The Privacy Act of 1974, as amended, 5 U.S.C. 552a, governs the means by which an agency collects, maintains, uses, and disseminates information about individuals that is maintained in a “system of records.” A system of records is any group of records under the control of an agency from which information about an individual is retrieved by the name, identifying number, symbol, or other identifying particular assigned to the individual. The Privacy Act generally grants individuals the right to access Privacy Act records maintained by an agency about themselves, as well as the right to request amendment of those records if they are not accurate, relevant, timely, or complete. The Privacy Act also allows the head of a Federal agency to promulgate rules to exempt a system of records from certain provisions of the Privacy Act, if the system of records contains “investigatory material compiled for law enforcement purposes, other than material within the scope of [5 U.S.C. 552a(j)(2)]: Provided, however, that if any individual is denied a right, privilege, or benefit that he would otherwise be entitled by Federal law, or for which he would otherwise be eligible, as a result of the maintenance of such material, such material shall be provided to such individual, except to the extent that the disclosure of such material would reveal the identity of a source who furnished information to the Government under an express promise that the identity of the source would be held in confidence, or, prior to the effective date of this section [September 27, 1975], under an implied promise that the identity of the source would be held in confidence.” 5 U.S.C. 552a(k)(2).

The U.S. Department of Agriculture's (USDA's) Animal and Plant Health Inspection Service (APHIS) published a proposed rule in the Federal Register on July 11, 2022 (87 FR 41077-41078, Docket No. APHIS-2015-0008)  1 to exempt a system of records, Smuggling Interdiction and Trade Compliance (SITC) National Information Communication Activity System (SNICAS), USDA/APHIS-21, from certain provisions of the Privacy Act in order to avoid interference with law enforcement functions. 2

We also proposed to update the list of systems exempt from certain provisions of the Privacy Act in accordance with 5 U.S.C. 552a(k)(2) to reflect administrative changes as a result of a notice published in the Federal Register on November 16, 2001 (66 FR 57698-57700, Docket No. 99-024-1), announcing that USDA combined three system of records (Plant Protection and Quarantine Program—Regulatory Actions, USDA/APHIS-1; Veterinary Services Programs—Animal Quarantine Regulatory Actions, USDA/APHIS-3; and Veterinary Services Programs—Animal Welfare and Horse Protection Regulatory Actions, USDA/APHIS-4) into one system of record: Investigative and Enforcement Records Regarding Regulatory Activities, USDA/APHIS-1. The reason for combining the system of records was to bring all records concerning investigation and enforcement together. However, USDA's Privacy Act regulations were not amended to reflect this consolidation, which we proposed to rectify in the proposed rule.

We solicited comments on the proposed rule for 30 days ending August 10, 2022. We received no comments by that date. Therefore, for the reasons given in the proposed rule, we are adopting the proposed rule as a final rule without change.

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

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. This final rule would not impose a requirement for small businesses to report or keep records as a result of any of the provisions contained in this rulemaking. The exemptions to the Privacy Act apply to individuals, not to entities covered under the Regulatory Flexibility Act.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this final rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.

This final rule contains no new information collection requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Accordingly, we are amending 7 CFR part 1 as follows:

This document announces changes to the maximum amount of each civil money penalty (CMP) within the OCC's jurisdiction to administer to account for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (the 1990 Adjustment Act), 1 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Adjustment Act). 2 Under the 1990 Adjustment Act, as amended, federal agencies must make annual adjustments to the maximum amount of each CMP they administer. The Office of Management and Budget (OMB) is required to issue guidance to federal agencies no later than December 15 of each year providing an inflation adjustment multiplier ( i.e., the inflation adjustment factor agencies must use) applicable to CMPs assessed in the following year. The agencies are required to publish their CMPs, adjusted pursuant to the multiplier provided by the OMB, by January 15 of the applicable year.

To the extent an agency codified a CMP amount in its regulations, the agency would need to update that amount by regulation. However, if an agency codified a formula for making the CMP adjustments, then subsequent adjustments can be made solely by notice. 3 In 2018, the OCC published a final regulation that removed the CMP amounts from its regulations while updating the CMP amounts for inflation through the notice process. 4

On December 17, 2024, the OMB issued guidance to affected agencies on implementing the required annual adjustment, which included the relevant inflation multiplier. 5 The OCC has applied that multiplier to the maximum CMPs allowable in 2024 for national banks and Federal savings associations as listed in the 2024 CMP notice  6 to calculate the maximum amount of CMPs that may be assessed by the OCC in 2025. 7 There were no new statutory CMPs administered by the OCC during 2024.

The following charts provide the inflation-adjusted CMPs for use beginning on January 10, 2025, pursuant to 12 CFR 19.240(b) and 109.103(c)(2) for conduct occurring on or after November 2, 2015:

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 757 airplanes. The NPRM published in the Federal Register on March 25, 2024 (89 FR 20565). The NPRM was prompted by reports of several occurrences of a PTU control valve that failed to open when commanded. In the NPRM, the FAA proposed to require installing new relays and changing certain wire bundles leading to the PTU control valve. The FAA is issuing this AD to address failure of the PTU control valve, which in conjunction with a loss of the left engine or engine-driven pump (EDP) during takeoff, may result in a failure of the landing gear to retract in a timely manner. This condition, if not addressed, could add drag, affect climb gradient, and prevent the airplane from clearing obstacles on takeoff. This condition can result in loss of continued safe flight and landing.

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

The FAA received additional comments from Aviation Partners Boeing (APB), Boeing, Delta Air Lines (Delta), and United Parcel Service Airlines (UPS Airlines). United Airlines (United) supported the NPRM and also provided additional comments, as discussed below. The following presents the comments received on the NPRM and the FAA's response to each comment.

APB stated that the installation of winglets per Supplemental Type Certificate STC ST01518SE does not affect the accomplishment of the manufacturer's service instructions.

The FAA agrees with the commenter that STC ST01518SE does not affect the accomplishment of the manufacturer's service instructions. Therefore, the installation of STC ST01518SE does not affect the ability to accomplish the actions required by this AD. The FAA has not changed this AD in this regard.

Boeing requested two changes in the description of the unsafe condition. One change is in the description of the state of the landing gear retraction abilities from “may result in a failure of the landing gear to retract” to “may result in a failure of the landing gear to retract in a timely manner.” Boeing explained that the left hydraulic system's electric motor pump would still function, but has a smaller output capacity that results in being unable to retract the landing gear in the time required to clear obstacles. The other requested change is to clarify what conditions lead up to the slowed retraction of the landing gear. Boeing explained that loss of either the left engine or the EDP would lead to use of the electric motor pump and requested that the related phrase “left engine and engine driven pump (EDP)” be changed to “left engine and/or engine driven pump (EDP).”

The FAA agrees to revise the unsafe condition statement. The revisions provide a more accurate description of the unsafe condition and of what conditions lead up to a slow retraction of the landing gear. However, the FAA has revised “left engine and engine driven pump (EDP)” to “left engine or engine-driven pump (EDP)” instead of using “and/or.” Although both failure conditions can occur, only one of the conditions is necessary to affect the landing gear retraction. The FAA has revised the Background section of this final rule and paragraph (e) of this AD accordingly.

Boeing stated that additional engineering definition for wire routing is necessary for a group of airplanes identified in Boeing Alert Service Bulletin 757-29A0071, dated November 16, 2023, and Boeing Alert Requirements Bulletin 75-29A0071 RB, dated November 16, 2023, and that the service bulletin and requirements bulletin will be revised. Delta and United requested that paragraph (h) of the proposed AD be revised to add an exception to address the errors in the wire routing definition for the airplanes identified as Group 3 airplanes in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023 (Group 3 airplanes). United also proposed that paragraph (g) of the proposed AD be revised to incorporate Revision 1 of Boeing Alert Requirement Bulletin 757-29A0071 RB, if it is created prior to the release of this AD. Both Delta and United noted that Boeing published Information Notice 757-29A0071 IN 01 to inform operators of issues with work instructions for the Group 3 airplanes and advised to stop work on those airplanes until new service information is published. United also reasoned that the requested revision would help United and other operators of Group 3 airplanes avoid applying for an AMOC when the final rule is issued.

The FAA agrees with the need to provide additional definition for wire routing that affects Group 3 airplanes because those airplanes would be unable to comply with the instructions provided in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023. However, the FAA does not agree to revise the AD to reference Revision 1 of Boeing Alert Requirement Bulletin 757-29A0071 RB, or to add an exception to address the errors in the instructions for Group 3 airplanes. A later revision of Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023, has not been issued and the publication date is yet to be determined. To delay this action until the revised service information is published would be inappropriate since the FAA has determined that an unsafe condition exists and that the actions must be conducted on the other affected groups of airplanes to ensure continued safety. Operators may apply for approval to use later revisions as an alternative method of compliance with this AD under the provisions of paragraph (i) of this AD. The FAA has not changed this AD in this regard.

Delta requested that paragraph (h) of the proposed AD be revised to add an exception that would allow the use of available connector positions on panels and disconnects other than the ones defined in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023. Delta explained that the figures in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023, are specific in defining positions within the panels and disconnects where the connectors will be installed. Delta also stated that the specific location of the connector installation and disconnects in the panel are not necessary for the function of the system. Delta reasoned that allowing operators to install the connectors in alternative available positions would be acceptable for compliance with the proposed AD while also giving operators flexibility in addressing variations in each airplane's existing wiring.

The FAA agrees that using only the defined positions within the panels and disconnect brackets for the new connectors to be installed is not necessary to address the unsafe condition, and that allowing alternatives would provide flexibility in complying with the requirements of this AD on airplanes that might have different wiring configurations. The action to perform the operational test verifies the functionality of the system and will continue to be required. The FAA has added an exception to paragraph (h) of this AD to allow for installing connectors in alternative available positions on panels and disconnect brackets than those defined in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023.

Delta requested a revision to paragraph (h) of the proposed AD to add an exception that would allow the use of operator-supplied materials that are the same as the Boeing-supplied materials in the parts kit specified in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023. Delta explained that Boeing kits expire within 3 months because of a limitation on the placard (decal) adhesive and opined that operators should have the ability to supply the same decal if the Boeing-supplied decal expires before use. In addition, Delta also reasoned that operators should be able to supply their own materials if Boeing-supplied kits are not available in time to avoid delays in compliance with the proposed AD.

The FAA does not agree to revise this AD regarding this request. The Boeing-supplied kits are specified in Boeing Alert Service Bulletin 757-29A0071, dated November 16, 2023, which is not required by this AD. This AD requires Boeing Alert Requirements Bulletin 757-29A0071 RB, dated November 16, 2023, which identifies parts that are required for compliance. This AD does not require procuring the Boeing-supplied kits that are specified in Boeing Alert Service Bulletin 757-29A0071, dated November 16, 2023. No revision to this AD is necessary in this regard.

UPS Airlines requested a revision to paragraph (h) of the proposed AD to add an exception to a compliance time identified in Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023. This requested exception would extend the calendar time limit from the proposed 30 months after the effective date of the AD to 36 months after the effective date of the AD. UPS Airlines explained that the availability of the Boeing-supplied parts kit could affect the ability to comply with the proposed compliance times. UPS Airlines stated that there are only 15 of the Boeing-supplied kits in stock as of the date of the NPRM, with an anticipated lead time of 175 to 352 days if all 15 kits are purchased and the inventory depleted. UPS Airlines added that they have 429 airplanes in a configuration group that would require the same part kit.

The FAA does not agree to revise the AD regarding this issue. As explained in the previous comment, the Boeing-supplied kits are not part of the requirements of Boeing Alert Requirement Bulletin 757-29A0071 RB, dated November 16, 2023, and are specified in Boeing Alert Service Bulletin 757-29A0071, dated November 16, 2023, thus operators may procure the parts from their supplies without an AMOC or revision to this AD. In developing an appropriate compliance time for this action, the FAA considered the recommendations of the manufacturer, the urgency associated with the subject unsafe condition, the availability of required parts, and the practical aspect of accomplishing the required modification within a period of time that corresponds to the normal scheduled maintenance for most affected operators. In consideration of these items, the FAA has determined that the compliance time of 30 months or 2,760 flight hours after the effective date of this AD, whichever occurs first, will ensure an acceptable level of safety. However, under the provisions of paragraph (i) of this AD, the FAA will consider requests for approval of an extension of the compliance time if sufficient data are submitted to substantiate that new compliance times would provide an acceptable level of safety.

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

The FAA reviewed Boeing Alert Requirements Bulletin 757-29A0071 RB, dated November 16, 2023. This material specifies procedures for changing the wire bundle from circuit breaker C4054 to the P33 panel, installing new relays in the P33 panel, and changing wire bundles to the PTU control valve. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 467 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

On November 2, 2015, Congress enacted the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Public Law 114-74, sec. 701 (Inflation Adjustment Act or Act), which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 as previously amended by the 1996 Debt Collection Improvement Act (collectively, the “Prior Inflation Adjustment Act”), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. Under the Inflation Adjustment Act, agencies (1) had to adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule (IFR); and (2) must make subsequent annual adjustments for inflation no later than January 15 of each year.

On July 1, 2016, the Department published an IFR that established the initial catch-up adjustment for most civil penalties that the Department administers and requested comments. See 81 FR 43430 (DOL IFR). On January 18, 2017, the Department published the final rule establishing the 2017 Annual Adjustment for those civil monetary penalties adjusted in the DOL IFR. See 82 FR 5373 (DOL 2017 Annual Adjustment). On July 1, 2016, the U.S. Department of Homeland Security (DHS) and the U.S. Department of Labor (DOL) (collectively, “the Departments”) jointly published an IFR that established the initial catch-up adjustment for civil monetary penalties assessed or enforced in connection with the employment of temporary nonimmigrant workers under the H-2B program. See 81 FR 42983 (Joint IFR). On March 17, 2017, the Departments jointly published the final rule establishing the 2017 Annual Adjustment for the H-2B civil monetary penalties. See 82 FR 14147 (Joint 2017 Annual Adjustment). The Joint 2017 Annual Adjustment also explained that DOL would make future adjustments to the H-2B civil monetary penalties consistent with DOL's delegated authority under 8 U.S.C. 1184(c)(14), Immigration and Nationality Act section 214(c)(14), and the Inflation Adjustment Act. See 82 FR 14147-48. Since 2018, the Department's annual Inflation Adjustment Act final rule has included H-2B civil monetary penalties. See 83 FR 7 (DOL 2018 Annual Adjustment); 84 FR 213 (DOL 2019 Annual Adjustment); 85 FR 2292 (DOL 2020 Annual Adjustment); 86 FR 2964 (DOL 2021 Annual Adjustment); 87 FR 2328 (DOL 2022 Annual Adjustment); 88 FR 2210 (DOL 2023 Annual Adjustment); 89 FR 1810 (DOL 2024 Annual Adjustment). The DOL 2022 Annual Adjustment also included the first annual adjustments for a newly enacted civil monetary penalty regarding retention of tips under the Fair Labor Standards Act (FLSA) and a newly established civil monetary penalty regarding whistleblower protections under the high-wage components of the labor value content requirements of the United States-Mexico-Canada Agreement Implementation Act (USMCA). See 87 FR 2328.

This rule implements the 2025 annual inflation adjustments, as required by the Inflation Adjustment Act, for civil monetary penalties assessed or enforced by the Department. The Inflation Adjustment Act provides that the increased penalty levels apply to any penalties assessed after the effective date of the increase. Pursuant to the Inflation Adjustment Act, this final rule is published notwithstanding section 553 of the APA.

This rule is not significant under Executive Order 12866.

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

A. The Department has undertaken a thorough review of civil penalties administered by its various components and is adjusting each penalty subject to the Inflation Adjustment Act in accordance with the Act and guidance issued by the Office of Management and Budget (OMB). 1

The Department first identified the most recent penalty amount, i.e., the penalty amount established by the 2024 annual adjustment as set forth in the DOL 2024 Annual Adjustment published on January 11, 2024. See 89 FR 1810. The Department then calculated the annual cost-of-living adjustment in accordance with the Act and OMB guidance by using a multiplier based on the percent change between the October 2024 Consumer Price Index for all Urban Consumers (CPI-U) and the October 2023 CPI-U. This resulted in a cost-of-living adjustment multiplier of 1.02598. 2 In order to compute the 2025 annual adjustment, the Department multiplied the most recent penalty amount for each applicable penalty by the multiplier, 1.02598, and rounded to the nearest dollar.

As provided by section 6 of the Inflation Adjustment Act, the increased penalty levels apply to any penalties assessed after the effective date of this rule. 3 Accordingly, for penalties assessed after January 15, 2025, including penalties whose associated violations occurred before that date but after the applicable dates listed in the tables below, the higher penalty amounts outlined in this rule will apply. The tables below demonstrate the penalty amounts that apply:

The Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101-410, as amended by the Debt Collection Improvement Act of 1996, Public Law 104-134, requires the head of each agency to adjust its CMPs for inflation no later than October 23, 1996 and required agencies to make adjustments at least once every four years thereafter. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Section 701 of Public Law 114-74 (the 2015 Act) further amended the 1990 Act by requiring agencies to adjust CMPs, if necessary, pursuant to a “catch-up” adjustment methodology prescribed by the 2015 Act, which mandated that the catch-up adjustment take effect no later than August 1, 2016. Additionally, the 2015 Act required agencies to make annual adjustments to their respective CMPs in accordance with guidance issued by the Office of Management and Budget (OMB).

Based on these statutes, the Department of State (the Department) published a final rule in June 2016  1 to implement the “catch-up” provisions, followed by annual updates in January of each year. The most recent update was in January 2024. 2

On December 17, 2024, OMB notified agencies that the annual cost-of-living adjustment multiplier for fiscal year (FY) 2025, based on the Consumer Price Index, is 1.02598. Additional information may be found in OMB Memorandum M-25-02. This final rule amends Department CMPs for fiscal year 2025.

See the table for specific changes. Within the Department of State (title 22, Code of Federal Regulations), this rule affects four areas:

(1) Part 35, which implements the Program Fraud Civil Remedies Act of 1986 (PFCRA), codified at 31 U.S.C. 3801-3812. The PFCRA, enacted in 1986, authorizes agencies, with approval from the Department of Justice, to pursue individuals or firms for false claims;

(2) Part 103, which implements the Chemical Weapons Convention Implementation Act of 1998 (CWC Act) (22 U.S.C. 6761). The CWC Act provided domestic implementation of the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on Their Destruction. The penalty provisions of the CWC Act are codified at 22 U.S.C. 6761(a);

(3) Part 127, which implements the penalty provisions of sections 38(e), 39A(c), and 40(k) of the Arms Export Control Act (AECA) (22 U.S.C. 2778(e), 2779a(c), and 2780(k)). The Assistant Secretary of State for Political-Military Affairs is responsible for the imposition of CMPs under the International Traffic in Arms Regulations (ITAR), which is administered by the Directorate of Defense Trade Controls (DDTC); and

(4) Part 138, which implements section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, provides penalties for recipients of Federal contracts, grants, and loans who use appropriated funds to lobby the executive or legislative branches of the Federal Government in connection with a specific contract, grant, or loan. Any person who violates that prohibition is subject to a civil penalty. The statute also requires each person who requests or receives a Federal contract, grant, cooperative agreement, loan, or a Federal commitment to insure or guarantee a loan, to disclose any lobbying; there is a penalty for failure to disclose.

The revised CMP amounts for all penalties will go into effect on the date this rule is published. All violations for which those CMPs are assessed on or after the effective date of this rule, regardless of whether the violation occurred before the effective date, will be assessed at the adjusted penalty level.

The 2015 Act directed agencies to undertake an annual review of CMPs using a formula prescribed by the statute. Annual adjustments to CMPs are made in accordance with the guidance issued by OMB. As in this rulemaking, the Department of State will publish notification of annual inflation adjustments to CMPs in the Federal Register no later than January 15 of each year, with the adjusted amount taking effect immediately upon publication.

The Department of State is publishing this rule using the “good cause” exception to the Administrative Procedure Act (5 U.S.C. 553(b)), as the Department has determined that public comment on this rulemaking would be impractical, unnecessary, or contrary to the public interest. This rulemaking is mandatory and entirely without agency discretion; it implements Public Law 114-74. See 5 U.S.C. 553(d)(3).

Because this rulemaking is exempt from 5 U.S.C. 553, a regulatory flexibility analysis is not required.

This rule does not involve a mandate that will result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule within the meaning of the Congressional Review Act, 5 U.S.C. 801 et seq.

This amendment will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this amendment does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement.

The Department believes that benefits of the rulemaking outweigh any costs, and there are no feasible alternatives to this rulemaking. Pursuant to M-25-02, the Office of Information and Regulatory Affairs (OIRA) has determined that agency regulations that (1) exclusively implement the annual adjustment, (2) are consistent with this guidance, and (3) have an annual impact of less than $100 million, are generally not significant regulatory actions under E.O. 12866. Therefore, agencies are generally not required to submit regulations satisfying those criteria to OIRA for review. This regulation satisfies all of those criteria.

The Department of State has reviewed the amendment in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

The Department of State has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian Tribal governments, and will not preempt Tribal law. Accordingly, Executive Order 13175 does not apply to this rulemaking.

This rulemaking does not impose or revise any information collections subject to 44 U.S.C. Chapter 35.

For the reasons set forth above, 22 CFR parts 35, 103, 127, and 138 are amended as follows:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers regulations setting forth standards of fill for containers of beverage distilled spirits and wine products distributed within the United States.

The authority to establish standards of fill is based on two provisions of law: (1) section 5301(a) of the Internal Revenue Code of 1986 (IRC), codified at 26 U.S.C. 5301(a) in the case of distilled spirits, 1 and (2) section 105(e) of the Federal Alcohol Administration Act (FAA Act), codified at 27 U.S.C. 205(e), for both distilled spirits and wine. Section 5301(a) of the IRC authorizes the Secretary of the Treasury to prescribe regulations “to regulate the kind, size, branding, marking, sale, resale, possession, use, and reuse of containers (of a capacity of not more than 5 wine gallons) designed or intended for use for the sale of distilled spirits . . .” when the Secretary determines that such action is necessary to protect the revenue. The FAA Act at 27 U.S.C. 205(e) authorizes the Secretary of the Treasury to prescribe regulations relating to the “packaging, marking, branding, and labeling and size and fill” of alcohol beverage containers “as will prohibit deception of the consumer with respect to such products or the quantity thereof . . . .” The FAA Act at 27 U.S.C. 206 generally prohibits the sale to consumers of distilled spirits “in bulk” which is defined as containers over one wine gallon.

TTB administers the IRC and FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, as codified at 6 U.S.C. 531(d). In addition, the Secretary of the Treasury has delegated certain administrative and enforcement authorities to TTB through Treasury Department Order 120-01.

The term “standard of fill” is used in the TTB regulations and in this document to refer to the authorized amount of liquid in the container, rather than the size or capacity of the container itself. For better readability, however, this document sometimes uses the terms “size” or “container size” and “standard of fill” interchangeably. The standards of fill for distilled spirits are contained in subpart K of part 5 of the TTB regulations (27 CFR part 5).

Within subpart K, paragraph (a)(1) of § 5.203 (27 CFR 5.203(a)(1)) specifies the following metric standards of fill for containers other than those described in paragraph (a)(2) of that section:

• 1.8 Liters.

• 1.75 Liters.

• 1 Liter.

• 900 mL.

• 750 mL.

• 720 mL.

• 700 mL.

• 375 mL.

• 200 mL.

• 100 mL.

• 50 mL.

In the case of distilled spirits in metal containers that have the general shape and design of a can, that have a closure which is an integral part of the container, and that cannot be readily reclosed after opening, paragraph (a)(2) of § 5.203 authorizes the use of the following metric standards of fill:

• 355 mL.

• 200 mL.

• 100 mL.

• 50 mL.

For better readability this document will refer to the containers referenced in 27 CFR 5.203(a)(1) as “containers other than cans” and those referenced in § 5.203(a)(2) as “cans.”

In addition to the metric standards specified above, § 5.203 contains provisions regarding tolerances (discrepancies between actual and stated fill), unreasonable shortages in fill, and distilled spirits bottled or imported before January 1, 1980, and marketed or released from customs custody on or after that date (the date on which the U.S. volumetric standards were replaced by the § 5.203 metric standards).

The standards of fill for wine are contained in subpart H of part 4 of the TTB regulations (27 CFR part 4). Within subpart H, paragraph (a) of § 4.72 (27 CFR 4.72(a)) authorizes the use of the following metric standards of fill for containers, in addition to those described in paragraph (b) which are discussed further below:

• 3 liters;

• 1.5 liters;

• 1 liter;

• 750 milliliters;

• 500 milliliters;

• 375 milliliters;

• 355 milliliters;

• 250 milliliters;

• 200 milliliters;

• 187 milliliters;

• 100 milliliters; and

• 50 milliliters.

Paragraph (b) of § 4.72 states that wine may be bottled or packed in containers of 4 liters or larger if the containers are filled and labeled in quantities of even liters (4 liters, 5 liters, 6 liters, etc.).

On May 25, 2022, TTB published Notice No. 210 in the Federal Register (87 FR 31787) proposing to add 10 authorized standards of fill for wine and, as an alternative, to eliminate all but a minimum standard of fill for wine containers. The 10 standards of fill proposed for wine were: 2.25 and 1.8 liters; and 720, 700, 620, 550, 360, 330, 300, and 180 milliliters. TTB also proposed to eliminate all but a minimum and maximum standard of fill for distilled spirits but did not propose to authorize any specific standards of fill for distilled spirits as an alternative.

The proposed rule followed, and took into consideration, a Department of the Treasury report on competition in the markets for alcohol beverages that recommended rulemaking to “again consider eliminating the standards of fill requirements.” See Treasury Report on Competition in the Markets for Beer, Wine, and Spirits (February 9, 2022), available at https://home.treasury.gov/system/files/136/Competition-Report.pdf. That report (referred to in this document as the “Competition Report”), which was produced in response to Executive Order 14036, “Promoting Competition in the American Economy” (published in the Federal Register on July 9, 2021, at 86 FR 36987), noted that “[c]ontainer size requirements can be a barrier to innovation and competition, insofar as producers must conform their packaging to the Treasury-mandated sizes.” Further, TTB had received questions regarding standards of fill from industry members noting difficulty in sourcing compliant containers during certain periods.

In response to Notice No. 210, TTB received 76 comments. Commenters included national trade associations, the European Union (EU), congressional representatives, individuals, and alcohol beverage companies. Most of the comments addressed the proposals, providing support for or opposition to them. However, many commenters requested that TTB consider adding certain additional authorized standards of fill for distilled spirits and wine that were not included in Notice No. 210, as either a preferred alternative to generally eliminating the standards of fill or, even if their preference was to eliminate the standards of fill, as an option for consideration in the event that the standards of fill were not eliminated. Several commenters also suggested TTB eliminate the distinction between standards of fill that apply to distilled spirits in cans and those that apply to distilled spirits in containers other than cans, which was also not proposed in Notice No. 210.

Because TTB received comments that requested amendments beyond the scope of the original request, and recognizing that these requests should be considered in the context of the proposals in Notice No. 210, TTB issued Notice No. 210A on September 9, 2024 (89 FR 73050), which reopened the comment period on Notice No. 210. In Notice No. 210A, TTB specifically requested comments on whether to authorize the following new standards of fill for distilled spirits: For both cans and containers other than cans, 3.75, 3, 2, and 1.5 liters and 500, 350, 250, and 187 milliliters; for cans, 945, 710, 700, 570, 475, and 331 milliliters; and for containers other than cans, 355 milliliters. TTB also requested comments on whether it should maintain the current distinction between standards of fill authorized for distilled spirits in cans and those authorized for distilled spirits in containers other than cans. TTB noted its particular interest in comments regarding whether the distinction, that is, whether the size in combination with the type of container, serves the purpose of preventing consumer confusion or preventing consumer deception consistent with TTB's mandate under the FAA Act. TTB also specifically requested comments on whether to authorize the following new standards of fill for wine: 600 milliliters, 19.2 oz, and 16 oz. 2

The comment period for Notice No. 210A closed on October 9, 2024.

In response to Notice No. 210A, TTB received 123 comments. In total, on Notices No. 210 and 210A, TTB received a total of 199 comments. Commenters included national and international trade associations, members of Congress, representatives of foreign governments, representatives of the glass container industry, individuals, and alcohol beverage industry members.

In addition to comments on particular proposed sizes and the proposal to generally eliminate the standards of fill, discussed further below, TTB received many comments that expressed general views on the standards of fill, either favoring or disfavoring TTB actions, but without reference to the technical aspects of the regulation.

In favor of amending the regulations, one individual commenter explained that it was “common sense to adjust this outdated and arbitrary regulation.” (Comment 11) Others articulated the benefits of expanding the standards of fill generally, i.e., independent of whether that was achieved through elimination or the addition of specific sizes (or groups of sizes). For example, one individual stated that expansion into “larger sizes” would “reduce waste and garbage and recycling burdens and increase productivity and profitability while reducing prices for consumers . . . a win-win-win for the triple bottom line.” (Comment 129) Another individual expressed that not allowing “critical single serve sizes puts wine and cider at an unfair disadvantage.” (Comment 128) Similarly, several commenters, for example Benny Boy Brewing (Comment 112), urged TTB to incorporate its proposed changes, but without referencing a specific size or approach.

Many commenters also expressed their general opposition to any changes at all, for example Bear Creek Winery (Comment 14) stated that TTB's proposal “does not address any issues” and expressed that they “do not wish to add any additional fill sizes to what is already approved.” Other commenters expressed that it seemed too soon to revisit the standards of fill given that TTB had recently amended them in 2020. Some commenters opposed the addition of any new standards on business and environmental grounds, such as the Mexican Chamber of the Tequila Industry (comment 165) who explained their view that, “The introduction of a wide range of bottle sizes would present significant challenges to forecasting demand and managing inventory levels, potentially leading to increased costs and inefficiencies, particularly for smaller tequila producers who may have limited resources to adapt to such changes,” and that “[s]tandardized sizes have generated significant environmental benefits by promoting efficiency in production and packaging.”

Of the 199 total comments TTB received in response to Notices No. 210 and 210A, approximately a third of the comments address the proposal to generally eliminate the standards of fill. Approximately a fifth of the comments support eliminating the standards of fill for distilled spirits, wine, or both. Several comments express a preference for eliminating the standards of fill but state that approving certain new sizes would be an acceptable alternative. A total of 30 comments specifically oppose eliminating standards of fill for distilled spirits and/or wine.

Commenters supporting the elimination of the standards of fill generally state that the standards are unnecessary, restrictive to producers, and out-of-date. They note that there are no standards of fill for malt beverages or for other consumer products. One distilled spirits producer, Endless West, notes that it regularly encounters challenges posed by the limitations of the standards of fill, and that these limitations reduce competition, inhibit packaging innovations which in turn constrain the industry member's ability to introduce new sizes to meet customer demands, and constrain industry members' efforts to improve profit margins, supply chain efficiencies, and environmental sustainability. The comment goes on to state that consumers are capable of reading the net contents on a label and making rational purchasing decisions in light of existing labeling regulations. Other commenters also contend that eliminating the standards of fill will result in lower costs for producers, will facilitate international trade, and will provide consumers with more options in beverage alcohol packaging. A commenter identified as Texas Vine Country states that eliminating standards of fill would, among other things, allow for harmonization with international packaging sizes, take advantage of available glass/container sizes, encourage responsible drinking by tailoring packaging size more closely to consumer's desired serving sizes, reduce wasted beverages by consumers due to arbitrary packaging sizes, and allow for new and innovative packaging that protects the beverage quality and is more efficient to transport and store.

Several commenters that support eliminating the standards of fill say that the reasons for them no longer apply or that TTB lacks authority under current circumstances to mandate them. Tincknell & Tincknell, a wine sales and marketing consultant, states that the standards relate to tax collection and “post-Prohibition era criminal behavior” that are no longer relevant. The National Federation of Independent Businesses asserts that statements made in the February 2022 Competition Report show that TTB cannot justify maintaining its standards of fill regulations under the relevant statutory authority in the IRC and FAA Act.

Several commenters favor eliminating the standards of fill but state that adding one or more of the proposed sizes would be an acceptable option. While noting similar reasons as those described above for supporting the elimination of standards of fill, these commenters stated that in the event the standards of fill are retained, adding specific new sizes would still provide benefits to producers and consumers. A number of these commenters referencing cider products specifically requested approval of 16 ounce and 19.2 ounce sizes for wine, while other commenters referencing “ready-to-drink” cocktails (often referred to as RTDs) specifically requested approval of the 475 ml and 570 ml sizes for distilled spirits in metal cans. These are addressed in the comment summaries related to specified sizes below.

Commenters opposing the elimination of the standards of fill cite a number of reasons to retain the standards. The most often cited reason is that the standards of fill prevent consumer confusion. The Wine Institute (Comment 43) stated that the standards of fill do as intended by preventing consumer confusion and deception that would otherwise exist if there was a limitless array of alcohol beverage container sizes in the marketplace. The Wine Institute stated that it “has had discussions with state Attorneys General who have expressed concerns about the ability of packaging and sizing to deceive consumers.” One concern is the difficulty in cost comparison and the potential for “shrinkflation,” when the packaging size and amount of product is reduced while the price remains the same, and the comment goes on to raise concerns with the small differences between some of the proposed container sizes compared with the existing standards of fill. Similarly, Fox Run Vineyards states that removing the standards of fill opens up the opportunity for consumer deception, citing how small differences in bottle sizes may result in less product provided for the same price. Milestone Brands, LLC, a producer and marketer of spirits-based products (Comment 72) states that it is “the best option on balance for consumers” and that retaining the standards of fill requirements while allowing for new sizes will maintain sizes that are “recognizable and familiar” to consumers while providing additional consumer choice and ensuring that “order is maintained in the marketplace.”

Other commenters claim that the standards of fill requirements have been in place for decades and have not caused a significant burden on industry members. For example, the Distilled Spirits Council of the United States (Comment 59) states: “Having standard sizes codified in the regulations supports investment in modern packaging and bottling equipment, which promotes efficiency, cost savings, and economies of scale as the number of necessary bottle sizes, labels, and machinery parts are reduced.” Representatives Mike Thompson and Dan Newhouse, co-chairs of the Congressional Wine Caucus (Comment 51), express concern that eliminating the standards of fill could cause “[s]ignificant disruption to business operations as producers, distributors, and retailers struggle to adapt business operations to accommodate a proliferation of container sizes.”

Commenters also argued that eliminating the standards of fill will result in conflicting State requirements. These commenters report that a number of States defer to the Federal standard of fill requirements, so elimination could result in a patchwork of different State rules. As the Washington Wine Institute (Comment 62) states, a proliferation of new rules “will create serious disruption to business as wineries would have to overhaul their sales, marketing, and compliance models to adjust to . . . varying state regulations.” A comment from the Colorado Wine Industry Development Board (Comment 69) echoes this view that eliminating standards of fill, or adding any new standards of fill for wine, will cause unnecessary consumer confusion, significant disruption to business operations, difficulty for producers' compliance across State lines, and unnecessary expenditure of State resources to create standards in lieu of the Federal standards. Also addressing the wine industry specifically, the Wine Institute asserts that the Federal framework for standards of fill creates a uniform system that allows wineries to comply with one national system of regulations and that eliminating the Federal standards will result in unnecessary business disruption. The comment goes on to assert that Federal uniformity enhances competition by providing stability and, noting that eight States currently have statutorily required standards of fill that have presented ongoing challenges to the industry, the Wine Institute asserts that it is in the best interest of the wine industry and consumers to have consistency rather than different State rules that allow for differing sizes to be offered in different marketplaces.

While some commenters supporting eliminating the standards of fill assert that doing so will allow greater flexibility for small businesses, others that oppose eliminating the standards of fill assert that maintaining the standards of fill levels the playing field for suppliers of all sizes. In its comment, the Wine Institute states that eliminating the standards of fill “will result in an unknown number of alternative sizes and bottle types that will put small and mid-sized suppliers at a competitive disadvantage because every different container size will require a different bottling run with accompanying costs that cannot be spread over a large number of units.

Notice Nos. 210 and 210A together solicited comments on adding a combined total of 13 authorized standards of fill for wine. A significant portion of comments address one or more of the proposed new sizes for wine containers. One of the comments, from the Washington Wine Institute (Comment 62), supports limited authorization of new sizes, but only if the requests come from “a large segment of the wine industry, and not just one or two producers or importers.”

Commenters expressed both support and opposition for the addition of specific petitioned-for sizes for wine as follows:

As explained in Notice No. 210, TTB received a petition from an importer of boxed wine requesting that the agency authorize a standard of fill of 2.25 liters for wine containers. The importer stated that such a container would significantly reduce the environmental impact of wine packaging because it holds as much as three 750-milliliter wine bottles at half the weight of such bottles.

Three commenters (two individuals and Bobo Wine, LLC—Comments 13, 186, and 185, respectively) specifically support approval of a 2.25-liter size. The commenters generally state that this size would enhance the availability of boxed wines, which they note has environmental benefits, and would be a convenient size for consumers, since it is the equivalent of three standard wine bottles.

In prior rulemaking, including T.D. TTB-165 (December 29, 2020, 85 FR 85514) and Notice Nos. 210 and 210A, TTB described an agreement between the United States and Japan that included a commitment for the United States to engage in rulemaking to propose the addition of specific new standards of fill and to take final action on that rulemaking. These six sizes were among those that the United States agreed to consider in rulemaking under a Side Letter agreement with Japan, dated October 7, 2019, which was part of a larger agreement between the United States and Japan agreed to on that same day.

Three commenters specifically support these six sizes: the National Tax Agency of Japan (Comment 26), the Japan Spirits and Liqueurs Makers (Comment 27), and the Japan Wineries Association (Comment 28). These commenters did not provide additional information beyond expressing support for these sizes. An additional commenter who identified themselves as a U.S. wine importer (Comment 2) also supports the 720 milliliter size to facilitate the importation of certain wines from Italy.

Some commenters expressed concern about one or more of these sizes. For example, the Colorado Wine Industry Development Board (comment 69) expressed concerns about approving sizes that are “nearly but not quite identical to the existing standards” because consumers might purchase a 720-milliliter container thinking it was the existing 750 milliliter size or a 300 milliliter container thinking it was the existing 375 milliliter size.

TTB had proposed a 700 milliliter size in Notice No. 210 in response to inquiries from foreign governments in 2007 and a comment on a 2019 notice of rulemaking addressing standards of fill for wine (Notice No. 182, 84 FR 31257). One individual commenter (comment 13) supports this size noting that prohibiting this size “denies American consumers high quality wines and hurts American import and retail businesses . . . .”

Some commenters, such as Fern Valley Vineyards, oppose authorizing 700 milliliter containers for wine due to the potential for consumer confusion. The commenter states that consumers would have trouble distinguishing between the slightly smaller and therefore less expensive 700 milliliter containers, which are commonly used for European wines, and the slightly larger and more expensive 750 milliliter containers, which are commonly used for domestic wines. As a result, Fern Valley Vineyards believes domestic wines would be at a disadvantage as consumers would choose the less expensive bottle without realizing it contains less wine.

As explained in greater detail Notice No. 210, TTB proposed a 620 milliliter size in response to inquiries over the years regarding the importation of the French product known as “vin jaune” (“yellow wine” in English). Vin jaune is historically and currently bottled in the 620 milliliters size so authorizing this container size would allow U.S. importers to legally import the wine in its traditionally used containers.

Several commenters specifically support authorizing a 620 milliliter size. Commenters include the French Federation of Wines and Spirits Exporters (FEVS), the European Union, and the Comité Européen des Enterprises Vins. Most of these commenters state that authorizing this size will allow the import of “vin jaune” from France, which is traditionally bottled only in 620 milliliter containers. FEVS (Comments 40 and 191) requests that TTB authorize this size only for vin jaune. No commenters raised concerns specific to this container size.

TTB received one comment from a person identifying themselves as a winemaker and former restaurant wine buyer (Comment 4), specifically supporting approval of a 600-ml size noting that this size has “become important for many distributors and wholesale buyers” and authorizing it would allow American consumers to try wines from “regions that are required to use this size package.” No commenters raised concerns specific to this container size.

TTB proposed the addition of these container sizes in Notice No. 210A at the request of the American Cider Association (ACA) who noted that both are already commonly used for similar products that are not required to conform to TTB standards of fill.

Numerous commenters support authorization of 473 ml (16 oz) and 568 ml (19.2 oz) sizes. The majority of commenters represent individual cideries and meaderies or cider and mead organizations, including the American Mead Maker Association, the Vermont Cider Association, the New York Cider Association, and the American Cider Association. Several cider producers state that the rationale for authorizing the 16 oz and 19.2 oz sizes along with their metric equivalents is similar to the rationale that was the basis for authorizing 355 milliliter (12 oz) can size in 2020 (T.D. TTB-165, 85 FR 85514), that is, that these sizes are commonly used and available for other products, including cider products to which the standards of fill do not apply and their customers want and expect that size, making it critical to their commercial success. These producers note that, in the production of cider, apples often naturally ferment to an alcohol by volume (abv) level just above 7.4 percent, so producers often take steps to lower the abv below 7 percent so that the standards of fill regulations will not apply, enabling them to use readily available containers, such as the 16 oz can that they could not use for products for which the abv is 7 percent or higher and the standards of fill apply. They state that sugar levels in apples vary widely depending on climate and other factors, making final alcohol levels difficult to predict. They argue that being able to use readily available container sizes that can be used for products not subject to the standards of fill, such as wine products under 7 percent abv and malt beverages will eliminate this uncertainty. Many producers explained, as did Wolffer Estate Vineyard (comment 169), that authorizing these sizes “allows cideries and wineries to stay competitive.” No commenters raised concerns specific to this container size.

As explained in greater detail in Notice No. 210, after the publication of T.D. TTB-165, TTB received a petition from a South African wine exporter requesting the approval of 330 milliliters as a standard of fill for wine. The petitioner stated that 330 milliliters is the standard can size for beer and soda products in South Africa and in most European countries.

Five commenters (Comments 13, 31, 32, 159, and 180) specifically support approval of a 330 milliliter size. Commenters include Ikhaya Wines LLC, Future Proof Brands, and Ball Corporation. Ikhaya Wines LLC (Comments 31 and 32) expresses the belief that authorizing this size will facilitate importing wines from South Africa, where 330 milliliters is a standard size for canned wines. Future Proof Brands (Comment 159) states that authorizing this size will allow American wine producers to expand their presence in European and Australian markets, where these sizes are common.

The Colorado Wine Industry Development Board (comment 69) expressed concerns about approving a 330 milliliter size noting that its proximity to the existing 375 milliliter size could cause consumer confusion.

Notice No. 210A solicited comments on adding a total of 15 authorized standards of fill for distilled spirits that were raised in comments responding to Notice No. 210. A large number of commenters expressed support for the addition of specific sizes for distilled spirits as follows:

Several commenters specifically support authorizing 3.75-liter and 3-liter sizes including DISCUS, The American Distilled Spirits Alliance, Milestone Brands, and FEVS. The American Distilled Spirits Alliance (Comment 198) notes that these larger sizes would “cater to consumers who prefer to purchase in bulk for cost savings or long-term use or who are conscious of their environment.”

Two commenters specifically support these sizes (Comments 149 and 197). The Distilled Spirits Council of the United States (DISCUS, Comment 197) states that 2-liter containers for other beverages are common in the United States, and consumers are already familiar with this size.

Only one commenter (Comment 191) specifically supports this size. In its comment, FEVS states that this size is currently allowed in Europe.

Eleven commenters (Comments 5, 59, 72, 78, 109, 148, 149, 166, 191, 194, and 198) specifically support this size. Commenters include DISCUS, Milestone Brands, Takara Shuzo International, the American Distilled Spirits Alliance, and the Chinese Ministry of Commerce. Most commenters note that authorizing this size would fill the large gap between two currently-authorized sizes (375 and 700 milliliters) and would “provide container size parity with the wine and malt based RTD products available to consumers” (Comment 72).

Five commenters (Comments 59, 148, 166, 191, and 198) specifically support this size. Commenters include DISCUS, Takara Shuzo International, FEVS, and the American Distilled Spirits Alliance. Allowing greater flexibility for producers and more choices for consumers were the most commonly cited reasons for supporting this size.

Four commenters specifically support these sizes (Comments 138, 163, 171, and 180). Commenters include Ball Corporation, Social Hour Cocktails, the Glass Packaging Institute, and Charbay Distillery. Ball Corporation (Comment 180) notes that these sizes would particularly benefit producers and consumers of RTD cocktails.

Ball Corporation (Comment 180) specifically supported these two sizes as a way to promote RTD cocktails.

Suave Spirits International (Comment 23) specifically supported this size, noting that it is a common size in European markets and would help establish uniformity in packaging sizes and reduce the number of SKUs needed to manage their products.

WISEACRE Brewing (Comment 25) and Ball Corporation (Comment 180) specifically supported these two sizes, which would fill the gap between the two currently authorized sizes (12 and 24 ounces) and allow more manufacturing options for small producers and greater choice for consumers.

DISCUS (Comments 59 and 197) and Ball Corporation (Comment 180) specifically commented on this size, noting that authorization of this size would help achieve greater operational efficiency.

Several commenters specifically supported this size. Commenters include Representative Glenn “GT” Thompson, Representative Austin Scott, the Glass Packaging Institute, O-I Glass, and Ball Corporation. The commenters generally state that allowing this size would provide greater consumer choice as the shift to smaller packaging formats continues to grow for both alcohol and non-alcohol beverages.

TTB received a number of comments to Notice No 210A requesting additional sizes for distilled spirits containers that were not proposed in Notice Nos. 210 and 210A, because commenters did not have a chance to comment on these specific sizes we are not taking action on those at this time.

During the comment period for Notice No. 210, TTB received several comments pertaining to the different standards of fill for spirits in cans and containers other than cans (for example, comments 45, 52, 53, 59, 63, 71, and 75). The comments generally stated that removing distinctions between cans and other containers for distilled spirits would result in greater competition, consumer choice, and a consistency of regulation, without adding to consumer confusion. As a result, in Notice No. 210A, TTB requested comments on whether it should maintain this distinction.

TTB received several comments to Notice No. 210A that address the question of harmonization of sizes for distilled spirits. Most of the commenters state that the current standards of fill unfairly promote can manufacturers. Applying the same standards of fill for all distilled spirits containers would allow producers of glass containers to compete more fairly with metal container producers. Both the Glass Packaging Institute and O-I Glass (Comments 163 and 196, respectively) note that the RTD cocktail market is rapidly expanding, and malt- or wine-based RTD cocktail manufacturers have a choice between cans or bottles when producing 355 milliliter (12 ounce) products, which is a popular size for consumers. Spirits-based RTD cocktail manufacturers, however, do not have a choice and must only use cans if they choose to produce products in this size. O-I goes on to say that glass is “endlessly recyclable without any loss of material or quality,” making it an environmentally-friendly choice for both spirits producers and consumers.

The only comments in opposition were those opposed to any revision to the standards of fill generally, for example, the Mexican Chamber of the Tequila Industry (Comment 165).

TTB received a number of comments that did not address retaining or eliminating the standards of fill, the specific proposed standards of fill sizes, or the harmonization of authorized standards of fill across distilled spirits container types. We note that we will not be addressing those comments in this rulemaking as they are outside of its scope.

As discussed previously, TTB received comments that express support for eliminating the standards of fill, asserting that eliminating the standards will provide them with greater flexibility to meet consumer demands and grow their businesses. TTB received comments that oppose eliminating the standards of fill. These commenters contend that eliminating the standards of fill would cause consumer confusion and potentially lead to a proliferation of differing State container size requirements that could cause further consumer confusion. Commenters also express concern about significant market disruption.

Based upon these comments, particularly those with regard to the potential consumer confusion, TTB believes that the appropriate action at this time is not to eliminate all standards of fill but instead to authorize all of the new standards of fill that were specifically requested and for which TTB received interest in and support for authorizing.

TTB notes that, while some commenters express support for eliminating of the standards of fill, a number of the comments themselves focus specifically upon ensuring that certain sizes, such as 473 milliliter (16 oz.) and 568 milliliter (19.2 oz) for wine and 500 milliliter for distilled spirits, were authorized. TTB believes that its authorization of these sizes largely addresses these commenters' concerns.

In light of this, TTB believes that the addition of the proposed sizes will result in many of the same benefits that were intended by proposing eliminating the standards of fill—providing bottlers with more flexibility, facilitating the movement of goods in domestic and international commerce, and providing additional purchasing options to consumers, but without causing the disruption commenters expressed concerns over regarding the proposed elimination of standards of fill. TTB does recognize that the result is several authorized standards that would be close to each other, including, for wine, 187 ml (an existing standard of fill) and 180 ml (one proposed in Notice Nos. 210 and 210A) and, for distilled spirits, 350 ml (proposed in Notice No. 210A) and 355 ml (which is already authorized for distilled spirits in cans, but would be authorized for all distilled spirits containers with the elimination of distinction in standards for different type of distilled spirits containers). While TTB understands the potential for consumers in the near term to mistake the size of new containers that are close in size to other authorized containers, TTB believes the additional flexibility for industry members and broader consumer choice that authorizing the new sizes provides offsets the potential that expectations may take time to adjust. TTB also believes that the limited nature of these approvals, as opposed to eliminating all standards, similarly limits the potential for consumer confusion.

As explained in Notice No. 210A, the distinction between distilled spirits in cans and distilled spirits in containers other than cans resulted from rulemaking in the early 1990s. On September 27, 1991, TTB's predecessor, the Bureau of Alcohol, Tobacco, and Firearms (ATF), proposed differentiating between cans and containers other than cans in ATF Notice No. 725 published in the Federal Register at 56 FR 49152). There, ATF explained its view at that time that approving both 375 and 355 milliliter containers for distilled spirits would be misleading for consumers because of how close together the sizes were. However, ATF also recognized that because 355 milliliters was not an approved size, it prevented utilization of one of the most common can sizes. ATF proposed to create mutually exclusive categories of distilled spirits containers, cans and containers other than cans, with separate standards of fill authorized for each, “. . . based on the belief that cans are sufficiently distinct from other types of [distilled spirits containers], in both shape and design, so that a different standard of fill would not be confusing to the consumer.” This proposal was adopted in the final rule published in the Federal Register on July 14, 1992, at 57 FR 31126. Accordingly, TTB solicited and received several comments on whether it should maintain a distinction between cans and containers other than cans consistent with this purpose.

After reviewing the comments, TTB has determined that there is no basis for maintaining the distinction between cans and other containers for distilled spirits for purposes of consumer protection. As some commenters note, consumers are already familiar with comparing net contents labels on other foods and beverages to determine if one package contains more product than another, regardless of the shape or material of the packaging. TTB currently requires net content statements on alcohol beverages, which allows consumers to do the same with distilled spirits products regardless of container type.

With regard to the comment that TTB lacks the authority to issue regulations relating to standards of fill, the commenter points to statements in the Treasury Competition Report that the standards are “no longer necessary to ensure accurate calculation of tax liabilities or to protect the revenue” and that “consumers presumably have ample information on bottle size from labeling and point of sale displays.” We disagree with the proposition TTB lacks authority.

As noted above, the FAA Act at 27 U.S.C. 205(e) authorizes the Secretary of the Treasury to prescribe regulations relating to the “packaging, marking, branding, and labeling and size and fill” of alcohol beverage containers “as will prohibit deception of the consumer with respect to such products or the quantity thereof . . . .” The Treasury Competition Report goes on to describe TTB plans for “future rulemaking to propose additional new standards of fill,” and states that such rulemaking “should again consider eliminating the standards of fill requirements and specifically examine whether the potential impact on competition outweighs potential consumer confusion.” That “future rulemaking” was Notice No. 210, which requested comment on eliminating the standards of fill. The comments to Notice Nos. 210 and 210A included information addressing the presumption that consumers have adequate information and that such information prevents consumer deception with respect to the products and quantities. As described above in the comment summaries, a number of commenters described confusion that was likely from a complete elimination of the standards of fill. In conclusion, rather than indicate TTB does not have authority for maintaining standards of fill, the statements in the Treasury Competition Report were the bases for soliciting comment from the public through Notice Nos. 210 and 210A, and those comments form the basis for the actions taken in this final rule.

After careful analysis of the comments discussed above, TTB has decided not to eliminate the standards of fill for wine and distilled spirits. Rather, TTB is adding all sizes for which TTB sought specific comments on in Notice Nos. 210 and 210A. Based upon the comments received to those notices, TTB is authorizing the addition of the 180, 300, 330, 360, 473 (16 oz.), 550, 569 (19.2 oz), 600, 620, 700, and 720 milliliters sizes and 1.8 and 2.25 liter sizes for wine to § 4.72, and the 187, 250, 331, 350,355, 475, 500, 570, 700, 710, and 945 milliliters sizes and 1.5, 2, 3, 3.75 liter sizes for distilled spirits containers to § 5.203.

TTB is also adopting the proposal in Notice No. 210A to eliminate the distinction between standards of fill for cans and containers other than cans for distilled spirits in § 5.203. As a result, all standards of fill for distilled spirits are approved for cans and containers other than cans.

TTB certifies that this final rule will not have a significant economic impact on a substantial number of small entities. This final rule will provide wine and distilled spirits bottlers and importers with additional flexibility to use new bottle sizes if they so choose. This proposed regulation does not impose any new reporting, recordkeeping, or other administrative requirements. Accordingly, a regulatory flexibility analysis is not required.

The collection of information in this rule has been previously approved by the Office of Management and Budget (OMB) under the title “Labeling and Advertising Requirements Under the Federal Alcohol Administration Act,” and assigned control number 1513-0087. This regulation will not result in a substantive or material change in the previously approved collection action, since the nature of the mandatory information that must appear on labels affixed to the container remains unchanged.

It has been determined that this final rule is not a significant regulatory action as defined in Executive Order 12866, as amended. Therefore, a regulatory assessment is not necessary.

Because these regulations relieve a restriction by providing wine and distilled spirits bottlers and importers with additional flexibility to use new bottle sizes if they so choose, and do not impose any new reporting, recordkeeping, or other administrative requirements, it has been determined, pursuant to 5 U.S.C. 553(d)(1), that these regulations will be issued without a delayed effective date.

For the reasons discussed in the preamble, TTB amends 27 CFR parts 4, 5, and 24 as follows:

On October 11, 2024, the EEOC published in the Federal Register a Notice of Proposed Rulemaking (“NPRM”) announcing its proposal to amend 29 CFR part 1602 by creating a new subpart addressing applications for exemptions that will be applicable to all EEO reports. This new subpart will replace the existing separate provisions addressing undue hardship applications for the six EEO reports; therefore, the NPRM also proposed to remove and reserve 29 CFR 1602.10, 1602.18, 1602.25, 1602.35, 1602.44, and 1602.53. This new subpart will apply to all EEO reports as now constituted or subsequently modified.

In addition, the Commission proposed to revise its regulations to: (1) delegate to its Chief Data Officer (CDO) or the CDO's designee  1 the authority to make determinations on exemption applications; (2) establish express procedures for exemption applications; and (3) delineate the criteria that are used for assessing exemption applications.

The EEOC received two brief comments from individuals. Both comments emphasized the importance of efficiency when the EEOC processes hardship exemptions. Neither comment suggested changes to the text of the proposed rule.

The final rule adopts all amendments proposed in the NPRM without any revisions.

The Commission has complied with the principles in section 1(b) of Executive Order 12866, Regulatory Planning and Review. This final rule is not a “significant regulatory action” under section 3(f) of the order and does not require an assessment of potential costs and benefits under section 6(a)(3) of the order.

The Paperwork Reduction Act (44 U.S.C. chapter 35) (PRA) applies to rulemakings in which an agency creates a new paperwork burden on regulated entities or modifies an existing burden. This final rule imposes no new information collection requirements on the public, and therefore it will create no new paperwork burdens or modifications to existing burdens that are subject to review by the Office of Management and Budget under the PRA.

The Commission certifies under 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities. To the extent that it affects small entities, it merely clarifies the process for requesting exemptions. For this reason, a regulatory flexibility analysis is not required.

This final rule will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. To the extent that it may apply to state or local government reporting requirements, it merely clarifies the process for requesting exemptions. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This final rule does not substantially affect the rights or obligations of non-agency parties and, accordingly, it is not a “rule” pursuant to the Congressional Review Act. Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.

Accordingly, for the reasons discussed in the preamble, the Equal Employment Opportunity Commission amends 29 CFR part 1602 as follows:

I. Background II. ONRR's Inflation-Adjusted Maximum Rates III. Procedural Matters A. Regulatory Planning and Review (Executive Orders 12866, 13563, and 14094) B. Regulatory Flexibility Act C. Congressional Review Act D. Unfunded Mandates Reform Act E. Takings (Executive Order 12630) F. Federalism (Executive Order 13132) G. Civil Justice Reform (Executive Order 12988) H. Consultation With Indian Tribes (Executive Order 13175) I. Paperwork Reduction Act J. National Environmental Policy Act K. Effects on the Energy Supply (Executive Order 13211) L. Clarity of This Regulation M. Administrative Procedure Act I. Background

FOGRMA, at 30 U.S.C. 1719(a)-(d), authorizes the Secretary of the Interior (“Secretary”) to assess CMPs for royalty reporting and other violations. Pursuant to the authority delegated to it by the Secretary, ONRR published regulations at 30 CFR part 1241 implementing the Secretary's CMP authority. The Inflation Adjustment Acts require Federal agencies to publish annual CMP inflation adjustments in the Federal Register by January 15 of each year.

The Inflation Adjustment Acts and OMB Memorandum No. M-25-02, dated December 17, 2024 (“OMB Memorandum”) specify that the annual inflation adjustments are based on the percent change between the Consumer Price Index for all Urban Consumers (“CPI-U”) published by the Department of Labor for the month of October in the year of the previous adjustment, and the October CPI-U for the preceding year. The OMB Memorandum further specifies that the cost-of-living adjustment multiplier for CY 2025, not seasonally adjusted, is 1.02598 (October 2024 CPI-U (315.664)/October 2023 CPI-U (307.671) =1.02598). ONRR used this guidance to calculate required inflation adjustments. Pursuant to the Inflation Adjustment Acts, any increases in CMPs are rounded to the nearest whole dollar and the new maximum penalty rates apply to CMPs assessed after the date the increase takes effect.

This final rule increases the maximum CMP dollar amounts for each of the four violation categories identified in 30 U.S.C. 1719(a)-(d) and implemented by 30 CFR part 1241. The following table identifies the applicable ONRR regulations, the dollar amounts set forth in the regulations, and the adjusted amounts.

Executive Order (“E.O.”) 12866, as reaffirmed by E.O. 13563 and E.O. 14094, provides that the Office of Information and Regulatory Affairs (“OIRA”) in the OMB will review all significant rules. OIRA has determined that agency regulations intended only to implement the annual inflation adjustments are not significant, provided they are consistent with the OMB Memorandum. Because ONRR is only implementing the annual inflation adjustments in this final rule, this rule is not significant under E.O. 12866.

E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the United States' regulatory system to promote predictability, reduce uncertainty, and use the most innovative and least burdensome tools for achieving regulatory ends. E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. ONRR developed this rule in a manner consistent with these requirements.

This rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601, et seq., because the rule only makes an adjustment for inflation. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires agencies to adjust civil penalties with an annual inflation adjustment. Therefore, the RFA does not apply to this rulemaking.

This rule is not a major rule under 5 U.S.C. 804(2), the Congressional Review Act. This rule:

(a) Does not have an annual effect on the economy of $100 million or more;

(b) Will not cause a major increase in costs or prices for consumers; individual industries; Federal, State, local government agencies; or geographic regions; and

(c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises.

This rule does not impose an unfunded mandate on State, local, or Tribal governments or the private sector of more than $100 million per year. This rule does not have a significant or unique effect on State, local, or Tribal governments or the private sector. Therefore, ONRR is not required to provide a statement containing the information that the Unfunded Mandates Reform Act (2 U.S.C. 1531, et seq. ) requires because this rule is not an unfunded mandate.

This rule does not result in a taking of private property or otherwise have takings implications under E.O. 12630. Therefore, this rule does not require a takings implication assessment.

Under the criteria in section 1 of E.O. 13132, this rule does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement.

This rule complies with the requirements of E.O. 12988. Specifically, this rule:

(a) Meets the criteria of section 3(a), which requires that ONRR review all regulations to eliminate errors and ambiguity and to write them to minimize litigation; and

(b) Meets the criteria of section 3(b)(2), which requires that ONRR write all regulations in clear language, using clear legal standards.

The Department of the Interior (“DOI”) strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their right to self-governance and Tribal sovereignty. Under the DOI's consultation policy and the criteria in E.O. 13175, ONRR evaluated this rule and determined that it will have no substantial, direct effects on Federally recognized Indian Tribes and does not require consultation.

This rule:

(a) Does not contain any new information collection requirements; and

(b) Does not require a submission to OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq. ). See 5 CFR 1320.4(a)(2).

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. ONRR is not required to provide a detailed statement under NEPA because this rule qualifies for categorical exclusion under 43 CFR 46.210(i) in that this rule is “. . . of an administrative, financial, legal, technical, or procedural nature . . . .” ONRR also has determined that this rule is not involved in any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.

This rule is not a significant energy action under the definition in E.O. 13211 and, therefore, does not require a Statement of Energy Effects.

ONRR is required by E.O. 12866 (section 1(b)(12)), E.O. 12988 (section 3(b)(1)(B)), and E.O. 13563 (section 1(a)), and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule ONRR publishes must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use common, everyday words and clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible;

If you feel that ONRR has not met these requirements, send your comments to ONRR_RegulationsMailbox@onrr.gov. Your comments should be as specific as possible. For example, you should identify the number of the sections or paragraphs that you find unclear, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

The Act requires agencies to publish annual inflation adjustments by January 15 of each year, notwithstanding section 553 of the Administrative Procedure Act. OMB has interpreted this direction to mean that the usual APA public procedure for rulemaking—which includes public notice of a proposed rule, an opportunity for public comment, and a delay in the effective date of a final rule—is not required when agencies issue regulations to implement the annual adjustments to civil penalties that the 2015 Act requires. See OMB Memorandum, M-25-02, at page 3. Accordingly, ONRR is issuing the 2025 annual adjustments as a final rule without prior notice or an opportunity for comment and with an effective date immediately upon publication in the Federal Register .

For the reasons discussed in the preamble, ONRR amends 30 CFR part 1241 as set forth below:

Coast Guard District Commanders and Captains of the Port (COTP) must be immediately responsive to the safety and security needs within their jurisdiction; therefore, District Commanders and COTPs have been delegated the authority to issue certain local regulations. Safety zones may be established for safety or environmental purposes. A safety zone may be stationary and described by fixed limits or it may be described as a zone around a vessel in motion. Security zones limit access to prevent injury or damage to vessels, ports, or waterfront facilities. Special local regulations are issued to enhance the safety of participants and spectators at regattas and other marine events.

Timely publication of these rules in the Federal Register may be precluded when a rule responds to an emergency, or when an event occurs without sufficient advance notice. The affected public is, however, often informed of these rules through Local Notices to Mariners, press releases, and other means. Moreover, actual notification is provided by Coast Guard patrol vessels enforcing the restrictions imposed by the rule. Timely publication of notifications of enforcement of reoccurring regulations may be precluded when the event occurs with short notice or other agency procedural restraints.

Because Federal Register publication was not possible before the end of the effective period, mariners would have been personally notified of the contents of these safety zones, security zones, special local regulations, regulated navigation areas or drawbridge operation regulations by Coast Guard officials on-scene prior to any enforcement action. However, the Coast Guard, by law, must publish in the Federal Register notice of substantive rules adopted. To meet this obligation without imposing undue expense on the public, the Coast Guard periodically publishes a list of these temporary safety zones, security zones, special local regulations, regulated navigation areas and drawbridge operation regulations. Permanent rules are not included in this list because they are published in their entirety in the Federal Register . Temporary rules are also published in their entirety if sufficient time is available to do so before they are placed in effect or terminated. In some of our reoccurring regulations, we say we will publish a notice of enforcement as one of the means of notifying the public. We use this notification to announce those notifications of enforcement that we issued and will post them to their dockets.

The following unpublished rules were placed in effect temporarily during the period between October 2021 and December 2021. To view copies of these rules, visit www.regulations.gov and search by the docket number indicated in the following table.

The GLS and SLSMC of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the GLS is amending the joint regulations by updating the Regulations and Rules in various categories. The changes update the following sections of the Regulations and Rules: Condition of Vessels, Seaway Navigation, Radio Communications, Dangerous Cargo, Information and Reports, and General. These changes are to clarify existing requirements in the regulations.

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

The joint regulations will become effective in Canada in 2025 prior to the opening of the Seaway. For consistency, because these are joint regulations under international agreement, and to avoid confusion among users of the Seaway, the GLS finds that there is good cause to make the U.S. version of the amendments effective upon the date of publication to ensure an effective date prior to the Seaway opening.

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

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

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

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

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

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

Accordingly, the Great Lakes St. Lawrence Seaway Development Corporation is amending 33 CFR part 401 as follows:

On February 9, 2022, SoundExchange submitted a motion  1 to the Copyright Royalty Judges (Judges) to reopen certain proceedings addressing determinations of royalty rates and terms under the 17 U.S.C. 112 license for making ephemeral copies of sound recordings for transmission by a Business Establishment Service (BES) in three proceedings, BES I, BES II, and BES III. 2

SoundExchange's request arose from litigation before the U.S. District Court for the District of Columbia (District Court) in which SoundExchange alleged that Music Choice had failed to pay royalties due under 17 U.S.C. 112 for the license to reproduce and transmit ephemeral copies of sound recordings to business establishments. See SoundExchange, Inc. v. Music Choice, No. 19-999 (RBW) (D.D.C. Dec. 20, 2021) (District Court Action). The District Court determined it was appropriate to refer a matter of regulatory interpretation regarding 37 CFR 384.3(a) to the Judges under the doctrine of primary jurisdiction and found that the Judges have continuing jurisdiction to clarify the BES regulations, even though those regulations were originally formulated by the Copyright Arbitration Royalty Panel (CARP), a rate setting body that preceded the Copyright Royalty Board (Board). See District Court Action, Memorandum Opinion at 9-10 (Dec. 20, 2021) (Memorandum Opinion) (attached to the Motion as Exhibit B) (citing Report of the Copyright Arbitration Royalty Panel to the Librarian of Congress, Rate Setting for Digital Performance Right in Sound Recordings and Ephemeral Recordings, Docket No. 2000-9 CARP DTRA 1 & 2 at B-7 (Feb. 20, 2002) ( Web I CARP Report)).

The underlying dispute revolves around the definition of “Gross Proceeds” in the rates and terms set forth through settlements in the BES I and BES II proceedings in 37 CFR 384.3(a). Id. at 4-5. 3 “Music Choice asserts that `its “Gross Proceeds” are only an allocated portion of its actual proceeds corresponding to music channels offered solely as part of its BES service.'” Id. at 6-7. SoundExchange asserts that “`Music Choice must pay BES statutory royalties on fees and payments it receives from providing music channels used in its BES service, even if Music Choice also provides such channels as part of a different service.'” Id. at 7.

Stated differently, the question is whether 37 CFR 384.3(a) requires BES providers to calculate royalties using their gross proceeds derived from the use of all licensed ephemeral copies used for the operation of the BES, or whether a BES may calculate royalties using their gross proceeds derived from the use of only those licensed ephemeral copies used for the “sole purpose” of the operation of the BES.

The Memorandum Opinion stated that “[a]s a preliminary matter, the Court notes that the Board's definition of `Gross Proceeds' in 37 CFR 384.3(a)(2) is `ambiguous and do[es] not, on [its] face, make clear whether [Music Choice's] approaches were permissible under the regulations.' ” Id. at 9 n.2.

On March 22, 2022, after considering the Motion, Music Choice's response  4 and SoundExchange's reply, 5 the Judges found that the claims to be addressed by the District Court only relate to time periods addressed by the BES I and BES II determinations and thus ordered the reopening of those two proceedings. The Judges ordered opening and reply briefing for the limited purpose of addressing the meaning of “Gross Proceeds” as defined in 37 CFR 384.3(a). 6

The relevant provision as set forth in the BES I determination states:

The relevant provision as set forth in the BES II determination states:

Music Choice puts forth the initial arguments that (a) the plain meaning of the “gross proceeds” definition only requires royalty payments from revenue attributable to copies made solely to facilitate a BES transmission; (b) the plain meaning of the definition of gross proceeds is confirmed by the unique nature of the BES license and the Judges' prior rulings; and (c) in the absence of a specific methodology in the regulations for apportioning revenues derived from copies made for the sole purpose of facilitating a BES transmission, a BES provider is entitled to use a reasonable methodology. See g enerally, Music Choice Opening Brief (eCRB no. 26631).

Music Choice urges the Judges to apply basic principles of regulatory interpretation, including that when a regulation is unambiguous, one should not look beyond the text of the regulation itself unless the plain meaning of the regulation would lead to an absurd result (Plain Meaning Rule and Absurdity Doctrine). Id. at 24. Music Choice adds that the regulation explicitly calls for the inclusion of only those revenues that are derived from copies of sound recordings that are made “for the sole purpose of facilitating a transmission to the public of a performance of a sound recording.” 37 CFR 384.3(a)(2). Music Choice asserts that the “sole purpose” language in the definition must place some limitation on the revenues that are to be included in “Gross Proceeds” or else the “sole purpose” language would be superfluous—a result that is at odds with long-settled cannons of regulatory and statutory interpretation (Rule Against Surplusage). Id. at 24-26 (citing e.g. U.S. v. Butler, 297 U.S. 1, 65 (1936), Lowe v. SEC, 472 U.S. 181, 207 n.53 (1985) (“[W]e must give effect to every word that Congress used in the statute.”), and Gustafson v. Alloyd Co., 513 U.S. 561, 577 (1995) (“the presence of limiting language in [the statute] requires a narrow construction.”).

Music Choice posits that even if one were to conclude that there was some ambiguity in the definition of Gross Proceeds, or that it was, for some other reason, appropriate to look to other evidence, such evidence only confirms that the limitation imposed by the “for the sole purpose” language serves valid economic and copyright policy purposes, and therefore that limitation must be given its full effect. In this regard, Music Choice points to its conception that the right to make ephemeral copies has no independent value separate and apart from the performance right. Id. at 27-28. Music Choice also refers to various statements urging copyright and economic policy positions calling for an outright exemption for the rights covered by the 112 license at issue. Id. at 29.

Music Choice then pointed to several statements by the Judges, made in the context of determinations involving different statutory licenses, urging that “it is almost axiomatic” that revenues unrelated to the particular statutory license at issue “should not be included in the revenue base” used to calculate royalties for a license where the royalty is calculated as a percentage of revenue. Id. at 29-31 (citing Final rule and order, Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III) (Feb. 5, 2019), 84 FR 1918, 1961; Final rule and order, Determination of Rates and Terms for Preexisting Subscription Services and Satellite Digital Audio Radio Services ( PSS/Satellite II), Docket No. 2011-1 CRB PSS/Satellite II, 78 FR 23054, 23096 (Apr. 17, 2013) (excluding “monies received by Licensee's carriers from others and not accounted for by Licensee's carriers to Licensee, for the provision of hardware by anyone and used in connection with the programming service” from the definition of “Gross Revenues.”)). 7

Music Choice then urges the Judges to go beyond the scope of the re-opened proceedings (provide guidance regarding the meaning of the “Gross Proceeds” definition) and provide guidance regarding the standard that should be used to evaluate the approach that a BES provider has taken to apportion its revenues. Music Choice argues the Judges should find that where a regulatory royalty formula at issue does not provide a specific approach for allocating revenues between those included in Gross Proceeds and those excluded, a “reasonableness” standard should be applied. In making this request Music Choice notes that it would be inappropriate to provide such guidance if doing so required any fact-finding. Id. at 34-35.

SoundExchange puts forth the initial arguments that (a) the “gross proceeds” definition is ambiguous, (b) Music Choice's proposed interpretation of 37 CFR 384.3(a)(2) creates incoherence with 37 CFR 384.3(a)(1), (c) Music Choice's interpretation of 37 CFR 384.3(a) produces absurd results, and (d) Music Choice's interpretation of 37 CFR 384.3(a) is inconsistent with past Determinations concerning that provision. See generally, SoundExchange's Opening Legal Brief Concerning the Meaning of 37 CFR 384.3(a) (eCRB no. 26639).

SoundExchange recounts the past proceedings for setting of rates and terms for BES, noting that BES rates and terms have been litigated in a ratemaking proceeding only once, in the first CARP proceeding after enactment of the DMCA. Id. at 7 (citing Web I CARP Report at 111; Final order, Designation as a Preexisting Subscription Service, 71 FR 64639, 64640-41 (Nov. 3, 2006)). SoundExchange notes that subsequent statutory royalty rates and terms for BES were settled in 2003, 2007, 2012, and 2018, using essentially the same wording in the relevant regulations. Id. at 12-14 (citing Final rule, Digital Performance Right in Sound Recordings and Ephemeral Recordings, 69 FR 5693 (Feb. 6, 2004); BES I Determination, 73 FR 16199; BES II Determination, 78 FR 66276; Final rule, Determination of Royalty Rates and Terms for Making Ephemeral Copies of Sound Recordings for Transmission to Business Establishments (BES III), 83 FR 60362 (Nov. 26, 2018)).

Regarding the one fully litigated determination of rates and terms for BES, SoundExchange observes that the CARP adopted as benchmarks existing direct license agreements for BES. Id. at 9 (citing Web I CARP Report at 121-23). Additionally, SoundExchange notes that the CARP relied upon benchmark agreements not only for the rates but for the terms of the statutory license. Id.

SoundExchange notes that the Librarian of Congress reviewed the Web I CARP Report and that the Librarian disagreed with the CARP's conclusions about BES rates in one respect relevant to this re-opened proceeding, namely the regulations regarding gross proceeds, specifically the inclusion of in-kind payments. Id. at 9-11. 8

SoundExchange argues that the relevant provision at issue is ambiguous. Id. at 20-24. In doing so, it cites to the District Court Opinion. SoundExchange also points to linguistic and interpretive challenges in the regulatory text. SoundExchange focuses specific attention to the word “including” and to the principle of regulatory interpretation known as the “Presumption of Nonexclusive `Include'.” Id. at 22 (citing Am. Hosp. Ass'n v. Azar, 983 F.3d 528, 534 (D.C. Cir. 2020) (quoting Puerto Rico Mar. Shipping Auth. v. Interstate Com. Comm'n, 645 F.2d 1102, 1112 n.26 (D.C. Cir. 1981) (it is “hornbook law that the word `including' indicates that the specified list . . . that follows is illustrative, not exclusive.”)). SoundExchange asserts that the regulation is ambiguous as to whether the lengthy matter that follows the word “including” in paragraph (a)(2) is: (a) a list of illustrative examples; (b) just one illustrative example; or (c) one or more illustrative examples plus some words that relate back to the “all fees and payments” at the beginning of the definition. Id. at 22-23. SoundExchange also focuses on the two instances of the phrase “derived from” arguing that both must be given effect, if possible. Id. at 24-25.

SoundExchange argues that these challenges within 37 CFR 384.3(a) render the regulation capable of numerous interpretations, which cannot all be right. It then offers two interpretations, which it views as being plausible.

Under the first of SoundExchange's proposed interpretations, the relevant regulation can be parsed as follows:

On August 10, 2022, the President signed into law the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act of 2022 (PACT Act). Public Law 117-168. The PACT Act provided a process for VA to establish presumptive service connection based on toxic exposures. 38 U.S.C. 1171-1174. The PACT Act also added a presumption of service connection for certain diseases associated with exposure to burn pits and other toxins (BPOT) in 38 U.S.C. 1120. This presumption applies to veterans who served in locations listed in 38 U.S.C. 1119(c)(1).

One of VA's priorities is to address the long overdue needs of the Gulf War cohort and to address the need for these veterans to receive timely care, services, and benefits. VA has reviewed both medical and scientific literature and has found sufficient evidence to conclude that a positive association exists between exposure to PM 2.5 and acute and chronic leukemias and multiple myelomas. Accordingly, VA has determined that presumptions of service connection for these diseases and two precursors to acute myeloid leukemia (AML), MDS and myelofibrosis, are warranted for certain Gulf War veterans.

In this IFR, VA adds 38 CFR 3.320b to its adjudicatory regulations to presume service connection for acute leukemias, chronic leukemias, multiple myelomas, MDS, and myelofibrosis for certain Gulf War veterans. VA adds these as presumptive conditions in 38 CFR 3.320b by IFR so that any veteran with these diseases and who served in a prescribed location need not wait for benefits.

On August 5, 2021, VA promulgated 38 CFR 3.320 to establish presumptions of service connection for certain chronic diseases based on exposure to PM 2.5 during service in the Southwest Asia theater of operations during the Persian Gulf War, or service in Afghanistan, Syria, Djibouti, or Uzbekistan, on or after September 19, 2001, during the Persian Gulf War. 86 FR 42724, 42733 (2021) (interim final rule); see 88 FR 60341 (2023) (adopting the interim final rule with changes). VA based these presumptions on review and analysis of airborne hazards in the Southwest Asia theater of operations during the Persian Gulf War, by examining the National Academies of Science, Engineering, and Medicine's (NASEM) 2020 report, Respiratory Health Effects of Airborne Hazards Exposures in the Southwest Asia Theater of Military Operations;  1 NASEM's 2011 report, Long-Term Health Consequences of Exposure to Burn Pits in Iraq and Afghanistan;  2 and NASEM's 2010 report, Review of the Department of Defense (DoD) Enhanced Particulate Matter Surveillance Program. 3 See 86 FR at 42725-42726. The 2010 report concluded that Service members deployed to the Middle East “are exposed to high concentrations of PM[ 2.5 ].”  4 See 86 FR at 42725. Toxic compounds present in burn pit fumes include PM 2.5. 5 This airborne pollution includes smoke from oil well fires; sand; dust; mechanical fumes from aircraft, vehicle, and ship engines; wood; plastic; rubber; metals; munitions; chemicals; and food and human waste. 6 Incomplete combustion of organic and inorganic material in burn pits results in high volumes of toxic PM in the air that includes metals, benzene, and other toxic compounds. 7

When promulgating 38 CFR 3.320 in August 2021, to determine the qualifying periods of service, VA primarily considered (1) whether burn pits were used in the location, (2) the PM 2.5 levels, and (3) desert climates according to 86 FR at 42725-42729. However, in August 2022, the PACT Act created new 38 U.S.C. 1119, “Presumptions of toxic exposure,” with different qualifying periods of service. Section 1119(c) defines a “covered veteran” as a veteran who served in the following eligible locations: Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Somalia, and the United Arab Emirates, on or after August 2, 1990, and Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Syria, Yemen, and Uzbekistan on or after September 11, 2001.

VA's new presumptions in 38 CFR 3.320b will include the locations in current 38 CFR 3.320(a)(5), and the locations listed in 38 U.S.C. 1119(c) (including Egypt, Jordan, Lebanon, Somalia, and Yemen). This approach conforms with the information available regarding documented burn pit use. In 2021, DoD provided Congress with a list of locations within U.S. Central Command where open burn pits have been used since 2001. 8 The U.S. Central Command's Area of Responsibility consists of 21 nations that stretch from Northeast Africa across the Middle East to Central and South Asia  9 and is the only combatant command that conducts open burn pit operations. 10 Egypt, Jordan, Lebanon, and Yemen were included as locations with open, active burn pits. 11 Somalia was not included on the list. However, there is evidence of burn pit use in Somalia when service members were deployed in support of Operation Show Care in 1993. 12 Additional deployments occurred in 1992, 1995, 2012, and 2022. 13

Additionally, all the locations listed in 38 U.S.C. 1119(c) have similar arid desert climate conditions. DoD's 2008 Enhanced Particulate Matter Surveillance Program studied the chemical and physical properties of dust at 15 deployment sites in the Middle East, Central Asia, and Northeast Africa. 14 The study found that Military Exposure Guideline (MEG) values for PM 2.5 were exceeded at all 15 sites for the entire one-year sampling period. 15 The study also demonstrated how short-term dust events—exacerbated by dirt roads, agricultural activities, and disturbance of the desert floor by motorized vehicles—all contribute to exceedance of both PM 10 and PM 2.5 mass exposure guidelines and standards. 16 Finally, DoD's report also stated that PM 2.5 levels in the Middle East are as much as ten times greater than the levels at both urban and rural southwestern U.S. air monitoring sites. 17

Dust storms and high windblown dust concentrations are one of many environmental hazards experienced during deployment to locations within U.S. Central Command. Windblown dust in these locations is considered an airborne hazard because it combines with elemental carbon and metals that arise from transportation and industrial activities. 18 Although dust in these locations can be toxic based on transportation and industrial activities alone, open air burn pits increase the concentration of toxins in PM 2.5 .

As discussed above, in locations that rely on open burning of waste, the PM 2.5 air pollution in that location will contain toxic combustion emissions. Open burning is the “burning of any matter in such a manner that products of combustion resulting from the burning are emitted directly into the ambient or surrounding outside air without passing through an adequate stack, duct or chimney.”  19 The Environmental Protection Agency (EPA) defines “ambient air” as “that portion of the atmosphere, external to buildings, to which the general public has access.” 40 CFR 50.1(e). Because PM 2.5 is a form of ambient air pollution that can have many different components from many different sources (for example, sand, dust, and smoke) and open burning of waste emits toxic combustion emissions into the ambient air; VA considers burn pit smoke to be a contributor to PM 2.5 .

The 38 U.S.C. 1119(c) locations have a history of annual PM 2.5 levels that exceed military and EPA air quality standards. Not only do they exceed air quality standards, average PM 2.5 concentrations have been increasing in North Africa and the Middle East since 1990, while Europe and North America have experienced decreasing trends in average PM 2.5 concentrations. 20 For consistency with the statutory start date for service in 38 U.S.C. 1119(c)(1)(B) locations (including Afghanistan, Syria, Djibouti, and Uzbekistan) back to September 11, 2001, new 38 CFR 3.320b will presume exposure to PM 2.5 for those countries back to September 11, 2001.

The PACT Act presumption determination process consists of four phases. The Ongoing Exploratory Surveillance Phase includes collaborating with VA partners, to include Veterans Service Organizations (VSOs) and other stakeholders, to identify, monitor, and investigate potential toxic exposures and adverse health effects. 38 U.S.C. 1172(a). The Research and Assessment Phase involves collecting information, evidence, and data regarding a particular toxic exposure and adverse health effect, and potentially conducting a scientific study and analysis of the data. 38 U.S.C. 1172(c). Based on the findings, VA's Military Environment Exposures Sub-Council (MEESC) may recommend that the Secretary initiate a formal evaluation of the issue. 38 U.S.C. 1172(d).

If the Secretary adopts that recommendation, the Formal Evaluation Phase begins. 38 U.S.C. 1173. In this phase, a technical working group is convened to conduct an evaluation of the evidence and research collected in the prior phases as well as claims data and potentially other factors, to render a conclusion on the strength of the evidence and to provide a recommendation to the Secretary with respect to a presumption. Id. If the Secretary decides to accept a recommendation to establish a presumption, the Rulemaking and Implementation Phase then begins. 38 U.S.C. 1174.

On July 26, 2023, VA published a notice soliciting public comment on its plan to assess the scientific literature and historical claims data regarding multiple myelomas, acute leukemias, and chronic leukemias associated with specific military environmental exposures. 88 FR 73094. On November 7, 2023, VA's Health Outcomes Military Exposures (HOME) office held a public listening session and briefed VSOs and Congressional staffers on the plan to study leukemias and multiple myelomas. Most comments were in favor of assessing the scientific literature and historic claims data regarding multiple myelomas, acute leukemias, and chronic leukemias. 89 FR 33471.

In November 2023, Veterans Health Administration (VHA) HOME and Veterans Benefits Administration's (VBA) Military Exposure Team (MET) (hereafter “the committee”) began collaboration to evaluate two distinct types of information (peer-reviewed scientific literature and VBA claims data) to determine the strength of the evidence supporting an association between exposure to PM 2.5 in the Southwest Asia theater of operations or Somalia on or after August 2, 1990, or in Afghanistan, Egypt, Jordan, Lebanon, Syria, Yemen, Djibouti, or Uzbekistan on or after September 11, 2001 and chronic and acute leukemias and multiple myelomas. The committee considered this issue because blood and bone marrow cancers were not included as presumptions in the PACT Act. The committee followed the Patient, Exposure, Comparator, Outcomes, Timing, Setting (PECOTS) framework to guide a literature search and identify relevant articles for review—and identified 319 peer-reviewed publications that met the search criteria, of which 154 were deemed relevant. 21

To assist in reviewing the relevant articles, the committee engaged experts including military exposure epidemiologists from VHA and the Department of Defense, VA scientists, VA oncologists/hematologists, board-certified occupational and environmental medicine (OEM) physicians, and a senior medical advisor from the Commissioned Corps of the U.S. Public Health Service. 22 Of the 154 relevant publications, 42 met the desired grade quality of high or moderate quality based on the Grading of Recommendations Assessment, Development, and Evaluation (GRADE) guidelines. 23 Of the moderate and high quality peer-reviewed scientific publications, 74% showed a positive association between exposure to PM 2.5 and development of acute and chronic leukemias and multiple myelomas. 24 The committee concluded with a recommendation that the Secretary initiate a formal evaluation of the matter. 25

On November 20, 2024, the Secretary initiated a formal evaluation on chronic and acute leukemias and multiple myelomas and their possible association with exposure to PM 2.5 pollution in the Southwest Asia theater of Operations. 26 At the same time, the Secretary also directed a formal evaluation on other blood cancers. 27

Under 38 U.S.C. 1173(b), a formal evaluation shall be based on the review of available scientific literature, including human, toxicological, animal, and methodological studies, and other factors, and must consider claims data including claim rate, grant rate, and service connection prevalence. It can also consider the level of disability and mortality caused by the health effects related to the case of toxic exposure being evaluated; the quantity and quality of the information available and reviewed; the feasibility of and period for generating relevant information and evidence; whether such health effects are combat- or deployment-related; the ubiquity or rarity of the health effects; and any time frame during which a health effect must become manifest.

A formal evaluation shall review scientific evidence in a manner that conforms to principles of scientific and data integrity; be free from suppression or distortion of scientific or technological findings, data, information, conclusions, or technical results; evaluate the likelihood that a positive association exists between an illness and a toxic exposure while serving in the active military, naval, air, or space service; and determine whether the evidence supports a finding of a positive association between the toxic exposure and the illness. 38 U.S.C. 1173(c).

Here, the formal evaluation team (hereinafter “the team”) reviewed the methods and findings of the committee's report from the Research and Assessment phase. 28 The team included the HOME policy team, and hematologists/oncologists, epidemiologists, a toxicologist, and VBA Compensation Service personnel who were not part of the scientific assessment. 29 The team assessed that the committee's report had three major components and was consistent with robust scientific methods. 30 First, the team noted that masters' trained biomedical librarians, not part of the scientific assessment committee, had followed a PECOTS framework to complete an expansive structured literature search. Second, the team noted that the committee had critically reviewed the papers of moderate and high-grade quality based on the GRADE structure. 31 Third, the team noted that the committee had reviewed VBA claims data on leukemias and multiple myelomas from March 2003-March 2023 for both deployed and non-deployed Gulf War Era veterans, including 1990-1991 Gulf War veterans, Global War on Terror veterans, and Karshi-Khanabad Veterans. 32

The team emphasized that the 74% of the moderate and high-quality peer-reviewed scientific publications reviewed by the committee, as discussed above, consistently showed a positive relationship between exposure to PM 2.5 and development of leukemias and multiple myelomas. The team noted that the VBA claims data provided a complementary perspective to the evidence in the scientific literature and showed trends among veterans with deployment to countries with recognized high levels of PM 2.5 and burn pit pollution. Notably, veterans deployed to the relevant countries were granted a higher proportion of claims (53% vs. 42% for non-deployed), which supports the correlation between PM 2.5 and higher risk of service-related diagnoses of these conditions. The data also showed that the deployed cohort filed more claims than non-deployed veterans, and also filed claims at a younger age, suggesting earlier onset of deployment related conditions. The team highlighted these data findings as supporting the link between PM exposure and increased risk for hematological cancers. 33

As an additional validation step, the team analyzed a sample of ten papers considered by the scientific review to be high-quality studies that reported positive associations between exposure to PM 2.5 and chronic leukemias, acute leukemias, and multiple myelomas. The team confirmed that, taken as a body of literature, the evidence suggested that environmental exposure to PM 2.5 is positively associated with acute and chronic leukemias and multiple myelomas. In sum, groups of people that had measured, documented exposure to PM 2.5 had a higher risk of developing leukemias and multiple myelomas than those who did not have a measured, documented exposure to PM 2.5 . 34

The team did note certain limitations in the data, including that PM is diverse and depends on many factors. PM air pollution can include smoke, fumes, soot, and other products of combustion, as well as particles from natural sources, including dust and sand. Further, the team noted that, of the 42 papers deemed to provide high or moderate quality evidence, none were done on military Service members or in the environments in which Service members were deployed to the Southwest Asia theater of operations or Somalia on or after August 2, 1990, or in Afghanistan, Egypt, Jordan, Lebanon, Syria, Yemen, Djibouti, or Uzbekistan. The studies relied upon were conducted in other parts of the world, studied firefighters, those exposed to ambient air pollution or specific pollutants, and individuals exposed to the possibly unique PM exposures at the WTC. Nevertheless, the team found that the argument that exposure to PMs creates risk for acute and chronic leukemias and myelomas is biologically plausible and remains regardless of the differences in location or particulates. 35

Despite these limitations, the team concluded that the evidence meets the “sufficient” category in 38 U.S.C. 1173(c)(2), where the evidence is sufficient to conclude a positive association existed. 38 U.S.C. 1173(c)(2)(A). This is the strongest category of positive association under the PACT Act's presumptive decision-making process. 38 U.S.C. 1173(c)(2)(A). Based on the positive association demonstrated, the formal evaluation team recommended—in its December 6, 2024, formal evaluation report—that the Secretary initiate rulemaking to establish acute leukemias, chronic leukemias, and multiple myelomas as presumptive service-connected conditions for veterans who served in the Southwest Asia theater of Operations or Somalia on or after August 2, 1990, or in Afghanistan, Egypt, Jordan, Lebanon, Syria, Yemen, Djibouti, or Uzbekistan on or after September 11, 2001. 36

Regarding the formal evaluation for other blood cancers, on December 5, 2024, the MEESC recommended that the formal evaluation team continue to research these conditions (Polycythemia Vera, MDS, Essential (Hemorrhagic) Thrombocythemia, Chronic Myeloproliferative Disease, Myelofibrosis, Histiocytosis, and Mastocytosis) and provide a formal evaluation report to the Secretary by March 20, 2025, i.e., within 120 days of the formal evaluation initiation, in accord with 38 U.S.C. 1173(d). 37 The MEESC noted that there were over 60,000 studies on polycythemia vera and millions of studies on myeloproliferative neoplasms  38 and, with respect to mechanistic studies that may establish biological plausibility, more investigation was needed. 39

To aid an evaluation of the MEESC's recommendation on these “other blood cancers,” the Office of the Secretary of Veterans Affairs requested additional information concerning the survivability of those seven diseases. On December 9, 2024, HOME provided the Secretary an information paper on the issue. 40 In summary, two of the seven other blood cancers (MDS and myelofibrosis) may progress to acute myeloid leukemia (AML), and veterans whose disease so progresses often have a very poor prognosis.

The Secretary considered the formal evaluation report on acute leukemias, chronic leukemias, and multiple myelomas; the MEESC's recommendation to continue the formal evaluation on other blood cancers; and the additional information on survivability provided by HOME. On December 13, 2024, the Secretary directed VA to initiate rulemaking to establish acute leukemias, chronic leukemias, and multiple myelomas, and precursors MDS and myelofibrosis, as presumptive service-connected conditions related to exposure to PM 2.5 in the Southwest Asia theater of operations or Somalia on or after August 2, 1990, or in Afghanistan, Egypt, Jordan, Lebanon, Syria, Yemen, Djibouti, or Uzbekistan on or after September 11, 2001. 41

Though much of the evidence supporting the Secretary's decision has already been chronicled above, we also provide additional information on each of the conditions below:

As noted above, the formal evaluation team reviewed the report generated by the scientific assessment committee, evaluated the methods, findings, and conclusions, and validated the conclusions. 42 Among the pertinent findings, the team cited the EPA's determination that there is suggestive evidence of a relationship between long-term exposure to PM 2.5 and cancers. 43

Of the PM components detected in air samples taken at Joint Base Balad Iraq in 2007 and 2009, some volatile organic compounds with documented associations with leukemias and other hematopoietic cancers, such as benzene and 1,3-butadiene, were measured at levels that exceed safety thresholds. 44 The team also highlighted several high-quality papers that reported positive associations between exposure to PM 2.5 and chronic leukemias and acute leukemias, which supported the findings that PM 2.5 exposure placed individuals at increased risk for leukemias. 45

The team concluded there is sufficient evidence supporting the conclusion that veterans deployed in the relevant areas develop leukemia earlier in their lives than those who did not deploy. 46 Among other findings, the studies cited show PM 2.5 exposure plays a major role in the process of activating or maintaining gene expression, leading to the development of leukemia. 47 Exposure to benzene, which may be absorbed by particulates as a result of burn pits, significantly increases the risk of developing leukemia. 48 Additional associative environmental causes are soot  49 and toxic metals, 50 which are known airborne hazards. 51 Further, excessive exposure to carcinogens due to inhalation of PM, such as fire, smoke, dust, and burning debris, leads to increased rates of leukemia. 52 Moreover, pollutants at the World Trade Center (WTC) recovery site were similar to PM 2.5 , and the workers who engaged in onsite recovery efforts developed hematological cancers, including myeloma, leukemia, and lymphoma at a higher rate than those who did not. 53 The studies cited also show that the higher the exposure to PM 2.5 in the year prior to diagnosis, the more likely a leukemia diagnosis would occur. 54

PM 2.5 exposure is of concern for those deployed to the Southwest Asia theater of operations and other known BPOT locations. VA has already examined studies by NASEM on the contribution of air pollution to adverse health effects among U.S. Service Members serving in the Middle East. 55 86 FR at 42725-42726. Thus, VA has determined that it will consider chronic and acute leukemias for this population to be associated with exposure to PM 2.5 . Accordingly, VA concludes it is appropriate to add chronic leukemias and acute leukemias to 38 CFR 3.320b.

Similar to leukemia, the scientific committee and formal evaluation team found strong scientific evidence linking exposure to PM 2.5 to the development of multiple myelomas. 56 The studies cited show that exposure to coal dust, coke dust, crude petroleum, iron, lubricants, and solvents found in PM 2.5 was a probable carcinogen causing multiple myelomas. 57 Another study noted higher than normal diagnoses of multiple myelomas occurred in WTC responders. These responders were exposed to a complex mix of pollutants, including benzene and polycyclic aromatic hydrocarbons, asbestos, paint and solvent vapors, aromatic hydrocarbons, polychlorinated biphenyls, pesticides, microscopic shards of glass, polychlorinated biphenyls, other organochlorines, dioxins, furans, engine exhaust, and metals, which previous studies had associated with higher rates of multiple myelomas. 58 The dust carrying PM 2.5 at the WTC recovery site was potent in inducing change in multiple myeloma cells, increasing risk for the disease. 59 First responders were diagnosed with multiple myelomas at a higher rate than the general population. 60 An excess number of cases of multiple myeloma were observed among first responders, in particular among those younger than 45 years of age. 61 The environmental etiology at the WTC may be similar to exposure to pollutants, including PM 2.5 . 62 Another study showed that both men and women who lived near a waste incineration plant had increased rates of multiple myelomas compared to those who did not. 63

For these reasons, VA concludes that the evidence is sufficient to warrant a presumption of multiple myelomas due to PM 2.5 for the affected population. As stated above, VA recognizes the adverse health effects of PM 2.5 exposure on U.S. Service Members serving in the Middle East. VA concludes it is appropriate to add multiple myelomas to 38 CFR 3.320b.

MDS and myelofibrosis are rare blood cancers that can progress to AML, a condition which will be presumptive under this rule. In addition to the presumptions above, VA has examined MDS and myelofibrosis and concluded that these diseases warrant presumptive service connection because they can progress to AML, and veterans whose disease so progresses often have a very poor prognosis. 64

Approximately 30% to 40% of individuals with MDS will eventually progress to AML  65 and “often have a very poor prognosis.”  66 The majority of patients with both MDS and AML fail to respond to available therapies  67 and often die from complications and/or disease progression. 68 Even among those with MDS who do not progress to AML, the five-year survival rate is only 37% 69 , meaning that 2 of 3 individuals with MDS will not survive 5 years. Like MDS, patients diagnosed with myelofibrosis can progress to AML based on their risk. 70 For low-risk patients, the five-year AML transformation rate is 6%, but it is 21% for high-risk patients (and 37% of patients diagnosed with myelofibrosis are high risk). 71 Even for those individuals who do not progress to AML, the five-year mortality is nonetheless relatively high at 51%. 72 Accordingly, VA has determined that expanding the presumptions to include these two conditions is necessary to ensure veterans diagnosed with MDS and myelofibrosis are given the benefit of a presumption before these diseases progress.

MDS are a group of rare cancers that occur when the blood-forming cells in the bone marrow become abnormal. 73 The blood cells produced by the abnormal bone marrow cells are damaged and accumulate in the bone marrow engulfing the normal blood cells. 74 As a result, individuals with MDS do not produce enough normal, healthy blood cells. 75 Most cases arise after age 65. 76 In the U.S. population, annually, 4.9 out of every 100,000 persons will develop MDS ( i.e., 20,451 annually). 77 The five-year prevalence (FY18-FY23) among post-9/11 veterans enrolled in VHA for health care is 10.78 out of 100,000. Given that data, it is estimated that approximately 102 to 136 post-9/11 deployed veterans with MDS could eventually have their disease progress to AML. 78

MDS are categorized into subtypes of those individuals who have a lower or higher risk for progressing to AML. 79 For those with lower risk for AML, median survival is three to 10 years, whereas patients with higher-risk disease have a median survival of less than three years. 80

Myelofibrosis is also a rare blood cancer that occurs when scar tissue forms in the bone marrow, disrupting the production of heathy blood cells. 81 The prevalence for developing myelofibrosis is one to nine out of every 100,000 in the U.S. 82 The five-year (FY18-FY23) prevalence rate of myelofibrosis among post 9-11 veterans enrolled in VA health care was 4.26/100,000. 83 The overall life expectancy depends on the severity of the disease, with an overall median survival estimated at six years. 84 The overall 10-year survival rate from one study showed that intermediate risk patients had a 30% survival rate and high risk patients had a 0% to 13% survival rate. 85 Based on the five-year veteran prevalence data cited above, it is estimated that approximately 14 to 27 post-9/11 deployed veterans with myelofibrosis could eventually have their disease progress to AML. 86

As discussed above, PM 2.5 exposure has been shown to be associated with the development of leukemias and multiple myelomas. Because a significant number of cases of MDS and myelofibrosis progress to leukemia, and because these diseases have a severe outcome and significant mortality rates on their own, VA has determined a presumption of service connection is warranted for MDS and myelofibrosis as precursors to AML.

In the PACT Act, Congress authorized VA to enact additional presumptions based on a positive association with a substance, chemical, or airborne hazard. 38 U.S.C.1120(b)(15). Because the evidence shows a positive association between exposure to PM 2.5 and acute leukemias, chronic leukemias, and multiple myelomas, VA concludes that these conditions and MDS and myelofibrosis, as precursors to AML, should be extended a presumption of service connection in new 38 CFR 3.320b. VA includes monoclonal gammopathy of undetermined significance (MGUS)  87 as part of multiple myelomas because the VA Schedule of Rating Disabilities places MGUS as part of the same diagnostic code as multiple myeloma. 38 CFR 4.117, Diagnostic Code 7712.

VA will use the heading of “[p]resumptive service connection for leukemias, multiple myelomas, myelodysplastic syndromes and myelofibrosis” for 38 CFR 3.320b. VA will describe the presumption of exposure in paragraph (a), describe the presumptions of service connection in paragraph (b), and provide the standard exceptions for presumptions in paragraph (c).

Although this rulemaking is based on current medical and scientific evidence related to the health effects of PM 2.5 on veterans who served during the Gulf War, VA will continue to review new scientific evidence as it develops regarding all health effects resulting from exposure to BPOT, including PM 2.5 . This rulemaking does not limit the future establishment of additional presumptions of service connection.

As discussed above, VA is enacting these presumptions pursuant to the 38 U.S.C. 1171 et seq. process or alternatively under 38 U.S.C. 501(a)(1), which permits VA to issue necessary or appropriate regulations with respect to the nature and extent of proof and evidence to establish rights to benefits, such as presumptions of service connection.

The purpose of this section is to clarify the agency's intent with respect to the severability of provisions of this rule. Each provision the agency of this rule can operate independently. If any provision of this rule is determined by judicial review or operation of law to be invalid, that partial invalidation will not render the remainder of this rule invalid. Likewise, if the application of any portion of this rule to a particular circumstance is determined to be invalid, the agency intends that the rule remain applicable to all other circumstances.

Moreover, we clarify here that VA benefits standards are distinct from the applicable standards for civil litigation, such that this final rule should have no effect on civil actions, to include Camp Lejeune Justice Act litigation.

Pursuant to 5 U.S.C. 553(b)(B) and (d)(3), VA has concluded that there is good cause to publish the IFR without prior opportunity for comment and to publish the rule with an immediate effective date. There is good cause to immediately address the needs of Service members and veterans who have been exposed to airborne hazards, i.e. PM 2.5 , due to their service in the Southwest Asia theater of operations, Afghanistan, Syria, Djibouti, Uzbekistan, Somalia, Egypt, Jordan, Lebanon, and Yemen.

Given the nature of the diseases at issue, VA concludes that the ordinary notice-and-comment procedures here would be impracticable, in that they would cause veterans serious harm by delaying and in certain situations entirely denying veterans the benefits of these presumptions. In particular, good cause exists because this veteran population is aging and leukemias, multiple myelomas, MDS, and myelofibrosis are diseases of significant morbidity and mortality. 88

For the population who served from August 1990 to present, which are the veterans affected by this rulemaking, there are 551,000 veterans aged 65 and older. 89 Per the most recent data available from the U.S. Centers for Disease Control and Prevention, which was from 2020 to 2021, the life expectancy for the overall United States population has dropped from 77 years to 76.1 years. The life expectancy of men dropped from 74.2 years to 73.2 years and women from 79.9 years to 79.1 years. 90 According to a 2017 VA National Center for Veterans Analysis and Statistics report, life expectancy is 0.8 and 1.2 life years shorter for male and female veterans, respectively, than the general U.S. population. 91

Leukemias account for 3.1% of all new cancer cases each year and account for 3.9% of all cancer deaths each year. 92 The age adjusted rate of new cases of leukemias is about 14.1 per 100,000 per year, and the age-adjusted death rate is about 5.9 per 100,000 per year. 93 The five-year overall survival rate is about 67%, such that one out of every three veterans with leukemia will not live five more years. The survival rate varies across different types of leukemias because some types of leukemia are more aggressive and fatal than others. The median age at diagnosis of leukemias is 67, and the median age at death is 76, with the highest proportion of deaths among those between the ages of 75 and 84. 94 As highlighted above, there are 551,000 Veterans who served after 1990 in this 65+ age range.

Myelomas are rarer than leukemias, with a lifetime risk of 0.8%. 95 The age-adjusted rate of new cases of myelomas is 7.2 per 100,000 and the age-adjusted death rate is 3.0 per 100,000; myelomas account for 1.8% of all new cancer cases, and 2.0% of all cancer deaths. 96 The five-year survival rate for those with myelomas is 61.1%, such that more than one out of every three veterans with myelomas will not live five more years, though the rate varies by stage at diagnosis. 97 The median age at diagnosis for myelomas is 69 and the median age at death is 76, with the highest proportion of deaths among those between 75 and 84. 98

MDS are uncommon and are typically diagnosed in individuals after age 65. 99 Approximately 30% to 40% of MDS patients eventually progress to AML. 100 Once the disease has progressed to AML, patients have a very poor prognosis. 101 Those with higher-risk disease have a median survival of less than three years. 102 For those with MDS who do not progress to leukemia, the overall five-year survival rate in the U.S. is approximately 37%. 103

The median age of diagnosis for myelofibrosis is 65. 104 Approximately 37% of the patients will be high risk. 105 The overall five-year mortality rate for myelofibrosis is 51%, and the overall life expectancy depends on the severity of the disease, with a median survival estimated at six years. 106 The overall 10-year survival rate from one study was 30% for the intermediate risk population and 0% to 13% for high risk population. 107

Those with myelofibrosis also may develop AML, 108 with the same poor prognosis. For high-risk patients, the five-year transformation rate is 21  109

Given this population's life expectancy, it is not served by waiting for a notice and comment period before obtaining the benefits of this presumption. Indeed, delaying this rulemaking for notice and comment runs the real risk of harming the very population this rulemaking intends to help. The new presumptions are entirely pro-claimant in nature. They do not adversely affect any person. And because VA has a sufficient scientific basis to support the new presumptions, withholding the presumptions during the notice and comment process could unnecessarily deprive veterans and beneficiaries of benefits to which they would otherwise be entitled and prolong their inability to timely receive benefits. Additionally, this could create risks to beneficiaries' welfare and health that would be exacerbated by any additional delay in implementation. Due to the complexity and the historical scientific uncertainty surrounding these issues of airborne hazard exposures and disease, many veterans who will be affected by this rule have long borne the burden and expense of their disabilities while awaiting the results of research and investigation. Under these circumstances, there is good cause to prevent imposing further delay on their receipt of benefits, potentially at the risk of their welfare and health.

Overall, the Secretary's decision to extend new presumptions to veterans who have been exposed to PM 2.5 due to their service in the Southwest Asia theater of operations, and Somalia, Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Syria, Yemen, and Uzbekistan requires immediate effect to help them access these benefits without undue delay. For veterans that are not otherwise eligible for health care, these presumptions could result in needed health care eligibility based on service connection.

Section 553(d) of 5 U.S.C. also requires a 30-day delayed effective date following publication of a rule, except for “(1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule.” Pursuant to section 553(d)(3), the Secretary finds that there is good cause to make the rule effective upon publication, for the reasons discussed above. However, VA will consider and address comments that are received within 60 days of the date this IFR is published in the Federal Register .

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 (Executive Order on Modernizing Regulatory Review) supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review established in Executive Order 12866 of September 30, 1993 (Regulatory Planning and Review), and Executive Order 13563 of January 18, 2011 (Improving Regulation and Regulatory Review). The Office of Information and Regulatory Affairs has determined that this rulemaking is a significant regulatory action under Executive Order 12866, Section 3(f)(1) as amended by Executive Order 14094. The Regulatory Impact Analysis associated with this rulemaking can be found as a supporting document at www.regulations.gov .

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This interim final rule will have no such effect on State, local, and tribal governments, or on the private sector.

Although this interim final rule contains provisions constituting collection of information under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), there are no provisions associated with this rulemaking constituting any new collection of information or any revisions to the existing collection of information. The collection of information for 38 CFR 3.320b is currently approved by the Office of Management and Budget (OMB) and has been assigned OMB control numbers 2900-0747, 2900-0886, and 2900-0004.

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as satisfying the criteria under 5 U.S.C. 804(2).

Denis McDonough, Secretary of Veterans Affairs, approved and signed this document on December 31, 2024, and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs.

For the reasons stated in the preamble, the Department of Veterans Affairs amends 38 CFR part 3 as set forth below:

On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Act) (Pub. L. 114-74, section 701, 129 Stat. 584, 599-600), which amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, section 5, 104 Stat. 890, 891-892), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The amended statute, codified in a note following 28 U.S.C. 2461, requires agencies to publish annual adjustments for inflation based on the percentage change between the Consumer Price Index (defined in the statute as the Consumer Price Index for all-urban consumers (CPI-U) published by the Department of Labor) for the month of October preceding the date of the adjustment and the prior year's October CPI-U. 28 U.S.C. 2461 note, sections 4(a) and (b) and 5(b)(1). This rule implements the 2025 calendar year inflation adjustment amounts.

Under 38 U.S.C. 3710(g)(4)(B), VA is authorized to levy civil monetary penalties against private lenders that originate VA-guaranteed loans if a lender falsely certifies that they have complied with certain credit information and loan processing standards as set forth by 38 U.S.C. Ch. 37 and 38 CFR part 36. Under section 3710(g)(4)(B), any lender who knowingly and willfully makes such a false certification shall be liable to the United States Government for a civil penalty equal to two times the amount of the Secretary's loss on the loan involved or to another appropriate amount, not to exceed $10,000, whichever is greater. VA implemented the penalty amount in 38 CFR 36.4340(k)(1)(i) and (k)(3). On December 17, 2024, the Office of Management and Budget (OMB) issued OMB Circular M-25-02. This circular reflects that the October 2023 CPI-U was 307.671 and the October 2024 CPI-U was 315.664, resulting in an inflation adjustment multiplier of 1.02598. Accordingly, the calendar year 2025 inflation revision imposes an adjustment from $27,894 to $28,619.

Under 31 U.S.C. 3802, VA can impose monetary penalties against any person who makes, presents, or submits a claim or written statement to VA that the person knows or has reason to know is false, fictitious, or fraudulent, or who engages in other covered conduct. The statute permits, in addition to any other remedy that may be prescribed by law, a civil penalty of not more than $5,000 for each claim. 31 U.S.C. 3802(a)(1) and (2). VA implemented the penalty amount in 38 CFR 42.3(a)(1)(iv) and (b)(1)(ii). As previously noted, OMB Circular M-25-02 reflects an inflation adjustment multiplier of 1.02598. Therefore, the calendar year 2025 inflation revision imposes an adjustment from $13,946 to $14,308.

Accordingly, VA is revising 38 CFR 36.4340(k)(1)(i) and (3) and 38 CFR 42.3(a)(1)(iv) and (b)(1)(ii) to reflect the 2025 inflationary adjustments for civil monetary penalties assessed or enforced by VA.

The Secretary of Veterans Affairs finds that there is good cause under 5 U.S.C. 553(b)(B) and (d)(3) to publish this rule without prior opportunity for public comment and to publish this rule with an immediate effective date. The statute requires agencies to make annual adjustments for inflation to the allowed amounts of civil monetary penalties “notwithstanding section 553 of title 5, United States Code.” 28 U.S.C. 2461 note, sections 4(a) and (b). The penalty adjustments, and the methodology used to determine the adjustments, are set by the terms of the statute. VA has no discretion to make changes in those areas. Therefore, an opportunity for prior notice and public comment and a delayed effective date are unnecessary.

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 (Executive Order on Modernizing Regulatory Review) supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review established in Executive Order 12866 of September 30, 1993 (Regulatory Planning and Review), and Executive Order 13563 of January 18, 2011 (Improving Regulation and Regulatory Review). The Office of Information and Regulatory Affairs has determined that this rulemaking is not a significant regulatory action under Executive Order 12866, as amended by Executive Order 14094. The Regulatory Impact Analysis associated with this rulemaking can be found as a supporting document at www.regulations.gov.

The Regulatory Flexibility Act, 5 U.S.C. 601 through 612, is not applicable to this rulemaking because notice of proposed rulemaking is not required. 5 U.S.C. 601(2), 603(a), and 604(a).

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This final rule will have no such effect on state, local, and tribal governments, or on the private sector.

This final rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as not satisfying the criteria under 5 U.S.C. 804(2).

Denis McDonough, Secretary of Veterans Affairs, approved and signed this document on December 31, 2024, and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs.

For the reasons stated in the preamble, the Department of Veterans Affairs amends 38 CFR parts 36 and 42 as set forth below:

On November 26, 2024, the EPA published a direct final rule (89 FR 93187) to partially withdraw two final actions finding that 13 States and/or local air pollution control agencies failed to submit SIP revisions required by the CAA to address the EPA's 2015 findings of substantial inadequacy and “SIP calls” for provisions applying to excess emissions during periods of SSM. In the proposal for the direct final rule published on the same day (89 FR 93243), the EPA stated that written comments must be received on or before December 26, 2024. The EPA stated that if any relevant adverse comments are received on the proposal, the EPA will publish a timely withdrawal of the direct final rule in the Federal Register . On December 22, 2024, an adverse comment dated December 18, 2024, was posted in the docket that the EPA interprets as relevant and adverse. Therefore, the EPA is withdrawing the direct final rule and will publish a subsequent final rule wherein the EPA will address all comments received. The EPA will not institute a second comment period on the subsequent final rule.

Throughout this document, “we,” “us” and “our” refer to the EPA.

On November 8, 2024 (89 FR 88690), the EPA proposed a limited approval and limited disapproval of the following rules that were submitted for incorporation into the Arizona SIP.

We proposed a limited approval because we determined that these rules improve the SIP and are largely consistent with the relevant CAA requirements. We simultaneously proposed a limited disapproval because some rule provisions conflict with section 110 and part D of the Act. In addition, we proposed a disapproval of MCAQD's RACT demonstration for the source categories listed in Table 2 for the 2008 8-hour ozone NAAQS in the Phoenix-Mesa ozone nonattainment area.

The following provisions of Rule 352 preclude full approval of the rule:

1. In addition to the annual certification test required by Section 301.1, Sections 502 and 503 of Rule 352 outline ongoing monitoring tests to perform to detect potential leaks. However, the rule does not identify any enforceable requirements to monitor using these tests on a periodic basis or any recordkeeping and reporting associated with this requirement.

2. Section 103.3(a) requires that an “owner or operator of a gasoline cargo tank provides documentation from the gasoline cargo tank testing company to the Control Officer that certifies that the gasoline cargo tank was tested and verified vapor tight using test methods at least as stringent as those in Section 501.1 (Maricopa County Vapor Tightness Test).” This provision allows the Control Officer authority to approve another test method, and without further specificity regarding how this authority will be exercised, it could functionally allow for a revision of the SIP without complying with the process for SIP revisions required by the CAA.

The following provisions of Rule 353 preclude full approval of the rule:

1. Rule 353 requires that control equipment or spill containment equipment at a stationary GDF or on a gasoline cargo tank be leak free and vapor tight, requiring weekly inspections. Rule 353 generally requires a facility to determine if there is a “potential vapor leak” prior to being required to conduct a more stringent vapor tightness determination. Section 501 of Rule 353 allows for four different options to identify potential vapor leaks. Section 501.1 allows for the “use of sight, sound, or smell” as an acceptable method for identifying potential vapor leaks. Although using sight, sound, or smell can play a role in identifying potential vapor leaks, allowing for that to potentially be the only method used could functionally allow for potential leak identification to be left solely to the operator's discretion and sensory inputs. Therefore, without a provision to periodically utilize methods beyond sight, sound, or smell, this provision undermines the enforceability of the rule's requirement for vapor tight compliance.

2. Section 500 of Rule 353 contains ongoing monitoring and recordkeeping requirements but does not specifically contain any requirements to report compliance information. However, reporting requirements are contained within Section 301 of the rule because it incorporates the applicable requirements from the National Emission Standards for Hazardous Air Pollutants for Source Category: Gasoline Dispensing Facilities at 40 CFR part 63, subpart CCCCCC (“Subpart CCCCCC”), which includes reporting requirements. 1 However, Subpart CCCCCC is not applicable to the loading of aviation gasoline into storage tanks at airports and the subsequent transfer of aviation gasoline within the airport. 2 Rule 353 does apply to loading of aviation gasoline at airports, but it does not elsewhere require periodic reporting for these facilities. Given this framework, Rule 353 has a reporting gap, because there is no periodic compliance reporting required for loading of aviation gasoline at airports. Due to the lack of adequate reporting requirements (or some alternative means of ensuring enforceability) during loading of aviation gasoline into storage tanks, this provision undermines the enforceability of the rule's requirement for vapor tight compliance, constitutes a SIP deficiency, and is inconsistent with the requirements of CAA Section 110.

Our proposed action contains more information on the basis for this rulemaking and on our evaluation of the submittal.

The EPA's proposed action provided a 30-day public comment period. During this period, we received one anonymous comment in support of EPA's November 8, 2024 proposed action. We thank the commenter for the comment.

No comments were submitted that change our assessment of the rules as described in our proposed action. Therefore, as authorized in sections 110(k)(3) and 301(a) of the Act, the EPA is finalizing a limited approval of the submitted rules. This action incorporates the submitted rules into the Arizona SIP, including those provisions identified as deficient. As authorized under sections 110(k)(3) and 301(a), the EPA is simultaneously finalizing a limited disapproval of the rules. The EPA is also finalizing a disapproval of the RACT demonstrations for the 2008 ozone NAAQS for the sources covered by the CTGs listed in Table 2.

As a result, the EPA must promulgate a federal implementation plan (FIP) under section 110(c) unless we approve subsequent SIP revisions that correct the rule deficiencies within 24 months.

In addition, the offset sanction in CAA section 179(b)(2) will be imposed 18 months after the effective date this action, and the highway funding sanction in CAA section 179(b)(1) will be imposed six months after the offset sanction is imposed. A sanction will not be imposed if the EPA determines that a subsequent SIP submission corrects the identified deficiencies before the applicable deadline.

Note that the submitted rules have been adopted by the MCAQD, and the EPA's final limited disapproval does not prevent the local agency from enforcing them. The limited disapproval also does not prevent any portion of the rules from being incorporated by reference into the federally enforceable SIP as discussed in a July 9, 1992 EPA memo found at: https://www.epa.gov/sites/production/files/2015-07/documents/procsip.pdf.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of MCAQD Rule 352, “Gasoline Cargo Tank Testing and Use,” revised on November 18, 2020, which regulates VOC emissions during loading and unloading of gasoline to any gasoline cargo tank within Maricopa County. The EPA is also incorporating by reference MCAQD Rule 353, “Storage and Loading of Gasoline at a Gasoline Dispensing Facility,” revised on November 18, 2020, which regulates VOC emissions during storage and loading of gasoline at a gasoline dispensing facility. Therefore, these materials have been approved by EPA for inclusion in the SIP, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of this final rulemaking, and will be incorporated by reference in the next update to the SIP compilation. 3 The EPA has made, and will continue to make, these documents available through www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to review state choices and approve those choices if they meet the minimum criteria of the Act. Accordingly, this final action is finalizing a limited approval and limited disapproval of state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law.

Additional information about these statutes and Executive orders can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to state, local, or tribal governments, or to the private sector will result from this action.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and it will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. Therefore, this action is not subject to Executive Order 13045 because it is merely finalizing a limited approval and limited disapproval of state law as meeting federal requirements. Furthermore, the EPA's Policy on Children's Health does not apply to this action.

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

Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.

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 communities with environmental justice (EJ) concerns to the greatest extent practicable and permitted by law. Executive Order 14096 (Revitalizing Our Nation's Commitment to Environmental Justice for All, 88 FR 25251, April 26, 2023) builds on and supplements Executive Order 12898 and defines EJ as, among other things, “the just treatment and meaningful involvement of all people, regardless of income, race, color, national origin, Tribal affiliation, or disability, in agency decision-making and other Federal activities that affect human health and the environment.”

The State did not evaluate EJ considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. The EPA did not perform an EJ analysis and did not consider EJ in this action. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of Executive Orders 12898 and 14096 of achieving EJ for communities with EJ concerns.

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by March 11, 2025. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For the reasons stated in the preamble, the EPA amends part 52, chapter I, Title 40 of the Code of Federal Regulations as follows:

On November 18, 2024, FMCSA published a final rule (89 FR 90608) that amended its regulations by making technical corrections throughout the FMCSRs. The rule made minor changes to correct inadvertent errors and omissions, remove or update obsolete references, and improve the clarity and consistency of certain regulatory provisions. The rule also made a change to its rules of organization, procedures, and practice. Through this document, FMCSA provides amendments to correct two errors in that final rule.

First, through amendatory instruction no. 107 in the final rule, the Agency sought to revise § 387.307, which is stayed, without first lifting the stay. The Agency corrects this error by providing a new instruction to lift the stay, revise the section, and stay the section. The revisions to § 387.307 are the same revisions described in the final rule (89 FR 90608, 90613). Since the final rule published, the Agency has published another final rule amending § 387.307, titled “Broker and Freight Forwarder Financial Responsibility; Extension of Compliance Date” (89 FR 107021, Dec. 31, 2024). That rule changed the date on which the stay of § 387.307 will be lifted, from January 16, 2025, to January 16, 2026. Accordingly, the Agency's instruction in this correction stays § 387.307 until January 16, 2026.

Second, through amendatory instruction no. 152 in the final rule, the Agency sought to revise paragraph (2) of the definition of “Commerce” in § 397.65. The instruction contained a typographical error that referenced paragraph (s) instead of paragraph (2). The Agency corrects this error by providing a new instruction that references paragraph (2).

In consideration of the foregoing, FMCSA amends 49 CFR parts 387 and 397 by making the following correcting amendments: