RD is a mission area within USDA comprised of the RHS, the Rural Business-Cooperative Service, and Rural Utilities Service, that strives to increase economic opportunity and improve the quality of life for all rural Americans. RD invests in rural America with loan, grant, and loan guarantee programs to help drive economic security and prosperity.

USDA's RHS offers a variety of programs to build or improve housing and essential community facilities in rural areas. The Agency offers loans, grants and loan guarantees for single- and multi-family housing, childcare centers, fire and police stations, hospitals, libraries, nursing homes, schools, first responder vehicles and equipment, housing for farm laborers and much more.

Multi-Family housing programs assist rural property owners through loans, loan guarantees, and grants that enable owners to develop and rehabilitate properties for low-income, elderly, and disabled individuals and families as well as domestic farm laborers.

Community Facilities Programs offer direct loans, loan guarantees and grants to develop or improve essential public services and facilities in communities across rural America. These amenities help increase the competitiveness of rural communities in attracting and retaining businesses that provide employment and services for their residents.

OMB revised several parts of OMB Guidance for Grants and Agreements which is now called OMB Guidance for Federal Financial Assistance which are applicable to all federal agencies. This guidance can be found in Title 2 of the Code of Federal Regulations (CFR) (2 CFR part 200). The revisions were published in the Federal Register on April 22, 2024, at 89 FR 30046, and are required to be implemented by October 1, 2024. This final rule is being published as a technical-administrative correction to ensure the Agency's audit and financial statement requirements align with the OMB revisions made to 2 CFR part 200.

This rulemaking makes the following changes:

(1) Updates § 1942.17 to increase the $750,000 audit threshold to $1,000,000.

(2) Updates § 3560.308 to increase the $750,000 audit threshold to $1,000,000.

(3) Updates § 3570.51 to remove the 2 CFR issue date.

(4) Updates § 3570.80 to replace the term “applicant” with “recipient” or “subrecipient.”

These loans are subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. RHS conducts intergovernmental consultations for each loan in accordance with 2 CFR part 415, subpart C.

This final rule is exempt from OMB review for purposes of Executive Order 12866 and, therefore, has not been reviewed by OMB.

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

The policies contained in this final rule do not have any substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this final rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

This final rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and Indian tribes or on the distribution of power and responsibilities between the Federal government and Indian tribes. Consultation is also required for any regulation that preempts tribal law or that imposes substantial direct compliance costs on Indian tribal governments and that is not required by statute.

The Agency has determined that this final rule does not, to its knowledge, have tribal implications that require formal tribal consultation under Executive Order 13175. If a Tribe requests consultation, the RHS will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified herein are not expressly mandated by Congress.

This final rule is not subject to the Congressional Review Act (“CRA”) (5 U.S.C. 801 et seq. ), as the CRA provides an exemption for any rule relating to agency management or personnel and for rules relating to agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties.

The Assistance Listing Numbers assigned to the programs affected by this final rule are 10.405—“Farm Labor Housing Loans and Grants,” 10.415—“Rural Rental Housing Loans,” 10.427—“Rural Rental Assistance Payments,” and 10.766—“Community Facilities Loans and Grants.” The Assistance Listings are available at SAM.gov .

This final rule contains no reporting or recordkeeping provisions under OMB Control Numbers 0575-0015 and 0575-0089 requiring OMB approval under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

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

This final rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned has determined and certified by signature on this document that this final rule will not have a significant economic impact on a substantial number of small entities since this rulemaking action does not involve a new or expanded program nor does it require any more action on the part of a small business than required of a large entity.

Section 270 of the Administrative Pay-As-You-Go Act of 2023 (Pub. L. 118-5, div. B, title III, 137 Stat 31) amended 5 U.S.C. 801(a)(2)(A) to require U.S. Government Accountability Office (GAO) to assess agency compliance with the Act, which establishes requirements for administrative actions that affect direct spending, in GAO's major rule reports. The Act does not apply to this rule because it does not increase direct spending.

Title II of the Unfunded Mandates Reform Act (UMRA), Public Law 104-4 (2 U.S.C. 1501 et seq. ), establishes requirements for Federal Agencies to assess the effects of their regulatory actions on State, local, and tribal Governments and on the private sector. Under section 202 of the UMRA, Federal Agencies generally must prepare a written statement, including cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, or tribal Governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires a Federal Agency to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule.

This final rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal Governments or for the private sector. Therefore, this final rule is not subject to the requirements of sections 202 and 205 of the UMRA.

RD is committed to the E-Government Act (44 U.S.C. 101 et seq. ), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible and to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

RD has reviewed this final rule in accordance with USDA Regulation 4300-4, Civil Rights Impact Analysis, to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex, disability, or marital or familial status. Based on the review and analysis of this final rule and all available data, issuance of this final rule is not likely to negatively impact low and moderate-income populations, minority populations, women, Indian tribes, or persons with disability, by virtue of their age, race, color, national origin, sex, disability, or marital or familial status. No major civil rights impact is likely to result from this final rule.

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

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

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

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

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

(3) Email: Program.Intake@usda.gov .

Accordingly, for the reasons set forth in the preamble, the Agency amends 7 CFR parts 1942, 3560, 3570, and 5001 as follows:

Title V, Section 506(b) of the Housing Act of 1949, as amended; 42 U.S.C. 1476(b).

RHS is committed to helping improve the economy and quality of life in rural areas by offering a variety of programs such as loans, grants, and loan guarantees to help create jobs, expand economic development, and provide critical infrastructure investments. RHS also provides technical assistance, loans, and grants by partnering with agricultural producers, cooperatives, Indian tribes, non-profits, and other local, state, and federal agencies.

The Multi-family Housing Program (MFH), an RHS program, assists rural property owners through loans, loan guarantees, and grants that enable owners to develop and rehabilitate properties for low-income, elderly, and disabled individuals and families as well as domestic farm laborers. MFH works with the owners of its direct and farm labor housing loan properties to subsidize rents for low-income tenants who cannot afford to pay their full rent. These programs assist qualified applicants that cannot obtain commercial credit on terms that will allow them to charge rents that are affordable to low-income tenants.

1. The pilot program is extended by one year until December 9, 2025.

2. Section 514 properties are now included in the pilot program.

3. The RHS contact person is updated.

4. Under Option 1, an exception for extending terms for imminent maturing mortgages has been added.

5. The Agency has made clarifications to Option 2 by removing (iii) (c) which was repetitive of (iii)(a) and (b).

MFH utilizes a variety of tools to revitalize and preserve the physical and financial health of more than 13,000 properties currently in USDA's rural rental portfolio. The Agency may authorize limited demonstration programs to test new approaches to offering housing under the statutory authority granted to the Secretary, as set forth in 42 U.S.C. 1476(b) and 7 CFR 3560.53(t). Such demonstration programs may authorize procedures and requirements that differ from those set forth in statute or regulation. However, any program requirements that are not expressly waived, whether statutory or regulatory, remain in effect.

There are two primary types of ownership changes that require approval by MFH which are (1) a change in the borrower entity's organizational structure or (2) a transfer of ownership to a new entity. Organizational changes that include changes in a borrower's current ownership entity structure are addressed in 42 U.S.C. 1485(h) and 7 CFR 3560.405. Transfers, which are sales of projects to new owners that continue to operate the projects in the 515 program, are detailed in 42 U.S.C. 1485(h) and 7 CFR 3560.406.

MFH has identified the need to simplify the transfer of ownership for certain types of transactions. The current process places the same submission requirements on applicants regardless of the complexity of the transaction, resulting in undue burdens for relatively uncomplicated transfers, thereby reducing potential transfer and preservation activity in the portfolio. To address this issue, MFH is implementing the Simple Transfer Pilot Program which will offer three additional transfer options as a way to encourage preservation and revitalize its portfolio. MFH expects that by reducing application requirements for certain types of transfers, the result will be lower transaction-related costs for applicants and improved processing times. At the end of the pilot program, MFH will evaluate the findings with consideration towards, if successful, future regulatory changes that could be codified into 7 CFR part 3560 and applied program wide.

(1) Simple Transfer Pilot Program: For a simple transfer, under certain conditions the Agency will process an application for an ownership change without requiring full rehabilitation financing and or reserve account funding typically needed to approve a standard transfer. Simple transfers include restrictions on new debt, equity payouts, and other limitations that are not included for standard transfers.

The Agency must determine that the new owner can operate the property successfully and that the ownership change will benefit the government and tenants even if there are remaining rehabilitation needs post-transfer. The property must meet the required conditions to be processed as a simple transfer. The Asset Management Division (AMD) will process simple transfers.

(2) Standard Transfer: All transfers that do not meet the requirements for a simple transfer are considered standard transfers. Standard transfers often include third-party financing, such as Low-Income Housing Tax Credits (LIHTC), and may include one property or multiple properties in a portfolio. Standard transfers follow the guidance in 7 CFR 3560.406. The Production and Preservation Division (P2) will continue to process standard transfers.

Eligible properties include Section 514 Farm Labor Housing and Section 515 Rural Rental Housing properties. Eligibility for the pilot program will be based on property conditions and the ability and willingness of the buyer and seller to meet required simple transfer conditions. Buyers must meet the eligibility criteria in 7 CFR 3560.406. Applicants must be able to clearly demonstrate that the property can operate successfully under new ownership. Applicants must abide by the regulatory requirements set forth in 7 CFR part 3560 and the requirements set forth in applicable statutes, except for the exceptions made available through this pilot program, as detailed in this Notice.

Under the pilot program, three simple transfer options are available to address different property circumstances, which are outlined below:

Option 1 is the most streamlined transfer process. It is available in circumstances where the Agency determines that an expedited ownership change is in the best interest of the Government, property, and tenants.

(i) Property is in acceptable physical condition as determined by the Agency based on information submitted by the applicant, available in Agency files, or available from third parties, AND

(ii) Conditions exist that require an expedited transfer, including but not limited to: deceased borrower or general partner, hardship, insolvency, receivership, imminent loan maturity, or sale to nonprofit under prepayment, AND

(iii) No additional debt will be incurred by the Buyer or secured by the property as part of the transfer, AND

(iv) New owner (nonprofit or for-profit) will provide a plan for the long-term viability of the property, which may include recapitalization/rehabilitation or resetting of reserves. The Agency must determine that the proposed viability plan demonstrates the continued physical and financial viability of the property.

(i) No Capital Needs Assessment (CNA) is required with the transfer application (the CNA requirement in 7 CFR 3560.406(d)(5) is waived for transfers qualifying for Option 1).

(ii) No new valuation of the property is required with the transfer application (the requirement in 3560.406(d)(3)(i) and (ii) that the security value of the housing project be determined at the time of transfer is waived for transfers qualifying for Option 1).

(iii) The maturity date and amortization period of the loan will not be changed or extended unless the Agency determines that an extension of the term is in the best interests of the Government, property and tenants.

(iv) No equity payout can be included as part of the transaction. Equity payout to transferor shall not be paid for by project funds and shall not be secured by the property. If agreed to by both parties, equity may be paid outside of the transaction.

(v) The project must meet minimum reserve account requirements as determined by the Agency. The Agency may require a post-transfer analysis to reset annual reserve deposits as a condition of the approved viability plan, which could include completion of a property conditions survey, a CNA, or another analysis acceptable to the Agency.

Option 2 is designed for properties that require rehabilitation and or resetting of the annual deposit to the reserve account.

(i) Property is or will be fully subsidized post-transfer OR rents can be increased without adversely impacting occupancy and without a term extension, AND

(ii) No additional amortizing debt will be incurred by the Buyer or secured by the property as part of the transfer, AND

(iii) One of the following conditions applies:

(a) Based on a CNA, rehabilitation is needed that cannot be funded by the current reserve account, OR

(b) Property is in acceptable condition, with only minor upfront rehabilitation or repairs needed, as determined by the Agency based on information submitted by the applicant, available in Agency files, or available from third parties. Reserves are sufficient to meet any upfront rehabilitation needs but are inadequate to address future rehabilitation needs,

(i) No new valuation of the property is required with the transfer application (the requirement in § 3560.406(d)(3)(i) and (ii) that the security value of the housing project be determined at the time of transfer is waived for transfers qualifying for Option 2).

(ii) The Agency may approve a junior lien for deferred financing as provided in 3560.409, except that: (a) deferred financing must at a minimum be coterminous with the Agency's loan(s), and (b) the Agency may set a maximum per unit limit on rehabilitation that can be approved under Option 2.

(iii) The maturity date and amortization period of the loan will not be changed or extended, except that a term extension may be permitted in accordance with 7 CFR 3560.409(j) if required by the deferred lender to preserve affordability for a longer period.

(iv) No equity payout can be included as part of the transaction. Equity payout to transferor shall not be paid for by project funds and shall not be secured by the property. If agreed to by both parties, equity may be paid outside of the transaction.

Option 3 provides flexibility to nonprofits and government agencies to complete an acquisition of a preservation-worthy property even if resources for rehabilitation of the property are not available at the time of the transfer. An appraisal and CNA are required as part of the transfer application.

(i) Based on a CNA, rehabilitation is needed that cannot be fully funded by the current reserve account or resetting of the existing reserve deposits, AND

(ii) The purchaser is a nonprofit organization or government agency, AND

(iii) The new nonprofit or government agency owner will pursue a strategy to rehabilitate/recapitalize the property with Agency and or third-party funds within two years of the transfer closing date. The Agency must determine that the recapitalization plan will meet the physical and financial needs of the property, the new owner is likely to obtain the Agency and or third-party funds, and the property can function successfully until either rehabilitation or recapitalization is complete.

(i) The Agency will waive the necessary reserve requirement adjustment under 7 CFR 3560.406(d)(5). The new owner must address the rehabilitation needs identified in the CNA over a period not to exceed two years after the closing date of the transfer. The Agency must approve the new owner's proposed rehabilitation plan and the new owner's plan to obtain funding for the rehabilitation prior to approval of the transfer.

(ii) The Agency will monitor the progress and implementation of the approved plan as part of routine project servicing. The new owner may propose changes to the approved plan; however, RD must authorize in writing any changes before they are implemented.

For all simple transfer options, health, safety, environmental, civil rights, and applicable accessibility requirements must be resolved at the time of transfer. The property must be rated “performing” in the internal risk rating tool unless an exception is approved by the Agency.

In cases where MFH determines that none of the simple transfer options are viable for a project, the property owner should follow the standard transfer requirements in 7 CFR 3560.406. The Agency may also determine that other servicing actions are more appropriate based on the property's circumstances.

Standard transfer requirements have not changed and are outlined in 7 CFR 3560.406 ( https://ecfr.federalregister.gov/current/title-7/subtitle-B/chapter-XXXV/part-3560/subpart-I/section-3560.406 ). A checklist and other information have been developed and are available by: (1) going to the MFH website at https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-direct-loans (click on the To Apply tab), (2) contacting the assigned servicing specialist, which can be found at USDA Service Center Agencies Online Services ; or (3) refer to the FOR FURTHER INFORMATION CONTACT section in this Notice.

A property owner should contact the assigned Field Operations Division (FOD) servicing specialist if interested in a transfer under the pilot program. The servicing specialist will take lead in intake of the information and in partnership with AMD and lead the concept call with the applicant. After the conversation with the applicant, the package will either be transferred to AMD for processing, or the servicing specialist will notify the applicant in writing of the decision to not proceed with the simple transfer process and the reasons.

The regulatory waivers for this pilot contain no new reporting or recordkeeping burdens under OMB control number 0575-0179 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

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

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

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

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

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

(3) Email: Program.Intake@usda.gov.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2024-2546; Project Identifier AD-2024-00574-A” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Gregory Koenig, Aviation Safety Engineer, FAA, 1801 S Airport Road, Wichita, KS 67209. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA is issuing this AD to correct an unsafe condition on certain Cirrus Model SR20, SR22, and SR22T airplanes. The FAA received a report that a Cirrus Model SR20 airplane was involved in an incident where the upper power lever failed while advancing to full throttle in preparation for takeoff. The flight was successfully aborted by cutting fuel to the airplane. After the incident, an additional 26 upper power levers have been reported to have cracks. The available data indicates that the probability of visual inspection methods to detect cracks in the upper power levers are inadequate, and therefore a fluorescent penetrant inspection (FPI) is also necessary if cracks are not detected during the visual inspection. These cracks have only been discovered on upper power levers that include a takeoff/go-around switch. This condition, if not addressed, could result in loss of engine thrust control and reduced control of the airplane. The FAA is issuing this AD to address the unsafe condition on these products.

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

The FAA reviewed Cirrus SR2X Service Bulletin SB2X-76-05, dated October 29, 2024 (Cirrus SB2X-76-05). This material specifies procedures for inspecting the upper power lever and replacement of the upper power lever if cracks are found. 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.

This AD requires accomplishing the actions specified in the material described previously, except as discussed under “Differences Between this AD and the Referenced Material.” This AD also requires sending all inspection results to the FAA.

The effectivity in Cirrus SB2X-76-05 specifies certain airplane serial numbers through 9749, but this AD is applicable to Model SR20, SR22, and SR22T airplanes, certificated in any category, that are equipped with upper power lever part number (P/N) 19181-001, 19181-002, or 46505-001.

Cirrus SB2X-76-05 specifies that the compliance time is within 10 flight hours for airplanes with 2,000 flight hours or more, but this AD has a compliance time of before an upper power lever accumulates 1,200 hours time-in-service (TIS), within 10 hours TIS on the upper power lever after the effective date of this AD, or within 15 days after the effective date of this AD, whichever occurs later. This compliance time was developed based on data received from the 27 reported incidents, which indicated that an incident occurred as low as 2,948 hours TIS and that this unsafe condition could occur on airplanes with 1,200 hours TIS accumulated on the upper power lever. Based on this incident data, coupled with the fact that a large number of airplanes are either approaching or over 1,200 hours TIS and the propagation rate for this unsafe condition is unknown, the FAA's risk assessment was that the accumulation of 2,000 flight hours or more would not adequately mitigate the unsafe condition.

Cirrus SB2X-76-05 includes an action to revise the aircraft maintenance manual (AMM) by including a temporary revision that specifies repetitive inspections every 2,000 hours TIS, but this AD does not require this AMM revision. Instead, this AD requires repetitive inspections at intervals not to exceed 110 hours TIS. While Cirrus specifies a repetitive inspection every 2,000 hours TIS, the FAA is requiring a repetitive inspection at a frequency that considers the potential development and propagation of these cracks beyond 1,200 hours TIS.

Cirrus SB2X-76-05 does not specify reporting inspection results and this AD requires reporting inspection results to the FAA.

Cirrus SB2X-76-05 specifies to return cracked (damaged) upper power levers to Cirrus, but this AD does not require this action. This AD, instead, requires removing any cracked (damaged) upper power lever from service.

Replacing the upper power lever with P/N 19181-001, 19181-002, or 46505-001 does not terminate the requirements of this AD. The inspection would be required before any affected upper power lever accumulates 1,200 hours TIS.

The FAA considers this AD to be an interim action. The manufacturer is currently developing a terminating action that will address the unsafe condition identified in this AD. Once the modification is developed, approved, and available, the FAA might consider additional rulemaking.

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

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies forgoing notice and comment prior to adoption of this rule because cracking in the upper power lever leads to failure of the upper power lever, which could result in loss of engine thrust control and reduced control of the airplane. The FAA's initial analysis based on crack data from the reported incidents shows that this condition could occur on airplanes with 1,200 hours TIS accumulated on the upper power lever. Since a large percentage of the Cirrus Model SR20, SR22, and SR22T airplanes have exceeded or are approaching 1,200 hours TIS and because the propagation rate for this unsafe condition is unknown, an inspection of the upper power lever is required within 10 hours TIS or 15 days after the effective date of this AD, whichever occurs later, for airplanes before accumulating 1,200 hours TIS to detect cracks in the upper power lever. These compliance times are shorter than the time necessary for the public to comment and for publication of the final rule. Accordingly, notice and opportunity for prior public comment are unnecessary, pursuant to 5 U.S.C. 553(b).

In addition, for the foregoing reason(s), the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days.

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

The FAA estimates that this AD affects 6,811 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 replacements that would be required based on the results of the inspection. The agency has no way of determining the number of airplanes that might need this replacement:

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

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB Control Number. The OMB Control Number for this information collection is 2120-0056. Public reporting for this collection of information is estimated to be approximately 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. All responses to this collection of information are mandatory. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Information Collection Clearance Officer, Federal Aviation Administration, 10101 Hillwood Parkway, Fort Worth, TX 76177-1524.

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

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-2024-1396 in the Federal Register (89 FR 42824; May 16, 2024), proposing to amend VOR Federal Airways V-258 and V-519, and RNAV Route T-426; and revoke Jet Routes J-213 and J-526, and VOR Federal Airway V-59. The FAA proposed this action due to the planned decommissioning of the VOR portion of the Beckley, WV, 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 final rule for Docket No. FAA-2023-2314 in the Federal Register (89 FR 52357; June 24, 2024), amending VOR Federal Airway V-258 by removing the airway segment between the Roanoke, VA, VOR/DME and the Danville, VA, VOR. That airway amendment, effective September 5, 2024, is included in this rule.

Jet Routes are published in paragraph 2004, VOR Federal Airways are published in paragraph 6010(a), and United States Area Navigation Routes are published in paragraph 6011 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 Airway V-519 and RNAV Route T-426; and revoking Jet Routes J-213 and J-526, and VOR Federal Airways V-59 and V-258 due to the planned decommissioning of the VOR portion of the Beckley, WV, VOR/DME NAVAID. The Air Traffic Service route actions are described below.

J-213: Prior to this final rule, J-213 extended between the Armel, VA, VOR/DME and the Beckley, WV, VOR/DME. The route is removed in its entirety.

J-526: Prior to this final rule, J-526 extended between the Beckley, WV, VOR/DME and the Louisville, KY, VOR/Tactical Air Navigation (VORTAC). The route is removed in its entirety.

V-59: Prior to this final rule, V-59 extended between the Pulaski, VA, VORTAC and the Parkersburg, WV, VOR/DME. The airway is removed in its entirety.

V-258: Prior to this final rule, V-258 extended between the Charleston, WV, VOR/DME and the Roanoke, VA, VOR/DME due to the final rule for Docket No. FAA-2023-2314 that published previously in the Federal Register (89 FR 52357; June 24, 2024). This action removes the airway segment between the Charleston VOR/DME and the Roanoke VOR/DME, resulting in the airway being removed in its entirety.

V-519: Prior to this final rule, V-519 extended between the Volunteer, TN, VORTAC and the Beckley, WV, VOR/DME. The airway segment between the Bluefield, WV, VOR/DME and the Beckley VOR/DME is removed. As amended, the airway is changed to now extend between the Volunteer VORTAC and the Bluefield VOR/DME.

T-426: Prior to this final rule, T-426 extended between the DANCO, WV, WP and the MCDON, VA, WP. The route is extended northward from the DANCO WP to the Parkersburg, WV, VOR/DME. As amended, T-426 is changed and now extends between the Parkersburg VOR/DME and the MCDON WP. The full T-426 route description is listed in the regulatory text of this final rule.

The NAVAID radials listed in the VOR Federal Airway V-519 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 Airway V-519 and RNAV Route T-426; and revoking Jet Routes J-213 and J-526, and VOR Federal Airways V-59 and V-258, due to the planned decommissioning of the VOR portion of the Beckley, WV, 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 Air Traffic Service (ATS) route structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.

The FAA published a NPRM for Docket No. FAA 2024-1934 in the Federal Register (89 FR 59862; July 24, 2024), proposing to amend Q-8 and revoke Q-18 in Alaska. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

The NPRM published for Docket No. FAA-2024-1934 in the Federal Register (89 FR 59862; July 24, 2024) listed the route points for Q8 in the incorrect order in the regulatory text. Additionally, the route point coordinates in the regulatory text for Q- 8 did not list the coordinates to the nearest 100th degree as required. This rule corrects these errors.

United States Area Navigation Routes are published in paragraph 2006 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11J, 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.

The FAA is amending 14 CFR part 71 by amending RNAV Route Q-8 and revoking RNAV Route Q-18 in Alaska.

Q-8: This action amends RNAV Route Q-8 by extending it to overlie the track of Q-18 that is being revoked by this action. As amended, Q-8 extends between the Barrow, AK, VOR/DME and the Anchorage, AK, VOR/DME.

Q-18: This action revokes Q-18 in its entirety.

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 airspace action of amending Q-8 and revoking Q-18 in Alaska 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 5-6.5k, which categorically excludes from further environmental review the publication of existing air traffic control procedures that do not essentially change existing tracks, create new tracks, change altitude, or change concentration of aircraft on these tracks. 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. Accordingly, 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 Air Traffic Service (ATS) route structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System (NAS).

The FAA identified a safety issue with similar sounding route point names, the CUDLE, NC, WP and the KALDA, VA, WP located 186 NM to the northeast of the CUDLE WP which contributes to communications errors resulting from the similar-sounding route point names in radio communications. To remedy this, the FAA is changing the name of the CUDLE, NC, WP to the RREGG, NC, WP in RNAV Routes Q-117 and Q-135.

United States Area Navigation routes (Q-routes) are published in paragraph 2006 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11J, 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 changing the name of the “CUDLE”, NC, WP to “RREGG” in RNAV Route Q-117 and Q-135 to overcome the similar-sounding pronunciation of the CUDLE, NC, WP and the KALDA, VA, WP which contributes to communications errors resulting from the similar-sounding route point names in radio communications. The amendment is described below.

Q-117: Prior to this final rule, Q-117 extended between the PRONI, NC, WP and the SAWED, VA, WP. The FAA replaces the CUDLE, NC, WP with the RREGG, NC, WP at the same location. As amended, the route continues to extend between the PRONI WP and the SAWED WP.

Q-135: Prior to this final rule, Q-135 extended between the JROSS, SC, WP and the CUDLE, NC, WP. The FAA replaces the CUDLE, NC, WP with the RREGG, NC, WP at the same location. As amended, the route is changed to extend between the JROSS WP and the RREGG WP.

This action is an administrative change and does not affect the airspace boundaries or operating requirements; therefore, notice and public procedure under 5 U.S.C. 553(b) is unnecessary.

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 airspace action of amending RNAV Route Q-117 and Q-135 by changing the name of the “CUDLE”, NC, WP to “RREGG” qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points); and paragraph 5-6.5b, which categorically excludes from further environmental impact review “Actions regarding establishment of jet routes and Federal airways (see 14 CFR 71.15, Designation of jet routes and VOR Federal airways ) . . .”. As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. Accordingly, the FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact statement.

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-2024-1364 in the Federal Register (89 FR 42828; May 16, 2024), proposing to amend VOR Federal Airways V-216 and V-380, and revoke VOR Federal Airways V-549 and V-551 due to the planned decommissioning of the VOR portion of the Mankato, KS, VORTAC 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 final rule for Docket No. FAA-2023-2483 in the Federal Register (89 FR 48504; June 7, 2024), amending VOR Federal Airway V-216 by removing the airway segment between the Lamoni VOR/Distance Measuring Equipment (VOR/DME) and the Iowa City, IA, VOR/DME. That airway amendment, effective September 5, 2024, is included in this rule.

Additionally, subsequent to the NPRM, the FAA published a final rule for Docket No. FAA-2023-2466 in the Federal Register (89 FR 48506; June 7, 2024), revoking VOR Federal Airway V-380 effective September 5, 2024. As a result, VOR Federal Airway V-380 is removed from this docket action.

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 Airway V-216 and revoking VOR Federal Airways V-549 and V-551. The FAA is taking this action due to the planned decommissioning of the VOR portion of the Mankato, KS, VORTAC. The airway actions are described below.

V-216: Prior to this final rule, V-216 extended between the Lamar, IA, VOR/DME and the Mankato, KS, VORTAC; and between the Iowa City, IA, VOR/DME and the Janesville, WI, VOR/DME. The airway segment between the Hill City, KS, VORTAC and the Mankato VORTAC is removed. As amended, the airway is changed to now extend between the Lamar VOR/DME and the Hill City VORTAC, and between the Iowa City VOR/DME and the Janesville VOR/DME.

V-549: Prior to the final rule, V-549 extended between the Hays, KS, VORTAC and the Mankato, KS, VORTAC. The airway is removed in its entirety.

V-551: Prior to this final rule, V-551 extended between the Salina, KS, VORTAC and the Mankato, KS, VORTAC. The airway is removed in its entirety.

The NAVAID radials listed in the V-216 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 Airway V-216 and revoking VOR Federal Airways V-549 and V-551, due to the planned decommissioning of the VOR portion of the Mankato, KS, VORTAC NAVAID, qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321 et seq. ) and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). 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:

In E.O. 13873, “Securing the Information and Communications Technology and Services Supply Chain,” the President delegated to the Secretary of Commerce (Secretary) pursuant to 3 U.S.C. 301, to the extent necessary to implement the order, the authority granted under the International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1701, et seq. ), “to deal with any unusual and extraordinary” foreign threat to the United States' national security, foreign policy, or economy, if the President declares a national emergency with respect to such threat. 50 U.S.C. 1701(a). In E.O. 13873, the President declared a national emergency with respect to the “unusual and extraordinary” foreign threat posed to the ICTS supply chain and has, in accordance with the National Emergencies Act (NEA) (50 U.S.C. 1601, et seq. ), extended the declaration of this national emergency in each year since E.O. 13873's publication. See 85 FR 29321 (May 14, 2020); 86 FR 26339 (May 13, 2021); 87 FR 29645 (May 13, 2022); 88 FR 30635 (May 11, 2023); 89 FR 40353 (May 9, 2024).

Specifically, the President identified the “unrestricted acquisition or use in the United States of [ICTS] designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries” as “an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States” that “exists both in the case of individual acquisitions or uses of such technology or services, and when acquisitions or uses of such technologies are considered as a class.” E.O. 13873; see also 50 U.S.C. 1701(a) and (b).

Once the President declares a national emergency, IEEPA empowers the President to, among other acts, investigate, regulate, prevent, or prohibit, any “acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States.” 50 U.S.C. 1702(a)(1)(B).

To address the identified risks to national security from ICTS transactions, the President in E.O. 13873 imposed a prohibition on transactions determined by the Secretary, in consultation with relevant agency heads, to involve foreign adversary ICTS and to pose certain risks to U.S. national security, technology, or critical infrastructure. Specifically, to fall within the scope of the prohibition, the Secretary, in consultation with relevant agency heads, must determine that any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology and services (an ICTS Transaction): (1) “involves [ICTS] designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” defined in E.O. 13873 as “any foreign government or foreign non-government person engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or security and safety of United States persons;” and (2):

A. “poses an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of information and communications technology or services in the United States;”

B. “poses an undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy of the United States;” or

C. “otherwise poses an unacceptable risk to the national security of the United States or the security and safety of United States persons.”

These factors are collectively referred to as “undue or unacceptable risks.” Further, E.O. 13873 section 1(b) grants the Secretary the authority to design or negotiate mitigation measures that would allow an otherwise prohibited transaction to proceed.

On November 27, 2019, the Department of Commerce (Department) published a proposed rule to implement the terms of E.O. 13873 (84 FR 65316). The proposed rule set forth processes for how: (1) the Secretary would evaluate and assess transactions involving ICTS with a nexus to foreign adversaries to determine whether they pose an undue risk of sabotage to or subversion of the ICTS supply chain, or an unacceptable risk to the national security of the United States or the security and safety of U.S. persons; (2) parties to transactions reviewed by the Secretary could comment on the Secretary's preliminary decisions; and (3) the Secretary would notify parties to transactions of the Secretary's decision regarding ICTS Transactions under review, including whether the Secretary would prohibit the transaction or mitigate the risks posed by the transaction. The proposed rule also provided that the Secretary could act without complying with the proposed procedures where required by national security. Finally, it provided that the Secretary would establish penalties for violations of mitigation agreements, the regulations, or E.O. 13873.

After receiving and reviewing comments to the proposed rule, on January 19, 2021, the Department published an interim final rule titled, “Securing the Information and Communications Technology and Services Supply Chain,” (the interim final rule or the IFR; 86 FR 4909). The interim final rule responded to comments to the proposed rule, many of which requested greater specificity about what constitutes ICTS, an ICTS Transaction, or transactions that would be subject to the Department's review.

In response to these and other comments, the IFR defined “ICTS” as “any hardware, software, or other product or service, including cloud-computing services, primarily intended to fulfill or enable the function of information or data processing, storage, retrieval, or communication by electronic means (including electromagnetic, magnetic, and photonic), including through transmission, storage, or display” (86 FR at 4923). The interim final rule further defined an “ICTS Transaction” as “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service, including ongoing activities, such as managed services, data transmission, software updates, repairs, or the platforming or data hosting of applications for consumer download . . . . [t]he term ICTS Transaction includes a class of ICTS Transactions.”

On November 26, 2021, the Department published a notice of proposed rulemaking (NPRM) (86 FR 67379), titled “Securing the Information and Communications Technology and Services Supply Chain; Connected Software Applications,” seeking comments on amendments to Part 7 incorporating provisions of E.O. 14034, titled “Protecting Americans' Sensitive Data From Foreign Adversaries” (86 FR 31423). On June 21, 2023, the Department published a final rule implementing E.O. 14034. That final rule incorporated the term “connected software applications” into the regulations at 15 CFR part 7 and added specific factors for the Department to consider when reviewing ICTS Transactions involving connected software applications (88 FR 39353). However, that final rule included only the changes to the regulations that were necessary to implement E.O. 14034 and within the scope of the November 26, 2021, NPRM on connected software applications. The June 21, 2023, final rule for connected software applications was more limited in scope than the January 19, 2021, interim final rule and did not fully respond to public comments on the interim final rule.

On July 18, 2024, the Department published a procedural rule entitled “Redesignation of Regulations for Securing the Information and Communications Technology and Services Supply Chain” (89 FR 58263) moving the regulations implementing E.O. 13873 and E.O. 14034 from 15 CFR part 7 to 15 CFR part 791. Consistent with the placement of the Office of Information and Communications Technology and Services (OICTS) within the Bureau of Industry and Security (BIS) on March 15, 2022, following the Consolidated Appropriations Act for Fiscal Year 2022, the action moved OICTS regulations from subtitle A in the CFR, which is generally reserved for Secretarial actions and Department-wide activities and operations, to chapter VII in title 15 of the CFR, where BIS regulations are located. Specifically, this action removed the regulations in title 15, subtitle A, part 7 (under the “Office of the Secretary of Commerce”), reserving that part, and redesignated them as title 15, subtitle B, chapter VII, subchapter E part 791 (under the “Bureau of Industry and Security, Department of Commerce”). This procedural rule also established Subchapter E entitled “Information and Communications Technology and Services Regulations.” This rule was of a purely procedural nature and did not and does not affect, impact, or alter any of the rules or regulations discussed herein other than moving their location in the CFR. The Department issued the procedural rule to bring the OICTS regulations into the same location in the CFR as the other BIS regulations. The redesignation is reflected in this final rule—any citation to 15 CFR part 7 in the interim final rule is now revised to 15 CFR part 791.

Sections 7.1 through 7.3 of the interim final rule explained the overall purpose of the rule, defined terms used in the regulatory text, and specified the types of ICTS and users of ICTS about which the regulations are primarily concerned, such as those in critical and emerging technologies or critical infrastructure. Sections 7.100 through 7.109 provided procedures for the Department's review of ICTS Transactions to determine whether the transactions pose “undue” or “unacceptable” risks as those terms are specified in E.O. 13873. Under the procedures set forth in the IFR, the Department could accept a referral of an ICTS Transaction from another agency or could undertake a review of an ICTS Transaction sua sponte based on information it possesses or receives. If the Department determined that an ICTS Transaction posed an “undue” or “unacceptable” risk, the Department could, after consulting with the appropriate agency heads about the potential risks posed by the ICTS Transaction under review, issue an Initial Determination that identifies the risks generally and contains a proposal to prohibit, mitigate, or allow such ICTS Transaction.

The IFR also required that the Initial Determination be followed by a period during which a party to the transaction that is the subject of the Initial Determination could provide the Department with additional information to respond to the Initial Determination or seek to negotiate with the Department to allow the ICTS Transaction, with modifications. Following that period, and upon reviewing any information provided by parties, and seeking consensus from the appropriate agencies to determine whether to prohibit, mitigate, or allow the ICTS Transaction under review, the Department would issue a Final Determination. Under the IFR, the Final Determination provided information supporting a finding that an ICTS Transaction does or does not pose an undue or unacceptable risk, and assessed any information provided by the party to the transaction under review. Under the IFR, the results of Final Determinations to prohibit an ICTS Transaction were printed in the Federal Register without any confidential business information, and they were also provided to the appropriate agency heads as well as the party or parties to the transaction that was the subject of the Final Determination.

Violating orders under IEEPA could result in civil penalties, criminal penalties, or both. Section 7.200 of the IFR captured the authorized penalties for violating a Final Determination order or requirement (in the case of mitigation or prohibition). The penalties could be administrative or criminal in nature, and § 7.200 set out both the standards for when civil or criminal penalties may apply to a violation, as well as the nature and value or duration of any punishment applied for violating a Final Determination order.

After the benefit of two years of implementation experience, the Department is amending some of the provisions of the IFR to improve and make more efficient the ICTS Transaction review process as outlined in 15 CFR part 791. In addition, the Department received and has considered the comments to the IFR and responds to those comments in this final rule.

This final rule specifically adds new definitions and revises existing definitions in § 791.2; amends § 791.3 to remove the requirement that a party must collect sensitive personal data from more than one million U.S. persons to be included in the scope of certain aspects of the regulations, as well as to reorganize and clarify the software, hardware, and other products and services that may be considered for review; adds the Special Administrative Region of Macau as part of the People's Republic of China to the foreign adversary list in § 791.4; clarifies procedures to initiate a review set forth in § 791.103; amends for additional clarity the requirements to notify and consult with appropriate agency heads regarding the Secretary's assessment in §§ 791.104 and 791.108; clarifies who are considered parties to an ICTS Transaction and will be notified of an Initial Determination in § 791.105; clarifies certain procedures for parties' responses to Initial Determinations in § 791.107; lists prohibited activities in § 791.200; and makes clarifying changes to other provisions.

Many of the changes in this final rule are non-substantive in nature. For example, the Department is adding a definition for “Covered ICTS Transaction” to clearly distinguish in the rule text between ICTS Transactions generally and ICTS Transactions that meet specific criteria in § 791.3. This change is meant to clarify for the public and parties to ICTS Transactions the process the Department will follow after determining a transaction is a Covered ICTS Transaction.

Although this is a final action, the Department will continue to review its procedures and may consider future rulemakings to further clarify aspects of these regulations, which would involve additional opportunity for stakeholder input.

During the public comment period for the IFR, which closed on March 22, 2021, the Department received 33 comment letters from a variety of sources, including members of industry, commercial trade groups, and private individuals. All comments received by the end of the comment period are available on the public rulemaking docket for the IFR (see ADDRESSES above). Many commenters were generally supportive of the Department's efforts to clarify the scope of the regulations, but commenters believed that the IFR did not completely resolve concerns stakeholders had expressed about the proposed rule. Additionally, commenters expressed concerns about multiple sections of the IFR, including: definitions; the scope of covered ICTS Transactions; foreign adversary determinations; and certain aspects of the Department's process to review ICTS Transactions. The Department has carefully considered all comments and addresses them below. The Department's discussion of comments on the IFR and changes implemented by this final rule are organized in numerical order by section of the rule and comments are addressed in the section to which they pertain. Comments that are either no longer relevant or that are outside the scope of this final rule are summarized at the end of the discussion section below.

The majority of comments the Department received to the IFR requested that the Department develop, amend, or clarify various definitions to provide the public with further clarity about the Department's specific concerns regarding ICTS Transactions and classes of ICTS Transactions and about what the Department intends to regulate. Commenters stated that the definitions in the IFR, which largely were adopted directly from E.O. 13873 without change, were vague and overly broad. In particular, commenters indicated that the terms “dealing in,” “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” and “transfer,” were not defined sufficiently to provide a reasonable understanding of which transactions are subject to prohibition or mitigation under the rule.

Commenters also noted that certain terms used within the definition of “ICTS Transaction” were undefined in the IFR. Commenters were concerned that the potential breadth of these terms could discourage U.S. and foreign entities from engaging in ICTS Transactions out of concern that any such transactions could be reviewed and prohibited. Other commenters expressed concerns that leaving undefined the term “ongoing activities” in the definition of ICTS Transactions might discourage beneficial activities such as software updates.

As described in detail below, although the Department does not believe it is necessary to provide new definitions for all the terms mentioned by commenters, the Department does agree that certain terms needed additional clarity and, accordingly, is revising and adding definitions for terms in § 791.2. The revised terms are: “party or parties to a transaction,” “Secretary,” “United States person,” “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” and “appropriate agency heads.” The newly defined terms are: “covered ICTS transaction,” “dealing in,” and “importation.” These include definitions for some of the terms that were used but not defined in the IFR's definition of ICTS Transactions, discussed below. The Department believes that its chosen changes address commenters' concerns and clarify the scope of the definitions in the rule, and does not believe it is necessary to provide definitions for the other terms, for reasons that are discussed below.

(1) Terms within the definition of “ICTS Transaction.”

The IFR defined an ICTS Transaction as any acquisition, importation, transfer, installation, dealing in, or use of any ICTS, including ongoing activities, such as managed services, data transmission, software updates, repairs, or the platforming or data hosting of applications for consumer download. The IFR also clarified that an ICTS Transaction includes any other transaction designed or intended to evade or circumvent the application of E.O. 13873 and that the term ICTS Transaction includes a class of ICTS Transactions.

This final rule continues to use the definition of “ICTS Transaction,” consistent with the IFR, but the Department has clarified this definition by further defining the terms “dealing in” and “importation” that appear within the definition of ICTS Transaction, as discussed below.

(2) New definition of “Dealing in” as used within the definition of “ICTS Transaction.”

To clarify the definition of “ICTS Transaction” this final rule defines “dealing in,” as the “activity of buying, selling, reselling, receiving, licensing, or acquiring ICTS, or otherwise doing or engaging in business involving the conveyance of ICTS.” This change responds to commenters' concerns that “dealing in” is a vague term that could have broad implications for ICTS importers, by emphasizing the provision of ICTS to or into the United States through sales, resales, licensing, or acquisition, rather than other means. Some commenters suggested that the term “dealing in” could be defined as “engaging directly in a financial transaction for the offering, buying, selling, or trading of prohibited ICTS,” consistent with the Securities and Exchange Act of 1934. However, the Department has not adopted the Securities Exchange Act of 1934 definition of “dealing in” because that definition would focus on the financial transaction resulting in a purchase, sale, or trade of ICTS. Because there may be instances in which ICTS is provided as a technology transfer or as a free service, such as some tax services or antivirus detection services, that definition would not capture the full scope of ICTS Transactions of concern in E.O. 13873.

Therefore, the definition of “dealing in” in this final rule, which also includes “receiving,” “acquiring,” or “licensing” ICTS, provides more clarity while remaining sufficiently broad to encompass the many ways in which ICTS enters the United States.

(3) New definition of “Importation” as used within the definition of “ICTS Transaction.”

To further clarify the definition of “ICTS Transaction,” this final rule adds a definition for the term “importation” as “the process or activity of bringing foreign ICTS to or into the United States, regardless of the means of conveyance, including via electronic transmission.” This definition is consistent with U.S. import laws, see, e.g., 21 U.S.C. 951, and the generally understood meaning of the term. This change will clarify that the Department interprets the term “importation” as used in E.O. 13873 and the defined term “ICTS Transaction” to encompass ICTS Transactions in which ICTS is brought to or into the United States and does not include exports, as some commenters had suggested.

The Department notes that, in the execution of its authorities, the Department may, in the context of specific technologies addressed in regulations under this part, further specify the particular meaning of “importation” with respect to those technologies. For example, the Department may tailor the scope of “importation” for a specific class of ICTS or a specific industry covered by a regulation under this part. In this final rule, the definition of “importation” applies broadly to any ICTS, including ICTS transmitted electronically, that is subject to the Department's jurisdiction under E.O. 13873.

(4) Other terms used in the definition of “ICTS Transaction.”

Some commenters requested that the Department remove the term “use” from the definition of “ICTS Transaction” or define “use” as “employing ICTS for its intended purpose.” Other commenters requested that the term “use” in “ICTS Transaction” apply only to the delivery of goods or services to U.S. consumers and not to research, testing, or standards development. The Department declines to remove “use” from the definition of “ICTS Transaction” because “use” is included in the description of prohibited ICTS Transactions in section 1 of E.O. 13873. Moreover, this final rule does not define “use” as suggested by commenters because the Department believes such change would define the term in a way to narrow the term beyond its ordinary meaning. Moreover, the Department does not interpret commenters' proposed limitations of the term “use” to be consistent with the objective of E.O. 13873. The Department does not intend to exclude certain uses or misuses of ICTS that present undue or unacceptable risks. Therefore, consistent with E.O. 13873, the Department declines to define “use” to avoid limiting the types of transactions that could fall within the definition of “ICTS Transaction.”

Commenters also noted that the terms “acquisition,” “transfer,” “installation,” and “ongoing activities” were not defined in the IFR and could have multiple meanings, resulting in confusion if left undefined. Some of these commenters suggested that the Department either remove these terms from the definition of ICTS Transaction, further elaborate on their meaning, or define these terms in a way that would impact the scope of the regulations. The Department will not remove these terms from the definition of “ICTS Transaction,” as removing the terms would be inconsistent with how E.O. 13873 describes ICTS Transactions that could pose undue or unacceptable risk. The Department is also not defining these terms in this final rule. Similar to the Department's decision not to define “use,” the Department's interpretation of each of these terms is consistent with their ordinary meanings and their use in E.O. 13873. Defining these terms inconsistently with their ordinary meanings could add unnecessary complexity to the regulatory text. The Department believes that providing definitions for the terms “acquisition” and “installation,” in particular, is unnecessary. Many comments requesting these definitions focused on the scope of the rule and how the terms “acquisition” or “installation” could impact the parties that may be subject to a transaction review. In this final rule, the Department is addressing such concerns, to the extent consistent with E.O. 13873, by revising the definition for “party or parties to a transaction” and implementing changes in other sections that more directly address the parties that may be subject to an ICTS Transaction review.

(5) Revised definition of “Party or parties to a transaction.”

As previewed above, the Department is revising the definition of “party or parties to a transaction.” The IFR defined this term as a person engaged in an ICTS Transaction, including the person acquiring the ICTS and the person from whom the ICTS is acquired. Party or parties to a transaction include entities designed, or otherwise used with the intention, to evade or circumvent application of the Executive Order. The IFR definition excluded common carriers, except to the extent that a common carrier knew or should have known (as the term “knowledge” is defined in 15 CFR 772.1) that it was providing transportation services of ICTS to one or more of the parties to a transaction that has been prohibited in a final written determination made by the Secretary or, if permitted subject to mitigation measures, in violation of such mitigation measures.

Commenters stated that the definition of this term in the IFR was unclear in part because it included many undefined terms. Commenters requested that the Department narrow the scope of the definition to exclude certain groups or industries, such as telecommunications carriers and transportation entities not engaged in the direct sale or purchase of ICTS.

The revised definition of “party or parties to a transaction” in this final rule is intended to clarify the types of activities in which a person would engage to be considered a party to a transaction. Specifically, this final rule amends the definition to provide that a party to a transaction is “a person or persons engaged in an ICTS Transaction or class of ICTS Transactions, including but not limited to the following: designer, developer, provider, buyer, purchaser, seller, transferor, licensor, broker, acquiror, intermediary (including consignee), and end user.” The new definition retains the existing exclusion for common carriers who operate without knowledge that they are providing transportation services of ICTS in connection with an ICTS Transaction that is prohibited or in violation of mitigation measures.

These changes are consistent with the reality that many of the risks related to ICTS Transactions result from the fact that the designer, developer, manufacturer, or supplier of the ICTS is owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary. This change also recognizes that, as described in the IFR and E.O. 13873, regardless of who receives the ICTS, it is possible that a single ICTS provider or class of ICTS designed, developed, manufactured, or supplied by a person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary poses an undue or unacceptable risk to the United States or to U.S. persons. The change to the definition of “party or parties to a transaction,” in combination with changes to §§ 791.105 and 791.109 described below, is intended to better describe the parties the Department expects to identify in, and provide specific notice of, Initial and Final Determinations. These are the parties that have the greatest ability to control or address the risks identified in an Initial Determination, and therefore are the most appropriate parties for the Department's focus.

Nevertheless, the Department is not precluded from notifying the public at large or a targeted group of consumers of an Initial Determination, though it expects to do so only when an ICTS Transaction or party or parties providing ICTS present a national security risk that the Department believes must be addressed immediately. Notably, these changes preserve parties' ability to provide information to the Department about ICTS Transactions in which they engage.

(6) Definition of “Person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.”

The Department is making clarifying edits to the definition of “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.” Many commenters requested that the Department revise or clarify the definition, or the terms within the definition, of “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” noting the potential breadth of entities covered by the definition.

Commenters specifically requested that the Department remove from the definition the language, “any corporation, partnership, association, or other organization organized under the laws of a nation-state controlled by a foreign adversary” because it could be construed to include U.S. companies' non-U.S. subsidiaries or operations located in foreign adversary countries. Commenters believed such a reading could cover intra-company transactions, and they did not view such subsidiaries and operations as posing any risk to U.S. national security or to the safety and security of U.S. persons.

This final rule retains the concept that an entity organized under the laws of a country controlled by a foreign adversary may be a person who is “owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.” The Department understands commenters' concerns that U.S. companies' subsidiaries or operations located in foreign adversary countries may be considered subject to the jurisdiction or direction of a foreign adversary merely because of their location. However, the Department notes that the location of a U.S. entity's foreign subsidiary in the jurisdiction of a foreign adversary could pose a risk in some circumstances because the subsidiary might be required to comply with the rules, laws, or other requirements of that foreign adversary.

The Department believes that these commenters' concerns are addressed by the Department's procedures that require that the Secretary assess whether an ICTS Transaction falls within the scope of § 791.3(a) and § 791.103 before issuing an Initial Determination in connection with a transaction review. If the requirements of § 791.3(a) are met, the Secretary then assesses whether the ICTS Transaction:

• Involves ICTS designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary; and

• Poses an undue or unacceptable risk under § 791.103.

The Department emphasizes that a foreign subsidiary's ICTS Transactions with its U.S. parent would be subject to further review only if those transactions present undue or unacceptable risks as identified in E.O. 13873 and under the criteria of § 791.103(c).

Other commenters expressed concern about the difficulty associated with determining whether a person is “directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in majority part by a foreign adversary.” Some questioned, for example, whether an ICTS Transaction by a U.S. citizen who resides in a foreign adversary country could be subject to review, or whether employing individual nationals of a foreign adversary country might make a U.S. company or its foreign subsidiaries “subject to the jurisdiction or direction of a foreign adversary.” These factors, commenters argued, could significantly impact the business models and outcomes for U.S. entities that conduct business in foreign adversary countries.

The Department is revising the definition to clarify that a U.S. citizen or permanent resident would not be considered a “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” merely due to dual citizenship, or residency in a country controlled by a foreign adversary. Moreover, the Department will carefully review particular ICTS Transactions connected to “persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” that may pose an undue or unacceptable risk as identified in E.O. 13873 to account for the unique operations and risks specific to foreign adversary activities. The Department notes that if the Secretary finds as part of the initial review of a potential ICTS Transaction that it does not involve “ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” the transaction would no longer be under review. Therefore, absent other factors, mere participation in an ICTS Transaction by a U.S. person located in a foreign adversary or country controlled by a foreign adversary or by any individual national of a foreign adversary or country controlled by a foreign adversary would not be sufficient for the Secretary to continue a review because an ICTS Transaction must also pose an undue or unacceptable risk. For example, if a U.S. person uses a software application in a foreign adversary country, the ICTS Transaction would not necessarily be subject to review under the regulation if the software application was designed, developed, manufactured or supplied by a company that is not owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary. Additionally, even if the software application were developed by a company that is owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, the Department would not continue its review of an ICTS Transaction if it determined that the transaction does not pose an undue or unacceptable risk to the United States or U.S. persons as described in E.O. 13873. However, if a U.S. person designed, developed, manufactured, or supplied a software application in collaboration with a foreign adversary-controlled entity and the Department found that the acquisition, importation, transfer, installation, dealing in, or use of the software application may pose an undue or unacceptable risk, ICTS Transactions involving that software application would be subject to review under these regulations.

Regarding commenters' concern that a U.S. entity or foreign subsidiary of a U.S. entity might be considered “owned by, controlled by, or subject to the jurisdiction or direction of” a foreign adversary because it employs nationals of a foreign adversary country, the Department notes that, absent other indicia of ownership, control, or influence by a foreign adversary, solely employing nationals of a foreign adversary country would not independently trigger an ICTS Transaction review.

Several commenters noted that the IFR's definition of “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” was overbroad and did not meaningfully clarify which ICTS Transactions might be subject to review. Based on this feedback, the Department has revised the definition of “person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” in this final rule to align with its original intent for the term's meaning. Specifically, the Department makes three clarifying edits to the definition. First, as noted above, the definition now makes clear that an individual would not be considered controlled by or subject to the jurisdiction of a foreign adversary solely due to their status as a citizen or resident of a foreign adversary or a country controlled by a foreign adversary, if that individual is also a U.S. citizen or permanent resident. Second, the Department clarifies that an entity may be subject to the jurisdiction of a foreign adversary if it has a principal place of business in, is headquartered in, is incorporated in, or is otherwise organized under the laws of a foreign adversary or a country controlled by a foreign adversary. Third, the definition now specifies that a person may be owned or controlled by a foreign adversary if another person that is owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary possesses the direct or indirect power, whether or not exercised, through the ownership of a majority or a dominant minority of the total outstanding voting interest in an entity, board representation, proxy voting, a special share, contractual arrangements, formal or informal arrangements to act in concert, or other means, to determine, direct, or decide important matters affecting an entity. This change more directly reflects the Department's intent that, for example, foreign subsidiaries of U.S. companies or U.S. subsidiaries of foreign companies may in some cases be considered owned or controlled by a foreign adversary.

These edits address public comments expressing that the IFR's definition was confusing and unclear regarding the individuals or entities that might be “owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary.” The revisions also better align the definition with the type of persons that the Department would consider to be “owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary,” though the Department notes that a determination of the persons who meet this definition will be fact specific and made on a case-by-case basis.

(7) Definition of “Appropriate agency heads.”

The Department received no comments on the definition of “appropriate agency heads” in the interim final rule but is revising the term in this final rule to make it clear that “appropriate agency heads” may refer to the designees of the agency heads listed in E.O. 13873. This addition is meant to clarify which officials may participate in the interagency notification and consultation processes described in §§ 791.104 and 791.108. This revision does not imply that agency heads must delegate any authority under E.O. 13873, but reflects current practice and will have no practical effect on the public or parties to an ICTS Transaction under review.

(8) Definition of “Covered ICTS Transaction.”

This final rule adds a definition for the new term “Covered ICTS Transaction,” which was not defined in the IFR. This rule employs this new term to distinguish between transactions involving ICTS generally and ICTS Transactions that meet the criteria set forth in § 791.3. The new term “Covered ICTS Transaction” does not implement any substantive changes from the interim final rule, but is intended to clarify when the regulatory text refers to an ICTS Transaction, generally, and an ICTS Transaction that meets the criteria described in § 791.3 of the rule. For additional discussion of comments about defining terms used in § 791.3, see the preamble section below related to Section 791.3 Scope of Covered ICTS Transactions.

(9) Definition of “Secretary.”

The Department is revising the definition of “Secretary” to identify the Under Secretary of Commerce for Industry and Security and the Executive Director of the Office of Information and Communications Technology and Services (OICTS) as designees to whom the Secretary may delegate authority under this final rule. Section 2(c) of E.O. 13873 permits the Secretary to redelegate within the Department the authority conferred on the Secretary pursuant to the E.O. Similar to the Department's revision of the term “appropriate agency heads,” this change reflects current practice and is meant to clarify which officials within the Department might be designated by the Secretary to take actions described in the regulation. This revision also addresses a question from commenters about which office within the Department will be primarily responsible for carrying out activities outlined in this final rule.

(10) Definition of “United States person.”

This final rule adds “any person in the United States” to the definition of “United States person” to correct an inadvertent omission in the IFR. E.O. 13873 specifically defines the term “United States person” to mean “any United States citizen, permanent resident alien, entity organized under the laws of the United States or any other jurisdiction within the United States (including foreign branches), or any person in the United States.” This addition does not change the Department's practice, but it is intended to completely align the regulatory definition with the definition in E.O. 13873. Adding “or any person in the United States” ensures that persons who are not citizens or permanent resident aliens, but who are physically located in the United States, are considered “United States persons” as intended by E.O. 13873.

The Department received many comments relating to the scope of the transactions covered by the interim final rule. Most of these commenters argued that the scope was too broad or not clearly defined, and commenters suggested that the rule could create burdens affecting technologies and ICTS Transactions that benefit the United States and chill routine and beneficial economic activity. Commenters also requested that the Department limit the scope of transactions covered by the rule to exclude activities already under review pursuant to existing regulations, and that the rule expand the existing exception for transactions reviewed by the Committee on Foreign Investment in the United States (CFIUS) to also include any ICTS Transaction by an individual or entity subject to a CFIUS mitigation agreement. Other commenters asked the Department to adopt a specific methodology for risk and threat analyses, and to review only those transactions with a “strong nexus” to the United States and that have the potential to have “significant” impacts on U.S. networks and infrastructure.

In this final rule, the Department declines to narrow the scope of transactions covered by the rule because it believes that the existing scope is appropriate and necessary to address undue or unacceptable risks as identified in E.O. 13873. E.O. 13873 describes the risk that certain ICTS Transactions could be used by malicious foreign actors to commit industrial or economic espionage, or that the unrestricted acquisition or use in the United States of ICTS with a foreign adversary nexus could be leveraged by foreign adversaries to find, create, and exploit vulnerabilities and undermine the resiliency of U.S. critical infrastructure or the safety and security of U.S. persons.

To protect U.S. ICTS supply chains from risks posed by malicious foreign actors' ICTS, it is necessary that the scope of transactions covered by this final rule encompass critical and emerging technologies and industries throughout the ICTS supply chain. The risks posed by ICTS Transactions are not always correlated with the transaction's scale and exist regardless of where or when the ICTS enters into the ICTS supply chain. The list of technologies in § 791.3 allows the Department to effectively address these risks by targeting different points of entry into the ICTS supply chain. The broad scope of § 791.3 gives the Department discretion to properly pinpoint and mitigate risks wherever they appear in the supply chain. The ICTS Transaction review process outlined in this final rule is consistent with the goals of E.O. 13873, while prioritizing the ICTS Transactions that pose the highest degree of undue or unacceptable risk, as identified in E.O. 13873, and minimizing the impact to digital and physical trade and commerce.

The Department notes that its reviews of transactions under the IFR have thus far been limited to the review of transactions involving all ICTS produced or provided by a single entity, rather than individual transactions between the entity and other parties, because the provision of ICTS by that entity was the basis of the undue or unacceptable risks. Therefore, the broad scope of the rule does not create undue burden but allows the Department to review ICTS Transactions to determine if an ICTS Transaction is in scope, pinpoint the source of the undue or unacceptable risk, and take action in the most efficient way to avoid tangential or unintended impacts on the U.S. economy or the ICTS supply chain.

In response to comments related to the CFIUS review exception, this final rule simplifies the language in § 791.3(b)(2) and consolidates the previous exception in § 791.3(b) and (c) of the IFR for CFIUS reviews, while preserving the safe harbor granted by CFIUS pursuant to its statute and regulations related to reviews of foreign investments into U.S. businesses and certain real estate transactions by foreign persons. ICTS Transaction reviews are limited to ICTS or classes of ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of one of the listed foreign adversaries, and the review of ICTS Transactions focuses on the undue or unacceptable risk posed by those ICTS Transactions. These reviews differ in scope from the focus on national security risk arising from certain transactions by foreign persons with or involving U.S. businesses or real estate under CFIUS. The revised provision in § 791.3(b)(2) clarifies that the Department will not review an ICTS Transaction that is also a covered transaction or covered real estate transaction under review, investigation, or assessment by CFIUS, or for which all action has concluded under section 721 of the Defense Production Act of 1950, as amended. This approach avoids duplicative reviews while eliminating potential gaps in mechanisms to review or address undue or unacceptable risks posed by transactions that are not or have not been in the CFIUS process. For the exception to apply, the ICTS Transaction must be the same transaction that CFIUS has determined is a covered transaction or covered real estate transaction under its authorities; a separate transaction, even if involving the same transaction parties subject to a CFIUS mitigation agreement, would not be subject to this exception. The mere fact that an individual or entity has participated in a CFIUS filing or is a party to a CFIUS mitigation agreement would not restrict the Secretary in reviewing any ICTS Transaction to which the individual or entity is party if the ICTS Transaction is distinct from the CFIUS transaction giving rise to a mitigation agreement. Otherwise, a foreign person that has obtained safe harbor for its investment into a U.S. company could then use that company to conduct or engage in malicious activities using ICTS Transactions that were not reviewed by CFIUS. Where CFIUS does not provide safe harbor with regard to the specific ICTS Transaction, the Department may review that ICTS Transaction for potential risks.

Several commenters requested that the Department implement additional exemptions or exclusions so that specific industries or technologies would not be subject to review under the rule. One commenter requested that arrangements for interconnection and the exchange of communications traffic (such as through fiberoptic cables) be exempted from the rule, while another noted that the rule should not be limited to any particular segment of the optical fiber communications industry. Other commenters sought exclusions in the rule for transactions involving information in the public domain, data transmission by telecommunication carriers on behalf of the general public, or technical research or standards development efforts. Others suggested express safe harbor provisions for transportation companies like common carriers that merely transport ICTS, or safe harbors to create incentives to achieve ICTS supply chain security. Finally, several commenters requested clarification of the statement in the preamble of the IFR that ICTS Transactions solely involving personal hardware devices would not warrant particular scrutiny.

This final rule does not adopt any further exceptions or exclusions to the ICTS Transactions that would fall under § 791.3 of the rule. The Department notes that § 791.3 now refines the ICTS Transactions subject to further review by listing broad technology categories to indicate that the Department is concerned about ICTS Transactions involving information and communications hardware and software; ICTS integral to data hosting, computing or storage that uses, processes or retains sensitive personal data; connected software applications; ICTS integral to critical infrastructure; and ICTS integral to critical and emerging technologies. Section 791.3 is tailored to ensure that the regulations address risks posed by transactions involving the most critical elements and functions of ICTS. Therefore, the rule does not categorically exclude technologies, such as software operating on personal devices listed in E.O. 14034. In addition, the Department believes that the broad technology categories now included in § 791.3 address risks involving ICTS Transactions in the fiber communications and other industries by not implying that technologies that are not specifically listed as part of a category are excluded from possible review. The Department remains open to considering exclusions if further experience with the rule demonstrates that certain types of ICTS Transactions do not pose an undue or unacceptable risk as described in E.O. 13873 to national security, critical infrastructure, or U.S. persons.

Although this final rule does not implement suggestions to revise § 791.3 to exclude additional ICTS Transactions from the scope of transactions subject to review for prohibition or mitigation determinations, the Department has, in response to comments, simplified the list of technologies in § 791.3. In addition to improving clarity about the types of ICTS Transactions the Department may review, this final rule revises the list to focus on ICTS Transactions most likely to pose undue or unacceptable risks due to their foreign adversary nexus. The Department describes below additional changes in § 791.3 affecting the scope of transactions subject to review for prohibition or mitigation, broken out to provide clarity on each change and its corresponding rationale.

This final rule removes the qualification that ICTS Transactions that involve the use, processing, or retention of sensitive personal data must include the data of more than one million U.S. persons to be subject to review. Additionally, this final rule removes the one-million-unit sales minimum for internet-enabled sensors, webcams, or other end-point surveillance or monitoring devices; routers, modems, or any other home networking device; or drones or other unmanned aerial systems. This final rule also removes the qualification that software designed primarily for connecting with and communicating via the internet be in use by over one million people to be considered ICTS for the purposes of the rule. The Department did not receive many comments regarding these provisions, except to note that it is common for multinational companies to collect and retain data on more than one million individuals and to request an explanation of how the Department would calculate whether a transaction met the numeric threshold.

The Department is removing these thresholds in § 791.3 because the use of a threshold to review an ICTS Transaction is not necessary. The numerical threshold served as a proxy for “undue or unacceptable risk” under the rationale that only transactions involving a large number of sales or users would constitute a true national security risk. However, numerical thresholds do not necessarily correlate with the risks presented by ICTS Transactions involving sensitive personal data. It is possible, for example, that an ICTS Transaction that results in the storage, retention, or use of sensitive personal data of relatively few U.S. persons (such as persons with restricted access to sensitive governmental information) could result in significant risks to U.S. national security or to the safety and security of U.S. persons. Furthermore, as one commenter pointed out; there is nothing inherently riskier about collecting, storing, or retaining data on a specific number of people, or of a certain number of sales. Put another way, the risks presented by ICTS Transactions involving sensitive personal data relate to the type of data collected and the identity of persons from whom that data is collected, rather than the volume of transactions. Moreover, the Secretary, with other appropriate agency heads, is separately tasked with evaluating the national security risk. That evaluation may include, as one factor, the number of sales or users.

Limiting review of transactions to only those that involve a certain number of users, units, or sales, would be contrary to the objective articulated in E.O. 13873 to reduce, remove, or minimize the risks posed by certain ICTS Transactions, as it would fail to address significant risks posed by ICTS Transactions that fall below the existing thresholds, especially where those ICTS Transactions involve sensitive personal data. Furthermore, such thresholds could result in strategic circumventive behavior by malicious foreign actors who might attempt to limit ICTS Transactions involving sensitive personal data or otherwise posing risks under a particular threshold so as to evade review. For these reasons, the Department is eliminating the thresholds referencing one million persons, units, or sales.

In addition to the changes noted above, the Department is consolidating the examples of software applications from what was § 791.3(a)(4)(v)(A) through (D) into revised § 791.3(a)(4)(iii) to clarify that desktop, mobile, gaming, and web-based applications are all non-exclusive examples of connected software applications that are subject to this final rule, so as to not suggest that those applications are distinct from connected software applications. This revision is consistent with E.O. 14034 but is not a substantive change from the interim final rule.

Several commenters requested that the Department clarify the meaning of certain phrases used in § 791.3. First, some commenters proposed that the Department define the phrase “any person subject to the jurisdiction of the United States” in § 791.3(a)(1) to have the same meaning as “United States person,” which they argued would clarify the status of foreign subsidiaries of U.S. companies. Alternatively, commenters suggested the term be defined to include only transactions in which the ICTS enters the United States or is used in the United States.

This final rule uses the phrase “person subject to the jurisdiction of the United States” in § 791.3(a)(1) because that is the phrase used in E.O. 13873. Specifically, section 1 of the E.O. describes the scope of conduct subject to prohibition as transactions “by any person, or with respect to any property, subject to the jurisdiction of the United States.” Therefore, this final rule does not change the phrase “person subject to the jurisdiction of the United States” in § 791.3(a)(1), which is meant to reflect the language and the requirements of E.O. 13873, to remain consistent with the Department's authorities under E.O. 13873.

Additionally, some commenters requested an explanation of the meaning of the term “integral” as it was used in § 791.3(a)(4)(ii), (iii), and (vi). However, like the IFR, this final rule uses “integral” in § 791.3 consistent with the word's common meaning as something that is important or necessary for the operation of ICTS. The Department believes it is not necessary to further define the term “integral” beyond its commonly understood meaning, because any such attempt might add to rather than reduce confusion and might widen or narrow the scope of the rule in ways detrimental to the Department's ability to identify and address risks.

Finally, a commenter asked the Department to define the term “interest” in § 791.3(a)(2). That provision states that the rule applies to ICTS Transactions that involve “any property in which any foreign country or a national thereof has an interest (including through an interest in a contract for the provision of the technology or service).” The commenter stated that, without a definition, the term “interest” could make ICTS Transactions in which a foreign person has only a tangential, non-controlling interest subject to Departmental review. However, unless an ICTS Transaction also involves “ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” under § 791.103(b), a foreign person's tangential interest in property alone would not be sufficient to warrant review by the Secretary. The Department does not provide a general definition for the term “interest.” To explain the term as it is used in section 791.3, the Department is adding language in § 791.3(a)(2) to clarify that the Secretary may review any ICTS Transactions that involve any property in which a foreign national or foreign country has any direct or indirect interest of any nature whatsoever. In the context of § 791.3, the term “interest” includes any interest whatsoever, direct or indirect. This is similar to the term “interest” as defined by the Office of Foreign Assets Control, which also include any interest whatsoever, direct or indirect.

One commenter requested that the Department provide guidance on the sectors that are included in the term “critical infrastructure” and suggested that the Department draw on definitions in CFIUS regulations for this definition. Like the IFR, this final rule continues to use an Executive Office of the President publication to identify critical infrastructure sectors. The IFR considered “critical infrastructure” sectors as those identified in Presidential Policy Directive 21—Critical Infrastructure Security and Resilience (PPD-21), and the final rule continues to identify the almost identical sectors that are listed in National Security Memorandum 22 on Critical Infrastructure Security and Resilience (NSM-22). However, whereas the IFR referred to the sectors designated as critical infrastructure by PPD-21, § 791.3 of this final rule specifically lists the individual critical infrastructure sectors identified in NSM-22 in § 791.3(a)(4)(iv) to provide additional clarity to the public. NSM-22 includes subsectors of the designated critical infrastructure sectors, and the Department may consider revising the list in § 791.3(a)(4)(iv) to conform to future changes related to critical infrastructure sectors identified in NSM-22. A further description of these sectors can be found here: https://www.whitehouse.gov/briefing-room/presidential-actions/2024/04/30/national-security-memorandum-on-critical-infrastructure-security-and-resilience/. Additional details on critical infrastructure sectors are also available at the U.S. Department of Homeland Security's Cybersecurity & Infrastructure Security Agency's website, https://www.cisa.gov/. NSM-22 uses a similar definition of “critical infrastructure” as CFIUS, though the Department is not adopting the commenter's suggestion to use the definition of the term “critical infrastructure” directly from CFIUS regulations. By listing the sixteen critical infrastructure sectors identified in NSM-22, the Department provides guidance to stakeholders about which sectors are of particular concern to the Department and represent the Department's highest priority.

Certain commenters expressed concern that specific critical and emerging technology categories in § 791.3 were too broad, and recommended that only facets of particular critical and emerging technologies should be specifically identified. In this final rule, the Department is not narrowing the scope of specific critical and emerging technologies but notes that the primary concern is with ICTS Transactions that pose undue or unacceptable risks related to critical and emerging technologies, as opposed to critical and emerging technology in general. The Department is amending the list of critical and emerging technologies in § 791.3(a)(4)(v) to indicate that the Department is not solely concerned about artificial intelligence and machine learning; quantum key distribution; quantum computing; drones; autonomous systems; or advanced robotics. Rather, the Department is concerned about potential situations where ICTS Transactions involving critical and emerging technologies with a foreign adversary nexus may pose undue or unacceptable risks to U.S. national and economic security. While quantum information and enabling technologies, artificial intelligence, autonomous systems, advanced robotics, and drones remain in scope, the critical and emerging technology list now includes eleven technology categories to reflect technological advancements and changes in the risk landscape since the Department issued the IFR. The list of eleven technologies is based on a comparison of common technologies between the 2023 United States Government National Standards Strategy for Critical and Emerging Technology and the White House's Office of Science and Technology Policy 2024 list of Critical and Emerging Technologies.

Under § 791.3, the regulations apply to ICTS Transactions that were initiated, pending, or completed on or after January 19, 2021. Several commenters were concerned that an investigation could require parties to divest entities or “unwind” long closed transactions. These commenters asserted that review of closed transactions could increase uncertainty for industry, disrupt ongoing business relationships, and deter U.S. innovation and technology investment.

Some commenters raised concerns about the retroactive application of the regulations to services under contract prior to January 19, 2021. A common example cited by commenters was the potential investigation of a transaction involving services provided under a purchase order or statement of work pursuant to a master service agreement entered by the parties prior to January 19, 2021. Commenters were concerned that the Department's review could disrupt the underlying service contract and requested that such arrangements be excluded from review.

The Department reiterates that this final rule does not apply retroactively to transactions that were completed prior to January 19, 2021. Nevertheless, under this final rule, the Department may review ICTS Transactions initiated, pending, or completed on or after January 19, 2021, even if they are related to a contractual or other agreement established prior to January 19, 2021. While the regulations could change expectations about how parties' multi-year arrangements would operate relative to before the rule took effect, the regulations nevertheless only apply to ICTS Transactions initiated, pending, or completed on or after January 19, 2021.

To clarify, using an example provided by commenters: ICTS obtained using a purchase order dated on or after January 19, 2021, may be subject to review by the Secretary, even if an agreement regarding the provision of such ICTS was established prior to the purchase order date. This is because the provision of ICTS after January 19, 2021, is considered a new ICTS Transaction that is distinct from the underlying contract. If reviews were limited to only transactions with no connection to business arrangements entered into prior to January 19, 2021 the Department would be prevented from examining and mitigating or prohibiting ongoing risks arising from the current provision of ICTS. Thus, like the IFR, this final rule provides that new activity—for example, provision of ICTS, service updates, or operations—under contracts that existed on or prior to January 19, 2021, constitute new ICTS Transactions that may be subject to review.

The Department's experience to date has involved reviews focused on systemic risks posed by classes of ICTS Transactions involving a particular ICTS provider, rather than risks posed by individual ICTS Transactions. The risks arising from such ICTS Transactions exist regardless of when a contract may have been entered into, and in fact the risks might persist because of such contracts. Therefore, under this final rule, the Department may review ICTS Transactions that occur after January 19, 2021, even if they occur pursuant to a contract or agreement entered into prior to that date.

Some commenters explained that—even for contracts initially entered after January 19, 2021—an investigation initiated by the Department several years after an arrangement's effective date could require the termination of long-settled business relationships. These commenters requested that the Department establish a statute of limitations of sorts, establishing a time limit beyond which the Department could not review an ICTS Transaction. However, the Department's reviews are focused on the timely elimination or mitigation of undue or unacceptable risks as identified in E.O. 13873, and changed circumstances over time may affect the risks posed by a closed transaction. Therefore, this final rule does not establish a limitations period separate from the statute of limitations for violations of IEEPA because the Department's experience with the procedures set out in the regulations has not suggested that implementing a fixed limitations period is necessary.

Some commenters raised concerns about the process in § 791.4 by which the Secretary determines foreign adversaries. These commenters argued that the process is unclear and could potentially be overly broad. Some commentors requested that the Department provide additional information about the criteria used to determine foreign adversaries, publish unclassified information supporting the Secretary's determination of foreign adversaries, or provide prior notice before any revisions to the Secretary's determination of foreign adversaries under § 791.4 take effect. Others requested that the Secretary focus on specific entities or persons rather than foreign governments, and another commenter requested that the Department exclude governments with whom the United States has a defense treaty alliance from designation as a foreign adversary. The commenters stated that these suggested revisions would avoid disproportionate responses to potential risks and would allow stakeholders time to comply with new regulatory requirements.

This final rule does not revise or amend the provisions on determinations of foreign adversaries, nor is the Department proposing specific procedures for such determinations. Although the Department appreciates commenters' desire for clarity about the determination process, a requirement for the Secretary to follow specific procedures in making a determination could undermine the security and safety of the United States, as a foreign adversary determination indicates that those entities pose significant risks to U.S. national security. Nonetheless, any new foreign adversary determination would apply only to actions taken after such a determination.

Regarding commenters' request that certain governments be excluded from designation as foreign adversaries, such as those with whom the United States has a defensive treaty alliance, or that the Department not designate entire governments as foreign adversaries, the Department notes two points. First, that the definition of “foreign adversary” in E.O. 13873 includes foreign governments and foreign non-government persons and is not subject to revision by this final rule. Second, E.O. 13873 grants the Secretary discretion to consider all aspects of entities before determining whether they are a “foreign adversary” that should be listed in the regulation. The Department declines to categorically exclude certain types of entities from possible foreign adversary determinations because doing so could limit the Department's ability to address future risks facing the ICTS supply chain.

Although this final rule does not exclude any foreign governments or foreign non-government persons from § 791.4 in response to comments, it does correct the definition to include the “Macau Special Administrative Region” in § 791.4(a)(1) within the People's Republic of China in the list of foreign adversaries. Section 791.4(a)(1) is updated to read “The People's Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region (China).” Macau is a part of the People's Republic of China, just as is Hong Kong, and should be included in the definition to remove any uncertainty as to the geographic scope of the term.

Several commenters expressed concerns that the Department may initiate an ICTS Transaction review solely on the basis of a referral of information from industry, and that accepting such referrals may encourage anti-competitive behavior. In response, the Department has updated § 791.100(a)(8) and (9) in this final rule to distinguish between a referral from another U.S. Government agency and information from private industry provided voluntarily. This final rule uses the term “referral” to mean information from or a recommendation made by other U.S. Government agencies to the Department. In some cases, information provided by an industry entity may assist the Department in assessing an ICTS Transaction and the potential risks such transactions may pose to U.S. national security or U.S. persons, and the Department would not reject that information. Even so, the Department emphasizes it does not encourage abuse of its processes for anti-competitive purposes. As with all information received by the Department, the Department will carefully vet information provided voluntarily by private industry pursuant to § 791.100(a)(9). This information will be treated holistically and will be used in the same ways as other information that is generally available to the U.S. Government.

Additionally, some commenters requested further explanation of how the Secretary will assess whether an ICTS Transaction involves ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary under § 791.100(c). Specifically, commenters requested that the Department define “ties between the person—including its officers, directors or similar officials, employees, consultants, or contractors—and a foreign adversary,” in § 791.100(c)(2). Some suggested that “ties” be defined to mean that a person is a business partner, close associate, or family member of a foreign adversary. The Department believes that § 791.100(c) currently captures the relationships that the Secretary may consider when assessing whether a transaction involves ICTS designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary and that limiting the Secretary's consideration as suggested by commenters could hinder the Secretary's ability to appropriately respond to risks in a given case.

The IFR specified that “persons involved in an ICTS Transaction” may be required to furnish information under oath. In this final rule, the Department updates § 791.101 to note that, pursuant to the authority granted to the Department by E.O. 13873 and IEEPA, the Department may require any person to furnish, under oath, complete information relative to a transaction involving ICTS. This revision is made to better reflect the authorities granted to the Department under IEEPA and E.O. 13873.

While generally supportive of the interim final rule's confidentiality provisions, a few commenters stressed that confidential information provided to the Department should not be disclosed publicly. Other commenters requested that the rule clearly establish the obligations of any third-party contractors to protect confidential information.

The Department appreciates these comments and the need to protect business confidential information or other sensitive information from disclosure, particularly as such information may be necessary for the Department to assess potential or actual risks related to ICTS Transactions or classes of ICTS Transactions. The Department believes that these confidentiality concerns are addressed by the protections for such information already afforded in § 791.102, along with the applicable disclosure exemptions under the Freedom of Information Act and criminal penalties for Federal employees who disclose business confidential information (18 U.S.C. 1905).

This final rule implements a few changes to § 791.102. First, it removes duplication within § 791.102(b) to make clear that all potential disclosures pursuant to the regulations of information or documentary materials that are not otherwise publicly or commercially available would be “subject to appropriate confidentiality and classification requirements.” It also revises § 791.102(b)(4), correcting an inadvertent typographical error in the IFR to permit the Secretary to disclose confidential information in response to “a request by” a governmental entity or a foreign government entity of a U.S. ally or partner, but only to the extent such disclosure is necessary for national security purposes.

Second, this final rule amends § 791.102(b)(6) to provide that, when otherwise permitted by law, the Secretary may disclose information or documentary materials that are not otherwise publicly or commercially available if necessary to prevent imminent harm to U.S. national security or the security and safety of U.S. persons. The Department anticipates that disclosure of information under this paragraph would only occur in the exceptional case where public or commercially available information would not suffice to prevent an imminent and specifically identified harm.

The Department received several comments about the Secretary's review of ICTS Transactions under § 791.103. Commenters generally raised concerns about the breadth of these provisions and sought greater clarity in the procedures the Secretary will follow when determining whether to initiate review of an ICTS Transaction. One commenter suggested that the initial review of the risks posed by an ICTS Transaction should include an analysis of the potential costs that would be required to remediate any identified risks. Several commenters questioned the circumstances under which the Secretary should be able to consider referrals for review of ICTS Transactions or classes of ICTS Transactions based on information received from private parties due to the potential for anti-competitive behavior. Those commenters provided multiple suggestions, including to eliminate the option for the Secretary to consider a transaction based on information submitted by private parties, implementation of a process for entities to review and respond to information from private parties that prompts review of a transaction, or a requirement that any private party submitting information that prompts a review also provide a sworn affirmation that the information supplied is true and correct.

As noted above in the discussion of Section 791.100 “Information Available to the Secretary,” the Department will consider all available information when reviewing an ICTS Transaction, including information received from private industry. The Secretary critically assesses all information received during a transaction review. Specifically, as outlined in § 791.103, the Secretary will assess whether an ICTS Transaction falls within the scope described in § 791.3, involves ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary as described in § 791.100(c), and poses an undue or unacceptable risk as described in §§ 791.100(d) and 791.103(c).

In response to commenters' concerns about anti-competitive conduct in connection with ICTS Transaction reviews initiated following the receipt of information from industry, as discussed further below, this final rule amends § 791.105 to clarify that the Secretary will provide a party or parties to a transaction with information regarding the factual basis supporting the Secretary's Initial Determination. Section 791.107 affords parties an opportunity to respond to the Initial Determination and identify potential errors in that document or argue that the circumstances leading to the Initial Determination no longer apply, prior to the Secretary taking any final action. Accordingly, pursuant to § 791.107, if the parties believe that information used for the Initial Determination is incorrect, the parties can correct that information during the response period. Consistent with the approach outlined above to address commenters' concerns about anti-competitive acts by parties, the Department expects that § 791.200, which authorizes penalties for, among other acts, submitting false or fraudulent statements to the Department, will deter submissions of false information for anti-competitive purposes.

This final rule also includes several procedural changes to § 791.103. First, this final rule revises § 791.103(a) to clarify that the Secretary has the discretion to initiate review of an ICTS Transaction after considering any of the information described in § 791.100(a), including referrals from other U.S. Government agencies. Section 791.103(b) specifies that the Secretary will make determinations during this review about whether a transaction is a Covered ICTS Transaction as described in § 791.3, involves ICTS that is designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary as described in § 791.100(c), and poses an undue or unacceptable risk as identified in E.O. 13873 and described in §§ 791.100(d) and 791.103(c). In assessing whether an ICTS Transaction poses an undue or unacceptable risk, the Secretary may evaluate the criteria listed in § 791.103(c) and the materials described in § 791.100(d). These revisions to § 791.103(a) and (b) in this final rule do not reflect substantive changes from the IFR, but the revisions clarify that, consistent with E.O. 13873, the Secretary may commence a review on the Secretary's own initiative or following a referral from another U.S. Government agency.

In addition, this final rule revises § 791.103(c) regarding the criteria the Secretary may consider when evaluating whether a Covered ICTS Transaction poses an undue or unacceptable risk. To provide more detail and to acknowledge the potential economic impacts of actions under this rule, this final rule amends § 791.103(c)(7), which previously specified that the Secretary would consider the “nature of the vulnerability implicated by the ICTS Transaction,” to state that the Secretary will consider the “nature and characteristics of the customer base, business relationships, and operating locations of the parties to the Covered ICTS Transaction.” Additionally, to streamline criteria that the Secretary will use to assess undue or unacceptable risks posed by covered ICTS Transactions, § 791.103(c) now combines certain aspects of the criteria for evaluating connected software applications listed in E.O. 14034 with the criteria for all other types of ICTS Transactions, when applicable. Under this final rule, the criteria previously listed in the IFR's § 791.103(d)(1), (3), and (4) related to connected software applications are now included in § 791.103(c)(2), streamlining the regulatory text and eliminating redundancies. Specifically, for all ICTS Transactions the Secretary may evaluate the ownership, control, or management by persons subject to the jurisdiction or direction of a foreign adversary, including connections to foreign adversary military and connections to persons involved in malicious cyber activities.

The criteria that specifically apply to connected software applications are now listed under § 791.103(c)(11), and the list consists of:

• The number and sensitivity of users;

• The scope and sensitivity of data that the application collects;

• Use of the connected software application to conduct surveillance that enables espionage;

• Regular, reliable third-party auditing of the application; and

• The extent to which identified risks can be mitigated and verified.

This reorganization clarifies the factors that the Secretary may evaluate when determining whether ICTS Transactions involving connected software applications pose undue or unacceptable risks pursuant to the authority granted by E.O. 14034, and it better integrates the criteria that may be relevant to reviews of ICTS Transactions involving connected software applications as well as to reviews of other ICTS Transactions.

Several commenters expressed uncertainty about the interagency consultation requirements in the IFR. Some suggested that the Department should further explain the meaning of “interagency consultation” mentioned in §§ 791.104 and 791.108, noting that the IFR did not establish a formal consultative process. Other commenters recommended that the rule specifically reference other agency or executive department heads for inclusion in the consultation process to avoid duplicative reviews of ICTS Transactions, particularly in the context of government procurement. Commenters also requested a definition of the term “consultation” to ensure it is more than a “mere notification” to other agencies, and that it require an interagency vote and interagency consensus on whether an ICTS Transaction is subject to the rule prior to elevating any disagreement to the President. Commenters argued that consensus-seeking would ensure a “whole of government” approach to addressing ICTS Transactions and avoid duplicate or conflicting actions taken by the agencies tasked with securing ICTS. In response, this final rule makes several changes to clarify the nature of the consultations with other agencies required prior to Initial Determinations and Final Determinations.

Consultations between agencies can take many forms and may have different meanings or requirements in specific contexts. Consultation may be “formal,” or “informal,” and result in a memorandum of agreement between agencies, written decisions, or more informal understandings or discussions between agencies. The IFR required consultation in certain circumstances but did not describe what such consultation would entail. In this final rule, the Department amends the consultation provisions to better describe the types of interagency consultation required prior to the production of the Initial Determination and the issuance of the Final Determination.

This final rule amends § 791.104 (Initial Determination) and § 791.108 (Final Determination) to clarify what is required of the Department and the appropriate agency heads during the processes prior to issuing Initial or Final Determinations. These changes are procedural in nature and will have a limited impact on the public or the parties to a transaction under review. The changes do not expand the list of agency heads included in the definition of “appropriate agency heads,” because the list consists of agencies specifically identified in E.O. 13873. Both the E.O. and this final rule provide that, where the Secretary determines it to be appropriate, other agency heads may be consulted, which allows for sufficient latitude to avoid redundant regulatory efforts.

This final rule amends § 791.104 to describe the Secretary's process of notifying and receiving comments from appropriate agency heads if the Secretary assesses that an ICTS Transaction meets the criteria in § 791.103. If the Secretary assesses that an ICTS Transaction meets the criteria described in § 791.103(b), as part of the consultation process the Secretary will notify the appropriate agency heads of such and provide each agency head the opportunity to submit to the Department, within 21 days, any comments in writing regarding the assessment. If an agency head does not provide written comments within that time, the Secretary may presume that the agency has no comments. Under this final rule, as under the IFR, if an agency head provides comments, the Secretary may use those comments to inform further assessment of whether the ICTS Transaction meets the criteria in § 791.103 and to inform the development of the Initial Determination issued under § 791.105. In such circumstances, if an agency head disagrees with the Secretary's assessment, the Secretary will carefully consider the agency head's position in determining how to proceed. The Department will notify appropriate agency heads of an Initial Determination at least twenty-one (21) calendar days prior to issuing and notifying a party or the parties to the Covered ICTS Transaction of the Initial Determination under § 791.105(b)(3).

E.O. 13873 does not require the Secretary to seek consensus from the appropriate agency heads prior to issuing an Initial Determination and this final rule does not add a consensus requirement to § 791.104. However, in all cases, the Secretary will carefully weigh the comments received from appropriate agency heads and will consult with the appropriate agency heads to avoid redundant regulatory efforts.

The amendments to § 791.108 in this final rule, covering the interagency consultation regarding the Final Determination, are discussed in more detail below in the discussion of Section 791.108 “Interagency Consultation on the Final Determination.”

The interim final rule established a process for the Secretary to issue an Initial Determination in § 7.105. The Department received relatively few comments addressing this section of the rule, but some commenters requested that the Department amend §§ 791.105 and 791.109(f) to strike provisions authorizing publication of the Initial Determination or Final Determination in the Federal Register , to require the Department to omit from public notices information that would reveal the identities of the parties to an ICTS Transaction, or to require party consent before publication in the Federal Register . Commenters acknowledged that the rule does not generally permit public disclosure of confidential information, but some argued that the Initial Determination and Final Determination should themselves be treated as confidential and noted that publication of the Secretary's determinations could lead to financial or reputational harm.

In consideration of the comments about publication of Initial Determinations, the Department is revising § 791.105(d) to note that the Secretary retains discretion to publish a notice of an Initial Determination—rather than the full text of an Initial Determination—in the Federal Register . The Department is committed to appropriately safeguarding confidential information in its possession and, when possible, mitigating unnecessary economic impact to parties to an ICTS Transaction. While some commenters asserted that, in all situations, Initial Determinations and Final Determinations should not be made public, the Department maintains its discretion to publish notices of Initial Determinations in the Federal Register when warranted; for example, to mitigate undue or unacceptable risks, or when an ICTS Transaction significantly impacts members of the public.

The Department disagrees with commenters who maintain that, if the Department publishes a notice of an Initial Determination in the Federal Register , the names of parties should be omitted from the notice. Because Initial Determinations do not represent final decisions, and because the Department recognizes that there may be an economic impact on parties named in those publications, the Department may choose not to publish notices of Initial Determinations in the Federal Register . However, the Department may choose to do so in certain situations, particularly when non-parties or parties that cannot be individually identified will be affected by a determination, such as when classes of ICTS Transactions are involved. The discretion to publish Initial Determinations, including the names of parties, allows the Department to address situations in which national security risks are significant or imminent and publication will assist the public, including U.S. businesses, in avoiding those risks.

In such cases, publishing a notice of an Initial Determination in the Federal Register allows for such persons to receive notice of a decision. In the circumstance in which the Department decides to publish a notice of an Initial Determination, the Department would also publish a notice of a Final Determination to inform the public of the final outcome of its review.

This final rule amends § 791.105(a) and (b) to reflect the new interagency notification procedures in § 791.104. These revisions explain that the Secretary will consider comments received from appropriate agency heads regarding the Secretary's assessment of whether an ICTS Transaction meets the criteria under § 791.103(b). However, the Secretary retains discretion to determine whether the transaction poses an undue or unacceptable risk and, therefore, the discretion to end review of an ICTS Transaction, amend the assessment, or proceed to making an Initial Determination.

This final rule also amends § 791.105(b)(1) to note that the Initial Determination will provide parties with information regarding the factual basis supporting the Secretary's decision to either prohibit an ICTS Transaction or permit the ICTS Transaction with mitigation measures. This clarification will ensure that parties receive notice of the material facts underlying the Secretary's Initial Determination and will help parties provide more specific and complete responses to the Secretary's Initial Determination under § 791.107. As discussed previously, this revision also responds to comments requesting that the rule provide parties an opportunity to respond to information that private parties submit to the Department. These changes allow for parties to review and respond to facts submitted by private parties when such information is part of the factual basis supporting an Initial Determination.

In addition, this final rule modifies § 791.105(b)(3) to clarify how the Department identifies parties to an ICTS Transaction that must be served with an Initial Determination. New § 791.105(b)(3)(i) addresses the situation in which the Department identifies a limited number of parties to a single or set of ICTS Transactions who would be served the Initial Determination. New § 791.105(b)(3)(ii) addresses situations, which the Department expects will be common, in which the Department reviews a class of ICTS Transactions involving a single person owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, as well as unidentified U.S. persons or U.S. persons whom it is not practical to identify. These situations may involve a large number of U.S. consumers, many of whom cannot be individually identified or whom it would be impractical to individually identify. In such case, individual service of the Initial Determination on every party may not be feasible or may be unnecessary or inappropriate. The unknown or unidentifiable U.S. parties in many cases will not have unique information that would affect the Final Determination or, for example, enable the Department to negotiate effective mitigation measures. New § 791.105(b)(3)(ii) therefore recognizes that seeking to notify all potential parties who have purchased or accessed ICTS that the Department deems to entail undue or unacceptable risk may not be possible or practical, nor would it help the Department to mitigate or eliminate risks associated with the ICTS.

The Department may still publish a notice of an Initial Determination in the Federal Register , pursuant to § 791.105(d), where, for example, notice would be beneficial to warn the public about an identified risk. These changes to § 791.105(b)(3) and (d) are procedural in nature. The Department will employ the method of service that is best suited to notifying the affected parties to an ICTS Transaction and provide them with an opportunity to respond to an Initial Determination.

The Department received no comments about the recordkeeping requirements in § 791.106. This final rule revises § 791.106, based on the Department's experience, to provide examples of the types of notification that require notified individuals or entities to retain records related to an ICTS Transaction, and to implement a time limit for record retention. In addition to directly notifying a person that an ICTS Transaction is under review, the Department may notify a person through other means, such as a demand for information or documents under § 791.101. Under revised § 791.106, upon receipt of this notification, a person must promptly take steps to retain records related to the identified ICTS Transaction. Revised § 791.106 also clarifies that any records that a notified person must retain in connection with an ICTS Transaction must be retained for ten years following issuance of a Final Determination unless the Final Determination specifies otherwise. Instead of retaining the interim final rule's indefinite record retention requirement, the Department intends for the ten-year time limit to reduce any costs associated with record retention pursuant to the rule. If the Department does not issue an Initial Determination to a person within ten years of providing notice that an ICTS Transaction is under review, that person can assume their recordkeeping obligation has been satisfied unless otherwise informed by the Department.

The interim final rule provided that, after being notified of an Initial Determination, parties to an ICTS Transaction would have 30 days to respond to the Initial Determination or to assert that the circumstances resulting in the Initial Determination no longer apply. Several commenters expressed concern that the time provided in § 791.107 for a party's response to the Secretary's Initial Determination was not long enough. Commenters explained that it may take a party to an ICTS Transaction longer than 30 days to respond or propose mitigation measures if the issues or business relationships identified in an Initial Determination are particularly complex. Some commenters also requested a maximum timespan for imposed mitigations, or a periodic review of the mitigation measures to determine whether they should remain in effect.

This final rule does not establish a maximum timespan for imposed mitigations because the Department continues to believe that such an across-the-board maximum would hinder the Department in fully evaluating any implemented mitigations, resulting in national security vulnerabilities. Risks will be specific to each case, and because the rule provides that the Department may negotiate mitigation measures with the parties to an ICTS Transaction, the mitigation measures (when applicable) will also be specific to each case and tailored to address the identified risks. In some cases, a mitigation measure might be appropriate for a limited time; in other cases, a limited time frame might merely delay the realization of the identified risks or even increase them. Furthermore, under § 791.6, which states that “any determinations, prohibitions, or decisions issued under this part may be amended, modified, or revoked, in whole or in part, at any time,” the Secretary is already permitted to modify mitigation measures when necessary or appropriate. Therefore, the Department believes that amending the rule as suggested by these comments is unnecessary.

However, this final rule does make several changes to the procedures governing response and mitigation in § 791.107, including some minor stylistic edits. Because 30 days may not always be sufficient time for a party to prepare a response to the Initial Determination or propose remedial steps, this final rule amends § 791.107, in response to comments, to allow an initial 30 days to respond to an Initial Determination. Additionally, § 791.107 allows parties to seek, and the Secretary to allow for good cause shown, an extension of another 30 days. In total, parties may receive up to 60 days to respond to an Initial Determination (30 days initially with a potential 30-day extension). The Secretary retains discretion to grant an extension and may consider factors such as the complexity of the ICTS Transaction under review, the severity of the risks identified in the Initial Determination, and the impact that granting an extension might have on the overall timeframe for review.

Additionally, this final rule amends § 791.107(c) to clarify that all written submissions from a party in response to an Initial Determination may not exceed 50 pages unless a party obtains prior approval from the Secretary. The Department believes that a page limit will facilitate more efficient communications between the Department and the party or parties to an ICTS Transaction. The Department also clarifies in new § 791.107(c)(3) that parties may include business confidential information in written submissions to the Department, but that any business confidential information included in a submission must be clearly and specifically identified. The clear demarcation of business confidential information in parties' submissions will help the Department be responsive to concerns raised by commenters about protecting this type of information.

In response to comments expressing uncertainty about the process the Secretary will use to consult with appropriate agency heads regarding a proposed Final Determination, this final rule amends § 791.108 to provide the public with more clarity about the procedures governing the interagency consultation on the Final Determination.

E.O. 13873 requires the Secretary to consult with appropriate agency heads when determining whether an ICTS Transaction involves ICTS designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, whether the ICTS Transaction poses an undue or unacceptable risk, and when designing or negotiating measures to mitigate the risks posed by an ICTS Transaction that would otherwise be prohibited. The IFR implemented the directive in E.O. 13873 for the Secretary to make certain determinations “in consultation” with heads of agencies by specifying in § 791.108 that the Secretary would “consult with and seek the consensus of all appropriate agency heads prior to issuing a final determination as to whether the ICTS Transaction shall be prohibited, not prohibited, or permitted pursuant to the adoption of negotiated mitigation measures.” However, as commenters noted, the IFR did not clearly explain that consensus requirement.

This final rule clarifies the requirement for the Secretary to seek the concurrence of all appropriate agency heads before issuing a Final Determination. With this final rule, the Secretary may presume concurrence if no response is received within fourteen days from one of the appropriate agency heads or the designee of appropriate agency heads. This final rule also clarifies that if an agency objects to the Final Determination, the objection must be received by the Secretary within the 14 days, and the objection must come from the agency's Deputy Secretary or equivalent level.

Under the final rule, the Secretary will consult with and seek concurrence of appropriate agency heads and will carefully consider views from the appropriate agency heads to inform a Final Determination. The Department has established procedures to ensure robust interagency participation in the process. Consultation will allow the Secretary to update Final Determinations based on interagency input.

Section 791.109 sets forth the process the Secretary will follow when issuing a Final Determination and the information that must be included in the Final Determination. Section 791.109(b) of the interim final rule required the Secretary, absent a finding that additional time is necessary, to issue a Final Determination within 180 days of accepting a referral and commencing the initial review of a Transaction. One commenter suggested that transactions should be deemed approved if the Secretary does not reach an Initial Determination or Final Determination within a fixed period, with the option for extensions under narrow and defined circumstances. This approach, the commenter argued, would reduce uncertainty for parties to an ICTS Transaction and avoid costly delays. Other commenters asserted that the 180-day limit was too long, given the fast pace of many commercial transactions.

After careful consideration, the Department believes that maintaining the interim final rule's 180-day time limit to issue a Final Determination strikes an appropriate balance between reducing potentially costly delays and ensuring the Department has sufficient time to thoroughly review ICTS Transactions. Notably, to date the Department has not delayed or sought to delay any ICTS Transactions during the pendency of an investigation. However, the Department agrees with commenters that the timeline for reviews was unclear and could create confusion because, among other things, the IFR did not specify when a review is initiated. To improve clarity, this final rule revises the 180-day time limit so that it begins when a party or parties to a transaction are served a copy of an Initial Determination pursuant to § 791.105(b)(3) and grants the Secretary sole discretion to extend this timeline.

Some commenters also requested that the Department implement a formal appeal process following issuance of a Final Determination or a mechanism to allow parties to seek reconsideration based on a change in circumstances. As discussed in the preamble to the IFR, the Department continues to believe that an administrative appeals process is unnecessary in this final rule. The Department directly engages with each party to the ICTS Transaction under review concerning the Department's finding that the party has engaged in a Covered ICTS Transaction, the Department's risk assessment, and whether the Department has initially determined that an ICTS Transaction is prohibited or permitted subject to the adoption of mitigation measures, as described in § 791.107. Each party has an opportunity to respond to the Initial Determination pursuant to § 791.107, including by asserting that there is an insufficient factual or legal basis for the Initial Determination. The Department carefully considers each party's arguments, evidence, or proposed remedial steps prior to making a Final Determination. The Department agrees that reconsideration of a Final Determination may be warranted in some cases, such as if there is a change of circumstances that materially alters the prior assessment. Section 791.6, which remains unchanged from the IFR, permits the Secretary to reconsider Final Determinations unless otherwise provided by law.

This final rule also revises § 791.109(c) in response to a comment which pointed out that the IFR implied that the Secretary has discretion to direct prohibitions that are more restrictive than necessary to address the undue or unacceptable risk resulting from an ICTS Transaction because of the IFR text saying the Secretary has “ discretion to direct the least restrictive means necessary to tailor the prohibition to address the undue or unacceptable risk.” The Department notes that, in most cases, what amounts to the least restrictive means to fully address the risks posed by a Covered ICTS Transaction could be open to different interpretations. Accordingly, this final rule revises § 791.109(c) to clarify that the Secretary will direct the means that the Secretary determines to be necessary to address the undue or unacceptable risk posed by the Covered ICTS Transaction. E.O. 13873 does not require the Secretary to implement the least restrictive means to address undue or unacceptable risk; it provides the Secretary certain discretion to craft mitigation measures that address the overall undue or unacceptable risks posed by ICTS Transactions or classes of ICTS Transactions.

This final rule also amends § 791.109(a) to provide that the Secretary must issue a Final Determination when the Secretary has previously issued an Initial Determination. The interim final rule required a Final Determination only following an Initial Determination that proposed to prohibit an ICTS Transaction. The Department believes that it is important to issue a Final Determination if it has issued an Initial Determination, regardless of whether the Initial Determination proposed to prohibit the ICTS Transaction or permit the ICTS Transaction with mitigation measures, to describe potential risks the Department has identified in connection with an ICTS Transaction, provide a record of decisions, and explain any changes from an Initial Determination.

In addition, this rule includes a new paragraph (9) to § 791.109(d) to clarify that, in cases where the Secretary determines to permit an ICTS Transaction subject to the implementation of measures to mitigate undue or unacceptable risk, the transaction may subsequently be prohibited if a party fails to comply with the terms or obligations of a mitigation agreement. This is not a substantive change from the IFR, but a clarification. Specific criteria for violations that would lead to prohibiting a previously mitigated transaction would be covered in the individual mitigation agreements implemented following the review of an ICTS Transaction or class of ICTS Transactions.

Finally, this action revises § 791.109(f) to clarify that the Secretary publishes notices of Final Determinations in the Federal Register , whereas under the IFR the Secretary published the results of Final Determinations to prohibit an ICTS Transaction in the Federal Register . This change more accurately represents the intention to publish the outcome of the determination proceedings, without necessarily sharing extensive details about those proceedings. The decision on whether to publish a notice of a Final Determination will vary based on the following new requirements.

The final rule continues to require publication of any Final Determination to prohibit an ICTS Transaction, but as a notice in the Federal Register . Publishing a notice of a Final Determination—especially in the case of a determination that a transaction will be prohibited—provides notice to persons about any steps they can take to reduce the risk associated with the ICTS Transaction or to comply with the Final Determination. Additionally, in some cases, the Department may need to inform members of the public about a Final Determination to mitigate risks with the parties to a transaction even if an ICTS Transaction is not prohibited. In those cases, the Secretary may publish a Federal Register notice of its Final Determination to mitigate the risk of an ICTS Transaction. Also, if the Department were to issue a Federal Register notice about its Initial Determination, the Department will also publish a notice of its Final Determination to inform the public of the Department's final decision to prohibit, mitigate, or permit an ICTS Transaction. In some cases, publication of notices of Final Determinations to prohibit, mitigate, or allow an ICTS Transaction may be valuable to warn the public about identified undue or unacceptable risks or to provide guidance to persons contemplating similar ICTS Transactions. Publication of a Final Determination in the Federal Register also provides notice of the Final Determination to persons that are not a party to an ICTS Transaction and who may also be subject to a prohibition in a Final Determination. This final rule also retains the protections for confidential information discussed above, and any published notice of a Final Determination will omit confidential business information under § 791.109(f).

The Department received a few comments on the penalty provisions of § 791.200. Citing the nuances of subcontracting government contracts, some commenters requested that the rule employ an intentionality standard for any violations of the regulation that lead to civil penalties. These commenters argued that the current standard, especially regarding the authorization of penalties for causing any knowing violation, risks confusion and higher compliance costs for contractors with multiple layers of subcontractors. Another commenter suggested that only the parties to a transaction should be held liable for a violation of a Final Determination.

It is possible for a non-party to an ICTS Transaction reviewed by the Department to engage in activities that are contrary to a Final Determination to prohibit an ICTS Transaction, and for those persons to be held liable for violating a prohibition on an ICTS Transaction and therefore these regulations. Also, a person or entity does not need to be a party to an ICTS Transaction to have notice that certain activity is prohibited and to assist or seek to assist others to violate a Final Determination to prohibit an ICTS Transaction (such as by attempting to import a prohibited ICTS) or a Final Determination to mitigate the risk of an ICTS Transaction (for example, directing a party to a mitigation agreement to procure ICTS that does not comply with a mitigation agreement with knowledge that such a mitigation agreement exists). Generally, persons must comply with direction that the Department publishes in the Federal Register with regards to mitigating undue or unacceptable risk posed by foreign adversary-nexus ICTS Transactions. The purpose of these rules and of E.O. 13873 is to protect against risks to the ICTS supply chain. In that regard, the penalty provisions serve to encourage U.S. entities engaging in ICTS Transactions with entities with a nexus to a foreign adversary to conduct appropriate due diligence about those transactions or face potential liability.

Although this final rule continues to authorize penalties against persons who are not parties to a transaction, the Department has revised § 791.200 to address commenter concerns about the mental state requirement for a civil violation in certain instances as described in § 791.200(a). Under this final rule, persons can be held responsible for assisting a violation of a Final Determination to mitigate an ICTS Transaction through a mitigation agreement between the U.S. Government and identified parties to an ICTS Transaction, if they have knowledge (as defined at 15 CFR 772.1) that such a mitigation agreement exists. Activities that are prohibited for those with knowledge of the existence of a mitigation agreement includes aiding and abetting violations, commanding a violation, procuring a product that is violative, and other prohibited activities. Finally, providing false information to the Department in connection with an ICTS Transaction under review is also prohibited.

This final rule also amends § 791.200 to clarify the conduct that may lead to penalties under the rule. Section 791.200(a) now provides a list of activities that may lead to civil or criminal penalties under the rule. This list provides more clarity and certainty about prohibited conduct. Section 791.200(b) adds references to the new list of prohibited activities in § 791.200(a) and consolidates and removes duplicative provisions covering civil penalties.

The Department received other comments, discussed below, that were not germane to the rulemaking and outside the scope of this action, or that, for the reasons explained below, the Department does not otherwise address in this final rule.

First, many commenters requested that the Department develop a variety of processes to provide stakeholders with licenses, and guidance about specific transactions that would not be subject to review, or “pre-clearance,” before commencing ICTS Transactions. Commenters explained that these processes would provide more certainty to businesses so that they can proactively develop compliance programs and avoid high-risk transactions. Several commenters addressed the potential licensing mechanism that the Department discussed in the preamble to the IFR, but without suggesting a framework for applying for or receiving licenses. Most commenters were in favor of a licensing process, either for parties to seek pre-approval of individual ICTS Transactions, or to exempt all transactions by vetted ICTS manufacturers or suppliers for a fixed period. These commenters stressed, however, that any licensing process should be entirely voluntary and non-duplicative of licensing regimes established by other regulations and should not unnecessarily delay contemplated transactions. Similarly, some commenters requested that the Department establish a list of restricted persons like the Entity List (Supplement No. 4 to Part 744 of the Export Administration Regulations) (15 CFR part 744. Supp.) or develop categories of transactions that could receive a presumption of approval or denial.

More generally, commenters sought the creation of additional avenues for the Department to provide guidance about the application of the rule. For example, one commenter requested that the Department issue enforcement guidelines and create a mechanism for entities to voluntarily disclose potential violations, while other commenters requested that the Department create a process to issue advisory opinions at the request of entities contemplating ICTS Transactions.

Given the complexity of the issues, the Department appreciates commenters' thoughtful suggestions. The Department is still considering the concepts related to providing licenses, but this final rule does not include a licensing process. Additionally, while the Department anticipates that published Final Determinations will provide guidance to the public about applications of this final rule, the Department understands that additional guidance materials may be useful to those planning compliance with this rule. However, developing procedures to issue guidance or for parties to obtain advisory opinions is outside the scope of this rulemaking, and the Department will seek further comment prior to implementing any rule on that topic.

Second, several commenters asserted that the IFR generally lacked transparency and suggested a number of ways that the Department could assist industry with the interpretation and application of the interim final rule and provide context for the reviews it undertakes. For example, several commenters suggested creating ongoing opportunities for direct industry consultation and engagement such as by hosting industry roundtables. Other commenters suggested that the Department provide an avenue for formal industry comments on reviews before the Secretary issues a Final Determination. Taking a contrary view, other commenters expressed concerns about potential anti-competitive behavior that could result from consultation with industry. The Department appreciates these comments and commenters' willingness to engage with the Department on implementing this rule, but the Department is not adopting any formal avenues for industry and stakeholder engagement in this rule at this time.

This final rule has been determined to be a “significant regulatory action” under section 3(f)(1) of Executive Order 12866, as amended by Executive Order 14094. The Department has examined the expected impact of this final rule as required by those Executive Orders and has conducted a regulatory impact analysis (RIA).

The Department has examined the economic implications of this final rule on small entities as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ). The RFA requires an agency to describe the impact of a rule on small entities by providing a regulatory flexibility analysis. The Department published an initial regulatory flexibility analysis in the proposed rule issued on November 27, 2019 (84 FR 65316), published a final regulatory flexibility analysis (FRFA) for the interim final rule (86 FR 4909), and has posted an updated FRFA as part of the RIA for this final rule (see ADDRESSES above). The revised FRFA incorporates more recent datasets that have been published since the Department issued the interim final rule and updates the economic analysis to conform to the provisions in the final rule. A summary of the FRFA follows. The Department assesses that the changes in this final rule, relative to the interim final rule, will have a limited economic impact.

A description of this final rule, why it is being implemented, the legal basis, and the purpose of this final rule are contained in the SUMMARY and SUPPLEMENTARY INFORMATION sections of this preamble, in the preamble to the Notice of Proposed Rulemaking issued on November 27, 2019, and in the preamble to the Interim Final Rule issued on January 19, 2021 (86 FR 4909) and are not repeated here.

Many commenters discussed the possibility that this rule would impose significant costs, both on businesses that need to develop compliance plans and on the U.S. economy generally due to the rule's potential effect on corporate profits and viability. Commenters remarked on the RIA's wide range of estimated affected entities and cost to the U.S. economy but questioned whether the RIA included the full range of potential costs or adequately quantified the rule's benefits.

In particular, one commenter noted that the RIA identified, but did not quantify, the cost of the following potential harms: the restriction of imports from adversarial nations, which could increase production costs for many firms; the potential loss of producer profits and lower profits for persons in an industry impacted by a prohibition or mitigation of an ICTS Transaction; the possibility that those who do not engage in transactions affected by the rule may still face higher production costs; the impacts of the rule are not confined to the firms in the industries that produce the products subject to the rule; investors will likely take extra time to evaluate potential transactions, which could result in delays and impose costs on consumers; and higher prices and lower consumer and producer surplus that could arise among inter-related industries. Commenters also critiqued the RIA's failure to quantify the rule's expected benefits to national security and asked for examples of the types of transactions the rule is meant to address to demonstrate its anticipated benefits more clearly and provide a point of reference for the rule's potential scope.

The Department understands commenters' desire for greater certainty in the calculations of the rule's potential costs and benefits. The unquantified harms discussed in the RIA to the interim final rule and listed by a commenter were meant to transparently identify potential downstream effects of the rule. These are not direct costs imposed by the rule and, due to the uncertainty regarding the extent to which they might arise, if at all, the portion of such costs attributable to the rule cannot reasonably be quantified. None of the commenters identified data sources or methods that the Department could use to concretely estimate these costs. As a result, the Department is not changing its earlier analysis of these potential harms.

Regarding the potential benefits of the rule, as discussed in the SUMMARY and SUPPLEMENTARY INFORMATION sections of this preamble, two years of experience with the interim final rule has shown that the Department's reviews are primarily reviews of classes of transactions involving all or a subset of all ICTS provided by a single person rather than individual transactions involving a single product or service. As a result, the Department anticipates that such reviews will have a greater impact on national security than would reviews of individual transactions, despite being more limited in number. The Department continues to assess that the actual benefits of this rule are incalculable because it is not possible to predict the type and extent of malicious actions that will be directed at the ICTS supply chain. Moreover, the Department is not providing examples of the types of transactions the rule is meant to address, as requested by commenters. The Department's experience to date has shown that ICTS Transactions present unique risks that would be difficult to describe in generic terms.

Additionally, two commenters asked the Department about the rule's potential impact on commercial items. These commenters asked whether commercial items are exempted from the rule and whether the Secretary has authority over all ICTS, even those with no impact on national security. As discussed in further detail below, the Department considered as an alternative to the rule whether to exclude ICTS Transactions that involve only the acquisition of commercial products as defined by Federal Acquisition Regulation Part 2.101. The Department decided against adopting this alternative to avoid creating an avenue that malicious actors could use to evade the rule. That said, the Secretary's reviews are targeted to ICTS Transactions or classes of Transactions that pose undue risks of sabotage or subversion to the ICTS supply chain and U.S. critical infrastructure or an unacceptable risk to the national security of the United States or the security and safety of U.S. persons. As such, the Department intends to devote its resources to reviewing ICTS Transactions with a potentially negative impact on national security. The Department's modifications to § 791.103 in the final rule to clarify the process that the Secretary will follow to determine which ICTS Transactions are within the scope of the rule are responsive to these comments.

Small Business Administration (SBA) size standards for businesses are based on annual receipts and average employment. For this analysis, as for the analysis for the interim final rule, we define a small business as one employing fewer than 500 persons. This definition allows us to use Census data on firm employment by NAICS industry to estimate the number of affected small entities.

In the RIA, the Department identified 4,533,000 firms in industries that imported significant amounts of goods and services potentially subject to review under the Rule. This formed our upper bound estimate for the total number of affected entities. By replicating this methodology with firm employment data, the Department finds that 4,516,000 of these firms, about 99.6 percent, have fewer than 500 employees. Assuming the lower bound estimate of 268,000 affected entities is also made up of 99.6 percent small businesses, the Department estimates that between 266,995 and 4,516,000 small businesses will be potentially affected by this Rule. The Department's estimate of the number of potentially affected small businesses remains unchanged from the interim final rule.

The Department did not identify any Federal rule that duplicates, overlaps, or conflicts with this final rule.

In the Costs section of the RIA, the Department estimates that costs to all affected entities will range between approximately $238 million and $20.3 billion (annualized at 7%), or about $2,800 to $6,300 per entity. The Department estimated the costs to small entities using the same methodology, adjusting for changes in hourly wages of operations managers and lawyers over time. As a result of these adjustments, the Department estimates that costs to affected small entities will range between approximately $112 million and $11.1 billion, or about $1,800 and $4,000 per small entity.

Small businesses, as opposed to larger firms, may not have the same ability to deal with the burdens, both direct and indirect, associated with the final rule. Faced with the various costs associated with compliance, firms will have to absorb those costs and/or pass them along to their consumers in the form of higher prices. Either action will reduce the profits of firms. Due to their lack of market power, and their lower profit margins, small firms may find it difficult to pursue either or both of those responses while remaining viable.

A similar situation will hold with respect to the indirect impacts of the final rule. Small firms downstream of impacted industries are likely to face increases in the prices of ICTS they use as inputs and either absorb the increase in cost and/or raise their prices. Given this situation, it is possible that the final rule will have a more substantial adverse impact on small firms relative to larger firms.

However, most of the changes in the final rule, relative to the interim final rule, affect the Department's internal procedures when implementing the rule and will have little impact on small businesses or the broader public. Additionally, many of the changes made from the interim final rule further clarify the scope of ICTS Transactions that the Department may review. These changes may benefit small businesses by reducing uncertainty and, therefore, compliance costs. For example, adding definitions for the terms used in the definition of “ICTS Transaction” and specifying who may be considered a “party or parties to a transaction” that will receive notice of, and an opportunity to respond to, an Initial Determination, may reduce the cost of learning about the final rule by making it easier to understand which entities and transactions are within the rule's scope.

Similarly, removing the requirement that certain ICTS needs to be in use by at least one million persons to be considered ICTS for purposes of the rule will not specifically increase costs to small entities. While eliminating this threshold means more ICTS Transactions could meet the criteria for review, as noted above, the reality is that most transactions reviewed involve the ICTS from one entity, so removal of the threshold will not increase the number of ICTS Transactions the Department reviews. It might, however, reduce the risk (and associated costs) of U.S. companies feeling pressure to track sales counts of ICTS they suspect or know to be connected to foreign adversaries. Again, the Department is removing the threshold not because the Department intends to or seeks to review more ICTS Transactions by small entities, but rather to indicate to the public that the risks associated with ICTS Transactions are not always related to the volume of or number of people involved in such transactions. The Department's reviews focus on risk posed by foreign adversaries and the ICTS involved.

The Department is also implementing changes to facilitate parties' responses to the Secretary's Initial Determination following an ICTS Transaction review by, for example, explaining the factual basis supporting the Secretary's Initial Determination. Finally, the Secretary is retaining discretion to publish notices of Final Determinations in the Federal Register after determining to prohibit or permit an ICTS Transaction with mitigation measures. The Department's publication of notices of certain Final Determinations enables small business to determine whether their ICTS Transactions are substantially similar to those that have been prohibited or to assess, based on published mitigations, whether they can proactively take any steps to reduce the risks potentially associated with the ICTS Transactions in which they engage.

SBA size standards for businesses are based on annual receipts and average employment. For the purpose of this analysis, the Department defines a small business as one employing fewer than 500 persons. This definition allows the Department to use recent Census data on firm employment by NAICS industry to estimate the number of affected small entities. The Department does not have access to sufficiently detailed data on firm employment and receipts to make use of the full set of SBA size standard thresholds.

The Department notes, however, that 84% of SBA employee thresholds are above 500, and 91% of SBA receipt thresholds are above $6 million. Census data show that average receipts for firms employing fewer than 500 employees are $2.2 million. Thus, using our threshold of 500 employees we estimate that about 99.6% of affected entities are small businesses.

This final rule allows the Secretary to review ICTS Transactions to determine whether they present an undue or unacceptable risk to national security, a function which is currently not performed by any other private or public entity. Private industry often lacks the incentive, information, or resources to review their ICTS purchases for malicious suppliers or other potentially bad actors in the ICTS supply chain. The U.S. Government is uniquely situated to determine threats and protect national security, including economic security.

The Department considered two regulatory alternatives to reduce the burden on small entities: (1) excluding small entities with 5 or fewer employees, and (2) excluding certain industries and sectors. However, the Department determined that neither of these alternatives would achieve the goal of protecting national security, nor would they eliminate the Rule's significant economic impact on a substantial number of small entities.

• No-action alternative: Rescinding the interim final rule and, accordingly, not implementing a rule under the E.O. is not a viable alternative because E.O. 13873 expressly directs that the Secretary “shall publish rules or regulations implementing the authorities delegated to the Secretary by this order,” to address the national security concerns associated with ICTS Transactions in the United States involving foreign adversaries that may create or exploit vulnerabilities in ICTS.

• Alternative that would categorically exclude small entities or groups of small entities: The Department considered providing an exemption for small entities that have 5 or fewer employees (smallest entities). According to Census Bureau data, about 6 in 10 employer firms have fewer than 5 employees. The Department also examined the feasibility of eliminating the application of the rule to certain small entities involved in specific industries or sectors by excluding: (a) ICTS Transactions that involve only the acquisition of commercial products as defined by Federal Acquisition Regulation Part 2.101; (b) ICTS Transactions that are used solely for the purpose of cybersecurity mitigation or legitimate cybersecurity research; or (c) ICTS Transactions under which a U.S. person is subject to a security control agreement, special security agreement, or proxy agreement approved by a cognizant security agency to offset foreign ownership, control, or influence pursuant to the National Industrial Security Program regulations (32 CFR part 2004). Ultimately, the Department decided against adopting these regulatory alternatives. Exempting certain industries or sectors or eliminating the application of the final rule to smallest entities could inadvertently allow potentially problematic transactions that are substantially similar to those conducted by non-exempt entities to avoid review, undermining the national security objectives of E.O. 13873. For example, a company that is headquartered in a foreign adversary country, regardless of its size or main industry sector, may be involved in legitimate cybersecurity research and development initiatives performed under the National Cooperative Research and Production Act (15 U.S.C. 4301-06) and the foreign company may study foreign equipment to gain insights on new innovations or potential network security risks. However, that same company may also be conducting operations during other ICTS Transactions that could harm U.S. national security interests. By promulgating the chosen alternative for the rule, the Department sought to remove both the possibility for confusion as well as the ability for malicious actors to argue that some legitimate cybersecurity research performed by a company would exempt all cybersecurity research by a company, legitimate or otherwise. Thus, the rule applies to types of ICTS Transactions most affecting U.S. national security and does not exempt categories of industries, sectors, or entities from review.

• Preferred alternative: The final rule is the preferred alternative. It would achieve the objectives of E.O. 13873 by implementing procedures that will allow the Secretary to apply a case-by-case, fact-specific review of ICTS Transactions or classes of Transactions that may pose an undue or unacceptable risk to U.S. national security, critical infrastructure, or U.S. persons and address any identified risks by prohibiting transactions or requiring the implementation of mitigation measures.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule and shall designate such publications as “small entity compliance guides.” The Department shall explain the actions a small entity is required to take to comply with a rule or group of rules.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA) provides that an agency generally cannot conduct or sponsor a collection of information, and no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, unless that collection has obtained Office of Management and Budget (OMB) approval and displays a currently valid OMB Control Number. This final rule does not contain a collection of information requirement subject to review and approval by OMB under the PRA.

This rule would not create a Federal mandate (under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995) for State, local, and tribal governments or the private sector.

This rule does not contain policies having federalism implications requiring preparations of a Federalism Summary Impact Statement.

This rule does not contain policies that have unconstitutional takings implications.

The Department has analyzed this rule under Executive Order 13175 and has determined that the action would not have a substantial direct effect on one or more Indian tribes, would not impose substantial direct compliance costs on Indian tribal governments, and would not preempt tribal law.

The Department has reviewed this rulemaking action for the purposes of the National Environmental Policy Act (42 U.S.C. 4321 et seq. ). It has determined that this final rule would not have a significant impact on the quality of the human environment.

This rule has been determined to be a “major rule” under the Congressional Review Act (5 U.S.C. 801 et seq. ).

For the reasons stated in the preamble, the Department amends 15 CFR part 791 as follows:

In FR Doc. 2024-24388 appearing on page 88594 in the Federal Register of Thursday, November 7, 2024, the following corrections are made:

On October 15, 2024, the Secretary of Homeland Security announced arrival restrictions applicable to flights to the United States carrying persons who have recently traveled from, or were otherwise present within, Rwanda due to an outbreak of Marburg Virus Disease (MVD) in Rwanda. (89 FR 83620). These restrictions directed such flights to arrive at one of the U.S. airports where the U.S. government focused public health resources to implement enhanced public health measures. For purposes of that document, a person had recently traveled from Rwanda if that person had departed from, or was otherwise present within, Rwanda within 21 days of the date of the person's entry or attempted entry into the United States. Also, for purposes of that document, crew and flights carrying only cargo ( i.e., no passengers or non-crew) were excluded from those measures.

The Secretary has decided to terminate the above arrival restrictions. The last unlinked case of MVD was isolated in Rwanda on October 24, 2024, and 42 days (two 21-day incubation periods) will have passed by the time the termination takes effect. Additionally, since October 30, 2024, there have been no new confirmed MVD cases reported in Rwanda, no new chains of transmission, and no new districts reporting local case transmissions. Therefore, arrival restrictions are no longer required for flights to the United States carrying persons who have recently traveled from, or were otherwise present within, Rwanda.

Pursuant to 6 U.S.C. 112(a), 19 U.S.C. 1433(c), and 19 CFR 122.32, for flights departing after 11:59 p.m. Eastern Standard Time on December 4, 2024, I hereby terminate the arrival restrictions applicable to flights to the United States carrying persons who have recently traveled from, or were otherwise present within, Rwanda announced in the Arrival Restrictions document published at 89 FR 83620 (Oct. 17, 2024).

In its role as coordinator of the Federal statistical system, the Office of Management and Budget (OMB) establishes and maintains the CBSA program. CBSAs are geographic areas containing a large population center, or urban area, and adjacent communities that have a high degree of integration with that population center measured by commuting ties. OMB maintains CBSAs solely for statistical purposes. Every decade, OMB reviews and updates the Standards for Delineating CBSAs (CBSA standards), which describe the data sources and methods OMB uses to determine which geographic areas are to be designated CBSAs, prior to their application to new decennial census data. OMB updated CBSA standards on July 16, 2021 (86 FR 37770) prior to applying them to 2020 Census data.

The Metropolitan Areas Protection and Standardization Act of 2021, or the MAPS Act, (31 U.S.C. 6102, et seq. ) prohibits agencies from automatically propagating OMB's CBSA standards for non-statistical use by any domestic assistance program unless the agency determines that the propagation: (1) supports the purpose of the program; and (2) is in the public interest. (31 U.S.C. 6309(a)(2)(A)). Propagation of the CBSA standards for non-statistical use by domestic assistance programs must be done through a notice and comment rulemaking. (31 U.S.C. 6309(a)(2)(B)).

On September 6, 2024, HUD published a proposed rule for public comment (89 FR 72766) to add new subpart M to 24 CFR part 5 adopting the 2020 CBSA standards as determined by OMB in 86 FR 37770 (July 16, 2021). The proposed rule described how HUD programs use CBSAs, as outlined in Table 1. The proposed rule also described how adoption of the new CBSA standards support the purpose of these programs and is in the public interest.

After considering comments received from the public, HUD adopts this final rule without changes from the proposed rule. HUD has determined that adoption of the 2020 CBSA standards, as determined by OMB in 86 FR 37770 (July 16, 2021), supports the purpose of HUD's programs and is in the public interest. The updated CBSA standards, and updated CBSA delineations based on the 2020 CBSA standards, will make calculation of Fair Market Rents, Area Median Family Income, and Income Limits more accurate. The accuracy of these program parameters is in the public interest as it most appropriately will direct resources governed by these parameters to recipients in the most appropriate amounts.

The new CBSA standards support HUD's designation of DDAs and QCTs as well as PIH, CPD, and Housing's programs because they more accurately reflect the current housing markets, which have changed significantly since the 2010 census. Furthermore, adopting the new standards will not be disruptive to the programs as program participants are expecting HUD to regularly update the metropolitan area standards and delineations to reflect current market conditions as HUD has done historically.

HUD received three relevant comments in response to the proposed rule. Two comments were from interested individuals and one was from a real estate association. Commenters were generally supportive of the proposed rule. This section includes a summary of the issues raised by commenters.

One commenter urged HUD to minimize disruptions for program participants. To do so, the commenter suggested that HUD adopt a “hold harmless” policy that keeps income limits constant rather than allowing them to decline. Specifically, the commenter noted that the exception should not merge a high-income county with an MSA that has a lower HAMFI but instead allow the high-income county to become its own HUD Metropolitan Fair Market Rent Area (HMFA). It would also hold harmless any county detached from an MSA, meaning that when a relatively lower-income county is detached from an MSA with a higher HAMFI, income limits in the detached county should be kept at the same level as they were when part of the MSA, rather than allowed to decline. The commenter noted that downward changes are difficult for program participants to predict and stated that this exception would avoid disruptive changes. The commenter recommended that this exception be available for all income limits, including Section 8 limits.

Additionally, the commenter asked that HUD allow reasonable “grandfathering” for uses of CBSAs beyond FMR/HAMFI/Income Limits such that any area, property or individual currently receiving assistance, or in the process of applying for assistance, should be grandfathered in for a reasonable period of time, rather than lose eligibility instantly due to the change in geographic definitions.

HUD Response: This rule allows HUD to use CBSA delineations based on OMB's latest standards for CBSA delineation in its program administration. It does not otherwise set policy for HUD program eligibility such as generally defining the methods by which HUD sets program eligibility income limits derived from the HAMFI or determining program eligibility in cases where income limits decline due to geographic change caused by adopting new CBSA delineations or for other reasons. HUD's FMR, Income Limit and HAMFI policies allow for various exceptions to the CBSA delineations HUD uses in the estimation processes for these program operating parameters. This rule allows HUD to include the latest CBSA delineations in the computation process for FMRs, Income Limits, and HAMFIs, but does not otherwise affect that process or the rules of program administration.

One commenter suggested that HUD use a zip-codes based system rather than a county-based system because zip codes are a more concise and accurate measure of populations and will help ensure taxes are going to the intended beneficiaries of these programs. The commenter also noted that there has been a change in commuting habits since 2020 and a decline in urban populations in 2020-2021 which is not reflected in the 2020 census data.

One commenter reflected that FMRs are poor indicators of the housing market and noted the move away from the regional standard to a zip code standard. The commenter asked whether the zip code standard will allow for more resources for enforcement and rent control to be directed towards lower-income areas. The commenter also asked whether tying large areas around a metropolitan area to the metropolitan area would turn the smaller areas into large areas again.

HUD Response: OMB determines the geographic units (counties and county equivalents) that form the basis of CBSAs in the process of setting the standards for CBSA delineation. HUD interprets its statutes and regulations referencing “metropolitan areas” as referring to the metropolitan CBSAs delineated by OMB. Thus, in HUD's program administration activities based on “metropolitan areas”, HUD is required to use the county-based metropolitan CBSAs delineated by OMB and cannot establish separate metropolitan areas based on ZIP-Codes or other alternative geographic units. Regarding changes in population since 2020, while OMB updates the standards for CBSA delineation approximately every 10 years, OMB generally updates the delineations annually based on changes in the underlying data as measured by the Census Bureau through the American Community Survey.

HUD produces the FMRs to help Public Housing Agencies (PHAs) that administer Housing Choice Vouchers to set payment standards that determine the amount the vouchers pay to participating landlords. Some PHAs in certain FMR areas are required to use “Small Area FMRs” estimated at the ZIP-code level to set all their payment standards, and other PHAs may opt into using Small Area FMRs to set some or all payment standards. Use of Small Area FMRs has no effect on the resources available to the PHAs for voucher administration. FMRs are not a mechanism for rent control, but rather a measure of the 40th percentile rent paid by recent movers into standard quality rental housing located in the applicable area. In estimating FMRs, HUD generally does not add new counties to metropolitan areas for purposes of the overall FMR unless the added county has rental data quality deficiencies.

One commenter noted that Fair Market Rents are calculated based on home-to-work interactions and asked how far out the standard reaches and if it is calculated on a case-by-case decisions for every metropolitan area.

HUD Response: CBSAs are delineated based on the commuting interchange between counties, and the larger are the counties, the larger is the CBSA. In estimating FMRs, HUD generally does not add new counties to metropolitan areas for purposes of the overall FMR unless the added county has rental data quality deficiencies. HUD may use the full CBSA delineation including newly added counties for some parts of the calculation, such as recent mover adjustments, inflation factors, and trend factors, but HUD uses the most local data allowed under data quality standards for setting base rents and making other adjustments in the FMR calculation process.

Pursuant to Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The order also directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 further directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. Executive Order 14094 entitled “Modernizing Regulatory Review” (hereinafter referred to as the “Modernizing E.O.”) amends section 3(f) of Executive Order 12866, among other things.

As discussed above, this rule adopts updated standards for CBSA delineations that HUD programs use for program administrative purposes. It is statistical and administrative in nature with the purpose of maintaining past administrative practices. This rule was determined not to be a “significant regulatory action” as defined in section 3(f) of Executive Order 12866 and is not an economically significant regulatory action.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, and on the private sector. This proposed rule does not impose any Federal mandates on any State, local, or Tribal governments, or on the private sector, within the meaning of UMRA.

This rule establishes discretionary review of loan limits, fair market rent schedules, income limits and exclusions with regard to eligibility for or calculation of HUD housing assistance or rental assistance, and similar rate and cost determinations and related external administrative or fiscal requirements or procedures which do not constitute a development decision that affects the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19 (c)(6), this rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This final rule adopts updated standards for the delineation of CBSA geographic areas that affected HUD programs use for various administrative purposes. The adoption is statistical and administrative in nature and consistent with longstanding HUD policy and practice. Therefore, this final rule does not have a significant economic impact on a substantial number of small entities.

Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either: (i) imposes substantial direct compliance costs on State and local governments and is not required by statute, or (ii) preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. 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.

Accordingly, for the reasons stated in the preamble, HUD amends 24 CFR part 5 as follows:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) recently published a final rule making technical corrections to certain of its regulations in 27 CFR chapter I. That final rule appeared in the Federal Register of November 6, 2024 (89 FR 87931). This document corrects two non-substantive errors in the amendatory instructions in that final rule. The errors described below were inadvertent, and their correction does not alter the intended meaning of any regulatory section contained in the final rule.

In the final rule document numbered FR Doc. 2024-23662 appearing on pages 87931 through 87953 in the Federal Register issue of Wednesday, November 6, 2024, make the following corrections:

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

On November 6, 2024, OFAC issued GL 5A to authorize certain transactions otherwise prohibited by the Western Balkans Stabilization Regulations, 31 CFR part 588. GL 5A superseded GL 5. GL 5A was made available on OFAC's website ( https://ofac.treasury.gov ) when it was issued. The text of this GL is provided below.

The Coast Guard is issuing this temporary rule under the authority in 5 U.S.C. 553(b)(B). This statutory provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” The Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the event sponsor notified the Coast Guard with insufficient time to publish an NPRM and immediate action is necessary to protect personnel, vessels, and the marine environment on the Sandusky Bay in Sandusky, OH. It is also impracticable and contrary to the public to publish a NPRM because we must establish this safety zone by December 14, 2024.

Also, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . For the same reasons discussed in the preceding paragraph, delaying the effective date of this rule would be impracticable because immediate action is needed to respond to the potential safety hazards associated with a firework display.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The COTP Detroit has determined that potential hazards associated with a firework display will be a safety concern for anyone within a 560-foot radius of the launch site. The likely combination of recreational vessels, darkness punctuated by bright flashes of light, and firework debris falling into the water presents risks of collisions which could result in serious injuries or fatalities. This rule is necessary to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone during the firework display.

This rule establishes a safety zone from 5:30 p.m. through 6:30 p.m. on December 14, 2024. The safety zone will encompass all U.S. Navigable waters of Sandusky Bay within a 560-foot radius of the firework display launch site located at 41°27′32.27″ N, 82°42′52.15″ W, on the Jackson Street Pier in Sandusky, OH. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters during the firework display. Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the COTP Detroit or his representative. The COTP Detroit or his designated representative may be contacted via VHF Channel 16 or call 313-568-9560.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, and duration of the safety zone. Vessel traffic will be able to safely transit around this safety zone which would impact a small, designated area of Sandusky Bay for one hour during the evening when vessel traffic is normally low. Moreover, the Coast Guard would issue a Broadcast Notice to Mariners (BNM) via VHF-FM Marine Channel 16 about the zone, and the rule would allow vessels to seek permission to enter the zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, 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 Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting approximately one hour that will prohibit entry within a 560-foot radius where the firework display will be conducted. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

Sections 112(e) and 114(f) of the Copyright Act, title 17 of the United States Code, create statutory licenses for certain digital performances of sound recordings and the making of ephemeral reproductions to facilitate transmission of those sound recordings. On October 27, 2021, the Copyright Royalty Judges (Judges) adopted final regulations governing the rates and terms of copyright royalty payments under those licenses for the license period 2021-2025 for performances of sound recordings via eligible transmissions by commercial and noncommercial noninteractive webcasters. See 86 FR 59452.

Pursuant to those regulations, at least 25 days before January 1 of each year from 2022 to 2025, the Judges shall publish in the Federal Register notice of a cost of living adjustment (COLA) applicable to the royalty fees for performances of sound recordings via eligible transmissions by commercial and noncommercial noninteractive webcasters. 37 CFR 380.10.

The adjustment in the royalty fee shall be based on a calculation of the percentage increase in the CPI-U from the CPI-U published in November 2020 (260.229), according to the formula: for subscription performances, (1 + (C y −260.229)/260.229) × $0.0026; for nonsubscription performances, (1 + (C y −260.229)/260.229) × $0.0021; for performances by a noncommercial webcaster in excess of 159,140 ATH per month, (1 + (C y −260.229)/260.229) × $0.0021; where C y is the CPI-U published by the Secretary of Labor before December 1 of the preceding year. The adjusted rate shall be rounded to the nearest fourth decimal place. 37 CFR 380.10(c). The CPI-U published by the Secretary of Labor from the most recent index published before December 1, 2024, is 315.664. 1 Applying the formula in 37 CFR 380.10(c) and rounding to the nearest fourth decimal place results in an increase for 2025 in the rate for subscription performances and no increase for 2025 in the rates for nonsubscription performances and performances by a noncommercial webcaster in excess of 159,140 ATH per month.

The 2025 rate for eligible transmissions of sound recordings by commercial webcasters is $0.0032 per subscription performance and $0.0025 per nonsubscription performance.

The 2025 rate for noncommercial webcasters is $0.0025 per performance for all digital audio transmissions in excess of 159,140 ATH in a month on a channel or station.

As provided in 37 CFR 380.10(d), the royalty fee for making ephemeral recordings under section 112 of the Copyright Act to facilitate digital transmission of sound recordings under section 114 of the Copyright Act is included in the section 114 royalty fee and comprises 5% of the total fee.

In consideration of the foregoing, the Judges amend part 380 of title 37 of the Code of Federal Regulations as follows:

On September 6, 2024 (89 FR 72770), the EPA published a notice of proposed rulemaking (NPRM) for the State of Maryland. In the NPRM, the EPA proposed to determine that the Anne Arundel-Baltimore County Area had attained the 2010 1-hour SO 2 primary NAAQS by the applicable attainment date of September 12, 2021. During the comment period for the EPA's NPRM, open from September 6, 2024 to October 7, 2024, the EPA received no comments.

This action addresses the EPA's obligation under CAA section 179(c) to determine whether the Anne Arundel-Baltimore County Area attained the 2010 SO 2 NAAQS by the September 12, 2021 attainment date. Notably, a determination of attainment by the attainment date does not constitute a redesignation of an area to attainment for the 2010 SO 2 NAAQS under section 107(d)(3) of the CAA. The area will remain designated nonattainment for the 2010 SO 2 NAAQS until the state formally requests redesignation of the area to attainment, the EPA takes formal action to determine that the area meets CAA requirements for redesignation, and the EPA approves an accompanying state-submitted maintenance plan that ensures the area will continue to meet the NAAQS for the successive 10-year period.

CAA section 179(c)(1) requires the EPA to “determine, based on the area's air quality as of the attainment date, whether the area attained the standard by that date.” As discussed in the NPRM, the EPA used an integrated analysis based on SO 2 emissions data, ambient air quality monitoring data, and the EPA's 2022 clean data determination modeling analysis (based on 2019-2021 SO 2 emissions) in making this determination of attainment by the attainment date for the Anne-Arundel Baltimore County Area.

The EPA finds that the integrated analysis of multiple types of air-quality related information supports the determination and is consistent with CAA section 179(c)(1)'s direction to determine the area's air quality as of the attainment date. Specifically, reduced SO 2 emissions within the Area from 2012 to 2020, no exceedances of the 2010 1-hour SO 2 NAAQS at monitoring sites within the Area since 2012, and the EPA's modeling analysis (based on 2019-2021 SO 2 emissions) predicting a maximum design value within the Area that is well below the NAAQS all provide supporting bases for the EPA's determination of attainment by the attainment date. Further details on the EPA's analysis are available in the NPRM related to this action. The comment period for this NPRM ended on October 7, 2024.

The EPA conducted an analysis, described in detail in the NPRM related to this action, to determine if the Anne Arundel-Baltimore County Area attained the 2010 1-hour SO 2 NAAQS by the September 12, 2021 attainment date. Based on that analysis and the information presented in the NRPM, the EPA is determining that the Anne Arundel-Baltimore County Area attained the 2010 1-hour SO 2 NAAQS by the applicable attainment date of September 12, 2021, consistent with CAA section 179(c)(1).

On September 6, 2024 (89 FR 72770), the EPA published an NPRM proposing to determine that the Anne Arundel-Baltimore County Area attained the NAAQS by the September 12, 2021 attainment date. The EPA sought public comment on the proposed determination and received no comments.

This action does not constitute a redesignation of the Anne Arundel-Baltimore County Area to attainment for the 2010 1-hour SO 2 NAAQS under CAA section 107(d)(3). The classification and designation status in 40 CFR part 81 will remain nonattainment until the state formally requests redesignation of the area to attainment, the EPA takes formal action to determine that the area meets CAA requirements for redesignation under section 107(d)(3)(E), and the EPA approves an accompanying state-submitted maintenance plan pursuant to section 175A that ensures the area will continue to meet the NAAQS for the successive 10-year period.

This action determines an area has attained the NAAQS by the relevant attainment date and does not impose additional or modify existing requirements. For that reason, this action:

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

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

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

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

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

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

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

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

In addition, this action does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because it is not approved to apply in Indian country located in the State, and the EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law. Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. The EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”

The EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, which finds that a nonattainment area attained the 2010 SO 2 NAAQS by the applicable attainment date, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 4, 2025. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action, the determination of attainment by the attainment date for the Anne Arundel-Baltimore County SO 2 nonattainment area, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, the EPA amends 40 CFR part 52 as follows:

The United States is a member of the IATTC, which was established under the 1949 Convention for the Establishment of an Inter-American Tropical Tuna Commission (1949 Convention). In 2003, the IATTC updated the 1949 Convention through the adoption of the Convention for the Strengthening of the IATTC Established by the 1949 Convention between the United States of America and the Republic of Costa Rica (Antigua Convention). The Antigua Convention entered into force in 2010. The United States acceded to the Antigua Convention on February 24, 2016. The full text of the Antigua Convention is available at: https://www.iattc.org/PDFFiles2/Antigua_Convention_Jun_2003.pdf .

The United States implements binding decisions of the IATTC as domestic regulations under the Tuna Conventions Act of 1950, as amended, 16 U.S.C. 951 et seq. (Pub. L. 114-81). The TCA directs the Secretary of Commerce, in consultation with the Secretary of State and, with respect to enforcement measures, the U.S. Coast Guard, to promulgate such regulations as may be necessary to carry out the United States' obligations under the Antigua Convention, including recommendations and decisions adopted by the IATTC. The authority of the Secretary of Commerce to promulgate such regulations has been delegated to NMFS.

The 101st Meeting of the IATTC was held in Victoria, Canada, in August 2023. At this meeting, the IATTC adopted Resolution C-23-03 (Amendment to Resolution C-99-07 on Fish Aggregating Devices) and Resolution C-23-04 (On the Design and Biodegradability of Drifting Fish Aggregating Devices (DFADs) in the IATTC Area of Competence).

Resolution C-23-03 amends Resolution C-99-07 and continues to recommend that tender vessels operating in support of vessels fishing on FADs in the EPO remain prohibited. The Resolution stipulates that vessels may engage in FAD recovery activities that are limited to the collection of FADs for final disposal, not maintenance or adjustment. The Resolution requires that Members and Cooperating Non-Members report all associated information on any such FAD recovery activities to the IATTC Secretariat. The Resolution encourages the initiation of FAD recovery programs through cooperative initiatives among fishing vessels and other vessels implementing recovery projects in the IATTC Convention Area. These measures are intended to improve FAD management and data collection for FAD-associated fishing sets and to reduce their impacts.

Resolution C-23-04 contains new requirements regarding materials that can be used in FADs that are deployed or redeployed in the IATTC Convention Area. These include biodegradable and non-entangling materials, which would be phased in between 2025 and 2029. Beginning on January 1, 2025, purse seine vessel owners and operators are required to meet non-entangling design requirements for FADs, and the use of mesh nets is prohibited for any part of a FAD. The Resolution defines “non-entangling FAD” as “a FAD that does not include any netting materials for any part of the FAD including both the surface structure ( e.g., raft) and subsurface structure ( e.g., tail).” Beginning on January 1, 2026, purse seine vessel owners and operators are required to begin using biodegradable materials in either the surface or subsurface portion of FADs. By January 1, 2029, both the surface and subsurface portion of the FAD must be composed of biodegradable materials. These measures are intended to reduce marine pollution and other impacts associated with non-biodegradable FADs.

NMFS published a proposed rule on July 19, 2024 (89 FR 58698), for public review and comment. The comment period closed on August 19, 2024. The preamble to the proposed rule contains additional background information that is not repeated here.

This rule is implemented under the TCA (16 U.S.C. 951 et seq. ) and includes changes to part 300, subpart C of title 50 of the Code of Federal Regulations (CFR). This rule implements the following three provisions in Resolutions C-23-03 and C-23-04:

First, the rule establishes new requirements for vessels that choose to recover FADs in the IATTC Convention Area for the purpose of final disposal. Except for authorized tuna purse seine vessels, vessels engaged in recovery activities may not deploy FADs. Recovered FADs must be taken on board and brought to port for recycling or final disposal. The rule also implements a reporting requirement for information associated with all FADs recovered by vessel owners and operators in the IATTC Convention Area, unless that information is already reported by an observer. These data must be reported to the IATTC scientific staff for analysis using a format and address provided by NMFS. Because these data are routinely collected by observers, this reporting requirement will only apply in situations where a vessel engaged in FAD recovery does not have an observer on board.

Second, beginning on January 1, 2025, U.S. purse seine vessel owners and operators will be required to meet non-entangling design requirements for FADs deployed or redeployed in the IATTC Convention Area. A definition of “non-entangling FAD,” consistent with the definition adopted by the IATTC, is included in the regulations as follows: “Non-entangling FAD means a FAD that does not include any netting materials for any part of the FAD including both the surface structure ( e.g., raft) and subsurface structure ( e.g., tail).”

Third, beginning on January 1, 2026, U.S. purse seine vessel owners and operators will be required to meet standards for biodegradable materials in either the surface or subsurface components of FADs in the IATTC Convention Area. A definition of “biodegradable,” consistent with the definition adopted by the IATTC, is included in the regulations as follows: “Biodegradable means non-synthetic materials and/or bio-based alternatives that are consistent with approved international standards for materials that are biodegradable in marine environments. The components resulting from the degradation of these materials should not be damaging to the marine and coastal ecosystems or include heavy metals or plastics in their composition. Examples of non-synthetic materials include plant-based materials such as cotton, jute, manila hemp (abaca), bamboo, and natural rubber; and animal-based materials such as leather, wool, and lard. The approved international standards are ASTM D6691, ASTM D7881, and TUV Austria.”

By January 1, 2026, FADs must be constructed according to one of three sets of specifications. Under option one, the surface part of the FAD must be made of fully biodegradable materials, except for flotation components, but the subsurface part may contain non-biodegradable materials ( e.g., synthetic raffia, metallic frame, plastic floats, nylon ropes). Under option two, the subsurface part of the FAD must be made of fully biodegradable materials, but the surface part and any flotation components may be made of non-biodegradable materials. Under option three, the surface part, except for flotation components, and subsurface part must both be made of fully biodegradable materials. All three options would allow for plastic-based flotation components ( e.g., plastic buoys, foam, purse-seine corks). The third option allows an exception for satellite buoys that are attached to FADs to track them, and for nylon ropes, which can be used exclusively to strengthen the structure of the floating or underwater component of the FAD.

By January 1, 2029, all FADs deployed or redeployed in the IATTC Convention Area must be designed and constructed such that the surface part and subsurface part are both made of fully biodegradable materials, except that any flotation component on the surface part may still be made of non-biodegradable materials. The exceptions for satellite buoys and nylon ropes will continue to apply.

NMFS received two comments during the 30-day comment period on the proposed rule, which closed on August 19, 2024. One comment was from a member of the general public and was fully supportive of the proposed rule as written. The second comment was from American Tunaboat Association (ATA), which represents U.S. large purse seine vessels in the Pacific Ocean. This comment, while generally supportive, raised two issues with the proposed rule text which are addressed below.

Issue 1: The commenters noted that the length of time needed to comply with the collection of information requirements for the FAD recovery form is likely to be greater than the 5 minutes estimated in the proposed rule.

NMFS Response: NMFS acknowledges the experience of industry participants in providing an estimate of the time burden for filling out forms and reporting information to the IATTC. After considering this public comment, NMFS has updated the estimated average time burden for collection of information associated with this rule from 5 minutes to 15 minutes, if FADs are voluntarily retrieved for disposal. However, as the commenters pointed out, much of the relevant information would already be collected by IATTC observers aboard the U.S. large purse seine vessels and therefore the time burden is unlikely to fall upon vessel owners and operators except when extenuating circumstances preclude the collection of such information by observers.

Issue 2: The commenters noted that the projected impacts on the profitability of the fishery resulting from FAD design requirements in this action are uncertain and may be greater than the estimates offered in the proposed rule. In particular, the commenters stated that the data produced by the IATTC and the International Seafood Sustainability Foundation (ISSF) overestimate the average amount of tuna which can reliably be harvested from biodegradable FADs and underestimate the costs associated with transitioning from traditional to biodegradable FADs.

NMFS Response: NMFS appreciates the perspectives of industry participants regarding the economic burden of transitioning from traditional to biodegradable FADs. NMFS cited the publicly available information from ISSF and the IATTC to estimate costs and harvest potential, but also acknowledges the fishing industry may have additional experiences with biodegradable FADs. NMFS also acknowledges there may be uncertainty and variation in harvest with biodegradable FADs between vessels as well.

However, the costs associated with the transition to the proposed FAD designs are not expected to reduce profitability or significantly impact the fleet because replacing and redeploying FADs has always been considered routine by large purse seine vessels, regardless of design type. Due to the routine nature of replacement and redeployment of FADs, large purse seine vessels already consider such operating costs. Based on available public information, NMFS does not predict that costs of replacement and redeployment of biodegradable FADs will vary so significantly from current estimates used by large purse seine vessels as to impact profitability. As such, the uncertainty highlighted by the commenter does not alter our determination, pursuant to the Regulatory Flexibility Act, that this action is not expected to have a significant economic impact on a substantial number of small entities.

The Classification section of this final rule includes an adjustment to the estimated time burden of the collection-of-information requirements, in response to the information submitted by industry participants via public comment. No changes to the regulatory text were made between the proposed and final rule.

The NMFS Assistant Administrator has determined that this final rule is consistent with the TCA and other applicable laws.

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

This final rule contains a collection-of-information requirement subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This rule changes the existing requirements for the collection of information No. 0648-0148 (West Coast Region Pacific Tuna Fisheries Logbook, Fish Aggregating Device Form, and Observer Safety Reporting) by requiring U.S. vessel owners and operators who voluntarily recover FADs for disposal or recycling to report information to the IATTC, unless that information is already collected and submitted to the IATTC by an observer onboard the vessel. Current FAD reporting requirements under that collection of information would continue to apply. Public reporting burden for reporting on recovered FADs is estimated to average 15 minutes per form, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

This public reporting burden will only be incurred in potential situations where an observer is either not present aboard the vessel, or is unable to collect the relevant information due to extenuating circumstances. Additionally, under existing regulations at 50 CFR 300.22(c), vessel owners and operators that do not have an observer on board are required to report detailed information on any interaction or activity with a deployed FAD, including information about the design of the FAD. The public reporting burden for this existing collection of information for FAD design will not change as a result of this final rule.

We invite the general public and other Federal agencies to comment on proposed and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Written comments and recommendations for this information collection should be submitted at the following website: https://www.reginfo.gov/public/do/PRAMain. Find this particular information collection by using the search function and entering either the title of the collection or the OMB Control Number 0648-0148.

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

Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that, for purposes of the Regulatory Flexibility Act, this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. Information received through public comment highlights uncertainty in some of the costs which may be incurred by the action. This information does not alter the analysis of the action as described in the proposed rule. Therefore, the initial certification published with the proposed rule—that this rule is not expected to have a significant economic impact on a substantial number of small entities—remains unchanged. As a result, a regulatory flexibility analysis was not required and none was prepared.

NMFS has determined that this action would not have a substantial direct effect 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; therefore, consultation with Tribal officials under Executive Order 13175 is not required, and the requirements of sections (5)(b) and (5)(c) of E.O. 13175 also do not apply. A Tribal summary impact statement under section (5)(b)(2)(B) and section (5)(c)(2)(B) of Executive Order 13175 is not required and has not been prepared.

For the reasons set out in the preamble, NMFS amends 50 CFR part 300 as follows:

The procedures for setting initial annual specifications for the species managed under the Mackerel, Squid, and Butterfish Fishery Management Plan (FMP) are described at 50 CFR 648.22. The regulations at § 648.22(a)(3) require annual catch limits, commercial annual catch targets (including research set-aside, domestic annual harvest (DAH), Tier 3 landings caps, and domestic annual processing), joint venture processing, total allowable levels of foreign fishing, and recreational annual catch targets (including research set-aside) to be specified for the Atlantic mackerel fishery for a period of up to 3 years.

The Regional Administrator monitors mackerel fishery catch based on dealer reports and other available information. When the Regional Administrator projects that 80 percent of the DAH is harvested, the regulations at § 648.24(b)(1)(i) require NMFS to close the commercial mackerel fishery in Federal waters for the remainder of the fishing year. The regulations at § 648.26(a)(2)(i) state that while such a closure is in effect, vessels issued a Tier 1, 2, or 3 limited access mackerel permit are prohibited from taking and retaining, possessing, or landing more than 10,000 lb (4.54 mt) of mackerel per trip at any time, and from landing mackerel more than once per calendar day. Additionally, the regulations at § 648.26(a)(2)(ii) state that while such a closure is in effect, vessels issued an open access mackerel permit are prohibited from taking and retaining, possessing, or landing more than 2,500 lb (1.13 mt) of mackerel per trip at any time, and from landing mackerel more than once per calendar day. The regulations at § 648.24(d) require that upon determining that a closure is necessary, NMFS must: Notify the Executive Directors of the relevant Fishery Management Councils; notify permit holders at least 72 hr before the effective date of the closure; provide adequate notice of the closure to recreational participants in the fishery; and publish notification of the closure in the Federal Register .

Based on dealer reports and other available information, the Regional Administrator projects that 100.06 percent of the mackerel DAH was harvested as of November 29, 2024. Therefore, effective 0001 local time on December 6, 2024, limited access mackerel vessels may not take and retain, possess, or land more than 10,000 lb (4.54 mt) of mackerel per trip at any time, and may only land mackerel once per calendar day, through 2400 hr local time on December 31, 2024. Limited access mackerel vessels that enter port before 0001 hr local time on December 6, 2024, may land and sell more than 10,000 lb (4.54 mt) of mackerel from that trip, consistent with possession restrictions at § 648.26(a)(1)(i). Additionally, open access mackerel vessels may not take and retain, possess, or land more than 2,500 lb (1.13 mt) of mackerel per trip at any time, and may only land mackerel once per calendar day, through 2400 hr local time on December 31, 2024. Open access mackerel vessels that enter port before 0001 hr local time on December 6, 2024, may land and sell more than 2,500 lb (1.13 mt) of mackerel from that trip, consistent with possession restrictions at § 648.26(a)(1)(ii).

Also, effective 0001 hr local time on December 6, 2024, through 2400 hr local time on December 31, 2024, federally permitted dealers may not purchase more than 10,000 lb (4.54 mt) of mackerel from a limited access mackerel vessel unless the vessel enters port before 0001 hr local time on December 6, 2024. Federally permitted dealers may not purchase more than 2,500 lb (1.13 mt) of mackerel from an open access mackerel vessel unless the vessel enters port before 0001 hr local time on December 6, 2024. The possession limits for the mackerel fishery will reset to the amounts outlined at § 648.26(a)(1)(i) and (ii) on January 1, 2025.

This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.

NMFS finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest and impracticable. The mackerel fishery opened for the 2024 fishing year on January 1, 2024. Data and other information indicating that 100 percent of the 2024 mackerel DAH was harvested have only recently become available. Landings data are updated on a weekly basis, and NMFS monitors catch data on a daily basis as catch increases toward the limit. Further, high-volume catch and landings in this fishery increase total catch relative to the DAH quickly. Atlantic mackerel is currently being managed under a rebuilding plan, and exceeding the DAH may harm the stock's rebuilding progress. The regulations at § 648.24(b)(1)(i) require NMFS to implement this action to ensure that mackerel vessels do not exceed the DAH. If implementation of this action is delayed to solicit prior public comment, the 2024 mackerel DAH may be exceeded, thereby undermining the conservation objectives of the FMP. Furthermore, the public had prior notice and full opportunity to comment on this process when these provisions were put in place. Based on these considerations, NMFS further finds, pursuant to 5 U.S.C. 553(d)(3), good cause to waive the 30-day delayed effectiveness period for the reasons stated above.