Treasury Department and the IRS have concluded that it is appropriate to maintain the section 4965 carveout in these final regulations. However, the Treasury Department and the IRS will consider proposing to eliminate or limit the section 4965 carveout in future regulations if qualified organizations continue to facilitate the syndicated conservation easement transactions (or substantially similar transactions) described in these regulations.

As discussed in part I.D. of this Summary of Comments and Explanation of Revisions, the proposed regulations provided no special rules for material advisors and noted that this differed from the approach taken in Notice 2017-29 (modifying Notice 2017-10), which provided that a donee described in section 170(c) is not treated as a material advisor under section 6111. The proposed regulations requested comments on whether qualified organizations are receiving fees for providing material aid, assistance, or advice with respect to the syndicated conservation easement transactions described in the proposed regulations, the nature of the services being provided, and why a carveout from the definition of material advisor for qualified organizations is needed.

Several commenters requested that the carveout for qualified organizations found in Notice 2017-29 be reinstated, claiming that the six-year look back period would be burdensome, that the IRS is already privy to information necessary to identify potentially abusive syndicated conservation easement transactions via reporting by other material advisors, and that eliminating the carveout for qualified organizations will discourage qualified organizations from accepting legitimate syndicated conservation easements due to confusion and fear of audits, potential penalties, and litigation. On the other hand, no commenter explained how a qualified organization, acting solely in its capacity as a qualified organization, could be considered a material advisor. To the contrary, several commenters asserted that donee organizations do not fit the definition of “material advisor.”

A person is a material advisor with respect to a transaction if the person: (1) provides material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction; and (2) directly or indirectly derives gross income in excess of the threshold amount defined in § 301.6011-3(b)(3) for the material aid, assistance, or advice. See § 301.6111-3(b)(1). “Gross income” includes all fees for a tax strategy, for services for advice (whether or not tax advice), and for the implementation of a reportable transaction, but a “fee” does not include amounts paid to a person, including an advisor, in that person's capacity as a party to the transaction. See § 301.6111-3(b)(3)(ii). A person provides material aid, assistance, or advice if the person makes or provides a tax statement to or for the benefit of certain taxpayers who are required to make a disclosure under section 6011 (including for participation in a listed transaction) or other material advisors. See § 301.6111-3(b)(2)(i). “Tax statement,” for these purposes, is any statement (including another person's statement), oral or written, that relates to a tax aspect of a transaction that causes the transaction to be a reportable transaction. See § 301.6111-3(b)(2)(ii)(A).

In a typical conservation easement transaction, the qualified organization signs the Form 8283 (Section B) and provides a contemporaneous written acknowledgement of the contribution. See section 170(f)(8). The qualified organization may also receive separate cash contributions from the donor to monitor and enforce the easement in perpetuity. The qualified organization might also make representations to the donor that it is a qualified organization. Signing the Form 8283 and the contemporaneous written acknowledgement and making representations regarding the donee's status as a qualified organization are not considered to be making a tax statement under § 301.6111-3(b)(2)(ii)(A). Therefore, a donee does not provide material, aid, assistance, or advice under § 301.6111-3 merely by signing the Form 8283 (Section B) and the contemporaneous written acknowledgement.

The Treasury Department and the IRS conclude that a qualified organization acting solely in its capacity as a qualified organization by, for example, accepting a conservation easement and separate payments or contributions to monitor and enforce that easement, provided such payments or contributions are in fact used for such purpose, would not be considered a material advisor. The Treasury Department and the IRS further conclude that if a qualified organization engages in activities that would result in the organization meeting the requirements to be considered a material advisor, then such organization should be subject to the material advisor rules, including the penalties for failure to disclose. Thus, the final regulations include no special carveout to material advisor status for qualified organizations.

Notice 2017-10 is obsoleted for transactions occurring after October 8, 2024.

The collection of information contained in these final regulations is reflected in the collection of information for Forms 8886 and 8918 that have been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. 3507(c)) under control numbers 1545-1800 and 1545-0865.

To the extent there is a change in burden as a result of these final regulations, the change in burden will be reflected in the updated burden estimates for the Forms 8886 and 8918. The requirement to maintain records to substantiate information on Forms 8886 and 8918 is already contained in the burden associated with the control number for the forms and remains unchanged.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The Regulatory Flexibility Act (RFA) (5 U.S.C. chapter 6) requires agencies to “prepare and make available for public comment an initial regulatory flexibility analysis,” which will “describe the impact of the rule on small entities.” 5 U.S.C. 603(a). Section 605(b) of the RFA allows an agency to certify a rule if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

The Secretary of the Treasury hereby certifies that these final regulations will not have a significant economic impact on a substantial number of small entities pursuant to the RFA. As previously explained, the basis for these final regulations is Notice 2017-10, 2017-4 I.R.B. 544 (modified by Notice 2017-29, 2017-20 I.R.B. 1243, and Notice 2017-58, 2017-42 I.R.B. 326). The following chart sets forth the gross receipts of respondents to Notice 2017-10 that report Federal tax information using Form 1065, U.S. Return of Partnership Income, and Form 1120-S, U.S. Income Tax Return for an S corporation:

This chart shows that the majority of respondents to Notice 2017-10 reported gross receipts under $5 million. Even assuming that these respondents constitute a substantial number of small entities, the final regulations will not have a significant economic impact on these entities because the final regulations implement sections 6111 and 6112 and § 1.6011-4 by specifying the manner in which and time at which an identified transaction must be reported. Accordingly, because the final regulations are limited in scope to time and manner of information reporting and definitional information, the economic impact of the final regulations is expected to be minimal. Further, the Treasury Department and the IRS expect the reporting burden to be low; the information sought is necessary for regular annual return preparation and ordinary recordkeeping. The estimated burden for any taxpayer required to file Form 8886 is approximately 10 hours, 16 minutes for recordkeeping, 4 hours, 50 minutes for learning about the law or the form, and 6 hours, 25 minutes for preparing, copying, assembling, and sending the form to the IRS. The IRS's Research, Applied Analytics, and Statistics division estimates that the appropriate wage rate for this set of taxpayers is $102.08 (2022 dollars) per hour. Thus, it is estimated that a respondent will incur costs of approximately $2,127.00 per filing. Disclosures received to date by the Treasury Department and the IRS in response to the reporting requirements of Notice 2017-10 indicate that this small amount will not pose any significant economic impact for those taxpayers now required to disclose under the final regulations.

Some commenters asserted that the hourly rate estimate of $98.87 (2021) in the proposed regulations is much lower than what professionals charge to prepare Form 8886. Given the availability of more recent data, the hourly rate estimate is revised in the final regulations to $102.08 (2022). The new number still does not address the substantial differences from the commenters' estimates. The differences are likely attributable to the different methodologies used. The commenters likely used the hourly rate that an independent professional would charge a retail customer to prepare a Form 8886. The Treasury Department and the IRS used the hourly cost that a business owner would pay to employ such a professional. This method was determined based on the comments received from stakeholders objecting to reporting of the retail hourly rate at earlier points.

One commenter asked for the data source for the hourly rate estimate. The source data used by our data unit comes from the Bureau of Labor Statistics.

Some commenters asserted that the estimate of the time to prepare Form 8886 is too low as provided because (1) the estimate ignores the time necessary to comply with the reporting requirement for the years to which the requirement applies retroactively and (2) the estimate does not properly account for some of the time spent, such as learning new topics. At this time, the Treasury Department and the IRS did not find a practical way to adjust the time estimate in response to these comments due to (1) the uncertainties involved and (2) with respect to the prior years, the effect of revealing our underreporting estimates on enforcement.

For the reasons stated, a regulatory flexibility analysis under the RFA is not required. Pursuant to section 7805(f) of the Code, the proposed rule preceding this rulemaking was submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Tribal government, in the aggregate, or by the private sector, of $100 million (updated annually for inflation). One commenter argued that it is at least possible that the UMRA trigger of $100 million could be triggered because of the potential burdens of updating State or local regulations concerning the acceptance of land donations, harmonizing information reporting with the requirements of the regulations, and cooperation with examination proceedings. The Treasury Department and the IRS have considered this comment and conclude that it is not persuasive, particularly in light of the continuing carve-out for donees in these final regulations. This final rule does not include any Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of that threshold.

Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. One commenter suggested that, if the Treasury Department and the IRS decide to eliminate the carveout for donees described in section 170(c) from being treated as a party to the transaction under section 4965, then the final regulations will have federalism implications under Executive Order 13132. The final regulations maintain the section 4965 carveout. This final rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.

Pursuant to the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the IRS are not subject to the requirements of section 6(b) of Executive Order 12866, as amended. Therefore, a regulatory impact assessment is not required.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2).

Guidance cited in this preamble is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.

The principal authors of these final regulations are Joshua S. Klaber and Eugene Kirman, Office of Associate Chief Counsel (Income Tax & Accounting). Other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

The Regulations (31 CFR part 501), originally issued August 25, 1997 (62 FR 45098), set forth standard reporting and recordkeeping requirements, license application procedures, and other procedures relevant to the economic sanctions programs administered by OFAC. On May 10, 2024 (89 FR 40372), OFAC published an interim final rule, effective on August 8, 2024, amending the Regulations with a request for comment. Public comments on the interim final rule were due by June 10, 2024.

In the May 2024 Interim Final Rule, OFAC amended the Regulations to require electronic filing of certain submissions to OFAC and to describe and modify certain reporting requirements related to blocked property and rejected transactions. In particular, the rule required the use of the electronic OFAC Reporting System (ORS) for submission of reports related to blocked property and rejected transactions, removed the mail option for certain other types of OFAC submissions, described reports OFAC may require from financial institutions for transactions that meet specified criteria, and added a reporting requirement for any blocked property that is unblocked or transferred. Additionally, OFAC clarified the scope of the reporting requirement for rejected transactions, in part to respond to comments received on an interim final rule OFAC published on June 21, 2019 (84 FR 29055), to amend the Regulations.

Among other changes, the May 2024 Interim Final Rule modified the procedures for requests relating to property that is blocked in error, updated the Regulations with respect to the availability of information under the Freedom of Information Act (FOIA) for certain categories of records, and clarified that persons may submit a petition for administrative reconsideration to seek removal of a person or property from the List of Specially Designated Nationals and Blocked Persons (“SDN List”) or any other list of sanctioned persons maintained by OFAC. OFAC also added a description of reports OFAC may require financial institutions to provide about transactions that meet specified criteria to aid in the identification of blocked property. Finally, OFAC made several technical and conforming edits.

As described further below, OFAC is responding to comments received on five sections of the Regulations: §§ 501.601, 501.602, 501.603, 501.604, and 501.806.

During the public comment period, OFAC received written submissions on the interim final rule. All comments received by the end of the comment period are available on the public rulemaking docket at https://www.regulations.gov.

OFAC considered each relevant comment submitted on the May 2024 Interim Final Rule and made certain revisions in this rule in response to the comments. Some of the comments were general in nature, for example, supporting OFAC's efforts and approach with respect to aspects of the May 2024 Interim Final Rule. In contrast, another commentor suggested that OFAC retract the interim final rule altogether either to give time to incorporate the comments received or to give financial institutions more time to incorporate the changes into their sanctions-related programs, systems, and policies and procedures. Some comments requested clarification of specific provisions, deadlines for certain OFAC determinations, modifications to reporting requirements, and a delay for the general requirements to use the ORS. One commenter questioned whether OFAC has the authority to require persons that submitted an erroneous blocking report to request OFAC's permission to release funds that never should have been blocked ( e.g., if a financial institution mistakenly blocked the funds of a U.S. person based on a “false hit” name match with a name that appears on the SDN List).

In the May 2024 Interim Final Rule, OFAC revised § 501.603(b)(3)(i) to require reports within 10 business days of when blocked property is unblocked or transferred, including pursuant to a valid order issued by a U.S. Government agency or U.S. court, as set out in that paragraph. This amendment enables OFAC to ascertain the current status of blocked and unblocked property. Filers must submit reports pursuant to this section electronically, either via email to OFACReport@treasury.gov or via ORS. Additionally, in revised § 501.603(d)(1), OFAC expanded the retention requirement previously in § 501.603(b)(2)(iii) for Annual Reports of Blocked Property to extend to initial reports of blocked property. In the May 2024 Interim Final Rule, OFAC indicated that reports need not be submitted for credits of interest payments that would not be transfers of blocked property or debits to blocked accounts for normal service charges, in each case as authorized pursuant to OFAC sanctions.

A commenter asked OFAC to modify § 501.603(b)(3)(i) to require reporting: (1) on an annual basis for any unblocking pursuant to an action taken by OFAC, such as a specific license or general license; and (2) within 10 business days only when unblocking is done pursuant to an action not taken by OFAC, such as a court order. Another commenter requested that OFAC amend § 501.603 to clarify that no reporting to OFAC is required should unblocking occur as the result of OFAC removing a person from OFAC's SDN List or the termination of a sanctions program. A third commenter asked whether funds that become unblocked pursuant to a specific license—but are subsequently returned to a financial institution by recipients—are still considered unblocked assets. The commenter also asked if financial institutions have 10 business days from the day a specific license is issued by OFAC to submit an unblocking report, or 10 business days from the day the property is unblocked by the institution. Commenters also requested that OFAC clarify that internal transfers, such as authorized administrative transfers between blocked accounts or transfers of blocked property within the same financial institution, are not subject to the new reporting requirement. One commenter requested clarity on what “transfers” mean in the context of § 501.603(b). The commenter also asked whether “OFAC licenses to unblock property expire.” One commenter asked whether OFAC will issue guidance on the information it expects parties to provide as part of an unblocked property report.

In response to these comments, OFAC is amending § 501.603(b)(3)(i) to clarify that reports need not be submitted pursuant to that section for: (1) authorized transfers of funds or credit by a financial institution between blocked accounts in its branches or offices or authorized debits for normal service charges; (2) blocked property that is unblocked or transferred pursuant to a general or specific license, unless the license includes a condition that requires the submission of an unblocking report; or (3) blocked property that is unblocked pursuant to OFAC's removal of a person from the SDN List. OFAC is implementing these changes to reduce the reporting burden on the public for unblockings about which OFAC generally does not have a strong interest in obtaining additional information or for which information is received via other reporting channels, while still allowing for tracking the status of blocked property. OFAC declines to make additional changes to § 501.603(b)(3)(i) in order to retain the ability to ascertain the current status of blocked and unblocked property. No changes were made to the rule in response to the remaining comments. OFAC considered the remaining comments, but the comments related to individual scenarios or requested specific guidance that were not within the intended scope of the rule. OFAC has provided guidance on its website related to filing an initial report of blocked property and an annual report of blocked property.

In the May 2024 Interim Final Rule, OFAC amended § 501.604(a) to clarify the scope of the term “transaction” for purposes of that section by specifying that the term includes transactions related to securities, checks, or foreign exchange, as well as sales or purchases of goods or services, thereby clarifying that securities, checks, foreign exchange, and goods and services are not in and of themselves transactions, when not provided as part of a transaction. OFAC confirmed that the reporting requirement in § 501.604(a) applies to all U.S. persons, as identified in the relevant parts of this chapter (or in the case of part 515, persons subject to U.S. jurisdiction), not only U.S. financial institutions. OFAC amended § 501.604(b) to clarify that the information required therein must be reported only to the extent the information is available to the filer at the time the transaction was rejected.

One commenter stated that the revisions to the definition of “transaction” do not provide sufficient clarity on the scope and types of actions that need to be reported to OFAC by non-financial institutions, including when during a transaction the reporting obligation arises. The commenter requested that the definition of “transaction” be further revised so that it encompasses only the act of instructing, or otherwise attempting, a transfer of value or a payment. OFAC declines to revise the Regulations in response to this comment because, based on the agency's experience evaluating rejected-transaction reports received over the last five years, it appears that financial institutions and non-financial institutions are able to identify rejected transactions with sufficient clarity to report them to OFAC.

OFAC will assess whether any clarification, modification or guidance related to § 501.604(a) would be appropriate in the future, and welcomes further feedback as we assess whether any clarification, modification, or guidance related to § 501.604(a) is appropriate in the future.

In the May 2024 Interim Final Rule, OFAC revised the procedures at § 501.806 for requesting release of funds blocked due to “mistaken identity” to extend to a broader category of any property blocked due to “typographical or similar errors leading to blocking.” OFAC also narrowed the procedures so they are available only to the person that mistakenly blocked the property. In these cases, the person that mistakenly blocked the property may request a “Compliance Release” from OFAC's Compliance Division. Others may continue to request unblocking of property through license applications submitted to OFAC's Licensing Division.

Commenters asked OFAC to clarify the circumstances that fall under the “similar error” category of bad blocks. One commenter asked OFAC to establish a deadline by which OFAC will respond to compliance release requests ( e.g., 30 days). Two commenters requested that OFAC continue to allow any party to a transaction that results in the blocking of funds to submit a request to OFAC for release of the funds, and not to limit the procedures for a compliance release in § 501.806 to persons that mistakenly blocked the property (in the vast majority of circumstances, a financial institution). Furthermore, one commenter questioned whether OFAC had the authority to require persons to request permission from OFAC to release funds that never should have been blocked, especially if no foreign country or national thereof has any interest in such funds ( e.g., if a financial institution blocked the funds of a U.S. person based on a false-hit name match with an SDN). One commenter also asked OFAC to implement a process allowing a financial institution that blocks funds in error to unblock those funds upon notice to OFAC, without submitting a compliance release request. One commenter indicated that in past practice a party could submit to OFAC a notice withdrawing its erroneous blocking report explaining its error and proceed with a contemplated transaction.

No changes were made to the rule in response to these comments. OFAC does not require persons to use the compliance release procedures in § 501.806 for unblocking property believed to have been blocked and reported in error due to mistaken identity or typographical or similar errors. Persons can treat the property that was blocked in error as not blocked in the event they determine that there was never any valid blockable interest in the property, provided that they notify OFAC of the change. OFAC plans to issue guidance regarding unblocking property believed to have been blocked and reported in error due to mistaken identity or typographical or similar errors. OFAC encourages persons to develop screening and due-diligence procedures that appropriately identify blocked property and, as needed, use the process to request a compliance release, which can provide OFAC an opportunity to confirm the factual assessment and help avoid situations where a transaction is erroneously processed or released in violation of U.S. economic sanctions laws. OFAC also encourages financial institutions to conduct an investigation to determine whether a match is a true hit prior to blocking property, consistent with longstanding OFAC guidance. In addition, OFAC declined to specify a deadline for responding to requests for a compliance release because each request is different and may require a different review timeline. Finally, OFAC declined to make the compliance-release procedure available to any party to a blocked asset transaction because specific licensing procedures remain available to those additional parties for release of the blocked funds.

In the May 2024 Interim Final Rule, OFAC generally required filers to use ORS for submission to OFAC of initial reports of blocked property and Annual Reports of Blocked Property pursuant to § 501.603(b)(1) and (2) and reports of rejected transactions pursuant to § 501.604(d).

Commenters indicated that OFAC should not mandate the use of ORS until OFAC resolves its functionality and reliability. Similarly, one commenter requested more engagement with OFAC regarding ORS due to issues when using the reporting system. The commenter asked whether ORS will be updated to allow for filing reports on unblocked property and whether OFAC will issue guidance on what information it expects persons to provide as part of a report of unblocked property.

No changes were made to the rule in response to these comments. OFAC has not experienced issues with the functionality and reliability of ORS and agrees it would be reasonable for OFAC to engage with the public on identified issues when using the ORS and work to resolve them. OFAC already works closely with filers to address any issues in the ORS system, provide guidance and user guides, and answer questions. This final rule does not incorporate any proposed changes to unblocking reports, because the May 2024 Interim Final Rule did not require such reports to be filed through ORS and already sets out the information required for such reports. However, OFAC is planning to develop an unblocking and transfer form in ORS and will notify the public once this feature is deployed.

In the May 2024 Interim Final Rule, OFAC added a note to § 501.602 to describe reports OFAC may require financial institutions to provide about accounts or transactions that meet specified criteria to aid in the identification of blocked property. If OFAC has reason to believe an account or transaction (or class of transactions) may involve the property or interests in property of a blocked person, OFAC may instruct the financial institution to report transactions that meet specified criteria and to notify OFAC prior to processing such transactions. Upon review, OFAC may determine that a reported transaction involves the property or interests in property of a blocked person and may take further action.

A commenter recommended that OFAC implement a deadline for a determination as to whether a transaction is blocked ( e.g., within 10 business days) to help manage customer expectations while waiting for determination on transactions that may involve a blocked interest and make the process more predictable for banks and their customers.

No changes were made to the rule in response to this comment due to the volume of notifications OFAC may receive and the transaction-specific analysis required for each determination. In addition, the benefits of managing customer expectations are outweighed by the national security and foreign policy risks of releasing blocked property. Customers may also reach out to OFAC's Compliance Division with questions about the status of their funds.

Section 501.601 requires every person engaging in any transaction subject to the provisions of chapter V of title 31 of the Code of Federal Regulations to keep a full and accurate record of each such transaction engaged in, regardless of whether such transaction is conducted pursuant to a license or otherwise, and make such record available for examination for at least five years after the date of such transaction. The 21st Century Peace through Strength Act, Public Law 118-50, div. D, signed into law on April 24, 2024, extended the statutes of limitation for civil and criminal violations of economic sanctions programs under the International Emergency Economic Powers Act, 50 U.S.C. 1701 et seq., or the Trading With the Enemy Act, 50 U.S.C. 4301 et seq., from five to 10 years.

A commenter indicated that OFAC should provide ample notice to the public prior to revising the recordkeeping requirement from five to 10 years. On September 12, 2024, OFAC issued a separate interim final rule updating the records and recordkeeping requirements in § 501.601, with a delayed effective date and an opportunity to provide comments (89 FR 74832).

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

Because the amendment of the Regulations is a rule of agency procedure and involves a foreign affairs function, the provisions of Executive Order 12866 of September 30, 1993, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), as amended, and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking and opportunity for public participation are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the collections of information related to this rule have been approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

For the reasons set forth in the preamble, the interim rule amending 31 CFR part 501, which was published May 10, 2024 (89 FR 40372), is adopted as final with the following change:

The Coast Guard will enforce the regulations set forth in 33 CFR 100.801 for the Battle of the Basin Boat Races. The regulations will be enforced from 10 a.m. to 6 p.m. on October 26, 2024 and October 27, 2024. This action is being taken to provide for the safety of life on navigable waterways during this event, which will be located between MM 4 and MM 5 on the Morgan City, Port Allen Route, LA. The Patrol Commander may be contacted on Channel 16 VHF-FM by the call sign “PATCOM.” During the enforcement periods, if you are the operator of a vessel in the regulated area you must comply with the regulations set forth in 33 CFR 100.801.

In addition to this notification of enforcement in the Federal Register , the Coast Guard plans to provide notification of this enforcement period via a Safety Marine Information Broadcast and Broadcast Notice to Mariners.

Throughout this document, wherever “we” or “our” is used, it means the EPA.

On February 23, 2024, the EPA proposed to approve the regional haze state implementation plan (SIP) revision submitted by Oregon on April 29, 2022, as supplemented on November 22, 2023, as satisfying applicable requirements under the Clean Air Act (CAA) and the EPA's Regional Haze Rule (RHR) for the program's second implementation period (89 FR 13622).

The public comment period for our proposed action was originally scheduled to close on March 25, 2024. However, on February 28, 2024, we received a request to extend the public comment period an additional 30 days. 1 On March 14, 2024, we published a document in the Federal Register extending the public comment period end date from March 25, 2024, to April 24, 2024 (89 FR 18866).

We received four comments. We determined that two comments were not germane to our action, for the following reasons. One commenter expressed opposition to the cultivation of cannabis, asserting general air pollution concerns. The commenter did not provide any tangible connection to the regional haze requirements or the Oregon submission. The EPA acknowledges the commenter's concerns; however, the comment is outside the scope of this action and does not indicate that the EPA's approval of the SIP submission is inconsistent with the CAA. Oversight of cannabis farms is unrelated to this regional haze action.

A second commenter cited some details from the Oregon regional haze plan, asserting a connection to transmission of the coronavirus. However, the commenter provided no logical basis for this assertion. The EPA acknowledges the commenter's concerns; however, the comment is outside the scope of this action and does not indicate that the EPA's approval of the SIP submission is inconsistent with the CAA. Potential connections between air pollution and respiratory viruses on public health is unrelated to this regional haze action.

We also received two germane comments. One was submitted by the National Park Service (NPS). The second was submitted by Earthjustice on behalf of a coalition of environmental organizations consisting of Cully Air Action Team, National Parks Conservation Association, Neighbors for Clean Air, Northwest Environmental Defense Center, Oregon Environmental Council, Sierra Club, and Verde (Environmental Organizations). The full text of the comments may be found in the docket for this action. We have summarized the comments and provided our responses in section II. of this preamble. Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Clean Air Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act.

Comment: “[W]e would like to make the EPA aware that the Oregon SIP process did not meet the requirements for Federal Land Manager (FLM) consultation . . . The NPS participated in early, informal engagement with the Oregon Department of Environmental Quality (ODEQ) regarding SIP development beginning in January of 2020. This productive collaboration included a meeting, subsequent written documentation, and staff-to-staff technical feedback on individual facility four-factor analyses as documented in the Oregon SIP. The NPS appreciates the extensive efforts that Oregon invested in early communication. However, many of the draft conclusions and determinations presented to the NPS during early engagement were not incorporated into the draft SIP released for public review in late August 2021. In fact, the public comment draft included substantial changes to the facility-specific control determinations in comparison with what the NPS had reviewed previously.”

Response: The EPA disagrees with the commenter's assertion that Oregon did not meet the requirements for Federal Land Manager (FLM) consultation in 40 CFR 51.308(i). As described below, ODEQ met all of the FLM consultation statutory and regulatory requirements.

Chapter 6.3 Consultations with Federal Land Managers of the April 29, 2022, SIP revision contained documentation of the extensive outreach with the NPS. This included providing a May 5, 2021, draft of the regional haze plan explicitly for the purpose of FLM consultation (May 2021 FLM draft). A key element of 40 CFR 51.308(i)(2) is that consultation occur early enough in a state's policy analyses of its long-term strategy so that information and recommendations provided by the FLMs can meaningfully inform a state's decisions on the long-term strategy. Chapters 6.3.3 Federal Land Manager Review of Draft State Implementation Plan and 6.3.4 Federal Land Manager Comments and DEQ Responses contained Oregon's responses to all comments received as part of the May 2021 FLM draft review process and prior consultation outreach. The NPS's characterization of this effort as “informal consultation” is not consistent with the EPA's regulations. The requirements of 40 CFR 51.308(i)(2) contain no bifurcation of “informal” versus “formal” consultation. Consistent with the preamble of the EPA's 2017 Regional Haze Rule, the Oregon Department of Environmental Quality (ODEQ) made a good faith effort to involve the NPS early in development of the long-term strategy. The RHR preamble specifically states that consultation should be used to inform “decisions that are about to be made by the state on its long-term strategy . . .” (emphasis added). 2 ODEQ used the comments and feedback from the May 2021 FLM consultation draft to inform the final control determinations contained in the draft provided for public notice and comment period starting on August 27, 2021 (August 2021 public comment draft). The interpretation that all control determinations must be finalized before initiating FLM consultation is not supported by the text of 40 CFR 51.308(i), nor is it in keeping with the intent of 40 CFR 51.308(i) to foster early engagement.

In addition to the May 2021 FLM consultation draft process, ODEQ provided opportunity for review and comment on the August 2021 public draft. In response to public interest, ODEQ extended the public comment period for an additional 30 days, going from August 27, 2021, to November 1, 2021, so that all parties had adequate time to review the technical determinations. The NPS used this opportunity to provide additional comments which are included in Chapter 6.6 Public Comments and Responses of the April 29, 2022, SIP revision, along with ODEQ's responses to the comments. 3

Also, in response to NPS and Environmental Organizations' concerns, ODEQ supplemented the regional haze SIP on November 22, 2023, with appendices 1 through 6 (2023 supplement). These appendices contained additional correspondence used by ODEQ in making control determinations under the statutory four factors for Boise Cascade Wood Products, LLC—Elgin Complex, Boise Cascade Wood Products, LLC—Medford, Georgia Pacific—Wauna Mill, Georgia Pacific—Toledo LLC, Cascade Pacific Pulp, LLC—Halsey Pulp Mill, and International Paper Company—Springfield Mill. As acknowledged by the NPS, ODEQ conducted FLM consultation on the 2023 supplement and included NPS comments in Section 6: Response to Federal Land Manager Review Comments.

For the reasons stated above, it is our determination that ODEQ adequately conducted FLM consultation and has thus fulfilled the requirements of 40 CFR 51.308(i).

Comment: “The NPS recommends that states, including Oregon, base reasonable progress control determinations on the four statutory factors identified in § 7491(g)(1) of the Clean Air Act (CAA). The NPS suggests that it may not be sufficient to consider the factors and then select a less protective control measure (or permit reduction) that is unrelated to the four-factor analysis. We recommend that determinations not clearly based on the four factors should demonstrate how the alternative measure is reasonable and/or equivalent to the outcome of the four-factor analysis.”

Response: The EPA agrees with the NPS that reasonable progress control determinations must be grounded in the state's consideration of the four statutory factors identified in CAA section 169A and 40 CFR 51.308(f)(2). In section IV.E.b of our proposed rulemaking, The EPA's Evaluation of the Oregon Long-Term Strategy, we explained how the Oregon process was grounded in the four-factor analysis (FFA) process. 4 However, the NPS's characterization that ODEQ's January 2021 “Preliminary Determination of Cost Effective Controls for Regional Haze” letters constituted final four-factor determinations, and all subsequent correspondence and action was outside the four-factor framework is an inaccurate characterization of the Oregon process. 5 The EPA will reiterate key aspects from our proposed rulemaking as well as details from Chapter 3.4 Four Factor Analysis of Oregon's April 29, 2022, regional haze plan.

Oregon Administrative Rules (OAR) Division 223 Regional Haze Rules dictated the regulatory processes for determining the controls necessary for reasonable progress. OAR 340-223-0110(1) required all affected facilities to submit four-factor analyses. The required contents of the four-factor analyses were specified in OAR 340-223-0120, which mirrored the four statutory factors of CAA section 169A(g)(1). Of the 17 facilities that submitted four-factor analyses in accordance with this rule, nearly all affected facilities submitted detailed demonstrations developed by independent consulting firms and/or certified professional engineers asserting that no feasible or cost-effective controls were available in applying the four-factors. 6 Only 2 facilities, Owens-Brockway Glass Container Inc. and Gilchrist Forest Products found cost effective controls under the four factors.

Rather than simply relying on these submissions to satisfy 40 CFR 51.308(f)(2), Oregon engaged with the affected facilities to identify feasible control options. Specifically, ODEQ issued “Preliminary Determination of Cost Effective Controls for Regional Haze” letters proposing more stringent controls unless facilities could further demonstrate that the measures were truly not cost effective or technically feasible. This initiated the process between January 2021 and August 2021 when ODEQ assessed and determined final control determinations under the four factors, primarily based on the technical feasibility and cost correspondence documented in appendices 1-6. 7

Thus, these preliminary letters did not replace the four factor analyses submitted by the affected facilities. Nor were the preliminary letters final determinations on what controls are feasible and necessary for reasonable progress under OAR 340-223-120(4) or 40 CFR 51.308(f)(2). Rather, these preliminary determinations letters were a result of ODEQ's initial adjustment of the four-factor analyses submitted by the affected facilities based on additional information and to aid in a consistent review across all four-factor analyses. 8 Consistent with 40 CFR 51.308(f)(2) and OAR 340-223-120(4), ODEQ determined the controls necessary for reasonable progress after issuing the preliminary determinations and collecting and analyzing additional information from the facilities regarding the four statutory factors. As ODEQ explained in its response to comments on the initial SIP submission, in some cases ODEQ agreed with facilities that controls it preliminarily proposed were not technically feasible or cost effective. 9 Ultimately, Oregon's submission demonstrates that it determined the controls necessary for reasonable progress based on its consideration of the four statutory factors and thus met the requirements of 40 CFR 51.308(f)(2).

Table 1 of this preamble provides a comparison of the controls evaluated in the four factor analyses submitted by the sources and the controls Oregon ultimately included in its long-term strategy. The exact facility-by-facility determinations are described in more detail in the Proposal and in subsequent responses to facility-specific comments in section II of this preamble.

Information Submitted for a Status Review

You may submit your comments and materials concerning the status of, or threats to, the Crater Lake newt, Florida intertidal firefly, Iowa skipper, San Francisco Estuary population of white sturgeon, or Tecopa bird's beak, or their habitats, by one of the methods listed in ADDRESSES . We request that you send comments only by the methods described in ADDRESSES . Please include sufficient information with your submission (such as scientific journal articles or other publications) to allow us to verify any scientific or commercial information you include.

If you submit information via https://www.regulations.gov, your entire submission—including any personal identifying information—will be posted on the website. If your submission is made via a hardcopy that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. We will post all hardcopy submissions on https://www.regulations.gov.

Comments and materials we receive, as well as supporting documentation we used in preparing these findings, will be available for public inspection on https://www.regulations.gov.

Section 4 of the Act (16 U.S.C. 1533) and its implementing regulations in title 50 of the Code of Federal Regulations (50 CFR part 424) set forth the procedures for adding species to, removing species from, or reclassifying species on the Federal Lists of Endangered and Threatened Wildlife and Plants (Lists or List) in 50 CFR part 17. Section 4(b)(3)(A) of the Act requires that we make a finding on whether a petition to add a species to the List ( i.e., “list” a species), remove a species from the List ( i.e., “delist” a species), or change a listed species' status from endangered to threatened or from threatened to endangered ( i.e., “reclassify” a species) presents substantial scientific or commercial information indicating that the petitioned action may be warranted. To the maximum extent practicable, we are to make this finding within 90 days of our receipt of the petition and publish the finding promptly in the Federal Register .

Our regulations establish that substantial scientific or commercial information with regard to a 90-day petition finding refers to credible scientific or commercial information in support of the petition's claims such that a reasonable person conducting an impartial scientific review would conclude that the action proposed in the petition may be warranted (50 CFR 424.14(h)(1)(i)). A positive 90-day petition finding does not indicate that the petitioned action is warranted; the finding indicates only that the petitioned action may be warranted and that a full review should occur.

A species may be determined to be an endangered species or a threatened species because of one or more of the five factors described in section 4(a)(1) of the Act (16 U.S.C. 1533(a)(1)). The five factors are:

(a) The present or threatened destruction, modification, or curtailment of its habitat or range (Factor A);

(b) Overutilization for commercial, recreational, scientific, or educational purposes (Factor B);

(c) Disease or predation (Factor C);

(d) The inadequacy of existing regulatory mechanisms (Factor D); and

(e) Other natural or manmade factors affecting its continued existence (Factor E).

These factors represent broad categories of natural or human-caused actions or conditions that could have an effect on a species' continued existence. In evaluating these actions and conditions, we look for those that may have a negative effect on individuals of the species, as well as other actions or conditions that may ameliorate any negative effects or may have positive effects.

We use the term “threat” to refer in general to actions or conditions that are known to, or are reasonably likely to, affect individuals of a species negatively. The term “threat” includes actions or conditions that have a direct impact on individuals (direct impacts), as well as those that affect individuals through alteration of their habitat or required resources (stressors). The term “threat” may encompass—either together or separately—the source of the action or condition, or the action or condition itself. However, the mere identification of any threat(s) may not be sufficient to compel a finding that the information in the petition is substantial information indicating that the petitioned action may be warranted. The information presented in the petition must include evidence sufficient to suggest that these threats may be affecting the species to the point that the species may meet the definition of an endangered species or threatened species under the Act.

If we find that a petition presents such information, our subsequent status review will evaluate all identified threats by considering the individual-, population-, and species-level effects and the expected response by the species. We will evaluate individual threats and their expected effects on the species, then analyze the cumulative effect of the threats on the species as a whole. We also consider the cumulative effect of the threats in light of those actions and conditions that are expected to have positive effects on the species—such as any existing regulatory mechanisms or conservation efforts that may ameliorate threats. It is only after conducting this cumulative analysis of threats and the actions that may ameliorate them, and the expected effect on the species now and in the foreseeable future, that we can determine whether the species meets the definition of an endangered species or threatened species under the Act.

If we find that a petition presents substantial scientific or commercial information indicating that the petitioned action may be warranted, the Act requires that we promptly commence a review of the status of the species, and we will subsequently complete a status review in accordance with our prioritization methodology for 12-month findings (81 FR 49248; July 27, 2016).

We note that designating critical habitat is not a petitionable action under the Act. Petitions to designate critical habitat (for species without existing critical habitat) are reviewed under the Administrative Procedure Act (5 U.S.C. 551 et. seq.) and are not addressed in this finding (see 50 CFR 424.14(j)). To the maximum extent prudent and determinable, any proposed critical habitat will be addressed concurrently with a proposed rule to list a species, if applicable.

The petition findings contained in this document are listed in the tables below, and the basis for each finding, along with supporting information, is available on https://www.regulations.gov under the appropriate docket number.

Betta miniopinna; Bintan Island of the Riau Archipelago, Indonesia.

On July 6, 2023, we received a petition dated July 5, 2023, from the Center for Biological Diversity and the Monitor Conservation Research Society, requesting that Betta miniopinna be emergency listed as a threatened species or an endangered species under the Act. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). Listing a species on an emergency basis is not a petitionable action under the Act, and the question of when to list on an emergency basis is left to the discretion of the Service. If the Service determines that the standard for emergency listing in section 4(b)(7) of the Act is met, the Service may exercise that discretion to take an emergency listing action at any time. Therefore, we are considering the July 5, 2023, petition as a petition to list the B. miniopinna. This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding the individual and cumulative effects of threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition, sources cited in the petition, and other readily available information, we find that the petition does not provide substantial scientific or commercial information indicating that listing the B. miniopinna as a threatened species or an endangered species may be warranted.

The petitioner provided credible information indicating potential threats to individuals of the species due to habitat loss and degradation and collection and trade. The petitioner also provided credible information that the existing regulatory mechanisms may be inadequate to address those potential threats. Although the petition did provide credible information regarding deforestation at less than one percent per year countrywide, the reference investigated deforestation across the entire country and did not mention either peat swamp forest, the specific habitat type for the species, or Bintan Island, the only island the species is known to exist. Furthermore, the references provided in the petition that discussed peat swamp forests did not include Bintan Island, the island where B. miniopinna currently exists. The petition did not link this general deforestation to effects on the species. Therefore, the petition does not present credible information to support the claim that habitat loss and degradation is having a negative impact on the population(s) of the species.

Additionally, regarding trade, the petitioners only presented information from a brief Google search on the trade of the species. While this brief search presents evidence of some illegal trade in wild specimens of the species, without more thorough information on the amount of trade of wild-caught B. miniopinna and abundance estimates, the petition does not present credible information to support the claim that trade is having a negative impact on the population(s) of the species. Credible sources cited in the petition do not provide substantial information indicating that threats identified by the petitions may have synergistic or cumulative effects on the population such that the petitioned action may be warranted for B. miniopinna.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-HQ-ES-2023-0229 under the Supporting Documents section.

Crater Lake newt ( Taricha granulosa mazamae ); Crater Lake, Klamath County, Oregon.

On November 28, 2023, we received a petition from the Center for Biological Diversity, requesting that the Crater Lake newt ( Taricha granulosa mazamae ) be emergency listed as an endangered species and critical habitat be designated for this species under the Act. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). The petitioners additionally requested that the Service immediately protect Crater Lake newts with its emergency listing authority under 16 U.S.C. 1533(b)(7). Because the Act does not provide for petitions to emergency list, we are considering it as a petition to list the Crater Lake newt. Listing a species on an emergency basis is not a petitionable action under the Act, and the question of when to list on an emergency basis is left to the discretion of the Service. If the Service determines that the standard for emergency listing in section 4(b)(7) of the Act is met, the Service may exercise that discretion to take an emergency listing action at any time. This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding effects of the threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition and readily available information regarding predation by introduced species (particularly by signal crayfish ( Pacifastacus leniusculus )) (Factor C), we find that the petition presents substantial scientific or commercial information indicating that listing the Crater Lake newt may be warranted. The petitioners also presented information suggesting habitat and food web alteration by signal crayfish, climate change, reduced effective population size, and range restriction may be threats to the Crater Lake newt. We will fully evaluate these potential threats during our 12-month status review, pursuant to the Act's requirement to review the best scientific and commercial information available when making that finding.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-R8-ES-2024-0025 under the Supporting Documents section.

Florida intertidal firefly ( Micronaspis floridana ): Florida (Brevard, Broward, Charlotte, Citrus, Collier, Dixie, Hernando, Hillsborough, Indian River, Levy, Manatee, Miami-Dade, Monroe, Pasco, Pinellas, Saint Lucie, Sarasota, and Volusia Counties) and the Bahamas.

On March 28, 2023, we received a petition from the Xerces Society for Invertebrate Conservation, requesting that the Florida intertidal firefly ( Micronaspis floridana ) be listed as an endangered species and critical habitat be designated for this species under the Act. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding the effects of threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition and readily available information regarding wetland destruction or loss and modified hydrology (Factor A), we find that the petition presents substantial scientific or commercial information indicating that listing the Florida intertidal firefly may be warranted. The petition also presented information on the following potential threats to Florida intertidal firefly: sea level rise, habitat fragmentation, modification of marsh and mangrove habitats for mosquito control, coastal eutrophication, harmful algal blooms, hypoxia, overutilization, nematode infection, predators, light pollution, pesticides, invasive species, small populations, ocean acidification impacts on prey, and increased temperature and extreme temperature events, and increased intensity and proportion of severe storms. We will fully evaluate these potential threats during our 12-month status review, pursuant to the Act's requirement to review the best scientific and commercial information available when making that finding.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-R4-ES-2024-0026 under the Supporting Documents section.

Iowa skipper ( Atrytone arogos iowa ); mid-continent prairie in Arkansas, Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Texas, and Wyoming.

On March 28, 2023, we received a petition from the Center for Food Safety, requesting that the Iowa Skipper ( Atrytone arogos iowa ) be listed as a threatened species or an endangered species under the Act. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding effects of the threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition and readily available information regarding habitat loss and fragmentation (Factor A) and prairie management (Factor A), we find that the petition presents substantial scientific or commercial information indicating that listing the Iowa skipper may be warranted. The petitioners also presented information suggesting pesticides, invasive species, climate change, and small, isolated populations may be threats to the Iowa skipper. We will fully evaluate these potential threats during our 12-month status review, pursuant to the Act's requirement to review the best scientific and commercial information available when making that finding.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-R6-ES-2023-0226 under the Supporting Documents section.

Long-tailed macaque ( Macaca fascicularis ); Brunei Darussalam, Cambodia, Hong Kong of China, Nicobar Islands of India, Indonesia, Lao People's Democratic Republic, Malaysia, Mauritius, Myanmar, Palau, Papua New Guinea, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam.

On April 12, 2023, we received a petition requesting that long-tailed macaque ( Macaca fascicularis ) be listed as a threatened species or an endangered species under the Act from People for the Ethical Treatment of Animals, Lisa Jones-Engel, Birutė Mary Galdikas, Jane Goodall, Action for Primates, Born Free USA, Sarah Kite, Nedim C. Buyukmihci, Angela Grimes, Liz Tyson-Griffin, The Macaque Coalition, Ecoflix, Ian Redmond, International Primate Protection League, Wildlife Alliance, Physicians Committee for Responsible Medicine, Michael Schillaci, One Voice, Abolición Vivisección, Sam Shanee, Gemunu de Silva, Northwest Animal Rights Network, Pam Mendosa, Phoenix Zones Initiative, Hope Ferdowsian, ACP, Nikhil Kulkarni, Neotropical Primate Conservation, EMS Foundation, Tim Ajax, Rise for Animals, Wildlife Friends Foundation Thailand, Douc Langur Foundation, Fundacion Entropika, Angela Maldonado, Animal Defenders International, World Animal Protection, Paula Pebsworth, and Japan Anti-Vivisection Association. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding the individual and cumulative effects of the threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition and readily available information regarding the effects of habitat loss and degradation (Factor A), collection and hunting (Factor B), disease (Factor C), and culling and sterilization (Factor E), we find that the petition does not provide substantial scientific or commercial information indicating that listing the long-tailed macaque as a threatened or an endangered species may be warranted. While we found that the petition provided documentation of negative impacts to individual macaques from these potential threats, the petition did not present credible information to support impacts to populations or the species as a whole due to these potential threats, either separately or cumulatively, such that the species may warrant listing.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-HQ-ES-2023-0228 under the Supporting Documents section.

White sturgeon [petitioned “San Francisco Estuary Distinct Population Segment”] ( Acipenser transmontanus ) (= San Francisco Estuary white sturgeon); Sacramento and San Joaquin Rivers in California.

On December 6, 2023, we received a petition from San Francisco Baykeeper, The Bay Institute, Restore the Delta, and California Sportfishing Protection Alliance, requesting that the San Francisco Estuary white sturgeon population ( Acipenser transmontanus ) be listed as a threatened distinct population segment (DPS) and critical habitat be designated for this species under the Act. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding effects of the threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition and readily available information regarding harmful algal blooms (Factor E), we find that the petition presents substantial scientific or commercial information indicating that listing the San Francisco Estuary population of white sturgeon as a DPS may be warranted. The petitioners also presented information suggesting dams, water diversions, entrainment mortality, recreational harvest, poaching, pollution, climate change, proposed hatchery supplementation, ship strikes, and dredging may be threats to the San Francisco Estuary white sturgeon. We will fully evaluate these potential threats during our 12-month status review, pursuant to the Act's requirement to review the best scientific and commercial information available when making our 12-month finding.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-R8-ES-2024-0049 under the Supporting Documents section.

Southern pig-tailed macaque ( Macaca nemestrina ); Brunei Darussalam, Indonesia (Kalimantan, Sumatra), Malaysia (Peninsular Malaysia, Sabah, Sarawak), and Thailand.

On April 12, 2023, we received a petition requesting that southern pig-tailed macaque ( Macaca nemestrina ) be listed as a threatened species or an endangered species under the Act from People for the Ethical Treatment of Animals, Lisa Jones-Engel (Ph.D.), Birute Mary Galdikas (Ph.D.), Jane Goodall (Ph.D.), Action for Primates, Born Free USA, Sarah Kite, Nedim Buyukmihci (Ph.D.), Angela Grimes, Liz Tyler-Griffin (Ph.D.), The Macaque Coalition, Ecoflix, Ian Redmond (Ph.D.), International Primate Protection League, Wildlife Alliance, the Physicians Committee for Responsible Medicine, Michael Schillaci (Ph.D.), One Voice, Abolicion Vivseccion, Sam Shanee (Ph.D.), Gemunu de Silva, Northwest Animal Rights Network, Pam Mendosa, Phoenix Zones Initiative, Hope Ferdowsian (Ph.D.), Nikhil Kulkarni (Ph.D.), Neotropical Primate Conservation, The EMS Foundation, Tim Ajax, Rise for Animals, Wildlife Friends Foundation Thailand, Douc Langur Foundation, Fundacion Entropika, Angela Maldonado (Ph.D.), Animal Defenders International, World Animal Protection, Paula Pebsworth, and The Japan Anti-Vivisection Association. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding the individual and cumulative effects of threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition, sources cited in the petition, and other readily available information, we find that the petition does not provide substantial scientific or commercial information indicating that listing the southern pig-tailed macaque as a threatened species or an endangered species may be warranted. While we found that the petition provided documentation of negative impacts to individual macaques from these potential threats, the petition did not present credible information to support impacts to populations or the species and the petition did not present credible information to support impacts to populations or the species as a whole due to these potential threats, either separately or cumulatively, such that the species may warrant listing.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-HQ-ES-2023-0227 under the Supporting Documents section.

Tecopa bird's beak ( Chrloropyron tecopense ); Esmeralda and Nye Counties in Nevada and Inyo County in California.

On September 26, 2023, we received a petition from the Center for Biological Diversity, requesting that Tecopa bird's beak ( Chrloropyron tecopense ) be listed as a threatened species or an endangered species and critical habitat be designated for this species under the Act. The petition clearly identified itself as such and included the requisite identification information for the petitioner, required at 50 CFR 424.14(c). This finding addresses the petition.

We reviewed the petition, sources cited in the petition, and other readily available information (within the constraints of the Act and 50 CFR 424.14(h)(1)). We considered the credible information that the petition provided regarding effects of the threats that fall within factors under the Act's section 4(a)(1) as potentially ameliorated or exacerbated by any existing regulatory mechanisms or conservation efforts. Based on our review of the petition and readily available information regarding hydrological alteration and groundwater extraction related to agriculture and exurban sprawl (Factor A), we find that the petition presents substantial scientific or commercial information indicating that listing the Tecopa bird's beak may be warranted. The petitioners also presented information suggesting off-road vehicles, non-native ungulate grazing, herbivory, climate change, and invasive species, as well as other potential effects from geothermal power production and mineral exploration and development, may be threats to the Tecopa bird's beak. We will fully evaluate these potential threats during our 12-month status review, pursuant to the Act's requirement to review the best scientific and commercial information available when making that finding.

The basis for our finding on this petition and other information regarding our review of the petition can be found at https://www.regulations.gov under Docket No. FWS-R8-ES-2023-0256 under the Supporting Documents section.

On the basis of our evaluation of the information presented in the petitions under section 4(b)(3)(A) of the Act, we have determined that the petitions summarized above for the Crater Lake newt, Florida intertidal firefly, Iowa skipper, San Francisco Estuary population of white sturgeon, and Tecopa bird's beak present substantial scientific or commercial information indicating that the petitioned actions may be warranted. We are, therefore, initiating status reviews of these species to determine whether the actions are warranted under the Act. At the conclusion of the status reviews, we will issue findings, in accordance with section 4(b)(3)(B) of the Act, as to whether the petitioned actions are not warranted, warranted, or warranted but precluded by pending proposals to determine whether any species is an endangered species or a threatened species. In addition, we have determined that the petitions summarized above for Betta miniopinna, long-tailed macaque, and southern pig-tailed macaque do not present substantial scientific or commercial information indicating that the petitioned actions may be warranted. We are, therefore, not initiating status reviews for these species in response to the petitions.

The primary authors of this document are staff members of the Ecological Services Program, U.S. Fish and Wildlife Service.

The authority for these actions is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq. ).

NMFS manages the groundfish fishery in the BSAI according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR parts 600 and 679.

The 2024 Atka mackerel ICA for the BS/EAI is 800 metric tons (mt) and the 2024 Atka mackerel total allowable catch allocated to the Amendment 80 cooperative for the BS/EAI is 25,081 mt as established by the final 2024 and 2025 harvest specifications for groundfish in the BSAI (89 FR 17287, March 11, 2024).

The Administrator, Alaska Region, NMFS, has determined that 700 mt of the Atka mackerel ICA for the BS/EAI will not be harvested. Therefore, in accordance with § 679.91(f), NMFS reallocates 700 mt of Atka mackerel from the BS/EAI ICA to the BS/EAI Amendment 80 cooperative allocation in the BSAI. In accordance with § 679.91(f), NMFS will reissue the cooperative quota permit for the reallocated Atka mackerel following the procedures set forth in § 679.91(f)(3).

The harvest specifications for Atka mackerel included in the harvest specifications for groundfish in the BSAI (89 FR 17287, March 11, 2024) are revised as follows: 100 mt of Atka mackerel for the BS/EAI ICA and 25,781 mt of Atka mackerel for the Amendment 80 cooperative allocation for the BS/EAI. Table 7 is revised and republished in its entirety as follows:

This will enhance the socioeconomic well-being of harvesters dependent upon Atka mackerel in this area. The Regional Administrator considered the following factors in reaching this decision: (1) the current catch of Atka mackerel ICA in the BS/EAI, and (2) the harvest capacity and stated intent on future harvesting patterns of the Amendment 80 cooperative that participates in this BS/EAI fishery.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion, and would delay the harvest of Atka mackerel in the BS/EAI fishery. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 25, 2024.

The Assistant Administrator for Fisheries, NOAA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice.