The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments using a method listed under the ADDRESSES section. Include “Docket No. FAA-2025-1729; Project Identifier MCAI-2024-00568-T” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to William Reisenauer, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 516-228-7301; email: 9-AVS-AIR-BACO-COS@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued AD 2022-12-10, Amendment 39-22082 (87 FR 45246, July 28, 2022) (AD 2022-12-10), for all Dassault Aviation Model FALCON 7X airplanes, except airplanes having Dassault modification M2091 embodied in production. AD 2022-12-10 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued AD 2021-0197, dated August 23, 2021 (EASA AD 2021-0197), to correct an unsafe condition on all Dassault Aviation Model FALCON 7X airplanes. EASA AD 2021-0197 states a weak point in the Falcon 7X “EASy” avionics architecture that, coupled with theoretical GEN I/O card failure, may lead to misleading data on display units.

AD 2022-12-10 requires revising the existing AFM to provide emergency procedures for inconsistent or unreliable flight data and emergency and abnormal operations procedures for the GEN I/O internal module failure and revising the operator's existing FAA-approved MEL items for the multi-function probe heating, air data, and inertial reference systems. AD 2022-12-10 also requires revising the existing AFM to incorporate additional information in the emergency procedures. The FAA issued AD 2022-12-10 to address misleading data on display units. The unsafe condition, if not addressed, could reduce safety margins and lead to increased pilot workload and consequent reduced controllability of the airplane.

The preamble to AD 2022-12-10 specifies that the FAA considers that AD “interim action” and that the FAA might consider further rulemaking if a final action is identified. The manufacturer has since developed modifications ( i.e., software upgrades) that fix a weak point in the avionics architecture to address the unsafe condition. The FAA has determined that the modifications and related AFM and MEL revisions should be required.

Since the FAA issued AD 2022-12-10, EASA superseded EASA AD 2021-0197 with EASA AD 2022-0145, dated July 12, 2022 (EASA AD 2022-0145). EASA AD 2022-0145 was issued to retain the requirements of EASA AD 2021-0197, exclude airplanes on which Dassault modification M2091 was embodied in production, and require airplane serial numbers (S/Ns) 402 and subsequent with the “EASy III—2nd CERT” or “EASy III—3rd CERT” standard to upgrade the avionics architecture to the “EASY III—4th CERT” standard (modification M2091).

EASA AD 2022-0145, in turn, was superseded by EASA AD 2023-0003, dated January 6, 2023 (EASA AD 2023-0003). EASA AD 2023-0003 was issued to retain the requirements of EASA AD 2022-0145, exclude airplanes on which Dassault modification M2096 or M2097 was embodied in production, and require airplane S/Ns 2 through 400 inclusive to upgrade the avionics architecture to the “EASy II—5th CERT” standard (modification M2096 or M2097, as applicable).

EASA subsequently revised AD 2023-0003 with EASA AD 2023-0003R1, dated September 26, 2024 (EASA AD 2023-0003R1) (also referred to as the MCAI), to correct an unsafe condition for all Dassault Aviation Model FALCON 7X airplanes, except airplanes on which Dassault modification M2055, M2059, M2091, M2096, or M2097 was embodied in production. Since EASA AD 2023-0003 was issued, Dassault developed modifications M2055 (for airplane S/Ns 2 through 400 inclusive) and M2059 (for airplane S/Ns 402 and subsequent) that upgrade the avionics architecture to the “EASy IV” standard and issued Dassault Service Bulletin 7X-600, dated November 7, 2022; Dassault Service Bulletin 7X-601, April 24, 2023; and Dassault Service Bulletin 7X-602, June 3, 2023; as applicable, to provide in-service modification instructions. Accordingly, EASA AD 2023-0003R1 excludes airplanes on which modifications M2055 or M2059 was embodied in production and allows incorporation of those modifications in service as an optional method of compliance for modifications M2091, M2096, or M2097, as applicable.

The FAA is proposing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2025-1729.

Although this proposed AD does not explicitly restate the requirements of AD 2022-12-10, this proposed AD would retain all of the requirements of AD 2022-12-10. Those requirements are referenced in EASA AD 2023-0003R1, which, in turn, is referenced in paragraph (g) of this proposed AD.

EASA AD 2023-0003R1 specifies revising the existing AFM to provide emergency procedures for inconsistent or unreliable flight data and emergency and abnormal operations procedures for the GEN I/O internal module failure; existing FAA-approved MEL items for the multi-function probe heating, air data, and inertial reference systems and modular avionic unit (MAU) #1B; and operational suitability manual—flight crew (OSM-FC). This material also specifies procedures for modifying the avionics system and incorporating related AFM and MEL revisions.

This material also describes optional procedures for modifying the avionics architecture to the “EASy IV” standard, revising the existing AFM to incorporate revision 6 or revision 25, as applicable, and revising the existing FAA-approved MEL to incorporate revision 16. Accomplishing the optional modification and AFM revision is an acceptable method of compliance for the applicable modification that upgrades the avionics architecture to “EASy III—4th CERT” or “EASy II—5th CERT” and related AFM revision. In addition, accomplishing the optional MEL revision is an acceptable method of compliance for the corresponding revisions to MEL items for the multi-function probe heating, air data, and inertial reference systems and MAU #1B.

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.

These products have been approved by the civil aviation authority of another country and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, that authority has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require accomplishing the actions specified in EASA AD 2023-0003R1 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD. See “Differences Between This Proposed AD and the MCAI” for a discussion of the general differences included in this proposed AD.

EASA AD 2023-0003R1 requires operators to “inform all flight crews” of revisions to the AFM and MEL, and thereafter to “operate the aeroplane accordingly.” However, this proposed AD would not specifically require those actions as those actions are already required by FAA regulations. FAA regulations require that operators furnish to pilots any changes to the AFM (for example, 14 CFR 121.137) and to ensure the pilots are familiar with the AFM (for example, 14 CFR 91.505). As with any other flightcrew training requirement, training on the updated AFM content is tracked by the operators and recorded in each pilot's training record, which is available for the FAA to review. FAA regulations also require pilots to follow the procedures in the existing AFM including all updates. Section 91.9 requires that any person operating a civil aircraft must comply with the operating limitations specified in the AFM. FAA regulations (14 CFR 121.628(a)(2)) require operators to provide pilots with access to all the information contained in the operator's MEL. Furthermore, 14 CFR 121.628(a)(5) requires airplanes to be operated under all applicable conditions and limitations contained in the operator's MEL. Therefore, including a requirement in this proposed AD to operate the airplane according to the revised AFM and MEL would be redundant and unnecessary.

EASA AD 2023-0003R1 requires operators to implement the instructions of Dassault Falcon 7X Falcon 8X OSM-FC DGT148654, Revision 6, dated July 2, 2021, or later approved revisions, and to inform all flightcrews of the AFM revision and ensure each pilot has performed the training and operates the airplane accordingly. This proposed AD would not require those specifics actions because the Dassault Falcon 7X Falcon 8X OSM-FC is not an FAA-approved document and therefore operators might not have that document as part of their training program. However, the FAA reviewed Dassault Falcon 7X Falcon 8X OSM-FC, Revision 6, and determined the information for Training Areas of Special Emphasis for Pilots (TASEp) Tp-118-EZII is necessary for flightcrew awareness and must be included in the AFM. Therefore, this proposed AD would require revising the Emergency Procedures section of the existing AFM to incorporate the information for TASEp Tp-118-EZII.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2023-0003R1 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2023-0003R1 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2023-0003R1 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2023-0003R1. Material required by EASA AD 2023-0003R1 for compliance will be available at regulations.gov under Docket No. FAA-2025-1729 after the FAA final rule is published.

The FAA estimates that this AD, if adopted as proposed, would affect 160 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

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

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

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

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

For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

Title 14 Code of Federal Regulations (14 CFR) part 141 (Pilot Schools) prescribes the requirements for issuing pilot school air agency certificates, provisional pilot school air agency certificates, and associated ratings, and the general operating rules applicable to a holder of a certificate or rating issued under part 141. Through a part 141 pilot school, a student may obtain equivalent levels of aeronautical experience in fewer hours than required by 14 CFR part 61 (Certification: Pilots, Flight Instructors, and Ground Instructors). Part 141 schools are required to have FAA certification and supplementary oversight. Specifically, part 141 includes curricula standards for training and procedures to ensure a training course used by a school is adequate, appropriate, and administered by qualified personnel.

The process of licensing or certification of pilot schools in the United States is approaching 100 years of existence. Although the FAA has revised certain regulatory requirements pertaining to pilot schools during this time, part 141 still has many foundational ties to Civil Air Regulations (CAR) part 50, which was implemented in the 1940s. Regulations for pilot schools are typically promulgated to improve safety, reduce aircraft accidents, and embrace changes such as advances in technology and the need for data collection and analysis. Modernizing part 141 is essential for addressing challenges pertaining to certification, certification management, examining authority, and evolving technology and learning methods. The objective of modernizing part 141 is to increase safety and create a foundation for a more structured and robust training environment to aid in the reduction of general aviation fatal accidents.

Therefore, part 141 must be analyzed to determine how it can evolve with the changing aviation industry. Over the course of the project, the FAA is seeking engagement from the flight training industry through participation in public meetings. Collaboration is encouraged to stimulate the innovation of a modern part 141 that will serve the needs of current and future pilot schools, as well as provide a robust and safe training environment that instills the necessary knowledge, skills, critical thinking, and aeronautical decision making in its pilots to create a safer national airspace system.

Information concerning the public meetings, including topics and meeting times will be posted at the following website: https://www.faa.gov/about/office_org/headquarters_offices/avs/offices/afx/afs/afs800/afs810/modernization_of_part-141_initiative.

Each meeting will be open to the public for virtual or in-person attendance on a first-come, first-served basis, as there is limited space. Please confirm your attendance with the person listed in the FOR FURTHER INFORMATION CONTACT section and provide the following information: full legal name and name of your industry association or applicable affiliation. If you wish to attend the meetings in-person, you must register before the scheduled deadline in the DATES section. We will not have on-site registration. The FAA will email registrants the meeting access information in a timely manner prior to the start of the meetings.

DOT is committed to providing equal access to these meetings for all participants. If you require an alternative version of files provided or alternative accommodations, such as sign language, interpretation, or other ancillary aids, please contact the Part 141 Modernization Initiative Team, at 9-AFS-Modernization-Part141-Comments@faa.gov no later than September 23, 2025.

The FAA encourages the public to submit comments to www.regulations.gov, Docket No.: FAA- 2024-2531. Comments that the FAA would find helpful include validated data and reports, unique discussion topics or scenarios, and/or feedback specific to modernizing part 141. The public is encouraged to provide feedback regarding innovative ideas; methods; solutions; products; and/or services that have, or could have, a significant impact on pilot school training. We encourage you to submit comments during these public meetings or electronically to Docket No.: FAA-2024-2531. If you submit your comments electronically, it is not necessary to also submit a hard copy.

The submission of public comments is encouraged but not required for meeting participation. The FAA will consider public feedback to determine the need for future considerations to the CFR. The FAA will review comments that are post-marked, or submitted electronically, on or before the comment closing date of September 30, 2025. Comments made after the closing date may be reviewed as time and resources permit.

Title 14 Code of Federal Regulations (14 CFR) part 141 (Pilot Schools) prescribes the requirements for issuing pilot school air agency certificates, provisional pilot school air agency certificates, and associated ratings, and the general operating rules applicable to a holder of a certificate or rating issued under part 141. Through a part 141 pilot school, a student may obtain equivalent levels of aeronautical experience in fewer hours than required by 14 CFR part 61 (Certification: Pilots, Flight Instructors, and Ground Instructors). Part 141 schools are required to have FAA certification and supplementary oversight. Specifically, part 141 includes curricula standards for training and procedures to ensure a training course used by a school is adequate, appropriate, and administered by qualified personnel.

The process of licensing or certification of pilot schools in the United States is approaching 100 years of existence. Although the FAA has revised certain regulatory requirements pertaining to pilot schools during this time, part 141 still has many foundational ties to Civil Air Regulations (CAR) part 50, which was implemented in the 1940s. Regulations for pilot schools are typically promulgated to improve safety, reduce aircraft accidents, and embrace changes such as advances in technology and the need for data collection and analysis. Modernizing part 141 is essential for addressing challenges pertaining to certification, certification management, examining authority, and evolving technology and learning methods. The objective of modernizing part 141 is to increase safety and create a foundation for a more structured and robust training environment to aid in the reduction of general aviation fatal accidents.

Therefore, part 141 must be analyzed to determine how it can evolve with the changing aviation industry. Over the course of the project, the FAA is seeking engagement from the flight training industry through participation in public meetings. Collaboration is encouraged to stimulate the innovation of a modern part 141 that will serve the needs of current and future pilot schools, as well as provide a robust and safe training environment that instills the necessary knowledge, skills, critical thinking, and aeronautical decision making in its pilots to create a safer national airspace system.

Information concerning the public meetings, including topics and meeting times will be posted at the following website: https://www.faa.gov/about/office_org/headquarters_offices/avs/offices/afx/afs/afs800/afs810/modernization_of_part-141_initiative.

Each meeting will be open to the public for virtual or in-person attendance on a first-come, first-served basis, as there is limited space. Please confirm your attendance with the person listed in the FOR FURTHER INFORMATION CONTACT section and provide the following information: full legal name and name of your industry association or applicable affiliation. If you wish to attend the meetings in-person, you must register before the scheduled deadline in the DATES section. We will not have on-site registration. The FAA will email registrants the meeting access information in a timely manner prior to the start of the meetings.

DOT is committed to providing equal access to these meetings for all participants. If you require an alternative version of files provided or alternative accommodations, such as sign language, interpretation, or other ancillary aids, please contact the Part 141 Modernization Initiative Team, at 9-AFS-Modernization-Part141-Comments@faa.gov no later than October 21, 2025.

The FAA encourages the public to submit comments to www.regulations.gov, Docket No.: FAA-2024-2531. Comments that the FAA would find helpful include validated data and reports, unique discussion topics or scenarios, and/or feedback specific to modernizing part 141. The public is encouraged to provide feedback regarding innovative ideas; methods; solutions; products; and/or services that have, or could have, a significant impact on pilot school training. We encourage you to submit comments during these public meetings or electronically to Docket No.: FAA-2024-2531. If you submit your comments electronically, it is not necessary to also submit a hard copy.

The submission of public comments is encouraged but not required for meeting participation. The FAA will consider public feedback to determine the need for future considerations to the CFR. The FAA will review comments that are post-marked, or submitted electronically, on or before the comment closing date of October 28, 2025. Comments made after the closing date may be reviewed as time and resources permit.

FDA is proposing to revise the standard of identity (SOI) for POJ established at 21 CFR 146.140 (§ 146.140). The SOI currently requires that finished POJ contain not less than 10.5 percent by weight of orange juice soluble solids, exclusive of the solids of any added optional sweetening ingredients (§ 146.140(a)). The percentage soluble solids by weight of an aqueous solution ( e.g., grams of sucrose in 100 grams of solution at 68 degrees F) can be expressed as Brix or degree of Brix (° Brix). The current SOI for POJ therefore requires a minimum orange juice soluble solids of 10.5° Brix. The proposed rule, if finalized, will amend the POJ standard by lowering the minimum orange juice soluble solids from 10.5° to 10° Brix for finished POJ. We tentatively conclude that this proposed amendment will promote honesty and fair dealing in the interest of consumers and provide greater flexibility in the manufacture of POJ (see section 401 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 341)).

We are issuing this proposed rule consistent with our authority in sections 401 and 701 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 341, 371).

The proposed rule, if finalized, would not require firms in the POJ industry to change their manufacturing processes or behavior in any way. Qualitative benefits include flexibility for manufacturers, flexibility of product choice for consumers, and potential sustainability for manufacturers in the face of disease or climate impacts. We note specifically that the proposed rule does not require any behavioral changes on the part of manufacturers, as it provides manufacturers with greater flexibility rather than imposing any restrictions. The proposed changes would provide for a wider range of products to be marketed as POJ. No changes would be required for products that already meet the existing POJ standard. Therefore, any changes made by manufacturers of POJ would be voluntary. The proposed rule, if finalized, would not impose any compliance costs to firms. We estimate cost savings to manufacturers due to substitution to cheaper inputs. The annualized costs would range from −$14.7 million to −$106.7 million, with a primary estimate of −$52.3 million, at a 7 percent discount rate, and from −$14.8 million to −$107.0 million, with a primary estimate of −$52.5 million, at a 3 percent discount rate.

The Florida Citrus Processors Association Inc. and Florida Citrus Mutual Inc. (“petitioners”) jointly submitted a citizen petition (Docket No. FDA-2022-P-1668) on July 22, 2022, asking us to amend the SOI for POJ to reduce the minimum orange juice soluble solids content for POJ from 10.5° to 10° Brix, exclusive of the solids from any added optional sweetening ingredients. See Citizen Petition from the Florida Citrus Processors Association Inc. and Florida Citrus Mutual Inc., entitled “Request to Amend Pasteurized Orange Juice Standard of Identity,” sent to the Division of Dockets Management (now the Dockets Management Staff), Food and Drug Administration, dated July 22, 2022 (“Petition”).

The petitioners stated that when FDA issued the SOI for POJ in 1963 (see “Orange Juice and Orange Juice Products; Definitions and Standards of Identity; Findings of Fact and Final Order,” 28 FR 10900, October 11, 1963), FDA recognized that Florida was the dominant supplier of juice oranges with an average Brix level of 11.8°. The petitioners asserted that, based on the fruits used in preparing POJ at that time, FDA set a minimum Brix level of 10.5° for the POJ standard (Petition at page 3). However, the petitioners stated that the average Brix of Florida oranges has steadily dropped since 2010-2011 due to a bacterial disease called “citrus greening disease,” also known as Huanglongbing (Petition at pages 3-4). According to information on the U.S. Department of Agriculture (USDA), Animal and Plant Health Inspection Service's (APHIS) website, symptoms of trees infected with citrus greening include blotchy mottled leaves, stunted growth, reduced fruit production, reduced fruit size, bitter fruit, and premature fruit drop. See USDA APHIS, “Citrus Greening and Asian Citrus Psyllid,” at https://www.aphis.usda.gov/plant-pests-diseases/citrus-diseases/citrus-greening-and-asian-citrus-psyllid. Currently, there is no cure or mitigating treatment for citrus greening disease and most trees die within a few years of being infected (id.). The U.S. production forecast for oranges is down to the lowest level in 88 years due to diseases like citrus greening and unfavorable weather (see USDA Foreign Agricultural service Global Market Analysis, “Citrus: World Markets and Trade,” at https://www.fas.usda.gov/data/citrus-world-markets-and-trade-01302025. The petitioners also stated that severe weather, particularly Hurricane Irma in 2017, has resulted in the reduced production of oranges and lower average fruit sugar content (Petition at pages 3-4). The soluble solids in orange juice consist mainly of sugars. The petitioners explained that, due to these factors, seasonal average Brix levels (weighted by volume) are hovering below the minimum of 10.5° Brix (Petition at page 4). The petitioners stated that the SOI for POJ was carefully constructed to reflect the qualities of U.S. oranges at the time the SOI was established, however they asserted that the SOI should now be updated to align with the modern U.S. crop (Petition at page 5). Hence, while still under review, the current USDA standard for Grades of POJ is based on the current POJ SOI (Ref. 1).

The POJ SOI allows for the addition of optional concentrated orange juice ingredients to increase the POJ solids to meet the minimum 10.5° Brix (§ 146.140(a)) with the label declaration of “prepared in part from concentrated orange juice,” “with added concentrated orange juice,” or “concentrated orange juice added” (§ 146.140(e)(1)). This label declaration enables consumers to identify POJ made from only expressed orange juice and POJ that has been made with concentrated orange juice ingredients. The petitioners asserted that “not from concentrate” orange juice is the most popular form of orange juice, indicating that consumers have a preference for POJ that is made from expressed juice rather than from concentrated juice (Petition at page 5). The petitioners explained that almost the entire Florida orange crop is used for the production of “not from concentrate” POJ (Petition at pages 4-5), thereby emphasizing the importance of Florida oranges in meeting consumer demand for “not from concentrate” POJ. Florida plays a vital role in the orange juice industry, although other states like California, Arizona, and Texas also contribute to the overall citrus production in the United States. Some states, such as California, primarily produce orange crops for the fresh market. However, in Florida, almost the entire orange crop is used to make POJ that is “not from concentrate” (Petition at page 4). The petitioners further explained that while “not from concentrate” orange juice may have a lower Brix value, the reduction in sugar content would be minimal and would unlikely impact consumer acceptance with respect to characteristics like taste and flavor (Petition at pages 5-6). The petitioners stated that most fruit juices, albeit many of which have a relatively lower volume of sales, have no SOI and that “this regulatory discrepancy further emphasizes the need to amend the SOI for POJ to keep pace with modern scientific understanding and naturally occurring dynamics impacting product production (Petition at page 7)”. The petitioners also stated that the 10° minimum Brix level they requested for POJ is consistent with the minimum Brix level of 10° in the SOI for canned orange juice ( See 21 CFR 146.141) (Petition at page 6).

In the Federal Register of August 16, 2023, we published a request for information (RFI) (Docket No. FDA-2023-N-2632) seeking comments on several topics, including if amending the POJ SOI could result in products that are inconsistent with consumer expectations and if consumers would accept changes in the nutritional value of POJ with a lower minimum soluble solids content (88 FR 55607, August 16, 2023). We requested this information to determine whether the SOI for POJ should be amended. Many comments supported lowering the Brix level. The comments stated that the Brix level is an intrinsic variable for oranges based on year, origin, and crops. The comments also asserted that most consumers would not notice the difference in taste and flavor of POJ with Brix levels between 10° and 10.5° and that any nutritional differences are minimal. A few comments opposed the petition, stating that there was no benefit to consumers if FDA lowered the Brix level. However, these comments did not indicate or provide evidence suggesting that consumers would be disadvantaged by lowering the Brix level.

The petitioners provided supplemental materials to their petition with new information on the decreasing average Brix level from the 2022-2023 orange season) and findings from a recent study demonstrating consumers' acceptance of POJ with a lower Brix level of 10°. See Citizen Petition Supplemental Materials from the Florida Citrus Processors Association Inc. and Florida Citrus Mutual Inc., entitled “Citizen Petition Supplemental Materials,” sent to the Division of Dockets Management (now the Dockets Management Staff), Food and Drug Administration, dated May 23, 2024 (“Supplemental Materials”). The petitioners also noted that the average Brix level continued to fall in 2022-2023 with an average Brix level of 9.7° due to tree stress caused by weather and disease pressures (Supplemental Materials at Appendix 2). The petitioners urged FDA to take swift action to amend the SOI for POJ by lowering the minimum Brix level from 10.5° to 10° (Supplemental Materials at page 1).

We received another citizen petition, jointly submitted from Florida Department of Citrus, Florida Citrus Processors Association, Florida Citrus Mutual and the Juice Products Association, regarding SOIs for orange juice and orange juice products (Docket No. FDA-2023-P-5063) on November 15, 2023, for which most of the requests are outside the scope of this rulemaking. However, one request is relevant to the POJ SOI. The POJ standard in § 146.140(a currently provides for a maximum allowable percentage of Citrus reticulata ( i.e., mandarin or tangerine oranges) or Citrus reticulata hybrids juice of not more than 10 percent by volume. The request seeks to increase the maximum allowable percentage from 10 percent to 15 percent. The petition states that, “Increasing the permitted percentage of juices from tangelos and tangerines would contribute to a better balancing of juice from oranges in diminishing supply and juice from oranges where there is a surplus.” The petition cited a 2021 study conducted by University of Florida Institute of Food and Agricultural Sciences Citrus Research and Education Center that found orange juice and Sugar Belle® blends at 50-50% levels performed better in sensory evaluation than pure orange juice. The study further noted that “consumer acceptance of the OJ label revealed that adding up to 30% tangerine juice to OJ might still be considered OJ by most consumers, providing an initial guide for citrus legislation to loosen the regulation on the content of tangerine juice blended with 0J.” While the proposed rule does not propose increasing the maximum allowable percentage of Citrus reticulata or Citrus reticulata hybrids juice because we do not know the potential impacts of such a change on POJ, in section VI. of this proposed rule, we invite comments about increasing the maximum allowable percentage of Citrus reticulata or Citrus reticulata hybrids in § 146.140(a).

FDA published a final order establishing SOIs for orange juice and orange juice products, including POJ, in 1963 (28 FR 10900, October 11, 1963). The final order contained various findings of fact, first being that “[t]he food commonly and usually known as orange juice is the natural liquid that is squeezed from mature oranges” (28 FR 10900 at 10901). The order found that a new product had been developed that was heat-treated and that the name of this product is pasteurized orange juice (28 FR 10900 at 10901 through 10902). In establishing minimum composition requirements for this product, the record supported a minimum orange juice soluble solids of not less than 10.5° Brix. Specifically, Florida was the dominant supplier of orange juice at the time, so we looked to the characteristics of Florida oranges (See 28 FR 10900 at 10905). The final order further stated that when fruit of low Brix is used in the manufacture of POJ, the Brix level may be adjusted by adding frozen single strength juice or orange juice concentrate, the latter being limited to one-fourth of the total orange juice solids (28 FR 10900 at 10902). The standard of identity permitted frozen concentrated orange juice (as specified in § 146.146) and concentrated orange juice for manufacturing (as specified in § 146.153) when made from mature oranges as optional concentrated orange juice ingredients (28 FR 10900 at 10906).

Section 401 of the FD&C Act permits us to establish a reasonable definition and standard of identity when such action will promote honesty and fair dealing in the interest of consumers. The Brix level of expressed juice, in contrast to concentrated juice, is subject to the vagaries of nature and therefore has a naturally occurring range beyond the manufacturer's control (see 58 FR 2897 at 2906). As such, a reasonable definition and standard of identity for POJ should take this circumstance into consideration. We recognize that citrus greening disease has caused damage to Florida's orange crop and to much of the orange crop of the United States. See USDA APHIS, “Citrus Greening and Asian Citrus Psyllid,” at https://www.aphis.usda.gov/plant-pests-diseases/citrus-diseases/citrus-greening-and-asian-citrus-psyllid. We also acknowledge that until a treatment is found to prevent or cure citrus greening disease, it is unlikely that the orange crop will recover and that the Brix level of juice from oranges will return to levels previously seen. The data submitted by the petitioners demonstrates that the Brix value of Florida oranges has been decreasing since 2010-2011, and a minimum Brix of 10.0° for POJ appears to be a reasonable level based on information submitted by the petitioners showing the historical seasonal Brix levels decreasing by year (Supplemental Materials at Appendix 2).

We have also considered whether amending the SOI for POJ would promote honesty and fair dealing in the interest of consumers. Although the SOI for POJ permits the addition of concentrated orange juice to raise the Brix level, some modern-day consumers may prefer POJ that is made from only expressed juice rather than from added concentrated juice. The petitioners assert that “not from concentrate” orange juice has become the most popular orange juice form. Since the SOI for POJ was established, consumers have come to prefer 100% juice, and labeling requirements have been established to inform consumers whether juice products are from concentrate (see 21 CFR 101.30(b)(3), (i), and 102.33(g)). Lowering the minimum Brix to 10.0° may prevent the addition of concentrated orange juice ingredients because they would not be needed to meet this minimum.

We further note that, as asserted by the petitioners and in comments submitted to the RFI we reviewed, lowering the minimum Brix from 10.5° to 10.0° is unlikely to affect the taste of POJ. Nutrition labels for POJ provided by the petitioners show that a serving (8 oz) of orange juice with a Brix of 10.5° has 18 grams of sugar, whereas a serving of orange juice with a Brix of 10.0° has 17 grams of sugar. Thus, lowering the minimum Brix of POJ, as proposed in this rule, would result in one gram difference in sugar content per serving. Moreover, data submitted by the petitioners indicates that a change in Brix from 10.5° to 10.0° has a minimal impact on the nutrient levels in orange juice.

Based on this information, we tentatively conclude that amending the SOI for POJ to permit a minimum Brix of 10.0° is reasonable and will promote honesty and fair dealing in the interest of consumers. Because the Brix value is a minimum value, orange juice processors may produce POJ with higher Brix. The proposed rule would lower the minimum Brix, thereby permitting more flexibility in the range of orange juice that can be used in the manufacture of POJ.

Pending issuance of a final rule amending the SOI for POJ or a response to the 2022 citizen petition in accordance with 21 CFR 10.30(e)(2), FDA intends to consider the exercise of enforcement discretion when POJ is manufactured with a Brix from 10.0° to 10.5° and is otherwise in compliance with § 146.140.

We are issuing this proposed rule consistent with our authority in sections 401 and 701 of the FD&C Act (21 U.S.C. 341, 371). Section 401 of the FD&C Act permits us to promulgate regulations establishing for foods a reasonable definition and standard of identity to promote honesty and fair dealing in the interest of consumers.

The proposed rule, if finalized, would amend the SOI for POJ in § 146.140. Our regulation, at § 146.140(a), requires a minimum orange juice soluble solids content of 10.5° Brix for POJ. The proposed rule would lower the minimum orange juice soluble solids content from 10.5° to 10° Brix.

The proposed rule, if finalized, would amend § 146.140(a) to allow the manufacture of POJ with a lower soluble solids content, which in turn impacts sugar content. The sugar content is reduced by 1 gram per serving (8 oz) when the Brix level of POJ decreases from 10.5° to 10°. This change is expected to have insignificant impact on taste and flavor and may facilitate the manufacture of POJ without added concentrated orange juice ingredients. The proposed rule reflects FDA's efforts to update and modernize food standards by aligning the standard with current crop properties and providing greater production flexibility, while maintaining the basic nature and essential characteristics of standardized foods. We tentatively conclude that this action would promote honesty and fair dealing in the interest of consumers.

This proposed rule, if finalized as proposed, is expected to be an E.O. 14192 deregulatory action.

We propose that any final rule that may result from this rulemaking become effective 30 days after its publication in the Federal Register . The final rule would apply to POJ products produced or delivered for introduction into interstate commence on or after the effective date. We propose that the compliance date for any final rule that may result from this rulemaking be 30 days after its publication in the Federal Register .

The petitioners requested that we amend the SOI for POJ to lower the minimum Brix level to 10° (Petition at page 2). The proposed standard was published when Florida oranges, the dominant supplier, had an average Brix level of 11.8° and FDA published the SOI with a minimum Brix level of 10.5° (28 FR 10905). Currently, we understand that Brix level has been declining over the past few decades, making it challenging for manufacturers to meet the current minimum Brix level of 10.5° (Petition at pages 3-4).

Thus, in addition, we invite comment on whether the minimum Brix level requirement should be further reduced or removed entirely from the SOI for POJ due to the steadily declining Brix levels. Would removal of a minimum Brix requirement better promote honesty and fair dealing in the interest of consumers while supporting innovation? Specifically, would it result in products that continue to meet consumers expectations about POJ? Please explain your answers and provide references and data that support your explanation, if possible.

We also invite comment on whether the SOI for POJ should be revoked so that manufacturers have more flexibility in POJ production. This would result in POJ being a nonstandardized food, similar to other juices such as apple, grape, and cranberry juices. Is the SOI for POJ no longer necessary to promote honesty and fair dealing in the interest of consumers such that it should be revoked? Please explain your answers and provide references and data that supports your explanation, if possible.

As mentioned in section II.A, we received a citizen petition requesting that we increase the maximum allowable amount of unfermented juice that can be obtained from mature oranges of the species Citrus reticulata or Citrus reticulata hybrids from 10 percent by volume to 15 percent by volume of the unfermented juice (see § 146.140(a)). We understand from industry that Citrus reticulata is sweeter than Citrus sinensis and thus has a higher Brix value. Increasing the maximum allowable amount of juice from Citrus reticulata to 15 percent by volume could help increase the overall Brix value of POJ. We invite comment on the acceptability of increasing the maximum allowable amount of unfermented juice from Citrus reticulata or Citrus reticulata hybrids from 10% to 15% by volume in § 146.140(a). If such change were made, would the essential characteristics of POJ be preserved? Please explain and provide any data or factual information.

We have examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, Executive Order 14192, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

Executive Orders 12866 and 13563 direct us to assess all benefits, costs, and transfers of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 14192 requires that any new incremental costs associated with significant new regulations “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least ten prior regulations.” The Office of Information and Regulatory Affairs (OIRA) has determined that this proposed rule is a significant regulatory action under Executive Order 12866. This proposed rule, if finalized as proposed, is expected to be an Executive Order 14192 deregulatory action.

The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because we tentatively conclude that this proposed rule, if finalized, would not generate compliance costs to industry, we propose to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (Section 202(a)) requires us to prepare a written statement, which includes estimates of anticipated impacts, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $187 million, using the most current (2024) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount.

The proposed rule, if finalized, would not require firms in the POJ industry to change their manufacturing practices or behavior in any way. As a result, we tentatively conclude that there would be no compliance costs associated with the proposed rule. The proposed rule would allow additional flexibility for, and the opportunity for innovation regarding, POJ, providing benefits to industry without harming consumers. Manufacturers may experience cost savings if they are able to avoid blending single strength orange juice with higher Brix or orange juice concentrate, or if they are able to substitute cheaper inputs into the manufacturing process, such as using cheaper local lower-Brix oranges that previously would not have been used to meet the SOI. We note specifically that the proposed rule does not require any behavioral changes on the part of manufacturers, as it provides manufacturers with greater flexibility rather than imposing any restrictions. The proposed changes would provide for a wider range of products to be marketed as POJ. No changes would be required for products that already meet the existing POJ standard. Therefore, any changes made by manufacturers of POJ would be voluntary.

Our primary estimate of cost savings experienced by manufacturers is −$52.3 million, annualized at 7% over 10 years; this primary estimate is −$52.5 million, annualized at 3% over 10 years. Therefore, we tentatively conclude that the proposed rule to amend the SOI for POJ, if finalized, is a deregulatory action under Executive Order 14192. Table 1 provides a summary of the benefits and costs associated with the proposed rule. We request comment on our described benefits and costs of the proposed rule.

In line with Executive Order 14192, in Table 2 we estimate present and annualized values of costs, cost savings, and net costs over an infinite time horizon, assuming 1% annual growth in cost savings corresponding to 1% annual growth of POJ market in perpetuity.

The proposed rule, if finalized, would not require firms in the POJ industry to change their manufacturing practices or behavior in any way. As a result, we tentatively conclude that there would be no compliance costs associated with the proposed rule. The proposed rule would allow additional flexibility for, and the opportunity for innovation regarding, POJ, providing benefits to industry without harming consumers. Manufacturers may experience cost savings if they are able to avoid blending single strength orange juice with higher Brix or orange juice concentrate, or if they are able to substitute cheaper inputs into the manufacturing process, such as using cheaper local lower-Brix oranges that previously would not have been used to meet the SOI. Our primary estimate of cost savings experienced by manufacturers is −$52.3 million, annualized at 7% over 10 years; this primary estimate is −$52.5 million, annualized at 3% over 10 years. Therefore, we tentatively conclude that the proposed rule to amend the SOI for POJ, if finalized, is a deregulatory action under Executive Order 14192. Table 1 provides a summary of the benefits and costs associated with the proposed rule. We request comment on our described benefits and costs of the proposed rule.

In line with Executive Order 14192, in 2 we estimate present and annualized values of costs, cost savings, and net costs over an infinite time horizon.

We request comment on our described benefits and costs of the proposed rule. We have developed a full Preliminary Economic Analysis of Impacts that assesses the impacts of the proposed rule. The full preliminary analysis of economic impacts is available in the docket for this proposed rule (Ref. 2) and at https://www.fda.gov/about-fda/economics-staff/regulatory-impact-analyses-ria.

We have determined under 21 CFR 25.32(a) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This proposed rule contains no new or revised collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. We have determined that this proposed rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive Order and, consequently, a federalism summary impact statement is not required.

We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13175. We have tentatively determined that the rule does not contain policies that would have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. We invite comments from tribal officials on any potential impact on Indian Tribes from this proposed action.

The following references are on display at the Dockets Management Staff (see ADDRESSES ) and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at https://www.regulations.gov and at the website address provided below. FDA has verified the website addresses as of the date this document publishes in the Federal Register , but websites are subject to change over time.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, we propose that 21 CFR part 146 be amended as follows:

This notice of proposed rulemaking contains proposed regulations that would amend the Income Tax Regulations (26 CFR part 1) under section 132(a) of the Internal Revenue Code (Code) related to no-additional-cost services and qualified employee discounts. The proposed regulations are issued under the authority conferred by Section 132(o), which provides the Secretary or his delegate (Secretary) with an express grant of regulatory authority to prescribe such regulations as may be necessary or appropriate to carry out the purposes of section 132. The proposed regulations are also issued under the authority of section 7805(a) of the Code, which authorizes the Secretary to prescribe all needful rules and regulations for the enforcement of the Code.

These proposed regulations would replace a business classification system that has not been updated since 1974 with a much more current classification system that is updated every five years. Under these proposed regulations, the application of the no-additional-cost benefit and employee discount exclusions from employee income under section 132(a)(1) and (2) would be determined under a classification system that more accurately reflects current economic activity than the system used under the existing regulations, thereby reducing burden in applying the exclusions from income under section 132(a)(1) and (2).

Section 132(a)(1) and (2) exclude from the gross income of an individual any fringe benefit that qualifies as a no-additional-cost service or a qualified employee discount, respectively. Section 132(b) defines the term “no-additional-cost service,” in part, as any service provided by an employer to an employee for use by such employee if such service is offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services. Section 132(c)(1) defines the term “qualified employee discount,” in part, as any employee discount with respect to qualified property or services. Section 132(c)(4) defines the term “qualified property or services” as any property (other than real property and other than personal property of a kind held for investment) or services that are offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services.

Section 1.132-4(a)(1) provides that, for purposes of determining whether the exclusion under section 132(a)(1) or (2) applies, an individual to whom or on behalf of whom the fringe benefit is provided must have performed substantial services in the employer's line of business that offers such services or property for sale to customers in the ordinary course of business.

Section 1.132-4(a)(2)(i) states that an employer's line of business is determined by reference to the Enterprise Standard Industrial Classification Manual (ESIC Manual) prepared by the Statistical Policy Division of the U.S. Office of Management and Budget (OMB) and further provides that an employer is considered to have more than one line of business if the employer offers for sale to customers property or services in more than one two-digit code classification referred to in the ESIC Manual. Section 1.132-4(a)(2)(ii) lists as examples of two-digit classifications under the ESIC Manual general retail merchandise stores; hotels and other lodging places; auto repair, services, and garages; and food stores.

Section 1.132-4(a)(3) provides that, if pursuant to § 1.132-4(a)(2), an employer has more than a single line of business, such lines of business will be treated as a single line of business where and to the extent that one or more of the following aggregation rules apply:

(i) If it is uncommon in the industry of the employer for any of the separate lines of business of the employer to be operated without the others, the separate lines of business are treated as one line of business.

(ii) If it is common for a substantial number of employees (other than those employees who work at the headquarters or main office of the employer) to perform substantial services for more than one line of business of the employer, so that determination of which employees perform substantial services for which line of business would be difficult, then the separate lines of business of the employer in which such employees perform substantial services are treated as one line of business.

(iii) If the retail operations of an employer that are located on the same premises are in separate lines of business but would be considered to be within one line of business under § 1.132-4(a)(2) if the merchandise offered for sale in such lines of business were offered for sale at a department store, then the operations are treated as one line of business.

Section 132 (including section 132(a)(1) and (2)), was added to the Code as part of the Deficit Reduction Act of 1984, Public Law 98-369, 98 Stat. 494. Concerning the line of business limitation that applies to the no-additional-cost service and qualified employee discount exclusions in section 132(a), the House Report on this legislation noted that “[i]n providing guidance as to the treatment of an employer as consisting of separate lines of business for this purpose, Treasury regulations . . . may refer to the Standard Industrial Classifications used for other governmental purposes.” H. Rept. 98-432, 1594, 1984 U.S.C.C.A.N. 697, 1218.

First used in 1938, the Standard Industrial Classification (SIC) is an industry classification system developed by OMB for use in the classification of establishments by type of activity in which the establishments are primarily engaged. See North American Industry Classification System (NAICS), United States, 2022, published by OMB, Executive Office of the President (hereinafter referred to as the “NAICS Manual”), pg. 13. 1 For purposes of the SIC, an establishment is an economic unit, generally at a single physical location, where business is conducted or where services or industrial operations are performed (such as a factory, mill, store, hotel, movie theater, mine, farm, ranch, bank, railroad depot, airline terminal, sales office, warehouse, or central administrative office). See Standard Industrial Classification Manual, 1987, published by OMB, Executive Office of the President (hereinafter referred to as the “SIC Manual”), Introduction, pg. 12. 2 The SIC is a hierarchical classification system that includes a two-digit major group, a three-digit industry group, or a four-digit industry code (the most specific classification). Id. Examples of four-digit industry code SIC classifications include metal mining, general building contractors—non-residential buildings, and knitting mills.

The ESIC Manual was developed by the Statistical Policy Division of OMB to supplement the SIC by providing a standard for use with statistics about enterprises (rather than “establishments,” the applicable unit for SIC) by kind of economic activity. See Announcement 86-6 (1986-4 IRB 52). For this purpose, the term “enterprise” consists of all establishments under common direct or indirect ownership. An enterprise, for this purpose, is generally defined to include all entities, including subsidiaries, if there is more than 50 percent common ownership. An enterprise may vary in composition ranging from a single legal entity ( e.g., corporation, partnership, individual proprietorship) to a complex family of legal entities under common ownership. Id. Just like the SIC, the ESIC Manual uses a four-digit code for detailed classification (with a decimal between the second and third digits to visually distinguish an ESIC Manual classification from a SIC classification). Id. “The first two digits of the code represent the Major Group, similar to that for the establishment SIC,” while “the third and fourth digits represent the enterprise subdivision.” ESIC Manual codes are similar, and sometimes identical to, SIC codes, but they aren't necessarily defined in the same way. The last update of the ESIC Manual was in 1974.

In response to the House Report suggestion that the SIC could be used as a reference for determining line of business, Treasury and the IRS elected to use the ESIC Manual, a supplement to the SIC as described above, as a basis for defining line of business for purposes of section 132(a)(1) and (2) when they issued final regulations under section 132 in the Federal Register in 1989 (54 FR 28576). In the early 1990s, “[r]apid changes in both the U.S. and world economies brought the SIC under increasing criticism.” See NAICS Manual, Introduction, pg. 13. In 1992, the OMB began work on developing a new classification system to address these criticisms and coordinated this work with Mexico and Canada. Id. The product of these efforts was the NAICS, which would take the place of the existing classification systems in the United States, Canada, and Mexico. Id. The United States implemented NAICS for the first time in 1997. Since then, the NAICS has represented a continuing cooperative effort among Statistics Canada, Mexico's Instituto Nacional de Estadística y Geografía (INEGI), and the Economic Classification Policy Committee (ECPC) of the United States, acting on behalf of OMB. See NAICS Manual, Preface, pg. 3. Since its inception, the countries have collaborated in revising the NAICS every five years in order to keep the classification system current with changes in economic activities. See 2022 NAICS Manual, Preface, pg. 3.

The NAICS is primarily a classification system for establishments, defined for this purpose as the “smallest operating entity for which records provide information on the cost of resources—materials, labor, and capital—employed to produce the units of output.” See NAICS Manual, Introduction, pg. 18. Similar to the SIC, an establishment for purposes of NAICS is typically “a single physical location where business is conducted or where services or industrial operations are performed (for example, a factory, mill, store, hotel, movie theater, mine, farm, airline terminal, sales office, warehouse, or central administrative office).” Id.

The structure of the NAICS is hierarchical. It classifies establishments into similar industries using a six-digit coding system. Id. The first two digits of the code designate the sector of an establishment, which represents general categories of economic activity ( e.g., under the 2022 classification, sector codes 44 and 45 designate “Retail Trade”). Id. at pg. 17. The third digit designates the subsector ( e.g., 449 designates the “Furniture, Home Furnishings, Electronics, and Appliance Retailers” subsector of “Retail Trade”); the fourth digit designates the industry group ( e.g., 4491 designates the “Furniture and Home Furnishings Retailers” industry group in the “Furniture, Home Furnishings, Electronics, and Appliance Retailers” subsector); and the fifth digit designates the NAICS industry ( e.g., 44912 designates the “Home Furnishings Retailers” industry of the “Furniture and Home Furnishings Retailers” industry group). Id. at pg. 18.

Any particular establishment is usually classified down to the NAICS five-digit industry level classification, using the classification of the industry that best matches its primary activity. Id. at pg. 19. When applicable, the sixth digit is used to designate the national industry ( e.g., 449122 designates the “Window Treatment Retailers” industry). Id. at pg. 18. “Typically the level at which comparable data will be available for Canada, Mexico, and the United States is the five-digit NAICS industry,” but where additional detail or clarifying classification is needed for a specific nation (Canada, Mexico, or the United States) the national industry classification can be used. Id. A zero as the sixth digit generally indicates that the NAICS industry and the U.S. industry are the same. Id.

Table I below provides a breakdown of the NAICS classification for a window treatment retail establishment.

The NAICS is used by the IRS for various purposes under the Code. See, e.g., Instructions for Form 1120, U.S. Corporation Income Tax Return (which asks that a “principal business activity code” based on the NAICS six-digit code be entered on line 2a on Schedule K of Form 1120); Instructions for Schedule C (Form 1040), Profit or Loss From Business (which requires that a six-digit Principal Business or Professional Activity Code based on the NAICS be entered on Line B); and section 15.10 of Rev. Proc. 2025-23 (2025 IRB 1476) (which uses the first three digits of NAICS codes in defining which taxpayers qualify as “specified transportation industry taxpayers” for purposes of accounting method change rules that apply specifically to specified transportation industry taxpayers).

These proposed regulations would replace the ESIC Manual with the NAICS as the industry classification system used to determine an employer's line of business for purposes of excluding no-additional-cost services and qualified employee discounts from employees' gross income pursuant to section 132(a)(1) and (2) of the Code, respectively. The ESIC Manual has not been updated since 1974. Conversely, the NAICS was most recently updated in 2022, and is the most current classification system in the United States, making it a more accurate and detailed reflection of present economic realities.

In addition, because significant changes and advances in technology have occurred since 1974, many current industries are not accounted for in the ESIC Manual because they did not exist at the time it was last updated. Examples include internet service providers, cell phone manufacturers, cell phone service providers, and smart phone application designers. The NAICS, on the other hand, is updated regularly to take into account new and developing industries. For instance, the 2022 NAICS specifically describes broadband internet service providers as falling under the four-digit category of Wired and Wireless Telecommunications (except Satellite) (5171). Under the ESIC Manual, this line of business could be considered under the two-digit code “Communication” (48), but none of the sub-categories in the Communication category include the broadband internet service provider industry, making determination of the appropriate ESIC Manual category for broadband internet service providers unclear. Replacing the ESIC Manual with the NAICS as the industry classification system used to determine an employer's line of business will make determining the line of business for new and constantly evolving industries easier and more certain.

While the numeric NAICS and SIC codes are not related to each other, their organizational structures have some similarities. 3 SIC codes (as well as ESIC Manual codes) are grouped into “divisions” that are labeled with a letter ( e.g., Division A is “Agriculture, Forestry, and Fishing”). 4 This roughly corresponds with the NAICS two-digit “Sector” level of classification ( e.g., the NAICS Sector 11 is Agriculture, Forestry, Fishing and Hunting”). 5 Continuing down the classification levels of both systems, the SIC two-digit “Major Group” level roughly corresponds to the NAICS three-digit “Subsector” level, the SIC three-digit “Industry Group” level roughly corresponds to the NAICS four-digit “Industry Group” level, and the four-digit SIC “Industry” level roughly corresponds with the NAICS five-digit “NAICS Industry” level. 6

Because the ESIC Manual is structured very similarly to the SIC codes, the comparison between ESIC Manual codes and NAICS codes largely parallels the comparison between SIC Codes and NAICS codes. Therefore, the NAICS three-digit “Subsector” level would roughly correspond with the ESIC Manual two-digit “Major Group” level used to determine line of business under the current § 1.132-4(a)(2)(i) regulations. However, the five-digit NAICS industry classification is intended to be applied to the primary activity of a single-location establishment, making it a more appropriate level for determining the line of business of an employer for whom the employee receiving the fringe benefit is performing services, since an employee typically performs services at a single location or establishment. Nevertheless, to account for the fact that some establishments may represent more than one NAICS industry, making determination of the most accurate NAICS industry classification challenging in certain situations, these proposed regulations would use the NAICS four-digit “Industry Group” classification in determining an employer's line of business for purposes of section 132(a)(1) and (2).

An employer is considered to have more than one line of business if the employer offers for sale to customers property or services in more than one four-digit NAICS industry group classification, according to the most recent version of the NAICS available on the first day of the taxable year in which the no-additional-cost service or qualified employee discount exclusion is being applied. Examples of four-digit NAICS industry groups are: General Merchandise Stores, including Warehouse Clubs and Supercenters; Traveler Accommodation; Automotive Repair and Maintenance; and Grocery Stores.

In situations where an employer has multiple primary activities corresponding to multiple four-digit NAICS industry group classifications causing it to have more than one line of business, the aggregation rules under § 1.132-4(a)(3) continue to apply under these proposed regulations. Minor modifications to the text of the aggregation rules under § 1.132-4(a)(3)(i) and (ii) have been proposed to accommodate the change from the ESIC Manual to the NAICS.

In addition, the proposed regulations would amend the aggregation rule under § 1.132-4(a)(3)(iii). Currently, this section provides that if the retail operations of an employer that are located on the same premises are in separate lines of business but would be considered to be within one line of business if the merchandise offered for sale in such lines of business were offered for sale at a department store, then the operations are treated as one line of business. The proposed regulations would amend this rule to replace “department store” with “general merchandise store, including warehouse clubs and super centers.” This update of the regulations reflects the pervasiveness of big-box stores, hypermarkets, super centers, and warehouse clubs in the current retail economy, especially in comparison to the traditional department store. These types of establishments sell an ever-increasing variety of merchandise but are still classified under one NAICS industry group (4552, Warehouse Clubs, Supercenters, and Other General Merchandise Retailers, under the 2022 NAICS). Therefore, under the proposed regulations, employees working for these types of employers would be considered to be working in one line of business. The proposed amendment to this section provides equal treatment for employees working for other types of employers that similarly sell a variety of kinds of merchandise on their business premises, but the variety is more narrowly tailored to cater to a specific segment of the retail market ( e.g., a store that primarily sells coffee and tea, but that also sells electric coffeemakers, electric tea kettles, and similar related small home appliances). Under the proposed amendment, employees working for such employers would still be considered to be working in one line of business, even if the sale of the various merchandise sold by the employer is classified under two or more NAICS industry groups ( e.g., specialty food retailers and electronics and appliance retailers), as long as the sale of the merchandise would be considered to be one line of business if the merchandise was being sold at a general merchandise store, warehouse club, or super center.

Finally, the proposed regulations provide updated examples of the application of the aggregation rules reflecting the use of NAICS classifications.

The Treasury Department and the IRS request comments on all aspects of the proposed rules, including on the use of the NAICS four-digit industry group code, whether additional changes are necessary to the aggregation rules under § 1.132-4(a)(3), whether the proposed applicability date could pose any challenges, and whether transition or other rules are necessary to accommodate the change in the standard for determining lines of business.

These regulations are proposed to be effective on the date these rules are published in the Federal Register as final regulations and would apply to taxable years beginning on or after that date.

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

The Office of Management and Budget's Office of Information and Regulatory Analysis has determined that these regulations are not significant and not subject to review under section 6(b) of Executive Order 12866, as amended.

These proposed regulations do not create new collection requirements, as defined under the Paperwork Reduction Act (44 U.S.C. 35), and do not alter any previously approved OMB information collection requirements and their associated burden.

It is hereby certified that these proposed regulations will not have a significant economic impact on a substantial number of small entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6). This certification is based on the fact that these proposed regulations do not impose any new requirements on small entities. The proposed regulations would apply only to employers that provide no-additional-cost services and/or qualified employee discount fringe benefits to their employees and, therefore, would affect a relatively small number of taxpayers. In addition, these proposed regulations are very unlikely to affect employment tax reporting or require any additional substantiation. Rather, the proposed regulations affect the industry classification system used to determine an employer's line of business for purposes of the exclusions from gross income under section 132(a)(1) and (2) and for this reason do not add any economic burden to affected entities. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

Notwithstanding this certification that the proposed regulations would not have a significant economic impact on a substantial number of small entities, the Treasury Department and the IRS invite comments on the impacts these proposed regulations may have on small entities.

Pursuant to section 7805(f) of the Code, these proposed regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. These proposed regulations do not include any Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector, in excess of that threshold.

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

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the ADDRESSES heading. The Treasury Department and the IRS request comments on all aspects of the proposed regulations. Any comments submitted will be available at https://www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person who timely submits electronic or written comments. Requests for a public hearing are also encouraged to be made electronically. If a public hearing is scheduled, notice of the date and time for the public hearing will be published in the Federal Register .

The principal author of these regulations is Andrew Holubeck of the Office of the Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). However, other personnel from the IRS and the Treasury Department participated in their development.

Accordingly, the Treasury Department and IRS propose to amend 26 CFR part 1 as follows:

On May 22, 2025, an organization notified the Coast Guard that it will be conducting a daily fireworks display from 8:30 p.m. to 11 p.m. from October 9, 2025, through October 12, 2025. The fireworks are to be launched from a barge in the Ohio River in the middle of the channel between MM 469.7 to 471.0 near Cincinnati, OH. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The Captain of the Port Sector Ohio Valley (COTP) has determined that potential hazards associated with the fireworks to be used in this display would be a safety concern for anyone within MM 469.7 to 471.0 on the Ohio River.

The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within MM 469.7 to 471.0 on the Ohio River for the fireworks barge before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority in 46 U.S.C. 70034.

The COTP is proposing to establish a safety zone from October 9, 2025, through October 12, 2025 and would cover all navigable waters within MM 469.7 to 471.0 on the Ohio River in Cincinnati, OH. The safety zone would be enforced from 8:30 p.m. to 11 p.m. each day during the period. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 8:30 p.m. to 11:00 p.m. fireworks display. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders.

Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

The Office of Management and Budget (OMB) has not designated this rule a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it.

This regulatory action determination is based on size, location, duration, and time-of-day of the safety zone. The safety zone would be enforced for only two and a half hours per day for four days, for a section of the river that is only 1.3 miles long. daily from 8:30 p.m. to 11 p.m. starting October 9, 2025, through October 12, 2025, on the Ohio River between MM 469.7-471.0. The Coast Guard will issue a written Local Notice to Mariners and Broadcast Notice to Mariners via VHF-FM marine channel 16 about the safety zone, and this rule also allows vessels to seek permission from the COTP or a designated representative to enter the area.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

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

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

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

A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone lasting 2.5 hours that would prohibit entry within MM 469.7 to 471.0 on the Ohio River. Normally such actions are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

We view public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

Submitting comments. We encourage you to submit comments through the Federal Docket Management System at https://www.regulations.gov. To do so, go to https://www.regulations.gov, type USCG-2025-0475 in the search box and click “Search.” Next, look for this document in the Search Results column, and click on it. Then click on the Comment option. If you cannot submit your material by using https://www.regulations.gov, call or email the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions.

Viewing material in docket. To view documents mentioned in this proposed rule as being available in the docket, find the docket as described in the previous paragraph, and then select “Supporting & Related Material” in the Document Type column. Public comments will also be placed in our online docket and can be viewed by following instructions on the https://www.regulations.gov Frequently Asked Questions web page. Also, if you click on the Dockets tab and then the proposed rule, you should see a “Subscribe” option for email alerts. The option will notify you when comments are posted, or a final rule is published.

We review all comments received, but we will only post comments that address the topic of the proposed rule. We may choose not to post off-topic, inappropriate, or duplicate comments that we receive.

Personal information. We accept anonymous comments. Comments we post to https://www.regulations.gov will include any personal information you have provided. For more about privacy and submissions to the docket in response to this document, see DHS's eRulemaking System of Records notice (85 FR 14226, March 11, 2020).

For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:

NMFS manages the groundfish fisheries in the Exclusive Economic Zone off Alaska under the BSAI FMP. The North Pacific Fishery Management Council (Council) prepares and recommends FMPS under the authority of the Magnuson-Stevens Act (16 U.S.C. 1801 et seq ). In order to promote the long-term health and stability of the BSAI Pacific cod fishery, NMFS is proposing this action under the rulemaking authority of the Magnuson-Stevens Act Section 302(h)(1) and 303(a)(1) (16 U.S.C. 1801 et seq. ) in alignment with the Council's recommendation. Regulations implementing the BSAI FMP appear at 50 CFR part 679. General regulations governing U.S. fisheries also appear at 50 CFR part 600.

The Council transmitted amendment 125 for review by the Secretary of Commerce, and a notice of availability (NOA) of amendment 125 was published in the Federal Register on June 4, 2025, with comments invited through August 4, 2025 (90 FR 23664). Comments submitted on this proposed rule by the end of the comment period (See DATES ) will be considered by NMFS and addressed in the response to comments in the final rule. All comments addressing amendment 125 must be received by August 4, 2025, to be considered in the approval/disapproval decision on amendment 125. Commenters do not need to submit the same comments on both the NOA and this proposed rule. All relevant written comments received by August 4, 2025, whether specifically directed to amendment 125, this proposed rule, or both will be considered by NMFS in the approval/disapproval decision for amendment 125 and addressed in the response to comments in the final rule.

Pacific cod ( Gadus macrocephalus ) is one of the most abundant and valuable groundfish species harvested in the BSAI. Vessels harvest Pacific cod using trawl gear and other types of authorized fishing gear, including hook-and-line gear, jig gear, and pot gear. Vessels harvesting BSAI Pacific cod operate as CVs that harvest and deliver the fish for processing or as catcher/processors (C/Ps) that harvest and process the fish on board.

The BSAI FMP and implementing regulations require that, after consultation with the Council, NMFS specify an overfishing limit (OFL), an acceptable biological catch (ABC), and a total allowable catch (TAC) amount for each target species or species group of groundfish, including Pacific cod, on an annual basis. An OFL is the catch level above which overfishing would occur for a species or species group. An ABC is the level of a species or species group annual catch that accounts for the scientific uncertainty in the estimate of OFL and any other scientific uncertainty. The TAC is the annual catch target for a species or species group, derived from the ABC by considering social and economic factors and management uncertainty. Under the BSAI FMP, an ABC is set below its respective OFL and the TAC must be set lower than or equal to the ABC.

The OFLs, ABCs, and TACs for BSAI groundfish are specified through the annual harvest specifications process. A detailed description of the annual harvest specifications process is provided in the final 2025 and 2026 harvest specifications for groundfish of the BSAI (90 FR 12640, March 18, 2025). The annual harvest specifications process for BSAI Pacific cod is briefly summarized here. Specific examples of Pacific cod OFLs, ABCs, TACs, and other apportionments of Pacific cod used in this preamble are based on the 2025 specifications from the final 2025 and 2026 harvest specifications for groundfish of the BSAI, unless otherwise noted.

Pacific cod is assessed as two distinct stocks with separate OFLs, ABCs, and TACs: (1) the eastern Bering Sea (BS) stock; and (2) the Aleutian Islands (AI) stock. Before the Pacific cod TACs are established, the Council and NMFS consider social and economic factors and management uncertainty, as well as two factors that are particularly relevant to BSAI Pacific cod: (1) the Pacific cod state waters Guideline Harvest Level fisheries; and (2) an overall limit on the maximum amount of TAC that can be specified for all BSAI groundfish species combined.

Once the groundfish TACs are established, regulations at § 679.20(a)(7)(i) allocate 10.7 percent of the BS Pacific cod TAC and 10.7 percent of the AI Pacific cod TAC to the Community Development Quota (CDQ) Program for the exclusive harvest by Western Alaska CDQ groups. Section 305(i) of the Magnuson-Stevens Act authorizes six CDQ groups representing 65 communities to receive exclusive harvest privileges of groundfish, including Pacific cod, and specifies the methods for allocating these harvest privileges.

After subtraction of the CDQ allocation from each TAC, NMFS combines the remaining BS and AI TACs into one BSAI non-CDQ Pacific cod TAC, which is available for harvest by nine non-CDQ fishery sectors. BSAI Pacific cod has been fully allocated to these sectors since 2008 with the implementation of amendment 85 to the BSAI FMP (72 FR 50788, September 4, 2007). Regulations at § 679.20(a)(7)(ii)(A) define the nine Pacific cod non-CDQ fishery sectors in the BSAI and specify the percentage allocated to each. The non-CDQ fishery sectors are defined by a combination of gear type ( e.g., trawl gear or hook-and-line gear), operation type ( i.e., CV or C/P), and vessel size, or LOA, categories ( e.g., vessels greater than or equal to 60 ft (18.3 m) LOA). Through the annual harvest specifications process, NMFS allocates an amount of the combined BSAI non-CDQ TAC to each of these nine non-CDQ fishery sectors. Regulations at § 679.20(a)(7)(ii)(A) allocate 1.4 percent of the BSAI non-CDQ Pacific cod TAC to the jig sector and 2 percent to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector.

Under regulations at § 679.20(a)(7), allocations of Pacific cod to most of the CDQ Program and non-CDQ fishery sectors are further apportioned by seasons. Season dates for the CDQ and non-CDQ fishery sectors are established at § 679.23(e)(5). In general, regulations apportion jig gear allocations among three seasons that correspond to January 1 to April 30 (A season), April 30 to August 31 (B season), and August 31 to December 31 (C season). The less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector is not divided into seasons and is open January 1 to December 31. Depending on the specific sector allocation (CDQ Program or non-CDQ fishery), between 40 and 75 percent of the Pacific cod allocation is apportioned to the A season. Because the non-CDQ sector allocations are defined BSAI-wide, sectors remain free to harvest their allocation in either of the two subareas (BS and AI) as long as they have the appropriate federal permits. However, if the non-CDQ portion of the TAC in either subarea (BS or AI) will be or is reached, NMFS will close directed fishing for Pacific cod in that subarea to all non-CDQ sectors.

While Pacific cod remains one of the most abundant species in the BSAI management area, population declines since 2016 have resulted in lower annual TACs than historical averages (see table 3-1 in Section 3.2 of the Analysis). The smaller annual TACs have resulted in earlier season closures. Directed fishing for BS non-CDQ Pacific cod closed prior to the end of the jig sector C season (December 31) in 4 of the last 5 years: on November 18, 2020 (with the exception of the trawl sector which closed earlier); September 17, 2021; October 7, 2022; and October 16, 2023. No early closure occurred in 2024.

This proposed rule refers to various groups of vessels using nontrawl gear and their corresponding sector allocations. Although in some cases it is somewhat intuitive from the name of the sector, it is useful to clearly explain the relationships between catch from groups of vessels using specific gear types and how their catch accrues toward various sector allocations. Catch from all vessels using jig gear, including CVs and C/Ps, accrues toward the jig vessels sector. Catch from vessels using hook-and-line gear or pot gear accrues toward one of five different sector allocations depending on the vessels operation type (CV or C/P) and LOA: (1) hook-and-line and pot CVs less than 60 ft (18.3 m) LOA; (2) hook-and-line CVs greater than or equal to 60 ft (18.3 m) LOA; (3) hook-and-line CPs; (4) pot CVs greater than or equal to 60 ft (18.3 m) LOA, and (5) pot CPs. Currently, catch from all CVs that are less than 60 ft (18.3 m) LOA using hook-and-line or pot gear accrues toward the hook-and-line and pot CVs less than 60 ft (18.3 m) LOA sector allocation. Under the changes proposed by this action, catch during the jig A season (January 1 to April 30) from CVs that are less than or equal to 55 ft (16.8 m) LOA would accrue to the jig vessel sector, while catch during the jig A season from CVs greater than 55 ft (16.8 m) LOA but less than 60 ft (18.3 m) LOA would continue to accrue to the hook-and-line and pot CVs less than 60 ft (18.3 m) LOA sector.

Regulations at § 679.20(a)(7)(iv)(B) allow any unused portion of a seasonal allowance from any sector except the jig sector to be rolled over to that sector's next season during the current fishing year unless the Regional Administrator determines that sector would be unable to harvest its allocation. Historically Pacific cod in the other sectors is often fully utilized later in the year, therefore the unused portion of Pacific cod has consistently rolled over to that sector's next season. This means that the only reliable source for reallocations during the A season would come from the jig sector's A season apportionment. Section 679.20(a)(7)(iv)(C) allows the Regional Administrator to reallocate any projected unused portion of the BSAI Pacific cod jig sector's seasonal allowance to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector.

There has historically been little to no participation by vessels using jig gear in the A season, which has allowed NMFS to reallocate projected unused A season TAC from the jig sector to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector early in the year (frequently in January). In recent years, the majority of the jig sector's A season allowance has been reallocated to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector at the beginning of the year. NMFS closely monitors the fishing activity in these sectors to understand their fishing activity and capacity to harvest Pacific cod. NMFS tries to time any reallocations during the jig sector's A season to ensure the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector does not experience a disruption in fishing between their initial allocation and the reallocation becoming available.

This action affects the jig gear sector and the hook-and-line and pot CVs less than 60 ft (18.3 m) LOA sector. The jig sector is allocated 1.4 percent of the annual BSAI Pacific cod non-CDQ TAC, which is further divided into seasonal allowances between the A, B, and C seasons. The A season is issued 60 percent of the jig sector's total apportionment while the B and C seasons are each issued 20 percent (§ 679.20(a)(7)(iv)(A)(3)). The jig gear sector includes all vessels operating as CVs and using jig gear, as well as C/Ps vessels using jig gear to harvest Pacific cod.

The less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector is allocated 2 percent of the annual BSAI Pacific cod non-CDQ TAC for the year, with no seasonal allocations (§ 679.20(a)(7)(iv)(A)(4)). Given this relatively small sector allocation and the number as well as the fishing capacity of participants in this sector, this typically results in full harvest of the less than 60 ft (18.3 m) LOA hook-and-line or pot CV sector annual allocation early in the year, closing the sector to directed fishing typically in late January to early February. Regulations at § 679.20(a)(7)(iii)(A) specify the reallocation hierarchy applied to projected unharvested TAC from CV sectors are first reallocated to the jig sector, the less than 60 ft (18.3 m) LOA hook-and-line or pot CV sector, or both, followed by the other sectors as described in § 679.20(a)(7)(iii). Since 2020, reallocations to the less than 60 ft (18.3 m) LOA hook-and-line or pot CV sector have typically occurred first at the beginning of the year and then again in early to mid-September. However, it is important to note that reallocations can happen any time of the year if it is projected there will be unused harvest.

The current regulations at § 679.20(a)(7)(iv)(B) and (C) require a reallocation of BSAI Pacific cod from the jig sector's C season to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector on or near September 1. On average, from 2008 through 2021, 95 percent of the BSAI Pacific cod jig's initial allocation has been reallocated to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector.

As explained in Section 1.2.1 of the Analysis (see ADDRESSES ), some vessels in the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector (typically vessels with an LOA around 58 ft (17.7 m)) are known to have disproportionately greater catch per unit effort and improved stability in the water than smaller vessels. The Council considered two options to set the LOA threshold for smaller hook-and-line or pot CVs to harvest the jig sector allocation during the A season: (1) less than or equal to 55 ft (16.8 m) LOA; and (2) less than or equal to 56 ft (17.1 m) LOA. Public comments received during the Council process suggested that a significant shift in capacity for harvesting BSAI Pacific cod occurs between 56 ft (17.1 m) LOA vessels and smaller vessels.

Increased participation in the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector and reduced TACs in recent years have resulted in early (January or February) directed fishing closures for the sector. Smaller vessels (less than or equal to 55 ft (16.8 m) LOA) are disproportionately affected by early closures because vessel operators have less flexibility to fish when the weather is poor and typically fish waters closer to port, which may be less productive. Historically, the jig sector allocation has not been fully used, particularly in the A and C seasons. This action would allow less than or equal to 55 ft (16.8 m) LOA CVs using hook-and-line or pot gear to harvest Pacific cod from the jig sector allocation, which is intended to increase stability for current fishery participants and potential new entrants with smaller CVs without negatively impacting vessels using jig gear.

Reallocation of the jig sector allocation has created an important fishing opportunity in the fall for the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector that allows vessels to transition ( e.g., retain crew) from summer fisheries like salmon or Individual Fishing Quota halibut and sablefish to the Federal Pacific cod fishery. Other reallocation opportunities available to open the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector on September 1 are uncertain, except for the jig sector, because it is not always possible to project if other sectors will be unable to fully harvest their TACs before the end of the year in September. It is important to also note that, because there has historically been little to no participation by the jig sector fishing in the C season, NMFS has been able to reallocate unused B and projected C season TAC to the current less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector on or near September 1.

Amendment 125 and this proposed rule would retain the current reallocation hierarchy as specified at § 679.20(a)(7)(iii)-(iv), which would still require the Regional Administrator to reallocate a projected unused portion of a Pacific cod allowance from the jig sector to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector at the beginning of the C season, and allow NMFS to reallocate earlier in the year if NMFS is confident that they could project the amount of TAC that the newly modified jig sector would need to finish the A season.

Amendment 125 would modify the jig sector, during the A season, to include catch from CVs using hook-and-line or pot gear that are less than or equal to 55 ft (16.8 m) LOA. Pacific cod harvest from these vessels during the jig sector A season would accrue to the jig sector allocation. This modification would provide an opportunity for these smaller CVs to fish the A season apportionment of the jig sector allocation. Reallocations from the jig sector to the less than 60 ft (18.3 m) LOA in the A season currently happen at the beginning of the season, in early January. Under the proposed rule, NMFS would not reallocate the majority of the jig sector allocation to the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector in January to account for CVs using hook-and-line or pot gear that are less than or equal to 55 ft (16.8 m) LOA participating in the jig sector A season. Therefore, the reallocation during the jig sector A season may not occur at all, or would likely occur much later in the jig sector A season, based on the level of participation during the jig sector A season by smaller vessels (less than or equal to 55 ft (16.8 m) LOA). This opportunity for smaller vessels to fish the A season allowance of the jig sector allocation would reduce competition for the smaller vessels (less than or equal to 55 ft (16.8 m) LOA) with larger vessels during the jig gear A season. Vessels within the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector that are greater than 55 ft (16.9 m) LOA would have reduced fishing opportunity during the jig gear A season; however, these vessels tend to have additional efficiencies that enable them to operate in different weather conditions with greater catch per unit effort. The proposed rule would also result in the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector having less available TAC to harvest in January and likely an earlier fishery closure. After the jig sector A season ends, harvest from all CVs that are less than or equal to 55 ft (16.8 m) LOA, and using hook-and-line or pot gear, would accrue to the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector allocation for the remainder of the year. There would be no change after the end of the jig sector A season for CVs less than 60 ft (18.3 m) LOA and greater than 55 ft (16.8 m) LOA, which would continue to have their harvest accrue to the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector allocation.

To implement amendment 125, NMFS proposes revising the Federal BSAI Pacific cod jig sector, during the A season only, to include CVs less than or equal to 55 ft (16.8 m) LOA that use hook-and-line or pot gear. After the jig sector A season ends, all harvest from CVs that are less than 60 ft (18.3 m) LOA, and using hook-and-line or pot gear, would accrue to the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector. This action would allow smaller CVs in the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector to harvest the Pacific cod jig allocation earlier in the year. Vessels larger than 55 ft (16.8 m) LOA within the less than 60 ft (18.3 m) LOA hook-and-line or pot gear sector would only receive reallocations from the jig sector in the A season if there was sufficient A season allocation that would not be harvested by CVs less than or equal to 55 ft (16.8 m) LOA. This action would not change the allocation percentages or reallocation hierarchy established under amendment 85 to the BSAI FMP (72 FR 50788, September 4, 2007).

NMFS proposes adding a small vessel provision at § 679.20(a)(7)(iv)(D) to specify the provisions for less than or equal to 55 ft (16.8 m) LOA hook-and-line or pot CVs participating in the jig sector A season. After the jig sector A season ends on April 30 at 1200 hours Alaska local time (A.l.t.), seasonal allowances will be designated for jig vessels only. Beginning April 30 at 1200 hours A.l.t., harvest from hook-and-line or pot CVs less than or equal to 55 ft (16.8 m) LOA would accrue against the hook-and-line and pot CV less than 60 ft (18.3 m) LOA sector's allocation.

NMFS proposes corresponding changes to the sector allocations table in regulations at § 679.20(a)(7)(ii)(A) to modify the descriptions of the jig sector and the hook-and-line and pot CV less than 60 ft (18.3 m) LOA sector to accommodate the distinction between smaller (less than or equal to 55 ft (16.8 m) LOA) hook-and-line or pot CVs and larger (greater than 55 ft (16.8 m) LOA) hook-and-line or pot CVs during the jig sector A season (January 1 to April 30) as specified at § 679.23(e)(5)(iv)(A).

NMFS proposes revising the descriptions of seasonal allowances by sector under § 679.20(a)(7)(iv) to reflect these distinctions by vessel size, type, and season. Note that season dates vary by sector and are listed under § 679.23(e)(5). This action would apply only during the jig gear A season and does not modify regulations that govern when directed fishing by CVs using hook-and-line or pot gear is authorized. Additional revisions are proposed in regulations to include cross references to the small vessel provision being proposed at § 679.20(a)(7)(iv)(D) as needed.

NMFS proposes changes to regulations at § 679.20(a)(7)(ii)(B) to modify which sectors have an incidental catch allowance (ICA) deducted from their aggregate TAC to include the jig sector. Currently, the ICA is deducted from the hook-and-line and pot gear sectors, but the inclusion of smaller CVs (less than or equal to 55 ft (16.8 m) LOA) using hook-and-line or pot gear in the jig sector means that the ICA deduction should apply to the jig sector as well. If the ICA deduction was not applied to the jig sector, then any incidental catch of Pacific cod by CVs less than or equal to 55 ft (16.8 m) LOA that use hook-and-line or pot gear that occurs January 1 to April 30 will accrue towards the jig TAC instead. In recent years the sablefish and halibut IFQ fisheries have opened in March and Pacific cod is a common incidental catch species in those fisheries.

NMFS proposes technical changes to regulations at § 679.20(a)(7)(iii) to incorporate the small vessel provision into the existing non-CDQ sector reallocation hierarchy and make technical changes to the organization. Paragraph § 679.20(a)(7)(iii)(A) would be divided into six subparagraphs and references to the new small vessel provision would be added to paragraph (a)(7)(iii)(A)(1). NMFS proposes revising § 679.20(a)(7)(iii)(B) to add introductory text that clarifies that reallocations to trawl gear sectors are considered after applying paragraphs (a)(7)(iii)(A)(1) through (6) that specify the hierarchy of reallocations to the non-trawl CV sectors.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the BSAI FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

The proposed rule has been determined to be not significant for purposes of E.O. 12866.

This proposed rule is not an Executive Order 14192 regulatory action because the rule is not significant under Executive Order 12866.

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

A Regulatory Impact Review (RIR) was prepared to assess all costs and benefits of available regulatory alternatives. A copy of this analysis is available from NMFS (see ADDRESSES ). The Council recommended amendment 125 based on those measures that maximized net benefits to the Nation. Specific aspects of the economic analysis are discussed below in the Initial Regulatory Flexibility Analysis (IRFA) section.

An IRFA was prepared for this proposed rule, as required by section 603 of the Regulatory Flexibility Act (RFA) (5 U.S.C. 603), to describe the economic impact this proposed rule, if adopted, would have on small entities. This IRFA: (1) describes the action; (2) the reasons why it is proposed; (3) the objectives and legal basis for this proposed rule; (4) the estimated number and description of directly regulated small entities to which this proposed rule would apply; (5) the recordkeeping, reporting, and other compliance requirements of this proposed rule; and (6) the relevant Federal rules that may duplicate, overlap, or conflict with this proposed rule. This IRFA also describes significant alternatives to this proposed rule that would accomplish the stated objectives of the Magnuson-Stevens Act, and any other applicable statutes, and that would minimize any significant economic impact of this proposed rule on small entities. The description of the proposed action, its purpose, and the legal basis are explained earlier in the preamble to this proposed rule and are not repeated here.

For RFA purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual gross receipts not in excess of $11 million for all its affiliated operations worldwide. A shoreside and mothership processor primarily involved in seafood processing (NAICS code 311710) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual employment, counting all individuals employed on a full-time, part-time, or other basis, not in excess of 750 employees for all its affiliated operations worldwide.

Entities directly regulated by this action include vessels operating in the Federal BSAI Pacific cod less than 60 ft (18.3 m) LOA hook-and-line and pot CV and jig sectors. The jig sector includes CVs and C/P vessels. This section identifies all entities that could be considered directly regulated entities under the range of alternatives considered and likely represents an overestimate of the number of small entities that would be directly regulated.

In the most recent five years for which annual economic data are available (2019 through 2023), there were 53 active vessels that participated in the Federal BSAI Pacific cod less than 60 ft (18.3 m) LOA hook-and-line and pot CV and jig sectors. All 53 active vessels are directly regulated entities. All but one of the 53 directly regulated entities are considered small entities under the RFA. As many as three vessels from the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector also participated in the BSAI Pacific cod jig sector in either 2019 or 2020; however, no vessel participated in the jig sector in 2021 through 2023. All of these jig vessels are considered directly regulated small entities. Sixteen hook-and-line or pot CVs that are less than or equal to 55 ft (16.8 m) LOA participated in the BSAI Pacific cod fishery (2019 through 2023), and all 16 were active in 2023. All 16 of these small hook-and-line or pot CVs are considered directly regulated small entities. Thirty-seven hook-and-line or pot CVs greater than 55 ft (16.8 m) LOA participated in the less than 60 ft (18.3 m) hook-and-line and pot CV sector (2019 through 2023), of which 34 vessels were active in 2023. Thirty-six of those 37 vessels are considered directly regulated small entities. These counts identify all unique directly regulated small entities that may participate in the fishery recognizing that not all of these vessels participate in every year.

All but one of the entities directly regulated by this action are small entities for RFA purposes. The potential impacts to these small entities are extensively analyzed in the associated RIR. A summary of those potential effects is provided here.

This action adds a small vessel provision to the current BSAI Pacific cod jig sector in the A season. Under this small vessel provision, catch from hook-and-line or pot CVs that are less than or equal to 55 ft (16.8 m) LOA harvesting Pacific cod in the BSAI during the jig gear A season would accrue to the jig sector allocation. This action does not change the allocation percentage to either the jig sector, or the less than 60 ft (18.3 m) hook-and-line and pot CV sector; however, during the jig gear A season, harvest by the hook-and-line or pot CVs less than or equal to 55ft (16.8 m) LOA would accrue to the jig sector allocation before any reallocation would occur. Changes to the timing of inseason reallocation of any unused portion of the jig sector allocation could affect the remaining vessels in the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector by delaying or eliminating a reallocation of the jig sector A season apportionment.

In terms of the effect on fleet revenue, the Analysis of Option 2 (see ADDRESSES ) estimates an average annual increase in fleet revenue of $1.15 million for the hook-and-line or pot CVs less than or equal to 56 ft (17.1 m) LOA and an annual average revenue decrease of $1.22 million for the hook-and-line or pot CVs greater than 56 ft (17.1 m) LOA. For the reasons discussed in Section 4.3.5 of the Analysis both of these numbers are likely overestimates. Although this action changes how the harvest of vessels less than or equal to 55 ft (16.8 m) LOA is accounted for, due to the small difference between the two options considered, the same revenue analysis could not be performed to directly compare the 55 ft (16.8 m) and 56 ft (17.1 m) LOA thresholds because presenting both analyses would reveal confidential fishery information. Therefore, the two options were analyzed together and the differences described qualitatively. This shift in revenue is largely attributable to changing the timing of reallocation of the jig sector apportionment to the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector. Additionally, the amount of Pacific cod reallocated may be reduced by the amount harvested by vessels CVs less than or equal to 55 ft (16.8 m) LOA during the jig season. This action is also expected to improve stability for hook-and-line or pot CVs less than or equal to 55 ft (16.8 m) LOA as it may provide extended fishing seasons and more flexibility for smaller CVs to choose when to fish.

This action could have a positive impact on the overall safety of smaller (less than or equal to 55 ft (16.8 m) LOA) hook-and-line or pot CVs as they could be more selective on when they take their fishing trips to target better weather windows during the early winter months without the competition of larger vessels in the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector. As explained in Section 4.3.3 of the Analysis, this action could also have a negative impact on the overall safety of vessels greater than 55 ft (16.8 m) LOA in the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector. This is because competition early in the fishing year for the 2 percent sector allocation could increase the pace of fishing by vessels that have excess capacity and ability to fish in worse weather. Those larger vessels in the sector would no longer have access to the jig sector A season allocation at the beginning of the year. If there are active vessels using jig gear, or vessels less than or equal to 55 ft (16.8 m) LOA using hook-and-line or pot gear, a reallocation of the jig sector allocation may not be available to the less than 60 ft (18.3 m) LOA hook-and-line and pot gear CV sector until after the end of the jig sector A season.

The Council considered two alternatives: a no action alternative and an action alternative with two options and a sub-option. Alternative 1 would retain the status quo by keeping the BSAI Pacific cod non-CDQ sectors specified at § 679.20(a)(7)(ii)(A), while Alternative 2 considered modifying the BSAI Pacific cod jig sector to include smaller hook-and-line or pot CVs with two options that would set the LOA for smaller CVs at either less than or equal to 55 ft (16.8 m) LOA (Option 1) or less than or equal to 56 ft (17.1 m) LOA (Option 2). Additionally, the sub-option allowed for the addition of smaller vessels to the jig sector during only the jig sector A season. The sub-option specified that the jig sector B and C seasons would remain a jig-gear-only fishery. After the jig sector's A season ends, all harvest by hook-and-line or pot CVs less than 60 ft (18.3 m) LOA (including vessels less than or equal to 55 ft (16.8m) LOA) would accrue to the same sector as under status quo.

The Council recommended Alternative 2, Option 1 with the sub-option as its preferred alternative. NMFS has reviewed the Council's recommendation and is proposing in this rule regulatory changes that would implement the Council's recommendation. As such, amendment 125 and this proposed rule would apply to the jig-gear A season only. During the A season, harvest from hook-and-line or pot CVs less than or equal to 55 ft (16.8 m) LOA would accrue to the jig sector allocation and harvest from hook-and-line or pot CVs with an LOA greater than 55 ft (16.8 m) LOA and less than 60 ft (18.3 m) LOA would accrue toward the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector's 2 percent allocation. After the jig-gear A season ends on April 30, all hook-and-line or pot CVs that are less than 60 ft (18.3 m) LOA would be in the same sector and would be eligible for reallocations utilizing the reallocation hierarchy defined in Federal regulations at § 679.20(a)(7)(iii)-(iv).

Under the status quo alternative, increased participation in the sector, and smaller BSAI Pacific cod allocation amounts and reallocations from other sectors, have resulted in shortened fishing seasons for the sector. In addition to potentially providing more stability to smaller hook-and-line or pot CVs, this action (Alternative 2, Option 1) could provide additional fishing opportunities for smaller hook-and-line or pot CVs by modifying the current BSAI Pacific cod jig sector to allow these hook-and-line and pot CVs to fish the jig sector's allocation without negatively impacting jig fishery participants. The BSAI Pacific cod jig sector has historically underutilized its 1.4 percent allocation of BSAI Pacific cod under amendment 85, the majority of which has been reallocated to the less than 60 ft (18.3 m) hook-and-line and pot CV sector.

The Council recommended Option 1 (less than or equal to 55 ft (16.8 m) LOA) to ensure the cut off for hook-and-line or pot CVs to harvest Pacific cod from the jig sector's allocation is set at a length that would exclude larger vessels with additional efficiencies. The Council received public comment that some hook-and-line or pot CVs with a reported LOA of exactly 56 ft (17.1 m) could have additional capacity to harvest BSAI Pacific cod more competitively than smaller vessels. Therefore, the Council did not choose to recommend, and NMFS did not choose to implement Option 2 because allowing 56 ft (17.1 m) LOA vessels with additional capacity to harvest Pacific cod from the jig sector's allocation in the A season may not eliminate the unintended inter-sector competition that current fishery participants in the less than 60 ft (18.3 m) hook-and-line and pot CV sector face.

The sub-option would likely result in additional opportunities for smaller hook-and-line or pot CVs to harvest Pacific cod during the jig sector A season. Keeping the B season as a jig-only fishery ( i.e., status quo) would minimize the potential impacts to jig vessels, which make the majority of their BSAI Pacific cod deliveries between April and September ( i.e., the B season) when the weather is safest for smaller vessels to operate. Additionally, hook-and-line or pot CVs typically prosecute other fisheries during the jig sector's B season. Due to this lack of demand and the amount of harvest allocation necessary to make reopening the sector practical, NMFS has not been able to make a reallocation to reopen the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector in the spring/summer months since 2011. Finally, keeping the C season as a jig-only fishery ( i.e., status quo) responds to concerns the Council heard in public comment from fishery participants with larger hook-and-line or pot CVs who have come to depend on a fall fishing opportunity and that the historically common reallocation of jig sector TAC on or near September 1 is important to maintain.

Overall, the proposed action would provide more stability for smaller hook-and-line or pot CVs (those less than or equal to 55 ft (16.8 m) LOA). Increased participation in the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector, smaller BSAI Pacific cod annual TACs, and fewer reallocations from other sectors, have resulted in shortened fishing seasons for the sector. In addition to potentially providing more stability to smaller hook-and-line or pot CVs, this action could provide additional fishing opportunities for smaller hook-and-line and pot vessels by redefining the current BSAI Pacific cod jig sector to include these hook-and-line or pot CVs without negatively impacting jig fishery participants. The BSAI Pacific cod jig sector has historically underutilized its 1.4 percent allocation of BSAI Pacific cod under amendment 85, the majority of which has been reallocated to the less than 60 ft (18.3 m) hook-and-line and pot CV sector.

A key challenge this action seeks to address is that the less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector has experienced a shortened initial fishing period in recent years, which negatively impacts smaller vessels because they have less capacity and flexibility to fish in poor weather and in more productive grounds farther from shore. Due to their size, smaller vessels typically fish waters closer to shore, which may be less productive for Pacific cod. Pacific cod is a demersal species found throughout the Eastern BS and the AI and are distributed over the continental shelf at depths from shoreline to 500 m (Section 4.3.3 of the RIR). However, Pacific cod do not typically appear inside shallow, inshore waters until mid to late February. Additionally, condensed fishing periods at the start of the year give smaller vessels less flexibility to avoid fishing when the weather creates unsafe conditions. These dynamics pose safety concerns for smaller vessels that this action will address by allowing hook-and-line or pot CVs less than or equal to 55 ft (16.8 m) LOA to harvest Pacific cod from the jig-sector's A season allocation and thereby providing a dedicated fishing opportunity to these smaller vessels separate from the more competitive vessels in less than 60 ft (18.3 m) LOA hook-and-line and pot CV sector. This would also provide smaller hook-and-line or pot CVs with greater flexibility in the timing of fishing, allowing for improved fishing safety as well as greater fishing opportunities. The Council acknowledged that vessels greater than 55 ft (16.8 m) and less than 60 ft (18.3 m) LOA could face reduced fishing opportunities early in the year in the absence of an A season reallocation from the jig sector. NMFS agrees with the Council's rationale that smaller vessels face greater safety risks and, thus, are of greater concern.

Based upon the best scientific data available, and in consideration of the objectives of this action, there are no significant alternatives to the proposed rule that have the potential to accomplish the stated objectives of the Magnuson-Stevens Act and other applicable statutes and that have the potential to minimize any significant adverse economic impact of the proposed rule on small entities.

Overall, this action is economically beneficial to entities operating vessels less than or equal to 55 ft (16.8 m) LOA in the BSAI Pacific cod hook-and-line and pot CVs less than 60 ft (18.3 m) LOA sector, including small entities. This action proposes modification to fishing sectors to improve fishery efficiency, allows for new small entity entrants to the fishery, and improves small vessel safety at sea. After public process during which the Council solicited input from stakeholders, the Council recommended this action. NMFS determined that the recommended action would best accomplish the stated objectives articulated in the preamble for this proposed rule, and in applicable statutes, and would minimize to the extent practicable adverse economic impacts on the universe of directly regulated small entities.

No duplication, overlap, or conflict between this proposed action and existing Federal rules has been identified.

This action does not modify recordkeeping or reporting requirements, or duplicate, overlap, or conflict with any Federal rules.

For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 679 as follows: