This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (the Act), amending Marketing Order No. 981 (7 CFR part 981; the Order), regulating the handling of almonds grown in California. The Almond Board of California (Board) locally administers the Order and is comprised of growers and handlers of almonds operating within California.

Section 608c(17) of the Act (7 U.S.C. 608c(17)) and the applicable rules of practice and procedure at 7 CFR 900.43 authorize amendment of the Order through this informal rulemaking action. The Agricultural Marketing Service (AMS) will consider comments received in response to this proposed rule and, based on all the information available, will determine if the amendment is warranted. If AMS determines amendment of the Order is warranted, a subsequent proposed rule and notice of referendum would be issued, and growers would be allowed to vote for or against the proposed Order amendment. AMS would then issue a final rule effectuating any amendments favored in the referendum.

This action is exempt from the Office of Management and Budget (OMB) review process required by Executive Order 12866. This rule amends existing Marketing Order No. 981, as amended (7 CFR part 981), Almonds Grown in California, and is necessary for the continued operation of Marketing Order No. 981. Additionally, this action is exempt from the requirements of Executive Order 14192, “Unleashing Prosperity Through Deregulation,” pursuant to section 5(c).

This proposed rule has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” which requires Federal agencies to consider whether their rulemaking actions would have Tribal implications. AMS has determined that this rule is unlikely to have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

This proposed rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This proposed rule is not intended to have retroactive effect. This proposed rule shall not be deemed to preclude, preempt, or supersede any State program covering almonds grown in California.

Section 608c(17) of the Act (7 U.S.C. 608c(17)) and the supplemental rules of practice at 7 CFR 900.43 authorize the use of informal rulemaking (5 U.S.C. 553) to amend Federal fruit, vegetable, and nut marketing agreements and orders. In determining whether informal rulemaking is appropriate, USDA is required to consider the nature and complexity of the proposed amendments, the potential regulatory and economic impacts on affected entities, and any other relevant matters.

AMS has considered these factors and has determined that the amendment proposed herein is not unduly complex and the nature of the proposed amendment is appropriate for utilizing the informal rulemaking process to amend the Order. A discussion of the potential regulatory and economic impacts on affected entities is discussed later in the “Initial Regulatory Flexibility Analysis” section of this proposed rule.

The Board discussed the proposal at length at its meeting held on August 8, 2024. Following that meeting, the Board voted on the proposed amendment to the Order, nine in favor and one opposed, by electronic vote distributed on August 19 and concluded on August 28, 2024.

Section 981.81 of the Order authorizes the collection of assessments from almond handlers to provide funds to meet authorized Board expenses and the operating reserve requirements. This proposal would establish § 981.81(f), to authorize the Board to borrow funds from a commercial lending institution through a seasonal line of credit. The authority to borrow would provide short term funds to address cashflow constraints associated with the timing of program expenditures and revenue collection. This would ensure continuity in operations and Board functions, such as during the first few months of the marketing year when new crop is received but no assessment revenue is collected. Borrowed funds would be repaid within a maximum period of 12 months.

The topic of borrowing authority previously appeared before California almond growers as a proposed amendment to the Order during a proposed rulemaking in April 2023 (88 FR 25559) and subsequent referendum order (88 FR 68500) conducted by USDA between October 30 and November 20, 2023. The proposal to add borrowing authority to the Order received the support of 63.59% of almond growers voting, representing 56.15% of the production volume. To be enacted, at least two-thirds of the growers voting, or at least two-thirds of the volume represented by those growers voting, would need to vote in favor of a proposal. The outcome fell just shy of these thresholds and was not enacted.

The Board reviewed and discussed borrowing authority over several meetings in 2023 and 2024 to identify the underlying cause of the failed amendment. It was determined the cause of the failed amendment was a combination of grower confusion with the regulatory language that appeared on the ballot and a lack of coordinated communication with stakeholders. Despite the failure, the Board maintained that having borrowing authority would allow it to better manage approved expenditures within its established internal control policies, and would help maintain cash flow.

As almond tonnage and assessment revenue have increased since the Order's promulgation, the industry has approved increasingly larger budgets which have year-round financial commitments. However, growers do not necessarily deliver the entire assessable crop at one time, nor do handlers have the facilities to process the entire crop at one time, and handlers instead purchase and market almonds throughout the production cycle. As a result, only about 18 percent of assessment revenue is paid to the Board when the first crop year assessment invoice is sent to handlers in October. Subsequently, the Board invoices for assessments in the second and third quarters of the crop year. Yet, many research activities and marketing programs are initiated early in the crop year, necessitating payment when services are performed, often well before the first assessments are received from October invoices. Although the Board currently maintains a reserve fund to help pay for early expenses, this fund is insufficient to advance some of the necessary payments. Authorizing the Board to borrow from commercial lending institutions would help it manage and sustain program activities during times of cash flow deficiencies.

Board members further noted that the ability to borrow against a line of credit is a common tool authorized in other Federal marketing orders, especially to accommodate expenses when the assessment revenue necessary to pay such expenses is not received until later in the year.

While addressing general business concerns about the potential risks associated with debt financing, the Board agreed that its internal control policies would be revised to reflect the new borrowing authorities. Notably, the Board stressed that these policies would include: monitoring by the finance department to take interest rates, debt levels, and timing of loans into consideration; allowing the lending institution to determine the maximum line of credit available; making the amount of credit needed proportional to the net position; and, ensuring line of credit advances are short term in nature, with preferred lengths and timelines to be decided by the industry-led finance and audit committee. The Board continues to believe that this proposal would make the Board more operationally efficient while not exceeding approved crop year budget ceilings. The Board does not anticipate this amendment to negatively impact California almond growers or handlers of any size.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 7,596 almond growers in the production area and 100 handlers subject to regulation under the Order. At the time this analysis was prepared, the Small Business Administration (SBA) defined small agricultural producers of almonds as those having annual receipts equal to or less than $3,750,000 (North American Industry Classification System (NAICS) code 111335, Tree Nut Farming). Small agricultural service firms, which include almond handlers, are defined by the SBA as those having annual receipts equal to or less than $34,000,000 (NAICS code 115114, Postharvest Crop Activities) (13 CFR 121.201).

To estimate the number of almond growers that would be considered small businesses per the SBA definition, AMS calculates the acreage required to produce the volume of almonds at an average price to reach the $3.75 million threshold. Due to the alternate-bearing nature of almonds, a two-year average is used to estimate price and yield, based on the most recent National Agricultural Statistics Service (NASS) data for 2023 and 2024. Based on a two-year average price of $1.93 per pound, shelled, and a two-year average yield of 1,880 pounds per acre, shelled, an almond grower would need more than 1,033 bearing acres to exceed the SBA threshold of $3.75 million ($3.75 million divided by $1.93 per pound, divided by 1,880 pounds per acre). According to the 2022 Census of Agriculture, 134 farms had almond acreage of 1,500 acres or more. This means that of the 7,596 growers in California, at least 98 percent of them would be considered small businesses.

To estimate the number of almond handlers that would be considered small businesses, per the SBA definition, AMS calculates total handler revenue using AMS Market News terminal market prices for almonds and for total California almond production, reported by NASS. The 2024 average terminal market price, used as a proxy for handler price, for almonds grown in California was $2.82 per pound. Total 2024 California production of almonds was 2.73 billion pounds, shelled. Assuming that all California almonds were processed by domestic handlers, total handler revenue in 2024 is estimated to be nearly $7.7 billion ($2.82 per pound multiplied by 2.73 billion pounds). If total handler revenue were evenly distributed among the 100 handlers in the production region, then each handler would have a 2024 annual receipt of nearly $77 million ($7.7 billion divided by 100 handlers), surpassing the $34 million threshold of the SBA definition of a small business. Therefore, based on this analysis, AMS estimates that most almond handlers would not be considered small businesses per the SBA definition.

This proposal would establish § 981.81(f) to authorize the Board to borrow funds from a commercial lending institution through a seasonal line of credit. The authority to borrow funds would provide necessary short term funds, given cashflow constraints associated with the timing of program expenditures and revenue collection. This amendment would better ensure continuity in operations during periods when neither operating assessments nor reserve funds are sufficient to fund the Board functions. Borrowed funds would be repaid within a maximum period of 12 months.

The Board noted that the ability to borrow against a line of credit is a common tool authorized in other Federal marketing orders, especially to accommodate expenses when the assessment revenue necessary to pay such expenses is not received until later in the year.

While addressing general business concerns about the potential risks associated with debt financing, the Board agreed that its internal control policies would be revised to reflect the new borrowing authorities. Notably, the Board stressed that these policies would include: monitoring by the finance department to take interest rates, debt levels, and timing of loans into consideration; allowing the lending institution to determine the maximum line of credit available; making the amount of credit needed proportional to the net position; and, ensuring line of credit advances are short term in nature, with preferred lengths and timelines to be decided by the industry-led finance and audit committee. The Board continues to believe that this proposal would make the Board more operationally efficient while not exceeding approved crop year budget ceilings. The Board does not anticipate this to negatively impact California almond growers or handlers of any size.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178, Vegetable and Specialty Crops. No changes in those requirements are necessary because of this proposed rule. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large almond handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

AMS has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

The Board's meetings are widely publicized throughout the California almond production area. All interested persons are invited to attend the meetings and encouraged to participate in Board deliberations on all issues. Like all Board meetings, the meeting held on August 8, 2024, was public, and all entities, both large and small, were encouraged to express their views on the proposed amendment.

Interested persons are invited to submit comments on the proposed amendment to the Order, including comments on the regulatory and information collection impacts of this action on small businesses.

Following analysis of any comments received on the amendment discussed in this proposed rule, AMS will evaluate all available information and determine whether to proceed. If appropriate, AMS would publish a proposed rule and notice of referendum, and growers could vote for or against the proposed amendment. AMS would publish information about the referendum, including dates and voter eligibility requirements, in a future issue of the Federal Register . AMS would then publish a final rule to effectuate any amendment favored in the referendum.

The findings hereinafter set forth are supplementary to the findings and determinations which were previously made in connection with the issuance of Marketing Order 981; and all said previous findings and determinations are hereby ratified and affirmed, except insofar as such findings and determinations may be in conflict with the findings and determinations set forth herein.

1. Marketing Order 981 as hereby proposed to be amended and all the terms and conditions thereof, would tend to effectuate the declared policy of the Act;

2. Marketing Order 981 as hereby proposed to be amended regulates the handling of almonds grown in California and is applicable only to persons in the respective classes of commercial and industrial activity specified in the Order;

3. Marketing Order 981 as hereby proposed to be amended is limited in application to the smallest regional production area which is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several marketing orders applicable to subdivisions of the production area would not effectively carry out the declared policy of the Act;

4. Marketing Order 981 as hereby proposed to be amended prescribes, insofar as practicable, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of almonds produced or packed in the production area; and

5. All handling of almonds grown or handled in the production area, as defined in Marketing Order 981, is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce.

A 60-day comment period is provided to allow interested persons to respond to this proposal. Any comments received on the amendment proposed in this rule will be analyzed, and if AMS determines to proceed based on all the information presented, a grower referendum would be conducted to determine grower support for the proposed amendment. If appropriate, a final rule would then be issued to effectuate the amendment favored by growers participating in the referendum.

For the reasons set forth in the preamble, AMS proposes to amend 7 CFR part 981 as follows:

The meeting will provide interested parties with an opportunity to present views, recommendations, and comments on the proposed airspace changes. This informal airspace meeting will be conducted in a virtual format using the Zoom teleconferencing tool. The meeting will also be recorded and available to watch on the FAA YouTube channel.

(a) Registration : To make a presentation at the meeting, you must register on or before May 5, 2026. To attend the meeting without making a presentation, the public can register here at any point prior to the start of the meeting within the space constraints: https://airportnetwork.zoom.us/webinar/register/WN_OZqxSoi7Ruq2p27_2aMmSA.

(b) The meeting will be open to all persons on a space-available basis. There will be no admission fee or other charge to attend and participate. The meeting will be informal in nature and conducted by one or more representatives of the FAA's Air Traffic Organization Eastern Service Area. A representative from the FAA will present a briefing on the planned airspace prior to opening the meeting to public comments.

(c) Each participant will be given an opportunity to deliver comments or make a presentation, although a time limit may be imposed to accommodate other speakers and closing times. Only comments concerning the plan to amend the Raleigh-Durham International Airport Class C airspace area will be accepted.

(d) Each person wishing to make a presentation will be asked to note their intent when registering for the meeting so appropriate time limits, if any, can be established. This meeting will not be adjourned until everyone who pre-registered to speak has had an opportunity to address the panel. This meeting may be adjourned at any time if all persons who so desire have had an opportunity to speak.

(e) Position papers or other handout material relating to the substance of the meeting will be accepted. Participants submitting papers or handout materials should send them to the physical or email address noted in the ADDRESSES section above. To be considered, such material must be received on or before the June 5, 2026, comment deadline noted in the DATES section above.

(f) This meeting will be formally recorded and available on the FAA YouTube channel. A summary of the comments made at the meeting will be filed in the rulemaking docket.

Information gathered through this meeting will assist the FAA in considering the proposal and drafting an NPRM, if any, that would be published in the Federal Register . The public will be afforded a separate opportunity to comment on any NPRM published on this matter.

A graphic depiction of the proposed airspace modifications may be viewed at the following URL: https://www.faa.gov/air_traffic/community_engagement/rdu.

The Copyright Office last adjusted its fee schedule in March 2020 based on a multi-year study of the Office's fiscal 2016 and 2017 costs. 1 Since that time, both inflation and the costs of providing Office services have risen substantially. To maintain fiscally responsible operations at a level commensurate with stakeholder demand for services, and in recognition of actual to-date cost increases and projected inflation, the Office proposes fee adjustments. The Office's goal is to restore recovery of the historically higher percentage of its actual expenses from fees in order to support its operations and provide high quality services to the public. This notice describes the Office's statutory authority in setting fees, outlines the methodology employed in studying its costs, and provides the justification for the proposed adjustments.

As discussed below, central to the Office's mission is ensuring that our fees do not impose undue barriers to access copyright services. While the fees proposed here fall far short of covering the Office's actual costs, we recognize that some of the increases are substantial and may impact some copyright stakeholders more than others. The Office is exploring ways to minimize this impact so that all stakeholders are able to use our services. Among other things, the Office will issue a Notice of Inquiry (“NOI”) on possible future alternative fee structures. 2 As discussed below, at least some such alternative fee structures are expected to be technically feasible within the Enterprise Copyright System (“ECS”) registration system now in development. The responses to the NOI will assist in determining which ones may be appropriate and desirable once ECS is fully operational.

The Copyright Act requires the Office to collect fees to apply toward the costs of providing certain services. The Act allows the Office to periodically adjust those fees, including for the following services enumerated in section 708:

(1) On filing an application under section 408 for registration of a copyright claim or for a supplementary registration, including the issuance of a certificate of registration if registration is made;

(2) On filing each application for registration of a claim for renewal of a subsisting copyright under section 304(a), including the issuance of a certificate of registration if registration is made;

(3) For the issuance of a receipt for a deposit under section 407;

(4) For the recordation, as provided by section 205, of a transfer of copyright ownership or other document;

(5) For the filing, under section 115(b), of a notice of intention to obtain a compulsory license;

(6) For the recordation, under section 302(c), of a statement revealing the identity of an author of an anonymous or pseudonymous work, or for the recordation, under section 302(d), of a statement relating to the death of an author;

(7) For the issuance, under section 706, of an additional certificate of registration;

(8) For the issuance of any other certification;

(9) For the making and reporting of a search as provided by section 705, and for any related services;

(10) On filing a statement of account based on secondary transmissions of primary transmissions pursuant to section 119 or 122; and

(11) On filing a statement of account based on secondary transmissions of primary transmissions pursuant to section 111. 3

Fees for the services described in paragraphs (1) through (9) above are established in accordance with a statutorily mandated process. The Register must first “conduct a study of the costs incurred by the Copyright Office for the registration of claims, the recordation of documents, and the provision of services.”  4 The study is to “consider the timing of any adjustment in fees and the authority to use such fees consistent with the budget.”  5 On the basis of the study, the Register may “adjust fees” by regulation “to not more than that necessary to cover the reasonable costs incurred by the Copyright Office for” its services “plus a reasonable inflation adjustment to account for any estimated increase in costs.”  6 The Register must then prepare a proposed fee schedule and submit it with the accompanying economic analysis to Congress. 7 The proposed schedule may be instituted after the end of 120 days after submission unless, within that 120-day period, Congress enacts a law stating in substance that it does not approve it. 8

Section 708 requires that fees under section 708(a)(1)-(9) “be fair and equitable and give due consideration to the objectives of the copyright system.”  9 Accordingly, the Copyright Office must consider not only the reasonable costs of services provided, but also the public interest.

The Copyright Act also authorizes the Register of Copyrights to establish fees for services other than those listed in paragraphs (1) through (9) of section 708(a). Though not subject to the procedural requirements of section 708(b), these fees are generally evaluated and adjusted as part of the fee study mandated by section 708(b) (as is the case here). First, paragraphs (10) and (11) of section 708(a) provide that the Copyright Office's Licensing Section may charge filing fees for the statements of account that cable and satellite companies must submit under the statutory licenses in sections 111, 119, and 122 for the secondary transmissions of primary broadcast television transmissions. 10 Such filing fees must “be reasonable and may not exceed one-half of the cost necessary to cover reasonable expenses incurred by the Copyright Office for the collection and administration of the statements of account and any royalty fees deposited with such statements.”  11 Second, section 708 authorizes the Register to set fees for any “other services,” such as “preparing copies of Copyright Office records,” and states that these fees must be “based on the cost of providing the service.”  12 Various other provisions of the Copyright Act outside section 708 authorize the establishment of fees for specific services and require fees to be set based on costs. 13

The Register has “wide discretion to adjust Copyright Office fees by regulation.”  14 In 1997, Congress amended section 708 specifically to grant the Register broad discretion and permanent authority to set fees for the Office. 15 The statute generally instructs the Register to set fees at a level that covers the Office's overall costs. 16 In doing so, she may set fees that account for the indirect costs of providing services, and use fee revenue from some services to offset losses from others in order to encourage the public to utilize them. 17

Since Congress first gave the Register the authority to set and adjust fees, the Office has adjusted its fees approximately every three to five years. The last such adjustment went into effect in March 2020.

In August 2023, the Office initiated a new cost study by contracting with the Library of Congress's Federal Research Division (“FRD”), with oversight from the Office's Assistant Register and Director of Operations and the Chief Economist. Based on information gathered in its study, FRD “conducted a comprehensive review of the full costs required [for the Office] to operate . . . and provide fee-based services, including current costs and future projected costs.”  18 In addition to studying the Office's costs, FRD built a cost and revenue projection model.

FRD employed a mixed quantitative and qualitative methodology to assess the Office's costs. 19 To collect data, it began by building an instrument to measure the time employees spent processing fee-based services (“time-use data”) over a four-week period. 20 FRD deployed an additional survey to collect time-use data for conducting work on second appeals for registration claims. 21 For further quantitative analysis, it reviewed personnel cost records, non-personnel financial records, licensing fiduciary statements, annual report data, and transaction costs for receiving and shipping materials. 22 It conducted qualitative interviews to confirm or qualify the time-use data, gather additional context, and collect estimates for services where time-use data was not available. 23

Using this data, FRD developed an original model for estimating the costs of the Office's fee-based services according to government-identified best practices. 24 The model incorporates both the direct and indirect costs of providing each service. Direct costs vary depending on service volume and are largely attributed to the paid time of the primary employee providing the service, calculated using 2025 General Schedule salary rates. 25 Indirect costs are fixed personnel and non-personnel costs that are required to operate the Office and support providing the service but are not directly attributable to the service. 26 Non-personnel indirect costs include the costs of IT infrastructure and modernization, office equipment, travel, and contract services. 27 Personnel indirect costs can include employees' paid time when not directly providing the service ( e.g., training, meetings, or leave) and the paid time of employees who support or oversee the fee-based service. 28 Indirect costs are allocated proportionally based on service volume and time spent providing the service. 29 To measure annual service volume, FRD calculated the average volume between fiscal years 2020 and 2024, when available. 30

Across the Office, FRD estimated $15.6 million in annual direct costs and $81.8 million in annual indirect costs for its fee-based services. 31 This estimate accounts for $14,052,125 in direct costs and $16,565,171 in indirect costs for registration services; $1,316,863 in direct costs and $6,242,077 in indirect costs for copyright records services; $201,078 in direct costs and $943,583 in indirect costs for the Licensing Section's record request and filing services; and $48,097,279 in overhead operating expenses. 32

In addition to estimating the costs of the Office's fee-based services, FRD determined that the median Consumer Price Index (“CPI”), a statistical measure of core inflation based on the median price change of goods and services, has increased approximately 23% since fees were last updated (between the years 2020 and 2025). 33 FRD further provided a conservative estimate of the projected year-over-year inflation at 3% for 2026 through 2030.

The Office's fees are set to recoup a reasonable portion of costs while encouraging participation in the copyright system and maintaining a robust and accurate system of copyright records. When considering adjustments to the fee structure, in addition to cost considerations and inflation adjustments, 34 the Office must give “due consideration to the objectives of the copyright system,”  35 which include “encourag[ing] the production of original literary, artistic, and musical expression for the good of the public.”  36 Thus, setting fees involves considering at least two factors.

First, the Office's services help maintain the value and vitality of the copyright system. Copyright transactions are a substantial and economically significant portion of the nation's gross domestic product. 37 Participation in the voluntary copyright registration and recordation systems furthers important national objectives. 38 While registration is voluntary, it is often indispensable for authors who wish to protect their rights in the works they create. A registration certificate made before or within five years of publication constitutes “prima facie evidence of the validity of the copyright and of the facts stated in the certificate.”  39 A certificate or a refusal of registration is required for a copyright owner of a U.S. work to bring an infringement lawsuit in federal court. 40 Moreover, registration must be made in a timely manner to allow a copyright owner to seek statutory damages or attorneys' fees. 41 Enabling authors and their assignees to efficiently register their works is therefore vital to meaningful judicial remedies and securing the value of copyrights.

In addition, the Office's maintenance of a public database of copyright ownership serves the general public—users of copyrighted materials as well as copyright owners. A robust public record of copyright ownership and copyright status facilitates efficient marketplace transactions (and the corresponding dissemination of copyrighted works) and encourages development of innovative business models that rely on accurate information about the legal status of copyrighted works.

Copyright registration also provides significant benefits to the Library of Congress, which maintains an unparalleled collection of materials for the use of Congress and the American public. Through the copyright system, the Library receives books, motion pictures, sound recordings, and other works that build its collection. 42 In fiscal year 2024 alone, the value of the materials that the Office provided to the Library was estimated at approximately $57.3 million. 43 Copyright thus plays a pivotal role in fostering and preserving knowledge, ideas, and cultural identity for future generations.

Second, the Office is guided by the statutory goal of cost recovery, and seeks to optimize its revenue without lessening participation in the national copyright system. Use of the Office's primary services—including copyright registration and recordation—is mostly voluntary; if fees were set at the significantly higher levels needed for total cost recovery, that could result in a substantial decrease in the use of those services to the detriment of the public. Demand for the services varies depending on prices—if fees are set too high, potential users (including many non-profit or non-corporate users) may reduce their participation.

At the same time, the Office must bring in sufficient revenues to cover its expenses. From at least 2009 to 2018, the Office recovered approximately 60% of its actual expenses from fees, 44 and Congress appropriated the remainder. In recent years, however, the percentage of actual costs recovered from fees has decreased sharply; in fiscal year 2024, the Office recovered only 41% of its actual expenses from fees. In addition to inflation, several factors contribute to this precipitous decline. While budget activities, like labor and modernization, are generally appropriated by Congress, their costs often end up exceeding the appropriated amounts. In recent budget years, there have been significant gaps between the funding provided for salaries via continuing resolution and the amounts needed to implement mandatory federal pay raises. Thus, the Office must absorb these costs within its preexisting budget. Moreover, since 2019, with the support of Congress, the Office has dedicated substantial resources to modernizing its information technology. Congress has directed the Office to spend “not less than” certain appropriated amounts on “modernization initiatives,”  45 but we must supplement those amounts to keep pace with our timeline for ECS planning and development and to account for the increased costs of IT services as well as inflation.

In addition to overseeing the national copyright registration and recordation systems, the Office continues to perform its statutory functions by advising Congress on copyright policy and legislation; working with the courts, the Department of Justice, and other federal agencies on copyright litigation and international matters; conducting administrative and regulatory activity as required to administer the Copyright Act; educating the public about copyright; and improving its public-facing applications and enhanced services. The Office does so with the support of a modest budget, 46 and if we do not continue to recover a sufficient portion of our actual expenses through fees, will have no choice but to request additional appropriations from Congress.

After evaluating FRD's cost study and considering the objectives of the Copyright Act, 47 policy goals, and overall fairness, as well as general guidance from the Government Accountability Office  48 and the Office of Management and Budget, 49 the Office proposes adjustments to our fee schedule. The Office analyzed potential changes to fees under section 708(a)(1)-(9) to ensure they remain “fair and equitable and give due consideration to the objectives of the copyright system,” as required by the statute. The proposed fee schedule ensures that the Office continues to be a prudent fiduciary of public funds while supporting the policy goals of promoting creativity and enabling the effective exercise of rights.

Overall, the Office has determined that fees should be raised an average of 43% to account for increases in the cost of providing services. This reflects both historic inflation since the last fee study and anticipated inflation over the next three years. When looking at the cost data on which the last fee adjustment was based—dating back to as early as fiscal year 2016—the median CPI increased approximately 33%. 50 Going forward, year-over-year inflation is projected at 3% for 2026 through 2030, approximating 10% over the next three years. 51

In preparing this proposal, the Office first considered inflation, and adjusted each fee “to account for any estimated increase in costs.”  52 We then determined the appropriate portion of costs to recover through each fee, based on its expected impact to the copyright system. For example, we generally apportioned more cost recovery to services that are primarily used by corporate organizations, and less to services used by individual creators. 53 Next, the Office categorized analogous services together ( e.g., group registration options) and set the same fee for each of them, where appropriate. For some services, amounts were further adjusted to incentivize or disincentivize their use. Finally, we reviewed each adjustment to assess its impact on projected revenue. Where significant cost-based increases would not result in additional projected revenue due to low service volume, we proposed only slight increases.

The Office estimates that revenues generated by these proposed fees would be roughly $51 million per year over the next five years (compared to the current schedule's projected $41 million per year), and would achieve approximately 53% projected cost recovery during the first year of implementation. While the proposed increase in fees may reduce service volume, at least temporarily, the decrease should be offset by a more consistent long-term level of cost recovery.

The Office seeks public comments on the proposed fee changes and will consider these comments as we finalize the fee schedule for submission to Congress.

Section 708(a)(1) requires the payment of fees “on filing each application under section 408 for registration of a copyright claim or for a supplementary registration, including the issuance of a certificate of registration if registration is made.”  54 While basic registration applications produce the highest volume of all the Office's fee-generating services, processing these claims also represents our largest cost center, accounting for approximately 30% of total expenditures. 55 Currently, the average cost recovery for Single and Standard applications stands at approximately 37% and 47%, respectively. These figures are well below the Office's historical cost recovery of 60% for most services.

The Office proposes increasing fees for Standard Applications and those submitted on paper, to begin to narrow the gap between their costs and fees. As to Standard Applications, we propose raising the fee primarily to account for the rising cost of goods and services due to inflation. The Office is currently recovering only 47% of its cost in processing claims submitted on the Standard Application. 56 We are proposing to increase this fee from $65 to $85—below the historical and projected inflation rate (43%) set forth above—to increase the cost recovery from 47% to an average 62% in the first year of the new fee term. The cost recovery for each subsequent year will be lower to the extent that the Office's costs continue to rise.

As to paper applications, the Office charges higher fees than for electronic applications, given the substantially higher costs of processing paper applications, and to incentivize use of the electronic system. We now propose to raise the fee for paper applications from $125 to $185, which is slightly above historical and projected inflation rate, but approximates the actual cost of this service. The Office has concluded that these proposed fees are “fair and equitable, and give due consideration to the objectives of the copyright system.”  57

The Office also proposes eliminating the Single Application registration option. 58 Established via interim rule in 2013, the Single Application was introduced in response to a prior fee study. 59 It was intended to provide a lower cost option for registering simple claims involving one work by a single author who is the sole owner of all rights in the work. It cannot be used for claims involving multiple authors, different copyright owners, or complex forms of authorship. 60

While the Single Application was intended to be a streamlined option, it has proven to be inefficient for both applicants and the Office. The Single Application results in the highest percentage of refusals among all types of registration applications, 61 as applicants routinely use it to submit works that do not fit its criteria. 62 The bulk of these refusals are on procedural grounds, regardless of whether the works themselves are copyrightable. Applicants seeking to remedy this type of error may resubmit their claims using a different registration application type, but in doing so they will incur additional fees. 63 The prevalence of unqualified submissions results in an examination process that is not simpler than the Standard Application, but more cost- and resource-intensive. The average cost recovery for the Single Application is approximately 10% less than the average cost recovery for the Standard Application, representing a significant subsidy.

Over time, the Office has seen a consistent decrease in the use of the Single Application. It accounted for only 6% of the basic claims received between 2021 and 2024, and the number received has decreased year-over-year by about 24%. 64 At the same time, the Office has created more cost-effective options to benefit individual creators and small businesses, permitting the registration of groups of works for a single filing fee. We currently offer options to register most classifications of groups of unpublished and published works; and, as discussed below, we are taking steps to explore other alternative fee structures. Eliminating the Single Application will allow us to more efficiently process the more widely-used registration options.

Based on these considerations, the Office proposes the following increases to the fees for basic registration applications, to be codified in 37 CFR 201.3(c).

Each basic registration application is limited to a single work of authorship, with some exceptions. Under the Copyright Act, however, the Register of Copyrights may allow groups of related works to be registered with one application and one filing fee—a procedure known as “group registration.”  68 These fees are also authorized by 17 U.S.C. 708(a)(1).

In response to stakeholder interest, the Office has expanded the availability of group registration options. As the data above suggests, however, processing group registrations is often costly due to the amount of time required for examination of between 10 and 750 works of various classes and categories. The Office's current cost recovery for most categories of group applications remains modest, in one category as low as approximately 5%. The effect of the high processing cost is compounded by the fact that group registrations are the second highest volume of services provided by the Office. Thus, to achieve a better cost recovery, we propose raising the fee for group registration options from $85 to $130, 69 with the exceptions described below.

First, the Office proposes more substantial fee increases for the group options to register photographic and non-photographic databases, and updates to news websites. Because these options primarily serve corporate applicants, we are allocating a greater portion of costs to these fees. Due to the relative inelasticity of the demand, the Office anticipates that the additional revenue from these fees can subsidize group registrations used primarily by individuals, for which greater cost recovery is impracticable. This is consistent with the Register's discretionary authority to use fee revenue to offset lower fees for other services to further “the objectives of the copyright system,”  70 as discussed above.

Second, the Office proposes more modest fee increases for registering groups of published and unpublished photographs. Photographers typically produce a large number of works  71 and have cited cost as an obstacle to registering them. 72 In recognition of these challenges, the group registration options for photographers are currently heavily subsidized to result in a fee as little as $0.07 per photograph if the applicant registers the maximum number of photographs ( i.e., 750). 73 The Office proposes raising the fee for these services from $55 to $85, which would be the same as the proposed fee for registering one work with the Standard Application. This works out to as little as $0.11 per photograph if the applicant submits the maximum number of photographs permitted  74 and is only slightly above the historical and projected inflation rate. These fees would achieve greater cost recovery while maintaining low levels on a per-work basis.

The Office proposes the following schedule of fees, to be codified in 37 CFR 201.3(c).

Participation in virtual public hearing. To request a virtual public hearing, contact the public hearing team at (888) 627-7764 or by email at NRDpublichearing@epa.gov. If requested, the hearing will be held via virtual platform on April 6, 2026. The EPA may close a session 15 minutes after the last pre-registered speaker has testified if there are no additional speakers. The EPA will announce further details at https://www.epa.gov/stationary-sources-air-pollution/air-curtain-incinerators-only-burn-wood-wastes-yard-wastes-and.

The EPA will begin pre-registering speakers for the hearing no later than one business day after a request has been received. To register to speak at the virtual hearing, please use the online registration form available at https://www.epa.gov/stationary-sources-air-pollution/air-curtain-incinerators-only-burn-wood-wastes-yard-wastes-and or contact the public hearing team at (888) 627-7764 or by email at NRDpublichearing@epa.gov. The last day to pre-register to speak at the hearing will be Wednesday, April 1, 2026. Prior to the hearing, the EPA will post a general agenda that will list pre-registered speakers at: https://www.epa.gov/stationary-sources-air-pollution/air-curtain-incinerators-only-burn-wood-wastes-yard-wastes-and.

The EPA will make every effort to follow the schedule as closely as possible on the day of the hearing; however, please plan for the hearing to run either ahead of schedule or behind schedule.

Each commenter will have four minutes to provide oral testimony. The EPA encourages commenters to submit the text of your oral testimony as written comments to the rulemaking docket.

The EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral testimony and supporting information presented at the public hearing.

Please note that any updates made to any aspect of the hearing will be posted online at https://www.epa.gov/stationary-sources-air-pollution/air-curtain-incinerators-only-burn-wood-wastes-yard-wastes-and. While the EPA expects the hearing to be conducted as set forth earlier, please monitor our website or contact the public hearing team at 888-627-7764 or by email at NRDpublichearing@epa.gov to determine if there are any updates. The EPA does not intend to publish a document in the Federal Register announcing updates. If you require the services of a translator or special accommodation such as audio description, please pre-register for the hearing with the public hearing team and describe your needs by Friday, March 27, 2026. The EPA may not be able to arrange accommodations without advanced notice.

Docket. The EPA has established a docket for this rulemaking under Docket ID No. EPA-HQ-OAR-2025-0068. All documents in the docket are listed at www.regulations.gov. Although listed, some information is not publicly available, e.g., Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy. With the exception of such material, publicly available docket materials are available electronically at www.regulations.gov.

Instructions. Direct your comments to Docket ID No. EPA-HQ-OAR-2025-0068. The EPA's policy is that all comments received will be included in the public docket without change and may be made available online at www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be CBI, Proprietary Business Information (PBI), or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI, PBI, or otherwise protected through www.regulations.gov or email. This type of information should be submitted as discussed below.

The EPA may publish any comment received to its public docket. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the Web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI, PBI, or multimedia submissions, and general guidance on making effective comments, please visit www.epa.gov/dockets/commenting-epa-dockets.

The www.regulations.gov website allows you to submit your comment anonymously, which means the EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to the EPA without going through www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the internet. If you submit an electronic comment, the EPA recommends that you include your name and other contact information in the body of your comment and with any digital storage media you submit. If the EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, the EPA may not be able to consider your comment. Electronic files should not include special characters or any form of encryption and should be free of any defects or viruses. For additional information about the EPA's public docket, visit the EPA Docket Center homepage at www.epa.gov/dockets.

The EPA is soliciting comments on numerous aspects in this document. The EPA has indexed each comment solicitation with a unique identifier ( e.g., “ACI-1,” “ACI-2,” “OSWI-1” . . .) to provide a consistent framework for effective and efficient provision of comments. Requests for comment solicitation are organized by category, and can be found in sections V, VI, and XI of this preamble. Accordingly, we ask that commenters include the corresponding identifier when providing comments relevant to that comment solicitation. We ask that commenters include the identifier either in a heading or within the text of each comment, to make clear which comment solicitation is being addressed. We emphasize that we are not limiting comments to these identified areas and encourage provision of any other comments relevant to this proposed action.

Submitting CBI. Do not submit information containing CBI to the EPA through www.regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information on any digital storage media that you mail to the EPA, mark the outside of the digital storage media as CBI and then identify electronically within the digital storage media the specific information that is claimed as CBI. In addition to one complete version of the comments that includes information claimed as CBI, you must submit a copy of the comments that does not contain the information claimed as CBI directly to the public docket through the procedures outlined in the Instructions section above. If you include other information whose disclosure is restricted by statute in your comment, clearly mark your submission as including that information. If you submit any digital storage media that does not contain CBI, mark the outside of the digital storage media clearly that it does not contain CBI and note the docket ID. Information not marked as CBI will be included in the public docket and the EPA's electronic public docket without prior notice. Information marked as CBI will not be disclosed except in accordance with procedures set forth in 40 Code of Federal Regulations (CFR) part 2. Information whose disclosure is otherwise restricted by statute will be processed by the EPA Docket Center in accordance with the applicable statute.

Our preferred method to receive CBI is for it to be transmitted electronically using email attachments, File Transfer Protocol (FTP), or other online file sharing services ( e.g., Dropbox, OneDrive, Google Drive). Electronic submissions must be transmitted directly to the Office of Clean Air Programs CBI Office at the email address oaqps_cbi@epa.gov, and as described above, should include clear CBI markings and note the docket ID. If assistance is needed with submitting large electronic files that exceed the file size limit for email attachments, and if you do not have your own file sharing service, please email oaqps_cbi@epa.gov to request a file transfer link. If sending CBI information through the postal service, please send it to the following address: OCAP Document Control Officer (C404-02), OCAP, U.S. Environmental Protection Agency, 109 T.W. Alexander Drive, P.O. Box 12055, Research Triangle Park, North Carolina 27711, Attention Docket ID No. EPA-HQ-OAR-2025-0068. The mailed CBI material should be double wrapped and clearly marked. Any CBI markings should not show through the outer envelope. Note that written comments containing CBI and submitted by mail may be delayed and no hand deliveries will be accepted.

Preamble acronyms and abbreviations. Throughout this preamble the use of “we,” “us,” or “our” is intended to refer to the EPA. We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this document and for reference purposes, the EPA defines the following terms and acronyms here:

The EPA is proposing to consolidate the existing provisions governing Air Curtain Incinerators (ACI) and placing them in one new rule subpart. Pursuant to Clean Air Act (CAA) section 129(g)(1)(C), the EPA has previously established in various CAA section 129 regulations opacity limitations and associated monitoring and recordkeeping requirements for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these three materials. In this rulemaking, the EPA is proposing to consolidate the opacity limitations and associated monitoring, recordkeeping, and reporting requirements that currently exist across CAA section 129 regulations for four different solid waste incineration unit source categories: large municipal waste combustors (LMWC), small municipal waste combustors (SMWC), commercial and industrial solid waste incinerators (CISWI), and other solid waste incinerators (OSWI). The EPA is also proposing to remove the CAA title V permitting requirement for this type of ACI that is subject to title V under current CAA section 129 regulations and are not located at title V major sources or subject to title V for other reasons. In addition to the proposed actions for ACI that only burn wood wastes, yard wastes, and clean lumber, or any mixture of these three materials, the EPA is soliciting comment on the definition of “municipal waste combustion unit” in the OSWI rules. The EPA anticipates that this rule will have cost savings due to the removal of title V permit requirements for ACI that only burn wood wastes, yard wastes, and clean lumber. The EPA is proposing this action to provide relief regarding the overly burdensome permit process for States as they work to utilize ACI for natural disasters clean up and to mitigate wildfires. This proposal would make it easier for the EPA's regulatory partners to understand and comply with the regulations under CAA section 129 and speed up the permitting process across the country, while still meeting all statutory requirements under the CAA.

Sources potentially affected by this proposed rulemaking are ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these three materials.

Wood waste refers to untreated wood and untreated wood products, including tree stumps (whole or chipped), trees, tree limbs (whole or chipped), bark, sawdust, chips, scraps, slabs, millings, and shavings. Wood waste does not include yard waste (defined later in this paragraph); construction, renovation, and demolition wastes; clean lumber (defined later in this paragraph); treated wood or treated wood products such as wood products that have been painted, pigment-stained, or pressure treated by compounds such as chromate copper arsenate, pentachlorophenol, or creosote; or manufactured wood products that contain adhesives or resins ( e.g., plywood, particle board, flake board, and oriented strand board). 1 Yard waste refers to grass, grass clippings, bushes, shrubs, and bush and shrub clippings from residential, commercial/retail, institutional, or industrial sources as part of maintaining yards or other private or public lands. Yard waste does not include construction, renovation, demolition wastes; and clean lumber, which is exempt from the definition of municipal solid waste (MSW) in this section. Clean lumber refers to wood or wood products that have been cut or shaped and includes wet, air-dried, and kiln-dried wood products. Clean lumber does include treated wood and treated wood products. 2

If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

In addition to being available in the docket, an electronic copy of this document is available on the internet. Following signature by the Administrator, the EPA also will post a copy of this document to www.epa.gov/stationary-sources-air-pollution/air-curtain-incinerators-only-burn-wood-wastes-yard-wastes-and.

A memorandum for ACI that only burn wood wastes, yard wastes, and clean lumber showing the rule edits that would be necessary to incorporate the changes to 40 CFR parts 60 and 62 is available in the docket for this action (Docket ID No. EPA-HQ-OAR-2025-0068). Following signature by the EPA Administrator, the EPA also will post a copy of this document to www.epa.gov/stationary-sources-air-pollution/air-curtain-incinerators-only-burn-wood-wastes-yard-wastes-and.

Section 129 of the CAA requires the EPA to establish standards for solid waste incineration units. Such standards include emission limitations for new sources and guidelines for existing sources pursuant to CAA section 129 and 111. 3 CAA section 129(g)(1) defines a “solid waste incineration unit” as “a distinct operating unit of any facility which combusts any material from commercial or industrial establishments or the general public (including single and multiple residences, hotels, and motels)”; however, “solid waste incineration units” do not include “air curtain incinerators provided that such incinerators only burn wood wastes, yard wastes and clean lumber and that such air curtain incinerators comply with opacity limitations to be established by the Administrator by rule.”  4 Because ACI that only burn these materials and comply with the opacity limitations established by the EPA under CAA section 129(g)(1)(C) are not solid waste incineration units, they are not subject to standards for solid waste incineration units established under CAA sections 129(a) and (b), and the only provisions in the existing section 129 regulations that apply to these ACI are the opacity limitations and the associated requirements established under CAA section 129(g)(1)(C).

Pursuant to CAA section 129(g)(1)(C), the EPA has previously established in various CAA section 129 regulations the opacity limitations and associated monitoring and recordkeeping requirements for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these three materials. In this rulemaking, the EPA is proposing to consolidate these requirements by removing them from existing CAA section 129 regulations and placing them in a new rule subpart specific to this type of ACI (40 CFR part 60 subpart Ca).

The EPA is also proposing to remove the CAA title V permitting requirement for such ACI to the extent they that are currently subject to title V under existing CAA section 129 regulations but are not located at title V major sources or subject to title V for other reasons. 5 In 2024 the EPA amended existing Other Solid Waste Incinerator (OSWI) CAA section 129 regulations to remove the title V permitting requirement for such ACI, 6 and in 2026 we finalized new LMWC New Source Performance Standards (NSPS) and did the same. 7 The remaining section 129 regulations that still subject such ACI to the title V permitting requirement include CISWI and SMWC rules as well as the LWMC Federal Plan. The EPA is proposing to remove this requirement from these existing regulations and clarify in the proposed new subpart Ca that title V permits are not required for any such ACI provided that it is not a major source or subject to title V for other reasons. Unless provided otherwise by law, an agency may change existing positions ( e.g., reconsider, revise, or rescind prior actions) so long as it acknowledges the change in position, provides a reasoned explanation for the change, and takes any serious reliance interests into account. 8 The EPA explains below in this section and in more detail in section III.B of this document why it had previously required title V permitting for ACI that only burn wood wastes, yard wastes, and clean lumber and why it is proposing to remove this requirement for such ACI. The EPA is not aware of any serious reliance interest engendered by the current title V permitting requirement for these ACI and is soliciting comment on whether there is any such interest that the EPA must consider in removing this requirement (ACI-0).

Section 129(e) of the CAA requires that “solid waste incineration units” operate pursuant to a title V permit. 9 Section 502(a) of the CAA also requires title V permits for sources subject to regulation under CAA section 111, 10 and the EPA's regulation at 40 CFR 70.3(a) clarifies that title V permitting is required for “[a]ny source, including an area source, subject to a standard, limitation, or other requirement under [CAA] section 111.” As explained in section III.B of this document, the title V requirements for “solid waste incineration units” under CAA section 129(e) do not apply to ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these three materials because these ACI are not “solid waste incineration units” as defined in CAA section 129(g)(1). The EPA also did not invoke CAA section 129(e) as the basis for requiring title V permitting for such ACI in the existing section 129 regulations. 11 Rather, the EPA explained that the opacity limitations for such ACI were established pursuant to CAA sections 111 and 129, and because these ACI are sources subject to regulation under CAA section 111, they must operate with title V permits as required by CAA section 502(a). 12 For the reasons explained in section III.B of this document, the EPA now believes that the opacity limitations established for these ACI are not CAA section 111 standards within the scope of section 502(a) and 40 CFR 70.3(a). Moreover, CAA section 502(a) authorizes the Administrator to exempt nonmajor source categories from title V through rulemaking. 13 The EPA also finds, in the alternative, that title V permitting is unnecessarily burdensome for these ACI and proposes to exempt them by rule from title V requirements on that basis.

As mentioned above, ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials, are currently addressed in separate CAA section 129 regulations for four different solid waste incineration unit source categories: LMWC, SMWC, CISWI, and OSWI. These CAA section 129 regulations are as follows:

• 40 CFR part 60 subpart Cb—Emission Guidelines (EG) and Compliance Times for Large Municipal Waste Combustors That are Constructed on or Before September 20, 1994;

• 40 CFR part 60 subpart Eb—Standards of Performance for Large Municipal Waste Combustors for Which Construction is Commenced After September 20, 1994, or for Which Modification or Reconstruction is Commenced After June 16, 1996;

• 40 CFR part 60 subpart VVVV—Standards of Performance for Large Municipal Waste Combustors;

• 40 CFR part 60 subpart WWWW—Emission Guidelines and Compliance Times for Large Municipal Waste Combustors Constructed on or Before January 23, 2024;

• 40 CFR part 60 subpart AAAA—Standards of Performance for Small Municipal Waste Combustion Units for Which Construction is Commenced After August 30, 1999, or for Which Modification or Reconstruction is Commenced After June 6, 2001;

• 40 CFR part 60 subpart BBBB—Emission Guidelines and Compliance Times for Small Municipal Waste Combustors Constructed on or Before August 30, 1999;

• 40 CFR part 60 subpart CCCC—Standards of Performance for Commercial and Industrial Solid Waste Incineration Units;

• 40 CFR part 60 subpart DDDD—Emission Guidelines and Compliance Times for Commercial and Industrial Solid Waste Incineration Units;

• 40 CFR part 60 subpart EEEE—Standards of Performance for Other Solid Waste Incineration Units;

• 40 CFR part 60 subpart FFFF—Emission Guidelines and Compliance Times for Other Solid Waste Incineration Units;

• 40 CFR part 62 subpart FFF—Federal Plan Requirements for Large Municipal Waste Combustors Constructed on or Before September 20, 1994;

• 40 CFR part 62 subpart III—Federal Plan Requirements for Commercial and Industrial Solid Waste Incineration Units That Commenced Construction on or Before November 30, 1999;

• 40 CFR part 62 IIIa—Federal Plan Requirements for Commercial and Industrial Solid Waste Incineration Units That Commenced Construction on or Before June 4, 2010, and Have Not been Modified or Reconstructed Since August 7, 2013; and

• 40 CFR part 62 subpart JJJ—Federal Plan Requirements for Small Municipal Waste Combustion Units Constructed on or Before August 30, 1999.

The provisions governing ACI that only burn wood wastes, yard waste, clean lumber, or any mixture of these materials, are, for the most part, the same or substantially similar across these regulations except for minor differences in definitions of an ACI and averaging times for determining compliance with applicable emissions limits. These differences are discussed further in section III.A of this document. Table 1 provides a summary of ACI definitions, applicability and exemption language, and opacity limits and averaging times across these rules.

There are also differences among the current title V permitting requirements for this type of ACI across CAA section 129 rule subparts. For example, the OSWI rules do not require a title V permit for ACI that only burn wood wastes, yard wastes, and clean lumber if they “are not otherwise required to obtain a title V permit.”  14 Similarly, the EPA removed the title V permit requirement for ACI that only burn wood wastes, yard wastes, and clean lumber and are not located at a major source or subject to title V for other reasons in the 2026 LMWC final rule. 15 However, similar ACI, such as those subject to the CISWI or SMWC rules and LMWC Federal Plan, must obtain a title V permit under current regulations. 16

In this rulemaking, the EPA is proposing to consolidate regulatory provisions governing ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials, by removing them from existing CAA section 129 regulations and placing them in a new rule subpart specific to this type of ACI. (40 CFR part 60 subpart Ca). Also, because these ACI are materially indistinguishable regardless of which CAA section 129 source category they are currently regulated under and therefore need to be treated in a consistent manner, the EPA is proposing to remove the title V permitting requirement for these ACI that are currently regulated under the CAA section 129 regulations for CISWI, SMWC, and the LMWC Federal Plan. This is consistent with the EPA's 2024 final rule that removed title V permitting for these ACI in the existing CAA section 129 OSWI regulations  17 and its 2026 amendments to the LMWC NSPS and EG. 18 For the new subpart Ca, the EPA is proposing that title V permits are not required provided that the ACI is not a major source or subject to title V for other reasons.

Please note that the proposed new subpart Ca does not directly apply to existing sources subject to state plans that implement CAA section 129 EGs. However, if finalized, States that currently require title V permitting in their state plans would be able to revise their plans to remove the title V permitting requirement for this type of ACI.

The EPA is proposing to consolidate requirements for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials, by removing them from existing CAA section 129 regulations and placing them in a new rule subpart specific to this type of ACI, 40 CFR part 60 subpart Ca. The proposed subpart Ca includes certain consolidated changes as described below.

The EPA is proposing a single definition for any ACI that burns only wood wastes, yard wastes, clean lumber, or any mixture of these materials. In the CAA section 129 rules governing LMWC, SMWC, and CISWI, an ACI is defined as an “incinerator that operates by forcefully projecting a curtain of air across an open chamber or pit in which burning occurs. Incineration of this type can be constructed above or below ground and with or without refractory walls and floor.”  19 The OSWI rules define ACI slightly differently as an “incinerator that operates by forcefully projecting a curtain of air across an open, integrated combustion chamber (fire box) or open pit or trench (trench burner) in which combustion occurs.”  20

We are proposing to adopt the OSWI regulation definition in the new subpart Ca for the following reasons. First, this definition specifically includes fire box and trench burner unit types that are commonly used for cleanup and disposal of wood wastes, yard wastes, and clean lumber while not excluding other potential types of units. Second, the part of the ACI definition in the CISWI, LMWC, and SMWC rules that the unit “can be constructed above or below ground and with or without refractory walls and floor” appears redundant ( e.g., construction can only be above or below ground—there is no third choice); without this phrase, ACI can still be constructed either above or below ground. Please note that the proposed definition is independent of unit design capacity and type of facility that owns or operates the unit, and so the choice of definition is not intended to and should not result in material differences in applicability or requirements imposed. We solicit comment on the proposed definition of ACI (ACI-1).

The proposed new subpart Ca would consolidate existing opacity limitations during periods of regular operation for this type of ACI and during the startup period of the unit. The opacity limits in the new subpart Ca would be the same as those across all existing CAA section 129 regulations ( i.e., 10 percent opacity during regular operation and 35 percent opacity during startup). 21 This proposal merely consolidates these longstanding opacity limitations for clarity and administrability and does not reopen them for comment.

The EPA also proposes to create a single set of opacity measurement averaging time requirements that are clear and consistent with the methodologies of EPA Method 9, a compliance determination method for opacity that is required in the LMWC, SMWC, OSWI, and CISWI rules. 22 We are proposing that compliance with the opacity limit will be based on 6-minute averages, as provided in the 40 CFR part 60 General Provisions at 40 CFR 60.11(b). This is the current requirement in all CAA section 129 rules except the CISWI rules, which require that the determination be based on “three 1-hour blocks consisting of ten 6-minute average opacity values.”  23 Under 40 CFR 60.11(b), “the minimum total time of observations shall be 3 hours” and the 3 hours are comprised of 30 6-minute averages. While the minimum observation period under the CISWI rules is also 3 hours, CISWI requires averaging the ten values for each 1-hour block and then averaging the three 1-hour block values, making the final value less representative of the individual 6-minute average values and in turn providing less confidence in determining whether there is an opacity concern, which would be indicative of a combustion issue that needs to be addressed. We did not find in the CISWI rule records an explanation for why the EPA chose to depart from 40 CFR 60.11(b) or why the averaging method in CISWI rules differ from other CAA section 129 rules. 24 As mentioned earlier in this preamble, the purpose of this proposed rulemaking is to have one set of requirements for all ACI that only burn wood wastes, yard wastes, clean lumber, or a mixture thereof. Because all the other rules follow 40 CFR 60.l1(b), we are proposing to apply the averaging requirement in 40 CFR 60.11(b) in the proposed consolidated new rule subpart Ca. We solicit comment on these proposed averaging time requirements (ACI-2).

In addition to creating a single set of averaging time requirements, the EPA is proposing to include text clarifying the opacity monitoring requirements. One of these clarifications describes how compliance is demonstrated when conducting opacity measurements; this clarification is consistent with our discussion on averaging times above. This clarification is especially needed for periods of startup, as the startup period is only 30 minutes. The EPA has previously received questions on how owners and operators are supposed to comply with 40 CFR 60.8 during the startup period, as 40 CFR 60.8 requires three test runs. The additional regulatory text would clarify that owners and operators only need to make observations for 30 minutes to demonstrate compliance during startup. We also propose to add a cross-reference to 40 CFR 60.11 for performance tests, as this section of the General Provisions provides instructions for conducting opacity measurements.

Currently, the LMWC, CISWI, and OSWI rules require an annual performance test, which must be conducted within 12 months following the date of the previous test. 25 However, the SMWC rule's required annual performance test must be conducted “no more than 13 months following the date of the previous test.”  26 To maintain consistency across ACI within the new subpart, we are proposing to require that the annual performance tests must be conducted within 12 months of the date of the previous test. We solicit comment on the proposed timeframe for these annual performance tests (ACI-3).

Currently, the OSWI rules state: “If the air curtain incinerator has been out of operation for more than 12 months following the date of the previous test, then the owner or operator must conduct a test for opacity upon startup of the unit.”  27 However, this language does not appear in the CISWI, LMWC, or SMWC rules. Therefore, the EPA is proposing to include in the new subpart Ca a provision similar to that in the OSWI rules but with further clarification. Specifically, the EPA is proposing that any ACI that is not in operation at the time the annual test is due (12 months from the previous test) is not required to conduct a test for opacity at that time. Without this language, owners and operators could assume that they must start up their unit to conduct annual testing, which would be an unnecessary burden for the owner or operator and would tend to increase, rather than control, emissions at a non-operating unit—a counterintuitive result with no environmental benefit. Therefore, we are proposing to delay testing until the next startup for any ACI that is not operating at the time of scheduled testing. Specifically, the proposed new subpart Ca would state: “If the air curtain incinerator is not operating at the time that the annual test would be required under paragraph (c) of this section, you may delay the annual test until the next day you operate the unit.” We solicit comment on this proposed requirement (ACI-4).

The EPA is also proposing to require the completion of an initial performance test within 60 days of the initial startup. Currently, the timeline for conducting the initial performance test in all the different CAA section 129 regulations is within 60 days after reaching the operational charge rate but no later than 180 days after initial startup. 28 Since the performance test is used to demonstrate compliance, allowing up to 180 days of startup for performance testing seems unreasonably long in this case. The “up to 180 days” is a default maximum timeframe provided in the General Provisions, which may be necessary for complicated sources with multiple air pollution control devices that may need time to fully begin operations and work through issues that can occur during initial startup. This is often referred to as a shakedown period. During the shakedown period, sources generally ramp up operations over time to protect the unit against operational problems like thermal stress, overheating, and leaks. We do not expect ACI that only burn wood wastes, yard wastes, and clean lumber, or mixtures of these materials, and are subject only to opacity limits, to require a long shakedown period. Such ACI are less complicated than other sources that are required to conduct performance testing, and as such, we would expect that these units can reach their operational charge rate not long after startup; therefore, we expect that these units should be able to conduct initial performance tests within 60 days of startup.

This proposed rulemaking also includes initial notification requirements. These would require the submission of an initial notification of startup of this type of ACI, location of the ACI unit, initial startup date, and types of materials burned in the ACI. Previous notification requirements for this type of ACI did not include the location of the ACI unit. We are proposing this requirement because we believe it would be helpful for the EPA, State, and local authorities to maintain an inventory of where these units are located, particularly given the proposed removal of title V permit requirements detailed in section III.B of this document. We solicit comment on these proposed initial notification requirements (ACI-5).

This rulemaking also proposes recordkeeping and reporting requirements for initial and annual opacity tests for this type of ACI. For such ACI currently regulated under the OSWI rules, owners and operators must keep records of these opacity tests in either a paper copy or computer-readable ( e.g., electronic) format for at least 5 years. 29 These records must be kept on site for at least 2 years but then may be kept off site for the remaining 3 years. These test results must be submitted to the Administrator (as paper or electronic copy). For initial opacity tests, results must be submitted within 60 days of the test. For annual opacity tests, results must be submitted within 12 months following the previous report. The recordkeeping and reporting requirements for this type of ACI regulated under the CISWI rules are identical to those in the OSWI rules, with the exception of requiring records of these opacity tests be kept on site for the entire 5-year recordkeeping period. 30 Like units regulated under CISWI, this type of ACI regulated under the LMWC and SMWC rules are required to keep records (paper or electronic copy) of these opacity tests on site for 5 years. 31 However, opacity test results are to be submitted to the Administrator by February 1 of the following year, rather than 60 days from the initial test for initial reports, or 12 months from submittal of the previous test for annual reports. In this case, the degree of flexibility afforded to owners and operators of these ACI for compliance with this reporting requirement could vary greatly depending on when during the calendar year an initial opacity test is performed. For this proposed rulemaking, we are basing the recordkeeping and reporting requirements on those in the OSWI rules, as we believe the language provides the greatest degree of specificity for these respective requirements. We solicit comment on the proposed recordkeeping and reporting requirements for these ACI (ACI-6).

We are proposing to remove the title V permitting requirements for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials, that were previously covered by CAA section 129 CISWI and SMWC regulations as well as the LWMC Federal Plan, provided they are not otherwise subject to title V. 32 The EPA made the same amendments in the revised OSWI rule in 2024  33 and the LMWC rule in 2026. 34

The EPA is proposing to remove the title V permitting requirement for this type of ACI for the following reasons. First, CAA section 129(e) and the EPA's title V regulation at 40 CFR 70.3(b)(1), which require that each solid waste incineration unit operate with a title V permit, do not by their terms apply to ACI that only burn wood wastes, yard wastes, or clean lumber and that are subject to opacity limitations established by the EPA. These ACI are not “solid waste incineration units” as defined in CAA section 129(g)(1)(C) and are therefore not subject to title V permitting under CAA section 129(e) or 40 CFR 70.3(b)(1).

Second, while CAA section 502(a) and the EPA's title V regulations at 40 CFR 70.3(a)(2) require that sources subject to CAA section 111 standards operate with a title V permit, the opacity limits for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials, are not section 111 standards. As mentioned earlier, the EPA had previously claimed that the opacity limits for these ACI “were established pursuant to CAA sections 111 and 129” and thereby triggered CAA section 502 requirement that sources subject to regulation under CAA section 111 must operate with title V permits. 35 However, the EPA now believes that prior assertion to be inaccurate for the following reasons. First, the opacity limitations and related requirements for these ACI were established under CAA section 129(g)(1)(C), which does not require the EPA to establish such opacity limitations under CAA section 111. Second, while certain section 129 provisions require that standards be established pursuant to CAA sections 111 and 129, it does not appear that the opacity limitations for these ACI were established pursuant to any such section. For example, CAA section 129(a) requires the EPA to establish standards “pursuant to section [111] of this title and this section for each category of solid waste incineration units.” As noted above, because these ACI are not solid waste incineration units, section 129(a) does not apply to such ACI. Similarly, CAA section 129(a)(2) requires that “standards applicable to solid waste incineration units” promulgated under section [111 and 129] shall reflect the maximum degree of reduction in emissions of air pollutants listed under section (a)(4) that the Administrator, taking into consideration the cost of achieving such emission reduction, and any non-air quality health and environmental impacts and energy requirements, determines is achievable for new or existing units in each category.” CAA section 129(a)(4), in turn, provides that standards promulgated under sections 111 and 129 and “applicable to solid waste incineration units shall” include opacity limits “as appropriate.” However, as noted above, ACI burning only wood wastes, yard wastes, clean lumber, or mixtures thereof are not solid waste incineration units under CAA section 129(g)(1)(C). Therefore, the EPA is not required by CAA section 129(a)(2) and (4) to establish opacity limits for such ACI units pursuant to sections 111 and 129. Nor is there any record showing that the opacity limits for this type of ACI were established pursuant to sections 111 and 129 in accordance with CAA section 129(a)(4). The EPA first established the opacity limits for ACI that only burn yard wastes in 1995. 36 The EPA explained at the time that it was directed by CAA section 129 to establish such opacity limits  37 and that the limits “are based on levels achieved by well-designed and operated air curtain incinerators.”  38 The EPA subsequently promulgated the same opacity limits for ACI that only burn wood wastes and clean lumber. 39 In neither rulemaking did the EPA explain how the standards were established pursuant to CAA sections 111.

For the reasons stated above, we do not believe that the opacity limitations established under CAA section 129(g)(1)(C) for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture thereof are CAA section 111 standards; therefore, these opacity limitations do not trigger the title V permitting requirement for this type of ACI.

Third, CAA section 502(a) authorizes the Administrator to promulgate regulations to exempt non-major sources from the title V permitting requirement if the Administrator finds, in his discretion, that compliance with such requirement is impracticable, infeasible, or unnecessarily burdensome. Such an exemption is not required in this case because, as proposed above, the statute does not require title V permitting for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture thereof. Nevertheless, the EPA finds, in the alternative, that compliance with title V permitting is unnecessarily burdensome for this type of ACI. Under this alternative, even if it were determined that such ACI are CAA section 111 standards subject to title V permitting requirements under CAA section 502(a) and the EPA's regulation at 40 CFR 70.3(a)(2), we would nevertheless exempt such sources from title V requirements on that basis. During the prior CISWI rulemakings, the EPA had acknowledged that it could exempt nonmajor sources from title V permitting by making the necessary finding under CAA section 502 but had declined to do so for these ACI because the EPA had not made such finding for these ACI in other CAA section 129 rules and believed that it was important to treat these ACI in the same manner. 40 As mentioned earlier, in 2024 the EPA amended existing OSWI section 129 regulations to remove the title V permitting requirement for such ACI. 41 42 The EPA is treating these ACI in the same manner by proposing to remove the title V permitting requirement for units regulated under the remaining section 129 regulations that currently require title V permitting for these ACI.

The EPA has previously developed a four-factor balancing test in determining under CAA section 502(a) whether compliance with title V is “unnecessarily burdensome.” These four factors are: (1) whether title V permitting would result in significant improvements in compliance with emission standards; (2) whether title V permitting would impose significant burdens on the area source category; (3) whether the costs are justified, taking into account potential gains; and (4) whether there are existing enforcement programs in place sufficient to ensure compliance. 43 The EPA has historically also considered whether such an exemption would adversely affect public health, welfare, or the environment. 44 In exercising the discretion conferred by statute, the Administrator considers these factors in combination, and not every factor must point in the same direction to support an exemption. As explained below, the EPA considers and balances these same factors in this action.

With respect to the first factor, the EPA does not believe that title V permitting would result in significant improvements in compliance with emission standards. One of the primary benefits of the title V program is to compile and clarify, in a single document, the various and complex regulations that apply to a facility in order to improve compliance and thereby “enable the source, states, EPA, and the public to understand better the requirements to which the source is subject, and whether the source is meeting those requirements.”  45 However, this benefit is not realized with respect to ACI that only burn wood wastes, yard wastes, clean lumber, or mixtures thereof; these ACI are subject only to opacity limitations and associated monitoring recordkeeping and reporting requirements established under CAA section 129(g)(1)(C), and we are not aware that they are subject to any other requirement under the CAA. Another way title V can improve compliance is its requirement that “ [e]ach permit . . . shall set forth . . . monitoring . . . requirements to assure compliance with the permit terms and conditions.”  46 This rulemaking, however, would adopt and consolidate the monitoring, recordkeeping and reporting requirements for these ACI in the current CAA section 129 rules with some minor variations as detailed previously in section III.A. of this document. Specifically, opacity would be monitored according to EPA Method 9, a long established and common practice for determining compliance with opacity limits. The owners and operators of these sources would perform an initial opacity test no later than 60 days after initial startup, and annual opacity tests no later than 12 calendar months following the date of the previous test, unless the ACI is not operating at the time that the annual test would be required. Owners and operators would submit the results of each opacity test to the Administrator no later than 60 calendar days after the date of completing the test. Records of these opacity tests would be kept in either paper copy or electronic format for at least 5 years; they would be kept on site for at least 2 years, then could be kept off site for the remaining 3 years. These requirements have been adequate to ensure compliance with the ACI opacity limits currently in the existing CAA section 129 regulations for various source categories. Although title V requires submitting reports of any required monitoring at least every 6 months, per 40 CFR 70.6(a)(3)(iii)(A), we do not think more frequent reporting is necessary for purposes of ensuring compliance with one single opacity limit. In light of the above, we believe that the proposed monitoring, recordkeeping, and reporting requirements of this proposed rulemaking would be sufficient to ensure compliance, and that title V would not significantly improve compliance.

Regarding the second factor, we believe that title V permitting would impose significant burdens on the owners and operators of these sources. Costs associated with initial application and annual fees for a title V permit can vary depending on state permitting policies. 47 The permitting process, which includes preparing and submitting the permit applications, meeting with the permitting authorities and subjecting their operations and permit application to public comment, takes time and could potentially delay operations. Considering the above, we believe that title V requirements would impose a significant additional burden without corresponding health or environmental benefit. 48

Regarding the third factor, we believe the title V permitting costs and other burdens are not justified as we believe there would be little, if any, potential gain in compliance from subjecting this type of ACI to title V. It is likely that many ACI that burn exclusively wood wastes, yard wastes, clean lumber, or mixtures thereof are commonly located at facilities that would not otherwise require a title V operating permit, such as land clearing operations in public or private land and fuels treatment for wildfire prevention. 49 State and industry stakeholders have commented that the title V requirements for these units are overly burdensome and costly, particularly in light of the dependence on ACI units to mitigate natural disaster debris, such as massive amounts of clean wood and vegetative waste for wildfire mitigation and forest management, burning of storm-generated wood and vegetative debris, and burning of land clearing debris. Several States have commented that these ACI should not be required to obtain title V permits because they are low-emitting and because permitting these ACI is unnecessarily burdensome and expensive. Further, ACI that burn exclusively wood wastes, yard wastes, clean lumber, or any mixtures thereof are often used temporarily at the location of a natural disaster or disaster prevention, not at facilities that are subject to title V. As mentioned earlier in this preamble, the only requirements for these ACI are opacity limitations and associated monitoring, recordkeeping, and reporting requirements that we believe are adequate to assure compliance. In light of the above, we conclude that the cost of title V permitting is not justified as we do not anticipate any potential gain in health and environmental outcomes from compliance by these ACI with additional title V requirements.

Regarding the fourth factor, we believe there are existing enforcement programs in place sufficient to ensure compliance with opacity limits for these ACI. State and local authorities can monitor compliance with these opacity limits and related requirements with delegated authorities for implementing and enforcing CAA section 129 regulations; the EPA is aware of no indication that these section 129 delegated authorities are insufficient to assure compliance with these requirements, which as mentioned above have been in place for a long time and are common practices. Therefore, enforcement of these opacity limits and related requirements through title V permitting is not necessary.

Lastly, requiring title V permitting for these ACI could adversely affect public health, welfare, or the environment by diverting resources toward permitting activities unlikely to generate additional health or environmental benefits. Since compliance with the opacity limitations for these ACI can be adequately assured without title V, as explained above, title V permitting would unnecessarily shift State resources away from assuring compliance for major sources and potentially reducing overall air program effectiveness. We therefore find title V permitting to be unnecessarily burdensome for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture thereof, and that are not major sources or subject to title V permitting requirements for another reason.

In sum, the title V requirements for “solid waste incineration units” and sources subject to CAA section 111 standards do not apply to ACI that only burn wood wastes, yard wastes, clean lumber, or any combination thereof, because these ACI are not “solid waste incineration units” under CAA section 129(g)(1) and the opacity limitations established for these ACI are not CAA section 111 standards. We also find, in the alternative, that title V requirements would be unnecessarily burdensome for this type of ACI. For the reasons stated above, we propose to remove from CAA section 129 regulations any existing title V permitting requirements for ACI that only burn wood wastes, yard wastes, and clean lumber, and state in the new subpart for this type of ACI that these ACI are not required to obtain a title V operating permit, provided that they are not otherwise required to obtain a title V operating permit.

This proposed rulemaking would consolidate the opacity limits and associated monitoring, recordkeeping and reporting requirements that currently exist across the OSWI, CISWI, LMWC, and SMWC rules for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials. The only additional cost that we anticipate is the cost of the initial notification requirement for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials. However, consistent with the current OSWI and LMWC rulemakings, we are proposing to remove title V requirements for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of these materials. We anticipate that the removal of the title V requirements would result in cost savings for such ACI that are not co-located at facilities with CISWI and SMWC units currently required to obtain a title V permit for these types of ACI. We do not anticipate any changes to emissions because no new emission standards are being set. With the removal of title V permitting requirements and the likelihood of associated net cost savings and the associated reduced overall cost of operation, there could be an increase in ACI use. This potential increase in ACI use could generate increased emissions. We are unable to quantify emissions changes of this nature for this proposed rulemaking but anticipate that they would be small, particularly given the retention of existing opacity limits for these units. We anticipate net savings because the cost of removing the title V requirements will outweigh any costs associated with the initial notification requirement. Hence, we anticipate that there will not be adverse economic impacts for those entities that use these types of ACI.

We solicit comment on all aspects of this proposed action described above. In addition to general comments on this proposed action, we are soliciting comments on the following topics. A comment reference indicator for each specific topic is provided ( e.g., ACI-1, ACI-2, etc.).

• Whether the existing title V permitting requirement for ACI that only burn wood wastes, yard wastes, and clean lumber, of any mixture thereof, has engendered any serious reliance interest that the EPA must consider in removing this permitting requirement. (ACI-0).

• The definition of ACI as an “incinerator that operates by forcefully projecting a curtain of air across an open, integrated combustion chamber (fire box) or open pit or trench (trench burner) in which combustion occurs” as discussed in section III.A of this document. (ACI-1).

• The averaging time requirement that compliance for opacity is based on 6-minute averages, as provided in the 40 CFR part 60 General Provisions at 40 CFR 60.11(b), as discussed in section III.A of this document. (ACI-2).

• The timeframe that annual performance tests be conducted within 12 months of the date of the previous test as discussed in section III.A of this document. (ACI-3).

• The ability to delay an annual performance test until the next startup of the unit if the ACI is not operating at the time that the annual test is required as described in section III.A of this document. (ACI-4).

• The initial notification requirement for this type of ACI as described in section III.A of this document. (ACI-5).

• Recordkeeping and reporting requirements as described in section III.A of this document. (ACI-6).

In addition to the proposed action on ACI that only burn wood wastes, yard wastes, and clean lumber, or any mixture of these materials, the EPA is soliciting comment on revising the definition of “municipal waste combustion unit” in the OSWI NSPS and EG to remove the reference to “pyrolysis/combustion units.” In the preamble to the 2005 OSWI final rule, the EPA stated that “pyrolysis/combustion units (two chamber incinerators with a starved air primary chamber followed by an afterburner to complete combustion)” are considered OSWI units but did not further elaborate. 50 The EPA proposed in 2020 to modify the definition of “municipal waste combustion unit” in the OSWI rules to remove the reference to pyrolysis/combustion units. The EPA published an advanced notice of proposed rulemaking on September 8, 2021 (86 FR 50296), to gather more details on pyrolysis/combustion units, including how they are used, the inputs and products of the processes, and emissions from these processes. In 2023, the EPA proposed to withdraw the 2020 proposed definition change. 51 To assist with the resolution of this longstanding issue, we are soliciting comment on whether removing the reference to “pyrolysis/combustion units” from the definition of “municipal waste combustion unit” in the OSWI rules is appropriate or not, along with supporting legal, policy, and factual arguments for the commenter's recommended position. (OSWI-1).

The EPA is proposing to allow the temporary use of incineration units subject to CISWI regulations during disaster recovery without the need to comply with CAA section 129 requirements. In 2005, the EPA promulgated the OSWI NSPS (40 CFR part 60, subpart EEEE) and EG (40 CFR part 60, subpart FFFF). 52 Those regulations established CAA section 129 standards and associated requirements for OSWI units, and authorized OSWI to combust debris from a disaster or emergency on a temporary basis without having to comply with applicable CAA section 129 requirements. In this rulemaking, we are proposing to authorize such temporary use for incinerators (including ACI) subject to CISWI regulations by adding temporary-use provisions similar to those in the OSWI regulations to existing Federal CISWI rule subparts. The EPA does not anticipate any additional capital costs associated with this proposal if finalized, only notification costs. This proposed action works to permanently respond to States' request for more incinerators to be available for disaster clean up. By proposing this action, the EPA is working to streamline responses to natural disasters and emergencies and to advance cooperative federalism.

Categories and entities potentially affected by this proposed rulemaking are those that operate incinerators (including ACI) subject to CISWI NSPS (40 CFR part 60, subpart CCCC), Federal Plan (40 CFR part 62, subpart IIIa), or EG (40 CFR part 60, subpart DDDD) (hereinafter collectively referred to as “CISWI”  53 ). If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

The EPA has established a docket for CISWI Temporary Use Incinerator rulemaking under Docket ID No. EPA-HQ-OAR-2003-0119. Following signature by the EPA Administrator, the EPA also will post a copy of this document to https://www.epa.gov/stationary-sources-air-pollution/commercial-and-industrial-solid-waste-incineration-units-ciswi-new.

Section 129 of the CAA, entitled “Solid Waste Combustion,” requires the EPA to develop and adopt NSPS and EG for solid waste incineration units pursuant to CAA section 111. 54 Section 111(b) of the CAA requires the EPA to establish NSPS for new sources, and CAA section 111(d) requires the EPA to establish procedures for States to submit plans for implementing EG for existing sources. The EPA promulgates Federal plans to regulate existing sources where there are no approved state plans.

Section 129(a)(1) of the CAA identifies five categories of solid waste incineration units and requires emissions standards for “each category of solid waste incineration unit.” The five categories of solid waste incineration units are as follows:

(1) Units with a capacity of greater than 250 tpd combusting municipal waste;

(2) Units with a capacity equal to or less than 250 tpd combusting municipal waste;

(3) Units combusting hospital, medical and infectious waste;

(4) Units combusting commercial or industrial waste;

(5) “other categories of solid waste incineration units.”

While the CAA specifically describes four of the five listed categories by the types of wastes burnt, it leaves unspecified the “other categories of solid waste incineration units.” As the EPA observed during the development of standards for OSWI, Congress could have unambiguously required OSWI to cover “every other possible type of incineration unit burning any type of solid waste” but did not to do so, thereby leaving to the EPA's discretion to delineate those “other” categories of solid waste incineration units. 55 Based on that authority, the EPA defined OSWI to include very small municipal combustion units and institutional waste combustion incineration units. The EPA analyzed and excluded various types of incinerators from being subject to CAA section 129 standards; among those excluded are incinerators when they are used on a temporary basis to combust debris during disaster recovery. The EPA determined that some incinerators “should be handled differently due to unusual circumstances ( e.g., unique geographic locations or climatic factors, temporary emergency use)” that would render compliance with CAA section 129 rules infeasible. 56 Accordingly, the EPA excluded incinerators from complying with CAA section 129 standards and associated requirements when they are used to combust debris during disaster recovery. 57 To qualify for this exclusion, an incinerator “must burn debris in an area declared a State of Emergency by a local or State government, or the President, under the authority of the Stafford Act, has declared that an emergency or a major disaster exists in the area.”  58 In addition, owners and operators must follow the notification requirements in the temporary use provisions. 59

Currently, these temporary use provisions are codified in the Federal OSWI regulations, and the EPA has realized that States need more incinerators for emergency/disaster debris cleanup. Some States have requested the temporary use of CISWI for such purposes;  60 based on the same authority and for the same reasons explained in the 2005 OSWI rule  61 and here in section VIII.B. of this preamble, the EPA is proposing to include similar temporary use provisions for disaster recovery in CISWI regulations, thereby extending such temporary use to incinerators at commercial and industrial facilities upon final promulgation.

The proposed action does not affect the EPA's obligation under CAA section 129(a)(1)(C) to establish standards for “solid waste incineration units combusting commercial and industrial wastes.” This action proposes to provide for the temporary use of incinerators that normally burn commercial or industrial wastes to instead burn debris (which is defined in the Webster Dictionary as remains of materials broken or destroyed, in this case by a natural disaster or emergency) during disaster recovery without having to comply with CISWI standards established pursuant to CAA section 129(a)(1)(c); the temporary use provisions do not apply to combustion of commercial and industrial wastes ( i.e., wastes generated by commercial and industrial facilities) for which standards are required under CAA section 129(a)(1)(C). The EPA, therefore, concludes that these incinerators that are normally used at commercial and industrial facilities to burn commercial or industrial wastes need not comply with CAA section 129 emission standards and associated requirements for CISWI while they are used to combust debris if they only burn non-hazardous debris and not waste from normal operations at their commercial and industrial facilities during the temporary use period.

Please note that while the EPA is proposing to amend the CISWI EG (40 CFR part 60, subpart DDDD), along with the CISWI NSPS and Federal plan, to include the temporary use provisions, the CISWI EG does not directly apply to existing incinerators covered by that EG. However, if finalized, States may revise their State plans implementing subpart DDDD to add the temporary use provisions that would be in subpart DDDD, thereby allowing their existing incinerators at commercial or industrial facilities to be used temporarily for emergency/disaster debris clean up without complying with their CAA section 129 standards during that period.

In 2005, the EPA promulgated the OSWI NSPS (40 CFR part 60, subpart EEEE) and EG (40 CFR part 60, subpart FFFF). 62 Those regulations established CAA section 129 standards and associated requirements for OSWI units; however, the regulations also allow temporary use of incinerators to burn debris during disaster recovery or other emergencies without complying with such standards. Because these OSWI regulations are currently the only CAA section 129 regulations with such temporary use provisions, only incinerators subject to the OSWI NSPS or State plans implementing the OSWI EG may be used on a temporary basis to combust debris from a disaster or emergency without complying with CAA section 129 requirements during that period.

On January 24, 2025, President Trump issued Executive Order (E.O.) 14181 to expedite cleanup of the catastrophic wildfires in Los Angeles County. 63 The E.O. sparked renewed awareness of regulatory challenges associated with disaster recovery, which have increased in both intensity and costliness in recent years. 64 During disaster cleanup, frequently there is considerable excess organic waste that, if left, would decompose into more harmful organic air emissions than if combusted or landfilled. Incinerators are useful tools for disaster or emergency cleanup, as they can process large quantities of debris and are considered safer and more environmentally sound than other remediation options. 65 When Hurricane Helene hit in September 2024, States and municipalities expressed concern over smoke impacts from open burning of waste and debris, and increased likelihood of wildfires. 66 To respond to the scale of the disaster and volume of debris generated, the EPA's Regional offices and Office of Enforcement and Compliance Assurance issued No Action Assurances to allow North Carolina and Tennessee to use their CISWI ACI units to combust non-hazardous disaster debris, as ACI can be easily mobilized to reduce waste volume and minimize harmful environmental impacts. 67 This situation highlighted the need for additional available incinerator capacity for States during disasters, beyond those that could be made available under the Federal OSWI regulations. In this action, the EPA is proposing to include temporary use provisions in the Federal CISWI regulations similar to those in the Federal OSWI regulations, increasing the incinerator capacity available to combust non-hazardous disaster debris during disaster or emergency events. These provisions were previously published by the EPA in a final agency action Interim Final Rule (IFR); however, due to the conclusion of the hurricane and wildfire seasons of 2025, the EPA is withdrawing the IFR and proposing those provisions through a notice-and-comment rulemaking action. The provisions propose to exclude incinerators subject to CISWI from CAA section 129 requirements when they are used on a temporary basis to combust debris from a disaster or emergency such as a tornado, hurricane, flood, ice storm, high winds, or act of bioterrorism. Such temporary use provisions are being proposed in the following CAA section 129 regulations:

• 40 CFR part 60, subpart CCCC—Standards of Performance for Commercial and Industrial Solid Waste Incinerations Units;

• 40 CFR part 60, subpart DDDD—Emission Guidelines and Compliance Times for Commercial and Industrial Solid Waste Incineration Units;

• 40 CFR part 62, subpart IIIa—Federal Plan Requirements for Commercial and Industrial Solid Waste Incineration Units That Commenced Construction on or Before June 4, 2010, and Have Not been Modified or Reconstructed Since August 7, 2013

As discussed earlier in section VIII.A, the temporary use provisions in the CISWI EG do not directly apply to existing sources. However, following final rule promulgation, States may amend their State plans implementing 40 CFR part 60, subpart DDDD to include these temporary use provisions.

This rule proposes temporary use disaster recovery and emergency provisions for the Federal CISWI regulations similar to those currently in the Federal OSWI regulations. Under this proposal, like OSWI units, CISWI units would not need to comply with their CAA section 129 emission standards and associated requirements while they are used to combust debris as long as they follow the conditions for these temporary use provisions. Specifically, the owners or operators of CISWI units would be allowed to combust debris only in an area declared a State of Emergency by a local or State government or where the President, under the authority of the Stafford Act, has declared that an emergency or a major disaster exists in the area. Under these temporary use provisions, debris that could be combusted would be any non-hazardous material that is the remains of something that is destroyed, broken, or discarded as a result of a disaster or emergency such as a tornado, hurricane, flood, ice storm, high winds, or act of bioterrorism; and during the disaster recovery period, the CISWI unit would not be burning waste from normal operations at their commercial and industrial facilities. Also, owners and/or operators would follow the notification requirements specified in the temporary use provisions.

In addition, under the CISWI temporary use provisions, we are proposing that control devices that have been installed to comply with CISWI NSPS, CISWI Federal plan or a State plan implementing CISWI EG would continue operation during temporary use status unless it is not technically feasible to do so due to conditions in the disaster recovery area;  68 otherwise, these controls are already in place, and they can minimize air pollution during the disaster recovery period even if the CISWI are excluded from CAA section 129 standards and associated requirements during that time. Examples of infeasibility to operate include insufficient electricity to operate a control device, lack of water to operate a wet scrubber or quench, and inability to get replacement supplies such as activated carbon or parts for maintenance.

We believe that during the disaster recovery period, CAA section 129 CISWI standards and associated requirements are not appropriate for incinerators at commercial and industrial facilities that are burning only non-hazardous debris and only long enough to complete the recovery tasks; during the disaster recovery period, these incinerators are not used as regular commercial and industrial waste disposal devices, which Congress intended the CAA section 129 standards to regulate. Also, as the EPA previously explained, “in emergency situations, quick removal of debris is of utmost importance to maintain public health and safety, and temporary use incinerators may be best suited to dispose of debris.”  69 Quick removal without complying with CAA Section 129 standards allows for the more expedited incineration of dried debris, which reduces the near-term likelihood of catastrophic wildfires occurring. 70 If units elect to comply with the CISWI standards, they may lose valuable time and bandwidth to incinerate debris as quickly as possible. The EPA, therefore, elected to exclude incinerators from CAA section 129 standards when they are used on a short-term basis to burn debris during disaster recovery, noting that such “regulation would hinder the recovery effort and this impact would outweigh the benefits from regulation of the units.”  71 The EPA found that “this proactive approach, which addresses the terms for use of a temporary-use incinerator during declared emergencies or disasters, is better than an approach that requires the EPA and others to react during or immediately after such an emergency or disaster strikes. This provision allows CISWI operators in a disaster region to quickly shift from existing operations to combusting only non-hazardous disaster debris, without the impediment of complying with the CISWI standards during temporary use. We also point out that States and the Federal government have specific procedures that are followed in declaring an area a State of Emergency or a major disaster area. Their procedures involve extensive involvement by local, State, and Federal officials to conduct a preliminary damage assessment, develop debris removal plans, and coordinate and manage disaster assistance activities.”

As in the OSWI regulations, we are not proposing to require any notification for temporary use of CISWI units for disaster recovery that lasts eight weeks or less (beginning on the date the unit starts operation in response to a disaster or emergency). This ability to start temporary use without notification during the first eight weeks would ease the burden during or immediately after a disaster or emergency. If the CISWI unit were used for longer than eight weeks, the owner or operator would be required to notify the Administrator in writing and request permission to continue to operate. Submitting such notification would permit temporary use for an additional eight weeks, which is a total of 16 weeks from the date the unit started operation. The notification would have to be submitted in writing by the date eight weeks after the temporary use incinerator starts operation and would include the following information: the date the incinerator started operation within the boundaries of the current emergency or disaster declaration area; identification of the disaster or emergency for which the incinerator is being used; a description of the types of materials being burned in the incinerator; a brief description of the size and design of the unit, including any existing control devices; the reasons the incinerator must be operated for more than eight weeks; the amount of time for which the owner or operator requests permission to operate including the date the unit is expected to cease operation; and, if applicable, a brief description of why the control devices are infeasible to operate due to the disaster. If the request is for longer than 16 weeks, the owner or operator would have to cease operation of the unit or comply with applicable CISWI regulatory requirements at the end of 16 weeks, unless the Administrator approves in writing a request to continue operation. 16 weeks will be the maximum length of time a temporary-use incinerator can operate in a given area declared a State of Emergency or major disaster without specific permission to continue operation from the Administrator. The approval of the request to continue operating must establish a site-specific date to cease operation. Similar to the OSWI exclusion, EPA is proposing this approach, rather than a uniform maximum amount of time, because a case-by-case approval process allows EPA and States to set the appropriate time limits for the specific situation.

If finalized, the proposed temporary use provisions would directly impact incinerators subject to the CISWI NSPS (40 CFR part 60, subpart CCCC) and Federal plan (40 CFR part 62, subpart IIIa) but not those subject to state plans implementing CISWI EG (40 CFR part 60, subpart DDDD). States could then amend their State plans for existing CISWI units to incorporate this temporary use provision.

We are proposing the temporary use of CISWI units during a disaster or emergency, for the purposes of combusting related debris. Facilities with CISWI units that use the disaster recovery temporary use provisions would not be subject to additional control requirements; they would not need to meet the existing CAA section 129 requirements during this temporary use period. Therefore, we anticipate there would not be any additional capital costs for compliance with this proposal if finalized, only annual notification costs. As cleanup responses are necessary during and following a disaster or emergency, we anticipate that this action would have minimal adverse environmental impacts, as the benefits of using CISWI units will outweigh the alternatives of open burning and/or increased risk of wildfires that would degrade air quality. 72 As we are unable to quantify the number of units that would be affected by this rulemaking, we are unable to quantify the cost savings from this action at this time.

The EPA solicits comment on all aspects of this proposed action described above. Comments can be submitted to the CISWI Docket ID No. EPA-HQ-OAR-2003-0119.

In addition to general comments on this proposed action, we are soliciting comments on the following topics. A comment reference indicator for each specific topic is provided ( e.g., Emergency-1, Emergency-2, etc.).

• Incidents of insufficient numbers of incinerators for emergency/disaster debris cleanup and the impacts on the affected communities. (Emergency-1).

• Information on the difficulty with complying with CISWI regulations during emergency/disaster debris cleanup. (Emergency-2).

• Information on State and local efforts in minimizing health impact during emergency/disaster debris cleanup. (Emergency-3).

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

The proposed actions to consolidate the regulations for ACI burning only certain fuels and to allow for temporary use of CISWI units during disasters or emergencies are not considered significant regulatory actions as defined in Executive Order 12866. This proposal was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action proposing to consolidate regulations for ACI that only burn wood wastes, yard wastes, clean lumber, or any mixture of those materials is considered an Executive Order 14192 deregulatory action because it would provide burden reduction by simplifying compliance and some permitting requirements. This action to allow for temporary use of CISWI units is considered an Executive Order 14192 deregulatory action because it would reduce burdens for CISWI units during emergency and disaster recovery with the temporary use provisions.

The information collection activities in this action have been submitted for approval to OMB under the PRA as discussed for each of the relevant subpart discussed in sections XII.C.1, XII.C.2, and XII.C.3.

The Information Collection Request (ICR) document prepared by the EPA has been assigned the EPA ICR number 7813.01. You can find a copy of the ICR in Docket ID No. EPA-HQ-OAR-2025-0068, and it is briefly summarized here.

The proposed rulemaking requires initial notifications and opacity tests by the owners and operators of the affected facilities. Owners and operators would also be required to maintain records of and submit the results of opacity tests. These notifications, reports, and records are essential in determining compliance and are required of all affected facilities subject to the subpart. The EPA notes that most of the burden associated with this ICR is burden being transferred from existing ICRs for the subparts that currently regulate ACI that only burn wood wastes, yard wastes, and clean lumber. The only new burden for this ICR is associated with the initial notification of applicability for existing units.

Respondents/affected entities: New or existing air curtain incinerators that only burn wood wastes, yard wastes, and clean lumber.

Respondent's obligation to respond: Mandatory (40 CFR part 60, subpart Ca).

Estimated number of respondents: 52.

Frequency of response: Once for startup/applicability notification, annually for opacity test, as needed for disaster recovery for the clean ACI.

Total estimated burden: 1,570 hours (per year), of which the EPA estimates approximately 640 burden hours are currently associated with the CISWI rules and 807 burden hours are currently associated with the OSWI rules. Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: $537,000, of which the EPA estimates that approximately $230,000 is currently associated with the CISWI rules and $290,000 is currently associated with the OSWI rules. The annualized capital operation & maintenance costs are $156,000.

The information collection request (ICR) documents that the EPA prepared have been assigned EPA ICR number 1926.10. You can find a copy of the ICR in Docket ID No. EPA-HQ-OAR-2003-0119, and it is briefly summarized here. The information collection requirements are not enforceable until OMB approves them.

This action proposes to amend the current requirements in 40 CFR part 60, subpart CCCC to allow owners and operators to temporarily combust debris associated with disaster recovery. As part of these proposed requirements, owners and operators would submit a notification to the Administrator whenever an incinerator is used to combust this type of debris for more than eight weeks. There would be no other changes to the notification, recordkeeping, and reporting required in these subparts. These notifications, reports, and records are essential in determining compliance with the applicable subpart.

Respondents/affected entities: Owners and operators of new CISWI units.

Respondent's obligation to respond: Mandatory if temporary use exceeds eight weeks (40 CFR part 60, subpart CCCC).

Estimated number of respondents: 16, of which the EPA estimates that approximately 1.6 will be subject to this proposed notification requirement annually.

Frequency of response: As needed for disaster recovery.

Total estimated burden: 2,230 hours per year for 40 CFR part 60, subpart CCCC, of which the EPA estimates approximately 3.7 hours are associated with this notification annually. Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: $1,530,000 (per year) for 40 CFR part 60, subpart CCCC, of which the EPA estimates that approximately $529 is associated with this notification annually.

This action proposes to amend the current requirements in 40 CFR part 60, subpart DDDD and 40 CFR part 62, subpart IIIa to allow owners and operators to temporarily combust debris associated with disaster recovery. As part of these proposed requirements, owners and operators would submit a notification to the Administrator whenever an incinerator is used to combust this type of debris for more than eight weeks. There would be no other changes to the notification, recordkeeping, and reporting required in these subparts. These notifications, reports, and records are essential in determining compliance with the applicable subpart.

Respondents/affected entities: Owners and operators of existing CISWI units.

Respondent's obligation to respond: Mandatory if temporary use exceeds eight weeks (40 CFR part 60, subpart DDDD, and 40 CFR part 62, subpart IIIa).

Estimated number of respondents: 76 for 40 CFR part 60, subpart DDDD and 40 CFR part 62, subpart IIIa, of which the EPA estimates that approximately 2.7 existing units will be subject to this proposed notification requirement annually.

Frequency of response: As needed for disaster recovery.

Total estimated burden: 8,510 hours per year for 40 CFR part 60, subpart DDDD and 40 CFR part 62, subpart IIIa, of which the EPA estimates approximately 6.2 burden hours are associated with this notification annually. Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: $13,500,000 (per year) for 40 CFR part 60, subpart DDDD and 40 CFR part 62, subpart IIIa, of which the EPA estimates that approximately $893 is associated with this notification annually.

An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR part 51 are listed in 40 CFR part 9. Submit your comments on the agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden to the EPA using the docket identified at the beginning of this rule. The EPA will respond to any ICR related comments in the final rule. You may also send your ICR-related comments to OMB's Office of Information and Regulatory using the interface at www.reginfo.gov/public/doPRAMain. Find this particular information collection by selecting “Currently under Review-Open for Public Comments” or by using the search function. OMB must receive comments no later than April 20, 2026.

I certify that these proposed actions will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, EPA concludes that the impact of concern for this rulemaking is any significant adverse economic impact on small entities, and that the agency is certifying that this rulemaking will not have a significant economic impact on a substantial number of small entities because the rule relieves regulatory burden on the small entities subject to the rule. This Consolidated ACI proposed action will impose monitoring, recordkeeping and reporting requirements that currently exist in the respective rules for OSWI, CISWI, LMWC and SMWC units. We only anticipate the additional costs of the initial notification requirements. The EPA has a provided a memo in the docket for this action titled, “Economic Impact and Small Business Analysis for the Consolidated Air Curtain Incinerators (ACI) and Temporary Use of Commercial Industrial Solid Waste Incinerators (CISWI) Proposed Rule.” For the CISWI Temporary Use Incinerator Actions, there are no additional control requirements and thereby no additional compliance costs. Therefore, we conclude that this action will relieve regulatory burden for all directly regulated small entities.

These proposed actions do not contain unfunded mandates of $100 million or more as described in the UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action imposes no enforceable duty on any State, local or Tribal governments or the private sector.

These proposed actions do not have federalism implications. The actions will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

These proposed do not have Tribal implications. It will neither impose substantial direct compliance costs on federally recognized Tribal governments, nor preempt Tribal law.

EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order.

The proposed actions are not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk. Since this action does not concern human health, EPA's Policy on Children's Health also does not apply.

These proposed are not “significant energy actions” because they are not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that this action is not likely to have adverse energy effects because it does not involve energy supply, distribution, or use of energy.

This notice of proposed rulemaking involves technical standards for ACI that only burn wood wastes, yard wastes, and clean lumber. Therefore, the EPA conducted searches through the Enhanced National Standards System Network Database managed by the American National Standards Institute (ANSI) to determine if there are voluntary consensus standards (VCS) that are relevant to this action. We conducted searches for EPA Method 9 of 40 CFR part 60, appendix A. During the search, if the title or abstract (if provided) of the VCS described technical sampling and analytical procedures that are similar to the EPA's reference method, the EPA considered it as a potential equivalent method. All potential standards were reviewed to determine the practicality of the VCS for these rules. This review requires significant method validation data which meet the requirements of EPA Method 301 for accepting alternative methods or scientific, engineering and policy equivalence to procedures in the EPA reference methods. The EPA may reconsider determinations of impracticality when additional information is available for particular VCS. ASTM D7520-16, Standard Test Method for Determining the Opacity of a Plume in the Outdoor Ambient Atmosphere, approved April 1, 2016, describes how digital imagery and associated hardware and software is used to determine the opacity of a plume. The EPA will allow the voluntary consensus standard ASTM D7520-16, as an acceptable alternative to EPA Method 9 with the following caveats:

1. During the digital camera opacity technique (DCOT) certification procedure outlined in section 9.2 of ASTM D7520-16, you (the operator of the regulated unit) or the DCOT vendor must present the plumes in front of various backgrounds of color and contrast representing conditions anticipated during field use such as blue sky, trees, and mixed backgrounds (clouds and a sparse tree stand).

2. You must also have standard operating procedures in place including daily or other frequency quality checks to ensure the equipment is within manufacturing specifications as outlined in Section 8.1 of ASTM D7520-16.

3. You must follow the recordkeeping procedures outlined in section 63.10(b)(1) for the DCOT certification, compliance report, data sheets, and all raw unaltered JPEGs used for opacity and certification determination.

4. You or the DCOT vendor must have a minimum of four (4) independent technology users apply the software to determine the visible opacity of the 300 certification plumes. For each set of 25 plumes, the user may not exceed 15 percent opacity of anyone reading and the average error must not exceed 7.5 percent opacity.5. Use of this approved alternative does not provide or imply a certification or validation of any vendor's hardware or software. The onus to maintain and verify the certification and training of the DCOT camera, software and operator in accordance with ASTM D7520-16 and these requirements is on the facility, DCOT operator, and DCOT vendor. This method is available at ASTM International, 1850 M Street NW, Suite 1030, Washington, DC 20036. See www.astm.org. The standard is available to everyone at a cost determined by ASTM. The cost of obtaining this method is not a significant financial burden, making the method reasonably available. Additional information for the VCS search and determinations can be found in the memorandum, Voluntary Consensus Standard Results for Consolidation of standards for air curtain incinerators that only burn wood wastes, yard wastes, and clean lumber, which is available in the docket for this action (Docket ID No. EPA-HQ-OAR-2025-0068).

Under 40 CFR 60.8(b) and 60.13(i) of subpart A of the General Provisions, a source may apply to the EPA to use alternative test methods or alternative monitoring requirements in place of any required testing methods, performance specifications or procedures in the final rule or any amendments.

Currently, there are four monetary thresholds that establish the nature and extent of CAS coverage: (i) the basic applicability threshold for CAS coverage, currently tied to the Truthful Cost or Pricing Data statute, which is currently $2.5 million as of October 1, 2025; (ii) the $7.5 million trigger contract threshold, which exempts contracts under this amount until a contractor receives at least one contract in excess of $7.5 million; (iii) the $50 million threshold for full CAS coverage (contracts below this threshold are subject to modified CAS coverage requiring compliance with just four of the current 19 standards); and (iv) the $50 million threshold for requiring a disclosure statement. The first two thresholds are statutory and require legislative action to change, while the latter two are regulatory and were established based on the Board's authority at 41 U.S.C. 1502(b)(2). The Board is proposing to raise the regulatory thresholds (see Section II), and proposing changes to the basic threshold as a result of Section 1806 of the 2026 National Defense Authorization Act (NDAA) (see Section III). The NPRM would also raise the CAS waiver authority threshold for executive agency heads from $15 to $100 million. This increase would implement changes made to 41 U.S.C. 1502 (b)(3) by Section 820 of the 2017 National Defense Authorization Act (see Section IV).

Lastly, the NPRM provides clarifications on applying CAS to indefinite delivery contracts (see Section V) after considering responses to a Staff Discussion Paper (SDP) issued on June 18, 2024 (89 FR 51491) to elicit public views on whether and how to amend its rules to address the application of CAS to indefinite delivery vehicles (IDVs). The SDP included discussion of six possible approaches for addressing CAS coverage to IDVs, and five principles to guide the evaluation of alternatives.

This proposed rule is issued by the Board in accordance with the requirements of 41 U.S.C. 1502.

In 1977, the Board established two levels of CAS compliance (full and modified) to partially address concerns that CAS creates a barrier to entry and the challenges of applying CAS to smaller government contractors, and to those contractors whose government business represents a small share of their total sales volume. The Board established a $10 million threshold for full CAS coverage based on a single award or cumulative CAS covered awards during the last period. Contractors subject to the newly created modified coverage were also largely exempted from filing disclosure statements.

In 1993, the Board raised the threshold to $25 million to adjust for inflation, and again in 2000 at the direction of Congress to the current thresholds of $50 million for full coverage and for filing disclosure statements. In addition, since 1992, a disclosure statement has not been required from a segment that has CAS covered contracts totaling less than $10 million and representing less than 30 percent of segment sales (CAS 9903-202-1(c)(ii)).

The Advisory Panel on Streamlining Acquisition Regulations established by Section 809 of the 2016 National Defense Authorization Act (809-Panel), recommended raising the thresholds for full CAS coverage and disclosure statement requirements to $100 million. They also recommended eliminating the condition for not requiring a disclosure statement from a segment that has CAS-covered contracts totaling less than $10 million and representing less than 30 percent of segment sales as it would no longer be necessary.

The Board conducted an analysis to assess the likely impact of raising these thresholds in terms of the number of entities and dollar amounts that would be covered at various threshold increases. The Board analyzed Federal Procurement Data System (FPDS) data for the five-year period covering Fiscal Years (FYs) 2020 through 2024. The data included all new definitive awards, and single award indefinite delivery contracts that included the CAS clause and excluded any contract awarded to a small business (as they already are exempt from CAS), or awarded using commercial procedures (as these generally would also be exempt). The Board has reasoned that the Unique Entity Identifier (UEI) represents a covered segment.

Based on analysis of the FPDS data, the Board estimates that raising the threshold for full coverage to $100 million would maintain nearly 99 percent of the dollars currently subject to full coverage today but remove nearly 30 percent of the entities. This would result in a substantial reduction of burden and lower the barrier to entry with a minimal loss in the total dollars currently subject to full coverage and disclosure statement requirements. Adjusting the $50 million thresholds based solely on inflation since 2000 would raise the threshold to $92 million today.

For these reasons, the Board is proposing to raise the thresholds for full CAS coverage and disclosure statement requirements to $100 million, and also proposing to eliminate the exemption at CAS 9903-202-1(c)(ii) which currently exempts a disclosure statement from a segment if during the most recently completed cost accounting period the segment's CAS-covered awards are less than 30 percent of total segment sales for the period and less than $10 million. As a result of the higher thresholds this exemption is no longer necessary. The Board seeks public comment on this proposal in this NPRM, and is interested in comments related to its assumption that each business segment has its own UEI. Specifically, the Board welcomes feedback on whether there any entities currently subject to disclosure statement requirements that are reporting as a segment without its own UEI, and if so, the specific circumstances that led to this determination and what UEI they use to bid on contracts.

The Board used the same data set discussed in Section II above, and conducted an analysis to assess the likely impact of raising the statutory CAS applicability thresholds in terms of the number of entities and dollar amounts that would be covered at various thresholds. The current threshold for CAS applicability is $2.5 million but with the caveat that the entity has at least one CAS covered contract valued at $7.5 million. The Board's analysis estimates that increasing the threshold to $35 million would reduce the number of CAS-covered business segments by approximately 60 percent, while still maintaining over 90 percent of the current dollars subject to CAS coverage.

OMB used the Board's analysis to develop a legislative proposal to decouple the basic CAS monetary threshold from the Truthful Cost or Pricing Data statute, and raise it to a stated dollar amount of $35 million. The proposal also eliminates the $7.5 million trigger contract threshold as it would no longer be necessary with a higher applicability threshold. The proposal was transmitted to Congress at the end of June for consideration in the 2026 NDAA. Section 1806 of the 2026 NDAA fully codified the OMB legislative proposal, and this rule proposes the changes to 9903.201-1 CAS applicability to implement these changes.

CAS 9903.201-5 provides that agency heads may waive CAS on their own for contracts valued up to $15 million without seeking approval from the Board but must notify the Board of the waiver. This proposed rule raises the CAS waiver authority threshold for executive agency heads to $100 million. This increase implements changes made to 41 U.S.C. 1502(b)(3) by Section 820 of the 2017 National Defense Authorization Act.

Indefinite delivery contracts (IDCs) are contracts where work is awarded through the placement of individual task and delivery orders as requirements arise, with a minimum guaranteed order value and a ceiling amount reflecting the maximum total value of orders that can be placed under the contract. They include the Federal Supply Schedules Program and government-wide acquisition contracts (GWACs), though obligations under the Schedules and GWACs are tracked separately from other task and delivery order contracts in FPDS.

Analysis of FPDS data shows the use of IDCs has continued to increase in both size and as a percentage of overall contract obligations. There have also been increases in the use of other indefinite delivery vehicles (IDVs), including blanket purchase agreements and basic ordering agreements. In FY 2024 obligations for orders against IDCs and other IDVs reached $467 billion which represented 60 percent of the total contract obligations. IDCs are the predominant form of IDVs used for ordering and represented 75 percent ($352 billion) of the $467 billion in obligations for orders against IDVs in FY 2024. Although there is a statutory preference to award IDCs to multiple contractors, they may also be awarded to a single contractor. The prevalence of obligations on orders against IDCs awarded to a single contractor has also increased reaching $262 billion in FY 2024, which represented over one-third of all contract obligations.

In formulating their recommendation, the 809-Panel appeared to focus exclusively on multiple award IDCs and noted some of the inherent challenges in determining CAS applicably at the IDC contract level. As the 809-Panel noted, for multiple award IDCs, the information needed to determine whether CAS applies—such as whether the order is competed and whether certified cost or pricing data is needed—is generally not available until the time a task or order is placed. In addition, the ceiling value for any individual holder of a multiple award IDC is highly speculative. The 809-Panel postulated that

The Board agrees with the 809-Panel assessment and recommendation in regards to multiple award IDCs, and is proposing to amend its rules to make clear that application of CAS applicability including all exemptions should be determined at the task or order level. CAS would apply only to those individual task or delivery orders whose values met the monetary threshold for CAS coverage and did not qualify for another CAS exemption.

However, the Board believes that the ceiling value is a more appropriate indicator of CAS applicability for single award IDCs than order value because it bears a significant relationship to the value of orders actually placed under the IDC.

The Board analyzed single award IDCs awarded in FY 2020 to compare the value of orders placed over the life or a substantial portion of the life of those IDCs against their ceiling value (base and all options). There were 369 new awards of IDCs to a single entity that included the CAS clause. Of these contracts, over 90 percent received orders above the statutory threshold for CAS of $2 million during the period, and over 75 percent received orders above the current $7.5 million trigger contracts. In addition, most of these IDCs received orders approaching their ceiling with nearly 65 percent reaching at least 90 percent of the original ceiling value. Because the government has an ongoing relationship with a single vendor for work performed within the scope of the IDC, the ceiling amount is an easy and clear way to determine if the threshold amount has been met. The Board noted that for IDCs valued at $35 million or more (the amount proposed by OMB for increase to the statutory threshold) 75 percent received orders of greater than $35 million.

The Board has also concluded that, unlike multiple award IDCs, the information required to determine CAS exemptions and consistently apply CAS to single award IDCs are available at the time of award of the IDC. For these reasons, the Board is proposing to add coverage on the application of CAS exemptions to IDCs to 9903.201-1 CAS applicability by adding the new paragraph 9903.201(c). The proposed rule is consistent with the criteria the Board identified for evaluating alternatives: it helps each contract party manage risk; it is expected to reduce regulatory burden and promote competition by minimizing complexity and providing guidance that is clear and straightforward. Having a clear and predictable rule will promote consistency in the application of CAS.

The Board received ten sets of comments from the public in response to the SDP. These comments came from companies, industry and professional associations, and individuals.

All commentors agreed with the need for the Board to provide clarity on applying CAS exemptions to IDCs. Nine of the comments supported the 809-Panel recommendation to determine applicability of CAS for all IDCs order by order, while one supported use of the minimum guaranteed amount for the IDC. None of the comments expressed concern about the criteria set by the Board for evaluating alternatives.

Comment: Commentors largely favored determining applicability based on the size of the order because they generally agreed with the 809-Panel conclusion that the maximum contract value bears little to no relationship to the cumulative value of orders.

Response: The Board's analysis of FPDS data shows that the ceiling value does bear a significant relationship to the value of orders actually placed under single award IDCs. The Board believes the proposed changes to raise the regulatory thresholds mitigates the minimal risk of a single award IDC being subject to full CAS coverage based on the maximum contract value and not receiving orders of a comparable value. The Board also noted that despite the statutory preference for multiple award IDCs, reliance on singe award IDCs has continued to grow. Single award IDCs increase the potential for vendor lock, reducing competition and creating cost risk to the government.

Comment: One commentor believes that the Board should make clear that any new rule on applying CAS exemptions to IDVs should be considered a required change in the implementation of the new regulations for CAS Administration purposes.

Response: The Board does not concur. The proposed rule does not change any standards. It only provides needed clarity on applying the CAS exemptions in 9903.201-1 to IDVs. This clarification does not require a contractor to change their cost accounting practices (9903.302) as the comment would suggest.

The proposed rule is expected to be deregulatory, reduce compliance cost and simplify CAS administration for existing contractors, and to reduce barriers to entry for nontraditional contractors, including new mid-size entities who no longer qualify for a full exemption from CAS as small businesses.

The proposed rule increases the basic CAS applicability threshold to $35 million to implement codification of OMB's legislative proposal discussed in Section III above. The decoupling of CAS from TIN, elimination of the trigger contract concept and establishment of a $35 million basic CAS applicability threshold simplifies the application of CAS while dramatically lowering barrier to entry for higher contract values. Higher contract values will attract additional private investment into the federal contracting marketplace and increase competition as a result of the increase point of entry without the need to establish more sophisticated compliance regimes required to comply with CAS requirements.

The proposed rule also would increase the thresholds for full CAS coverage and disclosure statement requirements from $50 million to $100 million. This action would significantly reduce compliance burden and lower barriers to entry into the federal marketplace. The Board analyzed FPDS data for the five-year period covering FYs 2020 through 2024 and estimates there have been 773 entities subject to full coverage and disclosure statement requirements with aggregate total contract values during the period of $1.22 trillion. Applying the proposed threshold increase of $100 million to the data set would reduce the number of entities to 564 while maintaining $1.21 trillion of the dollars. This represents a nearly 30 percent reduction in entities that would subject to all 19 of the current standards with a less than one percent loss of dollar coverage. The higher threshold for full coverage will also reduce barriers to entry for non-traditional contractors including contractors that have outgrown their small business size status and no longer qualify for a full exemption from CAS as small businesses as they may be more willing to compete for larger contracts only subject to modified coverage.

The proposed clarifications on when CAS applies to IDCs will avoid unnecessary ambiguity, friction and contract disputes. These changes will also lower barriers to entry into the federal marketplace as potential offerors will have clarity on whether or not they will be subject to CAS and, if covered, whether full or modified.

The changes addressed by this NPRM, both individually and in conjunction with the Board's ongoing broader CAS-GAAP conformance efforts are expected to simplify CAS administration and reduce barriers to entry for non-traditional contractors including new mid-size entities who no longer qualify as small businesses. These actions should increase competition in federal contracting, as envisioned by the Senate Armed Services Committee in promoting CAS-GAAP conformance (S. Rept. 114-25 Section 811), “The committee is concerned that the current cost accounting standards favor incumbent defense contractors and limit competition by serving as a barrier to participation by non-traditional, small business, and commercial contractors. To level the competitive playing field to access new sources of innovation it is in the government's interest to adopt more commercial ways of contracting, accounting, and oversight.”

The Board is interested in comments on the expected impact of this rule, including any quantified estimates on the cost reductions and savings expected to be achieved by the proposed changes.

CAS Board rules do not impact small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601-612. Contracts and subcontracts with small business concerns are exempted from all CAS requirements.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a significant regulatory action under E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is anticipated to be deregulatory action under E.O. 14192 based on the discussion in the “Expected Impact of the Rule” section.

The Paperwork Reduction Act, Public Law 96-511, does not apply to this proposed rule, because this rule imposes no paperwork burden on offerors, affected contractors and subcontractors, or members of the public which requires the approval of OMB under 44 U.S U.S.C. 3501, et seq.

For the reasons set forth in the preamble, the Office of Federal Procurement Policy proposes to amend chapter 99 of title 48 of the Code of Federal Regulations as set forth below:

Section 820 of the 2017 National Defense Authorization Act modified statutory responsibilities of the Board, codified at 41 U.S.C. 1501(c). These changes require the Board to conform CAS to GAAP, and minimize the burden on contractors while protecting the interests of the Government. This proposed rule is part of an ongoing series of Board actions to reduce the regulatory footprint of CAS for standards that are most suitable for potential conformance to GAAP, as identified in the Board's global roadmap published in March 2019 (84 FR 9143), because they focus primarily on cost measurement and assignment of costs to accounting periods, which is also addressed by GAAP. For additional recent discussion by the Board on the evolution of GAAP to address cost measurement and assignment of costs to accounting periods, see (90 FR 43994). This NPRM is issued by the Board in accordance with the requirements of 41 U.S.C. 1502.

Based on the Board's comparison of CAS 407 with pertinent GAAP content, other CAS Standards, and the Federal Acquisition Regulation (FAR), the Board has concluded that there is significant overlap and equivalent requirements. For the vast majority of requirements in CAS 407, comparable requirements exist in GAAP, CAS 401, CAS 418, the CASB Disclosure Statement, FAR 31.201-1 Composition of total cost, FAR 31.202 Direct costs, and FAR 31.205-26 Material costs. These comparable requirements protect the Government's interests and promote the uniformity and consistency that was the basis for promulgating CAS 407 more than 50 years ago, when comparable GAAP coverage did not exist. The Board has concluded that, for the vast majority of the requirements in CAS 407, the Government's interests are adequately protected by relying on disclosed GAAP practices that are consistently followed and subject to notice of changes and cost recovery pursuant to CAS 401—Consistency in estimating, accumulating, and reporting costs. Specifically, all contractors, whether subject to full or modified CAS coverage, are subject to CAS 401 and will continue to be required to consistently follow their disclosed or actual cost accounting practices. In addition, they will continue to be bound by the 9903.201-4 CAS contract clauses requiring disclosure and consistency in cost accounting practices regardless of whether a specific standard exists. These contract clauses implement the statutory requirements for disclosure of 41 U.S.C. 1502(f)(1), and protections from payment of increased costs as a result of changes to contractors' cost accounting practices provided by 41 U.S.C. 1502(f)(2).

As explained in greater detail below, the Board proposes to retain certain limited requirements ( i.e., CAS 407-30(a)(7), CAS 407-40(b), CAS 407-50(a)(4)(i) and (ii), CAS 407-50(d)(1) and (2), CAS 407-50(e), and CAS 407-60(b)). These requirements address standard costs and related variances at the production unit level that are not covered by GAAP. The Board proposes to move these requirements to CAS 418—Allocation of direct and indirect costs.

This proposal would be consistent with the Board's guiding principles for conforming CAS to GAAP because it would eliminate CAS content to minimize the burden on contractors while protecting the interests of the Government. Furthermore, the Board's conclusion to eliminate CAS 407 would align with the guiding principles to rely on coverage in GAAP when it would materially achieve uniformity and consistency in cost accounting without bias or prejudice to either party, rely on other CAS Standards which may protect the Government's interests, and eliminate CAS coverage when no longer necessary.

The Board has not identified any instance where the elimination of CAS 407, as contemplated, would result in a change to a contractor's disclosed cost accounting practices for government contracts. With the noted exceptions, the current CAS requirements are nearly identical to GAAP. The Board expects that contractors would continue to follow their existing practices as they are both compliant with CAS and GAAP. As such, having identified no cost accounting practice changes as a result of this proposed rule any current or future changes related to standard costing of direct material or labor and the treatment of variances would be considered unilateral as defined in 9903.201-6(b)(2).

CAS 407 was initially published April 1, 1974, at 39 FR 11869. The preamble for the original publication of CAS 407 stated that, “[w]ork preliminary to the development of this Cost Accounting Standard was initiated as the result of the recognition that practices concerning the use of standard costs for contract costing purposes have not been well defined in Government procurement regulations.” The preamble identified that, “. . . this standard provides needed criteria which the Board believes will improve cost measurement and will result in more equitable assignment of contract costs.” The purpose of CAS 407 is to provide criteria under which standard costs may be used for estimating, accumulating, and reporting costs of direct material and direct labor; and to provide criteria relating to the establishment of standards, accumulation of standard costs, and accumulation and disposition of variances from standard costs.

The CAS 407 standard has remained static since its initial promulgation, with the exception of being incorporated into the FAR (57 FR 14153, April 17, 1992) and having one of the illustrations corrected for a mathematical discrepancy (57 FR 34167, August 3, 1992). By contrast, GAAP has been revised significantly with additional content and changes in requirements since the original promulgation of CAS 407 in 1974. Additionally, the sophistication of accounting systems to accurately calculate, document, and support the utilization of standard costs has drastically changed since CAS 407 was first promulgated.

The Board performed a side-by-side comparison of CAS and GAAP requirements to identify any material differences. The Board assessed unique CAS requirements in order to determine whether they were necessary to protect the Government's interests or whether other existing requirements in CAS Standards or the FAR would adequately protect the interests of the Government.

The fundamental requirements of CAS 407 allow the use of standard costs for estimating, accumulating, and reporting costs of direct material and direct labor when: standard costs are entered into the books of account; standard costs and related variances are appropriately accounted for at the level of the production unit; and practices with respect to the setting and revising of standards, use of standard costs, and dispositions of variances are stated in writing and are consistently followed. GAAP states that, “standard costs are acceptable if adjusted at reasonable intervals to reflect current conditions so that at the balance-sheet date standard costs reasonably approximate such costs computed under one of the recognized bases” (ASC 330-10-30-12). While companies may elect to use a standard costing approach for operations, any variance between actual costs and standard costs would need to be absorbed to result in the reporting of actual costs in inventory, subject to the considerations in ASC 330-10-30-3 through 330-10-30-8. ASC 912-330-50-1 requires that a contractor disclose their accounting policies with respect to costs included in inventory.

In addition to the requirements in GAAP, the Board also evaluated other CAS Standards and FAR regulations. The Board identified that the CASB Disclosure Statement requires the disclosure of setting standards, revising standards, and disposing of variances related to standard costs. FAR 31.201-1(a), Composition of Total Cost also requires the adjustment of standard costs for applicable variances. For each of the fundamental requirements in CAS 407, with the exception of accounting for standard costs and variances at the level of the production unit, the Board identified that a comparable requirement exists in GAAP, other CAS Standards, or FAR that would protect the Government's interests and promote uniformity and consistency.

Based on the Board's research it concluded that GAAP does not define production unit. CAS 407-30 defines Production unit to mean a grouping of activities which either uses homogeneous inputs of direct material and direct labor or yields homogeneous outputs such that the costs or statistics related to these homogeneous inputs or outputs are appropriate as bases for allocating variances. This was in response to comments received and documented in the preambles:

The Board deliberated and concluded that the existing concept of the production unit in CAS 407 is required and therefore the definition at 407-30(a)(7), the fundamental requirement at 407-40(b), and the illustration at 407-60(b) should be retained.

The techniques for application of CAS 407 require the documentation of the criteria for setting and revising standards, details on calculating and allocating standard costs and the associated variances, and memorandum worksheet adjustments. GAAP directly addresses accounting policies with respect to inventory in ASC 912-330-50-1. GAAP requires that the contractor's basis of stating inventories be consistently applied and disclosed as well as disclosure of any change in valuation (ASC 330-10-35-20 and ASC 330-10-50-1). GAAP recognizes that practices vary in determining costs of inventory but ultimately requires consistency and disclosure (ASC 270-10-45-6.d and ASC 330-10-30-12). As discussed above, GAAP does not define production unit and therefore the techniques related to production units in CAS 407-50 do not have comparable GAAP requirements. On this basis, the Board concluded that CAS 407-50(a)(4)(i) and (ii), CAS 407-50(d)(1) and (2), and CAS 407-50(e) should be retained.

In addition to the requirements in GAAP, the Board also evaluated other CAS Standards and FAR regulations. The Board identified that the CASB Disclosure Statement requires disclosure of setting standards, revising standards, and disposing of variances related to standard costs. The CASB Disclosure Statement also includes the level of production unit to accumulate variances. CAS 402-50(e) states, “Any direct cost of minor dollar amount may be treated as an indirect cost for reasons of practicality where the accounting treatment for such cost is consistently applied to all final cost objectives, provided that such treatment produces results which are substantially the same as the results which would have been obtained if such cost had been treated as a direct cost.” This addresses the CAS 407 techniques related to immaterial variances and is also consistent with FAR 31.202(b) which states, “For reasons of practicality, the contractor may treat any direct cost of a minor dollar amount as an indirect cost if the accounting treatment (1) is consistently applied to all final cost objectives; and (2) produces substantially the same results as treating the cost as a direct cost.” The Board also evaluated the requirements in CAS 418—Allocation of direct and indirect costs and identified coverage in this Standard related to standard costs.

The proposed rule is deregulatory in furtherance of 41 U.S.C. 1501(c), which requires the Board ensure that the Cost Accounting Standards used by contractors rely, to the maximum extent practicable, on commercial standards and accounting practices and systems. In addition, 41 U.S.C. 1501(c) requires the Board to conform CAS requirements, where practicable, to GAAP. The proposed rule would eliminate 12 of the 16 individual requirements contained in CAS 407, retaining only the minimal content the Board has identified as needed to protect the Government's interest by moving it to another standard. This will eliminate the need for a separate CAS addressing standard costs for direct material and direct labor. The proposed rule would result in the removal of over 2,000 words of unnecessary regulatory text currently in place in this standard. Reliance on a contractor's disclosed GAAP practices for CAS purposes significantly reduces the regulatory footprint associated with CAS and places reliance on commercial accounting practices under GAAP consistent with 41 U.S.C. 1501(c). These changes, if finalized as proposed, are expected to reduce burden for contractors, external auditors, government auditors, and oversight functions by reducing duplicative compliance requirements.

These changes individually and in conjunction with the Board's ongoing broader CAS-GAAP conformance efforts and modernization of the CAS programmatic requirements are expected to simplify CAS administration and reduce barriers to entry for non-traditional contractors including new mid-size entities who no longer qualify as small businesses. These actions should increase competition in federal contracting, as envisioned by the Senate Armed Services Committee in promoting CAS-GAAP conformance (S. Rept. 114-25 Section 811), “The committee is concerned that the current cost accounting standards favor incumbent defense contractors and limit competition by serving as a barrier to participation by non-traditional, small business, and commercial contractors. To level the competitive playing field to access new sources of innovation it is in the government's interest to adopt more commercial ways of contracting, accounting, and oversight.”

The Board is interested in comments on the expected impact of this rule, including any quantified estimates on the cost reductions and savings expected to be achieved by the proposed elimination of CAS 407.

CAS Board rules do not impact small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601-612. Contracts and subcontracts with small business concerns are exempted from all CAS requirements.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action under section 3(f) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is anticipated to be a deregulatory action under E.O. 14192 based on the discussion in the “Expected Impact of the Rule” section.

The Paperwork Reduction Act, Public Law 96-511, does not apply to this proposed rule because this rule imposes no paperwork burden on offerors, affected contractors and subcontractors, or members of the public that requires the approval of OMB under 44 U.S.C. 3501, et seq.

For the reasons set forth in the preamble, the Office of Federal Procurement Policy proposes to amend chapter 99 of title 48 of the Code of Federal Regulations as set forth below:

Actual cost. See 9904.401-30.

Production unit. See 9904-418-30.

Labor cost at standard.

Labor-rate standard.

Labor-time standard.

Material cost at standard.

Material-price standard.

Material-quantity standard.

Standard cost.

Variance.