In FR Doc. 2026-07877, appearing on page 21713 in the Federal Register of April 23, 2026, the following corrections are made:

On January 7, 2026, the U.S. Department of Health and Human Services and U.S. Department of Agriculture (USDA) jointly released the Dietary Guidelines for Americans, 2025-2030   1 ( Dietary Guidelines ). The Dietary Guidelines state that “dairy is an excellent source of protein, healthy fats, vitamins, and minerals” and recommends including full-fat dairy as a part of a healthy diet. Specifically, the Scientific Foundation for the Dietary Guidelines highlight the importance of full-fat dairy to help children meet energy needs and support brain development during early and middle childhood. 2

Abbreviations 2014 Farm Bill The Agricultural Act of 2014 CFR Code of Federal Regulations FNS Food and Nutrition Service SBREFA Small Business Regulatory Enforcement Fairness Act SNAP Supplemental Nutrition Assistance Program RFA Regulatory Flexibility Act RIA Regulatory Impact Analysis UMRA Unfunded Mandates Reform Act U.S.C. United States Code USDA, the Department United States Department of Agriculture Executive Summary Purpose of the Regulatory Action

This rule finalizes the provisions of a proposed rule published on September 25, 2025 (90 FR 46081). With this final rule, the Department is amending 7 CFR 278.1 to codify a framework for determining distinct staple food varieties needed to meet retailer stocking requirements for SNAP participation. The updated framework emphasizes simplicity and consistency for retailer implementation as well as the importance of access to whole, real nutrient-dense foods for SNAP participants.

Upon the implementation date of this final rule, all of the provisions of the 2014 Farm Bill that increased the number of varieties, including perishable varieties that retailers must carry to become authorized to accept SNAP benefits, must be implemented and will be enforced. These provisions were first codified by the final rule, Enhancing Retailer Standards in the Supplemental Nutrition Assistance Program (SNAP) (81 FR 90675), published on December 15, 2016 (herein after referred to as the 2016 Final rule), though certain provisions of this rule have not been enforced due to annual appropriations language blocking implementation.

Additionally, this final rule updates and reorganizes definitions at 7 CFR 271 for greater clarity and to avoid redundancies and possible inconsistencies.

The final rule incorporates the following substantive changes to the proposed provisions:

* The descriptions of group 1 and group 2 distinct varieties will be revised for clarification, and some food products will be moved from group 2 to group 1 to align with those descriptions.

* A new group 3 will be created for distinct shelf-stable varieties and applicable varieties will move to this group from group 2. This new grouping is solely for clearer organizational purposes and does not involve the creation of new distinct varieties.

* The following distinct varieties will be moved from group 2 to group 1 as single-ingredient staple food varieties that are distinct from multi-ingredient products with the same main ingredient:

○ Shell eggs;

○ Perishable meat, poultry, or fish; and

○ Perishable liquid milk.

* Liquid milk will not be divided into distinct varieties by mammal;

* The following new distinct varieties will be added to group 2 as staple food varieties distinct from any other multi-ingredient products with same main ingredient:

○ Whole grain bread;

○ Whole grain pasta/noodles;

○ Shredded cheese; and

○ Sour cream.

* Breakfast cereals will be its own distinct variety and other breakfast foods will be classified as multi-ingredient foods based on their main ingredient.

* Butter and all jerky will be classified as accessory foods.

The 2014 Farm Bill amended the Food and Nutrition Act to increase the number of staple food varieties that certain SNAP authorized retail food stores must have available on a continuous basis in each of four staple food categories. The staple food breadth of stock standards increased from requiring a minimum of three (3) varieties to seven (7) varieties in each of the four (4) staple food categories and raised the number of varieties that must be perishable from one (1) variety in each of two (2) different staple food categories to one (1) variety in each of three (3) different staple food categories. Although these increased standards were codified in the 2016 final rule, section 765 of the Consolidated Appropriations Act of 2017 and provisions in subsequent appropriations acts have prohibited the Department from implementing, administering, or enforcing the retailer “Breadth of Stock” and “Variety” provisions of the 2016 final rule until the Department makes regulatory modifications to the definition of “variety” that would increase the number of food items that count as acceptable staple food varieties for purposes of SNAP retailer eligibility. This final rule will satisfy the conditions of the appropriations language and allow the SNAP retailer staple food breadth of stock standards in the 2014 Farm Bill to go into effect.

Many commenters expressed confusion about the differences between the proposed groups 1 and 2 in the regulatory text. Some commenters also incorrectly believed that multi-ingredient foods that were not specifically identified in the proposed regulatory text, such as canned soup, would not count as staple foods at all. To better define the differences between the groups in the regulatory text, the final rule breaks up and reorganizes the proposed subparagraph 7 CFR 278.1(b)(1)(ii)(C) into further subparagraphs and revises descriptive language. As a result, the final regulatory text now separates the default definition for determining distinct varieties from specially designated varieties listed under 7 CFR 278.1(b)(1)(ii)(D). Additionally, the final regulatory text includes a third group specifically for specially designated shelf-stable varieties and addresses plant-based alternatives under a separate subparagraph at 7 CFR 278.1(b)(ii)(E). Specific policy changes are discussed further below under section IV. Summary of Comments and Explanation of Revisions.

For all foods not specifically identified as specially designated varieties under 7 CFR 278.1(b)(ii)(D), the definition of a distinct variety at 7 CFR 278.1(b)(1)(ii)(C) in the final rule applies, including the definition for determining the variety of multi-ingredient products. For example, because there are no specially designated varieties identified for the fruit and vegetable staple food category, the default definition will apply to all fruits and vegetables. This means, for example, that fresh tomatoes, 100% tomato juice, a can of diced tomatoes, and a jar of pasta sauce with tomatoes as the main ingredient all count as one “tomato” variety.

The purpose of group 1 under 7 CFR 278.1(b)(1)(ii)(D)( 1 ), Single-ingredient varieties, is to identify specific single-ingredient foods that count as separate varieties from multi-ingredient food with the same main ingredient. The Department is defining single-ingredient foods as foods that contain no other ingredients, or in which the only other ingredients are fortifying vitamins. The following items that were proposed as distinct varieties under group 2 have been moved to group 1 in the final rule to more accurately reflect the Department's intention to count these items as separate varieties from multi-ingredient products when they do not have any other ingredients: eggs; perishable meat, poultry, or fish; and perishable liquid milk. This reorganization effectively means that several new varieties within group 1 have been created. For example, seasoned chicken breast is now a distinct variety from plain chicken breast because seasoned items are multi-ingredient products. Similarly, flavored or sweetened milk is now a distinct variety from non-flavored or non-sweetened milk. The Department has decided to make this change in the final rule for the sake of simplicity and consistency.

In contrast to group 1, the purpose of group 2 under 7 CFR 278.1(b)(1)(ii)(D)( 2 ), Derivative food product varieties, is to identify specific multi-ingredient food products that count as separate varieties from not only the single-ingredient items in group 1, but also from any other multi-ingredient products. No products that were identified in the proposed rule were moved into group 2. However, because cream is generally a perishable base ingredient that often contains other ingredients, such as milk, sodium, and/or stabilizers, it does not conform with the purposes of any of the groups. As a result, the Department is removing cream from group 2. Instead, cream will be classified as a separate variety from milk based on its main ingredient according to the default definition of variety. This change is solely for consistent organizational purposes and does not result in a substantive policy change from the proposed rule.

Group 3 was created in the final rule under 7 CFR 278.1(b)(1)(ii)(D)( 3 ), Shelf-stable varieties, to more clearly account for distinct shelf-stable varieties that may or may not be multi-ingredient products and, therefore, did not neatly fit in either group 1 or 2. For example, without this separate group, FNS would either need to look at the ingredients list for individual canned products to ensure they did not have any other ingredients under group 1, which is not operationally feasible, or count items, such as raw ground pork, as the same variety as potted meat with pork as the main ingredient, which was not the intent. The creation of group 3 does not result in any substantive policy changes from the proposed rule.

The Department received 231 comments on the proposed rule, including 65 copies associated with two different form letter campaigns, 112 other substantive comments, 50 other unique comments, one duplicate, and three non-germane submissions.

Overall, commenters expressed support for the proposed rule's stated goals of improving nutrition and expanding healthy choices for SNAP participants while improving regulatory clarity for participating retailers. Commentors specifically noted that the proposed changes have great potential to improve health by encouraging retailers to offer more whole foods rather than processed foods and to stock a wider range of fruits, vegetables, grains, dairy, and proteins, including plant-based and more culturally relevant foods. They also noted that the changes modernize and clarify staple food definitions, strengthen stocking standards, and align the regulatory expectations with Congressional intent to close loopholes that diminish program integrity by allowing retailers to meet minimum requirements by stocking low-nutrition items.

Several comments urged the Department to go even further by stipulating “healthy” standards for staple foods. For example, commenters suggested not counting foods that are high in added sugar, sodium, or saturated fat as staple foods, or requiring that retailers stock a certain percentage of “healthy” staple foods as a condition of SNAP authorization. Several commenters also suggested making accessory foods ineligible for purchase with SNAP benefits. Another commenter recommended the Department prohibit SNAP retailers from advertising certain unhealthy products in their stores, such as alcohol and sugary drinks. While the Department appreciates receiving these comments, such changes are outside of the scope of this rulemaking, which is to satisfy the conditions of the appropriations language to provide retailers with additional distinct varieties to better help them meet the increased breadth of stock retailer standards of the 2014 Farm Bill.

The main areas in which commenters expressed opposition were related to the inability of small-format retailers to meet the increased standards in the dairy and grains staple food categories, which they believed would lead to reduced SNAP household access to authorized stores and the creation of food deserts. Multiple commenters also emphasized the need for technical assistance to help smaller and rural retailers meet the new stocking requirements.

The Department has reviewed and considered all comments received. A discussion of the substantive concerns expressed by commenters and any related changes to the proposed provisions follows.

The Department received multiple comments about the importance of convenience stores, indicating that they offer convenient locations and hours, providing shoppers with options for fill-in shopping. Moreover, for people with limited mobility, rural communities, or Tribal communities, one nearby convenience store may be the only access point for buying food. The Department appreciates these comments and understands that the Congressionally mandated increase in the number of staple food varieties SNAP retailers must carry may render some currently authorized stores ineligible for continued SNAP participation or prevent other stores from becoming SNAP authorized. While one of the primary goals of the increased stocking standards is to make a greater variety of nutritious foods available to SNAP households, another related goal is to ensure all authorized retailers further the purpose of the program to raise the levels of nutrition among low-income households in order to better protect the overall integrity of the program. In Federal fiscal year 2024, 93 percent of all SNAP retailer sanctions FNS imposed were for violations at small format stores like convenience stores, small grocery stores, and stores whose primary business is not food sales. Convenience stores, specifically, accounted for nearly half (44 percent) of all SNAP retailers and 76 percent of all SNAP sanctions, but only five percent of SNAP redemptions. Such data indicates convenience stores, in general, represent a significant integrity risk and, at the same time, do not provide significant points of access for SNAP households to use their benefits. For small format stores that do provide significant points of access, offering more staple food varieties may help increase their SNAP customer business. Additionally, it was Congress' intent to make the stocking standards more rigorous so that unscrupulous retailers are not able to gain entry into SNAP for the sole purpose of defrauding the program (H.R. Rep No. 113-333, 2014). In a December 2018 report, SNAP: Actions Needed to Better Measure and Address Retailer Trafficking, the General Accountability Office (GAO) reiterated its 2006 finding that the minimal requirements for the amount of food that retailers must stock could allow retailers more likely to traffic SNAP benefits ( i.e., illegally exchanging SNAP benefits for cash or consideration other than eligible food) into the program.

With all these factors in mind, the Department believes that the final rule balances expanding nutritional choices for SNAP households and making compliance with the increased standards achievable for small retailers that are reputable and effective representatives of the program.

The Department also notes that the ability to make SNAP purchases online for food delivery provides many SNAP households in areas without convenient access to brick-and-mortar grocery stores alternative options for meeting their grocery needs. Further, given the limited retail food store options in low food access areas, the Department believes it is even more important that SNAP-authorized retailers in such areas carry a wide variety of staple foods rather than expecting SNAP households to rely on stores whose primary food sales business is accessory foods.

Approximately 100 commenters expressed concern that the Department did not provide sufficient flexibility in the dairy staple food category and recommended that the dairy products in group 2 be sub-divided into additional distinct varieties. Multiple advocacy groups, SNAP retailers, and trade associations expressed concern that small retailers, in particular, would not be able to comply with the proposed dairy stocking requirements, noting that refrigerated space is limited for perishable products. They stated that stocking additional products, which are mostly perishable, would lead to waste and higher operating costs. One commenter also indicated that they cannot reliably source milk from non-cow mammals, which have limited demand in convenience retail. Several commenters recommended the Department count full fat and reduced fat milk products as distinct varieties for milk, yogurt, and cheese. Some also asked for different types of cheese to count as distinct varieties, including counting spreadable cheese, soft cheese, and hard cheese as separate varieties. One industry group expressed the importance of providing SNAP households the ability to obtain dairy products in a form that meets their preference for taste, nutritional value, and convenience, indicating that cheese comes in variety of forms, including blocks, shreds, and shapes. Several industry groups and a food manufacturer also recommended that the Department count flavored milk or flavored dairy products as separate varieties. These commenters cited studies demonstrating that consuming flavored milk has similar health benefits to consuming unflavored milk.

While the proposed rule added several other dairy varieties that are not counted under current agency policy, the Department acknowledges that stocking a sufficient number of varieties in the dairy category represents the biggest challenge for small retailers. Therefore, the Department is adding shredded cheese, including grated, shaved, and crumbled cheese, as a separate variety from non-shredded cheese, and sour cream as a separate variety from any other product with cream as the main ingredient under group 2. While the Department understands that under this construct, shredded cheese may be the same kind of cheese as a separate non-shredded variety, the Department has chosen shredded cheese as a separate variety, as well as sour cream, to address small format retailer concerns with meeting the dairy stocking requirement in a way that aligns with common consumer purchasing habits while still ensuring that the varieties are easy to assess when determining retailer eligibility. The Department has chosen not to distinguish any dairy products by fat content because doing so would not further the objective of requiring SNAP retailers to stock not only a sufficient number of staples foods, but also a sufficient variety of staple foods. For example, allowing stores to meet the dairy staple food requirement by only stocking milk and yogurt or milk and cheese because each comes in a variety of fat contents would mean that SNAP households would have very limited choices. Individual households will generally want various types of dairy products, not multiple fat contents of milk, yogurt, or cheese. Also, by moving perishable liquid milk to group 1, multi-ingredient products with milk as the main ingredients become a separate variety. For example, flavored milk, such as chocolate milk, is now a separate dairy variety from plain milk. Given these new dairy varieties, and for the purpose of greater operational simplicity, the Department will no longer distinguish liquid milk by the mammal it comes from in the final rule. This change is in recognition of the very limited impact such a distinction has on the ability for small-format retailers to meet the dairy staple food requirement, adding no meaningful value.

Moving liquid perishable milk to group 1 and adding shredded cheese and sour cream as new varieties under group 2 create another three (3) possible dairy varieties in this final rule. Cream, while not separately listed in group 2, continues to be a separate main ingredient from milk. These changes, plus up to three distinct plant-based dairy alternative varieties that are each a substitute for a traditional dairy variety in either group 1 or 2, ensure that retailers have multiple pathways to compliance in the dairy staple food category. The corresponding changes have been made at 7 CFR 278.1(b)(1)(ii)(C)( 1 ) for cream, 7 CFR 278.1(b)(1)(ii)(C)( 2 )( i ) for clarification on flavoring, 7 CFR 278.1(b)(1)(ii)(D)( 1 ) for perishable liquid milk, and 7 CFR 278.1(b)(1)(ii)(D)( 2 ) for shredded cheese and sour cream.

The Department received many comments regarding the burden to small retailers of meeting the increased stocking requirements in the grain staple food category with the proposed varieties. SNAP retailers, trade associations, and an advocacy group wrote that stocking seven distinct grain varieties as defined in the proposed rule is not feasible for small convenience stores. Other commenters, including several trade associations and SNAP retailers, stated that small retailers do not stock items like raw grains and grain-based flour due to limited shelving capacity and lack of customer demand. One trade association highlighted that smaller retailers often stock items to meet the needs of their local, multicultural communities, and would not receive credit for this under the proposed rule's variety requirements.

Commenters recommended that the Department allow retailers to count more than one variety of bread in the grain category, arguing that the proposed rule grouped together breads with different forms, cultural significance, and customer preparation. They also argued that grouping together very different foods into a single “Breakfast Cereals/Foods” variety based on the assumption that these foods are eaten in the morning as part of the first meal of the day, contravenes common sense and Congressional intent since the foods have a wide variety of different main ingredients. Commenters also recommended counting all multi-ingredient grain-based food products as separate varieties based on their main ingredient. For example, commentors suggested rice cereal, oat cereal, and wheat cereal should count as three separate varieties. Finally, commenters recommended counting 100% whole grain and less than 100% whole grain products as distinct varieties.

The Department is convinced by the commenters' concerns about the need for more grain varieties and is creating additional grain varieties under group 2 in the final rule. Specifically, the Department is (1) counting whole grain bread as a separate variety from non-whole grain bread; (2) counting whole grain pasta/noodles as a separate variety from the non-whole grain pasta/noodles; and (3) counting breakfast cereals as a separate variety so that other breakfast products will count as separate multi-ingredient varieties based on their main ingredient. These changes provide additional varieties for some commonly stocked whole grain foods, giving retailers multiple pathways to compliance within the grain staple food category requirements without undue operational burden. The Department would also like to clarify that the designated grain products in group 2 count under the grain staple food category regardless of the main ingredient unless the main ingredient is an accessory food. For example, chickpea pasta counts as a “pasta/noodles” variety under the grain category even though chickpeas are not a grain and would otherwise count under the protein staple food category. Whole grain products do not need to be 100 percent whole grain; they may contain any amount of whole grain. The corresponding changes have been made at 7 CFR 278.1(b)(1)(ii)(D)( 2 ).

In general, the Department received comments in support of limiting the number of plant-based alternatives that may count towards the dairy category to three. Several commenters, including advocacy groups and a local government, expressed support for the limitation because it would encourage retailers to count both traditional dairy and plant-based dairy alternatives. Commenters also expressed support for including plant-based dairy alternatives to meet the needs of customers who cannot consume dairy. Other commenters expressed support for limiting plant-based alternatives to ensure that traditional dairy products are available to meet the nutritional needs of all customers, especially children. This provision is being finalized as proposed at 7 CFR 278.1(b)(1)(ii)(E).

The Department received multiple comments supporting the addition of snack bars, cheese and fruit spreads, and jerky to the accessory foods list, because these items are unlikely to contribute to a healthy diet and the change will help prevent retailers from meeting stocking requirements with less healthy snack foods. Two commenters also recommended categorizing butter as an accessory food alongside other cooking oils and fats that are classified as accessory foods under current policy.

Several advocacy groups expressed concern that excluding accessory foods from counting toward staple food stocking requirements would result in smaller retailers struggling to meet requirements and fewer SNAP-authorized retailers. Commenters recommended the Department work with retailers, States, and local partners to educate families about the need to eat a balanced diet instead of categorizing item as accessory foods. They also expressed concerns that the proposed changes do not acknowledge cultural diversity in purchasing, that the definition would limit the ability of retailers on college campuses to meet stocking rules, and disagreed with the Department's rationale for the requirements that stricter provisions would deter fraud.

Comments on excluding accessory foods from counting towards staple food stocking requirements reflect a fundamental misunderstanding of how the program currently operates. The Food and Nutrition Act already prohibits accessory foods from counting towards the retailer staple food stocking requirements. Other than the foods the Department proposed to add to the current accessory foods list established in guidance, retailers have long been required to meet the stocking requirements under current policy without counting those accessory foods. Also, commenters overwhelmingly agreed that the foods the Department proposed to categorize as accessory foods are not considered part of a balanced diet and the rule makes the accessory foods list clearer by being more comprehensive and consistent across all types of snack foods. Therefore, the Department is moving forward with codifying the existing accessory foods list and adding the additional food categories proposed.

Further, two commenters, including one health-related organization and one State office, specifically cited jerky as being an ultra-processed protein that is high in sodium and sometimes added sugar, whereas other staple foods in the protein category are high in protein without unhealthy additives. However, a trade association requested clarification on why whole-muscle meat jerky is being treated differently from other jerky. Upon further examination, the Department has determined that there is not a meaningful distinction between whole-muscle meat jerky and other jerky. Jerky, regardless of type and protein content, is not a nutrient-dense whole food product due to the high content of sodium, preservatives like nitrates and nitrites, and added sugars. Instead, jerky is considered a snack food because it is a relatively expensive on-the-go option, which is not suitable for daily consumption. Therefore, the final rule now classifies all types of jerky as accessory foods.

Finally, the Department agrees that counting butter as a staple food is not consistent with the definition of accessory foods or the inclusion of other cooking oils and fats in the accessory foods list, such as lard and vegetable oil. Even with the elimination of butter as a staple dairy variety, the other changes in this final rule still result in a net increase of two (2) distinct dairy varieties. This change will improve the clarity of the regulation and also eliminate a discrepancy in how plant-based dairy alternatives are treated since most non-dairy butters have an accessory food as their main ingredient. Therefore, the final rule now classifies butter as an accessory food. The corresponding changes have been made at 7 CFR 278.1(b)(7).

The Department reminds all stakeholders that while accessory foods are not factored into SNAP retailer eligibility determinations, SNAP households may still purchase accessory foods with SNAP benefits.

The Department proposed to codify the longstanding agency policy on the definition of prepared food. Commenters expressed support for clarifying that pre-cut fruits and vegetables intended for at-home consumption can count as staple foods in the fruits and vegetables category. This provision is being finalized with a slight change to the wording for clarification purposes only. By removing the second reference to “for immediate consumption” in the proposed language, the Department is making it clearer that the definition of prepared food is irrespective of whether the food is eaten on the premises of the store or carried out. The revision has been made at 7 CFR 271.2.

The Department reminds all interested parties that while cold and hot prepared foods are not factored into SNAP retailer eligibility determinations, SNAP households may still purchase cold prepared foods with SNAP benefits. Hot prepared foods remain ineligible for purchase with SNAP benefits.

The Department received four written responses on this rule from Tribal governments. One Tribal government expressed support for the intent of the rule to ensure that SNAP retailers stock a variety of healthy staple foods. All Tribal governments raised concerns about the unique procurement challenges that Tribal retailers face due to limited access to distribution networks, high transportation costs, and inconsistent supply chains. According to one Tribal government, “retailers in Tribal and rural communities face higher costs, higher spoilage rates, and limited customer bases for perishable items.” Three of the Tribal governments expressed concerns that the proposed rule would reduce the number of SNAP-authorized retailers in Tribal communities and limit access for food-insecure Tribal members.

Three respondents urged the Department to consider traditional foods and locally produced food as staple foods, such as bison, blue corn, wild rice, salmon, and chokecherries. The Department appreciates these comments and agrees that traditional foods should count as staple foods. The Department has long treated such foods as staple foods and the final rule continues to treat them as such, with the exception of jerky, as discussed under Accessory foods.

Tribal governments recommended that the Department develop Tribal-specific guidance and/or consider Tribal retailers for special authorization without meeting all the requirements of this rule. The Department appreciates these recommendations and will take them into consideration.

The Department received several comments from individuals, advocacy groups, a trade association, and a local government recommending that FNS provide technical assistance or clarify what technical assistance it will provide to help smaller and rural retailers meet the new stocking requirements. Multiple commenters offered specific suggestions on what the technical assistance should address or how it should be developed and presented.

As is standard practice with all regulatory changes impacting SNAP retailers, the Department will notify all currently authorized retailers about the new requirements and will review various resources for how best to present the information, including the resources suggested by commenters.

Several advocacy groups and an anonymous commenter recommended FNS establish a clear implementation timeline and allow adequate time for retailers to transition operations to comply with new requirements. Other commenters, including an individual, advocacy groups, and anonymous commenters, recommended FNS allow for a gradual, phased-in rollout of the proposed rule and compliance period for small retailers.

The Department understands that providing retailers with guidance and sufficient time to understand the new requirements, adjust their stocking plans, and make any required arrangements with distributors are important factors for ensuring smooth implementation of the new retailer staple food stocking standards without needlessly creating hardships for either retailers or SNAP households. At the same time, timely implementation is also important for providing SNAP households with access to a greater variety of staple foods and removing unscrupulous retailers.

After taking all of the above under consideration, the Department is providing retailers with six (6) months (180 days) to conform with these new stocking standards. Therefore, 180 days after this rule is published, new retailers or current SNAP retailers applying for authorization of a new store location will be assessed for compliance with the new stocking standards at authorization. Current SNAP retailer locations authorized under criterion A will be assessed for compliance with the new stocking standards at reauthorization, which generally occurs within five years from the date of authorization and every five years thereafter. However, since the Department may assess a retailer's eligibility for continued authorization at any time, as provided under current SNAP regulations at 7 CFR 278.1(j), all retailers are encouraged to make the necessary arrangements to come into compliance with the provisions of this final rule by the implementation date. Food items a retailer ordered or received up to 21 calendar days before the store visit will count towards meeting the stocking requirements as long as there is adequate documentation in accordance with SNAP regulations at 7 CFR 278.1(b)(1)(ii)(A).

Retailers who are denied authorization or reauthorization because they did not meet the staple foods stocking requirements will be required to wait six (6) months before applying for authorization again in accordance with SNAP regulations at 7 CFR 278.1(k)(2).

Under Executive Order 12866, as amended, agencies must assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, select regulatory approaches that maximize net benefits. The Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant as defined by Executive Order 12866 and, therefore, subject to OMB review.

This rule has been determined to be significant under section 3(f)(1) of Executive Order 12866 and was reviewed by OMB. The Regulatory Impact Analysis (RIA) for this rulemaking was published as part of the docket in Supporting Documents on www.regulations.gov. A summary of the RIA follows. This rule is considered an E.O. 14192 regulatory action.

Need for Action: In response to section 765 of the Consolidated Appropriation Act of 2017 and corresponding sections in subsequent enacted appropriations, the United States Department of Agriculture (the Department) Food and Nutrition Service (FNS) is revising the Supplemental Nutrition Assistance Program (SNAP) regulations at sections 271 and 278 to codify a new framework for determining distinct varieties of staple foods for purposes of assessing retail food store eligibility to participate in SNAP. The rulemaking is necessary to implement the enhanced stocking requirements of the Agricultural Act of 2014 (2014 Farm Bill), which increased the minimum number of varieties SNAP retail food stores must carry in each staple food category from three (3) to seven (7) as well as the minimum number of varieties that must be perishable from one variety in each of two (2) different staple food categories to one variety in each of three (3) different staple food categories. This rule will also update and codify the existing criteria for accessory foods (snacks, desserts, and foods meant to complement or supplement meals), which are not counted as staple foods for purposes of meeting the staple food stocking or sales requirements for SNAP retailer eligibility. This rule will primarily affect small SNAP-authorized retailers (convenience stores, small grocery stores, and combination stores) who are currently authorized under Criterion A.

Benefits: The rule will increase the variety of staple food products offered for sale at SNAP-authorized firms, which will help to ensure that SNAP households have access to healthier foods on a continuous basis.

Costs: The Department has estimated the rule's total cost to the Federal Government as approximately $4 million in fiscal year (FY) 2027, and to incur no further costs after implementation. The cost to currently authorized retailers is estimated to be approximately $77 million in the first year and about $1 to $2 million per year over the following four years.

Under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) (as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996; 5 U.S.C. 601 et seq. ), agencies must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities ( i.e., small businesses, small organizations, and small government jurisdictions). FNS believes the rule will not present a significant economic impact to a substantial number of small businesses. Although the number of stores impacted is large, we estimate that the cost to those small businesses of the changes in this rule would be nominal, on average about $407 in the first year and $482 over five years for those stores that need additional varieties to comply with this rule.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as a 'major rule', as defined by 5 U.S.C. 804(2).

This rule does not contain Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local and Tribal governments, or the private sector of $100 million or more in any one year. Thus, the rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have Tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

The proposed rule potentially had issues that required consultation, and FNS held a Tribal Consultation on the provisions of this rule on October 22, 2025. Tribal consulting officials expressed concerns that the proposed rule would reduce the number of SNAP-authorized retailers in Tribal communities and limit access for food-insecure Tribal members. The Department has considered these comments in the changes to provisions described above in the final rule that increase the number of varieties possible to meet staple stocking standards. The changes in the final rule do not rise to the level of requiring further consultation. If a Tribe requests further consultation, FNS will work with the Office of Tribal Relations to ensure meaningful consultation is provided.

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; 5 CFR 1320) requires the Office of Management and Budget (OMB) approve all collections of information by a Federal agency before they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number.

In accordance with the Paperwork Reduction Act of 1995, this rule contains information collections that are subject to review and approval by the Office of Management and Budget. The Department solicited public comments on the Notice of Proposed Rulemaking regarding changes in the information collection burden that would result from the finalization of changes in the rule as part of docket FNS-2025-0018, posted September 25, 2025 (90 FR 46081).

Title: SNAP—Store Applications.

OMB Control Number: 0584-0008.

Expiration Date: 4/30/2027.

Type of Request: Revision of a currently approved collection.

Abstract: This rule revises SNAP regulations to codify a new framework for determining distinct varieties of staple foods for purposes of assessing retail food store eligibility to participate in SNAP. To assist authorized retailers with the implementation of this rule, the Department intends to provide written notice to all authorized retailers outlining the changes to staple food stocking requirements. Additionally, the Department may consider new guidance for authorized retailers that further outlines these changes. Finally, the Department anticipates that currently authorized retailers may need to order additional stock to come into compliance with the regulations. These activities are considered one-time burden. There is no additional ongoing burden associated with this information collection. The Department intends to revise the currently approved information collection for SNAP—Store Applications (OMB Control Number 0584-0008, expiration 4/30/2027) to include the burden associated with these activities while seeking a three-year renewal for the OMB control number.

Commenters on the proposed rule noted that small retailers disproportionately face administrative burdens when navigating new rules, which are manageable for large stores but impose significant time costs on small operators. The Department has addressed these concerns by estimating separate burdens for large and small stores. The final rule adjusts the total burden estimate from 1,126,167.85 hours to 1,548,448.50 hours. The adjusted total burden hours reflects an increase from four (4) hours to eight (8) hours for small SNAP authorized stores and a decrease to half an hour for large SNAP authorized stores to review the notice and guidance and to update stock.

Respondents: Businesses, For Profit.

Estimated Number of Respondents: 269,217. As of April 30, 2025, there were 269, 217 SNAP-authorized retailers. Under this final rule, each authorized retailer would review the written notice of changes to SNAP staple food stocking requirements, review written guidance aligning with the rule, and make any changes to current stock, as necessary.

Estimated Number of Responses: 269,217. Each authorized retailer would be expected to review the written notice and guidance and update store stock, if necessary, one time.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: The estimated total one-time burden for authorized retailers reviewing the notice and guidance and updating stock is 1,548,448.50 hours.

Respondents: Business.

Estimated Number of Respondents: 269,217.

Estimated Number of Responses per Respondent: 1.46388229.

Estimated Number of Responses: 394,102.

Estimated Time per Response: 4.054149307.

Estimated Total Annual Burden on Respondents: 1,597,748.35.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2025-03-06, Amendment 39-22954 (90 FR 9595, February 14, 2025) (AD 2025-03-06); and AD 2025-17-07, Amendment 39-23117 (90 FR 41771, August 27, 2025) (AD 2025-17-07).

AD 2025-03-06 applied to certain Airbus SAS Model A318 and A320 series airplanes; Model A319-111, -112, -113, -114, -115, -131, -132, -133, -151N, -153N, and -171N airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, -232, -251N, -251NX, -252N, -252NX, -253N, -253NX, -271N, -271NX, -272N, and -272NX airplanes. AD 2025-03-06 required revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations (specified in Airbus A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2, Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 10, Issue 02, dated November 30, 2023). The FAA issued AD 2025-03-06 to address fatigue cracking, accidental damage, or corrosion in principal structural elements, which could result in reduced structural integrity of the airplane.

AD 2025-17-07 applied to certain Airbus SAS Model A318, A320, and A321 series airplanes; and Model A319-111, -112, -113, -114, -115, -131, -132, -133, -151N, -153N, and -171N airplanes. AD 2025-17-07 required revising the existing maintenance or inspection program, as applicable, to incorporate new airworthiness limitations (specified in Airbus A318/A319/A320/A321 ALS Part 2, Damage Tolerant Airworthiness Limitation Items (DT-ALI), Variation 10.3, dated August 7, 2024). The FAA issued AD 2025-17-07 to address fatigue cracking, accidental damage, or corrosion in principal structural elements, which could result in reduced structural integrity of the airplane.

The NPRM was published in the Federal Register on November 17, 2025 (90 FR 51218). The NPRM was prompted by EASA 2025-0030, dated February 10, 2025 (EASA AD 2025-0030) (also referred to as the MCAI), issued by EASA, which is the Technical Agent for the Member States of the European Union. The MCAI states new or more restrictive airworthiness limitations have been developed, as specified in Airbus A318/A319/A320/A321 ALS Part 2, Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 11, dated November 4, 2024.

In the NPRM, the FAA proposed to continue to require certain actions in AD 2025-03-06 and all actions in AD 2025-17-07, as specified in EASA 2025-0030. The FAA also proposed to require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations and add new airplane models. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2025-3989.

The FAA received comments from United Airlines who supported the NPRM without change.

The FAA received additional comments from Delta Air Lines (Delta) and the Citizens Rulemaking Alliance. The following presents the comments received on the NPRM and the FAA's response to each comment.

Delta requested the FAA revise paragraph (p) of the proposed AD to specify that AMOCs approved previously for AD 2025-03-06 are approved as AMOCs for the corresponding provisions of EASA AD 2025-0030 that would be required by paragraph (m) of the proposed AD. Delta stated that a modification incorporated under a certain supplemental type certificate prevents accomplishment of certain ALI inspections, but previously approved AMOCs provide an acceptable level of safety for those ALI inspections.

The FAA agrees and has added paragraph (p)(1)(ii) to this AD, accordingly.

The Citizens Rulemaking Alliance requested that the FAA either provide its justification for finding good cause to bypass notice and comment procedures, or convert this action to an NPRM and delay enforcement until the comment period is complete. The commenter asserted the FAA has not adequately justified use of the good cause exemption to bypass notice and comment and the 30-day delayed effective date.

The FAA notes the comment was submitted in response to an NPRM for which the FAA provided a 45-day comment period. This final rule is effective 35 days after its publication in the Federal Register . Therefore, no change to this AD is necessary.

The Citizens Rulemaking Alliance requested that the FAA make IBR material available and free to the public during the comment period.

The FAA clarifies that this AD incorporates by reference EASA AD 2025-0030, not the manufacturer service information referenced in that EASA AD. The FAA posted EASA AD 2025-0030 to the AD docket when the NPRM was published in the Federal Register . The FAA notes this AD also retains EASA AD 2024-0208, dated October 25, 2024 (for the actions retained from FAA AD 2025-17-07), and EASA AD 2024-0031, dated January 31, 2024; corrected February 1, 2024 (for the actions retained from FAA AD 2025-03-06), which were previously approved for incorporation by reference. That material is available under Docket No. FAA-2025-0748 and Docket No. FAA-2024-2145, respectively. The material referenced in EASA AD 2025-0030 may only be posted before the final rule's publication if it is already publicly available or if there is written consent from the owner of that material. Additionally, the FAA provided notice in the NPRM that the material referenced in EASA AD 2025-0030 will be available in the AD docket after this AD is published. The FAA did not change this AD as a result of this comment.

The Citizens Rulemaking Alliance requested that the FAA either provide the factual basis for its Regulatory Flexibility Act (RFA) certification that the AD will not have a significant economic impact on a substantial number of small entities, or prepare an initial regulatory flexibility analysis.

The FAA provides the following clarification. The RFA of 1980 (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) and the Small Business Jobs Act of 2010 (Pub. L. 111-240), requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

This AD will affect 23 domestic entities, of which 8 are small entities. The table below displays the industries of the small entities, their average annual revenue, and the AD's estimated cost burden relative to average annual revenue.

While the FAA has determined that this final AD affects a substantial number of small entities, the compliance cost of the AD relative to each small entity's annual revenue is minimal. The FAA estimates the total cost per affected entity to be $7,650 (90 work-hours × $85 per work-hour), which is 0.02% of the average small entity's annual revenue. Therefore, as provided in section 605(b), the FAA certifies this AD will not result in a significant economic impact on a substantial number of small entities. The FAA did not change this AD as a result of this comment.

The Citizens Rulemaking Alliance requested that the FAA reassess the estimated cost of the proposed AD and whether the action is “significant” under E.O. 12866. The Citizens Rulemaking Alliance also requested the FAA reopen the comment period for public input on the additional cost information. The commenter stated that the FAA should also provide the fleet size, per airplane labor and parts cost, any assumed downtime or out-of-service impacts, and aggregate costs.

In the Cost of Compliance section of the proposed AD, the FAA disclosed the number of airplanes affected on the U.S. registry, estimated number of work hours provided by the manufacturer, and the aggregate costs. The FAA did not disclose an estimated parts cost since this AD does not require any parts. Additionally, the FAA considered the impact that this AD will have on affected operators and determined this AD will not trigger any downtime costs because revising the existing maintenance or inspection program, as applicable, is an administrative action that can be performed without impacting operations. Since the FAA has assessed and disclosed the total known costs of the AD requirements in the Costs of Compliance section of the proposed AD, and the commenter did not provide additional cost data for the FAA to consider in its cost analysis, it is not necessary to reopen the comment period or provide additional information in the AD docket. Based upon the analysis provided throughout the proposed AD and in the previous comment response, the FAA certifies that this AD is not a “significant regulatory action” under Executive Order 12866. The FAA did not change this AD as a result of this comment.

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

The FAA reviewed EASA AD EASA AD 2025-0030, which specifies new or more restrictive airworthiness limitations for airplane structures and safe life limits.

This AD also requires EASA AD 2024-0208, which the Director of the Federal Register approved for incorporation by reference as of October 1, 2025 (90 FR 41771, August 27, 2025).

This AD also requires EASA AD 2024-0031, which the Director of the Federal Register approved for incorporation by reference as of March 21, 2025 (90 FR 9595, February 14, 2025).

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

The FAA estimates that this AD affects 1,900 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the total cost per operator for the retained actions from AD 2025-03-06 to be $7,650 (90 work-hours × $85 per work-hour).

The FAA estimates the total cost per operator for the retained actions from AD 2025-17-07 to be $7,650 (90 work-hours × $85 per work-hour).

The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the FAA estimates the average total cost per operator for the new actions to be $7,650 (90 work-hours × $85 per work-hour).

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

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

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

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

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

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

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

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

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain GALP Model Gulfstream G280 airplanes. The NPRM was published in the Federal Register on January 7, 2026 (91 FR 457). The NPRM was prompted by AD ISR I-27-2025-03-06 R1, dated August 28, 2025 (CAAI AD ISR I-27-2025-03-06 R1) (also referred to as the MCAI), issued by CAAI, which is the aviation authority for Israel. The MCAI states that several reports of empennage flight control related CAS messages have been attributed to the accumulation of water in electrical connectors located in the aft fuselage directly below the empennage. The unsafe condition, if not addressed, could, in combination with various specific failures or scenarios, result in loss of controllability of the airplane.

In the NPRM, the FAA proposed to require retrofitting the flight controls empennage electrical harness. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2025-5404.

The FAA received no comments on the NPRM or on the determination of the cost to the public.

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

CAAI AD ISR I-27-2025-03-06 R1 specifies procedures for retrofitting the flight controls empennage electrical harness by replacing the backshells of electrical connectors at the vertical tail compartment.

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

The FAA estimates that this AD affects 140 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

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

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments using a method listed under the ADDRESSES section. Include “Docket No. FAA-2026-3871; Project Identifier MCAI-2026-00247-T” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Taylor Stanley, Aviation Safety Engineer, FAA, 2200 South 216th St., Des Moines, WA 98198; phone: 407-852-7677; email: Taylor.Stanley@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2026-0055R1, dated April 14, 2026 (EASA AD 2026-0055R1) (also referred to as the MCAI), to correct an unsafe condition for certain Airbus SAS Model A319-153N airplanes; Model A320-251N, -252N, and -271N airplanes; and Model A321-251NX, -252NX, -271NX and -272NX airplanes. The MCAI states that an Airbus supplier identified a quality issue in production, resulting in potential deviations from the specified thickness of various fuselage panels delivered to Airbus. The potential for certain forward fuselage panels to have deviations from the specified thickness, in combination with certain repairs, can affect the structural integrity of the airplane.

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

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2026-3871.

EASA AD 2026-0055R1 specifies procedures for doing a “local thickness mapping” if the maintenance history verification determines a “CAT C/temporary repair” was done, contacting Airbus to report the repair status and any finding of that mapping and for additional instructions, and doing applicable additional instructions. EASA AD 2026-0055R1 also specifies procedures, for certain airplanes, for a GVI of certain forward fuselage section S12 panels for cracking and other damage (including panel failure or irregularity), a full panel thickness measurement, and applicable corrective actions ( i.e., contacting the manufacturer for repair instructions and doing the repair). EASA AD 2026-0055R1 also specifies, for all airplanes, a dispatch restriction from using certain MMEL items, and a prohibition to use certain SRM tasks.

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

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

This AD requires accomplishing the actions specified in EASA AD 2026-0055R1 described previously, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, EASA AD 2026-0055R1 is incorporated by reference in this AD. This AD requires compliance with EASA AD 2026-0055R1 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this AD. Using common terms that are the same as the heading of a particular section in EASA AD 2026-0055R1 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2026-0055R1. Material required by EASA AD 2026-0055R1 for compliance will be available at regulations.gov under Docket No. FAA-2026-3871 after this AD is published.

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

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies forgoing notice and comment prior to adoption of this rule because the potential for certain forward fuselage panels to have deviations from the specified thickness, in combination with certain repairs, can affect the structural integrity of the airplane. Additionally, the compliance time in this AD is shorter than the time necessary for the public to comment and for publication of the final rule. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b).

In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forgo notice and comment.

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

The FAA estimates that this AD affects 24 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

The FAA invites you to send any written data, views, or arguments about this final rule. Send your comments using a method listed under the ADDRESSES section. Include “Docket No. FAA-2026-3877; Project Identifier MCAI-2026-00437-T” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Gabriel Kim, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 516-228-7343; email: Gabriel.D.Kim@faa.gov. Any commentary that the FAA receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued Emergency AD 2026-08-52, dated April 20, 2026 (the emergency AD), to address an unsafe condition on all Embraer S.A. Model EMB-545 and EMB-550 airplanes. The FAA sent the emergency AD to all known U.S. owners and operators of these airplanes. The emergency AD requires an operational check of the pitch trim actuator of the horizontal stabilizer, an option to do a pitch trim verification, and applicable on-condition actions.

The emergency AD was prompted by ANAC Emergency AD 2026-04-02, effective April 20, 2026 (ANAC Emergency AD 2026-04-02) (also referred to as the MCAI), issued by ANAC, which is the aviation authority for Brazil, to correct an unsafe condition on all Embraer S.A. Model EMB-545 and EMB-550 airplanes. The MCAI states there have been reports of failures on one load path of the pitch trim actuator of the airplane horizontal stabilizer, during the accomplishment of the scheduled maintenance task: operational check of pitch trim actuator irreversibility. This failure increases the risk of failure on both load paths of the pitch trim actuator, and may leave the airplane horizontal stabilizer free to move according to aerodynamic loads, which may result in loss of control of the airplane. The FAA is issuing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2026-3877.

ANAC Emergency AD 2026-04-02 specifies procedures for an operational check of the pitch trim actuator of the horizontal stabilizer, an option to do a pitch trim verification, and applicable on-condition actions. The on-condition actions include replacing the pitch trim actuator if the operational check fails ( i.e., either the TEST STATUS field is TEST FAILED after five minutes, or the TEST STATUS field is TEST ABORTED after repeating the operational check five times) or if the pitch trim verification fails, and performing an operational check on the replaced pitch trim actuator. ANAC Emergency AD 2026-04-02 also specifies reporting the data from the operational check and pitch trim verification.

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

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

This AD requires accomplishing the actions specified in ANAC Emergency AD 2026-04-02 described previously, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, ANAC Emergency AD 2026-04-02 is incorporated by reference in this AD. This AD requires compliance with ANAC Emergency AD 2026-04-02 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this AD. Material required by ANAC Emergency AD 2026-04-02 for compliance will be available at regulations.gov under Docket No. FAA-2026-3877 after this AD is published.

The FAA considers that this AD is an interim action. The inspection reports required by this AD would enable the manufacturer to obtain better insight into the nature, cause, and extent of the unsafe condition and eventually to develop final action to address the unsafe condition. Once final action has been identified, the FAA might consider further rulemaking.

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

An unsafe condition exists that required the immediate adoption of Emergency AD 2026-08-52 issued on April 20, 2026, to all known U.S. owners and operators of these airplanes. The FAA found that the risk to the flying public justified forgoing notice and comment prior to adoption of this rule because of reports of in-service pitch trim actuator failures on one load path, which, if not addressed, could increase the risk of losing both load paths of the pitch trim actuator, potentially allowing the horizontal stabilizer to move freely under aerodynamic loads and could result in loss of control of the airplane. Additionally, the compliance time in this AD is shorter than the time necessary for the public to comment and for publication of the final rule. These conditions still exist, therefore, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b).

In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons the FAA found good cause to forgo notice and comment.

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

The FAA estimates that this AD affects 294 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

The FAA published an NPRM for Docket No. FAA-2026-0901 in the Federal Register (91 FR 10013; March 2, 2026), proposing to amend Class E airspace above Honesdale, PA. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. One comment was received. The commenter inquired as to the future disposition of the airspace. With this final rule, the area of Class E airspace that was associated with the former Honesdale Sports Complex Heliport is removed and will revert to uncontrolled airspace. The Class E airspace surrounding Cherry Ridge Airport (also associated with Honesdale, PA) is unaffected.

Class E airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the latest version of that order, FAA Order JO 7400.11K, dated August 4, 2025, and effective September 15, 2025. These amendments will be published in the next update to FAA Order JO 7400.11. FAA Order JO 7400.11K, which lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points, is publicly available as listed in the ADDRESSES section of this document.

This action amends 14 CFR part 71 by modifying Class E airspace over Honesdale, PA. The portion of the Class E airspace associated with the Honesdale Sports Complex Heliport is being removed due to the heliport being abandoned and associated instrument approach procedures being canceled.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Order 2100.6B, “Rulemaking and Guidance Procedure” (March 10, 2025); and (3) is expected to result in, at most, de minimis costs. Since these amendments are routine and the expected impact to operators is de minimis, the FAA certifies that this proposed rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1G, “FAA National Environmental Policy Act Implementing Procedures” paragraph B-2.5(a). This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant the preparation of an environmental assessment.

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

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

The FAA published an NPRM for Docket No. FAA-2025-5244 in the Federal Register (90 FR 57173; December 10, 2025), proposing to amend Very High Frequency Omnidirectional Range (VOR) Federal Airways V-14, V-192, V-210, and V-221 in the vicinity of Pullman, MI. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

After publication of the NPRM for this airspace action, the FAA determined that the amendments listed in this docket for V-55 have already been accomplished in a previous rulemaking action. See 90 FR 42531 (Sept. 3, 2025), as corrected by 90 FR 51097 (Nov. 17, 2025). Because the necessary amendments have already been implemented, the amendments to V-55 proposed in the NPRM for this docket are not included in this final rule. The FAA finds good cause that recirculating the NPRM for further notice and comment is unnecessary. The public was provided notice and an opportunity to comment as part of the separate rulemaking process that already implemented the amendments to V-55.

Jet Routes are published in paragraph 2004 and VOR Federal Airways are published in paragraph 6010 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11K, dated August 4, 2025, and effective September 15, 2025. These amendments will be published in the next update to FAA Order JO 7400.11. FAA Order JO 7400.11K, which lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points, is publicly available as listed in the ADDRESSES section of this document.

The FAA is amending 14 CFR part 71 by modifying Jet Routes J-70 and J-94 and VOR Federal Airways V-30, V-84, V-170, and V-274 and revoking Jet Routes J-547 and J-548 in the vicinity of Pullman, MI.

J-70: Prior to this amendment, J-70 extended between the Hoquiam, WA, VOR/VORTAC and the Kennedy, NY, VOR/DME. A portion of J-70, between the Badger, WI, VOR/DME and the Salem, MI, VORTAC will become unusable with the decommissioning of the Pullman, MI, VOR. As amended, J-70 now extends between the Hoquiam VORTAC and the Badger, WI, VOR/DME and between the Salem, MI, VORTAC and the Kennedy VOR/DME.

J-94: Prior to this amendment, J-94 extended between the Mustang, NV, VORTAC and the O'Neill, NE, VORTAC and between the Dubuque, IA, VORTAC and the Flint, MI, VORTAC. A portion of J-94, between the Northbrook, IL, VOR/DME and the Flint VORTAC will become unusable with the decommissioning of the Pullman, MI, VOR. Additionally, the FAA is revoking the portion between the Dubuque VORTAC and the Northbrook VOR/DME as this portion is overlaid by J-82, J-84, J-94, J-100, and J-128. As amended, J-94 extends between the Mustang VORTAC and the O'Neill, NE, VORTAC.

J-547: Prior to this amendment, J-547 extended between the Northbrook, IL, VOR/DME and the Flint, MI, VORTAC. The entire route will become unusable with the decommissioning of the Pullman, MI, VORTAC. Due to this, the FAA is revoking J-547 in its entirety.

J-548: Prior to this amendment, J-548 extended between the Pullman, MI, VOR/DME and the Traverse City, MI, VOR/DME. The entire route will become unusable with the decommissioning of the Pullman VOR. Due to this, the FAA is revoking J-548 in its entirety.

V-30: Prior to this amendment, V-30 extended between the Badger, WI, VOR/DME and the Pullman, MI, VOR/DME and between the Philipsburg, PA, VORTAC and the Solberg, NJ, VOR/DME. A portion of V-30, between the Badger VOR/DME and the Pullman VOR/DME will become unusable with the decommissioning of the Pullman VOR. The FAA is revoking the affected portion. As amended, V-30 extends between the Philipsburg VORTAC and the Solberg VOR/DME.

V-84: Prior to this amendment, V-84 extended between the Northbrook, IL, VOR/DME and the Pullman, MI, VOR/DME and between Geneseo, NY, VOR/DME and the Syracuse, NY, VORTAC. A portion of V-84, between the Northbrook, IL, VOR/DME and the Pullman, MI, VOR/DME will become unusable with the decommissioning of the Pullman VOR. The FAA is revoking the affected portion. As amended, V-84 extends between the Geneseo VOR/DME and the Syracuse VORTAC.

V-170: Prior to this amendment, V-170 extended between the Jamestown, ND, VOR/DME and the Sioux Falls, SD, VORTAC, between the Rochester, MN, VOR/DME and the Salem, MI, VORTAC and between the Slate Run, PA, VORTAC and the INT Andrews, MD, VORTAC 060° and Baltimore, MD, VORTAC 165° radials (POLLA, MD, Fix). A portion of V-170, between the Badger, WI, VOR/DME and the Salem VORTAC will become unusable with the decommissioning of the Pullman VOR. The FAA is revoking the affected portion. As amended, V-170 extends between the Jamestown VOR/DME and the Badger VOR/DME and between the Slate Run VORTAC and the INT Andrews VORTAC 060° and Baltimore VORTAC 165° radials. The airspace within R-5802 is excluded when active.

V-274: Prior to this amendment, V-274 currently extends between the Pullman, MI, VOR/DME and the Saginaw, MI, VOR/DME. A portion of V-274, between the Pullman VOR/DME and the Victory, MI, VOR/DME will become unusable with the decommissioning of the Pullman VOR. The FAA is proposing to revoke the affected portion. As amended, V-274 would extend between the Victory VOR/DME and the Saginaw VOR/DME.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Order 2100.6B, “Rulemaking and Guidance Procedure” (March 10, 2025); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action of amending Jet Routes J-70 and J-94 and VOR Federal Airways V-30, V-84, V-170, and V-274; and revoking Jet Routes J-547 and J-548 qualifies for categorical exclusion under the National Environmental Policy Act (42 U.S.C. 4321, et seq. ) and in accordance with FAA Order 1050.1G, FAA National Environmental Policy Act Implementing Procedures, paragraph B-2.5(a) which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points); and paragraph B-2.5(b) which categorically excludes from further environmental impact review, actions regarding establishment of jet routes and Federal airways (see 14 CFR 71.15, Designation of jet routes and VOR Federal airways). As such, this action is not expected to result in any potentially significant environmental impacts. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

On February 2, 2026, the “25-Hour Cockpit Voice Recorder (CVR) Requirement, New Aircraft Production” final rule (RIN 2120-AL92) was published in the Federal Register at 91 FR 4447. That final rule amended the recording time of cockpit voice recorders (CVRs) from the previously mandated 2 hours to 25 hours for all affected future manufactured aircraft. After publication, FAA discovered §§ 91.609, 125.227 and 135.151 contained the following typographical, grammatical, and formatting errors.

• In § 91.609(i)(2)(i)(B), the text should read “type-certificated with” instead of “type-certificated for.”

• In § 91.609(i)(2)(i)(C), the text should read “59,524 pounds or less.” rather than “59,524 pounds or less; or.”

• In § 125.227(h)(2)(i)(B), the text should read “more and type-certificated with” instead of “more type-certificated for.”

• In § 135.151(g)(1)(iii)(A), paragraphs (a), (b), and (c) were incorrectly designated and should have been designated as § 135.151(g)(1)(iii)(A)( 1 ), ( 2 ), and ( 3 ).

• In § 135.151(g)(1)(iii)(A)(b), herein corrected as ( 2 ), the text should read “more and type-certificated with” instead of “more or type-certificated for.”

• In § 135.151(g)(1)(iii)(A)(c), herein corrected as ( 3 ), the text should read “59,524 pounds or less.” instead of “59,524 pounds or less; or.”

• Due to the incorrect designations in § 135.151(g)(1)(iii)(A), § 135.151(g)(1)(iii)(B) cross-referenced the incorrectly designated subsections. As such, in § 135.151(g)(1)(iii)(B) the text should read “requirements found in (g)(1)(iii)(A)( 1 ), (g)(1)(iii)(A)( 2 ), and (g)(1)(iii)(A)( 3 ).”

• In § 135.151(g)(2)(iii)(A), paragraphs (a), (b), and (c) were incorrectly designated and should have been designated as § 135.151(g)(2)(iii)(A)( 1 ), ( 2 ), and ( 3 ).

• In § 135.151(g)(2)(iii)(A)(b), herein corrected as ( 2 ), the text should read “or more and type-certificated with” instead of “or more with.”

• Due to the incorrect designations in § 135.151(g)(2)(iii)(A), § 135.151(g)(2)(iii)(B) cross-referenced the incorrectly designated subsections. As such, in § 135.151(g)(2)(iii)(B) the text should read “requirements found in (g)(2)(iii)(A)( 1 ), (g)(2)(iii)(A)( 2 ), and (g)(2)(iii)(A)( 3 ).”

This document corrects these various issues contained in the regulatory text.

Accordingly, 14 CFR part 91, Part 125, and Part 135 are corrected by making the following correcting amendments:

Upon request, FDA (the Agency or we) has classified the external condom for anal intercourse or vaginal intercourse into class II (special controls), which we have determined will provide a reasonable assurance of safety and effectiveness of the device. In addition, we believe this action will enhance patients' access to beneficial innovation, in part by reducing regulatory burdens by placing the device into a lower device class than the automatic class III assignment.

The automatic assignment of class III occurs by operation of law and without any action by FDA, regardless of the level of risk posed by the new device. Any device that was not in commercial distribution before May 28, 1976, is automatically classified into, and remains within, class III and requires premarket approval unless and until FDA takes an action to classify or reclassify the device (21 U.S.C. 360c(f)(1)). We refer to these devices as “postamendments devices” because they were not in commercial distribution prior to the date of enactment of the Medical Device Amendments of 1976, which amended the Federal Food, Drug, and Cosmetic Act (FD&C Act).

FDA may take a variety of actions in appropriate circumstances to classify or reclassify a device into class I or II. We may issue an order finding a new device to be substantially equivalent under section 513(i) of the FD&C Act (21 U.S.C. 360c(i)) to a predicate device that does not require premarket approval. We determine whether a new device is substantially equivalent to a predicate device by means of the procedures for premarket notification under section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 (21 CFR part 807).

FDA may also classify a device through “De Novo” classification, a common name for the process authorized under section 513(f)(2) of the FD&C Act (see also part 860, subpart D (21 CFR part 860, subpart D)). Section 207 of the Food and Drug Administration Modernization Act of 1997 (Pub. L. 105-115) established the first procedure for De Novo classification. Section 607 of the Food and Drug Administration Safety and Innovation Act (Pub. L. 112-144) modified the De Novo classification process by adding a second procedure. A device sponsor may utilize either procedure for De Novo classification.

Under the first procedure, the person submits a premarket notification (510(k)) for a device that has not previously been classified. After receiving an order from FDA classifying the device into class III under section 513(f)(1) of the FD&C Act, the person then requests a classification under section 513(f)(2).

Under the second procedure, rather than first submitting a 510(k) and then a request for classification, if the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence, that person requests a classification under section 513(f)(2) of the FD&C Act.

Under either procedure for De Novo classification, FDA is required to classify the device by written order within 120 days. The classification will be according to the criteria under section 513(a)(1) of the FD&C Act. Although the device was automatically placed within class III, the De Novo classification is considered to be the initial classification of the device.

We believe this De Novo classification will enhance patients' access to beneficial innovation, in part by reducing regulatory burdens. When FDA classifies a device into class I or II via the De Novo process, the device can serve as a predicate for future devices of that type, including for 510(k)s (see section 513(f)(2)(B)(i) of the FD&C Act). As a result, other device sponsors do not have to submit a De Novo request or premarket approval application to market a substantially equivalent device (see section 513(i) of the FD&C Act, defining “substantial equivalence”). Instead, sponsors can use the less burdensome 510(k) process, when necessary, to market their device.

On December 9, 2021, FDA received Global Protection Corp.'s request for De Novo classification of the ONE Male Condom. FDA reviewed the request in order to classify the device under the criteria for classification set forth in section 513(a)(1) of the FD&C Act.

We classify devices into class II if general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness of the device, but there is sufficient information to establish special controls that, in combination with the general controls, provide reasonable assurance of the safety and effectiveness of the device for its intended use (see section 513(a)(1)(B) of the FD&C Act). After review of the information submitted in the request, we determined that the device can be classified into class II with the establishment of special controls. FDA has determined that these special controls, in addition to the general controls, will provide reasonable assurance of the safety and effectiveness of the device.

Therefore, on February 23, 2022, FDA issued an order to the requester classifying the device into class II. In this final order, FDA is codifying the classification of the device by adding 21 CFR 884.5305. 1 We have named the generic type of device “external condom for anal intercourse or vaginal intercourse,” and it is identified as a barrier device which covers the penis and is used to prevent the transmission of sexually transmitted infections (when used for anal intercourse or vaginal intercourse) and for contraception (when used for vaginal intercourse). This classification does not include condoms intended for vaginal intercourse only.

FDA has identified the risks to health associated with this type of device and the measures required to mitigate these risks in table 1.

FDA has determined that special controls, in combination with the general controls, address these risks to health and provide reasonable assurance of safety and effectiveness of the device. For a device to fall within this classification, and thus avoid automatic classification in class III, it would have to comply with the special controls named in this final order. The necessary special controls appear in the regulation codified by this final order.

Under the FD&C Act, submission of a premarket notification under section 510(k) is required to reasonably assure the safety and effectiveness of class II devices unless FDA determines that the device type should be exempt under section 510(m) of the FD&C Act. At this time FDA has not made this determination for external condoms for anal intercourse or vaginal intercourse. This device is therefore subject to premarket notification requirements under section 510(k) of the FD&C Act.

The Agency has determined under 21 CFR 25.34(b) that this action is of a type that does not normally have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This final order establishes special controls that refer to previously approved collections of information found in other FDA regulations and guidance. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The collections of information in part 860, subpart D, regarding De Novo classification have been approved under OMB control number 0910-0844; the collections of information in 21 CFR part 814, subparts A through E, regarding premarket approval have been approved under OMB control number 0910-0231; the collections of information in part 807, subpart E, regarding premarket notification submissions have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 820 regarding quality management system regulation have been approved under OMB control number 0910-0073; and the collections of information in 21 CFR part 801 regarding labeling have been approved under OMB control number 0910-0485.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 884 is amended as follows:

The Attorney General is responsible for enforcing the National Firearms Act (“NFA”), as amended, 26 U.S.C. chapter 53. 1 Congress and the Attorney General have delegated the responsibility for administering and enforcing the NFA to the Director of ATF (“Director”), subject to the direction of the Attorney General and the Deputy Attorney General. See 28 U.S.C. 599A(b)(1), (c)(1); 28 CFR 0.130(a)(1)-(2); Treas. Order No. 221(2)(a), (d), 37 FR 11696-97 (June 10, 1972). 2 Accordingly, the Department and ATF have promulgated regulations to implement the NFA in 27 CFR part 479.

Firearms subject to NFA provisions include machine guns; shotguns having a barrel or barrels of less than 18 inches in length; weapons made from a shotgun if such weapon as modified has an overall length of less than 26 inches or a barrel or barrels less than 18 inches in length; rifles having a barrel or barrels of less than 16 inches in length; weapons made from a rifle if such weapon as modified has an overall length of less than 26 inches or a barrel or barrels less than 16 inches in length; silencers; destructive devices; and any other weapons (“AOWs”) as defined by the Act. 26 U.S.C. 5845(e). Section 5841 of the NFA requires the Attorney General to maintain a central registry of NFA firearms in the United States that the United States does not possess or are not under its control. The registry is called the National Firearms Registration and Transfer Record (“NFRTR”). All firearms must be registered by their maker, manufacturer, or importer. Section 5821 sets forth the tax that persons making NFA firearms must pay, and section 5822 provides that makers must submit a request to the Attorney General and receive approval before making an NFA firearm. The term “make” under the NFA includes “manufacturing (other than by one qualified to engage in such business under this chapter), putting together, altering, any combination of these, or otherwise producing a firearm.” 26 U.S.C. 5845(i). Section 5811 sets forth the tax that a person wishing to transfer an NFA firearm must pay, and section 5812 provides that transferors must submit a request to the Attorney General and receive approval before transferring an NFA firearm to a given transferee. The NFA provides that a transfer includes “selling, assigning, pledging, leasing, loaning, giving away, or otherwise disposing of” a firearm. 26 U.S.C. 5845(j).

Transfer taxes in the amount of $200 were established in 1934 when the NFA was enacted. Taxes on making NFA firearms in the amount of $200 were established in 1968 when the NFA was revised. Under the NFA, ATF also collects special (occupational) taxes from federally licensed importers, manufacturers, and dealers in NFA firearms. 26 U.S.C. 5801. While tax revenues from sales of non-NFA firearms and ammunition are generally allocated to the Federal Aid to Wildlife Restoration Fund for wildlife restoration and hunter education and safety, 16 U.S.C. 669b(a)(1), taxes collected from NFA-generated tax receipts are deposited into the General Fund of the Treasury. Congress has previously considered, but has not passed, various proposals pertaining to changing the taxing and registering provisions for NFA firearms.

On July 4, 2025, the OBBBA became law. Public Law 119-21. Section 70436 of the OBBBA amended 26 U.S.C. 5811(a) to require that the transfer tax for all firearms regulated under the NFA, other than machine guns and destructive devices, be reduced to $0. Similarly, this section amended 26 U.S.C. 5821(a) to require that the making tax for all NFA firearms, except machine guns and destructive devices, also be reduced to $0. Accordingly, ATF is amending 27 CFR 479.61, 479.62, 479.81, 479.82, and 479.84 to reflect the changes to the statute and to make minor agency procedure and plain writing edits as described below.

The OBBBA specified that the tax reduction amendments to the NFA would be effective on January 1, 2026, at which point the NFA making and transfer taxes for NFA firearms other than machine guns and destructive devices would be reduced to $0. As a result, those statutory changes have already occurred. ATF is issuing this final rule to make conforming changes to the tax amounts within ATF's corresponding regulatory provisions under 27 CFR part 479. Although ATF is revising its rule to reflect that OBBBA reduced the tax amount for these NFA firearms to $0, all other regulatory provisions of the NFA application and registration process remain in full force and effect. In addition, the rule makes minor administrative edits to allow the ATF approval stamp on making and transfer applications to be electronic and to make the revised provisions easier to read.

Section 479.61 reiterates the requirement and scope of the making tax on NFA firearms. While the existing section currently mirrors pre-OBBBA statutory language of a $200 tax on “each firearm made,” this rule aligns the section with the OBBBA by narrowing the scope of the $200 tax to only machine guns and destructive devices and reducing the tax on silencers, short-barreled rifles, short-barreled shotguns, or AOWs to $0.

In addition, the rule revises § 479.61 to allow the statutorily required NFA stamp, which shows that the maker paid the tax and that ATF has approved the application, to be in electronic form or other form designated by the Director. ATF is doing this in accordance with technological developments and government-wide initiatives to implement electronic transactions. To make this section easier to read, the rule divides it into two paragraphs, with the stamp requirements moved to a new § 479.61(b).

Section 479.62 governs the process by which an individual may legally make an NFA firearm by submitting ATF Form 5320.1, Application to Make and Register NFA Firearm (“Form 1”). ATF must approve the Form 1 application before the person may make the firearm. This rule revises § 479.62(b)(1) to reflect the reduced tax rate of $0 for making silencers, short-barreled rifles, short-barreled shotguns, or AOWs. The existing regulation currently requires the pre-OBBBA remittance of $200 for all firearms made under this provision.

Section 479.81 reiterates the requirement and scope of the transfer tax as applicable to all NFA firearms transferred within the United States and requires that the tax-paid status be represented by an “adhesive” stamp affixed to the application form. This rule revises § 479.81 to allow the statutorily required NFA tax-paid stamp, which shows that the transferor paid the tax and that ATF has approved the application, to be in electronic form or other form designated by the Director. ATF is making this change in accordance with technological developments and government-wide initiatives to implement electronic transactions.

Section 479.82 sets forth the required tax rate for transferring an NFA firearm. The existing section currently mirrors the pre-OBBBA statutory language of a transfer tax “at the rate of $200 for each firearm transferred, except that the transfer tax on any firearm classified as `any other weapon' shall be at the rate of $5” and requires that the transferor pay the transfer tax. This rule amends § 479.82 to reflect the new tax rate of $0 for transferring any NFA firearms except machine guns and destructive devices.

Section 479.84 governs tax-paid transfers of NFA firearms using ATF Form 5320.4, Application to Transfer and Register NFA Firearm (Tax-Paid) (“Form 4”). Similarly to § 479.82, this rule implements conforming changes to § 479.84(b)(1) to reflect the new tax rate of $0 for transferring any NFA firearms except machine guns and destructive devices, in accordance with the OBBBA. The existing section mirrors the pre-OBBBA statutory language requiring a $200 tax for transferring silencers, short-barreled rifles, short-barreled shotguns, machine guns, and destructive devices, and a $5 tax for transferring AOWs. All other requirements for lawfully transferring an NFA firearm remain unchanged.

Under the Administrative Procedure Act (“APA”), 5 U.S.C. 553(b)(A), the usual requirements of prior notice and comment do not apply to “interpretive rules,” meaning those that “remind parties of existing statutory or regulatory duties, or `merely track[ ]' ” preexisting requirements and explain something the statute or regulation already required.” POET Biorefining, LLC v. EPA, 970 F.3d 392, 407 (D.C. Cir. 2020) (citation omitted); see also United States v. Kriesel, 508 F.3d 941, 945 (9th Cir. 2007) (a regulation that “mirror[s] the statute” is a “classic interpretive rule”). The usual requirements of prior notice and comment also do not apply to “rules of agency organization, procedure, or practice.” 5 U.S.C. 553(b)(A). As described above, this final rule incorporates statutory changes to the tax amount for NFA firearms into existing regulatory provisions that previously aligned with statutory language. These conforming updates to ATF regulations in 27 CFR part 479 ensure that they are consistent with the statute and can be relied on by the public. This final rule also makes minor agency procedural revisions to allow ATF to use electronic approval stamps on NFA forms and minor technical edits to conform with the Plain Writing Act. Even if these revisions were not mere interpretive rules or rules of agency organization, procedure, or practice, they would still be exempt from the APA's notice and comment requirements because they are either technical amendments of little public interest or else conform to statutory requirements so closely that they do not constitute an exercise of agency discretion. Accordingly, ATF has good cause to conclude that notice and comment is unnecessary for this action. 5 U.S.C. 553(b)(B). ATF is issuing this as a final rule, without prior public comment, effective 30 days after the date the Federal Register publishes the rule.

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits.

Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of agencies quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting public flexibility.

The Office of Management and Budget (“OMB”) has determined that this rule is a “significant regulatory action” under section 3(f)(1) of Executive Order 12866 because it has an economic impact of $100 million or more.

This final rule makes necessary conforming changes to 27 CFR part 479 by reflecting the statutory amendments that reduce the $200 tax previously imposed for making and transferring all NFA firearms except machine guns and destructive devices to a $0 tax. It also makes minor agency procedural changes to allow ATF's tax approval stamp to be in electronic form.

While an Initial Regulatory Impact Analysis may be required for significant rules, ATF does not include such an analysis for this rule because it is not subject to public notice and comment. However, ATF nonetheless evaluated potential impacts on small businesses and determined that the rule will have only a potentially positive indirect impact on small businesses.

In addition, ATF has laid out the impacts from implementing the OBBBA tax remittance change in ATF's OMB A-4 accounting statement here, in Table 1. Table 1 also illustrates the range of future estimates in a low, primary, and high range as ATF's Circular A-4 sensitivity analysis. ATF then provides its normal regulatory cost-benefit analysis below Table 1.

This rule incorporates the statutory change to reduce the $200 making and transfer taxes on NFA firearms except machine guns and destructive devices to a $0 tax. The $200 tax was paid with each application to make (Form 1) or transfer (Form 4) NFA firearms (see Table 2 below for estimated taxes paid to the Treasury). Due to the statutory change, individuals making or transferring NFA firearms other than machine guns and destructive devices now pay $0 with each of these applications, so ATF is updating its regulations to conform with this statutory change and prevent confusion.

ATF maintains a record of NFA applications to make or transfer an NFA firearm. Over the last ten years, the annual number of NFA applications has increased. 3 Table 2 provides the number of applications received annually during the ten years prior to drafting this rule (2016 to 2025) for silencers, short-barreled rifles, short-barreled shotguns, and AOWs. Because destructive devices and machine guns are not included in the reduced NFA tax, they are not impacted by this rule and are thus not included in this analysis. Table 2 provides the historical number of NFA applications that would have been affected by the statutory tax reduction from $200 to $0.

Based on this data, ATF forecasts future applications for years 2026 to 2035.

Table 3 provides the anticipated increase in Forms 1 and 4 applications arising from the statutory change permitting $0-tax transfers over the next ten years. 4

This rule reduces the $200 taxes on most NFA firearms (except machine guns and destructive devices) to $0 tax. Changes in tax collection are not deregulatory savings; instead, they are a transfer from the government to manufacturers and consumers. Table 4 provides the estimated transfers from the government to consumers and manufacturers.

ATF anticipates this rulemaking will have a total, ten-year undiscounted transfer of $2.4 billion, or annualized transfers of $238.7 million at a 3 percent discount rate and $234.2 million at a 7 percent discount rate.

ATF considered not updating the regulations to reflect tax changes under the statute. There would be no costs or savings attributed to this alternative as it would not make any changes. However, it would create confusion since the regulatory requirement and the statutory requirement would be inconsistent. There would be a non-monetized benefit to public safety from leaving the regulation as is. However, ATF rejected this alternative because the tax change is statutory and any such increased risks to public safety have therefore already occurred (even if the regulation remains the same).

This alternative reduces the existing regulatory requirement to pay $200 taxes on all NFA firearms except machine guns and destructive devices to match the statutory change to $0 tax. This conforms ATF regulations to recent statutory changes reducing the tax amount for these firearms and provides deregulatory savings to individuals wishing to purchase NFA weapons, due to the reduced tax rate of $0 per firearm. ATF accepted this alternative because it brings the regulations into compliance with the statute and provides substantial public benefit without any risk to public safety.

While this alternative would not impose any additional costs, the current tax rate requirements are in a regulation. This alternative does not have the force and effect of a regulation, and issuing guidance would not align the regulation with the statute. Giving guidance that does not align with the regulation would create more confusion and potential scope issues. Therefore, ATF rejected this alternative.

Executive Order 14192 (Unleashing Prosperity through Deregulation) requires an agency, unless prohibited by law, to identify at least ten existing regulations to be repealed or revised when the agency publicly proposes for notice and comment or otherwise promulgates a new regulation that qualifies as an Executive Order 14192 regulatory action (defined in OMB Memorandum M-25-20 as a final significant regulatory action under section 3(f) of Executive Order 12866 that imposes total costs greater than zero). In furtherance of this requirement, section 3(c) of Executive Order 14192 requires that any new incremental costs associated with such new regulations must, to the extent permitted by law, also be offset by eliminating existing costs associated with at least ten prior regulations. However, this rule is not an Executive Order 14192 regulatory action and provides transfers from the government back to the individual or entity.

Executive Order 14294 (Fighting Overcriminalization in Federal Regulations) requires agencies promulgating regulations with criminal regulatory offenses potentially subject to criminal enforcement to explicitly describe the conduct subject to criminal enforcement, the authorizing statutes, and the mens rea standard applicable to each element of those offenses. This rule does not create a criminal regulatory offense and is thus exempt from Executive Order 14294 requirements.

This final rule does not have substantial direct effects on the states, the relationship between the federal government and the states, or the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132 (Federalism), the Director has determined that this final rule does not impose substantial direct compliance costs on State and local governments, preempt state law, or meaningfully implicate federalism. It thus does not warrant preparing a federalism summary impact statement.

This final rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Civil Justice Reform).

Under the Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601-612, agencies are required to conduct a regulatory flexibility analysis of any final rule subject to notice-and-comment rulemaking requirements unless the agency head certifies, including a statement of the factual basis, that the final rule will not have a significant economic impact on a substantial number of small entities. Small entities include certain small businesses, small not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

However, in accordance with the RFA, 5 U.S.C. 603, 604, and 605(b), an agency is not required to conduct a regulatory flexibility analysis in a final rule for which it was not required to publish a general notice of proposed rulemaking. This rule will not have a negative impact on small businesses. Reducing the $200 tax to $0 may have positive net benefits for small businesses with respect to increased sales and revenue.

This final rule will not result in expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (as adjusted for inflation), and it will not significantly or uniquely affect small governments. Therefore, ATF has determined that no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Under the Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3521, agencies are required to submit to OMB, for review and approval, any information collection requirements a rule creates or any impacts it has on existing information collections. An information collection includes any reporting, record-keeping, monitoring, posting, labeling, or other similar actions an agency requires of the public. See 5 CFR 1320.3(c). This final rule does not create any new information collection requirements, but it does impact two existing ones covered by the PRA.

The two impacted information collections are: (1) OMB control number 1140-0011: Application to Make and Register NFA Firearm, which includes ATF Form 53201.1 (“Form 1”); and (2) OMB control number 1140-0014: Application to Transfer and Register NFA Firearm (Tax-Paid), which includes ATF Form 5320.4 (“Form 4”). Both forms contained in these information collections have had a non-substantive change made to the forms to add a $0 remittance option, in accordance with the statute's requirements. In addition, because this rule permits persons to buy and make some kinds of NFA firearms without paying the traditional $200 tax, ATF anticipates that the number of respondents submitting Forms 1 and 4 applications may increase, which would result in a higher total time burden arising from more applications. This would be the only change arising from this rule. Any increase in respondents and resulting increase to the time burden will be reflected in the collections' next renewals.

Title: Application to Make and Register NFA Firearm.

OMB control number: 1140-0011.

Form number: ATF Form 5320.1 (“Form 1”).

Summary of the information collection: Any person other than a qualified manufacturer who wishes to make and register an NFA firearm must submit a written application to ATF on a form prescribed by ATF. 26 U.S.C. 5822. They must also identify the firearm they are making and themselves as the maker. Finally, individuals must include their fingerprints and a photograph with the application. In § 479.62, ATF prescribed ATF Form 5320.1 (“Form 1”), Application to Make and Register NFA Firearm, for these required purposes.

Need for information and proposed use: ATF's NFA Division uses the information on this form to determine whether the applicant may legally make and register the firearm under federal, state, tribal, and local law. Section 5822 provides that ATF cannot approve an application if making or possessing the firearm would place the person making the firearm in violation of law. The form asks individual applicants to respond, under penalties of perjury, to questions to determine whether they are prohibited by federal law from possessing firearms. For a trust or legal entity, which cannot answer these questions on Form 1 because it is not an individual, each responsible person for that trust or legal entity instead provides this information when it submits Form 5320.23, NFA Responsible Person Questionnaire (covered by OMB control number 1140-0107).

Description of the respondents affected by this proposed rule: Individuals or households.

Number of respondents: 148,975 annually.

Frequency of response: Once.

Response time estimate: 12 minutes (overall reduction from 30 minutes, due to conversion to eForm and other technological changes).

Burden of response: 29,795 hours total for all respondents.

Title: Application to Transfer and Register NFA Firearm (Tax-Paid).

OMB control number: 1140-0014.

Form number: ATF Form 5320.4 (“Form 4”).

Summary of the information collection: Persons with an NFA firearm must apply to ATF for approval to transfer and register the firearm as required by the NFA. 26 U.S.C. 5812. ATF Form 5320.4 (“Form 4”), is the prescribed means for submitting this application, facilitates and records the firearms transfer, and also serves as proof of registration once approved.

Need for information and proposed use: ATF's NFA Division uses the information on this form to determine whether the applicant may legally make and register the firearm under federal, state, tribal, and local law. The form also identifies the transferor, transferee, and firearm(s). 26 U.S.C. 5812 provides that ATF cannot approve an application if receiving or possessing the firearm would place the person receiving the firearm in violation of law. The form asks individual transferees to respond, under penalties of perjury, to questions to determine whether they are prohibited by federal law from possessing firearms. For a trust or legal entity, which cannot answer these questions on Form 4 because it is not an individual, each responsible person for that trust or legal entity instead provides this information when it submits Form 5320.23, NFA Responsible Person Questionnaire (covered by OMB control number 1140-0107).

Description of the respondents affected by this proposed rule: Individuals or households.

Number of respondents: 546,424 annually.

Frequency of response: Once.

Response time estimate: 12 minutes per (overall reduction from 30 minutes, due to conversion to eForm and other technological changes).

Burden of response: 109,285 hours total for all respondents.

Pursuant to the Congressional Review Act, 5 U.S.C. 801 et seq., ATF has determined that this final rule meets the criteria in 5 U.S.C. 804(2) to constitute a major rule. This final rule is a major rule because it will result in an annual effect on the economy of $100 million or more. However, this rule will not cause an increase in prices, nor will it have an adverse effect on the economy, on competition, employment, investment, productivity, innovation, or US enterprises, because this rule provides transfers from the government back to the individual or entity. Pursuant to 5 U.S.C. 808(2), this rule is not subject to the CRA's requirement for a 60-day delayed effective date because, as discussed above, ATF has found good cause to conclude that notice and comment are unnecessary for this rule.

For the reasons discussed in the preamble, ATF amends 27 CFR part 479 as follows:

In 1978, the Contraband Cigarette Trafficking Act (“CCTA”), 18 U.S.C. 2341 et seq., was enacted to deter cigarette smuggling between states that had diverse tax rates. The Attorney General has delegated primary responsibility to enforce and administer the CCTA to the Director of ATF (“Director”). See 28 CFR 0.130. Accordingly, the Department and ATF have promulgated regulations  1 that implement provisions of the CCTA in 27 CFR part 646.

Since the CCTA was enacted, cigarette smuggling and trafficking has grown in complexity and become a global problem that costs governments throughout the world billions of dollars in lost tax revenue. Criminals smuggle and traffic cigarettes between low-tax and high-tax states and across international borders. ATF's investigations, Congress, and other sources have established that organized crime and terrorist groups divert legal tobacco products into illegal markets. 2 Organized crime and terrorist groups use profits derived from cigarette trafficking to finance additional criminal enterprises.

Further, trafficking in contraband tobacco products poses a serious health risk because selling trafficked tobacco products avoids taxes in the jurisdiction in which the tobacco product is resold. This decreases the cost of those tobacco products and promotes distribution of cheap tobacco, which, in turn, increases tobacco use. 3 The impact of this illicit trade on health and other public interests is discussed in the National Cancer Institute's Monograph 21, “The Economics of Tobacco and Tobacco Control.”  4 That report concludes that “tax avoidance and tax evasion, especially large-scale smuggling of tobacco products, undermine the effectiveness of tobacco control policies and reduce the health and economic benefits that result from these policies.”  5 Finally, the sale of contraband products poses a serious financial threat to legitimate manufacturers, wholesalers, and retailers.

Section 121 of the PATRIOT Improvement Act  6 made several amendments to the CCTA, 18 U.S.C. 2341 et seq., as discussed below.

Prior to its amendment, 18 U.S.C. 2342 made it unlawful for any person knowingly to ship, transport, receive, possess, sell, distribute, or purchase contraband cigarettes, defined as any quantity in excess of 60,000 cigarettes bearing no evidence that applicable state cigarette taxes had been paid in the state where such cigarettes were found. Section 121(a) of the PATRIOT Improvement Act amended this portion of the CCTA by reducing the number of cigarettes that trigger application of the CCTA to a quantity in excess of 10,000 cigarettes bearing no evidence that applicable state or local taxes had been paid in the state or locality where such cigarettes are found. 120 Stat. at 221.

Section 121(b) of the PATRIOT Improvement Act amended the CCTA by extending the CCTA's provisions to include contraband smokeless tobacco. It defined “smokeless tobacco” as “any finely cut, ground, powdered, or leaf tobacco that is intended to be placed in the oral or nasal cavity or otherwise consumed without being combusted.” 120 Stat. at 221. This amendment also defined “contraband smokeless tobacco” as a quantity in excess of 500 single-unit consumer-sized cans or packages of smokeless tobacco, or their equivalent, possessed by any person other than (1) a person holding a permit issued pursuant to chapter 52 of the Internal Revenue Code of 1986 (“IRC”) as a manufacturer of tobacco products or as an export warehouse proprietor, a person operating a customs bonded warehouse pursuant to sections 311 or 555 of the Tariff Act of 1930 (19 U.S.C. 1311, 1555), or an agent of such person; (2) a common carrier transporting such smokeless tobacco under a proper bill of lading or freight bill that states the quantity, source, and designation of such smokeless tobacco; (3) a person who is licensed or otherwise authorized by the state where such smokeless tobacco is found to engage in the business of selling or distributing tobacco products, and has complied with the accounting, tax, and payment requirements relating to such license or authorization with respect to such smokeless tobacco; or (4) an officer, employee, or agent of the United States or a state, or any department, agency, or instrumentality of the United States or a state (including any political subdivision of a state), having possession of such smokeless tobacco in connection with the performance of official duties. Id. at 221-22.

Prior to amendment, the CCTA authorized the Secretary of the Treasury to prescribe limited regulations concerning record-keeping and inspection requirements for any person who distributed any quantity of cigarettes in excess of 60,000 cigarettes in a single transaction. Section 121(c) of the PATRIOT Improvement Act amended these provisions of the CCTA by authorizing the Attorney General, rather than the Secretary of the Treasury, to prescribe regulations concerning record-keeping requirements, including requirements for retaining such information as the Attorney General considers appropriate for the purposes of CCTA enforcement against persons who ship, sell, or distribute  7 any quantity in excess of 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco in a single transaction. 120 Stat. at 222.

The act also authorized regulations requiring persons, except for tribal governments, who engage in a delivery sale, and who ship, sell, or distribute any quantity in excess of 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco within a single month, to submit to the Attorney General, pursuant to regulations prescribed by the Attorney General, a report setting forth (1) the person's beginning and ending inventories of cigarettes and cans or packages of smokeless tobacco (in total) for such month; (2) the total quantity of cigarettes and cans or packages of smokeless tobacco that the person received within such month from each other person (itemized by name and address); and (3) the total quantity of cigarettes and cans or packages of smokeless tobacco that the person distributed within such month to each person (itemized by name and address) other than a retail purchaser. Id. at 222-23.

Finally, the act added the term “delivery sale,” which means any sale of cigarettes or smokeless tobacco in interstate commerce to a consumer if (a) the consumer submits the order for such sale by means of a telephone or other method of voice transmission, mail, or the internet or other online service, or by any other means where the consumer is not in the same physical location as the seller when the purchase or offer of sale is made; or (b) the cigarettes or smokeless tobacco are delivered by use of mails, common carrier, private delivery service, or any other means where the consumer is not in the same physical location as the seller when the consumer obtains physical possession of the cigarettes or smokeless tobacco. Id. at 223.

Section 121(d) of the PATRIOT Improvement Act amended the CCTA to state that the provisions of 18 U.S.C. 981 through 987 relating to civil forfeiture extend to any seizure or civil forfeiture of contraband cigarettes or contraband smokeless tobacco involved in any violation of the CCTA. 120 Stat. at 223. Section 121(d) further provided that any cigarettes or smokeless tobacco so seized will either (1) be destroyed and not resold, or (2) be used for undercover investigative operations for the detection and prosecution of crimes, and then destroyed and not resold. Id.

Section 121(e) of the PATRIOT Improvement Act clarified that the CCTA is not intended to affect the concurrent jurisdiction of a state or local government to enact and enforce its own cigarette tax laws; to confiscate cigarettes, smokeless tobacco, or other property seized for violation of such laws; or to provide for penalties for the violation of such laws. 120 Stat. at 223. This section also clarified that the CCTA is not intended to inhibit coordinated law-enforcement efforts by state or local governments. Id. The existing regulations do not address these subjects, and ATF did not propose any regulatory amendments in relation to these statutory changes.

Section 121(f) of the PATRIOT Improvement Act created a new civil cause of action allowing state and local governments and federal tobacco permittees under the IRC to bring actions in federal district court to prevent or restrain CCTA violations. 120 Stat. at 223-24. In addition, it authorized state and local governments to seek civil penalties, monetary damages, and injunctive or other equitable relief. Id. at 224. The existing regulations do not address these subjects, and ATF did not propose any regulatory amendments in relation to these statutory changes.

Section 121(g) of the PATRIOT Improvement Act made several conforming and clerical amendments to the CCTA, such as changing the title of chapter 114 to read “Trafficking in Contraband Cigarettes and Smokeless Tobacco” and changing the section headings of 18 U.S.C. 2343 and 2345. 120 Stat. at 224.

On July 28, 2010, the Department, on behalf of ATF, published in the Federal Register a notice of proposed rulemaking (“NPRM”), titled “Implementing the USA PATRIOT Improvement and Reauthorization Act of 2005 Regarding Trafficking in Contraband Cigarettes or Smokeless Tobacco (2006R-1P),” 75 FR 44173, which proposed to implement the provisions of section 121 of the PATRIOT Improvement Act relating to trafficking in contraband cigarettes or smokeless tobacco. (RIN 1140-AA31.) The NPRM proposed to amend ATF regulations to comport with section 121 of the PATRIOT Improvement Act through a number of changes.

First, ATF proposed reducing the amount of cigarettes necessary to trigger jurisdiction under the CCTA from a quantity in excess of 60,000 to a quantity in excess of 10,000, per section 121(a) of the PATRIOT Improvement Act. ATF proposed amendments to carry out this change in 27 CFR 646.141 (revising the stated scope of part 646 to reflect the new threshold amount), § 646.143 (revising the definitions of “contraband cigarettes,” “distributor,” and “exempted person” to reflect the new threshold amount), § 646.146 (revising paragraphs (a) and (b)(1) to reflect the new threshold amount), and § 646.147 (revising paragraphs (1) and (2) to reflect the new threshold amount). 75 FR 44177-78. ATF also proposed to amend § 646.143 by adding a definition for the term “cigarette.” 75 FR 44177. The proposed definition reflected the meaning of the term set forth in the CCTA, as amended.

Second, the PATRIOT Improvement Act extended the CCTA to contraband smokeless tobacco, and ATF proposed to account for this by adding the statutory definitions of the terms “smokeless tobacco” and “contraband smokeless tobacco,” per section 121(b) of the PATRIOT Improvement Act. ATF proposed adding the CCTA's definitions for both terms to 27 CFR 646.143 to match the statutory definitions. 75 FR 44177. It also proposed amending §§ 646.146 and 147 to add “smokeless tobacco” and “cans or packages of smokeless tobacco” to the list of distributed items covered by the CCTA; and it proposed to amend § 646.154(a) by adding “or contraband smokeless tobacco” after “contraband cigarettes.” 75 FR 44177-78.

Third, to account for the reporting requirements imposed in section 121(c) of the PATRIOT Improvement Act, ATF proposed to add new CCTA requirements regarding contraband smokeless tobacco to 27 CFR 646.143 (amending the definitions of “business premises” and “distributor” and adding definitions of “delivery sale” and “interstate commerce”) and to § 646.146 (revising the section heading to read “Records and Reports” and incorporating the new reporting and record-keeping CCTA requirements). 75 FR 44177-78. The proposed regulatory language was identical to the statutory language regarding such reporting requirements.

Fourth, to implement the requirement of section 121(d) of the PATRIOT Improvement Act that cigarettes and smokeless tobacco be seized and forfeited under the CCTA and be either used in law-enforcement operations or destroyed, ATF proposed regulatory language in 27 CFR 646.155 that was identical to the statutory language. 75 FR 44178-79.

In addition, the NPRM stated that ATF was considering an amendment of the regulations in § 646.150 concerning distributors' retention of required records. In general, existing § 646.150 provides that each distributor of cigarettes shall retain the records required by §§ 646.146 and 646.147 for three years following the close of the year in which the records are made and shall keep the required records on the distributor's business premises. 75 FR 44175. ATF stated it was considering extending the record retention requirement to five years, thus harmonizing the regulations with the applicable statute of limitations for CCTA violations, which is five years. See id. The NPRM solicited comments on this issue.

The comment period for the NPRM closed on October 26, 2010. ATF received ten comments, which were submitted from consumers, industry members, public interest organizations and associations, and a local government agency.

One commenter generally opposed the NPRM, stating that reducing the threshold amount of cigarettes necessary to trigger jurisdiction under the CCTA from quantities in excess of 60,000 to quantities in excess of 10,000 “does not address the problem of the extraordinarily high taxation of cigarettes.” The commenter stated that the purpose of the CCTA is to permit prosecution when organized crime becomes involved in the illegal transportation and sale of cigarettes and asserted that decreasing the threshold to 10,000 would lead to prosecuting individuals crossing state borders to buy cigarettes for themselves and their friends.

ATF is reducing the threshold amount of cigarettes necessary to trigger jurisdiction under the CCTA to quantities in excess of 10,000 because it is implementing the change made by the PATRIOT Improvement Act. Any further change in the threshold amount would require legislative action. ATF does not have the authority to reinstate the 60,000-cigarette threshold. ATF also does not have authority to address levels of cigarette taxation imposed by other taxing authorities.

Nine comments expressed concerns regarding the proposed regulatory changes or the issue of trafficking in contraband tobacco products. These concerns are addressed below.

One commenter, a legal association, stated that the proposed revision to the scope of § 646.141—focusing on a single transaction—is not consistent with 18 U.S.C. 2343(b) and that “[i]t should be expanded to cover persons who ship, sell or distribute cumulatively in excess of 10,000 cigarettes (or their smokeless equivalent) within a single month, where such persons have also made any delivery sales.”

ATF concurs with this recommendation, and this final rule revises § 646.141 concerning the scope of part 646, consistent with the statutory language, to provide that the regulations also apply to persons who have made one or more delivery sales of smokeless tobacco and cigarettes, and who ship, sell, or distribute, either in a single transaction or cumulatively, more than 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco within a single calendar month. The final rule also includes a technical amendment substituting the word “part” for the word “subpart” in the regulatory text.

The NPRM proposed amending § 646.143 by adding a definition of “cigarette” to reflect the meaning of the term set forth in 18 U.S.C. 2341(1), as amended by the PATRIOT Improvement Act. This definition includes any roll of tobacco “wrapped in paper or in any substance not containing tobacco” and any roll of tobacco wrapped in any substance containing tobacco that, “because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette.” 18 U.S.C. 2341(1)(B).

One commenter stated that the final rule should clarify that ATF will define “cigarette” to include tobacco products labeled as “little cigars” or “filtered cigars.” According to the commenter, ATF needs to regularly inform the tobacco industry and others that ATF broadly applies its definition of “cigarette” to reach products labeled as “little cigars” or “filtered cigars” and not as “cigarettes.”

The definitions of “cigarette” and “smokeless tobacco” are set by the CCTA, as amended by the PATRIOT Improvement Act, and ATF lacks the authority to alter the statutory definitions. The definition of “cigarette” may reach some tobacco products labeled as “little cigars” or “filtered cigars” if, for example, such products are rolls of tobacco “wrapped in any substance containing tobacco” that, “because of [their] appearance, the type of tobacco used in the filler, or [the] packaging and labeling,” are “likely to be offered to, or purchased by, consumers as a cigarette.” 18 U.S.C. 2341(1)(B). The classification of tobacco products labeled as “little cigars” or “filtered cigars” is a complex issue because of the wide range of products that use these labels. ATF, therefore, declines to determine on a categorical basis that any product labeled as a “little cigar,” or “filtered cigar” is a “cigarette” under this rule. ATF will apply the statutory definition of “cigarette” on a case-by-case basis to determine whether the product at issue falls within that definition. Accordingly, ATF is not adopting the commenter's suggestion.

The regulations at 27 CFR 646.143 exempt from the definition of contraband cigarettes those cigarettes possessed by specific persons such as manufacturers and export warehouse proprietors holding permits under chapter 52 of the IRC; persons operating customs bonded warehouses; persons operating within foreign-trade zones (“FTZs”) when the cigarettes have been entered under zone-restricted access or, in respect to foreign cigarettes, have been admitted into the zone but not entered into the United States; common or contract carriers; persons licensed or otherwise authorized by a state to pay tobacco taxes; and federal, state, and local authorities when operating in connection with the performance of official duties.

The NPRM proposed to revise § 646.143 to conform to the PATRIOT Improvement Act amendments by changing the number of cigarettes sold from 60,000 to 10,000 and expanding the scope of part 646 to cover smokeless tobacco. In connection with expanding the regulations to cover smokeless tobacco, ATF proposed adding a new paragraph (b) under the definition of “exempted persons” to include persons handling smokeless tobacco—not just cigarettes. 75 FR 44177-78. ATF intended for the classes of exempted persons in paragraph (b) to mirror the existing list of exemptions for persons distributing cigarettes. However, ATF inadvertently did not include in paragraph (b) the foreign-trade-zone exemption from the current definition of “exempted person.” As a result, ATF is adding that exemption in this final rule to fully align the two provisions. Doing so will ensure that the regulations treat cigarettes and smokeless tobacco in a similar manner, just as the CCTA—as amended by the PATRIOT Improvement Act—treats cigarettes and smokeless tobacco in a similar manner. Compare 18 U.S.C. 2341(2)(A)-(D) (setting out exemptions from the definition of “contraband cigarettes”), with 18 U.S.C. 2341(7)(A)-(D) (setting out the same exemptions from the definition of “contraband smokeless tobacco”).

One commenter stated that ATF's current regulations are inconsistent with the CCTA and that ATF should bring its regulations into line with the act. This commenter was referring to the fact that the exemptions in 18 U.S.C. 2341(2) and 2341(7)—in contrast to ATF's current and proposed definitions of “exempted person”—do not explicitly exempt from the definitions of “contraband cigarette” and “contraband smokeless tobacco” certain quantities of cigarettes and smokeless tobacco held by persons operating in FTZs. The commenter argued that ATF should eliminate the FTZ exemption and stated that disallowing the FTZ exemption is particularly important in light of mounting evidence that FTZs play integral roles in the importation and domestic distribution of contraband cigarettes. The commenter said that an exemption for persons operating in FTZs may threaten the goal of reducing or eliminating contraband trafficking. The commenter provided background information on FTZs, such as zones in Buffalo and Las Vegas, being used as central hubs in schemes to smuggle contraband cigarettes into and throughout the United States. The commenter indicated that large quantities of imported cigarettes—all of them untaxed and unstamped—had been flowing through these FTZs and then into states around the country, where they were then sold in black market transactions. Given this existing abuse of FTZs, the commenter urged ATF to use the proposed rule as an opportunity to eliminate that exemption. Accordingly, the commenter recommended that the definition of “exempted person” in § 646.143 be amended by deleting the exemption for persons operating within an FTZ.

A different commenter raised a separate issue with respect to the definition of “exempted person.” This commenter encouraged ATF to clarify that simply having a federal permit under the IRC as a manufacturer of tobacco products, or as an export warehouse proprietor, or being an agent of such a permitted entity, does not mean that any and all cigarettes or smokeless tobacco in the permittee's possession are ineligible to be classified as contraband tobacco products. The commenter stated that the definition of “exempted person” in § 646.143 should include a manufacturer or export warehouse proprietor that possesses cigarettes and smokeless tobacco that might otherwise qualify as contraband only if the permittee is operating within the legal scope of its permit. Conversely, the commenter continued, the definition of “exempted person” should exclude a federally permitted manufacturer or export warehouse proprietor if it operates beyond the scope of its legal activities as a permittee. According to the commenter, the proposed rule, taken literally, inaccurately suggested a form of blanket immunity for those manufacturers or export warehouse proprietors that have federal permits.

The existing regulations provide “exempted person” status to any person operating within an FTZ when the cigarettes involved have been entered into the zone under zone-restricted status or, with respect to foreign cigarettes, have been admitted into the zone but have not been entered into the United States. Nothing in the PATRIOT Improvement Act amendments to the CCTA indicated an intention to narrow the scope of the existing FTZ exemption or any other exemption. The legislative history similarly does not reflect any concern with continuing to allow this almost 50-year-old existing exemption in the regulations, nor does it indicate that the list of exemptions in the CCTA and PATRIOT Improvement Act was meant to be exhaustive. The existing FTZ exemption has been in the regulations for decades, so Congress was aware of it and could have acted through the PATRIOT Improvement Act amendments to eliminate it; however, Congress did not choose to do so. “It is well established that when Congress revisits a statute giving rise to a longstanding administrative interpretation without pertinent change, the congressional failure to revise or repeal the agency's interpretation is persuasive evidence that the interpretation is the one intended by Congress.” Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 846 (1986) (quotation marks omitted). Here, because Congress “revisit[ed]” the CCTA in the PATRIOT Improvement Act but did not “revise or repeal” ATF's longstanding exemptions implementing the CCTA, ATF's existing regulatory exemptions—including the FTZ exemption—accurately reflect congressional intent.

In addition, the NPRM for this rule did not raise for public notice and comment the issue of eliminating the FTZ exemption. Because the FTZ exemption has been in effect for almost 50 years, industry business practices for importing and exporting products have been established with this exemption as part of their operations. Removing the exemption could, depending on any final regulatory language that ATF adopts, cause any unstamped cigarettes and smokeless tobacco within covered FTZ areas to become automatically contraband, which could have significant consequences. In addition, eliminating the exemption would cause tobacco products in customs bonded warehouses (“CBWs”) and FTZs to be treated differently, even though the two effectively serve the same function. That inconsistency could also have significant consequences. Moreover, this inconsistent treatment could undermine the efficacy of the commenter's proposal to eliminate the FTZ exemption, as any smuggling activity that would have occurred in an FTZ would simply shift to CBWs. Because of these issues and concerns, ATF believes—at the current time—that the question of removing the FTZ exemption would benefit from a greater opportunity for public comment. Therefore, ATF declines to revise this rule to remove the exemption for FTZs. ATF will, however, continue to vigorously carry out its law enforcement responsibilities and address FTZ abuses.

Next, regarding the concerns raised by a different commenter, the PATRIOT Improvement Act amendments to the CCTA did not amend the statutory definitions of “manufacturer” or “export warehouse proprietor.” The CCTA merely references those terms as they are presently defined in the IRC, 26 U.S.C. 5702. As such, ATF does not believe that rulemaking pursuant to the CCTA amendments is an appropriate vehicle to define the scope of potential criminal activities by manufacturers, export warehouse proprietors, or other exempted parties. ATF does agree with the commenter that the exemptions in the rule do not grant manufacturers the authority to operate beyond what their federal permits allow; however, ATF emphasizes that whether an exempted party under the CCTA is engaged in activities that are beyond the scope of its licensed activities and would therefore constitute illegal activity, aiding and abetting criminal activity, or a conspiracy to engage in criminal activity, is an issue that federal personnel would have to evaluate and prosecute on a case-by-case basis. Such evaluations and investigations are not appropriate subjects for this rulemaking.

Separately, ATF notes the need for a technical amendment to the definition of “Exempted person”; the definition should reference the 1986 version of the IRC, not the 1954 version.

The NPRM proposed to define the term “contraband smokeless tobacco” as “any quantity of smokeless tobacco in excess of 500 single-unit consumer-sized cans or packages, or their equivalent, that are in the possession of any person other than an exempted person.” 75 FR 44177.

A member of the tobacco industry commented, “[w]hile this regulation tracks the statutory language, its failure to define what constitutes a single-unit consumer-sized can or package may lead to confusion.” The commenter explained that it sells moist snuff in 1.2-ounce cans and 12-ounce tubs that hold as much moist snuff as ten individual cans. The commenter believed that the term “contraband smokeless tobacco” could be clarified by, for example, stating that “single-unit” cans include only 1.2-ounce cans or that a total weight requirement, such as 600 ounces of smokeless tobacco, would subject a person to the requirements of part 646.

ATF understands that different types of smokeless tobacco are marketed to consumers in packages of varying sizes. While the commenter referred to a typical “consumer-sized can” of moist snuff, a “consumer-sized can[ ] or package[ ]” of another variety of smokeless tobacco could be larger or smaller, and ATF has encountered such variations in its enforcement experiences. A “consumer-sized can” invariably includes a small amount of the product, but ATF does not believe that it is necessary to set a specific size for purposes of implementing the PATRIOT Improvement Act. ATF has not encountered confusion about what constitutes a single-unit consumer-sized can or package of smokeless tobacco in the 20 years since the PATRIOT Improvement Act was passed, and the commenter referred only to the potential for confusion, not actual incidents of confusion. Therefore, ATF believes that the statutory definition reflected in the proposed rule is preferable because it allows enforcement flexibility. Indeed, setting a specific size, such as 1.2 ounces, could allow for gamesmanship in which parties begin selling 1.1- or 1.3-ounce containers that—despite being intended for single-unit consumer sales—would fall outside the scope of the regulations.

The PACT Act, Public Law 111-154, 124 Stat. 1087, was enacted on March 31, 2010. Section 4 of the PACT Act, which amended the CCTA at 18 U.S.C. 2343(c), expanded ATF's inspection authority. This provision added to ATF's already-existing inspection authority by authorizing ATF to enter the business premises of delivery sellers to inspect records and tobacco products stored there, authorized federal district courts to compel such inspections, and imposed a civil penalty not to exceed $10,000 for denying access for an inspection or failing to comply with a federal district court order compelling such an inspection. 124 Stat. at 1109. The regulation that implements 18 U.S.C. 2343(c) is 27 CFR 646.153.

Two industry commenters requested that 27 CFR 646.153 be amended to reflect the changes to the CCTA made by section 4 of the PACT Act.

ATF concurs. The provisions of section 4 of the PACT Act that expand ATF's inspection authority are self-executing because section 6(b) of the PACT Act provided that section 4 of that act became effective on the date it was enacted. See 124 Stat. at 1110-11. However, ATF believes there is value in having the regulatory language concerning its inspection authority track the corresponding statutory language. Doing so makes the two authorities consistent, thereby reducing confusion, and provides more effective notice to regulated parties. Accordingly, the final rule includes the inspection provision from section 4 of the PACT Act.

The NPRM proposed to implement 18 U.S.C. 2343(b) by amending 27 CFR 646.146(b)(1) to provide that, except for a tribal government, each distributor who engages in a delivery sale, and who ships, sells, or distributes any quantity in excess of 10,000 cigarettes, or smokeless tobacco in excess of 500 single-unit consumer-sized cans or packages or their equivalent, within a single month, must prepare and submit to the Director of ATF the ATF Form 5200.25, Tobacco Inventory and Direct Sales Report. However, ATF has since determined that it would be more efficient for persons to submit reports without using a form because of the varying length of lists that could be submitted and because of developments in digital formats. This final rule accordingly removes references to the form itself but retains the report title and reporting requirements from the NPRM, as discussed in section IV.B.7 of this preamble, below. Paragraphs (i) through (iii) in 27 CFR 646.146(b)(1) continue to specify the information that must be included in the report.

Two commenters noted that the NPRM proposed to apply the reporting requirement to “each distributor” who engages in a delivery sale, while the PATRIOT Improvement Act applies the requirement to “each person.” Both commenters contended that the proposed reporting requirement in the rule was narrower in scope than that specified in the statute.

One of the two commenters stated that because the proposed definition of “Distributor” in § 646.143 included persons who distributed more than 10,000 cigarettes, or smokeless tobacco in excess of 500 single-unit consumer-sized cans or packages, in a single transaction, the reporting requirement was more limited than Congress intended. The commenter stated that the definition would exclude persons who ship, sell, or distribute in excess of 10,000 cigarettes in a month, but who do not make any single shipment, sale, or distribution over 10,000 cigarettes. The commenter argued that this was not the intent of the statute, and that Congress instead intended to capture persons making delivery sales for which the total monthly volume of all such person's monthly sales exceeded a certain threshold— i.e., 10,000 cigarettes (or their smokeless equivalent).

According to the two commenters, the term “distributor” should be replaced with “person” wherever it appears in § 646.146(b)(1). In addition, one of the commenters indicated that the final rule should specify that, in determining whether the person meets the threshold of 10,000 cigarettes (or their smokeless equivalent) in one month, the person must add together all shipments, sales, and distributions, regardless of the volume of any single sale, and must count all cigarettes sold by all locations under the person's common control or ownership.

ATF concurs with the comments. Hence, ATF has replaced the term “distributor” with “person” wherever it appears in § 646.146(b)(1), which covers the reporting requirement, as suggested by the commenters. ATF also concurs with the suggestion to include all locations under common control in the definition of “person.” In light of the fact that many distributors operate from multiple locations, ATF has also revised the definition of “person” in § 646.143 to include all locations under a person's common control. Therefore, in determining whether the person meets the threshold for the reporting requirements of 10,000 cigarettes (or their smokeless equivalent) in one month, the person must add together all shipments, sales, and distributions, 8 regardless of volume of any single distribution, and must count all cigarettes and smokeless tobacco sold at all locations under common control of the person.

ATF notes that the definition of “distributor” as included in the NPRM is not affected by this change to substitute “person” for “distributor” in the reporting requirement provisions. ATF is retaining the definition of “distributor” because it remains valid with respect to the record-keeping requirements already in ATF regulations.

As mentioned above, the NPRM proposed to revise paragraphs (i) through (iii) in § 646.146(b)(1) to specify the information persons are required to include under the new reporting requirement, for which ATF was proposing to develop a new form, ATF Form 5200.25. As noted above, ATF has now decided not to develop a form for this purpose, but these paragraphs of the rule will still set out the same information proposed in the NPRM.

The legal association commenter noted that the proposed regulations “merely quote the statute and do not provide any further guidance on the form or timing of the reports.” The commenter stated that the statute itself omits many details and offered the following comments:

a. The proposed regulations do not specify the required timeframe for making the reports. The commenter suggested that the final regulations specify that the reports be made no later than the 10th calendar day of the following month, which is consistent with the existing requirement in the Jenkins Act, 15 U.S.C. 376.

b. The proposed regulation in 27 CFR 646.146(b)(1)(i) does not specify exactly what must be reported as part of an “inventory.” The commenter suggested that a meaningful inventory must include, at a minimum, the manufacturer and brand family of each product, along with the number of cigarettes or ounces ( e.g., Philip Morris, Marlboro, 20,000 cigarettes).

c. The report of cigarettes or smokeless tobacco received should include the manufacturer, brand, and quantity, together with the vendor's name and address.

d. The report of cigarettes or smokeless tobacco distributed should include the manufacturer, brand, and quantity, together with the name and address of each person to whom the cigarettes or smokeless tobacco were distributed. The commenter noted this requirement would be consistent with the Jenkins Act, which requires a memorandum or invoice including the name, address, brand, and quantity. See 15 U.S.C. 376(a)(2).

e. The reports of cigarettes or smokeless tobacco distributed should include all distributions of cigarettes or smokeless tobacco (except for face-to-face retail sales), not just delivery sales ( i.e., all shipments from one distributor to another should be included in the reports, even where such distributions do not cross state lines).

f. The CCTA at 18 U.S.C. 2343(b) uses the term “ships, sells, or distributes,” while 18 U.S.C. 2343(b)(3) uses the term “distributed” only. The commenter stated that this difference in terminology should not be interpreted to limit the reporting requirements in section 2343(b), since that section was clearly intended to capture delivery sales to consumers, and that 27 CFR 646.146(b)(1)(iii) should make this clear in the final rule.

A second commenter concurred with several of the comments described above.

ATF agrees with the commenters' suggestions that the timeframe for filing reports should be no later than the 10th calendar day of the following month; that § 646.146(b)(1)(i) should specify what persons must report as part of a cigarette or smokeless tobacco inventory; that § 646.146(b)(1)(i) should also require that the brand name be identified, as well as the number of cigarettes or consumer-sized cans or packages of smokeless tobacco, in conformance with the Jenkins Act (which was previously amended by the PACT Act); that reports of cigarettes or smokeless tobacco under §§ 646.146(b)(1)(ii) and (iii) should identify brands and quantities, together with the name and address of the party from whom the cigarettes were obtained; that, apart from distributions to retail purchasers, the distribution reports prepared by delivery sellers should include all distributions, not just delivery sale distributions; and that the distribution reports required in section 2343(b)(3) should include all dispositions of cigarettes and smokeless tobacco made by a covered person during a given calendar month. However, the existing definition of the term “distribute” is “to sell, ship, issue, give, transfer, or otherwise dispose of,” and the existing definition of “disposition” is “movement of cigarettes [modified in this proposed rule to add smokeless tobacco] from a person's business premises, wherever situated, by shipment or other means of distribution.” In other words, in the context of these reporting requirements, all dispositions of cigarettes and smokeless tobacco made by a covered person would also all be distributions, and using either term results in the same effect. The final rule has been amended to make these changes.

Section 2343(b) refers to “[a]ny person, except for a tribal government, who engages in a delivery sale,” and section 2343(b)(3) includes a requirement that such a person prepare reports relevant “to each person (itemized by name and address) other than a retail purchaser.” A person engaged in a delivery sale who “ships, sells, or distributes” pursuant to section 2343(b) must prepare reports in compliance with section 2343(b)(3). As such, all cigarettes and cans or packages of smokeless tobacco that the person distributes (not just those distributed through delivery sales) to persons other than retail purchasers (as now defined in 27 CFR 646.143), must be reported. In other words, engaging in a “delivery sale” as defined in 18 U.S.C. 2343(e) triggers the potential application of the reporting requirements in 18 U.S.C. 2343(b). And those reporting requirements encompass all distributions in which the person engaged—not just those sales that specifically qualify as “delivery sales.”

Concerning the reporting exception for distributions to retail purchasers, ATF notes that the definition of “retail purchaser” it has chosen to adopt—as described below in section IV.B.8 of this preamble—specifies that the term applies as to a specific sale. Hence, a person required to prepare reports under 18 U.S.C. 2343(b) must include the information identified in 27 CFR 646.146(b)(1)(iii) for all non-retail distributions, which include all delivery sales, to a given consumer, even if the same consumer also made in-person purchases during the calendar month and was thereby a retail purchaser as to those specific sales.

Section 2343(b) of the CCTA, as amended by the PATRIOT Improvement Act, provides that any person, except for a tribal government, who engages in a delivery sale, and who ships, sells, or distributes any quantity in excess of 10,000 cigarettes, or any quantity in excess of 500 single-unit consumer-sized cans or packages of smokeless tobacco, or their equivalent, within a single month, must submit to the Attorney General a report that sets forth specified information, including the total quantity of cigarettes and cans or packages of smokeless tobacco that the person distributed within such month to each person (itemized by name and address) other than a retail purchaser. The proposed regulation that implements section 2343(b) is 27 CFR 646.146(b)(1).

Two commenters noted that the proposed regulations do not include a definition of “retail purchaser.” One of these commenters suggested the following definition:

Retail purchaser —A consumer who purchases cigarettes or smokeless tobacco in a face-to-face transaction whereby the consumer is physically present at the business premises of the person making the sale; makes the order directly to the seller without using a telephone, mail, the internet, or other means of remote communication; and takes possession of the cigarettes or smokeless tobacco directly from the seller rather than having the cigarettes or smokeless tobacco shipped to the consumer by means of mail, common carrier, or private delivery service.

This commenter also noted that the proposed regulations do not include a definition of “tribal government.” The commenter suggested that the term should be defined in the final rule and be limited to entities that are governments of federally recognized tribes published in the Federal Register in accordance with 25 U.S.C. 479(a)(1), 9 and not individual tribal members, persons licensed by the tribe, or other persons selling cigarettes manufactured by tribes or tribal members.

ATF concurs with the commenters regarding the definition of “retail purchaser,” and it adopts the definition proposed by the commenter because this definition harmonizes with the definition of “delivery sale” in 18 U.S.C. 2343(e). However, ATF does not agree that the term “tribal government” should be defined in the final rule. This is a complex issue that is outside the scope of ATF's expertise and is best handled on a case-by-case basis in consultation with the relevant federal agencies, such as the Department of the Interior. (As discussed in section V of this preamble, below (regarding consultations with tribal governments), ATF similarly declines to define “tribal business” as a term in the regulations).

In general, the current regulations at 27 CFR 646.150 provide that each distributor of cigarettes must retain the records required by §§ 646.146 and 646.147 for three years following the close of the year in which the records are made. The distributor must keep the required records on the distributor's business premises. In the proposed rule, ATF advised that it was considering extending the record retention requirement to five years. The proposed amendment would harmonize the regulations with the applicable statute of limitations for CCTA violations, which is five years. Accordingly, ATF solicited and received comments on this issue.

One commenter supported an extension of the record retention requirement to five years, stating that “[s]uch an extension should help to maintain records useful for both discovering and prosecuting contraband trafficking” and that “having to keep the records for just two more years, especially in this era of electronic record-keeping, would not unduly burden the tobacco industry businesses.”

Another commenter argued that an extension of the record-keeping period would increase the burden on the industry. However, the commenter stated that the additional burden could be substantially mitigated if the required records could be maintained in electronic form. The commenter recommended that in the final rule ATF clarify that any required records may be maintained in electronic form, without the need for regulated companies to retain hard copies of the same records.

ATF concurs that the records-retention requirement in the regulation should be extended to five years to comport with the statute of limitations on CCTA prosecutions. ATF also concurs that the required records may be kept in electronic form, and the final regulations have been amended accordingly. As discussed below in section VI.F of this preamble, ATF has also amended the final regulation to account for storage in cloud-based databases. The final rule allows persons to store their records remotely using a server located within the United States or its territories, or, if using a host facility, using one that has a business premises within the United States or its territories and that is subject to U.S. legal process.

One commenter stated that menthol cigarettes are preferred by over 18 million people, or one third of adult cigarette smokers, and that banning such cigarettes would create an enormous demand for contraband menthol cigarettes. According to the commenter, ATF is the agency with the greatest understanding of the dynamics of the contraband market and of the dangers to Americans from illicit cigarette trafficking, and it is incumbent on ATF to provide FDA with information and recommendations regarding the contraband cigarette issue. The commenter said extensive new trafficking opportunities resulting from a menthol ban would adversely affect ATF's ability to enforce the CCTA.

ATF does not believe that the statutory changes to the CCTA under the PATRIOT Improvement Act relate to this issue. The CCTA does not affect ATF's authority relating to this specific issue, nor does the CCTA affect FDA's authority under the Family Smoking Prevention and Tobacco Control Act. 10 ATF and FDA routinely collaborate, share, and exchange investigative information to ensure compliance with federal laws and regulations. For questions regarding the Family Smoking Prevention and Tobacco Control Act, interested parties should contact the FDA's Center for Tobacco Products by phone at 1-877-287-1373 or online at https://www.fda.gov/tobacco-products/about-center-tobacco-products-ctp/contact-ctp.

The reporting requirements in 18 U.S.C. 2343(b) (for persons who engage in a delivery sale and who ship, sell, or distribute any quantity of 10,000 cigarettes, or any quantity in excess of 500 single-unit consumer-sized cans or packages of smokeless tobacco, or their equivalent, in a single month) do not apply to tribal governments.

One city agency commenter stated that if, because of the statutory exemption, the reporting requirements cannot be imposed on tribal governments, there are other measures that could help combat illegal sales of tobacco products. For example, the commenter stated that the federal government should require that all tobacco products contain one of two traceable stamps: either a tax stamp or a restricted-sale notice stamp that indicates that the product will be sold at a tax-free location such as an Indian reservation, military base, or duty-free shop. Furthermore, any manufacturer or distributor involved in the sale of tax-free tobacco products should be required to track all such tax-free sales and report them to the federal government, which should disclose these sales to the state and local governments in the states and localities in which the sales occur.

ATF declines to adopt this suggestion in this rulemaking. The commenter did not identify a basis in the statutory changes to the CCTA effectuated by the PATRIOT Improvement Act that would authorize issuing regulations that require traceable tax stamps. Accordingly, any such change would be outside the scope of this rulemaking.

According to a city agency commenter, governments have increased taxes on “other tobacco products” (“OTPs”), meaning products other than cigarettes, such as cigarillos or cigars. The commenter suggested that these increased taxes could lead to increased trafficking, as buyers and sellers attempt to avoid the higher taxes. Therefore, the commenter requested that ATF “consider including language which would designate trafficking rules for OTPs such as small and large cigars, cigarillos, and pipe tobacco.”

As discussed above in section IV.B.2 of this preamble, the statutory changes to the CCTA effected by the PATRIOT Improvement Act do not expand the coverage of the CCTA to products other than cigarettes or smokeless tobacco, such as small or large cigars, cigarillos, or pipe tobacco. Therefore, making a regulatory change to do so is outside the scope of this rule.

Section 3(c) of Executive Order 13175 (Consultation and Coordination With Indian Tribal Governments) requires that “[w]hen undertaking to formulate and implement policies that have tribal implications, agencies shall . . . consult with tribal officials as to the need for federal standards and any alternatives that would limit the scope of federal standards or otherwise preserve the prerogatives and authority of Indian tribes.” Per Department policy, 11 “[c]onsultation is the formal process through which the Department of Justice seeks tribal input regarding the development of new or amended policies, regulations, and legislative actions initiated by the Department.”

Accordingly, on February 24 and 25, 2015, the Department invited the leaders of federally recognized tribes to consult on the proposed rule. The consultation process provided the Department useful feedback from tribes and tribal organizations, including the Winnebago Tribe of Nebraska, the Onondaga Tribe of New York, the Shoshone-Bannock Tribes of Idaho, and the Big Sandy Rancheria (Tribes) of California.

The Winnebago Tribe and the Shoshone-Bannock Tribe consultants noted that section 121(c) of the PATRIOT Improvement Act, amending 18 U.S.C 2343(b), requires that all distributors who engage in delivery sales and who sell in excess of 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco within a single month, except tribal governments, must submit reports to the Attorney General. During the tribal consultation, ATF indicated that, in its view, a business that was wholly owned and operated by a tribal government would fall within this reporting exemption. Both tribes asked for the regulations to define the term “tribal business.”

The amended CCTA does not use the term “tribal business.” ATF does not believe that it is necessary to create and define the term “tribal business” in these regulations or that it is helpful to do so at this time. If any issues arise concerning whether a particular business with a connection to a tribal government has reporting obligations, ATF believes it would be optimal to analyze specific factual situations to ascertain if the specific business is wholly owned and operated by a tribal government and is therefore exempt from the reporting requirements.

The Winnebago Tribe and the Shoshone-Bannock Tribe recommended that section 121(e) of the PATRIOT Improvement Act, amending 18 U.S.C. 2345, be amended to include tribal governments and tribal jurisdiction. These statutory provisions relate to the CCTA's effect on state and local laws. Expanding the scope of the statute is beyond ATF's regulatory authority; the changes recommended by the tribes would require congressional action.

The Winnebago Tribe, Shoshone-Bannock Tribe, and Onondaga Tribe recommended that ATF amend section 121(f) to preclude the creation of new civil enforcement actions against tribal governments or wholly owned tribal companies. The statutory language of the CCTA provides that a state, local government, or person who holds an IRC permit to manufacture or import tobacco cannot bring a civil action against “an Indian tribe or an Indian in Indian country (as defined in 18 U.S.C. 1151).” 18 U.S.C. 2346(b)(1). The final rule in no way alters the operation of this provision of the statute. States, local governments, and IRC permit holders will still be barred from bringing new civil enforcement actions against “Indian tribes” and “Indians in Indian country (as defined in 18 U.S.C. 1151)” under the amended CCTA. ATF cannot amend a statute, and thus the requested change is outside the scope of this or other rulemaking.

Big Sandy Rancheria commented that ATF's proposed rule should make clear that business-to-business transactions will not be included in determining the cumulative monthly total that triggers reporting requirements under 18 U.S.C. 2343(b). ATF does not adopt this recommendation. The statute states that any person who engages in a delivery sale and who ships, sells, or distributes “any quantity in excess of 10,000 cigarettes, or any quantity in excess of 500 single-unit consumer-sized cans or packages of smokeless tobacco, or their equivalent, within a single month” is subject to the reporting requirement. The statute does not contain an exemption for business-to-business sales. ATF cannot change a statute. Accordingly, the requested change is outside the scope of this rulemaking. ATF notes that all persons, regardless of whether they are subject to the reporting requirements of 18 U.S.C. 2343(b), must keep detailed records under section 2343(a) and this final rule's §§ 646.146 and 646.147, subject to inspection by ATF, of all sales or shipments in excess of 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco in a single transaction pursuant to 18 U.S.C. 2343(a).

The Onondaga Tribe objected to Congress lowering the CCTA threshold from 60,000 to 10,000 cigarettes. ATF notes that only Congress can amend statutory language lowering the threshold amount that triggers reporting requirements under the CCTA; ATF cannot do so through rulemaking.

Lastly, tribal governments noted that the PATRIOT Improvement Act amendments to the CCTA and the enactment of the PACT Act of 2009 were roughly contemporaneous and addressed similar subjects; they accordingly argued that the term “consumer” should be defined in these CCTA regulations using the PACT Act definition. However, Congress did not include a definition of “consumer” in the CCTA amendments in the PATRIOT Improvement Act. Instead, Congress used the term only to define the term “delivery sales,” which it used in turn only to discuss particular reporting obligations from which it specifically exempted tribal governments. ATF does not see any need to define the term “consumer” under the PATRIOT Improvement Act amendments to the CCTA at this time.

This final rule implements, with modifications, amendments to the regulations at 27 CFR part 646 that were specified in the NPRM published in the Federal Register on July 28, 2010, 75 FR 44173. In addition, the final rule is making minor technical amendments to change the word “shall” to “must” and other similar plain writing edits, in accordance with current regulatory conventions. The modifications to the NPRM are each discussed in detail below.

Because smokeless tobacco has been added to the scope of the CCTA by the PATRIOT Improvement Act, this final rule amends the heading of part 646, changing it from “Contraband Cigarettes” to “Contraband Cigarettes and Smokeless Tobacco,” in line with similar changes made in the statute. Likewise, the rule also amends the undesignated heading “Other Provisions Relating to the Distribution of Cigarettes (§ 646.153)” to read “Other Provisions Relating to the Distribution of Cigarettes and Smokeless Tobacco (§ 646.153).” Finally, this rule amends the undesignated center heading “Records” by adding “and Reports” to reflect the reporting requirements of the PATRIOT Improvement Act.

For consistency with 18 U.S.C. 2343(b), this final rule amends the NPRM's proposed 27 CFR 646.141 to include delivery sales of smokeless tobacco and cigarettes; and shipping, selling, or distributing, either in a single transaction or cumulatively, more than 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco within a single calendar month. In addition, it incorporates a technical amendment changing the word “subpart” to the word “part” in the text that describes the scope of these rules.

The final rule revises the NPRM's proposed definition of “exempted person” in § 646.143(b), by including certain persons operating in FTZs within the list of exempted persons for contraband smokeless tobacco. The exemption for operating within an FTZ when the smokeless tobacco involved has been entered into the zone under zone-restricted status or, in respect to foreign smokeless tobacco, has been admitted into the zone but has not been entered into the United States, is the same as the existing exemption for cigarettes and was inadvertently not included in the proposed rule. ATF adds this exemption to the final rule to align the smokeless tobacco exemptions fully with the FTZ exemption for cigarettes that already exists in the regulations implementing the CCTA.

The final rule removes the NPRM's proposed definition of “interstate commerce” in § 646.143 because including the definition for the entire CCTA goes beyond the scope of this rule and is not necessary. For purposes of the amendments made by the PATRIOT Improvement Act, the term “interstate commerce” has the definition supplied by the act itself at 18 U.S.C. 2343(f).

The final rule revises the definition of “person” in § 646.143 to include all locations under common control of a person. Therefore, in determining whether the person meets the threshold of 10,000 cigarettes (or the smokeless equivalent) in a single month for reporting purposes, the person must add together all shipments, sales, and distributions, regardless of volume of any single sale, shipment, or distribution, and must count all cigarettes and smokeless tobacco sold by all locations under the person's common control.

The final rule also adds to the NPRM's proposed § 646.143 a definition for “retail purchaser” that harmonizes with the definition of “delivery sale” in 18 U.S.C. 2343(e), makes technical amendments to the definition of “exempted person” to track the language in 18 U.S.C. 2341(2)(D), and references the correct 1986 version of the IRC.

In addition, the final rule amends § 646.146(a) and § 646.150 to add that each person who ships, sells, or distributes (which would become only each person who distributes) cigarettes or smokeless tobacco must keep copies of the required documents, which tracks the language in 18 U.S.C. 2343(a). Section 646.146 adds in-line headers to subsections (a) and (b) to identify their topics.

Consistent with two commenters who noted that the NPRM proposed to apply the reporting requirement to “each distributor” who engages in a delivery sale, whereas the statute applies the requirement to “each person,” the final rule replaces the NPRM's proposed use of the term “distributor” with “person” wherever it appears in § 646.146(b)(1).

The proposed regulation did not provide guidance on the timing for submission of the information required by the reporting requirements. Therefore, the final rule specifies that the report must be prepared and submitted by the 10th day of the calendar month following the month that is the subject of the report. The final rule also specifies what is to be reported, including the brand name of the cigarettes or smokeless tobacco. In addition, the final rule removes a reference to a new ATF form for the purpose of submitting reports. ATF has determined that it would be more efficient to allow persons to submit reports without being required to use a form, especially due to the highly variable length of lists that persons may need to submit.

This final rule makes a technical amendment to the phrase “more than 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco” in the NPRM's proposed § 646.147; this change ensures consistency with § 646.141.

The final rule extends the record retention requirement in the NPRM's proposed § 646.150 from three years to five years following the close of the year in which the records are made. This amendment harmonizes the regulations with the applicable statute of limitations for CCTA violations, which is five years. In addition, the final rule clarifies that these records may be maintained in electronic form on the person's business premises. Further, the final rule permits persons to use domestic remote data storage facilities or a host facility ( i.e., cloud-based storage) for the required records, if the entities that control the storage facilities are subject to service of U.S. legal process and have a business premises within the United States or its territories. In addition, persons required to maintain these records who choose to do so electronically must ensure that they are accessible by ATF on the business premises and are available on request, whether they are in cloud storage or an electronic device physically located at the premises.

This final rule does not apply to Electronic Nicotine Delivery Systems.

Executive Order 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits.

Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of agencies quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting public flexibility.

The Office of Management and Budget (“OMB”) determined that the proposed rule was a “significant regulatory action” under section 3(f)(1) of Executive Order 12866 because of facts that applied at the time the proposed rule was published in 2010. Although the factual circumstances have changed, as described below, OMB has reviewed this final rule because of OMB's determination that the prior NPRM was a “significant regulatory action.”

Most of the provisions in this rule simply incorporate statutory changes to the CCTA effected by the PATRIOT Improvement Act, primarily by modifying record-keeping requirements in the existing regulations to decrease the triggering threshold from 60,000 to 10,000 cigarettes and to include smokeless tobacco. In addition, the rule also implements reporting requirements that ATF originally projected in the NPRM would affect a substantial portion of the tobacco industry. The projected impact of this reporting requirement was the basis for OMB considering the NPRM to be “significant” under section 3(f) of Executive Order 12866. However, this rule will no longer have that originally projected impact because of intervening changes.

Five years after the PATRIOT Improvement Act was passed, Congress enacted the PACT Act in 2010, which effectively, as a practical matter, eliminated the ability to make lawful “delivery sales” of the sort that would trigger the reporting requirements imposed by the PATRIOT Improvement Act. The PACT Act bans mailing cigarettes and smokeless tobacco; provides that distributing cigarettes and smokeless tobacco must accord with state and local stamping, taxing, and other requirements; and provides that distributors must register with states, follow labeling, age verification, and packaging requirements, and more. In light of the PACT Act's comprehensive statutory requirements and prohibitions, distributors long ago ceased engaging in delivery sales covered by the PATRIOT Improvement Act's reporting requirement. ATF has thus determined that the CCTA reporting requirements incorporated into ATF's regulations via this final rule will have no cost to industry. It is vaguely possible that, at some distant date, one or more distributors might decide to start engaging in delivery sales covered by this requirement despite the PACT Act's disincentives, but ATF's experience over the 15 years since the PACT Act has been in effect indicates that this possibility is too speculative for assessing a projected possible economic impact from this final rule's reporting requirements.

Next, although most portions of this final rule simply incorporate statutory changes to the CCTA effected by the PATRIOT Improvement Act, it is possible this rule could result in a small number of additional distributors being subject to the record-keeping requirements in 27 CFR part 646 because of the decrease in the triggering threshold from 60,000 to 10,000 cigarettes and because the regulations also impose record-keeping requirements for certain shipments, sales, and distributions of smokeless tobacco. ATF has determined this potential increase will likely have a de minimis impact because distributors already generate such records in the regular course of business and likely will not have to make additional records or entries to comply with the rule.

Furthermore, this de minimis potential increase would be more than offset by the savings resulting from the rule's provisions allowing persons to use electronic records and to use commercial business records they generate in the course of regular business to meet the requirements.

Since the CCTA was enacted in 1978, cigarette smuggling and trafficking has grown in complexity and become a global problem that costs governments throughout the world billions of dollars in lost tax revenue. ATF's investigations, Congress, and other sources have established that organized crime and terrorist groups divert legal tobacco products into illegal markets. Organized crime and terrorist groups use profits derived from cigarette trafficking, and the more recent market of smokeless tobacco trafficking, to finance additional criminal enterprises. As a result, section 121 of the PATRIOT Improvement Act made several amendments to the CCTA, 18 U.S.C. 2341 et seq., to strengthen the ability to investigate and track cigarette and smokeless tobacco trafficking.

This rulemaking updates ATF's regulations to be consistent with the amendments made by the PATRIOT Improvement Act to the CCTA relating to trafficking in contraband cigarettes and smokeless tobacco and to facilitate enforcing the CCTA.

In this final rule, ATF has largely retained the substance of the regulations proposed by the NPRM, but has made certain modifications, including a modification that allows regulated entities to store records electronically. ATF has adjusted its analysis of the costs imposed by this rule to account for changes in the number of regulated entities since the publication of the NPRM and in response to public comments. In the NPRM, ATF estimated that 3,000 entities would be subject to monthly reporting requirements; in this final rule, ATF estimates that no entities will be subject to monthly reporting requirements. The decline in the number of entities subject to the reporting requirements is due to the implementation of the PACT Act. Because of this change, ATF estimates that there are no quantified costs associated with the monthly reporting requirements.

In response to public comments, and to incorporate current industry standards in light of advancing technology, ATF has amended the regulation proposed in the NPRM to provide that records in electronic form satisfy the rule's record-keeping requirements. This change is consistent with ATF's enforcement practice in recent years. ATF is codifying the permission to use electronic records in this final rule because industry now almost exclusively uses electronic records.

In addition, the final rule extends the current record-keeping requirement from three to five years. ATF estimates that there are no quantified costs associated with retaining records beyond the existing three-year requirement because no further action or capital will be required to implement the time extension, as all records are electronic and already produced in businesses' ordinary course of operations. Most tobacco industry businesses already maintain sales records and invoices electronically as part of standard business practices and to comply with other requirements, such as for tax purposes or as required by states, and this final rule does not require these entities to generate additional records for ATF record-keeping purposes.

Although, as discussed above, this rule does not include any quantified benefits, it does generate qualitative benefits. ATF's regulations implementing the CCTA already impose record-keeping requirements for manufacturers and wholesalers who sell more than 60,000 cigarettes in one transaction, enabling ATF to inspect their records and find indications of trafficking and other criminal activities. These requirements increase public safety and benefit the economy by reducing trafficking, thus impairing terrorism and other criminal activities funded by trafficking. However, the cigarette portion of the tobacco products market has been shrinking over the past 20 years, so the number of sales over 60,000 cigarettes in a single transaction has also diminished, and criminal enterprises have instead increased sales of lower transaction amounts. In addition, the decline in cigarette market share has been offset by a massive increase in market share for smokeless tobacco and an increase in illegal smokeless tobacco trafficking. These changes were a primary reason the PATRIOT Improvement Act added smokeless tobacco to the CCTA, added a requirement for keeping records on smokeless tobacco transactions of at least 500 single-unit consumer-sized cans or packages, and lowered the cigarette sale record-keeping threshold from more than 60,000 cigarettes to more than 10,000 cigarettes in a single transaction. These changes, and the change to the records retention period, permit ATF to inspect more records that aid it in finding traffickers.

This rule benefits the public by conforming ATF regulations with the statutory changes discussed above, thereby reducing confusion and providing clarity to regulated parties by eliminating discrepancies between the two. It also provides additional detail to industry on the scope of the record-keeping requirements, which helps inform regulated parties about their duties.

Executive Order 14192 (Unleashing Prosperity Through Deregulation) requires an agency, unless prohibited by law, to identify at least ten existing regulations to be repealed or revised when the agency publicly proposes for notice-and-comment or otherwise promulgates a new regulation that qualifies as an Executive Order 14192 regulatory action (defined in OMB Memorandum M-25-20 as a final significant regulatory action under section 3(f) of Executive Order 12866 that imposes total costs greater than zero). In furtherance of this requirement, section 3(c) of Executive Order 14192 requires that any new incremental costs associated with such new regulations must, to the extent permitted by law, also be offset by eliminating existing costs associated with at least ten prior regulations. However, this final rule is not an Executive Order 14192 regulatory action because it does not impose any more than de minimis regulatory costs.

Executive Order 14294 (Fighting Overcriminalization in Federal Regulations) requires agencies promulgating regulations with criminal regulatory offenses potentially subject to criminal enforcement to explicitly describe the conduct subject to criminal enforcement, the authorizing statutes, and the mens rea standard applicable to each element of those offenses. This final rule does not create a criminal regulatory offense and is thus exempt from Executive Order 14294 requirements.

This rule will not have substantial direct effects on the states, the relationship between the federal government and the states, or the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132 (Federalism), the Director has determined that this final rule does not impose substantial direct compliance costs on state and local governments, preempt state law, or meaningfully implicate federalism. It thus does not warrant preparing a federalism summary impact statement.

This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Civil Justice Reform).

Under the Regulatory Flexibility Act, (5 U.S.C. 601-612), agencies are required to conduct a regulatory flexibility analysis of any rule subject to notice-and-comment rulemaking requirements unless the agency head certifies, including a statement of the factual basis, that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include certain small businesses, small not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

Although there might be small entities that distribute sufficient tobacco products to trigger the thresholds for applying the PATRIOT Improvement Act, costs to these small entities would be de minimis because ATF is not requiring businesses to retain records more extensive than those that businesses retain in their normal course of operating, nor is ATF requiring that businesses deviate from their typical practice of storing records electronically. Also, as discussed in section VII.A of this preamble, the reporting requirements described in this rulemaking are obsolete because of the PACT Act, and these requirements accordingly will not affect any businesses, including small ones. Furthermore, because records covered by this rule are businesses' normal commercial records, ATF has already been inspecting them and providing awareness and feedback to businesses for the approximately two decades since the PATRIOT Improvement Act was enacted. Familiarization costs arising from this rule would thus be de minimis as well. Therefore, the Director certifies, after consideration, that this final rule will not have a significant impact on a substantial number of small entities.

This rule is not likely to have a significant economic impact on a substantial number of small entities under the Small Business Regulatory Enforcement Fairness Act of 1996, 15 U.S.C. 657 and 5 U.S.C. 601 note, as it neither imposes additional costs nor adds any barriers that would impact small businesses, as described above.

ATF does not anticipate taking enforcement actions against small businesses related to this rule; small businesses generally do not meet the threshold sales level for shipments, sales, or distributions that would trigger the record-keeping requirements. However, ATF has worked with and will continue to work with small businesses to ensure training, awareness, and compliance by such businesses. In addition, should an enforcement action be brought against a small business, ATF includes in the enforcement process steps that ensure small businesses are able to fully participate in and respond to any enforcement actions, in compliance with the Small Business Regulatory Enforcement Fairness Act.

This rule does not include a federal mandate that might result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, ATF has determined that no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Under the Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3521, agencies are required to submit to OMB, for review and approval, any information collection requirements a rule creates or any impacts it has on existing information collections. An information collection includes any reporting, record-keeping, monitoring, posting, labeling, or other similar actions an agency requires of the public. See 5 CFR 1320.3(c). The NPRM indicated that this rule would necessitate a new information collection under the PRA. The NPRM proposed a new information collection to capture the new reporting requirement proposed in that rule.

In addition, 27 CFR part 646 already includes an information collection in the form of record-keeping requirements, and this rule revises the threshold that triggers those record-keeping requirements, so ATF discusses that record-keeping here. Although those record-keeping requirements pre-date this rule and are not created by it, ATF did not previously include this record-keeping requirement under an OMB-approved information collection request (“ICR”) because it did not involve a form. However, this was an oversight, which ATF is now correcting by creating a new ICR to cover the existing record-keeping requirement in addition to the reporting requirement.

This ICR will also account for the new thresholds, created by the PATRIOT Improvement Act and implemented by this rule, that trigger the record-keeping requirement at 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco sales in one transaction (instead of only cigarettes at 60,000 in a transaction). Similarly, the ICR will account for the reporting requirement triggered when a person engages in a delivery sale and ships, sells, or distributes at least 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco, or their equivalent, in a single month. As described in section VII.A.2 of this preamble, these requirements do not result in more than a de minimis hour burden or cost, so the description below of the ICR as impacted by this rule shows a zero-hour burden. This rule changes the threshold for keeping records and the period for retaining them but otherwise makes no change to the record-keeping requirement.

The record-keeping portion of the information collection is associated with §§ 646.146, 646.147, and 646.150, and the reporting portion of the information collection is associated with § 646.146. The information collection is necessary because covered persons are required to maintain records on individual cigarette and smokeless tobacco shipments, sales, or distributions that meet the stated threshold requirements and to submit reports on monthly transaction totals of such sales that meet the stated threshold requirements. This information is required to implement the provisions of the CCTA, as amended by the PATRIOT Improvement Act, regarding trafficking in contraband cigarettes or smokeless tobacco. The likely respondents are businesses.

Title: Cigarettes and Smokeless Tobacco Record-keeping and Reporting Requirements.

OMB Control Number: 1140-[TBD].

Summary of the information collection: Each person who ships, sells, or distributes cigarettes or smokeless tobacco must keep copies of invoices, bills of lading, or other suitable commercial records equivalent thereto on each disposition of more than 10,000 cigarettes or of smokeless tobacco in excess of 500 single-unit consumer-sized cans or packages, in accordance with the requirements in 27 CFR 646.146(a), 646.147, and 646.150. These records may be maintained in electronic format and must be retained for five years.

In addition, each person, except for a tribal government, who engages in a delivery sale and who ships, sells, or distributes more than 10,000 cigarettes or 500 single-unit consumer-sized cans or packages of smokeless tobacco, or their equivalent, within a single month, must submit a Tobacco Industry and Direct Sales Report (“report”) by the 10th day of the following calendar month, in accordance with requirements in § 646.146(b). The person must include in the report the beginning and ending inventories of cigarettes and cans or packages of smokeless tobacco (in total) for such month, including the brand name and number of cigarettes or ounces of smokeless tobacco; the total quantity of cigarettes and cans or packages of smokeless tobacco that the person received within such month from each other person (itemized by name and address), including the brand name of the tobacco products; and the total quantity of cigarettes and cans or packages of smokeless tobacco the person distributed within such month to each person (itemized by name and address) other than a retail purchaser, including the brand name of the tobacco products. The person must submit a copy of each such report to the Director, ATF, and to the attorneys general and the tax administrators of the states from where the shipments, deliveries, or distributions both originated and concluded.

Need for the information: The purpose of the record-keeping and reporting requirements is so that revenue agencies and law enforcement officers can inspect and identify persons who are moving tobacco products into the black market or otherwise violating the law.

Proposed use of the information: ATF will inspect the records for law-enforcement purposes.

Description of the respondents: For record-keeping requirement: Any distributor, as defined in 27 CFR 646.143, is required to maintain this information in commercial dated records for each disposition meeting the statutory threshold as described in § 646.147. For reporting requirement: Any person except a tribal government who engages in a delivery sale is required to report this information for each calendar month in which the person meets the statutory threshold as described in § 646.146(b).

Number of respondents: For record-keeping requirement: 3,309 wholesalers and manufacturers. For reporting requirement: 0 persons.

Frequency of response: For record-keeping requirement: per sales transaction above the threshold described in § 646.147. For reporting requirement: per calendar month in which the person engages in a delivery sale and sells more than the threshold described in § 646.146(b) during that month.

Time burden of response: Burden hours due to rule: 0. The record-keeping requirement involves records that are already kept in the ordinary course of business. In addition, no persons have engaged in delivery sales for more than a decade, and ATF has no basis for anticipating a change in that number in the future, so no persons will trigger the reporting requirement. As a result, ATF assesses the impact from this rule to be 0 hours.

Estimate of total annual time burden: Total annual burden hours due to rule: 0 hours.

This rule is not a major rule as defined by the Congressional Review Act, 5 U.S.C. 804.

ATF has determined that this rule implements and is fully consistent with governing law. However, in the event any provision of this rule, an amendment or revision made by this rule, or the application of such provision or amendment or revision to any person or circumstance, is held to be invalid or unenforceable by its terms, the remainder of this rule, the amendments or revisions made by this rule, and application of the provisions of the rule to any person or circumstance shall not be affected and shall be construed so as to give them the maximum effect permitted by law.

Accordingly, for the reasons discussed in the preamble, ATF amends 27 CFR part 646 as follows:

“Historic Ships in Baltimore, Inc.” is the sponsor of an event titled “Air Show Baltimore,” which is held every two years, on the Patapsco River, including the Inner Harbor, in Baltimore, MD. To address potential hazards arising from the event, the Coast Guard has promulgated a Special Local Regulation (SLR) which is codified in 33 CFR 100.501. Normally, Air Show Baltimore is held on one four-day (Thursday through Sunday) weekend in September or October, as provided in Table 2 to Paragraph (i)(2) to § 100.501. This year, however, “Historic Ships in Baltimore, Inc.,” together with Fleet Week 2026, and Sail250, Inc., all of Baltimore, MD, have notified the Coast Guard that they will be conducting the Air Show Baltimore in conjunction with a Fleet Week celebration from 12 noon to 4 p.m. daily from June 24, 2026, to July 1, 2026.

The biennial air show consists of various types of military aircraft performing low-flying, high-speed precision maneuvers and aerial stunts. The U.S. Navy's Blue Angels flight demonstration squadron aircraft will fly between 12 noon and 4 p.m. on June 24-28, 2026. The new enforcement period would begin two hours before and end two hours after the hours during which air shows would be scheduled to occur. To address this, the Coast Guard proposed to change the existing rule by adding the new enforcement period to the existing entry in Table 2 to Paragraph (i)(2) to § 100.501 on January 27, 2026 (91 FR 3401.)

During the comment period that ended on February 26, 2026, we received four comments, but all of them were outside the scope of the rulemaking.

There are no changes in the regulatory text of this rule from the text of the rule proposed in the NPRM. This rule establishes a safety zone which will be subject to enforcement this year from 12 noon on June 24, 2026 until 4 p.m. on June 28, 2026. The existing SLR is subject to all the requirements which pertain generally to SLRs in § 100.501, as well as to specific requirements set out in paragraph (h)(2) of that section. The regulated area, which would not change, and periods during which the SLR are currently subject to enforcement are set out in the first row of Table 2 to paragraph (i)(2) of § 100.501. The existing SLR is currently only subject to enforcement on one of three four-day (Thursday through Sunday) weekends in September or October on alternating years. The sole purpose of the rule would is to create four new potential enforcement periods. This year, from 10 a.m. to 6 p.m. from June 24 to July 1.

Except for Air Show Baltimore participants and vessels already at berth, a vessel or person would be required to get permission from the COTP or PATCOM before entering the regulated area during the enforcement period. Vessel operators would request permission to enter and transit through the regulated area by contacting the COTP or PATCOM on VHF-FM channel 16. A person or vessel not registered with the event sponsor as a participant or assigned as official patrols would be considered a non-participant. Official Patrols are any vessel assigned or approved by the Commander, Coast Guard Sector Maryland-National Capital Region with a commissioned warrant, or petty officer on board and displaying a Coast Guard ensign.

If permission is granted by the COTP or PATCOM, a non-participant would be allowed to enter the regulated area or pass directly through the regulated area as instructed. Vessels would be required to operate at a safe speed that minimizes wake while within the regulated area, in a manner that would not endanger event participants or any other craft. Official patrol vessels would direct non-participants while within the regulated area. The air show aerobatics areas located within the regulated areas is restricted to Air Show Baltimore participants.

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

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

The Coast Guard certifies that, although some small entities may intend to transit the safety zone above, this rule will not have a significant economic impact on a substantial number of small entities. Vessel traffic will be able to safely transit around this safety zone. This safety zone will only impact a small designated area for a few hours. It is during a time when vessel traffic is normally low. In addition, the Coast Guard will issue a Broadcast Notice to Marines via VHF FM marine channel 16, which will allow small entities to adjust their transit plans, and the rule allows vessels to request permission to enter the zone from the COTP.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this rule will affect your small business, organization, or governmental jurisdiction and you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247).

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

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

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

As required by The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this rule will not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment.

This rule is a safety zone. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1.

The Gateway Development Commission, acting on behalf of the Port Authority of New York and New Jersey, has submitted a request, under 33 CFR 165.5(b), that the Coast Guard create a safety zone within the Hudson River Federal Channel, and pierhead line, near Pier 66, Manhattan, NY. Per 33 CFR 165.20, a safety zone is a water area, shore area, or water and shore area to which, for safety or environmental purposes, access is limited to authorized persons, vehicles, or vessels.

The Gateway Development Commission is a public authority which is facilitating and coordinating activities to effectuate the Gateway Program, a suite of rail infrastructure projects on the Northeast Corridor, between Newark, New Jersey and New York Penn Station. The Commission has submitted this request in support of the Hudson Tunnel Project (HTP), which will (a) build nine miles of new passenger rail track between New York and New Jersey, including nearly five miles of tunnel boring to construct a new, two-tube tunnel under the Hudson River, and (b) rehabilitate the existing rail tunnel beneath the Hudson River. The existing tunnel, known as the North River Tunnel, which is used by Amtrak for intercity passenger rail service and by NJ TRANSIT for commuter rail service, has been in service since 1910. 1

Boring the new tunnel involves two major marine construction packages: the Hudson River Ground Stabilization Project and the Manhattan Tunnel Project. Hazards from these projects include but are not limited to cofferdam installation and removal, soil mixing, crane and deck barge operations, and the construction of temporary marine structures that create hazards for the public. The Captain of the Port (COTP) New York has determined that potential hazards associated with the construction are a safety concern for anyone within the work area. Therefore, the COTP is issuing this rule under the authority in 46 U.S.C. 70034, which is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone.

The Coast Guard is issuing this rule without prior notice and comment. As is authorized by 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard became aware of the hazardous situation this project is creating on February 12, 2026, and must establish this safety zone as soon as possible to protect personnel, vessels, and the marine environment. Therefore, the Coast Guard does not have enough time to solicit and respond to comments.

For the same reasons, the Coast Guard finds that under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

This rule establishes a safety zone from 12:01 a.m. on May 1, 2026, through January 20, 2029. The Coast Guard anticipates construction to end sooner than that, but is establishing the safety zone for that length of time in case the project is delayed due to weather, construction, or funding delays or other unforeseen circumstances. If the project is completed before January 20, 2029, enforcement of the safety zone will be suspended, and notice given via Local Notice to Mariners. The Coast Guard Northeast District Local Notice to Mariners can be found at: https://www.navcen.uscg.gov/maritime-safety-information.

The safety zone will cover all navigable waters of the Hudson River from surface to bottom, within the following points: Point 1 at 40°45′20.32″ N, 074°00′23.84″ W; thence to Point 2 at 40°45′23.34″ N, 074°00′30.60″ W; thence to Point 3 at 40°45′24.03″ N, 074°00′40.85″ W; thence to Point 4 at 40°45′18.89″ N, 074°00′48.18″ W; thence to Point 5 at 40°45′13.80″ N, 074°00′48.64” W; thence to Point 6 at 40°45′08.03″ N, 074°00′46.44″ W; thence to Point 7 at 40°45′07.51″ N, 074°00′37.61″W; thence to Point 8 at 40°45′09.18″ N, 074°00′36.37″ W; thence to Point 9 at 40°45′06.70″ N, 074°00′30.78″W; thence returning along the Manhattan shoreline to Point 1. These coordinates are based on the World Geodetic System (WGS 84)/North American Datum 83 (NAD 83). Vessels and persons will not be allowed to enter the zone during this time, unless authorized by the COTP or the COTP's representative. The COTP has, however, authorized access by Hudson River Community Sailing vessels and paddlecraft transiting directly to or from the Pier 66 area. These vessels may transit through the southern area of the safety zone to the east of the Hudson River Cofferdam Lighted Hazard Buoy D (LLNR 37663.3).

The Coast Guard developed this rule after considering numerous statutes and Executive orders related to rulemaking. The Coast Guard's analyses based on a number of these statutes and Executive orders are provided below.

The regulatory flexibility analysis provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to rules that are not subject to notice and comment. Because the Coast Guard has, for good cause, waived the notice and comment requirement that would otherwise apply to this rulemaking, the Regulatory Flexibility Act's flexibility analysis provisions do not apply here.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this rule will affect your small business, organization, or governmental jurisdiction and you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

The Coast Guard has analyzed this rule under Executive Order 13132, Federalism, and has determined that it is consistent with the fundamental federalism principles and preemption requirements described in that Order.

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

As required by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this rule will not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

The Coast Guard has analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), and has determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment.

This rule is a safety zone. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket.

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

The event sponsor for the Portland Rose Festival Fireworks notified the Coast Guard that they will be requesting a change to their existing fireworks display dates. Currently, as per 33 CFR 165.1315, a safety zone exists and can be enforced annually on one day in May and one day in June. The newly proposed dates of May 22, 2026, and May 30, 2026 do not align with the existing regulation, therefore the Coast Guard is establishing a temporary Safety Zone for the Portland Rose Festival Fireworks in May 2026. Hazards from fireworks displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. Therefore, the Captain of the Port (COTP), Sector Columbia River is proposing this rule under the authority in 46 U.S.C. 70034, which is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone.

Because of these potential hazards, the Coast Guard is issuing this rule without prior notice and comment. As is authorized by 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable and contrary to the public interest. The Coast Guard was not provided with sufficient advance notice of this event before May 22, 2026, when the safety zone must be established to protect personnel, vessels, and the marine environment. Therefore, we do not have enough time to solicit and respond to comments.

For the same reasons, the Coast Guard finds that under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

This rule establishes a safety zone from 8:50 p.m. until 11:30 p.m. on May 22, 2026, and 8:50 p.m. until 11:30 p.m. on May 30, 2026. The safety zone would cover all navigable waters within a 450-yard radius of the launch site located at approximately 45°30′58″ N, 122°40′12″ W between the Hawthorne and Morrison bridges, located in Portland, OR. Vessels and persons will not be allowed to enter the zone during this time, unless authorized by the Captain of the Port.

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

The regulatory flexibility analysis provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to rules that are not subject to notice and comment. Because the Coast Guard has, for good cause, waived the notice and comment requirement that would otherwise apply to this rulemaking, the Regulatory Flexibility Act's flexibility analysis provisions do not apply here.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this rule will affect your small business, organization, or governmental jurisdiction and you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

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

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

As required by The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this rule will not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment.

This rule is a safety zone. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket.

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

The Coast Guard will enforce the security zone for the Portland Rose Festival in 33 CFR 165.1312 for the Willamette River regulated area from noon on June 2, 2026 through noon on June 8, 2026. This action is necessary to ensure the security of vessels participating in the 2026 Portland Rose Festival on the Willamette River during the event. Under the provisions of 33 CFR 165.1312 and subpart D of Part 165, no person or vessel may enter or remain in the security zone, consisting of all waters of the Willamette River, from surface to bottom, encompassed by the Hawthorne and Steel Bridges, without permission from the Captain of the Port Columbia River. Persons or vessels wishing to enter the security zone may request permission to do so from the on-scene Captain of the Port representative via VHF Channel 16 or 13. The Coast Guard may be assisted by other Federal, State, or local enforcement agencies in enforcing this regulation.

In addition to this notification of enforcement in the Federal Register , the Coast Guard will provide notification of this enforcement period via the Local Notice to Mariners and marine information broadcasts.

SAIL250® Maryland & Airshow Baltimore (SAIL250) is planning a week-long celebration of maritime and aviation events in Baltimore's Inner Harbor beginning June 24, 2026. Among these events are flyovers and aviation demonstrations. The events may include a U.S. Coast Guard Search and Rescue Drill and WWII-era “Warbird” flyovers. On January 30, 2026, the Coast Guard published a notice of proposed rulemaking (NPRM) titled Safety Zone; Inner Harbor, Baltimore, MD (91 FR 4022). In that NPRM, we stated why we issued the NPRM and invited comments on our proposed regulatory action related to this air show. During the comment period, which ended March 2, 2026, we received no comments.

To protect personnel, vessels, and the marine environment from potential hazards arising from these activities in these navigable waters before, during, and after the air demonstrations, the Captain of the Port, Sector Maryland-National Capital Region (COTP) is establishing a safety zone from 10 a.m. on June 24, 2026, through 6 p.m. on July 1, 2026. We are proposing this rule under the authority in 46 U.S.C. 70034.

There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.

Although the safety zone would be in effect for a week, it would only be subject to enforcement beginning thirty minutes prior to a demonstration and ending at the conclusion of that demonstration. It would cover all navigable waters of the Inner Harbor, encompassed by a line connecting the following points: beginning at Inner Harbor Pier 6 at position latitude 39°16′59″ N, longitude 076°36′12″ W, thence south to the Harborview Towers pier at latitude 39°16′41″ N, longitude 076°36′12″ W, thence northerly and easterly along the shoreline to and terminating at the point of origin located in Baltimore, MD. The dimensions of the safety zone are approximately 2,000 yards in length and 500 yards in width. The regulatory text we are proposing appears at the end of this document.

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

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

This regulation will only impact a small area for a few hours at a time. In addition, the Coast Guard will issue a Broadcast Notice to Marines via VHF FM marine channel 16, which will allow small entities to adjust their transit plans, and the rule allows vessels to request permission to enter the regulated area from the COTP.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this rule will affect your small business, organization, or governmental jurisdiction and if you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section. Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247).

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

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

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

As required by The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this rule will not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment.

This rule is a safety zone. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket.

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

On September 30, 2025, the Board issued a notice of proposed rulemaking proposing to (1) terminate existing requirements for Class I carriers to file supplemental reporting of PTC expenditures (PTC Supplement) as part of their annual R-1 reports filed with the Board and (2) require Class I carriers to report two service metrics to the Board on a weekly basis: original estimated time of arrival (OETA) and industry spot and pull (ISP). Updating Class I Rail Carrier Reporting Requirements ( NPRM ), EP 787 (STB served Sept. 30, 2025). 1

In response to the NPRM, the Board received 13 opening comments and 4 replies, which are discussed in this decision. 2 For the reasons discussed below, the Board will adopt its proposal with modifications. The text of the final rule is appended to this decision.

The Rail Safety Improvement Act of 2008 (RSIA) required Class I rail carriers to implement PTC—an automated safety system designed to prevent certain types of train accidents—by December 31, 2015, on main lines where intercity or commuter rail passenger transportation, as defined in 49 U.S.C. 24102, is regularly provided, and main lines over which five million or more gross tons of annual traffic and poison- or toxic-by-inhalation hazardous materials, as defined in 49 CFR 171.8, 173.115, and 173.132, are transported. 49 U.S.C. 20157(a)(1); see also 49 CFR 236.1019 (main line track exceptions). That deadline was later extended, pursuant to the Positive Train Control Enforcement and Implementation Act of 2015, to December 31, 2018, and railroads were allowed to individually petition the Federal Railroad Administration (FRA) for an alternative schedule and sequence that could further extend the deadline to a date that reflected implementation as soon as practicable but was no more than two additional years. 49 U.S.C. 20157(a)(1), (3)(A)-(D); 49 CFR 1.89.

In response to a petition by Union Pacific Railroad Company in 2013, in Docket No. EP 706, the Board adopted a final rule requiring Class I carriers to file certain data related to PTC expenses in a supplement included with their annual R-1 reports. 3 Reporting Requirements for Positive Train Control Expenses & Invs. ( Reporting Requirements ), EP 706, slip op. at 3-4 (STB served Aug. 14, 2013). In adopting the rule, the Board explained that the PTC Supplement would provide the Board with important information that “would help identify transportation industry changes that may require attention by the agency” and “would assist the Board in preparing financial and statistical summaries and abstracts to provide itself, Congress, other government agencies, the transportation industry, and the public with transportation data useful in making regulatory policy and business decisions.” Id. at 3. The PTC Supplement requirement was codified at 49 CFR 1241.11(b). A detailed description of the PTC Supplement requirement is contained in the NPRM, EP 787, slip op. at 2-3.

On December 29, 2020, FRA announced that PTC implementation was complete on all required freight and passenger railroad route miles. FRA, Positive Train Control (PTC), https://railroads.dot.gov/research-development/program-areas/train-control/ptc/positive-train-control-ptc (last visited Apr. 28, 2026). FRA also certified that each host railroad's PTC system complies with the technical requirements for PTC systems. Id.

On August 26, 2024, the Association of American Railroads (AAR) filed a petition to reopen Docket No. EP 706 and terminate the PTC Supplement requirement. AAR stated that, when the railroads requested that the Board adopt supplemental PTC reporting more than a decade ago, PTC-related capital costs and operating expenditures were “anticipated to be particularly high during the installation stage.” AAR Pet. 1, Reporting Requirements, EP 706. But AAR argued that, since that time, “the vast majority of costs associated with implementing PTC have been dispensed with,” and that the PTC Supplement requirement is no longer necessary. Id. at 4. Additionally, AAR argued that Class I railroads are “incurring unnecessary costs and expending significant time” to comply with the PTC-related reporting requirements. Id.

In the NPRM, the Board proposed elimination of the PTC Supplement. 4 NPRM, EP 787, slip op. at 1. The Board stated that, given that PTC has been fully implemented, the benefits from the supplemental reporting no longer justify the burden of generating and reporting the detailed information required by 49 CFR 1241.11(b). Id. at 3. Additionally, the Board noted that ending the PTC Supplement Requirement would simplify carriers' annual R-1 reporting. Id. Under the Board's proposal, PTC-related expenditures would still be reflected in the R-1 “capital investments and expenses” totals but would not be separately identifiable from non-PTC expenditures. Id. The Board also proposed that, should it adopt the proposed discontinuance of the PTC Supplement, carriers would be required to “submit a one-time summary document identifying individual line items in their respective R-1 reports that contain PTC-related expenditures representing at least 15% of the line-item amounts.” Id. at 4.

On January 30, 2026, the Board served a decision in Docket No. EP 706 (Sub-No. 1) waiving the requirement that carriers file, at that time, PTC Supplements with their 2025 R-1 reports, which were due March 31, 2026. 2025 Reporting Requirements for Positive Train Control Expenses & Invs., EP 706 (Sub-No. 1), slip op. at 2 (STB served Jan. 30, 2026). The Board stated that it would “in a subsequent decision in Docket No. EP 787 . . . address the need, if any, for carriers to file 2025 PTC Supplements at a later date.” Id., slip op. at 2.

Commenters generally express support for the Board's proposal to terminate the PTC Supplement. ( See ACC Comments 1; AFPM Comments 3; AAR Comments 1-3; CN Comments 1-2; CSXT Comments 3, 15; Ravnitzky Comments 2.) AAR comments, “[b]ecause Class I rail carriers have implemented PTC as required . . . separately reporting the expenses associated with the development and implementation of PTC is no longer necessary.” (AAR Comments 2.) CN argues that the Board, should it terminate the PTC Supplement requirement, would “benefit in terms of efficiency, as it would be able to reduce the hours spent reviewing the independent accountant's workpapers related to PTC data.” (CN Comments 4.) Additionally, ACC states that, because “PTC has been fully implemented on all required freight and passenger railroad route miles and implementation costs have largely been paid. . . . the supplemental reporting of PTC-related expenses provides little ongoing value to the Board and other stakeholders.” (ACC Comments 2.)

One commenter, Ravnitzky, notes his support of the proposed termination of the PTC Supplement but argues that the elimination of the PTC Supplement “should not foreclose the Board's ability to obtain targeted information when reasonably necessary.” (Ravnitzky Comments 1-2.) Ravnitzky recommends that the Board clarify that its action does not limit its statutory authority under 49 U.S.C. 11145 to request PTC-specific financial or operational data, to require production of records, or to conduct audits when the Board determines that collection of such information is necessary. ( Id. at 2.)

While no commenters oppose the Board's proposal to terminate the PTC Supplement requirement, two commenters object to the Board's proposal to require parties to submit a one-time summary document and two commenters support it. AAR and CN question the need for the summary, express concern about the burden associated with preparing the summary, and seek additional clarity regarding its contents. (AAR Comments 3; CN Comments 2, 4.) Both of these commenters note that the Board did not state whether the summary would be calculated with 2024 or 2025 data, and that basing the summary on 2025 data would eliminate the reduction in burden that the NPRM identifies for 2025. (AAR Comments 3; CN Comments 2.) ACC and AFPM support the proposed summary requirement, arguing that it would provide transparency and closure. (ACC Comments 2; AFPM Comments 3.)

After considering the comments, the Board concludes that separate PTC reporting is no longer warranted. Commenters have confirmed the Board's observation that the PTC implementation process is complete. At this time, there is limited, if any, benefit to requiring carriers to separately report PTC-related expenses, especially given the cost and time required to comply with the PTC Supplement requirements. The Board therefore will adopt its proposal to terminate the PTC Supplement requirement. As noted in the NPRM, PTC-related expenditures will still be reflected in the R-1 “capital investments and expenses” totals, but would not be separately identifiable from non-PTC expenditures. Elimination of the supplemental PTC reporting furthers the goals of the rail transportation policy of 49 U.S.C. 10101 by minimizing the need for federal regulatory control over the rail transportation system, 49 U.S.C. 10101(2), and by ensuring the availability of accurate cost information in regulatory proceedings, while minimizing the burden on rail carriers of developing and maintaining the capability of providing such information, 49 U.S.C. 10101(13). Given that the Board is terminating the PTC Supplement requirement, the Board will not require carriers to submit PTC Supplements for 2025 R-1 reporting. Moreover, in light of the comments received, the Board finds that the burden on the carriers of preparing the proposed one-time summary document would outweigh the transparency benefit to be derived from it. That proposal, therefore, will be omitted from the final rule. 5

With respect to Ravnitzky's request for clarification that termination of the PTC Supplement requirement does not limit the Board's authority to request PTC-specific information or data in the future, the Board notes that, pursuant to 49 U.S.C. 11145(a)(1), the Board may require rail carriers “to file annual, periodic, and special reports with the Board containing answers to questions asked by it” and, pursuant to 49 U.S.C. 1321(b)(3), the Board may obtain from carriers “information the Board decides is necessary to carry out subtitle IV.”

In the NPRM, the Board proposed weekly Class I carrier reporting of two service metrics, OETA and ISP. The Board stated that, in its experience, “ongoing, standardized reporting of data allows the Board to observe long-term trends and assess changes in service levels, enabling it to take early action to address potential concerns.” NPRM, EP 787, slip op. at 4. 6

The OETA metric proposed by the Board would measure a carrier's success in meeting its estimated arrival times for shipments. Id. at 5. The Board proposed to define OETA as the estimated time of arrival that a rail carrier provides when a shipper tenders the bill of lading or when the rail carrier receives the shipment from an interchanging carrier. Id. Under the Board's proposal, Class I carriers would report, for shipments moving in manifest service, the percentage of weekly shipments that were delivered to destination no later than 24 hours after the OETA, out of all shipments in manifest service on the carrier's system during each weekly reporting period. Id.

The ISP metric proposed by the Board would measure a rail carrier's success in performing local placements (“spots”) and pick-ups (“pulls”) of loaded railcars and unloaded private or shipper-leased railcars at shippers' or receivers' facilities during planned service windows. Id. at 6. Under the Board's proposal, the ISP metric would be calculated by comparing the number of cars for which a carrier successfully completed the requested spots or pulls during the planned service windows, to the number of cars for which a shipper or receiver requested spots or pulls by the applicable cut-off times for those windows. Id. For example, if over the course of a reporting period, a carrier pulls nine of 10 requested cars within the first service window and pulls seven of 10 requested cars during a second service window, the carrier's ISP metric would be 80%. Id. As proposed, the ISP metric would not apply to unit trains or intermodal traffic.

The Board proposed that carriers would report ISP performance both at the system level and at the operating division level. Id. For reporting at the operating division level, carriers would establish reporting regions using any geographic boundaries that they choose, provided that they identify the boundaries as part of their reporting, consistent with their business practices. Id.

Shipper interests broadly support the Board's proposed implementation of OETA and ISP reporting requirements. AFPM states, “[t]he Board's proposal to measure on-time performance through [OETA] reporting will provide critical insight into rail service reliability and shipment timeliness,” and it describes ISP as “a valuable tool for tracking first-mile/last-mile service quality.” (AFPM Comments 1.) In their joint comments, FRCA and NCTA state that they “strongly support” the Board's OETA and ISP proposals. (FRCA/NCTA Comments 1.) NITL also supports the Board's proposal and advocates for implementation of OETA and ISP metrics as part of the Board's “objective in ensuring rail service reliability and accountability.” (NITL Comments 2.) While carrier interests do not express support for the Board's service metrics, they also do not object to implementation of such metrics in general. 7

Both shipper and rail carrier interests propose modifications to the proposed metrics, which the Board will address below.

Several rail carrier interests argue that the Board should adopt a flexible approach that would allow rail carriers to gather data using their existing data collection systems and protocols. For example, AAR states:

In its reply, ACC opposes flexible OETA and ISP definitions, arguing that the definition of service performance metrics must be consistent across carriers. (ACC Reply 1-2.) It argues:

AFPM also argues for consistency in reporting, noting that standardized metrics and clear calculation methodologies will allow for comparison of performance results. (AFPM Comments 1-2.)

The Board will modify its proposal to allow for certain additional flexibility in reporting, as described in this decision. The Board does not believe it is necessary to compare carriers against each other in order to achieve its goal of identifying service performance trends. A more flexible approach, under which carriers could report their data in a manner consistent with the manner in which they track it in the ordinary course of business, would minimize the burden of reporting, while still enabling the Board to monitor each carrier's performance over time. In order to ensure that the Board and the public can appropriately interpret the data submitted, each carrier will be required to provide with its initial data submission a document explaining its methodology for deriving its data. While each carrier should strive to maintain consistency in its reporting methodology across reporting periods to the maximum extent possible, the Board recognizes that a carrier's reporting methodology may need to be adjusted from time to time. Accordingly, carriers will be required to update the Board of any changes to their methodology for reporting data by filing a revised methodology document with the first data submission that reflects that methodology change. 8 The Board will post the methodology documents on its website.

However, the Board recognizes shipper interests' concerns that too much flexibility could diminish the value of the metrics. Therefore, the Board will include a provision at 49 CFR 1251.2 to explicitly allow, to ensure data quality and utility, the Director of OE to require a carrier to change its methodology and submit revised metrics for past periods. For example, the Board may require changes if a carrier's methodology substantially deviates from industry practice or would produce misleading metrics.

Regardless of this provision, the Board recognizes that allowing this flexibility may impose additional burdens upon stakeholders who may want to review carriers' methodology documents in order to compare carriers against each other. However, this burden is smaller than the burden that would be associated with requiring carriers' operating practices to conform to a uniform reporting standard. Further, stakeholders will not need to familiarize themselves with the nuances of each carrier's reporting in order to utilize the data to monitor trends in the performance of individual carriers over time.

Additionally, the Board notes that it will retain the authority to audit carrier records in connection with OETA and ISP reporting requirements. Carriers' OETA and ISP data collections will be governed by 49 CFR 1220.6, which requires carriers to preserve certain records, including “[s]upporting data for reports filed with the Surface Transportation Board” for three years.

In the NPRM, the Board proposed that OETAs would be established at the time when the shipper tenders the bill of lading or when the rail carrier receives the shipment from an interchanging carrier. NPRM, EP 787, slip op. at 12. Both AAR and CSXT express concerns about this proposal. AAR states that bills of lading may contain errors that can take time to resolve. (AAR Comments 8.) Therefore, AAR proposes that the Board “should base OETA on the generation of the trip plan—which for some carriers may be the waybill creation event while for others it may be the time the shipper formally releases a car to the railroad.” ( Id. ) Similarly, CSXT notes that its own systems only issue a trip plan upon creation of a valid waybill and argues that the OETA should be established at the time of waybill creation, rather than at the time the bill of lading is issued. (CSXT Comments 6, 9.) CSXT further states that it “recognizes that carriers with different operating practices may have a different view” and that “[t]he Board need not make a determination on this granular issue because the Board can achieve its goal of monitoring trends without favoring one operating practice over another.” ( Id. at 6.) CSXT suggests that the Board define OETA as “the estimated time of arrival that the rail carrier provides when a trip plan is created (typically either upon tender of the bill of lading or creation of the waybill).” ( Id. at 10.)

ACC objects to AAR's and CSXT's calls for revisions to the Board's proposed OETA definition. It argues that “shippers base their planning on the OETA provided when they submit the bill of lading” and that “[t]he value of the OETA metric is diminished if the railroad is free to change it until the trip plan is issued.” (ACC Reply 3.)

In light of the comments received, the Board will revise its definition of OETA in 49 CFR 1251.1 to state that OETA means:

This change will allow carriers to continue to generate OETAs in accordance with their existing practices, and provide the carriers latitude to change their practices in the future. It is also intended to clarify the conditions that must be met before carriers will be expected to generate OETAs for movements beginning with either shipper release or interchange from another carrier. In either case, for a carrier's OETA to be reliable, the carrier must have access to both the railcar itself, and its necessary and customary documentation. There may be ambiguity or disagreement between shipper and carrier, or between two carriers at interchange, about the timing of events which satisfy these conditions. The Board encourages parties to regularly and jointly review OETAs and their supporting data to ensure they are produced promptly from accurate inputs, and encourages parties to notify the Board of protracted or material disputes regarding OETA generation.

The Board does not find that the revised definition of OETA adopted here would diminish the value of the OETA metric. Under the revised definition, the OETA would still be established at an early stage of a shipment (or interchange), and under 49 CFR 1251.2(a)(1), for purposes of calculating the OETA metric, a carrier is not permitted to change the OETA after that OETA has been communicated to the shipper, except when the change is made in response to a shipper's request or a shipper's failure to make cars available for pick-up. And, as noted above, the Director of OE will be delegated authority to require carriers to revise the methodology they use to generate reporting, including the OETA metric, in order to ensure data quality and utility, as required.

CSXT also argues that, for interline movements, OETA should be based on an estimated time of arrival generated when “the rail carrier receives the shipment from an interchanging carrier . . . . as more fully described in a methodology document.” (CSXT Comments 10-11.) CSXT argues that “[t]here are significant technical complexities in determining the precise moment of interchange between railroads that do not have visibility into each other's data” and the flexible approach it proposes would accommodate these issues and accommodate carriers' individual data systems. ( Id. )

The revised definition of OETA, discussed above, responds to CSXT's concerns by making explicit that a carrier generating an OETA must have access to the railcar itself and its necessary and customary documentation. The Board recognizes that rail carriers' reports of the times of interchange delivery and receipt frequently differ. The revision to the definition of OETA is not intended nor expected to resolve such differences in all instances.

The Board has refrained from establishing standards for the maximum intervals of time between reports of interchange delivery and receipt, between shippers' release of shipments and rail carriers' pulls from shippers, and between satisfaction of the conditions needed to generate OETAs and the carriers' generation and communication of OETAs. The Board nevertheless expects carriers to make reasonable efforts to pull released railcars from shipper facilities, pull or receive interchange traffic, and to promptly generate OETAs when the necessary conditions have been met. The Board retains authority to revise the metrics and reporting requirements adopted here in order to address systemic issues that undermine the purpose of this rule.

The Board will simplify the definition of “delivery” as it relates to interline movements, to provide that “a shipment will be deemed to be delivered to the receiving carrier or its agent or affiliated company when the shipment is offered for interchange.” The Board will also modify the definition of “time of arrival” to mean “the time that a shipment is delivered to the designated destination.” These revisions provide for flexibility and reflect that carriers may use different measures and tools to determine when a delivery is made, and to determine if it is completed within 24 hours of an OETA. The definition of “receipt of shipment” has also been removed from the regulations to allow this flexibility. Carriers should describe their methodology for determining time of receipt in their methodology documents. Again, the Board retains authority to revise the metrics and reporting requirements adopted here in order to address systemic issues that undermine the purpose of this rule.

In the NPRM, the Board proposed that any shipments arriving before its OETA, including those arriving more than 24 hours early, would be counted as on-time deliveries. NPRM, EP 787, slip op. at 5 n.6. All rail carrier interests filing comments support the Board's proposal. ( See, e.g., AAR Comments 7; AAR Reply 4; CN Comments 4-5; CSXT Comments 7.)

Several shipper interests, however, oppose the proposal. ACC argues that “unexpected early deliveries can also cause significant impacts for rail customers [and] can congest a customer facility with railcars, creating operational disruptions that are comparable to those resulting from late deliveries.” (ACC Comments 3.) Trinidad Benham also argues that early deliveries can lead to problems that are similar to those caused by late deliveries, including risks of demurrage and increased production costs. (Trinidad Benham Comments 1.)

USDA states that “[c]ars that are delivered too early are . . . problematic, as a shipper likely has not staged resources early enough and must now make costly adjustments.” (USDA Reply 2.) It argues that both late and early deliveries “represent differences from plans and expectations; they both impose costs.” ( Id. at 3.)

The Board will implement the proposal from its NPRM, under which cars arriving more than 24 hours in advance of the OETA are considered on-time deliveries. While the Board recognizes that early deliveries can cause operational difficulties for shippers, the goal of the service metrics adopted here is to monitor overall railroad service reliability. To the extent that shipments arrive early, this is not as indicative of rail network problems as late deliveries and, therefore, early and late deliveries should not be measured as effectively equivalent. Moreover, the Board finds that network problems would be adequately captured by measuring only late deliveries as part of the OETA metrics. The Board notes, however, that its treatment of early deliveries as on time in this network-focused reporting metric does not mean that early deliveries might not be relevant to relief sought in a particular case. See Pol'y Statement on Demurrage & Accessorial Rules & Charges, FD 757, slip op. at 12 (STB served Apr. 30, 2020) (“[B]unching should be addressed on a case-by-case basis in order to permit the Board to properly consider all relevant circumstances pertaining to an assessment of demurrage.”)

Under the Board's proposal, in order for a shipment to be considered “on-time” for purposes of the OETA reporting requirement, a carrier must deliver a shipment no later than 24 hours after the OETA. AAR argues that “OETA should be measured based on shipments that were delivered to the designated destination no later than the end of the calendar day following the OETA.” (AAR Comments 8.) In support of its position, AAR argues:

Shipper interests take an opposing view. ACC states that, contrary to AAR's arguments, “ACC members seek certainty on car deliveries and pick-up times and plan their operations accordingly.” (ACC Reply 2.) ACC argues that “AAR's proposal would substantially extend the period that is considered on-time delivery,” and notes that under the AAR's proposed next-day standard, a car that is delivered 40 hours after OETA could be treated as on time. ( Id. ) ACC states that “loosening of the 24-hour standard . . . merely serves to bolster the appearance of on-time performance.” ( Id. ) FRCA and NCTA also object to AAR's proposal, stating, “[a]dding an extra day grace period before a movement is considered late is simply another means of lowering the bar and making the data less informative.” (FRCA/NCTA Comments 2.) FRCA and NCTA also question whether, under the proposed modification, the grace period could be extended beyond the “next calendar day” in the event that a carrier does not provide weekend service to a shipper. ( Id. )

The Board will implement its original proposal. A shipment that arrives more than 24 hours after its OETA will not be considered on time. AAR's proposal represents a significant step away from the Board's proposal, and it appears that it could nearly double the window in which a shipment could be considered on time for OETA purposes under some circumstances. While OETA is only intended to provide a general indicator of rail carriers' overall network health, and while a grace period following an OETA is appropriate, a grace period that could allow a shipment arriving nearly 48 hours after OETA to be reported as on time would not adequately serve the purposes of this data collection.

Rail carrier interests propose a number of events that should trigger exclusions from a carrier's OETA metric reporting, including bad order cars, cars held for customs paperwork, cars held because of an embargo, or cars delayed by acts of God or other events outside the carrier's control ( e.g., a line outage). AAR argues that if a car is delayed due to an event that occurs in transit and the delay “is outside the rail carrier's control,” then that car should be excluded for purposes of calculating the OETA metric. (AAR Comments 9.) Shipper interests, however, support a narrower range of exclusions. ( See AAC Reply 2-3; Ravnitzky Comments 2.)

Both rail carrier and shipper interests support an OETA exclusion for bad order cars. (AAR Comments 9; CSXT Comments 8; Ravnitzky Comments 2; ACC Reply 2.) Bad order cars are cars that must undergo repair before completing their trips due to mechanical, safety, or structural problems. This exclusion is appropriate, as bad order cars are rarely indicative of overall rail network performance. The Board will therefore exclude bad order cars from OETA reporting. Additionally, for clarity, the Board will revise its proposed definitions to define bad order cars as cars that must undergo repair before completing their trips due to mechanical, safety, or structural problems.

AAR and ACC both support the exclusion of cars that are held for issues related to customs paperwork, (AAR Comments 9; ACC Reply 2), while CN argues that cars that move cross-border should be excluded entirely, (CN Comments 5). CN further argues that, because the Board's goal relates to monitoring of traffic within the United States, taking into consideration traffic movements that occur partially, or in some instances, mostly outside the United States, would not fulfill the Board's aims. ( Id. ) The Board will exclude cross-border traffic from OETA reporting. Cross-border shipments can be unexpectedly delayed at, or near, border crossings. For example, U.S. customs authorities may order that shipments be set out of trains for inspection or otherwise await clearance for onward movement.

AAR proposes exclusions for cars held due to embargos and cars impacted by acts of God or other events “like a line outage outside the rail carrier's control.” (AAR Comments 9.) CSXT also argues that cars impacted by embargoes or other events outside a carrier's control should be excluded from OETA reporting. (CSXT Comments 8.) ACC, however, objects to excluding embargo-related delays and shipments impacted by acts of God. (ACC Reply 2-3.) According to ACC, the “imposition of an embargo does not signify that a service failure is beyond the railroad's control.” (ACC Reply 2.) ACC argues that, “underlying conditions leading to past embargoes have been created or exacerbated by the railroad's own management decisions, including actions to cut jobs, mothball equipment, and delay infrastructure investments.” ( Id. ) ACC further argues that “[e]xempting such events from the service metrics creates a perverse incentive for railroads to use—and misuse—embargoes to manage network congestion.” ( Id. at 2-3.) Regarding exclusions for acts of God, ACC acknowledges that “weather and other disruptive events may be outside of the carrier's control,” but it argues that carriers are “responsible for maintaining network resilience and capacity to respond to such events.” ( Id. at 3.) ACC further argues that excluding acts of God would diminish the accuracy and utility of the data. ( Id. )

The Board finds that cars delayed due to acts of God and embargoes should not be excluded from OETA reporting. Allowing carriers to exclude embargo or weather event-impacted traffic from OETA reporting could provide a misleading view of railroad performance. For example, if in the aftermath of a disruptive weather event, railroads excluded impacted traffic from OETA reporting, OETA reporting data could create the appearance of service reliability, while masking widespread disruptions across the network. Additionally, the term “acts of God” is broad and could result in the exclusion of a significant number of movements. Exceptions for embargoes and acts of God therefore could undermine the reliability and usefulness of reported data as an indicator of overall rail network performance.

The Board will, however, encourage railroads to report extenuating circumstances that have led or may lead to reduced performance, including weather-related events, in cover letters accompanying their data filings in this docket. This will advance the Board's objective of monitoring the overall health of the national rail network and will help the Board recognize any unusual circumstances that may degrade rail performance. The Board may also request information from carriers regarding the causes underlying any notable performance deterioration, when appropriate. See 49 U.S.C. 11145.

AAR also asks the Board to clarify what constitutes a “change to the original trip plan made by the shipper.” (AAR Comments 9 (citing NPRM, EP 787, slip op. at 13).) AAR argues that this category may include shipments impacted by customer re-routes, as well as “customer exceptions,” which may include situations in which a customer notifies the carrier that its cars are not actually available to be pulled, or if a customer has left blue flags  9 in place, thereby preventing movement of cars. (AAR Comments 9.) CSXT also argues that OETA failures stemming from customer-requested reroutes or diversions, and other customer exceptions, including blue flags, should be excluded from OETA reporting. (CSXT Comments 8.)

The Board will clarify that a change to the original trip plan made by the shipper includes customer re-routes, diversions, and other customer-requested exceptions. Such events may result in establishment of a new trip plan due to customer choice, and treating impacted shipments as late would not accurately reflect railroad performance. In addition to OETA changes made at the request of the customer (which include customer reroutes and diversions), the Board will allow carriers to change an OETA when a shipper fails to make a car available for carrier pick-up, for example, when the shipper has left blue flags in place. The Board has revised the text of 49 CFR 1251.2(a)(1) to reflect this.

The Board will also clarify that if a shipper is unable to accept a car when a carrier attempts to make delivery and the car is constructively placed, that constructive placement is considered a “delivery,” as defined in 49 CFR 1251.1, for purposes of calculating the OETA metric.

In the NPRM, the Board proposed excluding unit trains from OETA reporting. Rail carrier interests support the proposed exclusion, while shipper interests do not.

AAR notes that unit train traffic has many distinguishing characteristics from manifest traffic, which is subject to OETA reporting requirements under the proposed rule. (AAR Comments 5.) It states that unlike trains carrying manifest traffic, not all unit trains have schedules, meaning that OETA reporting would not be pertinent. ( Id. ) According to AAR, “for some railroads, the number of unit trains delivered is based on the shipper's monthly demand, as opposed to a plan for delivery in a particular day's service window.” ( Id. at 6.) CN also voices its support for the Board's proposed OETA exclusion for unit train traffic, noting that the Board recognizes that some railroads, including CN, do not produce trip plans for unit trains. (CN Comments 5.)

Some shipper interests, however, call for including unit train traffic in OETA reporting. NGFA disagrees with railroads' contentions that unit trains do not have schedules or trip plans. (NGFA Comments 3.) NGFA disputes “the view that shuttle/unit trains do not have the same need to [reach destinations] within specified service windows while manifest trains do.” ( Id. ) It further argues that while unit train trip plans “may not take the same form as a manifest train trip plan,” all six Class I carriers calculate “an anticipated transit time and arrival date, the latter of which is supplied to the customer.” ( Id. ) It states that such plans “are a necessity for the railroads to manage their capacity and system use.” ( Id. at 3-4.)

Similarly, in its reply, USDA argues, “[t]he Board's decision to exclude unit trains stems from inconsistencies between railroads in how they produce trip plans. However, the railroads do give shippers estimated times of arrival for their unit trains.” (USDA Reply 2 (citing NGFA Comments 3).) NGFA also states that “the failure of a rail carrier to meet its [unit train] service representations to a shipper can result in proportionally greater harm to the shipper/receiver and the shipper/receiver's customers than manifest traffic.” (NGFA Comments 3.) PRFBA and NITL also support including unit trains in OETA reporting. (PRFBA Comments 3; NITL Comments 2.)  10